The Supreme Court last week clarified that while appointing arbitrators in civil disputes, the terms of the agreement between the parties should be adhered to as closely as possible. The court should not straightaway appoint an arbitrator at the request of one party.
It should first ensure that the parties follow the procedure set out in the agreement for appointment of an arbitrator. The qualifications and other considerations mentioned in the agreement also should be adhered to. These principles were laid down by the court in the case, Northern Railway vs Patel Engineering Co Ltd.
Earlier, the court had given conflicting views on this question in two judgments. In this decision, it interpreted Section 11(6) of the Arbitration and Conciliation Act and gave a final ruling on it.
Employees’ claim for absorption in NTPC rejected
The Supreme Court has set aside the Madhya Pradesh High Court judgment by which the National Thermal Power Corporation (NTPC) was ordered to absorb employees of its contractor. The workers were employed at the Korba super thermal power project and its residential colonies.
The workers claimed that they were working since 1987 under the supervision and control of NTPC and therefore they were employees of the corporation. The latter denied it and insisted that they were contract labourers and had no direct relationship with the corporation and they were engaged in temporary jobs. The division bench of the high court rejected the arguments of NTPC. However, the Supreme Court upheld the objections of the NTPC and the employees’ claim for absorption was rejected.
Tax can be levied even if the returned income is a loss
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The Supreme Court has overruled its own decision of last year in Virtual Soft Systems Ltd vs Commissioner of Income Tax and ruled that penalty can be levied under Section 271 (1)(c) of the I-T Act even if the returned income is a loss.
In the latest judgment, involving Gold Coin Health Food Ltd, a larger bench stated that the amendment made by the Finance Act 2002 to the provision was clarificatory and not substantive and it was applicable retrospectively.
The Supreme Court said that the purpose of the provision was to penalise the assessee for concealing income or furnishing inaccurate particulars. Therefore, whether the income returned was profit or loss did not matter.
Punjab & Haryana HC order on Malwa Mills’ cheque bounce case set aside
The Supreme Court has set aside the order of the Punjab & Haryana High Court and allowed the appeal of Malwa Cotton & Spinning Mills Ltd in a cheque bouncing case. The cheque was issued by a director of a company though he claimed that he had resigned from his position.
Malwa Mills disputed this, stating that the cheques were issued by him before resigning. The high court quashed the complaint against the director. The Supreme Court stated that the high court was wrong to quash the criminal proceedings as there were disputed questions of facts.
Electricity appellate tribunal ruling on margin for GRIDCO set aside
The Supreme Court has allowed the appeal of the Grid Corporation of Orissa Ltd (GRIDCO) and set aside the ruling of the electricity appellate tribunal on the issue of 4 paise/Kw as trade margin in inter-state sale. A petition was moved before the Central Electricity Regulatory Commission in New Delhi by way of public interest litigation asking it to direct GRIDCO not to sell electricity in the course of inter-state trade with a margin exceeding 4 paisa per unit.
The commission ruled that the 4 paise limit was not applicable to GRIDCO. The appellate tribunal overruled the commission. Therefore, GRIDCO appealed to the Supreme Court which set aside the tribunal’s order. It further held that sale of electricity from GRIDCO to Power Trading Corporation of India Ltd could not be considered as inter-state trading.