Arbitration

LEGAL DIGEST

The Supreme Court has dismissed the appeal of Pandey & Co Builders Pvt Ltd against the order of the Patna High Court in an arbitration case involving payment for canal repair work by the Bihar government. In this peculiar case, two arbitration proceedings were conducted simultaneously.

The superintending engineer gave an award as per the terms of the contract. The contractor did not recognise his arbitration but moved the high court chief justice for appointment of an arbitrator under the Arbitration and Conciliation Act, 1996. A retired high court judge was appointed as arbitrator.

However, his appointment was challenged in the high court and he withdrew stating that he had no jurisdiction in this matter. The contractor then moved the high court. It ruled that it had no jurisdiction, and according to the Arbitration Act, the appeal lay before the district court.

The Supreme Court dismissed the appeal of the contractor.

Sick company

The Supreme Court last week restrained Pharmaceutical Products of India Ltd, a sick company, not to transfer, alienate or create any charge on its assets till further orders.

The order was passed on the appeal of Tata Motors, an unsecured creditor of the sick company. The BIFR had recommended the winding up of the company.

While its appeal was pending before the appellate body, the pharma company moved the company judge of the Bombay High Court seeking approval of a scheme of revival allegedly devised by some unsecured creditors. It included the sale of assets and preferential payments to certain unsecured creditors.

Tata Motors was not among them, though it was a decree holder, according to it. The company court granted approval to the scheme. Tata Motors moved the division bench of the same high court which again dismissed its plea.

Therefore, it moved the Supreme Court alleging that the sick company was being transferred to Wanbury Ltd without following the rules. It also argued that while the sick company was before the BIFR, the company court could not interfere and approve of a scheme formulated by some unsecured creditors. The court also issued notice to the sick company.

Liquor price

The Supreme Court has set aside the order of the excise commissioner of Madhya Pradesh on a challenge of the price fixation of liquor by the state government.

A licencee, Bhupendra Singh, challenged the order of the excise department whereby the rates to be paid by the government to the wholesellers of foreign liquor to the government for sale through its retail outlets were fixed on the basis of the decision of the commissioner.

The decision on the rate was taken on December 23, effective from April 1 of the same year. The licencee opposed this practice arguing that the rate could not be changed mid-year and it was valid for the whole financial year.

Moreover, it could not be asked to refund the difference of rates. Though the high court dismissed this plea, the Supreme Court accepted it.

It remarked: "When a sale of any commodity is made, the seller and the purchaser both have to know the price at the time of or before the sale. A sale/purchase price to be fixed subsequent to the sale is unknown to the world."