AN arbitration agreement in an unregistered deed can be enforced and acted upon for dispute resolution, the Supreme Court has stated in the case, SMS Tea Estates Ltd vs Chandmari Tea Co. Even if the deed is compulsorily registrable, this principle will apply, the court said. The dispute in this case arose over a 30-year lease of two tea estates between the parties. When disagreement arose, Chandmari company evicted SMS estates. So the latter applied for arbitration. It was opposed by Chandmari arguing that having regard to Section 107 of Transfer of Property Act and Sections 17 and 49 of the Registration Act, which made registration of the deed compulsory, the arbitration clause was not enforceable. The Gauhati high court agreed with this and rejected arbitration plea. However, on appeal, the Supreme Court stated that even if the deed was not registered, the arbitration clause could be enforced. An arbitration agreement does not require registration under the Registration Act. “Even if it is found as one of the clauses in a contract, it is an independent agreement to refer the disputes to arbitration,” the judgment emphasized.
Insurance company to pay for mishaps of hired vehicle
The Supreme Court ruled last week that if a vehicle hired by a state road transport corporation meets with fatal accidents, the insurance company will be liable to pay compensation, not the corporation. Various high courts in the country had differed on this question. Dismissing the appeal of National Insurance Company and allowing the appeal of UP State Road Transport Corporation, the judgment asserted that insurance of third party against accident risks was a social welfare measure and the insurance company was bound to compensate for the deaths caused by vehicles hired by the corporation. The state corporation had hired mini vans to ply on certain routes. The vehicle and the driver were outsourced, but the conductor and the overall control was with the corporation. When the van killed five people in one case, the dependents moved the motor accident claims tribunal seeking compensation. The tribunal awarded damages and fastened it on the corporation, reasoning that the vehicle was being run under its contract and there was breach of insurance terms. The corporation, on appeal, argued that the insurance company was liable and there was no breach of the insurance policy. The Supreme Court agreed with it and asked the insurer to comply with the compensation order.
Supreme Court dismisses GlaxoSmithKline’s appeal
The Supreme Court last week dismissed the appeal of GlaxoSmithKline Pharmaceuticals Ltd challenging its prosecution for selling substandard quality drug, Betnesol tablet in Bhopal. The sample was taken in 1997 and the complaint was lodged under the Drugs and Cosmetics Act against the firm, its managing director and officers. The firm challenged it in the magistrate’s court and the high court, on technical grounds. All the courts rejected its pleas, and the case dragged on for long years. The Supreme Court, while dismissing the appeal, observed that “even if there was inordinate delay in launching prosecution or filing the complaint, it is of no consequence.” As a result, the prosecution will resume.
Scheme for regularisation of casual workers not job of courts
It is not for the courts to draw up a scheme to regularize casual workers attached to railway cooperative societies, the Supreme Court stated in two appeals from the Madhya Pradesh and Gujarat high courts. In both cases, the high courts asked the railways to draft schemes to absorb employees working in cooperative canteens. The government appealed to the Supreme Court. It quashed the orders of the high courts in the case, Union of India vs Ram Singh. The court remarked that in both cases the orders were “illegal and unwarranted.” Framing of schemes like this is “purely an executive function and the judiciary should not encroach into the domain of legislature or executive,” the judgment said.
Excise duty on turpentine oil upheld
The Supreme Court has set aside the judgment of the excise appellate tribunal and ruled that manufacture of turpentine oil and rosin attracted duty as the process involved use of power. Gurukripa Resins Ltd argued that it did not use power for condensing vapour in the process of manufacture of the products and therefore no excise duty was leviable. It was using water in the overhead tank to condense the vapour. The revenue authorities insisted that power was used to lift water to the tank and therefore the goods attracted 16 per cent levy. The tribunal accepted the company’s contention. But on appeal by the authorities, the Supreme Court reversed the finding and said: “Without the process of condensation, turpentine oil, the final product, cannot be obtained. Similarly, without lifting water from the storage tanks at the ground level with the aid of electric motor to a higher level, the water cannot fall on the cooling coils with its gravitational force. The operation of lifting of water to higher levels is so integrally connected with the manufacture that without this activity it is impossible to manufacture the said goods. Therefore, the process is carried on with the aid of power.”