Arbitrator to be covered by 1940 Act

LEGAL DIGEST

The Supreme Court has ruled that in a dispute which was examined by an arbitrator at the instance of the National Consumer Disputes Redressal Commission, the award would be covered by the Arbitration Act of 1940 and not by the Arbitration and Conciliation Act of 1996.

The case arose out of a complaint of some persons against the stock brokers of Delhi (Neeraj Munjal vs Atul Grover). The dispute arose before the new law was passed.

But the award was accepted by the consumer commission after the law came into force. Therefore, a doubt arose about the law applicable in this case.

When the dispute first came to the Supreme Court, it passed an order stating that the 1996 Act would apply. However, the dispute travelled through the Delhi high court and again to the Supreme Court.

Delivering its judgment last month, the apex court clarified: "We are clearly of the opinion that the provision contained in the 1940 Act would govern the proceedings and not the 1996 Act. Reference to the 1996 Act was a mere inadvertence on the part of this court."

Promoters asked to surrender

The Supreme Court has ordered two promoters of financial companies to surrender before the trial court following the applications of the Bombay Stock Exchange and the National Stock Exchange refuting their claims regarding dues towards them.

In November last year, Arvind Johari and Anand Johari had obtained bail from the Supreme Court following their statements that Rs 17 crore and Rs 13 crore were lying in the Bombay Stock Exchange and the National Stock Exchange respectively and those amounts could be utilised for paying off the depositors of their companies.

Among the companies involved are Century Consultants Ltd, Country Inform Tech Pvt Ltd and City Cooperative Bank Ltd. Recently, the two stock exchanges moved the Supreme Court stating that the statements made by the accused persons were not correct.

They said that in fact, they would be entitled to realise huge amounts from the two promoters. The Supreme Court realised that they had misled the court last year to get a bail order. Therefore, the court ordered that they be taken into custody.

Rigid rules for bank official cases

The Supreme Court has reiterated that in service cases involving bank officials, rigid standards of rules should be adopted. This is because they handle public money and are in responsible positions.

The court emphasised this while setting aside the judgment of the Kerala High Court in Canara Bank vs V K Awasthy. The high court had ruled that the dismissal of the bank official was illegal and in violation of "natural justice", which demands that the employee should be heard before taking action against him.

Canara Bank successfully appealed to the Supreme Court. The court stated that the employee in this case had replied to the detailed charge sheet and participated in the disciplinary proceedings.

The disciplinary authority had recommended his dismissal for activities prejudicial to the interest of the bank. Therefore, the high court could not have concluded that the employee had not been given adequate opportunity to defend himself.