Bank appeal rejected

LEGAL DIGEST

The Supreme Court has dismissed the Indian Bank's appeal against a ruling of the Calcutta High Court. ABS Marine Products Pvt Ltd approached the bank for credit.

According to the bank, the company defaulted in repayment. The bank moved the debt recovery tribunal seeking the amount from the company and its four directors who had stood guarantee. Around the same time, the bank withheld certain sanctioned loans.

The company filed a suit in the high court. The bank argued that the suit could be heard only by the tribunal as the earlier case was pending before it. Its contention was rejected. The bank moved the Supreme Court, which upheld the high cour'st ruling, allowing the civil suit to proceed.

Distt court ruling

The Supreme Court has set aside a judgment of the Rajasthan High Court and allowed the appeal of Hindustan Zinc Ltd (HZL) against Friends Coal Carbonisation (FCC).

The latter was supplying a particular quality of coke to HZL. The contract provided for variation in price. Later, FCC informed HZL that it could not supply the quality of coke it had been supplying so far, switched over to a higher quality coke, and raised the price.

This was objected to by HZL, which moved an arbitration tribunal. The three-member panel gave an award in favour of FCC. HZL moved the district court, which changed the base price for determining the escalation.

On appeal, the high court held that the district court could not have examined the terms of the contract to decide whether the claims were covered by the agreement. The Supreme Court set aside this ruling.

Fund told to pay

Emphasising the need for investor protection, the Supreme Court upheld the penalty of Rs 7 lakh on Shriram Mutual Fund and its associates for violating Sebi rules.

The appellate tribunal had absolved the mutual fund of the charge of indulging in excess trading and violating the regulations in 12 instances.

Criticising the tribunal, the Supreme Court emphasised that whether the mutual fund acted deliberately or not did not matter. Any mutual fund violating the regulations would automatically attract penalty. Otherwise, the confidence of investors would be shaken, the Supreme Court said.

Ceat workers' case

The Supreme Court has dismissed the appeal of Ceat Ltd against an order of the industrial court and the Bombay High Court and directed the company to grant permanent status to those who had been working for Murphy India Ltd.

The latter company became sick and merged with Ceat. The question arose whether those employed by Murphy's sister concern, Norwest Electronics Ltd, were entitled to be absorbed in Ceat. The employees were taken on probation and their services terminated later. This led to an agitation and a settlement.

The industrial court examined the terms of the settlement and held that the workers were entitled to the benefits of the settlement, which meant that they were entitled to the status of permanent workers after a three-month probation.

The industrial court also directed Ceat to pay the workers consequential monetary benefits with a compounded annual interest of 18 per cent. While dismissing the appeal of Ceat against this order, the Supreme Court reduced the rate of interest to 9 per cent in view of the prevailing interest rates.