The Supreme Court has appointed former Chief Justice of India R C Lahoti as the sole international arbitrator to settle disputes between Citation Inforwares Ltd, an Indian company at Gurgaon, and Equinox Corporation of USA, which has outsourced its business to India. Infowares carries on business in the US and India while Equinox does business through an agreement signed in Kolkotta with Infowares, a service provider.
The parties agreed that the governing law for the contract would be that of California. Following disputes, the agreement was terminated and the parties could not agree on a sole arbitrator. So Infowares moved the Supreme Court under Section 11 of the Arbitration and Conciliation Act. The Supreme Court held that it has jurisdiction to appoint a sole arbitrator under the Act but clarified that the law governing the arbitration would be that of California according to the agreement.
Surveyor’s report on damage not binding in insurance cases
The Supreme Court has dismissed the appeal of New India Assurance Co challenging the award of the National Consumer Commission and asserted that the estimate of the insurer's surveyor is not binding. In this case, a truck loaded with potatoes fell into a khud in Tehri Garhwal. While the claim for the repair of the truck was for Rs 1.5 lakh, the surveyor estimated the cost at Rs 63,000 only. This was challenged in the commission, which rejected the surveyor's estimate.
The Supreme Court upheld the commission's view citing Section S64-UM(2) of the Insurance Act and said: “Although the assessment of loss by the approved surveyor is a pre-requisite for settlement of a claim of Rs 20,000 or more by insurer, the surveyor's report is not the last and final word. It is not that sacrosanct that it cannot be departed from; it is not conclusive. The surveyor's report may be basis for settlement of a claim but surely such report is neither binding upon the insurer nor insured.”
Larger bench to hear clubs' liability in ESI
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The Supreme Court has expressed its doubts over its own judgement of 2004 in which it had held that clubs would be covered by the Employees State Insurance Act, as they are akin to shops. That view expressed in the judgment involving Hyderabad Race Club must be reconsidered, the court ruled in the new case, Bangalore Turf Club vs ESI Corporation. Clubs are not like shops, according to the new view. Therefore, the issue will go before a larger bench now.
Motor insurance with future date
A motor vehicle insurance policy which is issued from a future date must be with the consent of the holder of the policy, the Supreme Court has stated in the judgment, Balbir Kaur vs New India Assurance Co Ltd. In this case, a two-wheeler scooterist died in a road accident. Though the motor accident claims tribunal awarded Rs 8 lakh to the widow, the high court set it aside stating that the cover note of the insurance was issued on March 15, it was to take effect from March 19, but the death occurred on March 18.
Therefore, the insurance company was not liable to compensate the widow, according to the high court. The widow appealed to the Supreme Court. It told the company not to recover the amount already paid to her, but the insurer could recover it from the owner. Regarding a policy issued from a future date, the court said: “The insurance company cannot issue a policy unilaterally from a future date without the consent of the holder of a policy.”
Sales tax on wet grinders
The Supreme Court dismissed the appeal of Sree Krishna Electricals against the
Madras high court ruling that wet grinders producing by the firm was liable to be taxed under the Tamil Nadu General Sales Tax Act. The firm argued that it was selling parts of the grinders and not the whole machinery. The court rejected its argument but waived the penalty imposed by the revenue authorities.
No service tax on lotteries
The Supreme Court last week held that service tax cannot be levied on lotteries. It upheld the ruling of the Sikkim high court that quashed the excise department's notice demanding service tax to the tune of over Rs 2,000 crore from Coimbatore-based Martin Lottery Agencies.