The Supreme Court has dismissed the appeal of Kanpur Electric Supply Co Ltd against the Allahabad high court judgment in its dispute with LML Ltd over power dues. The latter company which manufactures two-wheelers was undergoing financial crunch and therefore it asked the power supply company to reduce the load from 8 MVA to 1.2 MVA. It was allowed at a meeting of the two companies. Later LML was declared a ‘relief undertaking’ under the UP Industrial Undertaking (Special Provisions for Prevention of Unemployment) Act and a sick unit under the Sick Industrial Companies Act.
Though the supplier had agreed to provide a lesser load, it sent bills at the rate of the old consumption. LML challenged this in the high court which granted an order in its favour. The power supply company appealed to the Supreme Court, which dismissed its petition. The Supreme Court observed that “This case is an example of how a positive decision taken to help a struggling industry to find its feet can be scuttled by legalese, although an agreement had been reached between the parties regarding payment of the arrears in installments along with the dues, and despite the same being duly followed by the company.” The court also observed that “what is difficult to comprehend is the inscrutable manner in which decisions arrived at in common are sought to be negated on account of bureaucratic lethargy.”
Incable appeal dismissed
The Supreme Court has dismissed the appeal of Incable Net (Andhra) Ltd against the order of the Andhra Pradesh high court and the Company Law Board rejecting its plea to wind up a consortium established by the Andhra Pradesh government to provide broadband connectivity to the rural areas in the state. The government had formed a consortium, AP Aksh Broadband Ltd as a special purpose vehicle to implement its ambitious Rs 395 crore project to link its offices throughout the state.
Later, the partners fell out leading to company petitions for winding up the consortium on the ground of mismanagement and oppression of members. Dismissing the appeal of Incable, one of the partners in the consortium, the Supreme Court observed that “we are not inclined to interfere with the orders of the HC or the CLB, since we are not satisfied that any act of oppression or mismanagement within the meaning of section 397, 398, 402 and 403 of the Companies Act has been made out against the majority shareholder, which would justify making of a winding up order.” The judgement stressed that breach of contract with regard to supply of materials, as alleged, would not constitute the ingredients of the provisions for winding up a company.
Apex court refuses to entertain defamation suit
The Supreme Court has dismissed the petition of US-based Chartered Financial Analysts Institute chief Jeffrey J Diermeier seeking a stay on defamation proceedings against him by his former Indian partner, Institute of Chartered Financial Analysts of India. The case was filed by the Indian unit for publishing notices warning industry against the CFA programme launched by ICFAI. CFAI and ICFAI are battling over a course of Chartered Financial Analyst (CFA) in India under a licence agreement entered into between them in 1985. The dispute started in 1997 over the word ‘CFA’ and it has since been fought in the Delhi and Calcutta high courts.
‘Single arbitrator faster than panel’
In an arbitration dispute, the intention of the parties as reflected in the agreement should be followed, a division bench of the Delhi high court stated last week while setting aside the order of the single judge bench in a dispute between Prime Industries and Seil Ltd. In this case, the agreement stated that in case of disputes, they shall be referred to a sole arbitrator according to the rules of the Indian Council of Arbitration.
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The dispute in this case was referred to a former Chief Justice of India and he gave an award in favour of Prime Industries. Seil challenged it before the single judge arguing that according to the ICA rules, disputes involving Rs 50 lakh and above should be decided by a three-member panel. The argument was accepted. But on appeal, the division bench stated that the agreement was for appointing a sole arbitrator, though the ICA rules were different.
In such cases, the terms of the contract should be the guide as the agreements are drawn up by expert corporate lawyers. Moreover, arbitration of a sole arbitrator has been observed to be faster, and “in a domestic arbitration a sole arbitrator is the norm because a tribunal of three or more arbitrators adds substantially to the costs of litigation and is apt to delay the proceedings.”