THE Supreme Court has ruled in favour of small scale companies in regard to payment of interest on dues towards them. In this case, Snehadeep Structures Ltd vs Maharashtra Small Scale Industries Development Corporation Ltd, the corporation issued supply order in favour of Snehadeep for work to be done for the Maharashtra State Electricity Board. There was delay in the payment to Snehadeep, a small scale unit.
It demanded interest on delayed payment under the Interest on Delayed Payments to Small Scale and Ancillary Undertakings Act. When it was denied, the matter went for arbitration. The arbitrator asked the corporation to pay Rs 78 lakh to the unit. The corporation moved the Bombay high court under Section 34 of the Arbitration and Conciliation Act to set aside the award. The single judge of the high court asked the corporation to deposit 75 per cent of the award amount in court before proceeding, according to Section 7 of the Interest Act.
However, on appeal, the division bench set aside the order to deposit the amount. Snehadeep appealed to the Supreme Court. It held that the rules set by the Interest Act, which is a special law, will override the provisions of the Arbitration Act and allowed the appeal of the small scale unit.
Auto parts dealers demand on excise duty difference upheld
The Supreme Court has upheld the demand of excise duty from an auto parts dealer on the difference in price on the date of removal and the enhanced price at which the goods were ultimately sold. In this case, International Auto Ltd supplied parts to Tata Motors, Mahindra and Piaggio Vehicles Ltd. The department issued notice proposing to levy interest on the differential duty paid by the assessee under Section 11AB of the Central Excise Act.
This was resisted by the dealer arguing that the prices indicated in the purchase orders were final during the period of supply of goods. It further contended that there was no price variation clause in the purchase orders and therefore there was no scope for increase in prices subsequently, that too retrospectively. The Supreme Court, allowing the appeal of the Commissioner of Central Excise, explained that “when the differential duty is paid after the date of clearance, it indicates short-payment/short-levy on the date of removal; hence interest which is for loss or revenue becomes leviable under Section 11AB.”
Procedure in cheque bouncing cases shortened
The Supreme Court has restricted the right of a person accused of sending a cheque without balance in his bank account in the case, Mandvi Co-op Bank Ltd vs Nimesh Thakore. In this batch of appeals, a number of accused persons moved the Bombay high court for quashing the charges against them and raising technical issues on the examination of witnesses. The high court passed varying orders.
On appeal, the Supreme Court clarified that during the trial for offence under Section 138 of the Negotiable Instruments Act, the accused can only cross-examine the complainant on the latter’s evidence on affidavit. He has no right for examination in chief. The object of the provision was to introduce radical measures to reduce trial procedure in view of the mounting cases involving bouncing cheques, the judgment pointed out. This was a problem referred to in the recent ‘Vision Statement’ by the Law Minister to the Chief Justice. If the trial procedure is made complicated, the problem would get worse, the judgment pointed out.
‘Termination of service during probation carries no stigma’
Termination of service during probation period normally does not carry any stigma, the Supreme Court ruled in the case, Chaitanya Prakash vs H Omkarappa. In this case, a person was appointed probationer in Hindustan Photo Films Manufacturing Ltd. Following some adverse remarks against him, he was not given a regular job. He later applied for a job in Spice Trading Corporation.
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That company consulted the former employer about him. Owing to the adverse remarks, he did not get the second job also. He moved a writ petition before the Madras high court. It held that the probationer dismissed with a ‘stigma’ and therefore he should have been heard before the order. The high court asked the photo film company to take him back. The company moved the Supreme Court. It held that when Spice Trading approached the photo film company, the latter could not suppress the fact that it had found the person unsuitable for the job. This does not amount to cast any stigma on him, the Supreme Court said while upholding the view of the Hindustan Photo company.
Longest arbitration case ends; appeal allowed
Putting an end to one of the longest arbitration cases in the annals of litigation, taking up 28 years, the Supreme Court last fortnight allowed appeal, State of Rajasthan vs Nav Bharat Construction Co. The dispute started in 1982 over the building of Bhim-sagar dam. It has split arbitrators, necessitating appointment of umpires, then changing them, travelling twice to the Supreme Court. Ultimately, the contractor lost his fight.