Substitution of arbitrator

LEGAL DIGEST

When an arbitrator appointed under an arbitration clause withdraws from his duty due to any reason, a substitute arbitrator can be appointed even if the agreement does not contain such a provision.

Such a situation has been taken care of by Section 15(2) of the Arbitration & Conciliation Act, the Supreme Court ruled last week in the Yashwith Construction Ltd vs Simplex Concrete Piles India Ltd case.

In this case, the substitution was challenged by the opposite party which had asked the chief justice of a high court to appoint an arbitrator. But the petition was dismissed.

The Supreme Court held that the chief justice had rightly rejected the request as the substitution was valid under the law.

Tax exemption for exporters

The Supreme Court last week set aside the Madras High Court judgement in the P R Prabhakar vs Commissioner of Income Tax case, and ruled that earning of commission on exports could be calculated for computing profit or loss under Section 80HHC of the Income Tax Act. This provision provides incentives to export houses.

In this case, the firm exported its own products and also procured export contracts for other exporters on commission. As an exporter, it incurred a loss during the assessment year. But it earned Rs 57 lakh as commission.

When the firm claimed deduction under Section 80HHC, the assessing authorities denied it on the ground that the firm had incurred loss in export business.

The law allowed deduction to the extent of profits and not for commission, the authorities maintained. The high court upheld the revenue authorities' view.

The Supreme Court overruled the courts below and allowed the appeal of the exporter.

Stanchart loses consumer case

The Supreme Court last week dismissed the appeal of Standard Chartered Bank Ltd against the judgement of the National Consumer Commission which had asked the bank to pay a non-resident Indian his fixed deposit with interest.

The customer had deposited $ 5,000 in fixed deposit and had given instructions to renew it. However, when he visited India, he found that the deposit was "prematurely withdrawn".

He had not given any such instruction or withdrawn the amount. He moved the state consumer commission, alleging deficiency in service. The commission awarded him the amount with interest. The national commission upheld it.

On the appeal of the bank, the Supreme Court asked the state commission to revise the rate of exchange payable as the rate calculated was on the higher side.

Except on this aspect, the court upheld the ruling of the consumer commission.