Suit no bar for arbitration

LEGAL DIGEST

The Supreme Court has held that the arbitration clause can be invoked even if a suit has been filed by one of the disputing parties. This ruling, interpreting Section 8 of the Arbitration and Conciliation Act, 1996, was made in the case, Rashtriya Ispat Nigam Ltd versus Verma Transport Company.

The public sector steel undertaking engaged the transporter, which was a partnership firm, for storage and transport of goods. One of the partners committed fraud, after which the PSU terminated the contract with the firm and asked it to explain why it should not be blacklisted.

The firm moved the civil judge against the termination of the contract. The judge ordered status quo.

The PSU moved the Punjab & Haryana High Court, arguing that there was an arbitration clause in the agreement and therefore, the suit was not maintainable. The high court rejected the contention. The Supreme Court allowed its appeal and asserted that the dispute could go for arbitration under Section 8 of the Act.

Mumbai HC ruling on retainers set aside

The Supreme Court last week set aside a judgment of the Bombay High Court in the case, Electronic Corporation of India versus ECI Service Engineers Union, stating that retainers could not claim regularisation.

The company, around 1978, engaged some engineers on a retainer basis for servicing TV sets and employed them till the early 1990s.

When they were dismissed, the engineers went to the tribunal, which rejected their claim for regularisation. However, the high court ruled in their favour, stating that the company must prove that they were not its employees.

The company appealed to the Supreme Court, which described the high court's conclusion as "peculiar". It ruled that there was no employer-employee relationship in this case and the employees could not claim regularisation.

Customs tribunal's ruling set aside

The Supreme Court has set aside a ruling of the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT) in the case of Alembic Glass Industries Ltd versus Commissioner of Central Excise.

The company was crippled by a prolonged strike and decided to cut down expenditure. Darshak Ltd, which was a bulk buyer of glassware produced by the company, started advertising to boost the sale of the products.

The excise authorities included the expenditure incurred by it in the assessable value of Alembic. The company argued that there was no special relationship between it and Darshak and the price was the same for Darshak and other buyers.

The revenue authorities maintained that Alembic had gradually shifted ad expenses to Darshak, which was purchasing 98 per cent of its products. CEGAT accepted the authorities' view. On appeal, the Supreme Court ruled in the company's favour, following Supreme Court precedents.

Details not needed for land acquisition

When land is acquired for an industrial purpose, the government notification need not specify the details and nature of the units which would come on the land, the Supreme Court has stated in the case, P Narayanappa versus State of Karnataka.

Some of the land owners challenged the acquisition of land under the state Industrial Areas Development Board Act. They argued that the purpose of the acquisition was to benefit a company, Vikas Telecom Ltd, which wanted to set up a software park with educational institutions, commercial and residential buildings.

This was not mentioned in the notification and it was a mala fide. The Supreme Court rejected this contention and said that at the preliminary stage, the only test to be applied was whether the acquisition was for industrial development. How the industries would utilise the land could not be decided at that stage.