Brief case: Award upheld after cyber probe

A weekly selection of key court orders

The Supreme Court has set aside the judgment of the Chhattisgarh High Court, which had quashed the tender for an infrastructure project in Bilaspur. The Chhattisgarh State Industrial Development Corporation invited tenders for the project and Raipur Constructions Ltd was selected. One contender, Amar Infrastructure Ltd, moved the high court (HC) challenging the process of selecting the winner in the technical bid. It alleged discrepancies in the e-auction and manipulation of documents. The HC ordered an investigation by the cyber police with specific questions. The police report was interpreted by the HC to conclude there was discrepancy in the documents and one of the selected firms in the first stage was not qualified. Therefore, the whole bid was quashed. The corporation appealed to the Supreme Court which ruled that even the cyber probe did not find any fault in the bid process and as half of the project had already been completed, it would not be fair to invite fresh bids.

 
Protection order for disputed amount
 
The Supreme Court last week imposed restrictions on the utilisation of Rs 94 crore deposited by the National Highways Authority of India (NHAI) in the Calcutta High Court on the acquisition of vacant land of Baranagar Jute Factory plc. In view of contrary claims on the amount, the high court had ordered NHAI to deposit the entire amount, but when the company received Rs 10 crore as refund for TDS, it used the amount to pay running expenses. The company’s employees’ union moved a contempt petition against it. The court said the refund must also be deposited in the court and the company should not operate its bank accounts till then. “Merely because the amount goes through the income tax department, it does not cease to be part of compensation,” the judgment said.

 

Unpaid staff can seek firm’s winding up 
 
An employee who has not been paid his salary and his trade union can move  company court  with a winding up petition, the Bombay High Court ruled last week in the case, Sanjay Varrier  vs Power Horse India Ltd. The division bench of the court settled the issue because a single judge had expressed doubts about an earlier judgment of the court. Varrier, a manager of the company, alleged the company had not paid him for two years, and Rs 40 lakh was due. He issued notice to the company under Section 434 of the Companies Act. There was no response; so he filed a winding up petition under Section 439. The company argued that an employee was not a creditor; so the petition was not maintainable. The court rejected this contention, analysing the provisions of the Companies Act and the Trade Union Act. It said: “We are clearly of the view that looking to the mandate of the Trade Unions Act, there is no doubt a petition for winding up would be maintainable at the instance of the trade union. This does not mean in every instance when a trade union or a workman files a winding up petition, the company is ipso facto to be wound up. Whether or not there is any merit in the claim made by the employee depends on the circumstances in each case.”

 
Arbitrator can’t hire court receiver
 
The Bombay High Court has ruled that an arbitration tribunal has no powers to appoint its court receiver to execute arbitration orders. The issue arose in the case, Shakti International Ltd vs Excel Metal Processors Ltd when an interim order had to be executed under the arbitration Act. Since the question involved was of wider significance, the court invited its receiver as well as anyone interested in the problem to address the court. On behalf of the receiver, it was argued that a receiver was an employee of the high court and therefore subject to the supervision only of its Chief Justice. No arbitral tribunal can exercise any power of appointment, which amounts to supervision and control over the receiver. It can appoint a private receiver, but not a court receiver. The high court accepted the contention and stated that even the debt recovery tribunal cannot appoint the court receiver to execute its orders. Though the 2015 amendment to the law gave wider powers to the arbitration tribunal, even conferring some powers of the courts, it is still not a court. Moreover, the court receiver already has his hands full with 6,683 matters, one of them going back to a suit of 1947.

 
Long delay defeats trademark suit
 
If two pharmaceutical products with identical formulations and similar trade dress have remained in the market for a long time, the court would be slow to pass an injunction against the company alleged to be passing off the goods. The Bombay High Court stated so in the case, Torrent Pharmaceuticals Ltd vs Wockhardt Ltd. Both companies manufactured medicines for sprains, fractures and respiratory infections. Torrent’s product was called Chymoral and that of Wockhadt, Chymotral. Torrent accused Wockhardt of passing off products with similar names. The latter contended that the product was in the market for a long time and Torrent did not complain. Agreeing with it, the high court stated that since the rival products have co-existed for a long time, it could not be said there was misrepresentation with intent to deceive the public, especially when the products were advertised and subsequently registered. It cannot be assumed that they would cause confusion in the mind of the buyers. “It is one thing to speak of a consumer of average intelligence and imperfect recollection; it is another to take him for a fool. That is not the law’s demand,” the court said while rejecting the application for injunction.

 
Ad council’s powers can’t be curbed
 
The Advertising Standards Council of India is free to make recommendation to an advertising agency or a television channel not to air an advertisement.  Its recommendation applies not only to its members but also to other entities in the field. The Delhi High Court stated so while dismissing the petition of Metro Tyres Ltd against complaints made against it by rival tyre manufacturer, MRF Ltd. The latter complained to the council that Metro was plagiarising its advertisement for Revz radial tyres. Metro moved the high court alleging the council had no power to decide the question and only a civil court could do so. Moreover, under the cable television networks Act, only the authorised officer under the law could prohibit transmissions. The high court rejected all arguments and emphasised that the council, a self-regulatory body, and its rules and procedures have been given a statutory flavour. Such regulatory bodies should be encouraged to cut down litigation. The court said the suit of Metro was premature. By instituting the suit, it cannot be permitted to scuttle the proceedings on the complaint of MRF before the council.