<b>Brief case:</b> Contesting foreign award in India

A weekly selection of key court orders

The Supreme Court (SC) has ruled that an application against an award given in arbitration proceedings conducted in London is not maintainable in Indian courts. The apex court thus set aside the Bombay High Court view that an application against a foreign award was maintainable in India. Allowing the appeal case, IMAX Corporation vs E-City Entertainment Ltd, the SC stated the high court had erred in observing that the seat of arbitration itself is not a decisive factor in such matters. The issue arose in an agreement between the two companies under which the Canadian corporation would supply projection systems to be installed in cinemas across India. The arbitration clause stated that disputes would be settled according to the ICC Rules of Arbitration. Following disputes, IMAX moved an application for arbitration and claims of damages before the International Chamber of Commerce (ICC) and it chose London as the venue. The award went against the Indian firm, which moved the HC. It held the application was maintainable before it. It was against this IMAX appealed to the SC which stated that “the place of arbitration determines the law that will apply and related matters like challenges to the award”.

Dubbed serials can’t be stopped 

Barring the telecast of serials dubbed in a vernacular language by artists and producers in that region would amount to anti-competitive practice, the Supreme Court ruled while setting aside the order of the Competition Appellate Tribunal. When a few television channels proposed to telecast the Mahabharat Hindi serial dubbed in Bengali, the Eastern India Motion Pictures Association and a committee of artists and technicians of West Bengal film and television moved the Competition Commission of India. They argued that dubbing would adversely affect local production and violated competition law. It rejected their petition, but on appeal, the tribunal found substance in their grievance. The commission appealed to the Supreme Court. It set aside the tribunal’s decision. The SC stated the association applied pressure on the channels like trade unions.  It said that “protection in the name of language goes against the interest of competition, depriving consumers of exercising their choice…. It amounted to creating barriers to the entry of new content in the dubbed TV serial”.

Insurer not to get back excess payment 

The Supreme Court dismissed the appeal of Oriental Insurance Company demanding the return of the excess amount it had paid a minor girl, Baby Radhika, who lost her father in a road accident. The Motor Accident Claims Tribunal had awarded Rs 45 lakh as compensation, which was reduced by the Delhi High Court to about Rs 6 lakh, without taking into several factors like the increase in income of the man who died at 32 years and the love and affection for his child. The SC had raised the amount to Rs 16 lakh. Meanwhile, the insurance company had paid 80 per cent of the tribunal’s award. Since the ultimate compensation according to the SC exceeded the deposited amount, the insurance company wanted it back. The court rejected the demand, exercising its extraordinary powers under Article 142 of the Constitution and also because the computation of compensation by the high court was not according to the principles laid down by it.

Creditors’ dues first, then VAT 

The Bombay High Court has ruled that a secured creditor has prior claim to the mortgaged assets of a liquidated borrower company and statutory duties have no first charge on them. This is so both under Section 529A of the Companies Act and under the amended provisions of the Sarfaesi Act, the high court held in the case, Axis Bank vs State of Maharashtra. In this case, the company had failed to repay the loan and the mortgaged properties were sold in auction. Meanwhile, the state VAT authorities issued notices to the bank for statutory dues of the liquidated company, claiming they have priority over the assets. The high court allowed the petition of the bank invoking the Companies Act and the newly introduced Section 26E of the Sarfaesi Act, which provided priority to a secured creditor over all other debts and all taxes, cess and other rates payable to central and state governments or the local authority.

Biscuit firms clash over package colour 

The two biscuit majors, Britannia Industries Ltd and ITC Ltd, are fighting over the trade dress of their popular biscuits and the Delhi High Court has reversed its own earlier order in a passing-off suit. It said the colour blue used by ITC in its package for a short time is no ground to bar Britannia from introducing that colour on its package. ITC’s product, “Sunfeast Farmlite Digestive All Good”, has a yellow-blue design. Britannia later came out with its “NutriChoice Digestive Zero” biscuit, using a design including blue. ITC moved the high court, alleging its rival was passing off its product, using its colour combination. The single judge agreed and passed an injunction against Britannia, barring it from using blue but allowing it to retain yellow. Britannia moved the division bench which set aside the earlier order. The judgment stated that if ITC wanted to establish exclusive rights over its blue-yellow design, it must prove that it is so distinctive that customers would go for it only because of the colour combination. Otherwise Britannia cannot be told to not use blue. The court further said it was not just colour that attracts customers, there are other identifiers on the packaging such as different product names, trademarks and trade names. 

Shutting of polluting eatery upheld 

Every polluting unit need not be given time to rectify its defects before taking action under the air and water pollution Acts, the Delhi High Court stated while upholding the order of the Delhi Pollution Control Board (DPCB) to shut down a restaurant run by KFC Sapphire Foods India Ltd. Its water and power connections were also disconnected by the municipal authorities. The company moved the high court arguing it had complied with the anti-pollution requirements. However, the DPCB, which was asked to test the claim by the court, found that the effluent treatment plant was not only defunct but was also bypassed, enabling the establishment to directly discharge sludge to the sewerage line. The restaurant, with a capacity to seat over a 100 customers, claimed it used only 10 litres of water while according to standard calculations it required 7,000 litres per day, entailing generation of substantial amount of effluents. The court therefore upheld the order of the board. It also cited Supreme Court judgments laying down the principle that the polluter must pay for the damage it caused to the environment.