Mere delay by the arbitral tribunal to pronounce its award is no ground to set it aside, the Delhi High Court stated, dismissing an appeal of Oil India Ltd (OIL) against an award by a three-member panel in favour of Essar Oil Ltd. The high court said a party can raise the issue only if it suffered prejudice by the delay. In this case, there was a delay of three years, but OIL could not demand quashing of the award as it had failed to assert its right under the Arbitration and Conciliation Act.
The dispute arose when OIL terminated part of its agreement with Essar to drill and set up four offshore oil/gas wells. It wrote to Essar that the latter was "incapable and incompetent of performing the obligations." The arbitrators delivered a split verdict, which was challenged by the public sector corporation. The high court, after going through the correspondence and events, upheld the majority view.
Execution of bank guarantee allowed
Gujarat Petronet, on the other hand, produced a chart to show the poor performance of the contracting firm. It also argued that as a foreign company, it could not move the high court in a commercial dispute and the right course was to move a civil court or invoke the provisions of the Arbitration and Conciliation Act. Accepting the contentions of Petronet, the high court followed Supreme Court rulings, which had laid down that courts would normally interfere in bank guarantee disputes only in case of fraud or "irretrievable injury".
Once a bank guarantee is executed, it is a separate commercial agreement and has to be considered on its own and the court would be slow in interfering in bank guarantees. Though the high court has inherent jurisdiction under Article 226 of the Constitution to interfere in such matters, as a matter of propriety, it would be reluctant to do so, the judgment emphasised.
BCCL to pay compensation to workers
The Supreme Court last week directed Bharat Coking Coal Ltd to pay Rs 2 lakh each to its workmen who have been fighting for 27 years for regularisation. Nearly a hundred workers of the Rashtriya Colliery Mazdoor Sangh had moved the Dhanbad industrial tribunal for regularisation since 1993. The tribunal had ordered their absorption with back wages.
However, cases in the high court and the Supreme Court continued on various issues. Several persons withdrew from the litigation and others superannuated during the decades-long case. In order to settle the issues once and for all, the Supreme Court ordered the public sector undertaking, which was sick till recently, to deposit the amounts due as compensation to eligible workers with the central government industrial tribunal within two months for disbursement.
Rajasthan to set up 'guidance committee'
The Rajasthan High Court last week upheld the qualifying criteria prescribed by the State Vidhyut Utpadan Nigam, which floated a tender for the supply of 2 mt a month for five years of raw coal and supply of washed coal to Chhabra thermal power station. One of the contending firms challenged the conditions in the tender document as onerous, inequitable and containing tailor-made conditions to benefit a particular group by promoting cartelisation among washeries and contractors, to oust general bidders from the tender process.
Rejecting the arguments, the high court said in the case, Chhattisgarh Power & Coal Beneficiation Ltd vs State of Rajasthan, the Nigam was right in attempting to secure the best interest of the organisation and price justification for the consumers of electricity. To get the best price and supervise the process, the court asked the state government to constitute a guidance committee of three senior-most officers of the state. The committee should be headed by principal secretary (energy) and have two senior-most directors of the Nigam as members.
Arbitration to resolve complicated questions
When complicated questions are raised involving allegations and counter-allegations over termination of a contract, these cannot be decided in a writ petition before the high court, but should be referred to arbitration, the Allahabad High Court stated in its judgment, Sew Lsy Highways Ltd vs State Of UP. The construction firm was given a contract to build part of a national highway.
However, disputes arose between the firm and the state highways authority and the contract was terminated. The firm alleged that the action was taken arbitrarily on the basis of a report of an independent engineer and it was not given an opportunity to explain. Moreover, the delay in the project was caused by the lack of environmental clearance.
The latter alleged that the firm abandoned the project and it had overdrawn funds from the lending agency. Dismissing the petition, the high court stated that it would require "intense exercise of fact-finding" to decide whether the termination of the agreement was arbitrary. The parties should resort to arbitration according to the procedure prescribed in the agreement.
Distilleries to get licences renewed
The Patna High Court has asked district collectors in Bihar to renew or grant licences for the manufacture of industrial alcohol or denatured spirit, striking down a notification prohibiting distilleries in the state from making rectified spirit. The notification of February this year also ordered that denatured spirit or any of its by-products would be compulsorily destroyed. Six distilleries under the banner of Samrat Laboratories challenged the notification, arguing that the state government had no power to pass such restriction on their trade.
Allowing their petitions, the judgment said the government cannot extend the definition of "intoxicant" to include denatured spirit which is not fit for human consumption. The court noted the argument of possibility of the product being abused justifying total prohibition. The court emphasised that the power of the state extended only to regulate such products to prevent possible abuse. It cannot, in any case, extend the prohibition to industrial use.
The dispute arose when OIL terminated part of its agreement with Essar to drill and set up four offshore oil/gas wells. It wrote to Essar that the latter was "incapable and incompetent of performing the obligations." The arbitrators delivered a split verdict, which was challenged by the public sector corporation. The high court, after going through the correspondence and events, upheld the majority view.
Execution of bank guarantee allowed
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The Gujarat High Court last week dismissed a petition of Fernas Construction Company Inc seeking to restrain Gujarat State Petronet Ltd from encashing its bank guarantees. It argued that it suffered financial crunch for want of release of funds. If the running bills and flow of cash is not permitted for execution of the work, it would not be able to perform its contractual obligations and, therefore, the bank guarantee may not be permitted to be executed.
Gujarat Petronet, on the other hand, produced a chart to show the poor performance of the contracting firm. It also argued that as a foreign company, it could not move the high court in a commercial dispute and the right course was to move a civil court or invoke the provisions of the Arbitration and Conciliation Act. Accepting the contentions of Petronet, the high court followed Supreme Court rulings, which had laid down that courts would normally interfere in bank guarantee disputes only in case of fraud or "irretrievable injury".
Once a bank guarantee is executed, it is a separate commercial agreement and has to be considered on its own and the court would be slow in interfering in bank guarantees. Though the high court has inherent jurisdiction under Article 226 of the Constitution to interfere in such matters, as a matter of propriety, it would be reluctant to do so, the judgment emphasised.
BCCL to pay compensation to workers
The Supreme Court last week directed Bharat Coking Coal Ltd to pay Rs 2 lakh each to its workmen who have been fighting for 27 years for regularisation. Nearly a hundred workers of the Rashtriya Colliery Mazdoor Sangh had moved the Dhanbad industrial tribunal for regularisation since 1993. The tribunal had ordered their absorption with back wages.
However, cases in the high court and the Supreme Court continued on various issues. Several persons withdrew from the litigation and others superannuated during the decades-long case. In order to settle the issues once and for all, the Supreme Court ordered the public sector undertaking, which was sick till recently, to deposit the amounts due as compensation to eligible workers with the central government industrial tribunal within two months for disbursement.
Rajasthan to set up 'guidance committee'
The Rajasthan High Court last week upheld the qualifying criteria prescribed by the State Vidhyut Utpadan Nigam, which floated a tender for the supply of 2 mt a month for five years of raw coal and supply of washed coal to Chhabra thermal power station. One of the contending firms challenged the conditions in the tender document as onerous, inequitable and containing tailor-made conditions to benefit a particular group by promoting cartelisation among washeries and contractors, to oust general bidders from the tender process.
Rejecting the arguments, the high court said in the case, Chhattisgarh Power & Coal Beneficiation Ltd vs State of Rajasthan, the Nigam was right in attempting to secure the best interest of the organisation and price justification for the consumers of electricity. To get the best price and supervise the process, the court asked the state government to constitute a guidance committee of three senior-most officers of the state. The committee should be headed by principal secretary (energy) and have two senior-most directors of the Nigam as members.
Arbitration to resolve complicated questions
When complicated questions are raised involving allegations and counter-allegations over termination of a contract, these cannot be decided in a writ petition before the high court, but should be referred to arbitration, the Allahabad High Court stated in its judgment, Sew Lsy Highways Ltd vs State Of UP. The construction firm was given a contract to build part of a national highway.
However, disputes arose between the firm and the state highways authority and the contract was terminated. The firm alleged that the action was taken arbitrarily on the basis of a report of an independent engineer and it was not given an opportunity to explain. Moreover, the delay in the project was caused by the lack of environmental clearance.
The latter alleged that the firm abandoned the project and it had overdrawn funds from the lending agency. Dismissing the petition, the high court stated that it would require "intense exercise of fact-finding" to decide whether the termination of the agreement was arbitrary. The parties should resort to arbitration according to the procedure prescribed in the agreement.
Distilleries to get licences renewed
The Patna High Court has asked district collectors in Bihar to renew or grant licences for the manufacture of industrial alcohol or denatured spirit, striking down a notification prohibiting distilleries in the state from making rectified spirit. The notification of February this year also ordered that denatured spirit or any of its by-products would be compulsorily destroyed. Six distilleries under the banner of Samrat Laboratories challenged the notification, arguing that the state government had no power to pass such restriction on their trade.
Allowing their petitions, the judgment said the government cannot extend the definition of "intoxicant" to include denatured spirit which is not fit for human consumption. The court noted the argument of possibility of the product being abused justifying total prohibition. The court emphasised that the power of the state extended only to regulate such products to prevent possible abuse. It cannot, in any case, extend the prohibition to industrial use.