From arbitration clause to brand name, here are the key court orders

SC: Arbitration clause must be specific

An arbitration clause in an agreement between two main parties cannot automatically be read into a sub-contract without a specific reference to it in the sub-contract, making the intention clear, said the Supreme Court in its judgment in the case Elite Engineering vs Techtrans Construction India. 
 

In this case, the National Highway Authority of India had a concession agreement with TK Toll Ltd for construction a road from Coimbatore to Nagapattinam. The latter entrusted the work to Utility Energy Tech Ltd. It further entered into an agreement with Techtrans, which in turn floated a tender for the work and Elite Engineering’s bid was accepted. A sub-contract was signed. 

When disputes over payment arose between the sub-contractors at the end of the chain, Elite moved civil courts and the Madras High Court for the appointment of arbitrators. The High Court, however, maintained there was no arbitration clause in the contract between them. Elite argued that its sub-contract had adopted the main contract with an arbitration clause. The contention was rejected by the High Court and the Supreme Court. 

The judgment emphasised that the sub-contract referred only to technical details and not to arbitration.  If the arbitration clause is incorporated in another contract, it should contain a clear reference to the documents containing the arbitration clause and the intention to incorporate it.

Essar objection to port expansion rejected

The Supreme Court has dismissed the appeal of Essar Bulk Terminal Ltd against the Gujarat government’s notification expanding the limits of Hazira port. According to the firm, it had spent a lot on the reclamation of land nearby and the expansion would affect them. The Gujarat Maritime Board and the state government contended that the port had to be expanded because of the arrival of more vessels and the consequent increase in facilities. It was made in public interest. The Supreme Court accepted the contention and stated that the ownership of the reclaimed land was with the government and the maritime board, and therefore, there was no violation of the right to private property. Moreover, “the alteration of the limits of the port cannot possibly be said to affect Essar’s rights with reference to the reclaimed land, which has been reclaimed illegally i.e. without prior permission under the Gujarat Maritime Board Act,” the judgment said.

What is a brand name?

Affixing the details of a product on the package would not make it a declaration of the brand name.  A brand name is used to enhance the value of the product. But if the information printed on the package is under compulsion of law, it could not be called a brand name, said the Supreme Court stated after discussing the meaning of ‘brand name’ and allowing the appeals of jute manufacturers against the ruling of the Excise Appellate Tribunal (RDB Textiles vs CCE). The manufacturers sold bags to the Food Corporation of India and other state entities for the retail sale of foodgrain in the PDS. The excise authorities maintained that the details printed on the bags, like the date and place of manufacture and BIS certificate, amounted to brand name and therefore excise exemption was denied to the firms. The tribunal upheld that view. On appeal, the Supreme Court stated that by printing the bare details, which were compulsory under the Jute Control Order, would not make it a brand name.

IOL ‘arbitrary’ in rejecting a bid

The Delhi High Court has stated the exclusion of Offshore Infrastructure Ltd in a tender floated by Indian Oil Corporation (IOL) was “unfair and arbitrary”. The court, while quashing the decision of the public-sector undertaking rejecting the bid, directed that it shall also be considered on merits. Tenders were invited for a package of projects in Andhra Pradesh. The offer of Offshore Infrastructure was rejected because it did not meet the technical standards. The firm alleged that IOL had not paid outstanding dues from a previous project and when it was pointed out, it was warned that if it continued to persist on those claims, its bids would face rejection. Allowing the petition, the High Court stated in the guidelines for the Contract Performance Evaluation that was used by IOL, there was “apparent and glaring procedural irregularity”. The bidder was also kept in the dark about the guidelines, among other things. Though courts would not interfere with the contractual matters, it could look into the procedure adopted to check whether it was fair, especially in the case of a government corporation.

Compensation should not deduct pension

The Bombay High Court has ruled that the pension received by a woman should not be taken into account while awarding compensation for the road accident death of her husband.  In this case, Bajaj Allianz General Insurance Co vs Prabhavati, the woman was getting a pension as her deceased husband was a government servant. The insurer argued that to that extent, her loss of dependency was compensated. Therefore, the amount received as pension should be deducted from the compensation. The High Court, while awarding Rs 1 million, stated that the compensation under the Motor Vehicles Act is based on contractual liability while the payment of pension is a statutory obligation of the government. These two cannot be merged. Pension cannot be called a “pecuniary advantage” and deducted from the compensation package, the judgment said.

UCO Bank fined for frivolous litigation

The Supreme Court imposed a penalty of Rs 100,000 on public sector UCO Bank for “unnecessarily litigating against an employee who had superannuated”. He was dismissed on the eve of superannuation, denied pension and subsistence allowance, and the bank appealed three times when it lost its case in courts against him. He was not given a fair chance of defending himself during the departmental proceedings. The judgment also pointed the same bank had lost its case before the Supreme Court two times earlier on similar facts. By starving Rajendra Shankar, a former manager, of all financial sources, the bank, in fact, had denied him access to justice. Moreover, the charge sheet against him was filed seven years after the alleged misconduct. The Supreme Court observed that this “inordinate and unexplained” delay alone was cause enough to dismiss the charge sheet. The misconduct was that he issued a cheque for Rs 300,000 to his brother when he had only Rs 1,000 in his account.  He later stopped payment of the cheque. The court observed that if there was any complaint, it should have been filed by his brother who was the payee.