Last week, The Supreme Court indicted the Karnataka government and its Director of Mines for the way they transferred large mining lands in Bellary district from Dalmia Cement Ltd to another mining firm, flouting rules under the Forest Act and the Mineral Concession Rules. National wealth should be distributed strictly according to the rules and the conduct of the state and its authorities are "highly condemnable and calls for stringent action against them," the court stated while setting aside the high court judgment in the case, Muneer Enterprises vs Ramgad Minerals and Mining Ltd. The apex court stated that the director "simply glossed over the gross violations of the Forest Act" by approving the transfer of land surrendered by Dalmia Cement to the Ramgad firm. The 100-page judgment narrated the complex dealings among the competing miners and stated that "there was total lack of bona fides on the part of the state government in taking a sudden U-turn for passing the order of transfer in favour of Ramgad Minerals." Reversing the view of the high court, the apex court stated that any lease granted or renewed without following the central laws would be void.
Injunctions should not stall arbitration
If there is an arbitration agreement, the civil court should not interfere in the dispute between the parties and pass injunctions, invoking the Civil Procedure Code. The rule under Section 8 of the Arbitration and Conciliation Act that the dispute should be arbitrated is peremptory, the Supreme Court has stated in the judgment, Sundaram Finance Ltd vs T Thankam. In this case, a woman bought a car on loan. Disputes having risen, she moved the civil court for an injunction against the financing company from repossessing the vehicle. The court passed such an order. The company moved the Kerala High Court in appeal, the high court stated that a petition for injunction can be separated from the main dispute and the Act did not bar the civil court from passing an injunction. The financier moved the Supreme Court. It allowed the appeal stating that the Arbitration Act is a special law which overrode the general civil law and Section 8 must be strictly followed. Otherwise, "it would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court," the judgment said while setting aside the orders of courts below.
Row over Indian court's jurisdiction
Agency commission not tax deductible
The Supreme Court last week ruled that manufacturers of alcoholic beverages are not entitled to the benefit of disallowance purportedly paid by them to their commission agents for procurement of order for supply of liquor. The Kerala High Court had rejected the claim made under the Income Tax Act, and the Supreme Court upheld that view in its judgment, Premier Breweries Ltd vs CIT, Kochi. Certain states like Kerala and Tamil Nadu have established marketing corporations which are exclusive wholesalers of liquor and all manufacturers have to sell their products to them. The corporations would then sell the liquor to retailers. The manufacturers pleaded that they have to engage agents to coordinate with retailers and the corporations to ensure continuous supply of beverages to the consumers. Therefore, they claimed benefits under Section 37 of the Act. The revenue authorities rejected the claim and the Supreme Court approved of it.
Pay order cannot bounce
If a bank stops payment of a pay order to another bank, a third party who is an account holder cannot file a complaint under the Negotiable Instruments Act for dishonour of cheques. The Supreme Court stated so in its judgment, ING Vysya Bank Ltd vs State of Rajasthan. In this case, ING had issued a pay order in the name of Citi Bank, New York, for account holder Jaya Enterprises. ING later stopped payment after receiving a telex message from Citi, at whose instruction the pay order was issued. The account holder then filed a complaint against ING. The magistrate took cognisance of it. The bank moved the Rajasthan High Court which dismissed the appeal. The Supreme Court set aside the orders of the courts below stating that there was no transaction between ING and the account holder. Dragging the bank to the criminal court was a "clear case of abuse of process of the power of court," the apex court said.
Bad math in computing compensation
The Supreme Court has once again observed that the motor vehicles accident tribunals and high courts err while computing the loss caused to victims of road accidents. In this case, Jakir Hussein vs Sabir, the driver of a vehicle lost his right hand in the mishap and the medical evidence showed 55 per cent loss of earning power. However, the tribunal awarded only Rs 4.38 lakh and the Madhya Pradesh marginally raised the compensation. The Supreme Court recalculated the loss and asked the insurance company to pay Rs 17.60 lakh to the victim. It said that the statutory minimum wage is not always binding and driving was a skilled job. The court fixed loss of future income of the driver at Rs 8.64 lakh and medical expenses at Rs 2 lakh and future medical expenses at another Rs 2 lakh. The insurer shall also pay nine per cent interest as the case was pending for six years. In another case, New India Assurance vs Sukanta Kumar, the tribunal awarded Rs 4 lakh to the senior medical officer of Bhilai plant who suffered permanent disability in an accident. The Orissa High Court raised the amount to Rs 55 lakh, but the Supreme Court reduced it to Rs 35 lakh as the high court passed the order "without discussion and computation".
Injunctions should not stall arbitration
If there is an arbitration agreement, the civil court should not interfere in the dispute between the parties and pass injunctions, invoking the Civil Procedure Code. The rule under Section 8 of the Arbitration and Conciliation Act that the dispute should be arbitrated is peremptory, the Supreme Court has stated in the judgment, Sundaram Finance Ltd vs T Thankam. In this case, a woman bought a car on loan. Disputes having risen, she moved the civil court for an injunction against the financing company from repossessing the vehicle. The court passed such an order. The company moved the Kerala High Court in appeal, the high court stated that a petition for injunction can be separated from the main dispute and the Act did not bar the civil court from passing an injunction. The financier moved the Supreme Court. It allowed the appeal stating that the Arbitration Act is a special law which overrode the general civil law and Section 8 must be strictly followed. Otherwise, "it would only delay the resolution of disputes and complicate the redressal of grievance and of course unnecessarily increase the pendency in the court," the judgment said while setting aside the orders of courts below.
Row over Indian court's jurisdiction
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The Supreme Court last week dismissed the appeal of Harmony Innovation Shipping Ltd against the Kerala High Court judgment in an arbitration dispute with Gupta Coal India Ltd. The issue was whether Indian courts have jurisdiction in the dispute as the cargo was sent from Indonesia to India and the arbitration clause referred to London as the seat of arbitration. The district court in Kerala directed Gupta Coal to furnish a security of Rs 6.60 crore and attached the cargo. On appeal, the high court set aside the orders of the court below. Upholding the high court view, the Supreme Court stated that "the commercial background, the context of the contract and the circumstances of the parties" irresistibly led to the conclusion that the seat of arbitration should be London.
Agency commission not tax deductible
The Supreme Court last week ruled that manufacturers of alcoholic beverages are not entitled to the benefit of disallowance purportedly paid by them to their commission agents for procurement of order for supply of liquor. The Kerala High Court had rejected the claim made under the Income Tax Act, and the Supreme Court upheld that view in its judgment, Premier Breweries Ltd vs CIT, Kochi. Certain states like Kerala and Tamil Nadu have established marketing corporations which are exclusive wholesalers of liquor and all manufacturers have to sell their products to them. The corporations would then sell the liquor to retailers. The manufacturers pleaded that they have to engage agents to coordinate with retailers and the corporations to ensure continuous supply of beverages to the consumers. Therefore, they claimed benefits under Section 37 of the Act. The revenue authorities rejected the claim and the Supreme Court approved of it.
Pay order cannot bounce
If a bank stops payment of a pay order to another bank, a third party who is an account holder cannot file a complaint under the Negotiable Instruments Act for dishonour of cheques. The Supreme Court stated so in its judgment, ING Vysya Bank Ltd vs State of Rajasthan. In this case, ING had issued a pay order in the name of Citi Bank, New York, for account holder Jaya Enterprises. ING later stopped payment after receiving a telex message from Citi, at whose instruction the pay order was issued. The account holder then filed a complaint against ING. The magistrate took cognisance of it. The bank moved the Rajasthan High Court which dismissed the appeal. The Supreme Court set aside the orders of the courts below stating that there was no transaction between ING and the account holder. Dragging the bank to the criminal court was a "clear case of abuse of process of the power of court," the apex court said.
Bad math in computing compensation
The Supreme Court has once again observed that the motor vehicles accident tribunals and high courts err while computing the loss caused to victims of road accidents. In this case, Jakir Hussein vs Sabir, the driver of a vehicle lost his right hand in the mishap and the medical evidence showed 55 per cent loss of earning power. However, the tribunal awarded only Rs 4.38 lakh and the Madhya Pradesh marginally raised the compensation. The Supreme Court recalculated the loss and asked the insurance company to pay Rs 17.60 lakh to the victim. It said that the statutory minimum wage is not always binding and driving was a skilled job. The court fixed loss of future income of the driver at Rs 8.64 lakh and medical expenses at Rs 2 lakh and future medical expenses at another Rs 2 lakh. The insurer shall also pay nine per cent interest as the case was pending for six years. In another case, New India Assurance vs Sukanta Kumar, the tribunal awarded Rs 4 lakh to the senior medical officer of Bhilai plant who suffered permanent disability in an accident. The Orissa High Court raised the amount to Rs 55 lakh, but the Supreme Court reduced it to Rs 35 lakh as the high court passed the order "without discussion and computation".