Payback time for BCCL
The Supreme Court last week directed the management of Kenduadih colliery of Bharat Coking Coal Ltd (BCCL) in Jharkhand to pay Rs 4 lakh each to 88 skilled workers who had moved an appeal under the banner of Rashtriya Colliery Mazdoor Sangh. They had complained that though they were working for several years they were not regularised and were discriminated against. The dispute was referred to the industrial tribunal in 1993 and it found that they were performing skilled job of a permanent and perennial nature. While those in other collieries of BCCL were regularised, these workers were given a “step-motherly” treatment. The tribunal ordered the management to absorb them. The dispute continued for several years travelling from the high court to the Supreme Court and back. The Supreme Court noted that over this period, many of them would have become superannuated. Therefore, it put an end to the litigation by ordering the payment. In a similar case from Dhanbad last month, the court had ordered payment of Rs 2 lakh each to unskilled colliery workers who had fought a legal battle for 27 years.
Biting back the hostile acquirer
In a hostile take-over, the target company might use ‘poison pills’ (making the effort unviable for the acquirer by making the cost of acquisition unattractive), or ‘shark repellents’ (measures like sale of valuable assets) but the acquirers who announce public offer for the shares cannot withdraw for that reason. The general principle is that public offer once made cannot be withdrawn, the Supreme Court stated in the judgment, Pramod Jain vs Sebi. Pranidhi Holdings Ltd (the acquirers) along with JP Financial Services Ltd made a bid to buy large shares of Golden Tobacco Ltd. However, the target company was hostile and took several steps apparently to stop the process. There were complaints against all the companies. The Securities and Exchange Board made enquiries which took two years. Ultimately, the acquirers moved the board to withdraw the public announcement. The board refused. The appellate tribunal approved the board’s stand. The Supreme Court upheld the board’s refusal stating that the board, as well as the tribunal, had concurrently held that public offer was capable of being carried out and had not become impossible. While dismissing the appeals of the acquirers, the court also blamed the board for a delay of two years in deciding the application of the acquirers. However, that was no ground to allow withdrawal of the offer.
Using processed ore is not ‘mining’
The Supreme Court has set aside the ruling of the Madhya Pradesh high court and granted relief on electricity tariff to Manganese Ore India Ltd and Hindustan Copper Ltd. The high court had dismissed their challenge to the state government’s demand of 40% on the ground that they were indulging in mining operation, and not manufacturing. The Supreme Court declared that these companies were not mining, which process was done earlier, and only using raw materials for producing new products. ‘Mining’ includes every activity by which minerals are extracted from earth. But after processing the ore to make alloy or concentrate, they become raw materials for these industrial units. Therefore, at that stage, they were not mining. The court explained that ferromanganese alloy used by the firm was not found in the natural state. Similarly, copper concentrate used by Hindustan Copper as raw material was not the same as ore which was mined earlier. Therefore, they would be charged only at the rate of 8%.
BIFR not to deal with healthy units
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The Board for Industrial and Financial Reconstruction (BIFR) has no authority to stop the sale of assets of a company which is not sick, though it might have bought them from a sick unit, the Supreme Court stated in its judgment, JK Sythetics Mazdoor Union vs Arfat Petrochemicals Ltd. Section 22A of the Sick Industries Act deals with power of BIFR to prevent disposal of assets of a sick unit to protect its interests. But that does not apply to a firm which bought assets from a sick company. In this case, JK Synthetics Ltd was declared sick in 1998. Several rehabilitation schemes were proposed but they were not acceptable to all parties and not implemented. Meanwhile, JK sold assets of its Kota cement plant to Arfat, leading to more litigation, including the question of liability to pay the workers. The crucial point of discord was whether BIFR could stop the sale of assets transferred to Arfat without the sanction of the board, declaring that it was a sick unit. The Supreme Court upheld the view of the Rajasthan high court that BIFR was wrong to pass an order against Arfat as it was not a sick unit.
Arbitrator must be above suspicion
The Delhi High Court insisted last week that after the Arbitration Act was amended last year, a person cannot be nominated to an arbitration tribunal if that person is “likely to give rise to justifiable doubts as to his independence or impartiality”. The court stated so citing new Sections 11 and 12 of the Act in its judgment, Hindustan Construction Co vs Ircon International Ltd. Disputes arose between the two over the construction of part of the J&K Rail Link Project. Ircon, which is a completely government-owned company, chose four persons who were either serving or former employees of Northern Railway. This was opposed by Hindustan Construction as violative of the Act as they were government employees. The court ruled that serving officers cannot be nominated. Ircon therefore undertook that they will bring a new set of names complying with the law.
Postal schemes only for individuals
National Savings Certificates, Kisan Vikas Patra and post office term deposits are only for individuals and not for institutions. If a post office issues the certificates or allows term deposits, by mistake, it should return the amounts as soon as it becomes aware of the mistake. Otherwise, it would be liable to refund the amount with interest, according to the National Consumer Commission. In this case, Indian Postal Dpt vs Lalita Agarwal, the principal of a school bought NSC in the name of the school. When it matured, she approached the post office which refused payment because NSC could not be bought for an institution. The commission ruled that it was the mistake of the post office for which it must pay interest on the amount. Similar cases have been decided in the case of Kisan Vikas Patra and term deposits by temples and charitable institutions.