Debt recovery

LEGAL DIGEST

The Supreme Court has set aside an interim order of the Madras High Court in a case, Industrial Investment Bank of India Ltd versus Marshal's Power & Telecom (I) Ltd, involving recovery of loans.

While the bank moved the debt recovery tribunal, the company moved the civil court and obtained injunction against action by the bank for recovery. The high court also passed such an order.

The bank appealed to the Supreme Court and said the high court had erred on several counts. It could not pass a discretionary injunction restraining the enforcement of any order that might be passed by the debt recovery tribunal. Such orders may be passed only in exceptional cases.

Arbitration case

The Supreme Court last week set aside a judgment of the Jharkhand High Court in a case, Chief Engineer versus Scoot Wilson Kirpatrick Ltd, in which the high court had held that the chief engineer's petition in an arbitration case was not maintainable under the Arbitration and Conciliation Act 1996.

According to Section 37(1)(b) of the Act, an appeal shall lie from an order of the court setting aside or refusing to set aside an arbitral award. The Supreme Court stated that the high court's view was wrong and the appeal was clearly maintainable.

Arbitration award

An award rendered under the Arbitration and Conciliation Act, 1996, cannot be treated as a decree under the insolvency law, the Supreme Court has held in a judgment in Paramjeet Patheja versus ICDS Ltd.

Patheja was a guarantor for a company, Patheja Forgings & Auto Parts Manufactures Ltd. The company became sick and an award for Rs 3 crore was rendered by the arbitrators. Patheja argued that an award by the arbitrators was neither a decree nor an order for the purpose of the Insolvency Act.

The Bombay High Court did not accept this argument. On appeal, the Supreme Court accepted the argument and set aside the high court order.

Re-look at bid

The Supreme Court has asked the Maharashtra State Power General Co Ltd to consider an offer of BSN Joshi & Sons Ltd once again though the Bombay High Court had quashed the award of a contract to it.

The rival contenders for a tender for procuring coal for generation of power had challenged the award of contract in the high court. The high court quashed the award in favour of BSN Joshi Ltd, which approached the Supreme Court.

Allowing the appeal, the court observed that though the employer was not bound to accept a bid only because it was the lowest, in this case, the company had been in this business for 52 years and doing similar work throughout the country.

It was quoting low rates and still making profits and so should be given another chance to bid.

The court further noted that the firms which won the contract had formed a cartel after the high court order. In the interest of all, the court ordered that if the contract was given to BSN Joshi for one year, the rivals be given sufficient time to wind up their business.