Dispute over foreign award remitted to local court

LEGAL DIGEST

The Supreme Court last week set aside the order of the Andhra Pradesh High Court in the arbitration dispute between the US firm Venture Global Engineering and Satyam Computers Services Ltd. It remitted the dispute over the foreign award to the civil court after affirming the law on this point as laid down in 2002 in the Bhatia International case.

Satyam had obtained an award in its favour from the London Court of International Arbitration and moved the Eastern District Court of Michigan, US, for enforcing it.

The US firm opposed it in the Indian court, arguing that it could not have pursued it in the US court. The Supreme Court accepted this view and remitted the case for reconsideration by the civil court in Secunderabad.

Borrowers derive no rights from RBI guidelines: SC

The Supreme Court last week allowed the appeal of Oriental Bank of Commerce against the judgment of the Delhi High Court which had asked the bank to declare a defaulter's account as Non-Performing Asset (NPA) and apply the Reserve Bank of India guidelines to it.

In this case, the bank moved the debt recovery tribunal which asked the defaulter to pay the amount with interest. When he moved the High Court, it stayed the recovery certificate and asked the bank to recover the amount in quarterly instalments.

The bank appealed to the Supreme Court. It ruled that the RBI guidelines had no force of law and was only in the nature of internal guidelines for banks and financial institutions. The borrowers did not derive any right from the guidelines. The High Court, therefore, erred in issuing the order to declare the account as an NPA, the Supreme Court said.

Karnataka VAT not applicable to advertising agencies

The Supreme Court held last week in the case, Imagic Creative Pvt Ltd versus the Commissioner of Commercial Taxes, that charges collected towards the services for evolution of prototype conceptual design, on which service tax had been paid under the Finance Act, 1994 is not liable to tax under the Karnataka Value Added Tax Act.

In this case, the firm provided advertisement services creating original concept and design advertising material for their clients and design brochures and annual reports. Granting relief to advertising agencies, the Supreme Court set aside the judgment of the High Court.