When the terms of a contract are not clear as to the existence of an international arbitration agreement, the correspondence between the firms could indicate its existence, the Supreme Court held last week in the dispute between Powertech World Wide Ltd of Mumbai and Delvin International General Trading of Dubai. In this case, the Indian company sought arbitration, but the Dubai firm denied that there was a clear term in the agreement about arbitration. However, the court examined the correspondence between the two firms and the circumstances and concluded that there was an arbitration agreement. “Once the correspondence between the parties and attendant circumstances are read conjointly with the petition and with particular reference to the purchase contract, it becomes evident that the parties had an agreement in writing and were ad idem in their intention to refer these matters to an arbitrator,” the court said. It appointed retired Justice D R Dhanuka of the Bombay high court as the arbitrator.
Lending firms must follow norms before ‘re-possession’
The Supreme Court last week cautioned hire purchase firms not to take goods forcibly but follow the norms set by Reserve Bank of India. In the judgment, Citicorp Maruti Finance Ltd vs S Vijayalaxmi, it emphasised that “in case of mortgaged goods subject to hire purchase agreements, the recovery process has to be in accordance with law.” The court noted that the recovery process referred to in the agreements also contemplated such recovery to be effected in due process of law and not by use of force. “Till such time as the ownership is not transferred to the purchaser, the hirer normally continues to be the owner of the goods, but that does not entitle himon the strength of the agreement to take back possession of the vehicle by use of force. The guidelines which had been laid down by the Reserve Bank of India support and make a virtue of such conduct. If any action is taken for recovery in violation of such guidelines or the principles as laid down by this court, such an action cannot but be struck down.”
Insurance firm told to pay higher compensation
The Supreme Court last week raised the compensation amount steeply in a motor vehicle accident case in which a 24-year-old carpenter was incapacitated due to multiple injuries. The motor accident claims tribunal awarded him Rs 45,000 only. On appeal to the Karnataka high court, the amount was raised by Rs 31,000. However, on further appeal to the Supreme Court, the amount was further raised to Rs 8.37 lakh in the case, Sri Laxman vs Oriental Insurance Co Ltd. The youth had asked for only Rs 5 lakh, but the court ruled that even if the victim asked for a lesser amount, the court could grant a “just” amount. The law does not limit the power of the tribunal to award a higher compensation. The judgment noted that the victim could not appoint a competent lawyer. The courts below also did not consider the pain and suffering of the young carpenter. Therefore, Rs 1.5 lakh was awarded on that ground, apart from loss of livelihood. Further, Rs 2 lakh was awarded on the loss of amenities “including the loss of prospects of marriage, which has become an illusion for him.”
Demand for excise duty on caps of collapsible tubes quashed
If caps for collapsible tubes of a product are manufactured separately by a different firm, the value of the caps will not form part of the assessable value of the tubes manufactured for central excise purposes. In this case, Essel Propack Ltd vs Commissioner of Central Excise, Mumbai, the company manufactured plastic tubes in its factory and supplied them to Colgate. The caps for the tubes were supplied by Colgate. They are fitted to the tubes before removing them the factory of Essel. The revenue authorities issued notice to Essel stating that the caps should be included in the assessable value. The excise tribunal confirmed this view. On appeal, the Supreme Court set aside the tribunal’s order and stated that since the caps are not manufactured by Essel, but supplied to it by its customers, the value of the caps will not form part of the value of the tubes manufactured by it.
