The Supreme Court has set aside the order of the Chief Justice of the Punjab and Haryana High Court appointing an arbitrator to resolve the dispute between the Ludhiana Improvement Trust and Today Homes and Infrastructure Ltd. The private firm was the highest bidder for raising a Rs 371-crore City Centre.
However, the trust suspected that the firm was indulging in underhand dealings by taking cash from those who booked space in the market complex. While the dispute was pending, the trust was dissolved by the government, which created more complications. The firm then invoked an arbitration clause and sought the appointment of an arbitrator under the Arbitration and Conciliation Act.
The Chief Justice of the high court appointed a former Chief Justice of India as the arbitrator. The trust objected to it in appeal, arguing that since the main agreement was obtained fraudulently, the arbitration agreement was also invalid. The Supreme Court stated that the appointment was against the law laid down by it in a Constitution bench judgment. Therefore, it remanded the matter to the high court for a fresh decision.
MRTPC order against KLM Royal Dutch Airlines set aside
The Supreme Court has set aside the order of the Monopolies and Restrictive Trade Practices Commission against KLM Royal Dutch Airlines, which charged it with unfair trade practice. The airlines had lost some consignments sent by Maharaja & Co for a function in New Orleans, US.
The firm therefore moved the commission for compensation. The commission, however, ruled that the airlines had committed unfair trade practice and told it not to repeat it. The airline moved the Supreme Court, which stated that it was not a case of unfair trade practice but deficiency in service.
Interest to banks on govt securities: Case remitted to Tribunals
The Commissioner of Income Tax has appealed against the judgments of the Madras and Bombay High Courts which went against the revenue authorities. The question involved was whether the interest earned by banks on government securities was liable to be assessed under Section 2(7) of the Interest Act.
The Income Tax Appellate Tribunal and the high courts held that it was not chargeable. The banks involved were the Industrial Development Bank of India Ltd, ICICI Bank Ltd, City Union Bank Ltd and the Ratnakar Bank Ltd. The authorities argued that interest on securities fell within the meaning of “interest chargeable to tax” as defined in Section 2(7).
However, there was dispute over the factual position in each of these cases. Therefore, the Supreme Court stated that though the law has been set in the recent judgment involving Corporation Bank, the factual position in the new batch of cases should be examined by the respective tribunals. Therefore, the cases were remitted to the tribunals.
Hanu Motel (P) Ltd vs UP Financial Corporation: Case remittted for review
The Supreme Court has set aside the judgment of the Uttaranchal High Court in the case, Hanu Motel (P) Ltd vs UP Financial Corporation. The private firm had taken a loan from the state corporation but had not repaid it. Therefore, it cancelled the loan agreement and issued a demand notice.
However, the directors of the company themselves were divided over the liability and the CBI was brought in to clear the responsibility for the loan agreement. The high court, without hearing one party, passed two orders which went against the company.
It appealed to the Supreme Court stating that the relevant parties were not heard by the high court before passing the order. The Supreme Court agreed with this contention and remitted the matter to the high court for review.
Krishak Bharati Cooperative vs Joint Commissioner I-T case remitted to tribunal
The Supreme Court described the case of Krishak Bharati Cooperative Ltd vs Joint Commissioner of Income Tax as unique as it involved agreements regarding the manufacture of heavy water for civilian uses like power generation. The cooperative was engaged in manufacturing urea and ammonia at Hazira. It used to supply ammonia gas to the Heavy Water Boardan arm of the Department of Atomic Energy.
The cooperative was entitled to be reimbursed for the cost of ammonia manufactured by it and supplied to the board and in addition it was also entitled to receive service charges and incentives from the board. The dispute was whether the service charges received by the cooperative could be viewed as profits arising from the manufacturing activity.
The tax tribunal and the Delhi High Court ruled against the cooperative. In its appeal, the Supreme Court stated that the forums below had not examined the agreement and data nor were they produced before them. Therefore, the dispute was remitted to the tribunal for reconsideration.
