An arbitration agreement, even though in writing, need not be signed by the parties if the record of agreement is provided by exchange of letters, telex or other modern means of telecommunication, the Supreme Court stated last week. "In the present day of e-commerce, in cases of internet purchases, tele purchases, ticket booking and in standard form of contract, terms and conditions are agreed upon," explained the judgment in the arbitration case, Govind Rubber Ltd vs Louids Dreyfus Commodities Asia Ltd.
"In such agreements, if the identity of the parties is established, and there is a record of agreement, it becomes an arbitration agreement if there is an arbitration clause showing ad idem between the parties. Therefore, signature is not a formal requirement under section 7 of the Arbitration and Conciliation Act," the court said.
This was an appeal against the Bombay High Court judgment in a dispute between a Mumbai importer of rubber and a Singapore company. The arbitrator in Singapore gave an award against the Indian firm. The foreign firm moved the high court for execution of the award and the high court allowed it. One of the arguments of the Indian firm in the appeal before the Supreme Court was that there was no signed agreement for arbitration. Rejecting the contention, the Supreme Court ruled that even if the agreement is not signed, it can be spelt out from the correspondence between the parties.
Higher VAT on cell phone charger
The Supreme Court last week ruled that a cell phone charger was an item different from the cell phone though the two might be sold in one package; therefore the charger attracted a higher rate under the Punjab VAT Act. The levy on cell phone will be 4 per cent but on the charger it will be 12.5 per cent. The revenue authorities argued that company was selling more than one products in a single package though the items were exigible to different rates of tax.
When the demand of the authorities was challenged in the Punjab and Haryana High Court, it accepted the contention of the company that the battery charger is a part of the composite package of the cell phone. The state appealed to the Supreme Court. It set aside the judgment of the high court and ruled that the battery charger was not a composite part of the cell phone, "but is an independent product which can be sold separately without selling the cell phone."
Firm to compensate harassed staff
The Supreme Court has imposed "exemplary cost" of Rs 1 lakh on a Mumbai textile mill for stalling adjudication proceedings between the management and the workers for two decades. In this case, Pee Vee Textiles Ltd vs state of Maharashtra, there was a dispute over variable dearness allowance according to the government notification of 1993. The government referred the issue to the industrial tribunal.
The government order was challenged in the Bombay High Court by the management. It dismissed the writ petition. The mill appealed to the Supreme Court. It dismissed the appeal criticising the management for putting forward untenable arguments. "The employer has been incessantly challenging the order of reference," the court said, and added, "the workers have been denied their legitimate monetary benefits for the last 21 years by taking untenable pleas and by not acceding to the charter of demands. The employer has been stalling the proceedings, which warrants imposition of exemplary costs to be paid to the workers."
Ex-director not liable for dud cheque
A person who was neither a director of a company nor in charge of or involved in the day to day affairs of the company at the time of issuing cheques which bounced cannot be prosecuted under the Negotiable Instruments Act, the Supreme Court said last week while allowing the appeal case, Pooja Ravinder vs state of Maharashtra. She was a housewife and formerly a non-executive director of a company. However, when cheques were dishonoured, a finance company which was payee filed complaints against her. She moved the Bombay High Court to quash it, but her petition was dismissed.
On appeal, the Supreme Court said that prosecuting her would be abuse of process of law and quashed the complaint. In another case, the court stated that criminal cases of cheating linked to cheque bouncing cannot be treated as civil disputes and the trial must go on. In this case, K K Singhal vs Steel Strips Ltd, 33 cheques were issued to the firm which bounced. Later, the drawer of the cheques arranged a business deal with the firm and induced the latter to withdraw the complaints. Though the firm withdrew all except one, it still did not get the payment. So it filed criminal complaints. Singhal moved the Punjab and Haryana High court for quashing the complaints, which it refused to do. He moved the Supreme Court arguing that the matter involved non-performance of contract which was a civil dispute. The court stated that this issue cannot be decided at this stage and asked the trial court to proceed with the case.
Honey export stuck at inspection
"The Export Inspection Authority of the Ministry of Commerce has to function within four corners of the statute and it is not open for it to act arbitrarily, whimsically or contrary to the provisions of law," the Delhi High Court stated while directing it to issue inspection certificates to all consignments of honey for export to the United States by MB Exim Ltd.
The authority has the statutory duty to inspect and issue certificates, it cannot refuse to discharge its function, the high court stated while allowing the petition of the exporter. The authority had withheld certificates because of allegations of violating rules in the past.
Service tax on philanthropy
The Bombay High Court last week dismissed a writ petition of the Bombay Bar Association challenging the imposition of service tax on legal profession. The argument of the association was that "the legal profession has not been understood from times immemorial as a profit-making activity or venture. It is not a business or trade. It is a solemn duty which is performed for the litigants… Service tax imposes a heavy additional burden on litigants… The fees received by an advocate is regarded as a mere honorarium and not as a matter of contractual right." The court rejected the arguments and said that advocates must pay tax just as other professionals like chartered accountants and architects and Parliament has the power to impose it.
