Fixation of a reserved price for auction by a public authority based on the circle rate of a property does not imply that it must sell it at that price. Circle rates are not a true measure to determine the actual market value of a property, the Supreme Court stated while dismissing the appeal case, E-City Entertainment vs State of Uttar Pradesh. The court explained that the authority must be satisfied that the price offered truly represented the market value. Otherwise, it can cancel the auction.
In this case, the Kanpur Corporation offered for sale a prime plot with a reserve price of Rs 15.47 crore. The firm offered Rs 21.51 crore, which was the highest of the three bids. However, after some time, the corporation cancelled the entire tender process because even the highest bid was far below the market value, which was assessed at Rs 100 crore.
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While ordering the return of the earnest money to the firm, the judgment said: "The property offered by the corporation is admittedly public property in the hands of the corporation as a trustee who is not only entitled but duty-bound to protect its interest by making sure that the same is sold at the optimum price it is capable of fetching in the open market."
HC's role in arbitration plea limited
When a high court is asked to appoint an arbitrator, it is not supposed to discuss, much less elaborate, on the factual issues arising in the dispute between the parties. The court's role under the Arbitration and Conciliation Act is only to examine whether there is an arbitration agreement between the parties and any dispute has arisen warranting appointment of an arbitrator, the Supreme Court stated last week in its judgment, Rajesh Verma vs Aswani Kumar.
The Supreme Court remarked that the Delhi High Court in this case went into the merits of the case, which was "wholly uncalled for and should not have been made." The high court had appointed an advocate as arbitrator according to the terms of arbitration in the agreement between the land owner and tenant, but in view of the opposition of the land owner, the Supreme Court appointed a retired high court judge as sole arbitrator.
NHAI's appeal against award rejected
The Supreme Court last week dismissed the appeal of the National Highways Authority of India against the order of the Delhi high court, which had approved the award of the arbitration tribunal in the dispute of the public sector undertaking with JSC Centrodorstroy. The latter firm was given a project to build a four-lane national highway in Uttar Pradesh. Two disputes arose between the parties, namely, compensation for additional costs on account of increase in service tax on the insurance premium and bank guarantee charges.
The award went in favour of the builder. The appeal against it was dismissed by the high court. The Supreme Court examined the terms of the contract and observed that "construction of the terms of a contract is primarily for an arbitral tribunal to decide and unless it construes the contract in such a way that no fair-minded or reasonable person would do, no interference by the court is called for. The view that the increase in rates of service tax in respect of bank guarantee and insurance premium is directly relatable to terms of the contract is certainly a possible view."
Bank told to release mortgaged deeds
The Supreme Court has dismissed the appeal of Punjab & Sind Bank and directed it to release the title of property mortgaged with it by Punjab Breeders Ltd. When there was a default in the repayment of a loan from the bank, both parties entered into a settlement. Punjab Breeders was to repay Rs 5.42 lakh subject to the condition that if the property was sold within three years, the bank's permission was required and the bank could claim 50 per cent of the increase in the fair market value of the property.
The bank tried to sell the property but could not get sufficient value. It allowed the firm to sell the property. It got a higher price and offered to repay the loan. But, the bank demanded 50 per cent of the market value. This was resisted by the firm, which moved court. The Supreme Court rejected the claim of the bank. It said the sale was made after three years of lock-in period under the settlement. Therefore, the bank could not claim a share in the increase in the market value as compensation. "There is nothing to recompense since the bank has not suffered or lost anything," the court said and asked the bank to hand over possession of the property to the firm in two weeks.
Prosecution of director quashed
The Supreme Court last week set aside the order of the Madras High Court and quashed prosecution of a director of a company calling it an "abuse of process of the court". In this appeal case, Ramesh Gopal vs Devi Polymers Ltd, the former, who was a director of the company, was accused of forgery and offences under the Information Technology Act. The high court allowed the prosecution to continue.
But, he appealed to the Supreme Court. Going through the background of the case, the judgment observed that the director wanted to improve consultancy services of the firm and appointed consultants and paid them from the company funds. He also created a website titled Devi Consultancy Service. The company alleged that both were offences involving misappropriation of funds and forgery. The Supreme Court denied it and stated that the allegations were "inherently improbable" and there was no sufficient ground to proceed with the prosecution. It appeared to be part of an ongoing dispute between the parties "due to private and personal grudge."
Bonanza after 48 years of litigation
Bhanji Gopal, a forester in Gujarat, was dismissed after disciplinary proceedings in 1968. The litigation over his dismissal lasted 48 years though he retired in 1992. The labour court had ordered reinstatement with back wages and benefits. The high court modified the order and still the benefits totalled Rs 17.71 lakh apart from pension.
But on the appeal of the state government, the Supreme Court held that the orders of the labour court and the high court contained "glaring infirmities". While setting aside the award, the court barred the government from recovering the amount already paid in view of his advanced age. But, he will not be paid anything more.
