If an arbitrator nominated by the contesting parties withdraws from the proceedings, the court can select a substitute arbitrator of its own choice. "It is the court's duty to give effect to the policy of law, that is to promote efficacy of arbitration," the Supreme Court has stated in its judgment, Shailesh vs Mohan. In this case, the parties selected a retired judge of the Supreme Court from a panel of names but she resigned midway.
The parties could not agree on a new name and the matter went back to the Bombay high court. It substituted one of its retired judges in her place. This was opposed by one of the parties, which argued that once the arbitrator withdraws, the agreement ended and the court could not name another. Rejecting this argument, the Supreme Court stated that under Section 15(2) of the Arbitration and Conciliation Act, when the mandate of an arbitrator terminates, a substitute arbitrator "shall" be appointed. Arbitration must go on.
For example, in a family dispute, the warring members might name the grand uncle as the only arbitrator as they repose faith in him. If he is not available, quits or dies, arbitration does not end; the court can nominate another person of its choice. If the parties specifically prohibit a substitute arbitrator, a new person cannot enter. Otherwise, the court has the power to name a new arbitrator, the judgment emphasised.
Insurer, lessor, lessee liable for damages
When a state road transport corporation grants lease to an owner of a private vehicle which meets with an accident on the road, the registered owner, the insurance company as well as the corporation would be liable to make the payment of compensation "jointly and severally" to the claimants. The corporation, according to the lease agreement with the owner of the vehicle, would be entitled to recover the amount paid to the claimants from the owner or from the insurance company.
In this judgment of the Supreme Court last week, Karnataka SRTC vs New India Assurance, a private bus under lease from the corporation run over a person and the tribunal awarded Rs 4 lakh as compensation. The tribunal fastened the liability upon the owner and the insurer of the vehicle jointly and severally to make the payment of compensation, not on KSRTC.
Aggrieved by the order, New India preferred an appeal before the high court. It held that the corporation alone would be liable to pay the damages. Therefore it appealed to the Supreme Court arguing that the insurer was liable to indemnify the owner. The insurer contended that since the vehicle was plying under the control of the corporation it could not escape liability. Interpreting the law, the Supreme Court held all the three liable.
Tisco vehicles exempted from extra tax
The Supreme Court has set aside the judgment of the Jharkhand high court and ruled that no additional tax would be charged on the vehicles of Tisco which run "captively, not for hire or reward". The Bihar and Orissa Motor Vehicles Taxation Act imposed additional tax on vehicles that carry passengers, tipping trucks in coal mines and those carrying explosives.
Tisco's vehicles were charged the additional tax, which was challenged in the high court unsuccessfully. The Supreme Court, however, stated that they were not used for hire or reward to third parties but only for its own business.
Tools sold to govt at higher price
The Supreme Court last week dismissed the appeals of several suppliers of equipment for an Andhra Pradesh government scheme for rural artisans, stating that the rates they charged from the government were higher than the price at which the tools were available in the market.
The suppliers in this case, Chebrolu Enterprises & others vs AP Coop Finance Corporation, had given an undertaking that its price, namely Rs 189 per kg, was the lowest possible for the tools and if it was not so, they would refund the difference. However, it was found later that similar tools were available for lower price.
The dispute was referred to arbitration. The tribunal concluded that the price quoted by the suppliers was excessive and the reasonable rate was Rs 115 per kg. The suppliers challenged the award in the high court, but were not successful. On appeal, the Supreme Court upheld the high court judgment.
Essar Power to compensate farmers
The Gujarat high court last week granted relief to hundreds of farmers in whose lands power transmission lines were drawn against their protests and allegedly violating telegraph and electricity laws. In this case, Jaisinh Patel vs Essar Power Transmission Ltd, the farmers demanded compensation from the company.
The court asked them to approach the district judges in their area who will determine the compensation after hearing all parties in six months. The amount decided shall be paid within a month. The company was also directed to pay Rs 3,000 to each farmer who moved the court as cost of litigation.
The court noted that the transmission lines have already been energised and distributing power to a large number of consumers including industrial undertakings. Though rules have been violated, removal or alteration of the lines will disrupt supply and compensation is the only remedy possible.
Medical test abroad not tax exempt
The Bombay High Court last week ruled that expenses incurred by a professional going abroad for treatment of eye is not eligible for income tax deduction. The assessee in this case, Dhimant Thakar vs CIT, was a lawyer and he argued that good vision was important for pursuing his profession. His claim for the assessment year 1986-87 was rejected by the revenue authorities.
His appeal was also rejected by the Commissioner of Income Tax (Appeals) who observed that if the logic of the lawyer was stretched, it would mean that even expenditure incurred on food to preserve oneself should be treated as allowable under Section 37(1) of the Income Tax Act as being incurred for business or profession.
On appeal, the high court upheld the view of the authorities observing that "eyes are essential not only for the purpose of business or profession but for purposes other than these which are so many. It is therefore clear that the said expenditure as claimed by the professional is not in the nature of expenditure wholly and exclusively incurred for the purposes of the profession… Effective eye sight is a necessity for living a life of a complete human. Therefore, in this case the expenditure is personal and incidental benefit if any is to the profession carried out by him."
