In a precedent-setting judgment affecting government contracts, the Supreme Court has asked BSNL to lay down guidelines for blacklisting firms which respond to tenders and undertake projects. Since blacklisting is a frequent cause of dispute and bitter litigation, this ruling may be followed in the case of other government entities, which enter into supply and works contracts. In this case, M/s Kulja Industries Ltd vs BSNL, the firm which supplies optical fibre and HDPE pipes was debarred "for all times" by the public sector undertaking on the charge of over-invoicing with the connivance of BSNL officers themselves. The Bombay High Court upheld the blacklisting. But the Supreme Court set aside the high court judgment on appeal. The apex court felt that permanently debarring the firm, which survives on supplies to BSNL alone, was too harsh. It felt there should be some "broad guidelines" to provide objectivity and transparency in imposing penalty on delinquent firms. The court asked BSNL to frame guidelines in six months and review the period of exclusion afresh in this case.
Relaxation in cheque bouncing cases
The stringent provisions in the Negotiable Instruments Act providing punishment for issuing cheques without sufficient funds in the bank is not a means of seeking retribution, but is more a means to ensure payment of money. The threat of jail is only a mode to ensure recovery, the Supreme Court stated last week in its judgment, Somnath Sarkar vs Utpal Basu, while relaxing the sentence on a person whose cheque bounced. In this case, a cheque of Rs 69,500 bounced, leading to an order of compensation amounting to Rs 80,000 plus twice the cheque amount apart from threat of prison. Setting aside the order of the Calcutta High Court, the apex court reduced the liability to Rs 80,000 as compensation to the payee plus Rs 20,000 as fine.
Cooperative banks not under RTI
The Supreme Court last week held that cooperative banks will not fall within the definition of 'public authority' for purposes of the Right to Information Act. The ruling was given in the context of the Kerala Co-operative Societies Act in the case, Thalappalam Service Coop Bank Ltd vs state of Kerala. The state government had issued a circular making the RTI applicable to coop societies. The Supreme Court quashed it as there was no evidence to show that the coops were owned, controlled or substantially financed by the government. The full Bench of the Kerala High Court had upheld the circular and brought coops within the RTI ambit. Reversing that view, the Supreme Court stated that coops are not statutory bodies, but are only governed by statutes. The state did not exercise any direct or indirect control over the affairs of the society.
Copyright in the world of e-commerce
Though the world has taken to e-commerce, with seller and purchaser in different parts of the world, the old principles of territorial jurisdiction of courts cannot be abandoned, the Delhi High Court ruled last week in the trade mark dispute between US corporation World Wrestling Entertainment and Indian firm M/s Reshma Collection. If the basic rules are waived, it would "lead to undue hardship to those resorting to e-commerce and open them to multifarious litigations in every nook and corner of the world where their goods or services may be sold over the Internet," the judgment said. The US corporation had sought permanent injunction against the Mumbai garment firm selling products with its copyright and trade marks. It argued that though it has no branch office or dealer in Delhi, with the advent of "new media" and transactions over the Internet, the US firm is deemed to carry on business in Delhi as its website is accessible to consumers in Delhi and its goods are available for sale in Delhi. Rejecting this argument, the high court stated that "merely because a person has embarked upon an e-commerce business model, the tests which apply for determination of issues, such as - when and where the contract is made, or whether the vendor carries on business at the place where the merchandise may be sold, or service may be offered, would not change and would be the same as apply to communications over telephone and fax."
Suit doesn't bar arbitration
The Bombay High Court last week rejected the argument that once a suit is filed in a dispute, arbitration cannot be invoked. Though the parties had an arbitration agreement, a suit was filed in Guwahati where the court rejected it for lack of jurisdiction. Then arbitration was invoked, which was again contested, with one party moving the Bombay High Court for arbitration. Since the parties still could not agree on arbitrators, the high court named two of its retired judges, who will choose an umpire. The court remarked in the judgment, Candid Drug Distributors vs Wanbury Ltd, that the whole controversy was unnecessary in view of the arbitration clause. "Arbitration would be the most appropriate and desirable forum since the parties have agreed to refer their dispute to arbitration," the judgment said.
Challenge to tender dismissed
The Bombay High Court has dismissed the challenge to the selection of HAL Offshore Ltd by ONGC in a tender to set up a Skid Fire Firing System offshore. One of the contenders, Homa Engineering Works, alleged that HAL was not entitled to be considered for the bid as it did not fulfil the technical qualifications. The high court stated that it could not accept the interpretation given by Homa to the clauses of the tender document. "We are unable to hold that ONGC's interpretation of the clause is unsustainable and irrational warranting interference in a writ petition. The view taken by ONGC is certainly a possible view and in such matters we would not be inclined to substitute our view for that of ONGC unless it is absolutely necessary. To say the least, this is not a case where only one interpretation of the clause is possible," the judgment said.
Minimum wage order quashed
The Calcutta High Court has ruled that medical representatives and employees under drug manufacturers are not covered by the Minimum Wages Act as they are not listed in the "scheduled employment" in the Act. The court stated so while allowing the petition of Indian Drug Manufacturers Association challenging a notification of the West Bengal government making the employees eligible for minimum wages. The manufacturers argued that employment under them is not covered in the schedule of the Act.
