Some employees of Bajaj Auto Ltd in Pune have been reporting for duty since 2003 but the management has not been giving work to them. They have been sitting in the premises of the company all the while. This is because way back in 1991, they have been fighting a legal battle from the labour court to the Bombay High Court and the Supreme Court. The high court had upheld their retrenchment and many of them had accepted a voluntary retirement package. One of them was offered Rs 20 lakh but he rejected the offer. To end the deadlock, and considering their age factor, the Supreme Court has asked the company to pay Rs 10 lakh each to the surviving employees who are reporting for duty. The judgment, Ghanshyam vs Bajaj Auto, clarified that it should not be treated as a precedent, because the court was using its extraordinary powers under Article 142 of the Constitution to settle the matter.
Injunction against bank guarantee
Though courts normally do not stop encashment of bank guarantees, in exceptional cases they do, like when there is fraud or irretrievable harm to one party. In the case, Gangotri Enterprises Ltd vs the Union of India, the Supreme Court passed an injunction against invocation of bank or performance guarantee though the district judge and the Allahabad High Court refused to pass an injunction order. The firm was given a contract in 2005 in connection with laying a railway line on North Central Railway. That project could not be completed, leading to disputes and arbitration. The same firm was given another project in 2006 to develop a terminal complex at Anand Vihar near New Delhi. That project was successfully completed and the contracting firm was to be paid its due. However, the railways stalled the payment and attempted to invoke the bank guarantee provided in relation to the 2005 project, which was caught in litigation. The firm opposed it, arguing that the 2006 guarantee was furnished in performance of the Anand Vihar project and it had nothing to do with the 2005 contract. The railway contended that according to the contract, it was entitled to recover any due or claim from the firm. The district judge accepted that argument and allowed the invocation of the bank guarantee. The high court upheld it, leading to the appeal. The Supreme Court allowed the appeal stating that the disputes over the 2005 contract was still pending and the 2006 bank guarantee could not be invoked for the 2005 contract, which was separate.
Court not to interfere in contract dispute
Time is the essence of a contract and if a printer does not supply books within the stipulated time, the contract can be cancelled. In this case, State of Madhya Pradesh vs Ruchi Printers, the state government gave an urgent print order, with a deadline. Since the lot could not be supplied on time, the time was extended by a month. The work was not completed within the extended period but the printer continued to print the books. The government cancelled the order and paid only up to the stipulated date. The printer moved the high court. It allowed his petition. The government appealed to the Supreme Court. It held that the high court had erred in the facts of the case and it should not have interfered in a contractual matter by granting relief in a writ petition.
Cheque-bounce case outside winding-up
The Bombay High Court has ruled that a company and its directors can be prosecuted for issuing a cheque which gets dishonoured by a bank even if the company is facing winding up proceedings under the Companies Act 1956. It is not necessary to get the assent of the company judge to prosecute the accused persons under Section 138 of the Negotiable Instruments Act which deals with bounced cheques as a criminal offence. There were two contradicting judgments on this point in the Bombay high court. Therefore, the issue was referred to a larger bench in the case, Indorama Synthetics Ltd vs State of Maharashtra. It upheld the view expressed in the judgment which had held that Section 446(1) of the Companies Act, dealing with winding up companies, has no application to proceedings under the Negotiable Instruments Act and therefore it is not necessary to obtain the consent of the company court. The matter involved the interpretation of Section 446(1) which says that when a winding up order has been made or an official liquidator has been appointed "no suit or other legal proceeding shall be commenced." The question was whether the phrase included criminal proceedings like cheque bounce. The high court said no, which means they can be taken forward.
'Patent illegality' ruled out in IOC verdict
The Bombay High Court has set aside the award of the arbitral tribunal in the dispute between Gujarat Chemical Port Terminal and Indian Oil Corporation. The judgment stated that the award showed "patent illegality, is prima facie contrary to the provisions of the agreement entered into between the parties, contrary to the principles of law laid down by the Supreme Court and this court and showed several contradictions." The dispute arose from a 'terminalling service agreement' between the parties. The Gujarat firm constructed port terminal facilities at Dahej, in Bharuch district. Indian Oil approached it for obtaining four dedicated tanks for storage and export of naphtha from the terminal. Disputes arose between them and the tribunal granted an award in favour of the central government corporation. The high court, after analysing the complex facts, allowed the petition of the Gujarat firm.
Bid conditions can't be read 'literally'
The Delhi High Court last week asked Oil and Natural Gas Corporation (ONGC) not to reject the bid of Quippo Oil & Gas Infrastructure Ltd invoking non-essential conditions for eligibility in bidding for deployment of drilling rigs and carrying out of 3-D seismic survey. Quippo is a subsidiary of SREI Infrastructure Finance Ltd, which owns 99.9 per cent of the shares. The financial criteria of ONGC insisted on 100 per cent. Quippo argued that the margin was minimal, not relevant to the execution of the project and was discriminatory. Agreeing with it, the court stated that "the condition is not an essential condition but merely ancillary and subsidiary with the main object to be achieved and ONGC cannot insist upon strict literal compliance of the condition."
