By M J Antony
The Supreme Court ruled last week that even if the arbitrators named in a contract had expired, the dispute may be referred for arbitration by others. In this case, ACC Ltd vs Global Cements Ltd, the arbitration clause in the 1989 contract stated that if disputes arose at any time, they shall be “referred either to Mr. N.A. Palkhivala or Mr. D.S.Seth, whose decision in the matter shall be final and binding on both the parties.” In the event, both had died when the disputes arose. ACC maintained that the arbitration clause expired with the demise of both the nominees. It was pointed out that Palkhivala was named since he was the chairman of the company and DS Seth was named since he was the director of the company. Both of them were nominated as they were closely associated with the company and also due to their eminence, impartiality and familiarity in all commercial transactions and the corporate laws. Global Cements argued that the arbitrators can be substituted by the court under the Arbitration and Conciliation Act and the contract did not bar it. The Bombay high court accepted this view and nominated Justice S N Variava, ex-judge of the Supreme Court, as arbitrator. ACC appealed, but the Supreme Court dismissed its petition and confirmed the appointment of the arbitrator.
Challenge to Delhi VAT dismissed
The Delhi high court has dismissed a batch of writ petitions moved by Larsen & Toubro against the demand of tax, interest and penalty from it under the Delhi Value Added Tax, 2004 and rules. The company challenged the validity of Section 5 (2) on the ground that it did not provide for a proper mechanism to compute the taxable turnover after deducting “turnover of sub-contractors”. It was also argued that the rules did not provide any mechanism for deducting the sub-contractor’s turnover in the hands of the main contractor and there could be double taxation. The government argued that grant of deduction or exemption is a matter of legislative prerogative. Under the Act, the turnover of sub-contract is not taxed in the hands of the contractor but through a different mechanism. Agreeing with this, the court rejected the apprehension of the company of double taxation. The matter will also depend upon the terms of the works contract as to when the parties intend to pass the property.
Order can be amended any time
The Supreme Court has ruled that the erstwhile Monopolies and Restrict Practices (MRTP) Commission had the power to amend or revoke any of its order in the manner it was made, at any time. The law has not made any limitation on the commission’s power in this respect, the court stated while dismissing the appeal, M/s A B N A vs UPSIDC Ltd. The appeal was against the ruling of the Competition Appellate Tribunal, which replaced the MRTP commission. The dispute arose over allotment of industrial land in Greater NOIDA, near Delhi, on payment of 10 per cent of the cost of allotted land. Earlier, the commission asked the UPSIDC to hand over the plot, but later it withdrew the interim order, leading to the question of power of the commission to do so. CAT ruled that the commission had the power. This view was upheld by the Supreme Court.
Insurance firm loses appeal
When an insurance company rejects the claim on the ground that the terms of the policy have been violated, it is for the insurer to prove it with evidence, the Delhi high court stated in the case, New India Assurance Ltd vs Suresh Kumar. In a motor vehicle accident, the company resisted the claim on the ground that the driver had no valid licence when the accident occurred. However, it could not prove that the licence was invalid or fake. No witness was produced in its defence. The claims tribunal therefore awarded over Rs 1 lakh to the claimant. The insurance company’s appeal against the tribunal’s order was dismissed.
Choice of consortium quashed
The Bombay high court last week quashed the decision of the Mira Bhayander Municipal Corporation to grant a water supply project to R K Consortium, rejecting the offer of another consortium, Wellspun Projects Ltd. The latter moved the high court against the decision of the standing committee to reject its financial bid for the project, which was meant to meet the growing demand of water in the corporation region. It envisaged development and augmentation of the source of water supply and internal water distribution on a public private partnership basis. The high court, analysing the facts, stated that the decision was “a manifest error, bordering on arbitrariness and discrimination.” The court therefore asked the corporation to reconsider the bids. It may also invite fresh tenders with new terms and conditions.