Vedanta arbitration to liquor tender, here’re last week’s key court orders | Business Standard Column

MMTC loses arbitration case against Vedanta

MMTC lost its case against Vedanta Ltd for the fourth time when the Supreme Court last week dismissed its challenge to the award against it by a three-member arbitral tribunal. MMTC and Vedanta had signed an agreement in 1993, according to which the public sector company would provide services such as storage, handling and marketing of the copper items produced by the Vedanta. The agreement contained an arbitration clause. MMTC raised invoices in the name of customers of the products and received a commission from Vedanta. MMTC could supply goods on letter of credit also. One of the customers had a direct deal with Vedanta for the purchase of copper, but it did not pay either MMTC or Vedanta. Therefore, Vedanta referred the question to the arbitration panel. It granted an award of Rs 15,73,77,296 with 14 per cent interest in favour of Vedanta. MMTC challenged it in the Bombay High Court twice and lost. It argued that the arbitration clause did not cover the direct purchase. The Supreme Court declined to go into the details of the dispute, asserting that in arbitration matters it did not want to reappreciate evidence. Moreover, the communication between the two companies showed that the direct deal between Vedanta and the defaulting customer was also covered by the arbitration clause. The judgment further blamed the officers of MMTC for not making any effort to ensure that the letters of credit pertaining to the supplies were honoured, “pointing towards gross negligence on the part of MMTC”.

Exemplary costs dragging litigation

The Supreme Court has imposed ‘exemplary costs’ on a firm for attempting to “overreach” the court in the execution of a foreign arbitration award. It asked LMJ International Ltd to pay Sleepwell Industries Ltd Rs 20 lakh in the “peculiar facts” of the case. The two companies had an agreement on the export of rice of Thailand origin. Disputes arose between them over a consignment sent to Bangladesh. Sleepwell referred the question to foreign arbitration in London according to the rules of the Grain and Feed Trade Association (GAFTA). The opposite party did not appear before the arbitration tribunal. It gave an award in favour of Sleepwell. However, the execution of the award was challenged by LMJ on various grounds in the Calcutta High Court. It even changed its name allegedly for avoiding the execution. Its appeal to the Supreme Court was dismissed and it was asked to pay the entire due amount with interest accrued in US dollars, plus the costs. The judgment reiterated that the court would not go into the details as the arbitrators and the high court had already examined them.

Equality in liquor licence tender

In the liquor business, the state cannot be compelled to part with its exclusive right or privilege of manufacturing and selling liquor. “But when the state decides to grant such right or privilege to others, it cannot act arbitrarily or at its sweet will. It must comply with the equality clause while granting the exclusive right or privilege of manufacturing or selling liquor,” the Supreme Court stated in its judgment in Gwalior Distilleries vs State of Madhya Pradesh. The excise authorities were asked to consider the distillers’ bid for licence for supply of country spirit in sealed bottles in the state. Earlier, they had rejected the bid for CS-1 licence on the ground that the firm had not participated in a tender and not allotted an area of operation. Since others similarly situated have been allowed to participate in the tender, this company’s application also should be considered, the Supreme Court stated while setting aside the high court judgment.

Penalty for not paying minimum wage

The Supreme Court last week directed the General Reserve Engineers Force to pay the minimum wage withheld from its skilled workers plus 100 per cent of it as compensation for violating the Minimum Wages Act. The workers were not given the minimum wages for four years. Therefore, they complained to the concerned authority. It asked the employer to pay the difference between what was paid and the entitlement along with 200 per cent of the amount as compensation. The government moved an appeal in the Punjab and Haryana High Court, which dismissed its petition. On appeal, the government argued that in similar cases of violation of the minimum wages law, the high court had ordered only 100 per cent as compensation. The Supreme Court agreed and stated that the high court did not give reasons for upholding the 200 per cent compensation. Therefore, the apex court reduced the package and asked the authorities to pay Rs 99,608 to each worker.

Pharma firm faces corruption charge

The Karnataka High Court has held that criminal prosecution against a corporate entity, without arraigning its directors or a person in charge of the affairs of the company, is maintainable. The high court ruled so in the case, Sanofi India Ltd vs State, where the pharma company was accused of criminal offences and corrupt practices before a special judge. The company was charge-sheeted for paying an amount to a scientific officer of BARC for conducting diabetes tests. He conspired with Sanofi to get orders for diabetes drugs. The company was chosen in the tender though others had quoted lower prices. Sanofi argued that the scientist was called for a training programme. In any case, the company was a juristic person that cannot have a guilty mind. The high court ordered the company to stand trial.

High court can hear consumer appeal

Settling differences among different benches, the Calcutta High Court has ruled that homebuyers can move a high court against the decisions of the state consumer commission. The high court stated so in its judgment in Universal Consortium of Engineers vs State. In this case, there was a divergence of opinion and therefore, the issue was referred to a larger bench. One question was whether the consumer courts have jurisdiction over disputes between developers and purchasers of residential units. The court answered that consumer forums can decide complaints from homebuyers. Second, the court held that an appeal can be moved in the high court against the consumer court’s decision even if there is an alternative remedy. The judgment said: “Requiring a party to exhaust the alternative remedy before approaching the writ court is not a rule of law but a rule of convenience and discretion which, at any rate, does not oust the jurisdiction of the court.”

via Vedanta arbitration to liquor tender, here’re last week’s key court orders | Business Standard Column

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