Case BriefsHigh Courts

Jharkhand High Court: Rajesh Kumar, J. allowed the petition of the appellant hereby remanding the matter to the Tribunal for fresh adjudication.

The facts of the present case are that Bokaro Steel Plant (SAIL) dismissed the workman from his services for long absenteeism. The industrial dispute was raised against the order of dismissal under Reference No. 75 of 2014 before the Central Government Industrial Tribunal (No. 1), Dhanbad. The Tribunal awarded fresh employment to the workman.

The Counsel for the appellant relied upon the decision of Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496 and stated that award is an unreasoned one as there is no discussion of the material available on the record and further argument and pleading of the parties.

In view of the above, the Court held that the award is indeed has been passed on sympathy, therefore, an unreasoned one and hence the matter is remanded to the tribunal for a fresh decision.[Employer, In re, Management of Bokaro Steel Plant v. State of Jharkhand, 2019 SCC OnLine Jhar 976, decided on 25-07-2019]

Case BriefsHigh Courts

Jharkhand High Court: Rajesh Kumar, J., modified the order passed by the tribunal to the extent that relief granted by the Tribunal is unauthorized and out of jurisdiction as Tribunal went beyond the terms of reference to pass the Award.

The present writ petition had been filed against the Award dated 18-11-2013 passed in Reference No. 13 of 1991 by the Central Government Industrial Tribunal No. 2, Dhanbad whereby reference was in favour of the workmen. The factual matrix of the present case is that all three concerned workmen were an employee of the company. They were charged for misappropriation and after conducting a departmental enquiry, they were dismissed from service. Against the said order of dismissal, an Industrial Dispute was raised, referred to as Ref. No. 13/91. Since the management failed to justify the dismissal of the workmen, the Tribunal passed an order of reinstatement in favour of the employees, Suresh Ram and Sarda Shovel. As Sukhdeo Bhuian had died during the pendency of the reference case, he had been substituted by his son namely Santosh Kumar. The issue herein is with respect to the appointment of the dependant of the deceased employee.

The Court stated that “It is trite that Tribunal gets jurisdiction to pass the Award in terms of reference. Tribunal cannot go beyond the terms of reference to pass an Award.” Further, the Court observed that reference is only with regard to justification with the order of dismissal of three workmen and issue of appointment was not the subject matter of the reference. Hence, in the absence of such reference, relief granted by the concerned Tribunal is wholly unauthorized and beyond the jurisdiction. Hence, the Court modified the award to the extent that the appointment to the dependent of the deceased employee is quashed.[Employers In re, Management of Sendra Bansjora Colliery v. Workmen, WP (L) No. 4632 of 2014, decided on 22-07-2019]

Bail Application
Case BriefsHigh Courts

Himachal Pradesh High Court: The instant petition was related to Section 29-A of Arbitration and Conciliation Act, 1996 entertained by Jyotsna Rewal Dua, J. where the petitioner sought an extension of time.

Factual matrix of the case was that when the dispute arose between the parties the matter was referred to a sole arbitrator who was Superintending Engineer. The Tribunal was unable to conclude the proceedings within the stipulated time of one year. Therefore the period of the passing of award was delayed by six months, but the extension was not fruitful as the period expired and yet the case was undecided. It was further suggested by the Arbitrator to apply to a Competent Authority for further extension of time.

Hence both the parties requested the Authority for extension of time for a further period of six months. The Authority further directed the parties to take steps in accordance with the amended provisions of the Act, 1996.

Anil Jaiswal and Rameeta Rahi, counsels for the respondents submitted a letter dated 10-07-2019, addressed to the respondents by the Executive Engineer, to the effect that their office had no objection in case the mandate of learned Arbitrator if was extended by six months.

The Court observed that, Section 29-A (4) and (5) which provided that, if the award was not made within the period specified or within the extended period, the mandate of the arbitrator was to be terminated unless the Court, either prior to or after the expiry of the period so specified, extended the said period. It was further observed that the proceedings were at a final stage, hence, the Court allowed the petition. The parties, through learned counsel representing them, were directed to co-operate in the arbitral proceedings and not to seek unnecessary adjournments before the Arbitrator and an endeavor was made to complete the arbitral proceedings well before the time granted.[Devki Nand Thakur v. State of H.P., 2019 SCC OnLine HP 988, decided on 12-07-2019]

Case BriefsHigh Courts

Allahabad High Court: This petition was filed by petitioners before the Division Bench of Pankaj Kumar Jaiswal and Dr Yogendra Kumar Srivastava, JJ. praying for a direction to the respondent to decide the application of petitioner filed under Section 28-A of the Land Acquisition Act, 1894 and to re-determine compensation sought to be given to the petitioner.

Facts of the case were such that a notification was issued under Section 4(1) of the Act, 1894 where an award was passed by the Special Land Acquisition Officer, Ghaziabad in respect of certain land parcels. Petitioner did not challenge the aforementioned award under Section 18 of the Act but the same was challenged by other persons which gave rise to land acquisition references decided by District Judge thereby re-determining the compensation amount. It was against this judgment that the first appeal was filed which was decided with the re-determined compensation amount. Under the decision in the first appeal, the petitioner filed an application under Section 28-A of the Act to claim the benefit of the re-determined compensation. This application was rejected.

The question before Court was to decide if the application was time-barred under Section 28-A of the Act which mentioned about re-determination of the amount of compensation on the basis of the award of the Court within 3 months of its decision. Thereby leading to the second question from which Court’s decision the time period was to be calculated i.e. Reference Court or High Court first appeal. 

Krishna Mishra, learned counsel on behalf of petitioners, submitted that the time period for claiming the benefit of re-determined compensation amount was to begin after the decision in the first appeal and since their application was within that time period the application was validly made. Suresh Singh learned Addl. Chief Standing Counsel appearing on behalf of State respondents, submitted that the limitation period to file application was to be taken from the date of the award made by Reference Court which means that petitioner’s application was time-barred.

Under the Act, Court was defined to mean a principal Civil Court of original jurisdiction. Catena of cases were referred to concluding that limitation period should be computed from the date of award of Reference Court on basis of which re-determination was sought and not from the appeal which was filed against the award. Accordingly, the application thus filed was beyond the time period of 3 months if computed from the award of Reference Court. Further, proviso of the Section did not state any other reason for the extension of the time period than to obtain a copy of award.

High Court on the discussion above was of the view that petitioners could not have claimed the benefit of re-determined compensation as their application was time-barred. The application was to be filed within 3 months of the award passed by Reference Court and not after the decision of High Court in first appeal. Therefore, this petition was dismissed. [Tejpal Singh v. State of U.P., Writ C No. 7218 of 2019, Order dated 08-03-2019]

Case BriefsHigh Courts

Bombay High Court: Sunil K. Kotwal, J., allowed SBI Insurance Co. (insurer) to recover, from the owner of the offending bus (insurer), the amount paid to a third party claimant) under a policy which was cancelled by the insurer on account of non-payment of the premium amount by the insured.

An accident occurred between a motorcycle and the offending bus, as a result of which the driver of the motorcycle passed away. A claim petition was filed by the claimants under which an award was passed by the Motor Accident Claims Tribunal. The insurer paid the claim amount in the discharge of its liability towards the claimant. It, however, claimed to recover the said amount from the insured. Insurer’s case was that the insured issued a cheque in his favour towards payment of the insurance premium for the policy taken on 10-11-2015. The accident occurred on 19-11-2015. Pertinently, the cheque issued by the insured towards payment of premium got dishonoured by the bank and, therefore, the insurer cancelled the policy on 14-12-2015. As such, the insurer claimed recovery of the amount paid to the third party.

After perusing the authorities cited, the High Court was of the opinion that in such type of cases, if the policy is cancelled before the accident occurs, then the insurer is not liable to pay compensation to the claimant. However, if the policy is cancelled after the accident happens, then he is so liable. But, in the latter category of cases, the insurer is entitled to recover the amount so paid to the claimant from the insured. It was observed that a contract of insurance between an insurer and an owner of the offending vehicle includes reciprocal promised by both the parties. In such view of the matter, the owner of the offending bus (insured) was directed to pay back the amount of the award to the insurer along with interest thereon. [SBI Insurance Co. v. Madhubala, 2019 SCC OnLine Bom 639, decided on 15-04-2019]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Pratibha M. Singh, J., allowed a petition filed by the Food Corporation of India challenging the award passed by the Arbitrator whereby its claim was dismissed by a cryptic award.

The matter arose out of an agreement between the petitioner and the respondent whereby the respondent had agreed to store, mill and supply certain quantity of paddy to the petitioner. Due to default on the part of the respondent in the performance of terms of agreement, the petitioner incurred a huge loss. Consequently, in pursuance of the arbitration clause as contained in the agreement, the petitioner moved for arbitration. However, even after more than 30 hearings of the matter before the arbitrator, the respondent did not appear even once. Hence, the arbitrator, vide the award impugned, dismissed the claim of the petitioner observing that since the respondent did not appear, nothing remained to be adjudicated. Aggrieved thereby, the instant petition was filed.

The High Court, on perusal of the award impugned, held that it was unsustainable. It was noted that the petitioner had deposited, before the arbitrator, detailed accounts of dealings which formed the basis of its claim. The Court was of the view that the reasoning given by the arbitrator for dismissal was quite cryptic. Detailedaffidavit was filed by the petitioner, however, none of the facts were considered by the arbitrator. The Court observed that without giving any findings on the claim of the petitioner, the arbitration could not have been terminated. Non-appearance of a party-respondent cannot result in dismissal of claims. Such a course of action defies basic logic. A claimant cannot be punished for non-appearance of the respondent. An arbitrator has a duty to decide claims in accordance with law. Therefore, the petition was allowed and the award impugned set aside. [FCI, Ludhiana v. Gupta Rice & General Mills, Ludhiana,2018 SCC OnLine Del 11961, decided on 13-09-2018]

Case BriefsHigh Courts

Punjab and Haryana High Court: A Single Judge Bench comprising of Shekher Dhawan, J., dealt with a petition filed under Article 226 and 227 of the Constitution of India in nature of certiorari for modification of award passed by Industrial Tribunal where petitioner was denied continuity of services though reinstated.

Facts of the case are that petitioner’s services were terminated orally and no show cause notice was provided to petitioner or was paid any retrenchment compensation thereby violating Sections 25-F, 25-G and 25-H of the Industrial Disputes Act, 1947. An industrial dispute was referred to Tribunal.

Petitioner contended that he was accepted to be employed under respondent and was a workman under Section 2(s) of the Act who has duly completed 240 days of service. Whereas respondent argued that petitioner was not entitled to reinstatement as he was not a workman under the relevant provision and that 240 days in service was not completed.

The High Court was of the view that Tribunal was right in reinstating petitioner and not continuing the service as petitioner himself failed to show his employment for a continuous period of 240 days. Tribunal has rightly exercised its discretion, therefore, no merit in writ petition was found and the same was dismissed. [Jaibir v. Industrial Tribunal,2018 SCC OnLine P&H 1359, decided on 21-09-2018]

Case BriefsSupreme Court

Supreme Court: The bench of J. Chelameswar and SK Kaul, JJ held that the enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings.

Different High Courts had given different opinion on the question as to whether an award under the Arbitration & Conciliation Act, 1996 is required to be first filed in the court having jurisdiction over the arbitration proceedings for execution and then to obtain transfer of the decree or whether the award can be straightway filed and executed in the Court where the assets are located is required to be settled in the present appeal.

Delhi High Court, Kerala High Court, Madras High Court, Rajasthan High Court, Allahabad High Court, Punjab & Haryana High Court and Karnataka High Court were of the opinion:

“An award is to be enforced in accordance with the provisions of the said Code in the same manner as if it were a decree of the Court as per Section 36 of the said Act does not imply that the award is a decree of a particular court and it is only a fiction. Thus, the award can be filed for execution before the court where the assets of the judgment debtor are located.”

However, the Madhya Pradesh and Himachal Pradesh High Courts held:

“The transfer of decree should first be obtained before filing the execution petition before the Court where the assets are located.”

After discussing various provisions of the Act and the various orders of the High Courts at length, the Bench said:

“An award under Section 36 of the said Act, is equated to a decree of the Court for the purposes of execution and only for that purpose. Thus, it was rightly observed that while an award passed by the arbitral tribunal is deemed to be a decree under Section 36 of the said Act, there was no deeming fiction anywhere to hold that the Court within whose jurisdiction the arbitral award was passed should be taken to be the Court, which passed the decree. The said Act actually transcends all territorial barriers.”

It was, hence, held that the view taken by the Madhya Pradesh High Court and the Himachal Pradesh High Court is held to be not good in law while the views of Delhi High Court, Kerala High Court, Madras High Court, Rajasthan High Court, Allahabad High Court, Punjab & Haryana High Court and Karnataka High Court reflect the correct legal position. [Sundaram Finance Limited v. Abdul Samad, 2018 SCC OnLine SC 121, decided on 15.02.2018]

Case BriefsHigh Courts

High Court of Judicature at Madras: The Bench of V. M. Velumani, J. recently addressed a civil revision petition filed under Article 227 of the Constitution which challenged the decree order of the Small Causes Court, dated 28/10/2010.

The petitioner, also the claimant, had filed a case in the Motor Accident Claims Tribunal claiming compensation of Rs. 3,00,000 for the injuries sustained due to an accident. During the pendency of the case before the Lok Adalat, the petitioner and the second respondent, i.e., the insurance company came to a settlement wherein it was agreed upon that the second respondent would pay an amount of Rs. 1,55,000, in view of which the Lok Adalat passed an award directing the said amount to be paid for full withdrawal of the petitioner’s claim. The second respondent had deposited the amount. This was followed by the first respondent challenging the award and to stop issuance of the cheque and instead conducting the trial on merits. This was based on the contention of the first respondent, i.e., the owner of the vehicle that her vehicle was not the offending vehicle in the first place.

The counsel for the petitioner contended that an award of the Lok Adalat can be challenged only by initiating proceedings under Article 226 or 227 of the Constitution. He contended that the Tribunal failed to see that the matter was referred to the Lok Adalat on the application filed by the petitioner under Section 19 of the Legal Services Authorities Act and it was not correct to state that no notice was served on the first respondent. Despite the notice having been served, there had been no representation on behalf of the first respondent.

The Court held that the relief that was being seeked by the petitioner would not stand since it was already well settled in law by way of the judgment in Bharvagi Constructions v. Kothakapu Muthyam Reddy, 2017 (5) CTC 775 that an award of the Lok Adalat could only be challenged by initiating proceedings under Article 226 or 227 of the Constitution of India and that too only on limited grounds. Hence, it held that the Tribunal had committed an error and irregularity by allowing the petition filed by the first respondent. [N. Prabhuraj v. Josephine, 2017 SCC OnLine Mad 12290, order dated 6/12/2017]

Case BriefsHigh Courts

Kerala High Court: Deciding upon the validity of the awards passed by the Lok Adalat under Section 21 of the Legal Services Authorities Act, 1987 on a reference, the Court observed that the function of a Lok Adalat organised under Section 19 of the Legal Services Authority Act, 1987 is only to help the parties to the dispute arrive at a compromise or settlement, which is seen from Section 20(3) of the Act. The Adalat cannot enter a finding. It can only record the compromise or settlement between the parties.

The dispute between the parties to a partition suit was referred to the Lok Adalat which were settled and awards passed. However, the petitioner contended that the awards passed were not in terms of the settlement entered into.

Finding several shortcomings in the awards, the Bench of K. Abraham Mathew, J. observed that “When the award cannot be challenged in a suit or execution proceedings or even in appeal the Lok Adalat should make sure that its proceedings are transparent and not vitiated by procedural illegalities or irregularities. Its proceedings should inspire confidence in the public, failing which the very existence of the institution will be at peril. To ensure its credibility, the Lok Adalat shall comply with the procedure prescribed by the statues scrupulously.”

Regulation 17 of the National Legal Services Authority (Lok Adalats) Regulations, 2009 contains the procedure to be followed while drawing up an award. The Court observed that the impugned award neither contained the names and addresses of the parties to the proceedings, signature of the counsel or the settlement entered into and held that the impugned orders were not awards passed by the Lok Adalat in the eye of law since there was no means to ascertain whether the petitioner agreed to the terms recorded in it, which is the result of violation of mandatory provisions in the relevant statutes. The trial court was directed to proceed with the trial but to comply with the request of the parties if they wanted to refer the dispute to Lok Adalat again. [K.S. Sunil v. Sherly, 2016 SCC OnLine Ker 12168, decided on August 18, 2016]

Legislation Updates

On 21-04-2015, the Income Tax department was awarded the ‘Prime Minister Award for excellence in public administration’ for ‘Easy Tax Compliance through Quality Service’. The award has been conferred to the Income Tax Department for setting-up and successful implementation of end to end solution of core services which includes integrated e-governance initiatives viz. e-filing portal, Centralized Processing Cell (CPC-TDS) for processing of TDS statements, Centralized Processing Centre (CPC) for processing of Income Tax Returns and the Refund Banker. The projects have been conceptualized based on principles of USAGE – Uniform interpretation of tax laws, Simplification of forms, Easy Accessibility of services, Good tax governance and Empowerment of taxpayer with information. More USAGE prompts more Voluntary Compliance. The award is a recognition of the sustained efforts of officers of the Income Tax Department and their commitment towards achieving ‘Minimum Government and Maximum Governance’ in tax administration and to move towards a non-adversarial and tax-payer friendly regime.

 

-Ministry of Finance

Supreme Court

Supreme Court: In one of the prominent decisions of Supreme Court, the 3 judge bench  decided with a ratio of 2:1 that the decision given in  S.L. Arora Case, (2010) 3 SCC 690, was wrongly decided. The question before the Court was that whether the decision of Supreme Court in State of Haryana  v. S.L. Arora , wherein it was held that an award of interest on interest from the date of award is not permissible Section 31(7) of the Arbitration and Conciliation Act, 1996 , and is in consonance with earlier decisions of this Court. Abhay Manohar Sapre, J opined with the view given by S.A Bobde, J while H.L Dattu, CJ dissented with the majority.

It was decided in S.L Arora case that a  sum directed to be paid by an Arbitral Tribunal and the reference to the Award on the substantive claim does not refer to interest during the actual progress of law suit awarded on thesum directed to be paid upon Awardand that in the absence of any provision of interest upon interest in the contract, the Arbitral Tribunal does not have the power to award interest upon interest, or compound interest either for the pre-award period or for the post-award period.

In this view of the matter, S.A Bobde, J said that it is clear that the interest, the sum directed to be paid by the Arbitral Award under clause (b) of sub-section (7) of Section 31 of the Act is inclusive of interest during the actual progress of a law suit.Critical of the view taken by Supreme Court in S.L Arora case, S.A Bobde, J said that the Parliament has the undoubted power to legislate on the subject and provide that the Arbitral Tribunal may award interest on the sum directed to be paid by the Award, meaning a sum inclusive of principal sum adjudged and the interest, and this has been done by Parliament in plain language.

Dissenting from the majority, H.L Dattu, CJ concluded that the terminterest, appears to be distinct from the principal amount on which it is imposed. According to him, there was no infirmity with the S.L. Arora case, whereby it was held that if the arbitral award is silent about interest from the date of award till the date of payment, the person in whose favour the award is made will be entitled to interest at 18% per annum on the principal amount awarded, from the date of award till the date of payment.( HYDER CONSULTING (UK) LTD v. GOVERNOR, STATE OF ORISSA2014 SCC OnLine SC 940 Decided on-25/11/2014)