Page 14 - Banking Finance December 2016

LEGAL UPDATE

LEGAL

CASES
CASES
CASES
CASES
CASES

SC dismisses move by Dalmia against foreign compa- Auction of property set
nies aside for showing 'un-

The Delhi High Court has dismissed an The award was challenged in the Delhi due haste'
application moved by Dalmia Bharat High Court raising several objections,
(Cement) Ltd opposing one of them being The Supreme Court has set aside the
an international arbi- that it was "opposed auction sale of a
property of a de-
tration award against it to public policy". Re-
faulting borrower
in its dispute with Swiss jecting the conten- by a creditor bank
corporation, Xstrata tions, the judgement because the bank
Coal Marketing AG. stated that the showed "undue
In the contract, Xstrata grounds on which the haste" in selling it.
had agreed to supply and Dalmia had enforcement of a for- "The creditor
agreed to purchase 120,000 tonnes of eign award may be refused are very bank could have waited for some time
limited.
South African steam coal. The contract when the proceedings were pending
included an arbitration clause, which, The question whether the award con- before the debt recovery tribunal as
stated that proceedings would be held travenes the fundamental policy of In- well as the Calcutta High Court before
in London according to the laws of En- dian law would not entail a review of conducting the auction and confirm-
gland. Disputes did arise following a the disputes. "The ground that a for- ing the sale," the court stated in the
cyclonic storm in the cement plant in eign award is against the interests of judgement, Oasis Dealcom Ltd vs
Karnataka and proceedings were held India is no longer available to refuse en- Khazana Dealcomm Ltd.
under the arbitration rules of the Lon- forcement of an arbitral award," the
don Court of International Arbitration. judgement said. It added that the high court and the
appellate tribunal had set aside the
Tax legislation does not require consent of President: SC sale because of irregularities commit-
ted in holding the auction. The court
The Supreme Court has upheld the constitutional validity of the state laws with directed the bank to refund the pay-
regard to levy of entry tax on goods coming into its ment received from the auction pur-
territory. A 7:2 majority verdict by the apex court chaser with interest and allow the
ruled that the tax legislation by the State does not borrowers to repay the amount due.
require the consent of the President under Article If they fail to do so, the bank can con-
304B of the Constitution. However, the nine judge duct auction but this time following
bench said there cannot be discrimination between procedures like public notice in two
the goods. local newspapers.

14 | 2016 | DECEMBER | BANKING FINANCE

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