Page 22 - Banking Finance January 2020

LEGAL UPDATE

Alternative remedy in in- Transmission lines over private property
come tax case Raising power transmission lines on private land often leads to suits involving
several parties. The landowner does not want to
part with his property, the beneficiary presses for
the line, electricity authorities want unobstructed
access and the government has to protect the pub-
lic interest and economic development. In this
case, Century Rayon vs IVP, the chemical company
wanted a transmission line through a piece of land
belonging to IVP firm. The latter moved a civil court and obtained an injunction
against the construction. The Bombay High Court dismissed the writ petition of
Century Rayon. The Supreme Court allowed the work to go on imposing several
When there is an alternative remedy conditions. Century will pay the landowner Rs. 20 lakh and the electricity au-
provided in the Income Tax Act, it thorities can complete the work which had already reached an advanced stage.
should be exhausted before ap- The civil suit involving the Telegraph Act and the Electricity Act would go on.
proaching a high court, the Supreme
Court stated while dismissing the
appeal Genpact India vs Deputy Trusts don’t come under consumer law
Commissioner, and upholding the The Supreme Court ruled last week that employees of ONGC, which formed a
Delhi High Court order. In this case, trust for their benefit, are not “consumers”
shares held by its sole shareholder of the trust for purposes of the Consumer
and holding company Genpact India Protection Act. The scheme is managed and
Investment, Mauritius, was bought run by a trust and not by ONGC. There is
back in two stages. virtually no privity of contract for providing
service between ONGC and the claimants.
Meanwhile, Section 115QA of the
The scheme is also voluntary and optional.
Act, dealing with buyback of shares, The court emphasised that there is no relationship of consumer and service pro-
was amended and an assessement vider between the claimants and ONGC. The Gujarat state consumer commis-
order was passed according to it. sion and the national commission had accepted the consumer complaints of the
This was challenged by the company. employees and ordered ONGC to pay amounts to the employees. On appeal
The revenue authorities mantained (ONGC vs Consumer Education & Research Society), the court held that the
that the concerned provision was employees are not consumers. However, they will be paid according to the
introduced in 2013 to counter the commission orders as the public sector corporation had agreed to pay the
tax avoidance practice mainly amounts.
adopted by Indian subsidiaries to dis-
tribute income among shareholders
of their foreign-based holding com- Arbitration of AAI replaced
panies under the garb of buyback of The Bombay High Court, in a similar case last week, emphasised that the guid-
shares. ing principles in arbitration are “neutrality, independence, fairness and trans-
parency even in the arbitral-forum selection process”. In this case, Lite Bite Foods
They demanded tax at the rate of 20
per cent. The company moved a vs Airports Authority of India, disputes arose after two restaurants at Pune air-
writ petition before the high court port were told to change their sites. They complained that the change had caused
them severe loss as they received less footfall at the new locations. The airport
arainst the demand but the revenue
director of Pune appointed a retired CPWD officer the sole arbitrator. This was
authorities submitted that there was
opposed by Lite Bite as the airport director himself was disqualified under Sec-
an alternative remedy provided in
the Act. The high court argeed and tion 12 of the Arbitration Act and its two schedules because he was an inter-
dismissed the petition. The appeal ested party in the adudication. Therefore, he could not nominate the arbitra-
was also rejected. tor. The court accepted this argument and appointed a former chief justice of
the Bombay High Court the sole arbitrator in the case.

22 | 2020 | JANUARY | BANKING FINANCE