Page 16 - Banking Finance August 2017

LEGAL UPDATE

LEGAL

CASES
CASES
CASES
CASES
CASES

SC suggests more time for those who failed to deposit Arbitrator cannot be
scrapped notes nominated by ineligible

A bench headed by chief justice J.S. Khehar asked the government to consider person
an extension of time for those who had failed to de-
posit old, demonetized currency notes in their bank Recently in a Supreme Court ruling it
account and inform the court of its possibility.The sug- was held that
gestion was made by the bench in favor of people who once an arbi-
trator pre-
had "genuine and valid reasons" and should be given scribed in a
another opportunity to do so.
contract be-
Name struck off but firm exists in ROC list comes ineligible to act as such, he
cannot nominate another person in
If a company's name was deleted once and then restored again with Registrar his place. It was a general practice
of Companies, the status of the entity would remain in government contracts and even in
same as it was. The same was mentioned by the Delhi some private contracts to prescribe
High Court recently in an international arbitration case, its own key managerial personnel as
Value Advisory Services (VAS) vs ZTE Corporation. "The the sole arbitrator, which is now chal-
company is a legal juristic entity and that clothes an as- lenged due to an amendment to the
sociation of persons with an independent and a sepa- Arbitration and Conciliation Act in
rate identity. However, such entity is not a hollow en- 2015 to bar such persons from act-
tity; its resources, human as well as material, constitute the substratum of such ing as arbitrator and it provided two
legal entity. Thus, even though the legal form may disappear, the substratum schedules - one setting guidelines
continues to exist and its form can be resuscitated. Once such order restoring and another disqualifying certain
the company to its legal status is passed, such company would be deemed to persons to prevent suspicion of bias.
have been always in existence", as stated by the Court. "It is inconceivable in law," the judg-
ment explained, "that the person
Award in favour of Glencore who is statutorily ineligible can nomi-
A dispute over an agreement between the two companies Glencore International nate a person. Once the infrastruc-
AG (supplier) and Dalmia Cement (Bharat) Ltd (Purchaser of coal) resulted in the ture collapses, the superstructure is
Delhi High Court ruling allowing the enforcement of a foreign award in favour of bound to collapse." The court high-
Swiss firm Glencore. It was alleged by Glencore that Dalmia had breached the lighted that allowing an ineligible
terms of contract by not accepting delivery of three shipments, to which Dalmia arbitrator to nominate a person
disputed the charge by stating the quality of the coal was not according to speci- would reflect the powers utilized by
fications. The London arbitrators awarded in favour of Glencore. the person him/herself.

16 | 2017 | AUGUST | BANKING FINANCE

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