Page 16 - BANKING FINANCE JULY 2016
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LEGAL UPDATE
Bombay HC recalls arbi- Court not to interfere in contract dispute
tration order In the case of State of Madhya Pradesh vs Ruchi Printers, the state government
gave an urgent print order, with a deadline. Since the
If one of the companies in an arbi- lot could not be supplied on time, the time was ex-
tration case is incorporated outside tended by a month. The work was not completed
India, the chief justice of a high court within the extended period but the printer continued
has no power to appoint an arbitra- to print the books.
tor even if the parties agree to arbi-
tration and name arbitrators. This The government cancelled the order and paid only up to the stipulated date.
power belongs only to the Chief Jus- The printer moved the high court. It allowed his petition. The government ap-
tice of India or his designate as it is pealed to the Supreme Court. It held that the high court had erred in the facts
an "international commercial arbi- of the case and it should not have interfered in a contractual matter by grant-
tration" under the Arbitration and ing relief in a writ petition.
Conciliation Act.
'Patent illegality' ruled out in IOC verdict
The high court can initiate arbitra-
tion only in disputes between domes- The Bombay High Court has set aside the award of the arbitral tribunal in the
tic parties. Moreover, before naming dispute between Gujarat Chemical Port Terminal and Indian
an arbitrator, the high court chief Oil Corporation. The judgment stated that the award showed
justice or his designate is bound to "patent illegality, is prima facie contrary to the provisions of
verify whether he has jurisdiction in the agreement entered into between the parties, contrary
the matter. This clarification to the to the principles of law laid down by the Supreme Court and
Arbitration Act came in the case, this court and showed several contradictions."
Roptonal Ltd vs Aneez Bazmee. The
Bombay High Court, after pointing The dispute arose from a 'terminalling service agreement' between the par-
out the error in law made by it ear- ties. The Gujarat firm constructed port terminal facilities at Dahej, in Bharuch
lier, recalled its 2014 judgment and district. Indian Oil approached it for obtaining four dedicated tanks for storage
allowed the petition of the company and export of naphtha from the terminal. Disputes arose between them and
which is incorporated in Cyprus. the tribunal granted an award in favour of the central government corpora-
tion. The high court, after analysing the complex facts, allowed the petition of
None of the parties brought this prin- the Gujarat firm.
ciple to the notice of the chief
justice's designate, nor did they ob- Bank held liable for forgery
ject to the appointment of arbitra-
tors. The designated judge ap- The National Consumer Commission has indicted Dena Bank
pointed arbitrators without examin- for negligence and deficiency in service in two cases of large
ing whether he has jurisdiction to do sums deposited in fixed accounts by Mumbai Metropolitan Re-
so. gion Development Authority (MMRDA) the Maharashtra Tour-
ism Development Corporation.
Nevertheless, the 2014 order was il-
legal, the judgment said. The Cyprus The receipts were forged by the go-betweens, and large
Company moved the high court only amounts were siphoned off through overdrafts, leading to CBI (Central Bureau
now and the present judgment set of Investigation) stepping in. The Commission held both the public authorities
aside the arbitration launched two and the bank were negligent in their own ways.
years ago. Though the foreign com-
pany had reportedly vested all its It asked the bank to return Rs 351 crore to MMRDA and Rs 125 crore to the
rights in its Indian arm, Viacom 18 Tourism Corporation, with interest. It also suggested administrative action
Media, the situation did not change against guilty officials of the government entities.
as both parties had jointly moved the
court for arbitration. Woman sent to prison in cheque bounce case
A Delhi court has sent a woman to six months in jail and directed her to pay Rs.
18 lakh as compensation to a jeweller in a cheque bounce case. The east Delhi
resident had tried every trick to retain unjust enrichment, the judge said.
16 | 2016 | JULY | BANKING FINANCE
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