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Tribunal decision set aside
January, 29th 2007

The Supreme Court last week allowed the appeal of Commissioner of Central Excise, setting aside the judgement rendered by the Customs, Excise and Service Tax Tribunal in the case of alleged unjust enrichment by Birla Corporation Ltd. The court remitted the matter to the assistant collector for deciding the issue on the facts of the case. 
 
The crucial issue was whether the company had passed on the duty element to the customer. The tribunal had held that the bar of unjust enrichment did not apply to claim for refund in cases where original payments of duty were made under protest. The assistant collector had held that the cement firm had failed to prove that the duty incidence had not been passed on to the customers. The company maintained that the principle of unjust enrichment would not apply as the amount had been paid under protest. This contention was accepted by the tribunal. 
 
Therefore, the revenue authorities appealed to the Supreme Court. Since the company asserted its stand, the court stated that the crucial issue, that is, whether the duty was passed on to the consumers should be verified. For this purpose, the matter was remitted to the authorities. 
 
Arbitrators award restored 
 
The Supreme Court held last week that when an arbitrator does not give the grounds for his award, the high court should not speculate on the reasons which led the arbitrator to give the award. The high court also should not consider whether the arbitrator was justified in coming to his conclusion based on the available evidence. This rule was reiterated by the court in the case Engineer Syndicate vs State of Bihar. 
 
In this case, the firm was given the construction work of a block of residential quarters by the Bihar government. Disputes arose between them and they were referred to an arbitrator. The award went in the firms favour. The government challenged it. 
 
The subordinate judge as well as the Patna High Court set aside the award on the ground that the award did not give reasons for its conclusion. The firm then appealed to the SC which allowed its pleas based on a five-judge bench decision of the SC in the case Raipur Development Authority vs Chokhamal Contractors. The court restored the award of the arbitrator. 
 
Arbitration agreement 
 
The Supreme Court ruled in its judgement delivered last week in the case M/s Agri Gold Exims Ltd vs M/s Sri Lakshmi Knits & Wovens that under Section 8 of the Arbitration and Conciliation Act, when there is an arbitration agreement between two parties, the court is under an obligation to refer the parties to arbitration under the terms of the agreement. 
 
Those issues could not be decided by a suit in a civil court. The rule is peremptory in nature, the Supreme Court pointed out. This was an appeal against the judgement of the Andhra Pradesh High Court which had directed the disputing parties to take recourse to the provisions of the Arbitration and Conciliation Act and the suit moved by the first party was not maintainable. There were disputes between the parties regarding dishonour of a few cheques and other issues. Though the money was paid by draft, other issues were taken to the civil court in a suit. 
 
The opposite party wanted that the issue should be decided in arbitration, as per the agreement. This contention was upheld by the high court. Upholding the high court view, the Supreme Court stated that there was a distinction between the old and new arbitration law. 
 
Under the new law, a reference of the disputes was mandatory. The judgement said that Agri Gold had taken an inconsistent stand. If it was satisfied with the payment, it should not have pursued with the suit. It cannot approbate and reprobate, the court emphasised. 
 
Enforcement of circular 
 
In an excise duty dispute, a beneficial circular should be applied retrospectively while an oppressive circular should be applied only prospectively, the Supreme Court stated in Suchitra Components Ltd vs Commissioner of Central Excise. In this case, the circular was against the assessee. 
 
Therefore, the firm had a right to claim enforcement of the same prospectively. The Customs, Excise and Service Tax Appellate Tribunal had taken a contrary view. It was wrong and the correct law has been laid down recently by the Supreme Court in the case of Mysore Electricals Industries Ltd, the court pointed out. 
 
Agricultural income 
 
The Supreme Court has held in a labour case that the income received by an employee from agricultural pursuits could be equated with the income from gainful employment in an establishment. The term gainful employment in the Industrial Disputes Act would also include self-employment. There is only a difference in the source of income, but the end use is the same, the court stated in the judgement in the case North East Karnataka Road Transport Corporation vs M Nagagowda. 
 
An employee of the corporation was dismissed for alleged misconduct. The labour court found the action wrong and ordered his reinstatement with full back wages. It had found that the dismissed employee was engaged in agricultural operations, but held that it was not an alternative employment under the industrial law. The Karnataka High Court took the same view. Therefore, the corporation appealed to the Supreme Court. It set aside the labour court ruling. 
 
Third party insurance 
 
The Supreme Court allowed the appeal of Oriental Insurance Co Ltd against the ruling of the Gauhati High Court raising the issue of third party insurance in motor vehicle accidents. In this case, the owner of the vehicle died in a road accident. His widow, Jhuma Saha, filed a claim petition under the Motor Vehicles Act. The insurance company resisted the claim arguing that the owner was not covered by third party insurance and therefore it was not liable to compensate the widow. 
 
Moreover, the jurisdiction of the accident claims tribunal was confined to third party claims. However, the tribunal as well as the high court rejected that objection. Therefore, the insurance company moved the Supreme Court. It relied on its earlier judgements on this point and asserted that since the owner had not paid additional premium in respect of the entire risk of death or bodily injury, the claim could not be satisfied.

M J Antony

 
 
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