Apex bench to resolve contradictions

Written by Indu Bhan | Indu Bhan | Updated: Jan 2 2013, 09:19am hrs
Award should be served to the party itself

The Supreme Court has held that the service of a copy of an arbitral award on the agent or a lawyer of a party to the agreement did not amount to service on the party itself as per the provisions of the Arbitration and Conciliation Act, 1996. The issue before the court in the case Benarsi Krishna Committee vs Karmayogi Shelters Ltd was whether the service of an arbitral award on the agent of a party amounts to service on the party itself under sections 31(5) and 34(3) of the Act.

In this case, the Committee of Managing Landlords, the co-owners of the Benarsi Krishna Estate in Delhi, had amended its collaboration agreement of November 1990, by which Karmayogi Shelters Ltd (KSL), an estate developer, was to convert a cinema hall compound into a commercial complex. As disputes arose between the parties over the payment scheme, KSL sought appointment of an arbitrator before the Delhi High Court, which appointed Justice K Ramamoorthy, a retired judge, as the sole arbitrator. The arbitrator held the company guilty of committing breach of agreement and directed the committee to refund the money to the developer within three months.

The copy of the award was available with the lawyer, but not the firm itself. This caused a delay of nine months. A single-judge bench in August 2009 held that if the lawyer or agent got the copy of the award, it would amount to the party itself getting it. But the division bench overruled this and insisted that the award should be served properly on the party itself. On appeal, the Supreme Court upheld this view by accepting the stand of senior counsel KV Viswanathan, who on behalf of the firm argued that after conclusion of the hearing and passing of the award by the arbitrator, the power given to an advocate came to an end and the advocate was no longer entitled to act on the strength thereof.

Bench to resolve puzzle

In view of conflicting views by its various benches, the Supreme Court has referred to a larger bench the issue related to the maintainability of a review petition in a high court after the disposal of the special leave petition (SLP) by the apex court without granting leave. In the case Khoday Distilleries Ltd vs Mahadeshwara SSK Ltd, the former had challenged the Karnataka High Courts decision that ruled that a review petition cannot be moved after approaching the Supreme Court. On appeal, the apex court said that a large number of review petitions are being filed in high courts after the Supreme Court dismissed the SLPs. Thus, an authoritative pronouncement by a constitution bench is necessary to resolve contrary opinions of the apex court for proper guidance to the high courts. Mahadeshwara, by relying on the top courts judgment in Abbai Maligai Partnership Firm vs K Santhakumaran, had contended that decision would squarely apply to the facts of this case and the HC had rightly dismissed the review petition by holding that when the judgment and decree passed by the HC was confirmed by the Supreme Court while dismissing the SLP, there was no question of entertaining the review petition. Counsel Gopal Jain, appearing for Khoday Distilleries, submitted that the HC has committed a grave error in dismissing the review petition since the SLP was dismissed at the admission stage by a non-speaking order and it would not constitute res judicata and does not culminate in merger of the impugned judgment.

CESTAT has powers to condone delay

The Supreme Court has ruled that the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has discretionary power under Section 129A (5) of the Customs Act, 1962 to condone the delay in filing appeal, if there is a sufficient cause for the delay. In this case M/s Thakker Shipping Ltd vs Commissioner of Customs, a container containing assorted electrical and electronic goods of foreign origin was intercepted by the customs department in 2001. The goods were cleared by custom house agent Thakker Shipping. The value of seized cargo was estimated at R77,10,000 as against the declared value of R10,03,690 by the importer, which could not be interrogated. The CHAs licence was suspended by the department, but was later set aside by CESTAT. Even the Commissioner of Customs in 2004 dropped the proceedings by rejecting the findings of the inquiry officer. The Committee of Chief Commissioners of Customs had directed the Commissioner to apply to the tribunal for determining whether the order of the Commissioner dropping the proceedings against the CHA should be quashed.

However, the Commissioner could not make the application within the prescribed period. The tribunal rejected the application for condonation of delay. The commissioner appealed to the Gujarat High Court, which reversed the decision and allowed the application of the commissioner for condonation of delay. This view was upheld by the Supreme Court.