HC should not convert itself into a court of first appeal: SC

Written by Indu Bhan | Indu Bhan | Updated: Jul 3 2013, 08:53am hrs
Exporters and payment default

The Supreme Court has held that an exporter insured by the state-owned Export Credit Guarantee Corporation (ECGC) cannot make a claim under the insurance policy if he has failed to disclose default in payment by a foreign buyer within the stipulated time. Citing its previous judgments in the case of Export Credit Corpn vs Garg Sons International, the apex court said since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed in order to determine the extent of the liability of the insurer

In this case, M/s Garg Sons International had in March 1995 purchased a policy from ECGC for insuring a shipment to Natural Selection Co of UK. After the buyer committed default in making payments, the exporter sought enhancement of credit limit to R50 lakh. Subsequently, he presented 17 claims, which the insurer rejected on the ground that the exporter failed to ensure compliance with the insurance agreement, which stipulated 30 days within which the insurer is to be informed about any default committed by a foreign importer. But the exporter declared only two shipment in due time as per policy.

Garg Sons then filed several complaints before the state consumer court, which in June 2001 directed the insurer to make various payments due under different claims with 9% interest and litigation expenses, etc. The National Consumer Disputes Redressal Commission also rejected 11 claims but accepted only 5 claims made by the insured. Both the parties filed cross-appeals in the Supreme Court, which allowed the exporters claim only in two shipments where the intimation was given.

Reinstatement cant be automatic

The Supreme Court while upholding the dismissal of a daily wage earner's service in the case of Assistant Engineer Rajasthan Dev Corp vs Gitam Singh said that he is not entitled to reinstatement and back wages both even if he had worked in an establishment for more than 240 days continuously.

It said that under the Industrial Disputes Act 1947, the relief of reinstatement with full back wages should not be granted automatically only because it would be lawful to do so. Grant of relief for wrongful termination would depend upon several factors including the mode and manner of appointment, nature of employment, length of service, the ground on which the termination has been set aside and the delay in raising the industrial dispute before grant of relief, it said, adding that a distinction has been drawn between a daily wager and an employee holding the regular post for the purposes of consequential relief.

In this case, Singh was terminated after working only for eight months in 1991. He challenged the termination order before a labour court, which directed the Corporation to reinstate him with 25% back wages as his termination was violative of the Industrial Disputes Act.

Judges should apply restraint

Judges at all levels are required to be restrained and circumspect in use of the language, even when criticising the conduct of a party, the Supreme Court stated in its judgment, Sachin Gupta vs KS Forge Metal Ltd. In this case, the Delhi High Court had set aside the award which was passed without hearing a concerned party.

While the Supreme Court upheld that part of the order, it criticised the HC judge for making certain remarks against one party. It was certainly not necessary to examine the dispute so minutely or to make such strong remarks against any one of the parties, the apex court said.

Appointing former Delhi HC Chief Justice AP Shah as the arbitrator, it said that a HC should not convert itself into a court of first appeal in an arbitration case.

indu.bhan@expressindia.com