The penalty for trying to fleece customers is high

Written by Indu Bhan | Indu Bhan | Updated: Apr 3 2013, 09:20am hrs
Appoint an arbitrator when you can

The Supreme Court in the case of Deep Trading Company vs Indian Oil Corporation has held that the right of a party who has entered into an arbitration agreement to appoint an arbitrator is forfeited if it fails to appoint one despite the other party demanding it. In this case, Deep Trading Co had entered into an agreement for kerosene/light diesel oil dealership with IOC. The Corporation had later suspended its supplies alleging violation of the terms of the contract, prompting the dealer to move the trial court. After the trial court restrained IOC from stopping supplies, the latter moved the Allahabad High Court. The dealer made a demand to IOC to refer the disputes to the arbitrator and also moved the Chief Justice of the HC for the appointment of one on the grounds that the Corporation had failed to act under the agreement. While the proceedings were pending, the Corporation appointed its senior manager as the sole arbitrator. Pursuant to this, the Chief Justice found no reason to appoint the arbitrator and dismissed the dealers plea. The dealer then moved the Supreme Court, which held that the IOC had forfeited its right to appoint the arbitrator. It is so for the reason that the dealer called upon the Corporation to appoint the arbitrator in accordance with the agreement but that was not done till the dealer had made application to the Chief Justice of the HC... The appointment was made by the Corporation only during the pendency of the proceedings. Such appointment after forfeiture of its right is of no consequence and has not disentitled the dealer to seek appointment of the arbitrator by the Chief Justice.

Charge excess toll and be penalised

The Supreme Court has endorsed the Madhya Pradesh High Court order that upheld NHAIs decision to terminate the contract of a firm and impose penalty for collection of excessive toll on the Morena-Gwalior section of the national highway. In this case, M/s AS Motors Pvt Ltd vs Union of India, NHAI had awarded the contract for the collection of fee for the particular section to the firm. Later, the authority had terminated the contract after it received various complaints against the contractor including charging excess fee from the users. Aggrieved by the termination of the contract, the firm moved the HC, which in 2007 upheld the imposition of penalty and forfeiture of performance guarantee. The contractor appealed to the Supreme Court arguing that termination of the contract between the parties was legally bad not only because the principles of natural justice requiring a fair hearing to it were not complied with but also because there was no real basis for the NHAI to hold that it had committed any breach of the terms and conditions of the contract. However, the apex court rejected AS Motors stand saying that it had breached the terms of the contract, made users pay more and thus undeservedly enriched itself before turning to the court to claim relief.

Gratuity does not bar pension

Rejecting the Allahabad Banks appeal, the Supreme Court has held that an officer, who opted for voluntary retirement from service and was paid gratuity and provident fund, was also entitled to pension. In this case, Allahabad Bank vs AC Aggarwal, the latter, who had joined service as clerk and promoted as an officer, had taken voluntary retirement. He was paid gratuity under the Payment of Gratuity Act, 1972, along with the amount of Contributory Provident Fund. But he was denied pension by the bank on the grounds that benefits under the pension scheme was subject to the condition of refund of the amount of gratuity already paid to him. Aggarwal challenged the bank's stand in the Allahabad High Court, which directed the bank to pay pension. The bank moved the top court, which dismissed its appeal saying that pensionary benefits or the retirement benefits as the case may be whether governed by a scheme or rules may be a package consisting of payment of pension and as well as gratuity. Pensionary benefits may include payment of pension as well as gratuity. One does not exclude the other