[LEGAL DIGEST ]

SUPREME COURT PULLS UP

REVENUE DEPARTMENT
The Supreme Court has criticised the revenue
departments for ignoring its recommendation on
imposing duty on products and goods. It had asked
the authorities, while imposing customs, excise or
income tax, to examine the process applicable to the
product in question and not to go by dictionary
meanings. “This recommendation is not being followed
over the years,” the court stated in the judgment,
Commissioner of Income Tax vs Emptee Poly-Yarn Pvt
Ltd. “Even when the assessee gives an opinion on a
given process, the department does not submit any
counter opinion wherever such counter opinion is
possible,” the court said. In this case, the question
was whether twisting and texturising of partially
oriented yarn amounts to ‘manufacture’ in terms of
Section 80IA of the Income Tax Act. Upholding the
judgement of the Bombay high court, the apex court
stated that in the facts and circumstances of this case,
the yarn is a semi-finished product and it cannot be
used directly to manufacture fabric.

Rules, by-laws on BSE be published

in the official gazette, state gazette
The Supreme Court has observed that even if the
Securities Contracts
(Regulation) Act 1956
did not contemplate
publication of the
pre-recognition rules
for stock exchanges
and by-laws, “The
position is and would
continue to be rather
ambivalent if the
amended rules and
by-laws were
published in the
official gazette while
the main rules
remain unpublished.”
Therefore, the court stated that it might be in the fitness
of things to have the rules and by-laws also published in
the official gazette and the state gazette. The
observations came in the judgement, Mahesh Ratilal
Shah vs Union of India while ruling that the Bombay
Stock Exchange (BSE) did not commit any irregularity
in the listing of the scrips relating to Presto Finance Ltd
which was later delisted for cheating investors. The
court dismissed the special leave petition filed by Shah,
a sub-broker, who sought a direction to the SEBI to de-
recognise the BSE for allegedly misleading the
investors by listing the shares on its exchange.

Courts’ approach to social

welfare laws criticised
The Supreme Court has criticised the “visible shift in
the courts’ approach in dealing with cases involving the
interpretation of social welfare legislations” in its recent
judgment in Harjinder Singh vs Punjab State
Warehousing Corporation. “The attractive mantras of
globalisation and liberalisation are fast becoming the
raison d'etre of the judicial process and an impression
has been created that the constitutional courts are no
longer sympathetic towards the plight of industrial and
unorganised sectors,” the court observed. In this case,
an employee was ordered to be reinstated by the labour
court. The order was modified by the Punjab and
Haryana high court. The Supreme Court upheld the
labour court order to reinstate him with 50 per cent of
back wages, holding that his retrenchment was illegal.

Justice Srikrishna is arbitrator in

Vedanta’s dispute
The Supreme Court has appointed its former judge,
Justice B N Srikrishna as arbitrator in the dispute
between Dubai-based Trimex International FZE Ltd
and Vedanta Aluminium Ltd of India. The court
examined the e-mail communication and documents to
arrive at the finding that there was indeed an arbitration
clause in the bauxite purchase order exchanged
between the parties. The dispute started when Vedanta
asked the Dubai firm to stop mineral shipments to it,
whereas the former expressed its inability to do so,
terminated the contract and claimed damages.

‘Arbitrator should give a reasoned

award, not a terse one’
If the central government does not produce relevant
documents and fails to cross examine witnesses during
arbitration, it cannot argue that the arbitrator had not
given a reasoned order, the Supreme Court stated in the
judgement, Union of India vs Harbans Singh Tuli. The
Supreme Court has stated in several of its judgements
that the arbitrator should give a reasoned award and
not a terse one, which baffles the court when the award
is brought before it for making it an order of the court.
In this case, the government argued that the award was
without reasoning and therefore should not be given
the judicial stamp. The Supreme Court stated that the
award was short because the government did not
cooperate with the arbitrator by giving the necessary
documents to him.

Civic body told to invite fresh

bids for golf course
A division bench of the Bombay high court has directed
the City and Industrial
Development Corporation
of Navi Mumbai to invite
fresh bids for the
development of 18 Holes
International Standard Golf
Course and Country Club
extending to 35.55 hectares.
The order was passed in the
petition filed by Makhija
Developers challenging the award of contract to
another firm. The high court held that “ the entire
tender process was vitiated” and the letter of allotment
to the winning firm was illegal from the start. The lease
deed was held void.