From ground rent at ports to arbitration, here are the key court orders

Illustration by Ajay Mohanty
Redemption of mortgage only before sale
The Supreme Court ruled last week that a mortgage can be redeemed before the date fixed for sale or transfer by the secured creditor, but not after that.  “It is only where the dues of the secured creditor are tendered together with costs, charges and expenses before the date fixed for sale that the secured assets are not to be sold or transferred,” the court stated in its judgment in the case, Dwarika Prasad vs State of Uttar Pradesh. In this case, Prasad was a guarantor for an educational loan from Corporation Bank with a mortgage on his property. The loan was not repaid despite extensions. The bank e-auctioned the guarantor’s property. Meanwhile, Prasad moved the debt recovery tribunal and the Allahabad high court for stopping the sale. The sale went through and possession was given to the purchaser. Prasad alleged that he had offered to pay the full amount due and, therefore, the sale should be scrapped. The Supreme Court cited the provisions of the Securitisation Act and the Transfer of Property to 
reject his contention.

Ground rent at ports: Issue sent to larger Bench 
Amid a difference in views expressed by two benches of the Supreme Court on the liability to pay ‘ground rent’ on containers unloaded at major ports, but not cleared by the consignees/importers, a new bench last week referred five questions to a larger bench to be constituted by the Chief Justice.  The issue arose in the case of Cochin Port Trust vs Arebee Star Maritime Agencies when importers declared that the cargo contained woollen rags but in fact were brand new clothes. In view of the customs complications, the importers did not turn up to take the goods and the space of the port trust was occupied 
by the goods. It demanded rent from the owners of the vessels and steamer agents on the ground of inadequate storage 
space. The High Court partially allowed the port trust’s view, leading to the appeal.

Labour court restricts lawyer’s role  
The Bombay High Court dismissed the writ petition of Thyssen Krupp, challenging the provision of Industrial Disputes Act that restricted the appearance of lawyers in labour courts, tribunals and national tribunals. All leading trade unions and the Bar Councils of India and Maharashtra intervened in the petition moved by Thyssen pressing their cases. The company had dismissed a worker who challenged the action. He argued his case in the labour court himself. The company wanted to engage a lawyer, stating that the facts were complicated, and assistance of an advocate was necessary. The trade unions countered it quoting Section 36(4) and rules arguing that the company can appoint a lawyer only with the consent of the opposite party, 
in this case the dismissed worker.  The bar councils, representing the interests of advocates, supported the company. The Maharashtra government supported the trade unions. Ultimately, Thyssen lost the case as the High Court ruled that litigants have no fundamental right to be represented by a lawyer. The company must get not only the consent of the worker against whom it is fighting, but also permission from the labour court or tribunal. The Industrial Disputes Act does not allow a worker to be represented by a lawyer. He must get legal representation from a trade union executive. Similarly, an employer 
must engage a person listed in the rules. This situation is peculiar to the Industrial Disputes Act. Though the Advocates Act provides for the right of lawyers to represent litigants in legal forums, their role in several forums have been restricted.

Arbitration clause rolled into tenders 
If an arbitration clause is contained in the bidding documents, it would operate even if the final documents are not signed by the parties, the Bombay High Court held in the case between Jawaharlal Nehru Port Trust and PSA Mumbai Investment. In this case, a consortium was to build a container terminal in Sheva, Mumbai. The consortium led by a Singapore firm was successful in the global bid.  However, disputes arose between the consortium members and the board of trustees of the port. The trustees chose arbitration, while the consortium denied there was a concluded contract containing arbitration clause. According to the latter, the contract had not been signed. 
The arbitrator ruled that he has no jurisdiction to proceed as he could not find an arbitration clause in the concluded contract. The High Court held that he was wrong and asked him to proceed with the arbitration. According to the 
high court, the bidding documents included a draft concession agreement for the project. The letter of award issued by the port trustees to the consortium was counter-signed by the latter and it formed a concluded contract between the parties. 

NTPC blacklisting declared arbitrary
The Delhi High Court has indicted public sector National Thermal Power Corporation (NTPC) for blacklisting Aqua Designs India because of an error in the tender document regarding a date. The judgment emphasized that an error does not amount to a fraud, warranting blacklisting. Blacklisting by a government company with many contracts has serious consequences for private companies. “The focus of the Blacklisting Policy is not to inflict punitive measures for inaccurate information but to exclude parties indulging in any deceptive and fraudulent practices,” the High Court explained. Courts usually do not interfere in the discretionary power of the government, but if it is arbitrary and unreasonable, it will exercise its power of judicial review, the judgment said. 

Oriental to reimburse banquet company
The National Consumer Commission has rejected an ingenious argument of Oriental Insurance Co that while it had insured materials for raising pandals for banquet services, a raised pandal would not be covered by the policy. In this case, Bathla Lotels Ltd vs Oriental Insurance, a storm flattened the pandal on a ceremonial occasion. The banquet event company claimed reimbursement from the insurer, which was rejected claiming though the pandal materials have been insured, a raised pandal is not. 
Rejecting this argument, the commission directed the insurer to reimburse the banquet company. The judgment said: “Obviously, the material insured was meant to be used for erecting pandals. Even on the erection of a pandal, the material does not lose its character as pandal material. Therefore, irrespective of whether the pandal material is just lying inside the premises of the company or it is used in the form of an erected pandal, it would be covered under the insurance policy.”  

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