Plot owner in MoU can move consumer forum

The owner of a plot who signs a memorandum of understanding (MoU) with a builder for raising multi-storeyed apartments is a 'consumer' and, therefore, can sue the builder for deficiency in service, the Supreme Court ruled, overruling the National Consumer Commission and the Andhra Pradesh consumer commission. According to the Consumer Protection Act, a person who obtains goods or avails of any services for "resale or for any commercial purpose" is not a consumer and he cannot move the consumer forums. In this case, Bunga Babu versus Sri Vasudeva Constructions, the owner of two plots, signed MoUs and divided the number of apartments between them. The project was delayed and there were several other complaints against the construction firm. The owner moved the Vizag consumer forum, which ordered compensation be paid to him. Appeals were moved before the state commission and the National Commission. Both took the view that the landowner was not a consumer entitled to move consumer courts. According to them, the owner wanted to sell the apartments or let these on rent to earn profit. As this was 'commercial purpose', the owner was not a consumer who could move consumer forums. The Supreme Court reversed the finding, stating that the MoU did not make the landowner a "partner or co-adventurer" in commerce.

HC told to review grant of orchards

For the second time, the Supreme Court has asked the Uttarakhand High Court to examine the grant of orchards to The Energy and Research Institute (earlier TERI) and one Akhilesh Kala as its order did not consider their arguments. The state has more than 100 unproductive orchards and it wanted to introduce a policy of public-private partnership to make these profitable. Seven orchards were given to six parties out of which three surrendered the orchards to the government. The institute, Dabur Research Foundation and Kala retained the grants. However, a person named Suhrid Shah moved a public interest petition against the grants, alleging that the allotments were made on a nomination basis, without auction. The high court struck down the grant to all the three. Dabur did not appeal, and Kala had died. Though the Supreme Court had asked the high court to reconsider the issues, it made a cryptic order cancelling the grants, which led to the appeal. The judgment commented that the high court did not even realise that Kala had died long ago.

Lone bid can be rejected

The Supreme Court has declared that when there is only one valid offer in a tender, it could be cancelled and a fresh tender could be invited. In the case, State of Jharkhand vs CWE-Soma Consortium, the latter was found to be the only firm fulfilling the technical and financial conditions. Therefore, the state cancelled the tender for building the Icha dam and started the process anew. This was challenged by the firm. The high court allowed the petition. The state appealed to the Supreme Court, which set aside the high court judgment. It said the state was well within its right to reject the bid without assigning any reason, as long as it was not arbitrary. In this case, the state has given adequate reason for fresh invitation, that is, to make the bids more competitive. The judgment said that "the high court was not justified to sit in judgment over the decision of the tender committee and substitute its opinion on the cancellation of tender." The court also noted the statement of the attorney general that the dam, which would submerge large areas, was also opposed by the tribal advisory council and it could not proceed under the new land acquisition law.

SC orders in arbitration petitions

The Supreme Court last week set aside the nomination of a former judge by the Gauhati High Court to arbitrate between the Railway and Premco-DKSPL. It said that the Railway had sent a panel of arbitrators within the time stipulated in the agreement and the high court had misread the terms of the contract on the time limit for seeking appointing of the arbitrator. In another case under the Arbitration and Conciliation Act, Etoile Creations vs Sarl Danset Deco, the court appointed an arbitrator to resolve disputes between the Indian firm manufacturing and exporting home furnishing and a French firm. There were disputes over payments and breach of the terms of buyers' agreement. On the application of the Indian firm, the Chief Justice nominated a retired judge of the Delhi High Court as the sole arbitrator, though the French firm did not appear before the court.

Minimum wage estimate altered for tenders

When the tender conditions insist on payment of minimum wages to the staff, it cannot be altered by the labour department and then the threshold amount cannot be kept a secret. It would unfairly benefit a bidder, the Supreme Court observed last week in its judgment, in Bakshi Security & Personnel Services Ltd vs Devkishan Computers Ltd. The Gujarat government had invited tenders for employment of staff at road check-posts. The two firms were the main contenders. Both of them bid for amounts which were below the minimum wage expenditure calculated by the labour department. Later, the department lowered the amount. Then Bakshi became eligible, but not Devkishan. The latter moved the high court, which asked the authorities to choose. Bakshi appealed and the Supreme Court quashed the high court order. It pointed out that when a tender condition clearly states that if the component of salary quoted is less than the minimum wage prescribed, the bid is liable to be rejected, and the high court cannot hold otherwise. The Supreme Court also blamed the state government for re-fixing the estimate of minimum wages and keeping it secret two times during the litigation, "muddying the waters".

DRI guilty of illegal detention

The Delhi High Court last week asked the Customs authorities to issue a detailed set of instructions, in consultation with Central Board of Excise and Customs, to avoid indefinite detention of goods illegally. In this case, Worldline Tradex Ltd vs Commissioner of Customs (Import), consignments of unbranded mobile accessories were imported. These were not cleared at the instance of the Directorate of Revenue Intelligence, which suspected mis-declaration by certain Delhi importers of electronic goods. However, the goods were not examined or cleared because of lack of coordination between the authorities concerned. Reasons for the detention were also not given. The court asked the authorities to take a decision within two weeks and pay the warehouse charges as the DRI had acted illegally.

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