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Conflict of interest in power panel

M J Antony/New Delhi 29 Oct 12 | 12:51 AM


The appointment of the chairperson of the UP State Electricity Regulatory Commission has been struck down by the Supreme Court as the selection committee did not follow the rule that “such person does not have any financial or other interest which is likely to affect prejudicially his functions as chairperson or member." This is a condition under Section 82(5) of the Electricity Act. In this case, Rajesh Awasthi vs Nand Lal, the allegation was that the chairperson was vice president of JP Power Venturs Ltd at the time of his selection. It was also alleged in the petition before the Allahabad high court that he had approved higher tariff right to favour that firm in 2010. The high court found that there was violation of the rules by the selection committee. On appeal by the chairperson, the Supreme Court upheld the high court view and stated that the question of conflict of interest was an issue which the selection committee ought to have considered. Since this was not done, the appointment was in clear violation of Section 85 and, consequently, he has no authority to hold the post.

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Bench to resolve puzzle
In view of conflicting views expressed by various benches of the Supreme Court in the past on a constitutional question, a new bench has referred the issue to a larger bench. The difference is over the maintainability of a review petition in a high court after the disposal of the special leave petition (SLP) by the Supreme Court, without granting leave. In this judgment, Khoday Distilleries Ltd vs Mahadeshwara SSK Ltd, such a situation arose before the Karnataka high court. It ruled that a review petition cannot be moved after approaching the Supreme Court. On appeal, the Supreme Court said that a large number of review petitions are being filed in high courts after the Supreme Court dismissed the SLPs. Therefore, an authoritative pronouncement by a constitution bench is necessary to resolve contrary opinions of the apex court for proper guidance to the high courts.

Three ways of computing loss
The Supreme Court has declared that in motor vehicle accident cases, compensation must be granted for both permanent disability consequent to the mishap as well as loss of earning capacity. The Madras high court, in the case, K Suresh vs New India Assurance Ltd, had held that no compensation can be granted towards permanent disability once compensation is computed for the loss of earning capacity. On appeal, the Supreme Court overturned the high court view. Otherwise, it would result in unjust decisions. “It cannot be disputed that apart from the fact that the permanent disability affects the earning capacity of the person concerned, undoubtedly, one has to forego other personal comforts and even for normal avocation they have to depend on others," the judgment explained while revising the compensation under different heads. The tribunal had arrived at the figure of Rs 25 lakh. The high court recalculated and reduced it to Rs 9.78 lakh. The Supreme Court, invoking the principle of “just compensation" finally arrived at the figure of Rs 13.48 lakh.

Arbitration award set aside
A division bench of the Bombay high court has set aside the arbitral award in a dispute between Central Railway and Shyam Constructions because the arbitrator acted contrary to the terms of the contract between them. The tribunal had directed the railway to pay certain amounts with interest and compensation. The railway challenged the award before a single judge of the high court on the ground that in awarding interest and compensation for delay, the tribunal had acted contrary to the express conditions of the contract under which the award of such claims was prohibited. The judge rejected the contention. But on appeal, the division bench accepted the argument of the railway.

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