Interim stay against demand to continue pending counter-affidavit
The State Government, which rushed to the Madras High Court on Monday to restrain Japanese automaker Nissan Motor from proceeding with international arbitration demanding incentives worth $770 million, did not show equal interest on Tuesday in conducting a case filed by Renault Nissan in the same court challenging the commercial taxes department’s July 28 demand for tax arrears to the tune of 130.80 crore.
Justice T.S. Sivagnanam refrained from vacating an interim stay granted by him on all further proceedings pursuant to the demand for tax arrears since the government failed to file its counter-affidavit despite several adjournments. On October 4, the judge had granted the stay for a limited period (till October 30) after the petitioner’s counsel B. Raveendran pointed out that the court had adjourned the case thrice and yet no counter-affidavit had been filed.
Subsequently, when the case came up for hearing on October 26, the judge extended the stay until further orders after recording the submission of an Additional Government Pleader that he required 15 more days’ time to file the counter-affidavit. Then, the court also gave more than a month’s time for the filing of a counter-affidavit by the Deputy Commissioner-II, Large Taxpayers Unit, Commercial Taxes Department, Chennai, who had demanded the tax arrears.
Nevertheless, on Tuesday again, a Special Government Pleader (SGP) requested the court for more time to file a counter-affidavit. Acceding to her request, the judge adjourned the case by two weeks. When senior counsel R.L. Ramani, representing the petitioner company, pressed for an interim order, the judge pointed out that the interim stay granted earlier would continue to be in operation until further orders were passed by the court.
During the course of hearing, the judge broached the subject of international arbitration too and told the SGP that the government might go bankrupt if it had to pay $770 million in incentives. Blaming the government for having invited the trouble, he said the demand made by the Japanese automaker was the result of conducting events such as Global Investors’ Meet and promising all kinds of incentives to foreign companies if they establish their units here.