Op EdsOP. ED.

Introduction

Dr B.R. Ambedkar while presenting the Indian Constitution, 1950[1], in the Constituent Assembly, said that every generation is a nation of its own.  It is this perennial change in generational thought that demands the law to be adaptive[2]. With the rapid advancement upon the advent of the internet has allowed us to possess goods or services with a click of a button. Now more than ever before, we need the law to clearly state guidelines to allow the smooth functioning of e-commerce transactions. The purpose of the law should be to present solutions to resolve the probability of miscommunication, that could arise, because of the barrier caused by physical distance.

The term “e-commerce” is a common abbreviation used for “electronic commerce”. It includes carrying out business activities electronically, rather than abiding by the conventional method of physical shopping. With different stages involved in online shopping, it is realistic to say that in case of a dispute it will be extremely difficult to decide which court will have a jurisdiction in the matter, due to the multifaceted jurisdictional nature of such transactions. Sections 15-20 of the Code of Civil Procedure, 19082 (hereinafter “CPC”) deals with different types of jurisdiction and the “place of suing”. In simple terms, it specifies the venue of a particular case that is triable before a court.3 Jurisdiction is of three types – pecuniary, territorial, and subject-matter jurisdiction. To exercise territorial jurisdiction more effectively, the law segregates products that can be purchased into two categories – immovable properties and movable properties. Immovable as the word suggests means a property that cannot be moved from one place to another because it is fixed to the ground. Sections 16-18 of CPC deals with such properties, and the law applied is simple since the jurisdiction of a court, in case of immovable property, lies where the property is located.4 However, it should be noted that in cases of a parties only wanting to have benefit on property, different rules are applied.

This article aims to focus on the second category at hand, which is movable property. Through this piece, I shall explore the various statutory templates that are followed by courts in adjudicating jurisdictional disputes involving moveable property, particularly in the field of e-commerce matters. Subsequently, I shall analyse the impact of foreign judgments on cross-border jurisdictions followed by a brief examination of alternative mechanisms that can be utilised to resolve such disputes.

The term “movable property” is defined as property which can be transferred from one place to another. Sections 19 and 20 of the CPC lays down the law according to which courts shall have jurisdiction in cases concerning movable properties. The two places where the law provides for a jurisdiction to file for the suit depends on:

(a) the person who is aggrieved files a case that is where the cause of action happens; and

(b) where the defendant/perpetrator of the grievance carried on his business that is where the breach took place.5

The concept of “exclusive jurisdiction contracts” complicates the concept of place of suing in case of movable property. In such cases, it should be kept in mind that the contract exists between the company and the customer and that the manufacturers are not involved in case of any dispute.

The establishment of the e-commerce market has given birth to companies like Amazon, Nykaa, etc. – which have become popular, not just regionally, but throughout the world. Such online business companies insert exclusive jurisdiction clauses into their contracts which instructs that only courts, of a specific place/State/region, shall have the jurisdiction to settle potential disputes. This is in accordance with Official Trustee v. Sachindra Nath Chatterjee6 where the Supreme Court observed that before a court can be held to have jurisdiction to decide a particular matter, it must not merely have the jurisdiction to try the suit brought before it. It must also have the authority to pass the order sought for. Hence, there is no scope to create a new jurisdiction that does not exist at the first place.7

Tests to decide jurisdiction in e-commerce matters

As it has already been established, with the advent of e-commerce transactions, there is plenty of scope for confusion regarding the jurisdiction of courts. This varies with the nature of good in question, as well as place where the suit is filed. In India, civil matters intertwined with aspects of e-commerce are traditionally governed by Sections 15-19 of the CPC. At times, the issue(s) gets intermingled with complications due to the nature of business, wherein a specific territory cannot be ascertained to settle a jurisdictional dispute.

It is pertinent to mention that this legal vacuum has not gone unrecognised by the courts. To fill this gap in the current absence of a decisive law, courts have employed several tests to determine jurisdiction in e-commerce matters. One such test is the purposeful availment test as given by a 2011 US Supreme Court decision8 and affirmed by a 2009 Delhi High Court judgment of Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy9, and further explained via another 2017 Delhi High Court judgment of Impresario Entertainment & Hospitality (P) Ltd. v. S&D Hospitality10. The US Supreme Court laid down the interpretation of the purposeful availment test. The Court held that this test could be understood as the placing of goods into the stream of commerce, by the defendant, with the expectation that they will be purchased by consumers within the forum of the State. They further elucidated this concept by explaining that this, however, did not amend the rule of personam jurisdiction11. It was merely an observation that a defendant may then be subjected to a certain jurisdiction without ever entering the certain forum. The real test was associated with the defendant’s “intentionality” and whether their activities were intended to submit to the power of that sovereign.12

The Banyan Tree case, as decided by the Delhi High Court, expounded on this further considering e-commerce disputes. They deliberated on the issue of mere accessibility versus purposeful usage and held that:

…to establish jurisdiction in cases where the defendant does not reside/carry on business in the forum state but the website in question is “universally accessible”, the plaintiff will have to show that the defendant purposefully availed the jurisdiction of the forum court.13

In other words what was required to establish jurisdiction was the defendant’s intention to engage in a commercial transaction specifically at a forum state. In the Impresario Entertainment case14, the High Court further clarified this position by differentiating between the purposeful availment test from the purposeful avoidance test. The Court explained that to decide jurisdiction, it was not enough for the defendant to show that he had avoided the forum state but rather essential for the plaintiff to prove that the defendant had purposely availed the jurisdiction of the forum state.

Another test that can be used to decide jurisdiction in e-commerce matters is the forum convenience test. This is a test derived from the general doctrine of forum non conveniens which pertains to all civil matters. The general principle is that a court can recognise that a select forum is inconvenient for the parties involved in a suit and can, in accordance with that recognition, send the case to a more appropriate court. This change is to be made in the interests of all the parties and intent of reaching end of justice. 15

In the Supreme Court’s decision in Kusum Ingots & Alloys Ltd. v. Union of India16, this principle was legitimised and allowed in the Indian context when it laid down that in appropriate cases as it deemed fit, the Court could refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum convenience. Part of cause of action arising in a certain territorial jurisdiction cannot compel the relevant court to decide the case conclusively. Instead, they can choose to exercise this principle to concede and confer jurisdiction. In light of this, it is reasonable to infer that this principle can be applied to e-commerce matters, when appropriate, as well. Considering this is a legitimate principle under the law and has been affirmed by the Supreme Court, there is no reason why it cannot be applied.

While Indian courts have not adopted a specific manner of adjudication, there are many more available tests derived from law across the world that can be applied and derived for deciding jurisdiction in e-commerce disputes. One such significant example is the minimum contacts test. This is a test based on a theory first instituted in the US Supreme Court’s decision in International Shoe Co. v. Washington 17. It governs personam jurisdiction in a forum state when parties are “non-residents”. Curiously, this theory works where the personam jurisdiction is derived from connections and contacts to forum state. It can be applied if the court feels that a person has “sufficient minimum contacts” – which may be the defendant’s physical presence, conferred jurisdiction through a contract, a stream of commerce, etc.

More tests like the substantial connection test18, zippo test19 and the effects test20 are also continually being adopted for e-commerce cases abroad. Clearly, there is a substantial number of precedents available internationally, regarding jurisdiction in e-commerce. Ultimately, it is up to Indian courts to decide which test is most suitable for them or to come up with a new test altogether. 

Analysing Indian judicial precedents

With the advent of the internet and e-commerce, Indian courts as well as courts around the world are having a difficult time in deciding the place where a person can sue, or which courts shall have the requisite jurisdiction. This becomes increasingly complicated because e-commerce is not like the traditional business transaction. It involves various intermediaries before the final product reaches the beneficiary. When there are more people involved, things get even more complicated as far as exact jurisdiction, and the power of courts are concerned. This section of the paper will try and analyse Indian case laws to provide some clarity in cases pertaining to e-commerce.

Naturally, the question that arises is why it is necessary to delve into a discourse pertaining to the jurisdictions of courts. Ergo, this discussion would entail exploring the implications of a court not having any jurisdiction. In Kiran Singh v. Chaman Paswan21, the court held that any decision passed by courts without having a proper jurisdiction to adjudicate the suit would end up as a nullity. A defect in jurisdiction can be of anything – meaning territorial, pecuniary, or even subject-matter. Therefore, if the court does not have proper jurisdiction, then it loses all its power to decide a case. Even if both parties consent to a particular court’s jurisdiction, the law will strike down the authority of the court, in such a case.22

Initially when the courts were not experienced while dealing with questions of jurisdiction in cases dealing with transactions over the internet, certain incorrect judgments were made. One of them is Casio (I) Co. Ltd. v. Ashita Tele Systems (P) Ltd.23. The court in this case held that only because the plaintiff was able to use the internet from a particular place, the court had the requisite jurisdiction to adjudicate upon the matter.24 This case is perhaps against the interest of the defendants which the CPC would certainly not endorse. Perhaps the court did not envisage the wrong precedent it was setting up because if this case were to be applied in the current times where any website could be virtually accessed from anywhere, then according to this judgment every court would have competent jurisdiction.

After this the Banyan Tree25 case removed the inadequacy with the Casio (I) Co. Ltd.26 judgment. In Banyan Tree27, the defendant challenged the jurisdiction of the High Court of Delhi. The plaintiff argued relying on the Casio28 case that since the internet is accessible to everyone in India, therefore, the question of jurisdiction should not be entertained. This argument of the plaintiff is completely erroneous, and the court rightfully rejected this claim of the plaintiffs. The court held that plaintiff either must show that he or she carried on a business within the jurisdiction of the court and if not, he or she should show that the injury arose within the jurisdiction of the court where the plaintiff has filed the case. This case was the very few ones who set a right precedent and tried to bring in some objectivity in absence of any previous judgments.

Things get quite perplexing as one cannot possibly fathom what the term “carrying business” encompasses. In today’s times with large e-commerce companies spread across several jurisdictions, it is difficult to specify where exactly the customer can sue a particular e-commerce company. For further clarity, we can refer to Dhodha House v. S.K. Maingi29. In this case, the court clarified the meaning of the term “carrying business”. A mere presence of an agent at a particular place, say X, does not mean that the firm carries out its business at the place X. For example: Amazon has various agents across the country which deliver its packages to many places. Just because its agents deliver packages to various places it cannot be said that Amazon carries out its business from all those places. One would have to look at that branch of Amazon which regularly receives orders and initiates the transactions. This place does not have to be the head branch necessarily. If we go by the reasoning of the Dhodha House case30, Amazon can be sued even those places where there are sub-branches. However, it should be shown that the specific branch does in fact carry out substantial business of Amazon.

Indian laws and precedents still do not provide a clear picture specifically in cases involving business to customer transactions (B2C). Indian laws were enacted without considering the numerous complexities that the internet creates. It is highly recommended that there should be separate legislation in the form of a statute specifically dedicated to e-commerce transactions or if not, then certain additions must be made to the CPC so that there is no room for confusion when dealing with such transactions. Although there is some clarity regarding B2B transactions, issues arise when there are multiple intermediaries and consumers are involved.

Understanding the impact of foreign judgments on cross-border jurisdictions

Indian statutory provisions accommodate and acknowledge the applicability of certain rulings that are in compliance with the judgments of international courts. The implication of international rulings on courts within the Indian jurisdiction is laid down in Section 13 of the CPC31. This provision also allows for judicial compliance in all situations, except for a few scenarios wherein the courts would have to delve further to ascertain the court’s jurisdiction. In certain cases, courts have noted that if there was a mutual arrangement to accede to a particular court’s jurisdiction, then the court would be officially recognised as having presiding authority over the issue at hand. As a result, its final verdict would be binding upon both parties.32

The role of legislation holds utmost importance especially with regards to decisions of foreign tribunals concerning internet-related conflicts. The Indian judiciary does not refuse to implement the decision of a foreign court. It can only maintain that the decision of a foreign court is incomplete when it does not comply with the requirements specified under Section 13 of the CPC.33 Hence, if a judgment is issued against such a citizen of India in consequence of any egregious infringement of some other country’s laws, the judgment would be implemented against such an Indian citizen within the subcontinent, given that they do not have to bear any of the maladies laid down in Section 13 of the Code of Civil Procedure.34 When it becomes an issue of who shall be vested with the “primary jurisdiction” over the internet, the legal precedents examined would strongly suggest that the Indian courts will have no reservation in endorsing a rational judgment of a foreign court, in the instance of such a court passing an extra-territorial judgment to be enforced against an Indian citizen.35

Understanding the corpus of private international law (PIL) and alternative dispute resolution (ADR)

Private international law, which is referred to as a dispute of laws in more common law-based countries, is a corpus of statutes that aims to address any issues stemming from the existence of an external factor in contractual relationships.36 Upon the emergence of the internet, cross-border ties gradually escalated, creating increasingly complicated issues of purview and relevant legislation. A variety of unique features of internet-based operations has also introduced fresh complexities. The fundamental challenge in dealing with legal relations involving international facets arises from the fact that the legal structures of more than a few nations can be observed to have a correlation with each other.37 Thus, the implementation of the regulations from one regulatory regime, instead of the latter, would, for most cases, yield different outcomes.38

Theory of harmonisation and reaching a middle ground

A proposed solution to this issue seems to be the option of choosing, on the basis on some parameters between the multiple presumably practicable systems, the legislation of a one specific legal framework to regulate the contractual relationship. This would mean the process of deciding the relevant legislation could take place under private international law. This also happens to be the approach that has the minimum impact on existing national legislation, since it does not entail any amendments to it to tackle the issue presented by way of inclusion of a foreign factor.39

Concepts of private international law are acknowledged in the Indian subcontinent. The Supreme Court held in 1964 that India follows the very well-established concept of private international law that the “law of the forum”, in which the litigation is commenced, regulates all issues of procedural practice.40 It is left at the discretion of the parties to consent and select one or more appropriate court systems to resolve their differences. If the respondents and plaintiffs specifically agree, in compliance according to their own arrangement, that their case be heard by a specific court, the two parties shall be obliged by the “forum selection” provision in their contract.41

The other approach, that is far more invasive to established domestic law, would be to attempt via a mechanism of “harmonization”, to eliminate the root cause of the issue by removing the discrepancies that arise amongst the law and regulations of a nation. “Harmonization” can be implemented via the conciliation process between nations by way of treaties instituting uniform policy and following ratification by the participating nations of the foreign conventions concerned. The results in the adjustment of state laws to harmonise them into conformity with the provisions of the requisite convention.42

Conclusion

Not only can e-commerce platforms have revolutionary multidisciplinary facilities, but also well-functioning information systems including appropriate data protection and precautions for individuals. The clauses of the agreement, based on the location of the products, must not be generic, but instead should be specific in nature in order to avoid jurisdiction discrepancies in the event of disputes. These must be drawn to the customer’s appropriate attention and should even provide them with a sufficient chance to read, review and then finally accept the conditions given. It will indicate that perhaps the concerns continue to be properly dealt with or that at minimum e-commerce platforms have a resolute plan in place to tackle such issues with ease and efficiency.


Undergraduate student enrolled in the BA, LLB (Hons.) course at Jindal Global Law School (Authored on 10-11-2020), e-mail: 18jgls-raghav.sg@jgu.edu.in.

[1] <http://www.scconline.com/DocumentLink/Uei3bEDC>.

[2] Misra, J.P., and J.P. Mishra, Dr B.R. Ambedkar and the Constitution – Making in India, Proceedings of the Indian History Congress 52 (1991): 534-41, accessed 17-10-2020. <http://www.jstor.org/stable/44142653>.

3 Mishra, Sachin, 2020, Determining Jurisdiction over E-Commerce Disputes in India, docs.manupatra.in, accessed October 8 <http://docs.manupatra.in/newsline/articles/Upload/FE4BA350-DBEF-49DA-97D4-09E54ED8B813.pdf>.

4 India, Legal, 2020, Jurisdiction of Civil Court and Place of Suing, legalservicesindia.com, accessed October 9 <http://www.legalservicesindia.com/article/1780/Jurisdiction-of-Civil-Court-and-Place-of-Suing.html>.

5 India, Legal, 2020. Jurisdictional Challenges in Online Transactions, legalservicesindia.com, accessed October 13 <http://www.legalservicesindia.com/article/2268/Jurisdictional-Challenges-in-Online-Transactions.html>.

6 (1969) 3 SCR 92

7 Ibid.

8 J. McIntyre Machinery Ltd. v. Nicastro, 2011 SCC OnLine US SC 122: 564 US 873 (2011) 

9 2009 SCC OnLine Del 3780

10 2018 SCC OnLine Del 6392

11 Ibid.

12 Ibid.

13 Banyan Tree Holding (P) Ltd., supra note 9.

14 2018 SCC OnLine Del 6392

15 Bryan A. Garner and Henry Campbell Black, Black’s Law Dictionary (St. Paul, Minn. West Group, 1999).

16 (2004) 6 SCC 254

17 1945 SCC OnLine US SC 158 : 326 US 310 (1945) 

18 Douglas De Savoye v. Morguard Investments Ltd., 1990 SCC OnLine Can SC 124 : (1990) 3 SCR 1077 

19 Zippo Mfg. Co. v. Zippo Dot Com Inc., 952 F Supp 1119 (WD Pa 1997).

20 Calder v. Jones, 1984 SCC OnLine US SC 58 : 465 US 783 (1984)

21 (1955) 1 SCR 117

22 Ibid.

23 2003 SCC OnLine Del 833

24 Ibid.

25 2009 SCC OnLine Del 3780

26 2003 SCC OnLine Del 833

27 2009 SCC OnLine Del 3780

28 2003 SCC OnLine Del 833

29 (2006) 9 SCC 41

30 (2006) 9 SCC 41

31 <http://www.scconline.com/DocumentLink/Mw0TY9U5>.

32 Narhari Shivram Shet Narvekar v. Pannalal Umediram, (1976) 3 SCC 203

33 Ibid.

34 Lalji Raja and Sons v. Firm Hansraj Nathuram, (1971) 1 SCC 721

35 O.P. Verma v. Gehrilal, 1960 SCC OnLine Raj 89

36 Dr Verschraegen Bea, Private International Law, 1st edn., (Kluwer Law International, 2001)

37 Malcolm N. Shaw, International Law 573 (Cambridge University Press, 5th edn. 2003).

38 Ibid.

39 S.C. Symeonides, Private International Law Bibliography 2017: US and Foreign Sources in English, American Journal of Comparative Law, 66 (2018), No. 2, pp. 89-100.

40 Ramanathan Chettiar v. Somasundaram Chettiar, 1963 SCC OnLine Mad 187

41 Ibid.

42 P. Hay, P.J. Borchers and R.D. Freer, Conflict of Laws: Private International Law: Cases and Materials, St. Paul, MN, Foundation Press, 2017.

Op EdsOP. ED.

The substantive legal provision dealing with extraterritorial jurisdiction under the Penal Code, 1860[1] (IPC) are Section 3[2] and Section 4[3] and its procedural counterpart under the Criminal Procedure Code, 1973 (CrPC) is Section 188 CrPC[4].

The proviso to Section 188 casts an obligation to obtain previous sanction of the Central Government for inquiry and trial of offences committed outside India. It is a procedural impediment while conducting criminal trial under Section 188 CrPC. The rationale behind the same lies in the principle of double jeopardy.

One of the first judgments which discussed the ambit for the term “inquiry” within the meaning of Section 188 CrPC is Sanoop v. State of Kerala[5]. The Court gave a broad interpretation of the word “inquiry” and included certain stages of investigation also (arrest and detention) within its sweep, to attract the sanction requirement under the proviso to Section 188 CrPC. However, this judgment runs contradictory to the jurisprudence constante of the Supreme Court in Ajay Aggarwal  v. Union of India[6], Thota Venkateswarlu v. State of A.P.[7] and  Hardeep Singh v. State of Punjab[8].

A Single-Judge Bench in Remla v. SP of  Police[9]  by relying upon State of W.B. v. Jugal Kishore More[10] ,  Nikka Singh v. State[11]  and Narumal v. State of Bombay[12] , held that the proviso to Section 188 casts an obligation to obtain previous sanction of the Central Government to inquire into and try such person and that Section 188 has a message that for the pre-inquiry stage, no such sanction is needed and since the pre-inquiry stage substantially relates to investigation of the crime, no sanction is required for investigation.

Interpretation of the word “dealt with” under Section 188 CrPC

In order to understand whether sanction will be required under Section 188 CrPC for investigation, the words “dealt with” under Section 188 CrPC need detailed construction. The most significant Supreme Court judgment on this point is Delhi Admn. v. Ram Singh[13]. The Court broadly constructed the words “dealt with” under Section 188 CrPC to include within its sweep not only “inquiry” and “trial” but other aspects also. The words “dealt with” in Section 188 CrPC, must be held to include “investigation” also, apart from “inquiry” and “trial”. It was also held that the “words ‘dealt with’ in the main part cannot be restricted to ‘inquiry’ and ‘trial’ used in the proviso”. Also, on a conjoint reading of Section 188 CrPC and Section 4 IPC, it must cover the procedure relating to investigation and hence the scope and ambit of the main part of Section188 CrPC cannot be controlled by the proviso. In the backdrop of conflicting High Court judgments on this point, the Full Judge Bench of Samaruddin v. Director of Enforcement[14], following Delhi Admn. case[15] upheld  the views rendered in Remla case[16] and in Mohd. Shameer Ali v. State of Kerala[17]

Ambit of “inquiry” under Section 188 CrPC: At what stage of inquiry will the sanction be needed – Post-cognizance or pre-cognizance

The judiciary was embroiled in a huge controversy over the interpretation of the word “inquiry” for attracting the proviso to Section 188 CrPC. After a perusal of rationale rendered in Rabindra Rai v. State of Bihar[18], State of U.P. v. Lakshmi Brahman[19]  and Dalu Gour v. Moheswar Mahato[20] it can be clearly said that the moment the charge-sheet is filed before the court, the inquiry is said to commence under Section 2(g) CrPC[21]. It is not necessary that such inquiry shall commence only after a formal order is passed by the Magistrate. In order to understand what stage of inquiry will attract the proviso of Section 188 CrPC, it is relevant to note four important judgments.

Firstly, in C.V. Padmarajan v. Govt. of Kerala[22], the Court under para 20 held that application of judicial mind to the police report, deciding to take cognizance of offences will certainly be part of the “inquiry” which is barred unless the prior sanction of the Central Government has been obtained under Section 188 CrPC in respect of the offences committed outside India. In other words, the Court held that taking cognizance of an offence will attract the proviso to Section 188 CrPC.

Secondly, in para 27 of Ajay Aggarwal  v. Union of India[23], the Court held that prior sanction under the proviso to Section 188  CrPC is not a condition precedent for taking cognizance of the offence and that if need be, such sanction could be obtained after the trial begins. However, since the offence in this case was committed at Chandigarh in India and not outside India and therefore, Section 188 CrPC was not attracted and hence, is only an obiter dictum which cannot be treated as law laid down by the Supreme Court within the meaning of Article 141 of the Constitution of India[24].

Thirdly, a 3-Judge Bench of the Supreme Court in Thota Venkateswarlu v. State of A.P.[25] has held that bar in the conduct of “inquiry” by the Magistrate Court in relation to an offence committed outside India without obtaining sanction of the Central Government as per the proviso to Section 188 CrPC would apply only in respect of the “post-cognizance inquiries”. The Court by applying “purposive and contextual interpretation” held that only “inquiries” within the meaning of Section 2(g) which are to be conducted after the taking of cognizance and before the framing of the charges alone would come within the zone of prohibition of the proviso to Section 188 CrPC, thus partially overruling Padmarajan case[26].

Fourthly, the 5-Judge Bench in Hardeep Singh v. State of Punjab[27] held that all “inquiries” held after submission of the final report/charge-sheet, including the “inquiry” by the court in the matter of taking cognizance, will be also barred by the proviso to Section 188 CrPC however, the Court made it clear that so long as the above specific legal position in Thota Venkateswarlu case[28] is not specifically overruled by the Supreme Court, it is only to be held that even taking of cognizance is not barred in such cases.

From the abovementioned analysis, it can be said that the Courts have given a restrictive interpretation of the word “sanction” restricting it to post-cognizance stage and not to the investigation. The rationale for the same is twofold:

  • Firstly, as investigation is the very first stage that will determine the flow of criminal proceedings in later stages, the requirement for sanction at the first stage will derail the criminal process in totality. To ensure that investigation is not in any manner fettered by the restriction as per the proviso to Section 188 CrPC and to ensure full freedom on the police to conduct investigation, it is kept outside the zone of prohibition under the proviso to Section 188 CrPC.
  • Secondly, to prevent enormous and unrealistic burdens[29] on the Central Government to take decisions on the question of sanction in each and every case, which may arise in various parts of the country, the Court logically kept investigation outside the requirement of sanction from the Central Government.

Conclusion

Thus, from the above discussion, it can be succinctly said that the bar as per the proviso to Section 188 (requirement of sanction) can be only in relation to conduct of inquiry and trial and the said proviso cannot impose any restriction on the powers of the police to the conduct of investigation into such offences committed outside India. Investigation is kept outside the requirement of sanction of the Central Government under the proviso to Section 188 CrPC.


*3rd year student, BA LLB (Hons.), Maharashtra National Law University, Nagpur. Author can be reached at shreyatripathi.204@gmail.com.

[1] Penal Code, 1860

[2] Section 3 IPC. 

[3] Section 4 IPC. 

[4] Section 188 CrPC.  

[5] 2018 SCC OnLine Ker 1268. 

[6] (1993) 3 SCC 609. 

[7] (2011)  9 SCC 527. 

[8] (2014) 3 SCC 92.

[9] 1992 SCC OnLine Ker 323. 

[10] (1969) 1 SCC 440. 

[11] 1950 SCC OnLine Punj 126. 

[12] 1960 Cri LJ 1674: AIR 1960 SC 1329.

[13] (1962) 2 SCR 694.   

[14] 1999 SCC OnLine Ker 279. 

[15] Supra Note 13.

[16] Supra Note 9.

[17] 2019 SCC OnLine Ker 2778. 

[18] 1983 SCC OnLine Pat 155. 

[19] (1983) 2 SCC 372. 

[20] 1946 SCC OnLine Pat 175.

[21] Section 2(g) CrPC

[22] (2009) 1 ILR Ker 36 : 2009 (1) KHC 65.

[23] (1993) 3 SCC 609. 

[24] Article 141 of the Constitution of India

[25] Supra Note 7.

[26] Supra Note 22.

[27] (2014) 3 SCC 92 

[28] Supra Note 7.

[29]Mohd. Shameer Ali v. State of Kerala, 2019 SCC OnLine Ker 2778, para 34

Case BriefsDistrict Court

Consumer Disputes Redressal Commission Gujarat State, Ahmedabad: Justice V.P. Patel, President and U.P. Jani, Member, addressed an appeal which was raised in light of a complaint raised due to excess of electricity duty being charged.

Appellants filed the instant appeal under Section 15 of the Consumer Protection Act, 1986 on being dissatisfied with the decision of the District Commission.

 Factual Matrix

Complainant obtained electric connection for their industrial undertaking and consumed exclusively low-tension energy from the opponent company. Energy bills were raised by the opponent corporation and said bills included charges of electricity duty liable under the Bombay Electricity Duty Act, 1958 (Electricity Act). Complainant realized in the year 2012 that the opponents have been collecting electricity duty at a higher rate than the prescribed rates under the Electricity Act.

Opponent charged the electricity duty at the rate of 60%, 30%, 15%, 50% or 25% without any basis. Further, it was stated that the charges of electricity duty were collected by the opponent illegally and unconstitutional in service. It was stated that the opponents could charge the electricity duty as per rules, but they have charged at a higher rate than prescribed in the rules.

Vide letter on 19-12-2012, opponent replied that the electricity duty was required to be collected at the rate of 10% as per the rules and they have started to issue bill with electricity duty at the rate of 10%. Therefore, the complainant had filed a consumer complaint about the difference in amount.

Limitation Period 

Limitation prescribed under the local or special act will be applicable and no general provision of limitation Act will be applied for counting prescribed period.

As per Rule 12(1) of the Electricity Rules, the period of limitation prescribed is 1 year to file an application for refund. Electricity Rules were amended with effect from 31-07-2014.

Coram noted that the documents produced by the complainant addressed to the Collector of Electricity Duty can be said to be applicants for a refund of an amount of excess electricity duty under Rule 12 of the Electricity Rules.

Section 3 of Consumer Proetction Act cannot be said to be inconsistent with Rule 12 of the Electricity Duty Rules.

Since the Collector of Electricity Duty did not act in conformity with fundamental principles of judicial procedure, District Consumer Commission had jurisdiction to deal with the matter.

Commission observed that:

It is true that where the statute gives finality to the order of the Collector of Electricity Duty jurisdiction of Courts is excluded. However, Collector of Electricity Duty had not been complied with the fundamental principle of judicial procedure and acted in conformity of Electricity Duty Act.

In view of the above observation, Consumer Court has jurisdiction in this case.

Collector of electricity duty has not considered the period of 1 year under Section 12(2) of the rules and has not passed an order of refund of electricity duty, this amount to deficiency in service as well as unfair practice.

Hence, in the present matter, it was held that the complainant can get refund of the amount of Electricity Duty charge not prescribed under the Electricity Act and Rules.

As per the documentary evidence and arguments of the parties, Commission concluded that the complainant was not entitled to get any amount of electricity duty for last one year. Therefore, the appeal was allowed.

On verifying the amount deposited by appellant the same shall be refunded with interest. [Gujarat Urja Vikas Nigam Ltd. v. Cham Trawi Nets Organisation, Appeal No. 913 of 2014, decided on 24-05-2021]


Additional Read:

Section 2(1)(o) of Consumer Protection Act, 1986: Supply of electricity is included in the definition of service. [for the definition of “service” in CPA, 2019, see S. 2(42)]

Section 2(1)(c) of Consumer Protection Act, 1986: ‘Complainant’ means any allegation in writing made by the complainant that trader or service provider, as the case made, has charged for the goods or for the service mentioned in the complaint a price in excess of the price, fixed by or under any law in time being force.[for the definition of “complainant” in CPA, 2019, see S. 2(6)]

Case BriefsHigh Courts

Bombay High Court: S.C. Gupte, J., dismissed a guardianship petition on the ground of jurisdiction.

A Guardianship petition was filed under Sections 6 and 11 of the Hindu Minority and Guardianship Act, 1956.

Petition sought petitioner’s appointment who was stated to be the father of the two minors for whose guardianship the present petition was filed.

Another relief was sought concerning the minor’s property, particularly a declaration that the respondent mother had unauthorizedly and fraudulently withdrawn or transferred amounts from the bank accounts of the minors for her personal use and benefit and a recovery order by making payment to the petitioner as their natural guardian or by depositing the same in the bank accounts of the minors.

Section 7 read with Section 8 of the Family Courts Act reserves exclusive jurisdiction to entertain a suit or proceeding in relation to the guardianship of the person of any minor unto Family Courts by virtue of Clause (f) of the Explanation to Sub-section (1) of Section 7.

Full Bench of Bombay High Court observed that in view of the provisions of the Family Courts Act, the Court exercising its ordinary original civil jurisdiction relating to matters under the Family Courts Act would lose its jurisdiction to the Family Court, since the former would be a district court and under Section 17 of the Family Courts Act that Act would have an overriding effect.

An application for guardianship of the minor’s person can lie only before the Family Court.

Bench while moving forward with other prayers expressed that an application for a declaration about the property of a minor, which is said to be fraudulently or unauthorisedly transferred, and an order for recovery of that property cannot lie in a guardianship petition independently of any claim for being appointed as a guardian of the person or property of a minor.

“…what lies before a court, other than a family court under Section 7 of the Family Courts Act, is an application for appointment of guardian of the property of a minor or an application for permission to deal with such property. It is only these applications which are made by means of a guardianship or a miscellaneous petition before this court.”

 Petitioner’s case was that the bank accounts were created and monies were deposited into them for the sake of ensuring the minors’ pursuit of education and that these amounts, meant for the minors’ education, were illegally withdrawn by the respondent mother.

To the above, Court stated that is the petition sought to be framed as a petition for making provision for maintenance of the minors by seeking to recover amounts illegally withdrawn by respondent-wife, it would obviously be an application in the nature of a proceeding for maintenance. The said application would also exclusively lie before the family court.

Hence, In Court’s opinion, the instant guardianship petition was dismissed, and this Court had no jurisdiction to entertain the same. [Ashu Khurana Dutt v. Aneesha Ashu Dutt, 2021 SCC OnLine Bom 550, decided on 01-04-2021]


Advocates before the Court:

Mr Shanay Shah i/b. Sapana Rachure for Petitioner.

Mr Santosh Paul, Senior Advocate with Pradip Chavan, Mahir Bhatt and Manan Sanghai i/b. Wasim Ansari for Respondent.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Anil Choudhary (Judicial Member) allowed an appeal in which the issue before the Tribunal was that whether the show cause notice was validly served on the appellant which is a condition precedent for giving jurisdiction to the Adjudicating Authority to pass an order.

Appellant was neither an importer nor engaged in the business of import and export. Further, he does not have any Import Export Code (IEC). The Revenue had seized post parcels imported from China not bearing the name of consignor, at foreign post office, New Delhi. The parcels were examined by the officers of DRI under panchnama. Summons were issued in the name of the appellant dated 11-02-2016, 02-03-2016 and 15-03-2016. Thereafter, nobody appeared before the DRI. An officer personally visited the premises at D-164, Punjabi Basti, Baljeet Nagar, New Delhi-110008, but the person – Shri Baljeet Singh was not found. Thereafter, without ascertaining or identifying the main person – Shri Baljeet Singh, show cause notice dated 20-07-2016 was issued by speed post and also marked to notice board of DRI.

Counsel for the appellant, Mr. Akhil Krishan Maggu submitted that neither the aforementioned show-cause notice nor any communication like summons or notice, nothing was served on him thus the ex-parte was wholly without jurisdiction and a nullity.

Authorised Representative for the Revenue, Mr. Pradeep Gupta submitted that the address given by the appellant in the memo of appeal was same on which the show cause notice etc. was issued through speed post, and accordingly stated that there was sufficient service of show cause notice.

The Tribunal noticed that inspite of opportunity given, Revenue failed to produce the proof of delivery of the show cause notice and from the perusal of records it was observed that Adjudicating Authority had not recorded satisfaction of service of show cause notice and have proceeded to pass the ex-parte order-in-original, which is held to be a nullity in the eyes of law.

The Tribunal while allowing the appeal held that for passing a valid adjudication order, valid service of show cause notice is essential.[Baldeep Singh v. Commr. of Customs, 2021 SCC OnLine CESTAT 176, decided on 07-04-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Bombay High Court: A Division Bench of Dipankar Datta, CJ. and G.S. Kulkarni, J. has directed the Central Bureau of Investigation (CBI) to conduct a preliminary enquiry into the complaints against the Home Minister of the State of Maharashtra, Anil Deshmukh. The Court’s order came after the former Commissioner of Mumbai Police, Param Bir Singh, and others moved the High Court seeking investigation into allegations of illegal money collection ordered by the Home Minister, Anil Deshmukh. While opining that the information furnished prima facie discloses commission of cognizable offence by Anil Deshmukh, and directing that preliminary inquiry be preferebly concluded within fifteen days, the Court held:

[Anil] Deshmukh is the Home Minister. The police department is under his control and direction. There can be no fair, impartial, unbiased and untainted probe, if the same were entrusted to the State Police Force. As of necessity, the probe has to be entrusted to an independent agency like the CBI.”

  1. Backdrop, Timeline and the Factual Matrix

In February, a vehicle laden with explosives was found parked at Altamount Road, Mumbai, near ‘Antilia’, the residence of Mukesh Ambani, the Chairman and Managing Direcotr of Reliance Industries Ltd. In this matter, on 25-2-2021, an FIR was registered with Gamdevi Police Station, Mumbai, and investigation was handed to the Anti-Terror Squad. Simultaneously, the National Investigation Agency (NIA) started conducting investigation. Soon thereafter, the owner of the vehicle died under mysterious circumstances. During NIA’s investigation, the role of one Sachin Vaze, a police officer attached to the Mumbai Crime Branch came under scanner and he was arrested.

On 17-3-2021, the incumbent Commissioner of Mumbai Police, Param Bir Singh was transferred. On 20-3-2021, Param Bir Singh, in a letter to the Chief Minister of Maharashtra, took exception to statements made against him by the Home Minister wherein he said that there were serious lapses committed by the Commissioner’s office, and Param Bir Singh’s transfer was not on administrative grounds.

In his letter to the Chief Minister, Param Bir Singh made some serious allegations stating that the Home Minister, Anil Deshmukh, had instructed Sachin Vaze to assist in collection of funds for the Home Minister, with a target of accumulating Rs 100 crores a month. As per further allegations, similar instructions were given by Anil Deshmukh to some other officers of the Mumbai Police. It was also alleged that Anil Deshmukh, on several occasions, called officers of the Mumbai Police to instruct them to adopt a specific course of action in police investigations. Param Bir Singh asserted that the Home Minister found his reservations and resistance undesirable and his transfer seem to be for extraneous and vindictive reasons.

On 21-3-2021, Param Bir Singh moved the Supreme Court under Article 32 of the Constitution seeking a writ of mandamus directing the CBI to conduct an impartial and fair investigation into the complaints against Anil Deshmukh, and to quash his transfer order. This writ petition was however withdrawn by Param Bir Singh with a liberty to approach the High Court. Availing such liberty, Param Bir Singh approached the High Court on 24-3-2021, filing a Public Interest Litigation (PIL).

On 21-3-2021 itself, one Dr Jaishri Laxmanrao Patil lodged a complaint with the Malabar Police Station and the Director, Anti-Corruption Bureau of the CBI in the same matter. No action was taken on the complaint, which prompted Dr Patil to file a Criminal Writ Petition in the present matter before the High Court seeking direction to CBI/ED to investigate the matter.

  1. Analysis

2.1. Need for an FIR

There was much debate at the Bar in respect of the omission or failure to furnish information to/lodge a complaint before the police for the same to crystallize into an FIR, which could be investigated. According to the High Court, the issue paled into insignificance in view of the disclosure made by Dr Patil of she having lodged a complaint disclosing commission of cognizable offence on 21-3-2021 and that such complaint was not given the attention that it deserved. Had such disclosure been made at the inception of hearing, much of the early exchanges may not have been necessary at all and could be avoided.

2.2. Maintainability of Param Bir Singh’s PIL

The High Court refused to be drawn into the larger controversy raised by the respondent State on the aspect of maintainability of the PIL filed by Param Bir Singh and another PIL filed by another petitioner (there were a total of three PILs including that of Param Bir Singh and one Criminal Writ Petition of Dr Patil, which were heard together). The controversy, in the Court’s opinion, which was common to the petitions, could be taken care of within a narrow compass by deciding whether, if at all, and to what extent, if any, action on the complaint of Dr Patil should be directed to be taken.

2.3. Maintainability of Dr Patil’s Criminal Writ Petition

The High Court noted that registration of a case is a sine qua non for starting an investigation. The jurisdictional fact for setting the criminal law in motion in the present case was traceable in the Criminal Writ Petition of Dr Patil, who provided a crucial breakthrough by lodging a complaint in the matter.

2.3.1. Writ Petition versus Efficacious Alternate Remedy

The State’s objection to Dr Patil’s Criminal Writ Petition was primarily grounded on existence of an efficacious alternative remedy before the Magistrate under the CrPC, which she had not availed of.

The Court explored the answer to the question: The Criminal Writ Petition of Dr Patil raises an important issue of lack of enforcement of law by the police. Does this per se warrant entertainment of the Criminal Writ Petition?

In the context of the nature of the concern expressed in the Criminal Writ Petition, the Court considered that the restriction to be kept in mind in deciding the question of entertainability is, whether there exists any equally efficacious alternative remedy in a criminal court and even if such a forum of redress is available, should the writ court entertain the writ petition. The Court found answer to this stating that where the facts of any case are such that the remedy provided by the law is found to be inadequate or inefficacious to the judicial mind, a writ petition may be entertained and decided. Provisions in Section 23 of the Police Act, 1861 and the CrPC cast a duty on the police to prevent commission of offence and to bring an offender to justice. Where a person or authority is vested with a duty by specific statutory provisions, to compel such person or authority to perform such duty is certainly within the power and jurisdiction of a writ court.

[T]he courts shall not countenance violation of Constitutional principles by anyone, howsoever high an office he occupies, and hence while acting as the sentinel on the qui vive and being always there as a watch guard of the Constitution to repel any attack on it, the courts would ensure that the democratic values enshrined in the Constitution are respected and the ideals upheld.

On this point, the High Court relied on several decisions of the Supreme Court including, Municipal Council, Ratlam v. Vardichan, (1980) 4 SCC 162; Union of India v. R. Redappa, (1993) 4 SCC 269; and N. Kannadasan v. Ajay Khose, (2009) 7 SCC 1.

While finally deciding this point, the Court held that it is not unknown that despite the existence of a remedy, the remedy against the particular mischief complained of and the redress sought for, at times, might be of no avail. It would be opposed to Constitutional philosophy if relief is refused only on the ground of existence of an alternative remedy, which may not be equally efficacious. Therefore, if a case presented before a writ court appears to it to be extraordinary, which the Criminal Writ Petition of Dr Patil indeed is, there is no bar that could operate for entertaining the same. After all, the rule which requires exhaustion of an alternative remedy is a rule of convenience and discretion, rather than a rule of law.

[I]t is indeed unheard of and unprecedented that a Minister could be so openly accused of wrongdoings and corrupt practices by none other than a senior police officer attracting wide attention from all and sundry.”

2.4.  Cognizable Offence (prima facie)

The High Court perused the complaint of Dr Patil to consider whether it makes out a prima facie case of a cognizable offence. It was clarified that examination of the veracity and/or credibility of the allegations contained therein is not the Court’s task at this stage. Dr Patil annexed to her complaint, a copy of Param Bir Singh’s letter to the Chief Minister.

As per the Court prima facie opinion, the information furnished therein discloses commission of cognizable offences by Anil Deshmukh and should have been acted upon in the manner required by the CrPC, and as judicially interpreted by the Supreme Court in Lalita Kumari v. State of U.P., (2014) 2 SCC 1.

2.5. CBI Investigation

The High Court noted that a CBI inquiry cannot be ordered as a matter of routine or merely because a party makes an allegation. But, if after considering the materials on record, the Court concludes that such materials disclose a prima facie case calling for investigation by the CBI, the Court can make the necessary order. Reliance was placed on Common Cause v. Union of India, (1999) 6 SCC 667 and T.C. Thangaraj v. V. Engammal, (2011) 12 SCC 328, among others. The Court opined that w]hen high officials are likely to be involved and a question of public confidence in the impartial working of the State agencies arises, the writ court in exercise of its jurisdiction under Article 226 of the Constitution is certainly not powerless to order such inquiry and investigation by the CBI.

It was noted by the Court that Dr Patil had submitted her complaint to the Senior Police Inspector of the Malabar Hill Police Station on 21-3-2021; however, except for making an entry in the Inward Register, no action whatsoever, was initiated. The allegations made by Param Bir Singh in his letter dated 20-3-2021, which triggered Dr Patil to lodge the complaint are of a serious nature and against the highest functionary of the Government of Maharashtra, when it comes to the functioning of the police department. Prima facie, the issues are such that the very faith of citizens in the functioning of the police department is at stake. If there is any amount of truth in such allegations, certainly it has a direct effect on the citizens’ confidence in the police machinery in the State. Such allegations, therefore, cannot remain unattended and are required to be looked into in the manner known to law when, prima facie, they indicate commission of a cognizable offence

It is, hence, certainly an issue of credibility of the State machinery, which would stare at the face when confronted with the expectations of the law and when such complaints are received against high ranking public officials. This Court cannot be a mere spectator in these circumstances. There is certainly a legitimate public expectation of a free, fair, honest and impartial inquiry and investigation into such allegations which have surfaced in the public domain.

2.6. Preliminary Inquiry

While holding that to instill public confidence and safeguard the fundamental rights of the citizens, it is necessary that an inquiry and investigation is conducted by an independent agency, the Court also noted the caution in P. Sirajuddin v. State of Madras, (1970) 1 SCC 595, wherein the Supreme Court held that before a public servant is publicly charged with acts of dishonesty which amount to serious misdemeanour or misconduct and a first information is lodged against him, there must be some suitable preliminary enquiry into the allegations by a responsible officer. The means adopted no less than the end to be achieved must be impeccable.

  1. Directions

Concluding the discussion, the High Court ordered the following:

3.1. Although there is no immediate reason to direct registration of an FIR by the CBI based on Dr Patil’s complaint, interest of justice would be sufficiently served if the Director, CBI is directed to initiate a preliminary inquiry into the complaint of Dr Patil which has the letter of Param Bir Singh addressed to the Chief Minister, as an annexure.

3.2. Such preliminary inquiry shall be conducted in accordance with law and concluded as early as possible but preferably within 15 (fifteen) days from receipt of a copy of the instant order.

3.3. Once the preliminary inquiry is complete, the Director, CBI shall be at liberty to decide on the future course of action, also in accordance with law. Should the Director, CBI see no reason to proceed further, Dr Patil shall be duly informed of the same.

3.4. Param Bir Singh shall be at liberty to raise grievances, if any, in regard to transfers and postings of police officers and for enforcement of the directions in Prakash Singh v. Union of India, (2006) 8 SCC 1, before the appropriate forum in accordance with law, if so advised.[Param Bir Singh v. State of Maharashtra, 2021 SCC OnLine Bom 516, dated 05-4-2021]


Advocates who appeared in this case:

Mr. Vikram Nankani, Senior Advocate a/w Dr. Birendra Saraf and Mr. Sharan Jagtiani, Senior Advocates, a/w Mr. Subodh Desai, Mr. Chetan Kapadia, Mr. Sunny Punamiya and Mr. Akshay Bafna, Advocates for Petitioner.

Mr. A.K. Singh and Mr. Piyush Singh, Advocates for Applicant/Intervenor in I.A. St. No. 6356/2021.

Mr. A.A. Kumbhakoni, Advocate General a/w Mr. Deepak Thakare, Public Prosecutor, a/w Mr. Akshay Shinde, “B” Panel Counsel and Mr. Manoj Badgujar, Advocate for State.

Mr. Anil C. Singh, Additional Solicitor General a/w Mr. D.P. Singh, Mr. Amogh Singh and Mr. A.A. Ansari, Advocates for Respondent nos. 2 and 3.

Dr. Jaishri L. Patil, Petitioner-in-person.

Mr. A.A. Kumbhakoni, Advocate General a/w Mr. Deepak Thakare, Public Prosecutor, a/w Mr. Akshay Shinde, “B” Panel Counsel and Mr. Manoj Badgujar, Advocate for State.

Mr. Subhash Jha, Mr. Nilesh Ojha a/w Mr. Samir Vaidya, a/w Mr. Harekrishna Mishra a/w Mr. Siddharth Jha, Mr. Abhishek Mishra a/w Mr. Munish Hemani i/b Law Global for Petitioner.

Mr. A.A. Kumbhakoni, Advocate General a/w Mr. Deepak Thakare, Public Prosecutor, a/w Mr. Akshay Shinde, “B” Panel Counsel and Mr. Manoj Badgujar, Advocate for State.

Mr. Alankar Kirpekar and Mr. Shekhar Bhagat, Advocates i/b Maglegal for petitioner.

Mr. A.A. Kumbhakoni, Advocate General a/w Mr. Deepak Thakare, Public Prosecutor, a/w Mr. Akshay Shinde, “B” Panel Counsel and Mr. Manoj Badgujar, Advocate for State.

Case BriefsHigh Courts

Jammu and Kashmir High Court: Sanjay Dhar, J., addressed the instant petition against the order of Judicial Magistrate, Bandipora, whereby the Magistrate had returned the petition seeking maintenance stating it to be beyond the jurisdiction of the Trial Court. The Bench remarked,

“If at all there was any ground for returning the petition to the petitioners, the same should have been done at the very first hearing, not after proceeding with the case for more than six months, that too in a case where a destitute lady had approached the learned Magistrate for grant of maintenance.”

The petitioner, who was the wife of the respondent and was the mother of a minor son. The petitioner approached the Court of Chief Judicial Magistrate, Bandipora, with a petition under Section 488 of CrPC seeking maintenance from the respondent. The petition was transferred by CJM to Judicial Magistrate 1st Class, Bandipora, for disposal.

The Trial Court had observed that the petitioner at the time of filing the petition were residing at Hajin, Bandipora whereas the respondent was residing at Grath Saloora, Ganderbal, and according to the magistrate, neither Hajin, Bandipora nor Grath Saloora, Ganderbal fall within his territorial jurisdiction. The Magistrate had further observed that it was not the case of the petitioners that they at any point in time last resided within the jurisdiction of the Trial Court. Therefore, the Trial Court held that it did not have territorial jurisdiction to entertain the petition and, accordingly, the same was directed to be returned to the petitioner.

Observation and Analysis

The Bench, after going through the provisions of Section 488(8) of the J&K CrPC, which is in pari material with Section 126(1) of Central CrPC opined that proceedings for maintenance could be filed by a wife against her husband either in the district where she resides or in the district where the husband resides and also where she had last resided with her husband. The provisions of Section 488(8) read as under:

“488(8)Proceedings under this section may be taken against any person in any district where he is or his wife resides or where he last resided with his wife, or as the case may be, the mother of the illegitimate child.”

Noticing that the petition was transferred to the Trial Court by the orders of CJM, Bandipora, who was vested with jurisdiction over whole of the District Bandipora and that Section 192 of J&K CrPC gave jurisdiction to CJM to transfer any case of which he had taken cognizance, for inquiry or trial, to any Magistrate subordinate to him, the Bench opined,

“When a Chief Judicial Magistrate transfers a petition or a complaint to a Magistrate subordinate to him, the said subordinate Magistrate is conferred with the jurisdiction to entertain and try such complaint or petition.”  

Hence, the Court reached the findings that the Magistrate, while passing the impugned order, had ignored the provisions contained in section 192(2) of the J&K CrPC. Also, the Court vehemently criticised the fact that, the petition was pending in the Court of Judicial Magistrate for about six months and the Trial Court had put the hapless petitioner in a precarious position by returning the petition citing lack of jurisdiction.

Consequently, it was held that the impugned order of the Trial Court suffered from grave illegality as the same had been passed in disregard of the provisions contained in Section 192 of the J&K CrPC and, therefore, was unsustainable in law. Hence, the impugned order was set aside with the directions to the Trial Court to entertain and dispose of the petition filed by the petitioners with utmost promptitude in accordance with the law.[Masooda Begum v. Mohammad Ashraf Dar,  2021 SCC OnLine J&K 163, decided on 03-03-2021]


Appearance before the Court by:

For the Petitioner: Adv. Aftab Ahmad


Kamini Sharma, Editorial Assistant has reported this brief.

Op EdsOP. ED.

The principle of least judicial interference was legislatively codified as Section 5 of the Arbitration and Conciliation Act, 1996[1] (Act) in order to ensure continuation of the arbitration without periodic interdicts by any court.  Section 16[2] of the said Act carves out an exception to the general rule by providing a right to the parties before arbitration to raise the plea of objection to the competency of an Arbitral Tribunal. This is based on the principle of kompetenz-kompetenz i.e., the power of the Tribunal to rule on its own jurisdiction[3].  The reason is that if an arbitrator is himself of the view that he is not competent, no purpose would be served by continuation of the arbitration proceedings. If the arbitrator finds lack of competency, the arbitral proceedings would come to an end. It is in view thereof that an appeal has been provided under Section 37[4] of the said Act. The position would be however different where the Arbitral Tribunal finds that it is competent to proceed with the arbitration. No appeal has been provided in such a case. The consequences of such a decision are provided in Section 16(5) of the said Act is that the arbitral proceedings would continue resulting in an arbitral award. The remedy is provided in Section 16(6) of the said Act which is to challenge the ultimate award under Section 34[5] of the said Act. There is no segregated challenge permissible only on the question of the competency of the Arbitral Tribunal.

            The question then would be, at what stage should the jurisdictional objections raised by a party to the arbitration be considered and decided by the Arbitral Tribunal?  This question also arises in view of the prevalent trend of Arbitral Tribunals deferring the consideration of jurisdictional objections to the stage of final award which often results in the party which has raised the objection at the threshold, having to contest the entire proceedings, thereby wasting considerable amount of time and that too at great expense.

            In the respectful view of the author, the bare reading of Section 16(2) along with Section 16(5) of the Act leaves no manner of doubt that the Tribunal has no discretion in deferring a decision on an application under Section 16 of the Act. Section 16(2) stipulates that a party raising jurisdictional objections shall have to do so not later than the submission of the statement of defence.  The very purpose of having a party raise objections at the threshold would get defeated in the event the decision on these objections is also not taken with equal promptitude. As per Section 16(5) of the Act, the Arbitral Tribunal “shall” decide on the jurisdictional objections, and where the Arbitral Tribunal takes a decision rejecting the plea, the Tribunal shall continue with the arbitral proceedings and make an arbitral award. The reading of Section 16(5) indicates that a decision rejecting the jurisdictional objections is a statutory precondition for continuance of arbitral proceedings. The statute envisages only one of two situations i.e. first, where Section 16 objections are accepted and Tribunal holds that it does not have jurisdiction and second, where the objections are rejected by the Tribunal. In the first case, the remedy of Section 37 appeal is available and in the latter, the award passed by the Tribunal can be assailed under Section 34 of the Act. Therefore, once a statutory remedy has been provided against an order passed on a challenge to the jurisdiction of the Tribunal under Section 16, then, such a challenge must, in the opinion of the author be determined at the threshold itself and there is no apparent reason for deferring a decision on the Section 16 application.

            Any refusal to go into the merits of the dispute is a jurisdictional issue.[6] Therefore, it would be manifest, that a decision on any objection regarding the competence of the Tribunal to go into the merits of the dispute must not, and indeed cannot be deferred and must be taken at the preliminary stage itself. This position is consistent with the decisions of the Supreme Court in McDermott[7], Kvaerner Cementation[8] and also in Ayyasamy[9], where it was held that “the jurisdictional challenge is required to be determined as a preliminary ground”.

            In several cases, while deferring the consideration of a challenge under Section 16, parties and Tribunals have placed reliance on the decision in Maharshi Dayanand University v. Anand Coop. L/C Society Ltd.[10] where it was held by a two-Judge Bench of the Supreme Court that there is no mandatory requirement to decide jurisdictional challenge as a preliminary matter, and that the same can be decided along with the final award. It is to be noted that the decision in Maharshi[11] did not consider the previous decision in McDermott[12], therefore, it could be argued that the decision in Maharshi[13] is “per-incuriam” and would not be good law. Similarly, in SAIL v. Indian Council of Arbitration[14] the Delhi High Court held that the wordings of Sections 16(2) and 16(5) do not place any mandatory condition of deciding preliminary objections to jurisdiction of the Tribunal at the threshold. Again, the High Court in arriving at its conclusion did not take into account the decision in McDermott[15] and Kvaerner Cementation[16], as such, the decision of the High Court cannot be said to be good law.

            Another aspect of the matter is the impact of the introduction of the Arbitration and Conciliation (Amendment) Act, 2015[17] (“2015 Amendment”) on the timeline and stage of consideration of the jurisdictional objections under Section 16 of the Act.  The 2015 Amendment was introduced with the objective of making arbitration user-friendly, cost effective and expeditious disposal.[18] In particular, Section 29-A was introduced mandating strict timelines of approximately one year for conclusion of arbitration proceedings.  With the introduction of the stricter timelines, there is a stronger case to be made for threshold examination of any jurisdictional objections at the preliminary stage itself. This would be consistent with the objective of expeditious disposal of arbitration proceedings and would also ensure that in cases of abuse of process, apparent jurisdictional bar, the party raising such objections is not made to wait till the conclusion of the proceedings for determination of these fundamental objections.  Such a course, if adopted, in the opinion of the author would pave way for furthering the cause of expeditious, and inexpensive arbitration proceedings.


Advocate, Delhi High Court and Supreme Court of India.

[1] <http://www.scconline.com/DocumentLink/87bn601l>.

[2] <http://www.scconline.com/DocumentLink/C8X6A4y5>.

[3] Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641; Duro Felguera SA v. Gangavaram Port Ltd., (2017) 9 SCC 729; Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Ltd., (2020) 2 SCC 455.

[4] <http://www.scconline.com/DocumentLink/0Vi7sQsH>.

[5] <http://www.scconline.com/DocumentLink/teuo89l3>.

[6] National Thermal Power Corpn. Ltd. v. Siemens Atkeingesellschaft(2007) 4 SCC 451.

[7] McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181.

[8] Kvaerner Cementation India Ltd. v. Bajranglal Agarwal, (2012) 5 SCC 214.

[9] A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

[10] (2007) 5 SCC 295.

[11] (2007) 5 SCC 295.

[12] (2006) 11 SCC 181.

[13] (2007) 5 SCC 295.

[14] 2013 SCC OnLine Del 4490.

[15] (2012) 5 SCC 214.

[16] (2012) 5 SCC 214.

[17] <http://www.scconline.com/DocumentLink/9ajA4z9b>.

[18] Statement of Objects & Reasons – Arbitration and Conciliation Amendment Bill, 2015.

Case BriefsInternational Courts

Caribbean Court of Justice: A Full Bench of Justice Saunders, Wit, Anderson, Rajnauth-Lee, Barrow and Jamadar dismissed the appeal being devoid of merits.

BACKGROUND

The facts of the case are such that criminal complaints were filed in the Magistrates’ Court by the Respondents pursuant to Sections 56 and 59 of the House of Assembly (Elections) Act (i.e. “Elections Act”). The Respondents alleged that the Appellants (members of the Dominica Labour Party, “DLP”) were guilty of the offence of treating by hosting two free public concerts shortly before the 2014 General Elections, intending thereby to corruptly influence the electorate to vote for the DLP. After the Magistrate issued the summons, the Appellants sought judicial review of his decision to assume jurisdiction over the complaints. It was held that the Magistrate was acting in excess of his jurisdiction since a charge of treating challenged the validity of the Appellants’ election, and as such, any action had to be brought by election petition to the High Court. This view was premised on Section 40 (1) (a) of the Constitution which provides that the High Court has the jurisdiction to hear questions of membership and questions concerning the validity of an election. The summons was quashed. The Respondents appealed. The majority Court of Appeal decided in favour of the Respondents and reinstated the summons. The majority stated that Section 59 created a summary process and gave the Magistrate the power to summarily try and convict a person for treating. That power did not intrude upon the accepted exclusive jurisdiction of the High Court in Section 61 of the Elections Act and Section 40 (1) (a) of the Constitution to determine questions of membership of the House. Therefore, the relevant sections did not conflict. Thereby instant appeal before the CCJ was filed.

ISSUES

The parties disagree on four main points which may conveniently be encapsulated as follows:

  1. The ‘Parallel Modes of Trial Point’;
  2. The ‘Constitutionality Point’;
  3. The ‘Weight of Jurisprudence Point’ and
  4. The ‘Equality before the Law Point’.

OBSERVATION AND DECISION

The ‘Parallel Modes of Trial Point’

The Court observed that where a candidate was involved, there were two distinct modes of addressing elections offences, evident on a reading of the Elections Act. First, the summary offences procedure, where offences like treating are tried before a Magistrate. Second, the election petition procedure, which was concerned with the undue return or undue election of a member of the House and where one of the bases upon which such return or election can be found to be undue is the engagement in certain corrupt practices, inclusive of treating. The imposition of the disqualification from retaining a seat in the House set out in Section 61 of the Act did not fall within the summary jurisdiction mode of trial and therefore, was not within the Magistrate’s power.

The ‘Constitutionality Point’;

The Court observed that the relevant provisions of the Elections Act did not conflict with Section 40 (1) of the Constitution. First, summary proceedings for treating did not concern the validity of elections; they were concerned to vindicate the criminal law. Second, on reading section 35 (4) of the Constitution, it was clear that ‘any person’ may be convicted of treating and such conviction impacts, inter alia, their membership, or prospective membership, in the House. Such a person necessarily included members of the House of Assembly.

‘Weight of Jurisprudence Point’,

The Court observed that the cases relied on by the Appellants were all inapplicable to the present appeal as they dealt with the quite separate issue of the exclusive jurisdiction of the High Court, to determine the validity of an election by way of election petition. The proceedings before the Magistrate did not directly concern any question of the validity of elections, it concerned the criminal prosecution of the summary offence of treating.

 ‘Equality Before the Law Point’,

The Court observed that the Appellants’ contention, if correct and put into practice would create two categories of offenders, that is, ordinary citizens subject to the summary prosecution process and members of the House who were immune from it. Such an interpretation offended the principles of equality before the law and the rule of law which were deeply embedded in the Constitution. There was no evidence that it was the intention of the Legislature of Dominica to create this bifurcation in the exposure to the criminal law.

In a concurring judgment, Burgess J. agreed with the decision of the majority, that the appeal should fail as the Elections Act created a two-pronged punitive approach aimed at eliminating corrupt electoral practices, first, the imposition of criminal consequences and second, the unseating of successful candidates. A comparative analysis of legislation from various Commonwealth jurisdictions demonstrated that this two-pronged approach is not anomalous. The Appellants argued that the words, “every person” in Section 56 of the Elections Act did not encompass successful candidates, and Justice Burgess found that in the absence of express language by Parliament, that argument must fail.

In view of the above, appeal was dismissed.[Roosevelt Skerrit v. Antoine Defoe, CCJ Civil Appeal No DMCV2020/001, decided on 09-03-2021]


Arunima Bose, Editorial Assistant has reported this brief.

Op EdsOP. ED.

Introduction

A commercial contract stipulates the terms whereupon the contracting parties jointly conduct their proposed business or a transaction. At times, the parties are unable to agree to a governing law clause. In such situations, where the governing law clause is intentionally omitted, some rules/guidelines are resorted to determine where the governing law of the contract should be. The rules include – determining the location of the parties, the obligations that are to be performed in different jurisdictions, and other factors.

The complexity of the rules makes determining of the governing law of contract difficult. The purpose of a governing law clause is to express the parties’ mutually agreed choice as to what that law should be. Governing law or choice of law is different from the choice of jurisdiction. The selection of choice of law and choice of jurisdiction clauses (in contracts) is more important than an afterthought, pro forma usage, or cut and paste, as the subject-matter of commercial contracts regularly expands beyond domestic intra-State activities and into inter-State and international trade and commerce.

Often international business and trade involves traders belonging to different countries whose legal systems may differ in many ways to that of the other, presenting complicated and even conflicting features. The courts of each country have jurisdiction only within the territorial limits of the country concerned. The rules of private international law resolve the issues concerning conflict of laws, which arise because of differences between the law of the country of nationality of a person and that in which that person may reside, or of which he may acquire nationality. These issues most frequently arise in relation to personal matters such as marriage and divorce, custody of children, abduction of children, adoption and succession. These rules are mainly based on court decisions.

Conflict of laws may also arise in such cases where two or more parties belonging to different countries enter into a contract, and they are governed by two different systems of laws. Conflict of laws or private international law may be described as physics of the law because it is concerned with the application of the law in space and time. It is that part of private law of a country which deals with cases having a foreign element[1].

The first question that arises in conflict of laws cases is whether the forum or the court has the power to decide the case in hand. If the answer to the first question as to the jurisdiction of the court is positive, then the second issue that arises is which law should be applied to decide the dispute?

Choice of law

There has remained always a conflict regarding either the place of contracting or the place of performance of parties as the criteria to determine which law should be applied to the issue related to contract arising between two parties. But under the Indian and English private international law, the autonomy of the parties in this regard has been consistently recognised and the parties are deemed to be free to choose any law which can govern their contract.

However, this freedom of choice is not absolute and is subject to certain restrictions—the reason is that such choice may mean the exclusion of the operation of some law, which could be otherwise applicable. It means this choice makes that applicable law, inapplicable in particular circumstances. Subject to certain limitations, the court will give effect to a choice of law by the parties, either express or implied.

For international contracts, in the absence of any domestic codification on that aspect, the Indian judiciary relies, for its persuasive value, on the traditional common law position as enunciated in Vita Food Products Inc. v. Unus Shipping Co. Ltd.[2], wherein it was held by the Privy Council that the parties were free to choose any governing law, irrespective of its connection with the contract, provided that the choice was bona fide, legal and not contrary to public policy.

Choice of forum

In some countries, parties are at liberty to make a choice of judge or arbitrator to decide the dispute arising between them. Moreover, the parties may also make a choice of the law which the Tribunal shall apply at that particular place. In case the parties do not express the specific law which the Tribunal has to follow, then the English private international law is there to solve this problem. There is a rule which is recognised in the English private international law i.e. elegit judicem elegit jus, which means the implied choice of law can be inferred from the express choice of the Tribunal. The Latin term “lex fori” has its relevance here that means law of the forum. Basically, it means that once the parties have chosen a particular tribunal, then the law of that forum should be the governing law to the dispute of the parties.

In Hemlyn and Co. v. Talisker Distillery[3], the question was that whether in view of the arbitration clause, could an action under the contract be brought in Scotland. Thus, while answering this question the House of Lords held that a contract was governed by English law, according to which the arbitration clause was valid, and the courts of Scotland had no jurisdiction to decide upon the merits of the case until unless the arbitration proved abortive. The observation of Lord Herschel, L.C. in this case was as:

“The present case solved the conflicting situation in a very good manner. He further stated that it appears to me that the language of the arbitration clause very clearly indicated that the parties intended that the rights under that clause should be determined according to the law of England.”

In James Miller and Partners Ltd. v. Whitworth Street Estates (Manchester) Ltd.[4], again it was observed by the House of Lords that the contract with reference to arbitration would have been absolutely null and void if it were to be governed by the law of the country which did not have any real and close connection with the contract. It is unreasonable to attribute that intention on the parties which was not actually their intention. Thus, it is easy to construe the contract in the language which could be used as an indication that the contract or that term of the contract was to be governed by the law of a particular country.

In Tzortzis v. Monark Line A/B[5], it was held by the Court of Appeal that from the choice of English arbitration the natural inference was also about the choice of English law as it was provided that the matters of dispute between the parties were to be decided by arbitration in London, and this choice raises an irresistible inference which overrides all the other factors. However, the freedom of choice of law which was provided was subject to certain conditions like by selecting such jurisdictions the parties could not escape from the obligation, which would otherwise had normally arisen under the law, with which the contract has the most real and closest connection.

Indian jurisprudence and choice of law

In India, the situation is more complicated because here the applicable law is the personal law relating to these matters which is determined by the religion of the individuals concerned. India is also a member of the Hague Conference on Private International Law. In international trade and commerce, every commercial activity is generally preceded by a contract fixing the obligations of the parties to avoid legal disputes. But in this ever-changing world of trade and commerce, disputes between parties are inevitable. No matter how carefully a contract is drafted, a party to the contract may understand his right and obligations in a different way.

Under Indian law, certain rules related to conflict of laws are mentioned specifically in the Civil Procedure Code, 1908. The rules relating to jurisdiction in action inter parties are laid down in Sections 19, 20 of the Code. Section 19 is confined to suit for compensation for wrongs to person or movables. But this section is confined to torts committed in India and to defendants residing in India. It does not include within its ambit the suits in respect of foreign torts. Such cases are covered by Section 20.

The Explanation to this section says that a corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. Essentially, the Indian rules of private international law are identical to the rules of English private international law. Thus, it is submitted that Indian courts should not construe strictly the requirement of residence in private international law cases, nor should it exercise jurisdiction over persons on whom process has not been served just because cause of action arises within jurisdiction.

If a person to the court submits to the jurisdiction then the court gets the jurisdiction to try the action and a decree or an order is passed if such action will be valid internationally. Mere appearance in the court is considered to be the submission. A person may submit to the court either impliedly or by way of express stipulation in the contract. If a person is outside the jurisdiction, the court will have the jurisdiction on him only if he submits to the jurisdiction of the court. In case, the foreign defendant does not submit to the jurisdiction of the court, then the judgment delivered in his absence would be null and void.

Indian private international law is majorly governed by judiciary decisions in concrete cases. The courts have generally adopted the English rules of private international law. The Supreme Court in Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh[6] had to decide whether Indian private international law gave the parties the freedom to choose whatever governing law from any part of the world. The case pertained to the recovery of balance from the plaintiff who resided in Pakistan and was in business with the defendant in India.

It was observed that the subjective theory may produce strange results because of the unconnected law and it is possible that there must be difficulty in enforcing the law if it is illegal or against the public policy. Similar observation was made in British India Steam Navigation Co. Ltd v. Shanmughavilas Cashew Industries[7], where the court emphasised that the choice of proper law must be bona fide and legal, and not against public policy. Similarly, the Calcutta High Court in Rabindra N. Maitra v. LIC of India[8] upheld the same principle and observed that there would be no justification for a choice of an unconnected law in the contractual agreement between international parties, unless the law is also the proper law.

However, it has been argued that the position has changed subsequently, and in NTPC v. Singer Co.[9], the Supreme Court abandoned the restrictive approach that confined the parties to make a choice of the governing law that was unconnected to the contract. The parties were permitted to make a choice of law even if there was no geographical nexus between the obligation in the contract and the chosen law. Thus, it implied that the parties became more autonomous in their choice of law. The court also extended the autonomy by observing that the parties were free to choose different laws to govern different parts of the contract. It also observed that the only limitation to the parties’ freedom to choose a governing law for their international commercial contract would be that such choice was not bona fide or was opposed to public policy. Similarly, in Modi Entertainment Network v. WSG Cricket Pte. Ltd.[10], the Supreme Court again clarified that Indian private international commercial law permits the choice of any legal system even if the legal system does not have any connection with the contractual obligation in question.

Conclusion

In recent years, the basic features of the conflict of laws, its methodology, and its governing ideologies have been seriously questioned. No scholarly or judicial consensus is found on the choice of law rules. Particularly, the conventional ideas of seeking uniformity of result and of establishing equality between domestic and foreign laws have been criticised on the grounds that such ideas are not pragmatic and appropriate, since the domestic courts actually do and in fact, should be inclined to domestic law in a situation where it is one of the applicable legal systems. To conclude, it can be stated that the stability and fairness of international legal undertakings seem to depend upon the strengthening of this renewed attempt to supra-nationalise the conflict of laws.


*Bhumesh Verma is Managing Partner at Corp Comm Legal and can be contacted at bhumesh.verma@corpcommlegal.in.

**Ritisha Gupta, Research Assistant and final year student with Hidayatullah National Law University, Raipur, e-mail: ritishagupta02@gmail.com

[This article was first published in the Practical Lawyer Magazine, March Issue 2021. Republished with the kind permission of Eastern Book Company.]

[1] Professor Emeritus, I.O. Agbede, Conflict of Laws, (1998) at p. 513.

[2] 1939 AC 277.

[3] (1894) AC 202.

[4] 1970 AC 583 : (1970) 2 WLR 728 : (1970) 1 All ER 796.

[5] (1968) 1 WLR 406.

[6] AIR 1955 SC 590

[7] (1990) 3 SCC 481.

[8] 1963 SCC OnLine Cal 48 

[9]  (1992) 3 SCC 551 

[10] (2003) 4 SCC 341.

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud* and MR Shah, JJ has held that under Insolvency and Bankruptcy Code, 2016 (IBC), NCLT has jurisdiction to adjudicate disputes which arise solely from or which relate to the insolvency of the Corporate Debtor. The Court, however, issued a note of caution to the NCLT and NCLAT to ensure that “they do not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the Corporate Debtor. The nexus with the insolvency of the Corporate Debtor must exist.”

Jurisdiction of the NCLT/NCLAT over contractual disputes

“NCLT owes its existence to statute. The powers and functions which it exercises are those which are conferred upon it by law, in this case, the IBC.”

The NCLT has been constituted under Section 408 of the Companies Act, 2013 ―to exercise and discharge such powers and functions as are, or may be, conferred on it by or under this Act or any other law for the time being in force.

Sub-section (1) of Section 60 provides the NCLT with territorial jurisdiction over the place where the registered office of the corporate person is located. NCLT shall be the adjudicating authority ―in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors.

The institutional framework under the IBC contemplated the establishment of a single forum to deal with matters of insolvency, which were distributed earlier across multiple fora. In the absence of a court exercising exclusive jurisdiction over matters relating to insolvency, the corporate debtor would have to file and/or defend multiple proceedings in different fora. These proceedings may cause undue delay in the insolvency resolution process due to multiple proceedings in trial courts and courts of appeal.

“A delay in completion of the insolvency proceedings would diminish the value of the debtor‘s assets and hamper the prospects of a successful reorganization or liquidation. For the success of an insolvency regime, it is necessary that insolvency proceedings are dealt with in a timely, effective and efficient manner.”

Residuary jurisdiction of the NCLT under section 60(5)(c)

The residuary jurisdiction conferred by statute may extend to matters which are not specifically enumerated under a legislation. While a residuary jurisdiction of a court confers it wide powers, its jurisdiction cannot be in contravention of the provisions of the concerned statute.

The residuary jurisdiction of the NCLT under Section 60(5)(c) of the IBC provides it a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings.

“If the jurisdiction of the NCLT were to be confined to actions prohibited by Section 14 of the IBC, there would have been no requirement for the legislature to enact Section 60(5)(c) of the IBC. Section 60(5)(c) would be rendered otiose if Section 14 is held to be the exhaustive of the grounds of judicial intervention contemplated under the IBC in matters of preserving the value of the corporate debtor and its status as a ‘going concern’. “

Ruling on facts 

In the present case, NCLT stayed the termination by the Gujarat Urja Vikas Nigam Limited of its Power Purchase Agreement (PPA) with Astonfield Solar (Gujarat) Private Limited on the ground of insolvency. The order of the NCLT was passed in applications moved by the Resolution Professional of the Corporate Debtor and Exim Bank under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. On 15 October 2019, the NCLAT dismissed the appeal by Gujarat Urja Vikas Nigam Limited under Section 61 of the IBC.

The PPA was terminated solely on the ground of insolvency, since the event of default contemplated under Article 9.2.1(e) was the commencement of insolvency proceedings against the Corporate Debtor. Hence, the NCLT was empowered to restrain the appellant from terminating the PPA. In the absence of the insolvency of the Corporate Debtor, there would be no ground to terminate the PPA. The termination is not on a ground independent of the insolvency. The present dispute solely arises out of and relates to the insolvency of the Corporate Debtor.

“The PPA has been terminated solely on the ground of insolvency, which gives the NCLT jurisdiction under Section 60(5)(c) to adjudicate this matter and invalidate the termination of the PPA as it is the forum vested with the responsibility of ensuring the continuation of the insolvency resolution process, which requires preservation of the Corporate Debtor as a going concern. In view of the centrality of the PPA to the CIRP in the unique factual matrix of this case, this Court must adopt an interpretation of the NCLT‘s residuary jurisdiction which comports with the broader goals of the IBC.”

The Court further explained that the adjudication of disputes that arise dehors the insolvency of the Corporate Debtor, the RP must approach the relevant competent authority. For instance, if the dispute in the present matter related to the non-supply of electricity, the RP would not have been entitled to invoke the jurisdiction of the NCLT under the IBC. However, since the dispute in the present case has arisen solely on the ground of the insolvency of the Corporate Debtor, NCLT is empowered to adjudicate this dispute under Section 60(5)(c) of the IBC.

The Court took further care to clarify that,

“Judicial intervention should not create a fertile ground for the revival of the regime under section 22 of SICA which provided for suspension of wide-ranging contracts. Section 22 of the SICA cannot be brought in through the back door. The basis of our intervention in this case arises from the fact that if we allow the termination of the PPA which is the sole contract of the Corporate Debtor, governing the supply of electricity which it generates, it will pull the rug out from under the CIRP, making the corporate death of the Corporate Debtor a foregone conclusion.”

Conclusion

“NCLT‘s jurisdiction shall always be circumscribed by the supervisory role envisaged for it under the IBC, which sought to make the process driven by trained resolution professionals.”

The jurisdiction of the NCLT under Section 60(5)(c) of the IBC cannot be invoked in matters where a termination may take place on grounds unrelated to the insolvency of the corporate debtor. Even more crucially, it cannot even be invoked in the event of a legitimate termination of a contract based on an ipso facto clause, if such termination will not have the effect of making certain the death of the corporate debtor. As such, in all future cases, NCLT would have to be wary of setting aside valid contractual terminations which would merely dilute the value of the corporate debtor, and not push it to its corporate death by virtue of it being the corporate debtor‘s sole contract.

Section 60(5)(c) of the IBC vests the NCLT with wide powers since it can entertain and dispose of any question of fact or law arising out or in relation to the insolvency resolution process. However,

“NCLT‘s residuary jurisdiction, though wide, is nonetheless defined by the text of the IBC. Specifically, the NCLT cannot do what the IBC consciously did not provide it the power to do.”

The Court, however, made it clear that it’s finding on the validity of the exercise of residuary power by the NCLT is premised on the facts of the case at hand and that it was not laying down a general principle on the contours of the exercise of residuary power by the NCLT. However, it is pertinent to mention that the NCLT cannot exercise its jurisdiction over matters dehors the insolvency proceedings since such matters would fall outside the realm of IBC.

[Gujarat Urja Vikas Nigam Limited v. Amit Gupta,  2021 SCC OnLine SC 194, decided on 08.03.2021]


*Judgment by: Justice Dr. DY Chandrachud

Know Thy Judge| Justice Dr. DY Chandrachud

Appearances before the Court by”

For appellant: Senior Advocate Shyam Diwan and Advocate Ranjitha Ramachandran

For Respondent: Senior Advocate C U Singh and Nakul Dewan

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): The Division Bench of Justice Bansi Lal Bhat (Acting Chairperson) and Dr Ashok Kumar Mishra (Technical Member) observed that:

“I&B Code would not permit the Adjudicating Authority to make a roving enquiry into the aspect of solvency or insolvency of the Corporate Debtor except to the extent of the Financial Creditors or the Operational Creditors, who sought triggering of Corporate Insolvency Resolution Process.”

Present appeal has been heard in ex-parte.

Bench notes that the application of appellant filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 has not been admitted or rejected by the Adjudicating Authority (NCLT, Bengaluru Bench).

Adjudicating Authority disposed of the application directing the respondent to make endeavours for resolution in respect of outstanding debt, failing which the appellant would be at liberty to invoke the arbitration clause contained in the Agreement.

The above finding of the Adjudicating Authority was found to be unique and not in conformity with the provisions embodied in Section 9 (5) of the I&B Code, hence cannot be supported.

Section 9(5) of the I&B Code, 2016:

“9(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), by an order—

(i) admit the application and communicate such decision to the operational creditor and the corporate debtor if,—

(a) the application made under sub-section (2) is complete;

(b) there is no repayment of the unpaid operational debt;

(c) the invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;

(d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and

(e) there is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.

  1. ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if—

(a) the application made under sub-section (2) is incomplete;

(b) there has been repayment of the unpaid operational debt;

(c) the creditor has not delivered the invoice or notice for payment to the corporate debtor;

(d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or

(e) any disciplinary proceeding is pending against any proposed resolution professional:

Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority.”

The above provision abundantly makes it clear that the Adjudicating Authority has only two options, either to admit Application or to reject the same. No third option or course is postulated by law.

Appellant’s counsel invited Tribunal’s attention to the fact that the Adjudicating Authority took note of the fact that the respondent did not respond to the Demand Notice, demanding the outstanding amount in respect of the four invoices noticed in the impugned order.

Further another point was brought in from the impugned order wherein it was observed that mere acceptance of the debt in question by the Respondent would not automatically entitle the Appellant to invoke the provisions of the Code, unless the debt and default is undisputed and proved to the satisfaction of the Adjudicating Authority.

Bench in view of the above expressed that the Adjudicating Authority should have, in absence of any dispute contemplated under Section 8(2) having been raised by the Respondent as a pre-existing dispute or that the claim of Appellant had been satisfied, proceeded to admit the Application, as no dispute had been raised before it, justifying its disinclination to admit the Application.

We cannot understand as to how the availability of alternate remedy would render the debt and default disputed.

Tribunal further added to its reasoning that

In absence of pre-existing dispute having been raised by the Corporate Debtor or it being demonstrated that a suit or arbitration was pending in respect of the operational debt, in respect whereof Corporate Debtor was alleged to have committed default, the Adjudicating Authority would not be justified in drawing a conclusion in respect of there being dispute as regards debt and default merely on the strength of an Agreement relied upon by the Appellant.

Adjudicating Authority clearly landed in error by observing that the course adopted by it was warranted on the principle of ease of doing business, ignoring the fact that such course was not available to it, ease of doing business only being an objective of the legislation.

Hence, while allowing the appeal and setting aside the impugned order, Tribunal directed the Adjudicating Authority to pass an order of admission. [Sodexo India Service (P) Ltd. v. Chemizol Additives (P) Ltd., 2021 SCC OnLine NCLAT 18, decided on 22-02-2021]

Case BriefsHigh Courts

Madhya Pradesh High Court: G.S. Ahluwalia, J., disposed of a writ petition setting aside the orders passed by the Board of Revenue and Additional Commissioner in relation to a matter of Will.

The petition contained that the husband of the petitioner had one-half share in the agricultural land bearing survey nos.1031 area 0.81 hectare, 1033 area 0.15 hectare, 1040 area 0.72 hectare, 1084 area 0.76 hectare total area 2.44 hectare situated in a village. The husband of the petitioner had died issue-less on 17-5-2006 due to illness. The respondents had then filed an application for mutation of their names on the basis of a “Will” purportedly executed by the deceased. The petitioner submitted her objection and claimed that she is the sole legal heir of deceased, being his legally wedded wife. After which the Tehsildar had rejected the application filed by the respondents, being aggrieved an appeal was filed before the Court of SDO which was again rejected. Finally respondent made n appeal before the Additional Commissioner which was allowed after relying upon the so called “Will” executed by deceased and the names of the respondents were directed to be mutated in the revenue records, aggrieved by which the petitioners had preferred an appeal before the Additional Commissioner which was dismissed. Thus, the instant appeal was filed.

The Court relied on the decision given in Ranjit v. Nandita Singh, MP No.2692 of 2020 which talked about the Conferral of Status of Courts on Board and Revenue Officers where it was clearly held that the revenue authorities have no jurisdiction to decide the correctness and genuineness of a “Will” and if the propounder of the “Will” wants to take advantage of the “Will”, then he had to get his title declared from the Civil Court of competent jurisdiction.

The Court while setting aside the orders passed by the Board of Revenue and Additional Commissioner directed that the revenue authorities restore the names of the petitioner in the revenue records.[Ramkali v. Banmali, 2021 SCC OnLine MP 359, decided on 17-02-2021]


Suchita Shukla, Editorial Assistant has put this story together.

Case BriefsSupreme Court

Supreme Court: The bench of Dr. DY Chandrachud* and MR Shah, JJ has held that the presence of an arbitration clause within a contract between a state instrumentality and a private party does not act as an absolute bar to availing remedies under Article 226.

“If the state instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably, relief under the plenary powers of the Article 226 of the Constitution would lie.”

In the case where it was argued that a remedy for the recovery of moneys arising out a contractual matter cannot be availed of under Article 226 of the Constitution, the Court clarified that the recourse to the jurisdiction under Article 226 of the Constitution is not excluded altogether in a contractual matter. A public law remedy is available for enforcing legal rights subject to well-settled parameters.

“The jurisdiction under Article 226 is a valuable constitutional safeguard against an arbitrary exercise of state power or a misuse of authority. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Court must, undoubtedly eschew, disputed questions of fact which would depend upon an evidentiary determination requiring a trial. But equally, it is well-settled that the jurisdiction under Article 226 cannot be ousted only on the basis that the dispute pertains to the contractual arena.”

The Court, however, made clear that though the presence of an arbitration clause does not oust the jurisdiction under Article 226 in all cases, it still needs to be decided from case to case as to whether recourse to a public law remedy can justifiably be invoked.

[Unitech Ltd. v. Telangana State Industrial Infrastructure Corporation, 2021 SCC OnLine SC 99, decided on 17.02.2021]


*Judgment by: Justice Dr. DY chandrachud 

Know Thy Judge| Justice Dr. DY Chandrachud

Case BriefsHigh Courts

Calcutta High Court: Sabyasachi Bhattacharya, J., reiterated the decision of Supreme Court in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542, regarding whether NCLT and Resolution Professional have jurisdiction to take control and custody of any asset except as subject to the determination of ownership by a court or authority.

“…the power of the resolution professional to take control of any asset, itself, is subject to the determination of ownership by a court or authority.”

Factual Matrix

Kolkata Municipal Corporation filed the present petition challenging an order passed by the National Company Law Tribunal (NCLT) acting as Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016 for handing over physical possession of the office premises.

KMC, in exercise of its authority under Sections 217-220 of the Kolkata Municipal Corporation Act, 1980, had distrained the said property in the recovery of municipal tax dues from an assessee.

Debt of the assessee came within the purview of a Corporate Insolvency Resolution Process (CIRP), thus prompting respondent 4, the Resolution Professional, representing the owner of the asset, to approach the NCLT for handing over of such physical possession of the property-in-question from the KMC.

In view of the above, the instant petition was filed.

Questions that arise in the instant matter are:

  • Whether the writ jurisdiction of this court under Article 226 of the Constitution of India can be invoked in the matter, despite the availability of an alternative remedy;
  • Whether the property-in-question, having been seized by the KMC in recovery of its statutory claims against the debtor, can be the subject matter of a Corporate Resolution Process under the Insolvency and Bankruptcy Code, 2016.

While considering the first question, Bench referred to the decision of Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542, wherein it was held that, in so far as the question of exercise of the power conferred by Article 226, despite the distinction between lack of jurisdiction and the wrongful exercise of the available jurisdiction, should certainly be taken into account by High Courts, when Article 226 is sought to be invoked by passing a statutory alternative remedy provided by a special statute.

Petitioners urged that the NCLT and the Resolution Professional have no jurisdiction to take control and custody of any asset except as subject to the determination of ownership by a court or authority. KMC exercised its powers under Sections 217 to 220 of the 1980 Act to distraint the asset of the debtor and to attach the property, to be followed by sale in future, but the said exercise of power was argued to be beyond the purview of IBC. Resolution Professional and the NCLT acted de hors their statutory powers in seeking to take control and custody of the asset.

Hence, the challenge in the present petition was on the ground of absence of jurisdiction and not ‘wrongful exercise of the available jurisdiction’, thus bringing it within the fold of Article 226 of the Constitution. Therefore, petition is maintainable.

“…although a wrongful exercise of available jurisdiction would not be sufficient to invoke the High Court’s jurisdiction under Article 226 of the Constitution, the ground of absence of jurisdiction could trigger such invocation.”

Considering the second questions posed above, Bench stated that it would be particularly apt to consider the tests laid down by the Supreme Court in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542.

In the above-referred decision, while discussing Section 60(5)(c) of IBC, Supreme Court held, “…a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law, cannot, by any stretch of imagination, be brought within the fold of the phrase “arising out of or in relation to the insolvency resolution”.

Further, the Court, while moving ahead in the analysis of the matter and reaching a conclusion expressed that there cannot be any doubt about the proposition that the contours of the powers conferred on the Adjudicating Authority, being the NCLT, under Section 60 of the IBC, are defined by the duties of the interim resolution professional under Section 18.

What is to be seen to examine the charter of the interim resolution professional is whether the assets, of which control and custody is sought to be taken by the professional, are sub judice before a court or authority for the purpose of “determination of ownership” thereof.

In the instant matter, petitioner proceeded with acquiring the possession of the property-in-question and putting up the same for attachment under its powers as flowing from Sections 217-220 of the 1980 Act.

The above-said provision envisages a situation where an amount of tax, for which a bill has been presented under Section 216 of the Act, is not paid within 30 days from the presentation thereof.

In view of the event, Municipal Commissioner may cause a demand notice to be served on the person for such liability and on the non-payment of such tax, petitioner shall under Section 219 of the 1980 Act issue a distress warrant, for distraint of the property. Further in the process, person charged with the execution of the warrant in the presence of two witnesses, makes an inventory of the property which he seizes under such warrant. Thereafter, steps are taken for disposal of such property, including attachment and sale.

KMC followed the above-laid procedure and took possession of the disputed property for non-payment of tax. Hence, there was no scope of any ‘determination’ of ownership of the property by the KMC. Thus, in view of the Supreme Court decision in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542  a finalised claim would come within the purview of “operational debt” under Section 5(21) of the IBC. Hence, the Resolution Professional has jurisdiction to take custody and control of the same.

Parameters of powers of the NCLT, as an Adjudicating Authority under Section 60 of the IBC, is defined and circumscribed by the scope of Section 18(f)(vi) of the IBC. Such exercise of power would fall within the ambit of the expression “arising out of or in relation to the insolvency resolution”, as envisaged in Section 60(5)(c) of the IBC.

Crown Debts

Referring to the decision of Supreme Court in Commr. of Income-tax v. Monnet Ispat Energy Ltd., [Special Leave to Appeal (C) No (S) 6438 of 2018], wherein it was held that income tax dues, being in the nature of crown debts do not take precedence even over secured creditors, Bench stated that the said proposition holds true in the present matter as well.

Hence, KMC’s claim being in the nature of crown debts, cannot gain precedence over other secured creditors, as contemplated in the IBC.

Therefore, in view of the Supreme Court decision in Embassy Property Developments (P) Ltd. v. State of Karnataka, 2019 SCC OnLine SC 1542 Finalised claim of the KMC can very well be the subject-matter of a Corporate Resolution Process under the IBC.

Accordingly, the Court decided the above two questions in affirmative.[Kolkata Municipal Corpn. v. Union of India, 2021 SCC OnLine Cal 145, decided on 29-01-2021]


Advocates who appeared:

For Petitioners:

Ashok Kumar Banerjee, Sr. Adv.,

Rajdip Roy,
Anindya Sundar Chatterjee,
Goutam Dinda

For Respondent 3:

Jishnu Chowdhury,

Dilwar Khan,
Sondwip Sutradhar

For Respondent 4:

Rishav Banerjee,

Pronoy Agarwal,

Ankita Baid

Case BriefsSupreme Court

Supreme Court: The 3-Judge Bench comprising of Ashok Bhushan*, R. Subhash Reddy and M.R. Shah allowed the instant appeal against the order of High Court of Uttrakhand regarding summon issued under S. 319 of CrPC. The Bench said,

“Order dated 18-09-2019 by which the Trial Court has directed appearance of the accused-appellant is to be taken to its logical end but that order cannot provide a shield of protection to earlier order dated 17-08-2019 by which appellant has been summoned.”

The appellant was made an accused under Ss. 147, 148, 149, 323, 324, 307, 452, 504 and 506 of IPC along with six other accused. Police, after carrying out investigation submitted a charge-sheet exonerating the appellant. During trial, the informant was examined as PW-1. In his Statement, the informant implicated all accused including the appellant but no specific role was assigned to the appellant.

An application under S. 319 CrPC was filed by the informant before the Sessions Judge praying that appellant be also summoned in the case. The Trial Court rejected the said application, pursuant to which the applicant approached the High Court by revision appeal to take actions against the appellant. The High Court, while relying on Rajesh v.State of Haryana, (2019) 6 SCC 368, remitted the matter back to the Trial Court and directed that the application under Section 319 CrPC to should be considered afresh.

Pursuant to the order of the High Court, the Trial Court allowed the application and summoned the appellants by Order dated 17-08-2019. On non-appearance of the appellant, the Trial Court had issued non-bailable warrant to the appellant and a notice under S. 446 CrPC was also issued.

The appellant filed Criminal Revision before the High Court against the order dated 17-08-2019 which was dismissed by the High Court on the ground that since the proceeding in pursuance to allowing the application under Section 319 CrPC had already been initiated, revision appeal could not be entertained.

In Hardeep Singh versus State of Punjab, (2014) 3 SCC 92, the Constitution Bench had elaborately considered all contours of Section 319 CrPC. The Court had held,

power under S. 319 CrPC is a discretionary and extra-ordinary power which has to be exercised sparingly. It is not to be exercised because the Magistrate or the Sessions Judge is of the opinion that some other person may also be guilty of committing that offence. Only where strong and cogent evidence occurs against a person from the evidence led before the Court that such power should be exercised and not in a casual and cavalier manner.”

Hence, the Bench opined that the High Court had completely erred in holding that since the proceedings in pursuance of Section 319 CrPC had already been initiated, no simultaneous challenge to the impugned order dated 17-08-2019 summoning the revisionists under Section 319 CrPC would be tenable before the High Court till the order dated 18-09-2019 subsist. The Bench held that,

“Subsequent proceedings, in no manner could be a ground to not consider the correctness and validity of order dated 17-08-2019 and when it is found that order dated 17-08-2019 could not have been passed in exercise of jurisdiction under S. 319 CrPC, all subsequent proceedings thereto shall automatically come to an end.”

Therefore, the order of the High Court was held to unsustainable and deserving to be set aside. The High Court was directed to consider the Criminal Revision afresh.

[Ajay Kumar v. State of Uttarakhand,  2021 SCC OnLine SC 48, decided on 29-01-2021]


Kamini Sharma, Editorial Assistant has put this report together 

*Judgment by: Justice Ashok Bhushan

Op EdsOP. ED.

The advent of the internet has enabled individuals to copy and distribute protected marks and materials with ease, while its accessibility across territories has complicated the issue of determining jurisdiction for legal action. The issue of jurisdiction has been raised before courts time and again, and the volume of adjudication upon it is extensive. This article summarises takeaways from said adjudication, and sets out the principles currently guiding the choice of forum in a suit involving online infringement of trademarks or copyrights.

I. Legislative Backdrop

The general provision governing territorial jurisdiction in respect of intellectual property disputes is contained under Section 20 of the Civil Procedure Code, 1908 (hereinafter “CPC”), which provides that a suit may be instituted at the court within whose jurisdiction:

  1. the defendant resides, carries on business, or personally works for gain; or
  2. where a part of or the entire cause of action arises.

According to the accompanying explanation, a defendant corporation is deemed to carry on business at its sole/principal office, or at a subordinate office if the cause of action arose at the place where such subordinate office is located.

More specifically, the issue of territorial jurisdiction is governed by Section 62 of the Copyright Act, 1957 (hereinafter “the CR Act”) and by  Section 134 of the Trade Marks Act, 1999 (hereinafter “the TM Act”),  both of which are pari materia. According to the same, suits are to be instituted at a “district court having jurisdiction”, which includes courts within whose territorial limits the plaintiff resides, carries on business, or personally works for gain. These provisions may be availed only in cases of infringement, and not in cases of passing off i.e. only a registered right-holder may sue at the place of its residence or business.

It is to be noted that any explanation for the aspect of “carrying on business” similar to the one for a defendant corporation under Section 20 CPC is absent from the text under both the CR Act and the TM Act (hereinafter collectively “the IP Acts”). Despite that, the explanation has been read into the IP Acts by virtue of the decisions in Indian Performing Rights Society Ltd. v. Sanjay Dalia[1] (hereinafter “Sanjay Dalia”) and Ultra Home Construction (P) Ltd. v. Purushottam Kumar Chaubey[2] (hereinafter “Ultra Home”). This acts as a restriction on forum shopping by plaintiffs and is discussed later in the article.

Ordinarily, the doctrines of lex specialis and lex posterior would apply, and the provision under CPC would be restricted. However, in light of the language used in the IP Acts, the Supreme Court has held that the jurisdiction under CPC is not ousted[3]; rather the IP Acts merely provide an additional forum where suits may be filed. The purpose behind this additional route is to expose an infringer with inconvenience rather than compelling the sufferer to chase after the former.

Since content, products and services on a website or mobile application are available throughout territories wherever the reach of the internet extends, there are two pertinent questions that need answering:

  1. In respect of an entity having an online presence, where exactly can a plaintiff or a defendant be said to “carry on business”?
  2. In respect of infringing goods/services offered or sold over the internet, where exactly does the “cause of action” arise?

Answers to these can assist us in addressing the conundrum of jurisdiction around internet-based intellectual property disputes, and pinpoint the appropriate forum for institution of a suit.

II. “Carrying on Business”

In Dhodha House v. S.K. Maingi[4] (hereinafter “Dhodha House”), it was observed that the presence of any man was not necessary for the purpose of “carrying on business”, and the Supreme Court set out three fundamental conditions that had to be satisfied for establishing that an entity carries on business within a court’s jurisdiction:

  1. Presence of an agent who carries on business exclusively for and in the name of the principal;
  2. Agency in the strict sense of the term; and
  3. An “essential part” of the business must take place in that place.

However, in World Wrestling Entertainment Inc. v. Reshma Collection[5] (hereinafter “WWE”), the Division Bench clarified that in case of web-based business models, the first two conditions set out in Dhodha House[6] will not apply, since they specifically relate to agents. What warrants consideration is whether in transactions over the internet  the third condition stipulating performance of the essential part of the business is satisfied, and if yes, where?

It was noted that display of goods on a website amounts to an invitation to offer against which an offer is made by a customer at the place where he or she is located. If accepted, the money is paid from the customer’s location, and the goods are delivered to the same location. Owing to the nature of the internet, the offer and acceptance are instantaneous. Keeping these factors in mind, it was held that the availability of transactions through a website at a particular place is virtually the same as a seller having a shop at that place in the physical world, and therefore, such seller would be regarded as carrying on business at that place.

The principle expounded in WWE[7] has been upheld and applied in subsequent cases. In Millennium & Copthorne International Ltd. v. Aryans Plaza Services (P) Ltd.[8] (hereinafter “Millennium & Copthorne”), it was clarified that service providers would also attract jurisdiction at places where customers can make a mere reservation (even through third-party websites), whether the reservation concludes into a transaction or not. For example, if there is a hotel located at A, and through a tourism website, customers at B and C can book a room at the hotel, the hotel would be carrying on business at B and C, and would attract jurisdiction on this ground at both of those places in addition to A.

III. Cause of Action

The determination of the cause of action, and thereby, jurisdiction under Section20 CPC in an online context has been examined extensively in Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy[9] (hereinafter “Banyan Tree”); a case where interestingly, neither the plaintiff nor the defendant was located within the territorial limits of the court. Here, the Division Bench of the Delhi High Court decided that mere accessibility or interactivity of a website in a particular place would not confer jurisdiction to courts in that place. Rather, the plaintiff must establish that the defendant “purposefully availed” itself of the jurisdiction at the place of suing. After noting common law developments in UK and USA, the following elements were held necessary to show that the cause of action partly arose in a particular place through the use of internet:

  1. Specific targeting of customers in that place;
  2. Conclusion of commercial transactions with such customers; and
  3. Injury to plaintiff’s business, goodwill or reputation in that place.

Thus, a rigorous standard to determine cause of action and jurisdiction in cases of online transactions was set up. Over the years, however, adjudication has diluted this standard. In Sholay Media and Entertainment (P) Ltd.  v. Yogesh Patel[10], the Court considering that mere display of a trade mark at an exhibition confers jurisdiction[11] observed that an act of advertising counterfeit products or soliciting customers therefor in a place would constitute a part of the cause of action, and courts in such place would accordingly have jurisdiction.

Similar views have been held in Burger King Corpn. v. Techchand Shewakramani[12] and in Exxon Mobil Corpn. v. Exoncorp (P) Ltd.[13] (hereinafter “Exxon Mobil”).  According to these decisions, the cause of action arises in each and every place where infringement/passing off occurs. Since, in addition to actual sales, advertisements and promotions too constitute infringement according to the IP Acts, the cause of action partly arises in all places where such advertisements and promotions are made. The courts exercising jurisdiction in all those places would thus be appropriate fora for institution of proceedings.

IV. Restriction on Forum Shopping

Guided by the motive of aiding convenience, the IP Acts provide for an additional forum where a registered right-holder could sue for infringement. However, the motive was never to enable a plaintiff to indulge in forum shopping, and the legislature did not attend to require either party to travel to distant places. Therefore in Sanjay Dalia[14], the Supreme Court interpreted Section 62 of the CR Act and Section 134 of the TM Act in a manner that allowed the availment of the additional route to plaintiffs while restricting harassment of defendants through filing of suits at far-flung places.

It was noted that generally, a plaintiff under the IP Acts ought to file a suit at the place of ordinary residence or where the principal office is situated. However, if a right-holder is residing or carrying on business at a place where the cause of action has also arisen, the suit must be filed at that place itself – the IP Acts thus do not allow the right-holder to travel to a far-off place where it carries on business for the purposes of instituting proceedings. For example, if a company has its registered office at A and branch offices at B and C, with the cause of action arising at B, the appropriate forum for filing a suit under the IP Acts would be the court exercising jurisdiction over B.

This position has been adopted and further clarified in Ultra Home[15], where specific scenarios contemplating the plaintiff as a corporation were set out as follows:

Sl. No. Place of principal or registered office Place of subordinate or branch office Place where cause of action arose Place where plaintiff may sue under IP Acts
1. A C A
2. A B A A
3. A B B B
4. A B C A

It is important to remember that this stance is not in derogation of Dhodha House[16].  While the Court in that case elucidated upon the meaning of the phrase “carrying on business”, in Sanjay Dalia[17], the Court defined the geographic limits for institution of a suit under the IP Acts. The above table is applicable in scenarios where one seeks to sue under Section 62 of the CR Act or under Section 134 of the TM Act, and is in addition to the fora available to a plaintiff under Section 20 CPC.

V. Conclusion: Synopsis

Section 62 of the CR Act and Section134 of the TM Act provide a forum additional to those under Section 20 CPC where a plaintiff may institute proceedings. However, the jurisdiction under IP Acts may only be utilised in respect of a registered copyright/trade mark; in cases of passing off, only the jurisdiction under CPC may be availed.

In a case involving infringement of a copyright/trade mark, jurisdiction may be invoked either under the IP Acts or under CPC. Both are individually sufficient for determining the appropriate forum of dispute.

By virtue of Sanjay Dalia[18], the plaintiff’s right to sue under the IP Acts has been restricted to those places of residence or business where there is an overlap with the cause of action. Alternatively, the cause of action ipso facto confers jurisdiction under CPC to courts in the place where it has arisen, regardless of whether that place has an office/residence of the plaintiff/defendant or not.

In context of disputes over the internet, the scope of “carrying on business” has been elucidated in WWE[19] while the scope of “cause of action” has been expounded in Banyan Tree[20]. The ratios of these decisions have been applied and clarified in the subsequent decisions of Millennium & Copthorne[21] and Exxon Mobil[22] to hold that jurisdiction is conferred even in places where a website advertises infringing goods and services or facilitates the mere making of bookings or reservations.

These decisions have greatly expanded the ambit of jurisdiction in cases of online intellectual property violations, so far so that they were recently applied in HT Media v. Brainlink International[23] towards the exercise of extra-territorial jurisdiction to injunct the infringing activities of a defendant located in New York.

Clearly, Section 20 CPC has a wider scope than jurisdiction under the IP Acts, and in context of intellectual property violations over the internet, right-holders would be able to invoke jurisdiction on the basis of “cause of action” under CPC with greater ease than on the ground of “carrying on business”. To demonstrate the same, the table provided by the Court in Ultra Home[24] is reproduced below, with an additional column setting out the choice of forum under CPC as well.

Sl. No. Place of principal or registered office Place of subordinate or branch office Place where cause of action arose Place where plaintiff may sue under IP Acts Place where plaintiff may sue under CPC
1. A C A A, C
2. A B A A A
3. A B B B B
4. A B C A A, C

*Practising Lawyer, New Delhi. Author can be reached at aggarlaw@gmail.com.

[1] (2015) 10 SCC 161

[2] 2016 SCC OnLine Del 376

[3] Exphar SA v. Eupharma Laboratories Ltd., (2004) 3 SCC 688

[4] (2006) 9 SCC 41

[5] 2014 SCC OnLine Del 2031 : (2014) 60 PTC 452 

[6] Supra Note 4.

[7] Supra Note 5.

[8] 2018 SCC OnLine Del 8260

[9] 2009 SCC OnLine Del 3780

[10]2014 SCC OnLine Del 7704

[11] Laxman Prasad v. Prodigy Electronics Ltd., (2008) 1 SCC 618

[12] 2018 SCC OnLine Del 10881

[13] 2019 SCC OnLine Del 9193

[14] Supra Note 1.

[15] Supra Note 2.

[16] Supra Note 4.

[17] Supra Note 1.

[18] Ibid.

[19] Supra Note 5.

[20] Supra Note 9.

[21] Supra Note 8.

[22] Supra Note 13.

[23] 2020 SCC OnLine Del 1703

[24] Supra Note 2.

Case BriefsForeign Courts

I.Introduction

The Brownlie case[1], subject of comment on jurisdictional aspects of “damage” in tortious claims, centered on the rules applicable on service out where tort claims have connections with UK Court, only to the extent where claimant suffers consequential damages within its territory.

II. Brief Description of Facts

Litigation before the High Court of England and Wales[2] commenced between Lady Christine Brownlie, widow of renowned international lawyer Sir Ian Brownlie QC and Four Seasons Holdings Incorporated (Canadian Corporation) running a chain of hotels by the name and style of Four Seasons. She along with her husband, daughter and grandchildren suffered a tragic accident in Cairo, Egypt, on a holiday. Their excursion on 3-1-2010 resulted in a car crash whereby Lady Brownlie and the grandchildren survived serious injuries. However, Sir Ian Brownlie and their daughter died.

It is Lady Brownlie’s evidence that on her previous visit she had taken a brochure, published and circulated by Four Seasons advertising safari tours provided by them. She contacted the hotel before leaving England for the holiday through telephone and made a booking to hire a chauffeur-driven vehicle for an excursion with the concierge of the hotel.

Lady Brownlie’s claims were against — (a) Four Seasons Holdings Inc., the holding company (first defendant); (b) Nova Park SAE (Egyptian company), owner of the hotel building (as per Lady Brownlie’s solicitors) (second defendant).

The three tortious claims by Lady Brownlie, through service out jurisdiction after her return to England against defendants (Canadian) were for (a) “personal claim” on account of severe injuries suffered on her person; (b) being a dependent, for loss of her husband under Fatal Accidents Act, 1976; and (c) as an executrix of the estate of Sir Brownlie, for the loss and damages under the Law Reform (Miscellaneous Provisions) Act, 1934.

III. Applicable Rules of Jurisdiction           

Prior to the Brownlie case[3], English courts since 1852 opined that jurisdiction in tort cases was delimited by the power of the court[4], for permission for grant of service on the defendant subject to the claimant’s proof that a serious issue existed for trial by England courts (forum conveniens).[5]

According to English common law, English courts have adjudicatory competence on the basis of “submission” and “presence”. The service of proceedings on a foreign-based defendant is possible wherein the defendant is domicile of European Union (EU) member State/another part of UK. As per Civil Procedure Rules (CPR) (Rules 6.32 and 6.33), the claimant is not required to take the permission of the court and Brussels I Regulation Recast is applicable.

However, in a cross- border commercial matter wherein the defendant is not domiciled, the claimant needs a prior permission of the court before submission of claim form (outside jurisdiction) and an English Court, may grant permission, as per the CPR (Domestic Law of UK).[6] Exercise of discretionary powers[7]  by the court to allow service out are subject to the main obligations being satisfied by the claimant. These mandatory service out conditions on a foreign-based defendant are[8]

(i)      Application for permission (Rule 6.36) setting out grounds in Para 3.1 of Practice Direction 6-B. “Good arguable case” to be tested on the ground that at least one of the claims by the parties falls within the “gateways” of Practice Directions.

(ii)     Belief that the claim has a reasonable prospect of success.

(iii)    A “reasonable issue” must exist between the claimant and defendant and “reasonably” tried on merits by the court.

Discretion is exercised once the court believes that England and Wales are forum conveniens (proper place) for the claim to be brought, by applying the test in Spiliada Maritime Corpn. v. Cansulex Ltd.[9].

In Lady Brownlie case[10], the application for permission of the claim founded on contract to serve out was based on Practice Direction 6-B, Para 3.1(6)(a), contending that the contract was made within jurisdiction. Her claim founded on tort was based on Practice Direction 6-B, Para 3.1(9)(a), further arguing consequential losses were suffered in England. She placed reliance on an earlier decision[11] to support that consequential damage sustained by her in England was sufficient to satisfy requirements of CPR Practice Direction 6-B Para 3.1(9)(a) gateway. However, defendants supported the decision in Erste Group Bank AG (London) v. JSC (VMZ Red October)[12] wherein English courts determined the meaning of damage preferring direct damage interpretation [in torts – CPR  Para 3.1(9)(a)] in line with the Brussels I Regulation Recast.

In my opinion, a fading line of distinction distinguishes direct damage (which completes cause of action) from damage that is consequential leaving applicability to be an open question.

IV. Interpretation of Rules on Jurisdiction and Decision

Claimant, resident of England brought the claim in England against the defendant of a Canadian Holding Company, on the ground that the contract for excursion was with defendant or that defendant was vicariously liable for fatal accident due to driver’s negligence.

The analysis of English Court’s approach is primarily for the determination of “damage” as per CPR Practice Direction 6-B Para 3.1(9)(a), regarded as obiter dicta.

The Court of Appeal[13] unanimously upheld direct damage suffered by the claimant to be outside tort gateway however, the loss of dependency claim was well within its confines.

The Supreme Court[14] opined that Lady Brownlie stumbled on the first aspect to provide the prerequisites of service out as first defendant, the non-trading holding company were neither owners nor operated the Cairo Hotel.

The interpretation of the “tort gatewayas per Practice Direction 6-B, Para 3.1(9)(a) is divided in the ratio of 3:2.

The majority opinion concluded upon the ordinary and natural meaning of gateway, to include, “all detriment, physical, financial and social, which the plaintiff suffers as a result of the tortious conduct of the defendant”. The Court opined that despite personal injury and death of Sir Brownlie in Egypt, the consequential damage (funeral and medical expenses, pain, suffering and loss of amenity) were suffered in England.

 It is my view that the majority opinion has adopted a very wide approach in determining the gateway to test damage suffered to serve out. Any event occurring in England sans “significant damage” will not hold good to prove forum conveniens. It has trodden away from “direct damage”[15] since the applied gateway only mentioned “damage”. No differentiation of direct and indirect/consequential damage is clear in the absence of lucid and precise meaning of the gateway being provided, leading to an unreliable test. This wide approach poses a risk of opening floodgates to many applications to serve out of the jurisdiction, by interfering with the sovereignty of another State. The required cautious approach is not being exercised by the UK jurisdiction, leaving the concept of damage open to questions since the Court has not discarded it by clearly defining the boundaries of tort gateway. The opinion of rejecting the consistency between the gateway and Brussels I Regime is however a test for if the history behind the draft of the gateway is being correctly applied.

I agree with the minority view to the extent of supporting restrictive application of “damage” as personal injury. However, the universal jurisdiction of English courts on tort claims suffered anywhere is vague.

V. Conclusion

Through the majority view, whether expansive interpretation by English courts of tort gateways should be abandoned or that ambiguity can be removed if the meaning is brought within the scope of the interpretation under Article 7(2) Brussels I Regulation for achieving certainty in a situation gripped with the conflict of laws. It is also hard to conclude the approach which the courts will finally adopt in order to attain a balance in the situation of the claimant and defendant considering if the test of forum conveniens is applicable. It can be said that the Supreme Court missed the bus for determining scope of jurisdiction – service out in tortious claims.


* BA LLB (Hons.) Amity Law School, Delhi, Guru Gobind Singh Indraprastha University, Delhi (Batch of 2019).

[1] (2018) 1 WLR 192

[2] Ibid.

[3] (2018) 1 WLR 192

[4] R. 6.36, Civil Procedure Rules.

[5] Seaconsar (Far East) Ltd. v. Bank Markazi Jomhouri Islami Iran, (1994) 1 AC 438 : (1993) 3 WLR 756 HL(E) (Seaconsar).

[6] (2018) 1 WLR 192; R. 6.37, Civil Procedure Rules.

[7] Lord Collins of Mapesbury et al., Dicey, Morris & Collins on the Conflict of Laws, 15th Edn., Sweet & Maxwell,   2012.

[8] R. 6.37, Civil Procedure Rules, UK.

[9] 1987 AC 460 : (1986) 3 WLR 972 HL(E)

[10] (2018) 1 WLR 192

[11] Booth v. Phillips, (2004) 1 WLR 3292:  2004 EWHC 1437 (Comm)

[12] [2015] EWCA Civ 379; [2015] 1 CLC 706, CA

[13] Brownlie v. Four Seasons Holdings Inc., (2016) 1 WLR 1814

[14] (2018) 1 WLR 192

[15]Dumez France SA v. Hessische Landesbank, (Case C-220/88) ,1990 ECR I-49; Marinari v. Lloyds Bank Plc., 1996 QB 217 : (1996) 2 WLR 159 

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Viswanath (Presiding Member) expressed that:

Law is settled that illegal and forceful means cannot be adopted by Banks to seize any property.

The present revision petition was filed by the petitioners against the order dated 31-10-2011 of the West Bengal State Consumer Disputes Redressal Commission wherein the appeal filed by the petitioners was dismissed.

Complainant had purchased a ten-wheeler truck financed by OP 1 and accordingly OP 1 through OP 2. Further, the complainant entered into an agreement with OP 1and accordingly both OP 1and 2 sanctioned a loan of Rs 9,15,000.  The Complainant was supposed to repay a sum of Rs 11,57,700 in 47 instalments.

Thereafter, when it came to the notice of the Complainant that the Registration Certificate bore the name of Opposite Party 3 as a joint registered owner, on enquiry, Opposite Party 3 informed him that he had incurred an expenditure of Rs 45,000 from his own pocket in order to get the loan sanctioned in favour of the Complainant and as and when the Complainant would repay the same, he would take necessary steps to remove his name from the Registration Certificate.

Later, although the Complainant paid Rs 45,000 to Opposite Party 3 in two instalments, Opposite Party 3 took no steps to delete his name from the Registration Certificate. Further, Opposite Party 3 detained the vehicle by force and removed its tyres to render it defunct. According to the Complainant, Opposite Parties, in collusion with each other, seized the vehicle.

Decision

Bench stated that it is not understood as to why respondent 2/OP 3 took possession of the vehicle and removed its tyres and later on said to have voluntarily handed over the possession of the vehicle to the petitioners.

The Petitioners could not place any evidence as to any notice having been given to the Complainant for seizure of the vehicle nor any notice of auction of the vehicle.

Commission expressed that District Forum rightly held “we do not see any reason to accept the contention of Opposite Party 2 that they did not take possession of the vehicle in question by force.”

State Commission observed that the vehicle was auctioned without issuing any prior notice to the Complainant.

Law is settled that illegal and forceful means cannot be adopted by Banks to seize any property. Due notice had to be given for seizure of the vehicle and following the established procedure the vehicle could be seized and later auctioned.

 While concluding the bench decided that the petitioners in collusion with respondent 2/OP 3 adopted illegal and unfair means in seizure of the vehicle which amounted to unfair trade practice.

Jurisdiction of this Commission under Section 21 (b) is very limited. This Commission is not required to re-appreciate and reassess the evidences and reach its own conclusion. The Court can intervene only when the petitioner succeeds in showing that the Fora below has wrongly exercised its jurisdiction or there is a miscarriage of justice.

 Referring to the decision of Supreme Court in Rubi (Chandra) Dutta v. United India Insurance Co. Ltd. (2011) 11 SCC 269 and Lourdes Society Snehanjali Girls Hostel v. H&R Johnson (India) Ltd., (2016) 8 SCC 286, Commission did not find any infirmity or illegality in the impugned order. [Manager, IndusInd Bank Ltd. v. Abani Kanta Das,  2021 SCC OnLine NCDRC 14, decided on 11-01-2021]


Advocates for the parties:

For the Petitioner: Rana Ranjit, Advocate
For the Respondent 1: Somraj Gangopadhyay, Advocate

Case BriefsSupreme Court

Supreme Court: B.R. Gavai, J., while addressing a contempt petition expressed that:

“…contempt proceeding is not like an execution proceeding under the Code of Civil Procedure.”

“…contempt proceedings are quasi-criminal in nature and the standard of proof required is in the same manner as in the other criminal cases.”

“A mere objection to jurisdiction does not instantly disable the Court from passing any interim orders.”

Contempt Petition | Father v. Sons

The instant contempt petition arose out of an unfortunate family dispute between a father and his two sons from his first wife.

Petitioner in the contempt petition Rama Narang was married to Smt. Motia. The respondent’s 1 and 2 i.e. Ramesh Narang and Rajesh Narang so also Rakesh Narang are sons of the petitioner and Smt. Motia. The petitioner and Smt. Motia divorced in 1963. The petitioner thereafter married Smt. Mona. Out of the said wedlock, two sons Rohit and Rahul, as well as a daughter Ramona, were born.

Family Settlement

In accordance with the family settlement, that insofar as ‘Narang International Hotel Limited’ and its subsidiaries were concerned, Rama Narang, Ramesh Narang and Rajesh Narang were to be the only Directors.

Further, it was added that any decision by the Board of Directors was to be taken by the mutual consent of Rama Narang on one hand and Ramesh and Rajesh, on the other hand. Though if the amount of any transaction was exceeding Rs 10 lakhs, then the same could be undertaken only through a cheque signed jointly by Rama Narang on one hand and Ramesh or Rajesh on the other hand.

Though the matter was settled in terms of minutes of Consent Order, there was no quietus to the dispute between the parties.

Allegations

Rama Narang alleged that Ramesh and Rajesh had violated the terms of Consent Order stipulated in clause 3 (c), (d), (e) and (f) of the Minutes of the Consent Order. Violation of the said order amounted to clear disobedience and thus punishable under the Contempt of Courts Act, 1971.

Contempt Proceedings against the Respondents

Court initiated contempt proceedings and requested Justice V.A. Mohta, retired Chief Justice of Orissa High Court to act as a Mediator for settlement of disputes between the parties. However, despite serious efforts made by the Mediator, the settlement could not be arrived at.

A three-Judge Bench of this Court in Rama Narang v. Ramesh Narang, (2006) 11 SCC 114, observed the following:

“32. The object of entering into consent terms and jointly filing the undertaking was to run the family business harmoniously with the active participation of all as a family business but the respondents had taken absolute control of the Company NIHL to the total exclusion of the petitioner.

 33.The respondents have erroneously submitted that joint management and control of the Company means giving veto power to the petitioner. According to the terms of undertaking the petitioner and the respondents were under an obligation to run the Company harmoniously with the active participation of all as a family business but unfortunately the respondents have taken absolute control to the total exclusion of the petitioner. This is contrary to the terms of the undertaking given to this Court.”

The Court in the earlier Order held the respondents guilty of contempt, taking into consideration the fact that immediately sending respondents to jail would create total chaos in the Company and it would also vitally affect the interest of large number of people including the employees of the Company the sentence of imprisonment imposed on the respondents was kept in abeyance.

Consequences

On account of non-cooperation by Rama, the functioning of the Company had come to a standstill. It was contended in the said company petition, that due to non-cooperation by Rama in signing cheques, the employees could not be paid their salaries from November 2007 onwards. It was also contended, that bills for payment to supplier could also not be paid, due to which, the entire functioning of the various units of the Company had been seriously affected.

Company Law Board

CLB noticed, that due to differences among the Directors, many operational issues like payment of salaries/wages, payment to supplier etc. were pending, leading to agitation by employees and irregularities in supply.

The CLB found it appropriate, that till the petition was disposed of, as an interim measure, in the interests of the Company and more than 3000 employees/workers, there should be a mechanism by which the day-to-day operations of the Company were carried on without any hitch.

Petitioner alleged that the CLB Order was violative of the order of the Supreme Court and nothing but an attempt to legalize their conduct of contempt but the petitioner approached the Court by the instant contempt petition.

Analysis

Section 2(b) of the Contempt of Courts Act, 1971:

2. Definitions. – …..
(b) “civil contempt” means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court.”

Civil Contempt

It is clear that for bringing an action under the ambit of civil contempt, there has to be a wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to the Court.

Respondents submitted that the petitioner was attempting to use the consent terms as a veto to stall the functioning of the Company.

Bench referred to Sections 397, 398 and 403 of the Companies Act, 1956.

Respondents legitimately invoked the jurisdiction of Company Law Board invoking the powers under Sections 397, 398 and 403 of the Companies Act, to which they were entitled to in law and were not restrained to do so by any competent Court/forum.

 CLB had passed interim orders in exercise of its powers under Section 403 of the Companies Act. Petitioner had approached the Court immediately after the order dated 10-04-2008, was passed by the CLB by way of present contempt petition.

Main Contention

Petitioner’s primary contention was that invoking the jurisdiction of the CLB and entertaining the said proceedings by the CLB, itself amounts to contempt.

 Observation

Court referred to the observations of in Pratap Singh v. Gurbaksh Singh, 1962 Supp (2) SCR 838:

“The principle behind all these cases is that such action of the person which he takes in pursuance of his right to take legal action in a Court of law or in just making a demand on the other to make amends for his acts will not amount to interfering with the course of justice, even though that may require some action on the part of the other party in connection with his own judicial proceeding, as a party is free to take action to enforce his legal rights.”

 Supreme Court stated that in the present case, the respondents were entitled to invoke the jurisdiction of the CLB under Sections 397, 398 and 403 of the Companies Act. Respondents had to take recourse to that remedy in compelling circumstances to safeguard the interest of the Company and its stakeholders.

Further, the Court added that merely taking recourse to the statutory remedy available to the respondents would not amount to contempt.

“…for bringing an action for civil contempt, the petitioner has to satisfy the court that there has been a willful disobedience of any judgment, decree, direction, order, writ or other processes of the Court.”

Requisite in a contempt proceeding

In a contempt proceeding, before a contemnor is held guilty and punished, the Court has to record a finding, that such disobedience was wilful and intentional.

Adding to the above, it has also been stated that if from the circumstances of a particular case, though the Court is satisfied that there has been disobedience, but such disobedience is the result of some compelling circumstances, under which it is not possible for the contemnor to comply with the same, the Court may not punish the alleged contemnor.

Bench also referred to the decision of Supreme Court in Kanwar Singh Saini v. High Court of Delhi, (2012) 4 SCC 307.

Situation in the present case

Court held that the petitioner failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by the Court or acting in breach of an undertaking given to the Court.

“…where an objection is taken to the jurisdiction to entertain a suit and to pass any interim orders therein, the Court should decide the question of jurisdiction in the first instance. However, that does not mean that pending the decision on the question of jurisdiction, the Court has no jurisdiction to pass interim orders as may be called for in the facts and circumstances of the case.”

Further, the Bench expressed in light of jurisdiction that,

“…question of jurisdiction should be decided at the earliest possible time, the interim orders so passed are orders within jurisdiction, when passed and effective till the court decides that it has no jurisdiction, to entertain the suit. It has been held, that those interim orders would undoubtedly come to an end with the decision that the Court had no jurisdiction.”

 Violation of Interim Orders

 While in force, the interim orders passed by such Court have to be obeyed and their violation can be punished even after the question of jurisdiction is decided against the plaintiff, provided violation is committed before the decision of the Court on the question of jurisdiction.

 Another Observation made by the Court was that in the present case, the petitioner qualified under Section 399 of Companies Act and that the Company Law Board had jurisdiction to deal with the petition under Sections 397 and 398 of the Companies Act.

“…in the proceedings under Sections 397/398, it is the interest of the Company which is paramount.”

Bench expressing no more opinion in the present matter held that the contempt petition deserves to be dismissed and added that parties may invoke the jurisdiction of NCLT for seeking orders as deemed fit in the facts and circumstances. [Rama Narang v. Ramesh Narang, 2021 SCC OnLine SC 29, decided on 19-01-2021]