Legal RoundUpSupreme Court Roundups

Top Story – Right to Safe Abortion

Unmarried persons cannot be denied rights based on narrow patriarchal principles on “permissible sex”: Key takeaways from SC’s historic verdict on right to safe abortion

While the interim order was passed in the case on 21.07.2022, the Supreme Court took over two months to write a far-reaching 75-pages-long verdict, touching upon various aspects like purposive interpretation of Medical Termination of Pregnancy laws, equal status of married and unmarried or single women, right to reproductive autonomy, right to dignity, effect of unwanted pregnancy on mental health of women, etc.

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Video Explainer: Unmarried persons have right to abortion; Marriage not a precondition: Supreme Court

“Sexual assault” or “rape” under Medical Termination of Pregnancy laws includes “marital rape”: holds Supreme Court, without changing the contours of ‘rape’ defined under Section 375 IPC

“The nature of sexual violence and the contours of consent do not undergo a transformation when one decides to marry. The institution of marriage does not influence the answer to the question of whether a woman has consented to sexual relations. If the woman is in an abusive relationship, she may face great difficulty in accessing medical resources or consulting doctors.”

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Video Explainer: Sexual assault or rape under Abortion laws includes ‘marital rape’: Supreme Court 

Constitution Bench

Binding nature of a judgment depends on the Bench Strength and not the numerical strength of the Judges taking majority view

Explaining the doctrine of precedents, the 5-judge Constitution Bench of Indira Banerjee*, Hemant Gupta*, Surya Kant, MM Sundresh and Sudhanshu Dhulia, JJ has held that the numerical strength of the Judges taking a particular view is not relevant, but the Bench strength is determinative of the binding nature of the Judgment.

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Reference

Pre-sentence hearing in Capital Punishment Cases: Mandatory or discretionary? CJI lead 3-judges Bench refers question to Constitution Bench

Explainers

Determination of Juvenility: Hierarchy of documents that can be relied on; belated plea if can be allowed; Bone ossification test at a belated stage

“Known source of income” under Section 13(1)(e) of PC Act, 1988 means the sources known to the prosecution or the accused?

Party willing to pay but has no funds: Will it amount to readiness and willingness for specific performance of a contract?

Can sentence of a murder convict be reduced to sentence already undergone which was less than life imprisonment?

Retroactive, True Retroactivity, Quasi-retroactivity, and Retrospective: Synonymous or distinct?

Admiralty Law: Scope of Intra-Court appeals from interim orders to Commercial Appellate Division of the High Court

Dishonour of Cheques: Can non-executive Directors of the accused company be held vicariously liable under Section 141 NI Act?

Order 6 Rule 17 CPC: Doctrine of dominus litus for amendment of plaint

Freedom of Speech

Prophet Remark Row| All FIRs against Journalist Navika Kumar clubbed. Here’s how Supreme Court’s order in Nupur Sharma case helped her

Various FIRs/criminal complaints have been filed against Kumar, along with politician and lawyer Nupur Sharma, in different police stations in different States in relation to the Newshour Debate telecasted on Times Now on 26.05.2022, where some objectionable remarks were made against the Prophet, thereby allegedly hurting religious sentiments.

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Service Law

Hiding criminal antecedents while applying for Government job? Good enough reason for employer to terminate services. Supreme Court lays down clear principles governing such cases

While dealing with a case relating to termination of a CRPF probationer for suppressing material information relating to his criminal antecedents, the bench of Surya Kant and JB Pardiwala*, JJ realised that the principles of law laid down in various rulings governing the subject were inconsistent.

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Supreme Court holds private school teachers entitled to gratuity; upholds Constitutional validity of Payment of Gratuity (Amendment) Act, 2009

“When the legislature acts within its power to usher in a valid law and rectify a legal error, even after a court ruling, the legislature exercises its constitutional power to enact the law and does not overrule an earlier court decision.”

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Make way for the outsiders: Compassionate Appointment cannot be extended to heirs of the retiring employees, holds Supreme Court 

“If such an appointment is permitted, in that case, outsiders shall never get an appointment and only the heirs of the employees on their superannuation and/or retirement shall get an appointment and those who are the outsiders shall never get an opportunity to get an appointment though they may be more meritorious and/or well educated and/or more qualified.”

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Punjab/Haryana Superior Judicial Services| Can candidates seek disclosure of marks through RTI before viva-voce? SC decides

“The disclosure of the marks in the main examination before it is finalised and the viva-voce is conducted, would be against the principles of transparency, rather it will invite criticism of bias or favouritism.”

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Supreme Court finds High Court and Tribunal finding erroneous for applying standard meant for ad hoc promotions to the case of regular promotions

In three appeals against an order directing separate zone of consideration for promotion of Scheduled Caste (SC)/Scheduled Tribe (ST) candidates to the post of Superintendent in Customs and Central Excise Commissionerate (CEC) from the post of Inspector, the division bench of Hemant Gupta* and Vikram Nath, JJ. has observed that the Tribunal and the High Court answered a question that did not arise. Therefore, the Court finds their orders clearly erroneous and not sustainable in law as the orders passed for regular promotion by extending the zone of consideration did not arise.

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Arbitration

Arbitration clause, even without the words “final and binding”, valid if the intention of the parties, to abide by arbitrator’s decision, is clear: Supreme Court

When Section 7 or any other provisions of the Arbitration and Conciliation Act, 1996 do not stipulate any particular form or requirements, it would not be appropriate for a court to gratuitously add impediments and desist from upholding the validity of an arbitration agreement.

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Supreme Court holds ‘Arbitrators cannot unilaterally issue binding and enforceable orders determining their own fees’; Justice Sanjiv Khanna partially dissents

The 3-judge bench of Dr DY Chandrachud*, Surya Kant and Sanjiv Khanna*, JJ has held that arbitrators do not have the power to unilaterally issue binding and enforceable orders determining their own fees. While Chandrachud, J wrote the majority opinion for Surya Kant, J and himself, Khanna, J wrote a separate opinion where he agreed with the majority opinion of certain parts but disagreed on some.

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Constitutionality of Laws

Delhi Land Reforms Act 1954 a special law; Succession provided in Hindu Succession Act 1956 will not prevail over it

In a case where challenge was made to declare Section 50(a) of the Delhi Land Reforms Act, 1954 unconstitutional being ultra vires Articles 14, 15, 254 and 21 of the Constitution of India, the bench of Hemant Gupta and Vikram Nath*, JJ has held that all the legislations included in the Ninth Schedule to the Constitution before the Judgment in the case of Kesavananda Bharati vs. State of Kerala, 1973 (4) SCC 225 that is 24.04.1973, would stand protected under Article 31B of the Constitution and, therefore, the challenge to the validity of provisions of the 1954 Act must fail.

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Supreme Court upholds the constitutional validity of the Haryana Sikh Gurdwara (Management) Act, 2014

The Court observed that the Statement of Objects and Reasons of the Haryana Sikh Gurdwara Management Bill, 2014 provides that the Bill is an earnest effort to provide a legal procedure by which the Gurdwaras can be brought effectively and permanently under the exclusive control of the Sikhs of Haryana for their proper use, administration, control and financial management reforms to make it consistent with the religious views of the said community.

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Crime and Punishment

Reversing acquittal of only 2 out of 22 acquitted murder accused, despite glaring contradictions between witness testimonies, illogical; SC sets aside Karnataka HC verdict

“We do not know how, in the facts and circumstances of the case, the conviction of only 2 out of the 22 accused can be sustained and that too only for the offence under Section 302 when the allegation of unlawful assembly, common object, trespass, rioting etc. are held not proved against all of them”.

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Imposing higher punishment on an illiterate senior citizen, merely because psychotropic substance was recovered from her residence, wrong; SC reduces sentence

“neither the trial Court nor the High Court has considered that the lady was illiterate and a senior citizen, was indeed residing but completely unknown to law, with two grown up children, with no previous background of being involved in any kind of criminal cases at any point of time in her lifetime”.

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Dishonour of Cheques

Dishonour of Cheque — S. 141 NI Act| Complainant only supposed to have general knowledge of person(s) in charge of company/firm; Burden on Director/Partner to prove their innocence: SC 

“Quashing of a complaint is a serious matter. Complaint cannot be quashed for the asking. For quashing of a complaint, it must be shown that no offence is made out at all against the Director or Partner.”

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Drafting, Pleading, Practice and Procedure

Bar under Order II Rule 2 CPC cannot apply to an amendment sought on an existing suit; Supreme Court lays down Principles for Amendment of Pleadings

 On the question as to whether Order II Rule 2 CPC can be made applicable to an application for amendment of plaint, the bench of Aniruddha Bose and JB Pardiwala*, JJ has held that Order II Rule 2 of the CPC operates as a bar against a subsequent suit if the requisite conditions for application thereof are satisfied and the field of amendment of pleadings falls far beyond its purview, and cannot apply to an amendment which is sought on an existing suit.

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Clever drafting cannot result into Plaintiff getting relief indirectly which otherwise cannot be given

“It may be true that in a given case, an unregistered document can be used and/or considered for collateral purpose. However, at the same time, the plaintiff cannot get the relief indirectly which otherwise he/she cannot get in a suit for substantive relief, namely, in the present case the relief for specific performance.”

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Supreme Court observes documents relied upon for formation of opinion under Rule 3 of the SEBI Adjudication Rules 1995, not required to be disclosed to the noticee unless relied upon in the inquiry

In a special leave petition against the impugned judgment passed by the Bombay High Court, whereby, the Court dismissed the writ petition filed by the petitioner to sought directions against Securities and Exchange Board of India (SEBI) to forthwith furnish the documents relied upon by them to issue Show Cause Notice to the petitioner, the division bench of Indira Banerjee* and A.S. Bopanna, JJ. has observed that there was no procedural irregularity, at least till the stage of notice fixing a date of hearing and the High Court rightly did not interfere with the proceedings at the stage of the Show Cause Notice, thus, there is no infirmity in the impugned judgment of the High Court of dismissing the writ petition.

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Preliminary inquiry & opportunity of hearing to would-be accused under Section 340 CrPC: Whether mandatory? Supreme Court answers

“The scenario is that any order or judgment passed by this Court becomes a reportable exercise to create more volumes of reported cases! This thus has a possibility at times of causing some confusion on the legal principles prevalent.”

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Education

‘Right to establish an educational institution is a fundamental right’; Pharmacy Council of India can only impose moratorium by way of a law and not by execution instruction

The ruling came in a case where the Court was called upon to decide whether the moratorium, as imposed by the Pharmacy Council of India (PCI), could have been imposed by resolution/communications dated 17.07.2019 and 09.09.2019, which is in the nature of an executive instruction of the Central Council.

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Elections

Non-disclosure of assets in the municipal elections would also amount to ‘undue influence’ and consequently to ‘corrupt practice’

In a Special leave petition under Article 136 of the Constitution against a judgment passed by the High Court of Karnataka, wherein the court set aside the election of the appellant to the Mysore Municipal Corporation as Councillor, the full bench of Uday Umesh Lalit, CJ., Indira Banerjee* and Ajay Rastogi, JJ. has affirmed the setting aside of the election of the appellant and observed that the non-disclosure of assets would amount to ‘corrupt practices’, entailing disqualification, as evident from Sections 35 and 39(ii) of the Karnataka Municipal Corporations (KMC) Act, read with Section 123(2) of the Representation of People (RP) Act 1951.

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Environment Protection

Entire country under impression that Re-Rolling Steel Plants do not require prior Environmental Clearance; NGT right in giving such plants opportunity to meet the requirement

The bench of Hemant Gupta* and Vikram Nath, JJ. has observed that there was no error in the order passed by the Tribunal that opportunity should be provided to re-rolling or cold rolling units to fall within Environmental Clearance (EC) regime by granting a period of at least one year to operate for the purpose. However, the order of closure of the unit cannot be sustained.

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Closure of Bio-Medical Waste Treatment Facility, only for want of prior Environmental Clearance, would be against public interest

“This Court cannot lose sight of the fact that the operation of a Bio-Medical Waste Treatment Facility is in the interest of prevention of environmental pollution. The closure of the facility only on the ground of want of prior Environmental Clearance would be against public interest.”

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Supreme Court upholds eco-sensitive zone notifications for Sanjay Gandhi National Park and Thane Flamingo Creek Sanctuary; Huge relief to developers and flat buyers

The applicant submitted that the eco-sensitive zone (ESZs) around Sanjay Gandhi National Park has already been notified vide final notification dated 05.12.2016 and the eco-sensitive zone around Thane Flamingo Creek Sanctuary has already been notified vide final notification dated 14.10.2021. Thus, the judgment dated 03.06.2022 which directs that each protected forest, that is a national park or wildlife sanctuary must have an eco-sensitive zone of minimum one kilometre wide, would not be applicable to them.

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Health

Two persons died after first dose of Covishield due to severe adverse effects following immunization; Supreme Court issues notice Central Government

The petitioner submitted that her 18-years-old daughter received first dose of Covishield Covid-19 vaccine on 29-05-2021 and lost her life on 19-06-2021. Similarly, 20-years-old daughter of petitioner 2 received the first dose of Covishield Covid-19 vaccine on 18-06-2021 and she lost her life on 10-07-2021. Both the petitioners alleged that after vaccination, the deceased girls suffered from severe Adverse Effects Following Immunization (AEFI).

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Insolvency and Bankruptcy

IBC’s Section 53 does not over-ride Section 48 of GVAT Act; Adjudicating Authority may reject Resolution Plan if it ignores statutory dues payable to State/Legal authority

Holding that NCLAT clearly erred in its observation that Section 53 of the IBC over-rides Section 48 of the GVAT Act, the Court observed that, Section 48 of the GVAT Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC.

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IBC-Limitation| Pendency of proceedings in a parallel forum not sufficient cause for delay in filing Section 9 IBC application: Supreme Court

“A claim may not be barred by limitation. It is the remedy for realisation of the claim, which gets barred by limitation.”

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SC upholds applicability of SEBI Circular; but gives a green signal to Reliance Commercial Finance resolution to avoid “unscrambling of resolution process” 

“Such unscrambling of the resolution process will not only prove time-consuming, but may also adversely affect the agreed realized gains to the retail debenture holders, who have already consented to the negotiated settlement before the High Court.”

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Land and Property

Supreme Court pulls up Ludhiana Improvement Trust for sitting over an acquired land for three decades without paying for it; says ‘citizen’s right cannot be taken for a ride’ like this 

“The Improvement Trust behaved as if it had some superior right to appropriate the property of the owners without paying for it contrary to the mandate of the LA Act.”

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UAPA

Journalist Sidhique Kappan gets bail after 23 months in prison; cannot leave Delhi for 6 weeks: Supreme Court 

The Kerala journalist was arrested under the Unlawful Activities (Prevention) Act on his way to Hathras, Uttar Pradesh to report on the alleged gang-rape of a Dalit woman, who later died in the Hospital.

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In other News

SC Collegium recommends Bombay HC Chief Justice Dipankar Datta for elevation as Supreme Court judge

Case BriefsForeign Courts

   

Court of Appeal of the Republic of Singapore | In a case arising out of a vehemently contested arbitration where the Tribunal after carefully going through the viewpoints of both the parties considered it essential to revert the matter back to the Judge who ordered remission for the resolution of dispute, a bench comprising of Sundaresh Menon, CJ, Judith Prakash, JCA and Jonathan Hugh Mance*, IJ., dismissed the appeal with costs upholding the judgment given by the Tribunal while reiterating that the Tribunal’s jurisdiction is only revived “to the extent of” the remission ordered.

Factual Matrix

An appeal was filed under Or. 21 R. 20 of the Singapore International Commercial Court Rules, 2021 against an order of the International Judge.

CKH claimed that they raised numerous issues relating to the principal debt and interest which CKG had disputed as they fell outside the scope of the remission ordered. The Tribunal, after carefully going through the viewpoints of both the parties recorded in the judgment, that it considered it imperative for the parties to revert to the Judge who had ordered remission for the resolution of the dispute.

Appellant’s contention

The appellant contended that the Judge “erred in holding that the Tribunal’s determination of the amount of the Principal Debt had to be subject to appellant’s concessions” as to the amount of the principal debt outstanding in April, 2011. The appellant also contended that the imposition of an interest rate of 2% compounded monthly was never canvassed before the Tribunal in relation to the principal debt and hence, the rate of interest so imposed is not justified.

The appellant also submitted that they are entitled to challenge and require proof of what sums owe by way of the principal debt. The contention was raised that the parameters fixed by the recitals are not open to being revisited before the Tribunal on the basis of which the remission was ordered.

The appellant submitted that, even though the parties agreed that the outstanding Principal Debt would carry interest at the rate of 2% compounded monthly, they must be allowed to argue that the penalty so imposed was unreasonable and should be considered unenforceable. They also contended that during the period from 20-12- 2011 to 3-11- 2014, CKG was not claiming the Principal Debt and hence the penalty at the rate of 2% shall not be imposed for that period.

Opinion and Analysis

Placing the reliance on Soh Beng Tee & Co Pte Ltd. v. Fairmount Development Pte Ltd, [2007] 3 SLR(R) 86 at [27], L W Infrastructure Pte Ltd. v. Lim Chin San Contractors Pte Ltd., [2014] 1 SLR 1221 at [41]-[42] and AKN v. ALC, [2016] 1 SLR 966 at [47], the Court held that the order challenged was carefully defined and had precisely specified what a tribunal should do and apart from the remission ordered, “there was no ground on which the appellant or the Tribunal itself can seek to re-open or expand the subject matter of the award or arbitration.” It was also opined by the Court that it was highly unlikely that the BANI award could lead to double recovery.

The Court further observed that the remission was ordered on the parameters fixed by the Recitals and is not open to be revisited before the Tribunal on the remission.

The Court also concluded that all the arguments regarding the rate interest of 2% compounded monthly fell outside the scope of the limited remission ordered.

[CKH v. CKG, [2022] SGCA(I) 6, decided on 30-08-2022]


Advocates who appeared in this case:

Hee Theng Fong, Toh Wei Yi, Poon Pui Yee and Leong Shan Wei Jaclyn (Harry Elias Partnership LLP), Counsel for the Appellant;

Tan Beng Hwee Paul and Victor Yao Lida (Cavenagh Law LLP), Counsel for the Respondent.


*Ritu Singh, Editorial Assistant has put this report together.

Children's Ark
Case BriefsForeign Courts

   

The High Court of Justice (Technology and Construction Court): While deciding the instant matter revolving around the Dispute Resolution Procedure (DRP) in a construction contract between the parties; the Bench of Justice Joanna Smith, DBE, termed the DRP in question to be “unusual and surprising” and observed that the Procedure did not include a sufficiently defined mutual obligation upon the parties in respect to referral of their dispute to the Liaison Committee and the ensuing process, thus, creating an obvious difficulty in determining whether either Children’s Ark Partnership or Kajima Construction had acted in breach.

The Facts of the Case: In June 2004, Children’s Ark Partnership (CAP) entered into an agreement with Sussex University Hospital NHS Trust (Trust) to design, build and finance the redevelopment of the Royal Alexandra Hospital for Sick Children. Subsequently, CAP and Kajima Construction entered into a “construction contract” whereby which Kajima was appointed to design, construct and commission the afore-stated hospital.

The Trust was entitled to make deductions from CAP under the Project Agreement in respect of service failures arising from defects and Kajima Construction would be liable to reimburse those Deductions under the terms of the Construction Contract. Kajima Construction carried out the work between 2004 and 2007.

In September 2018, concerns around cladding and fire-stopping issues were notified to Kajima Construction, which agreed to carry out remedial works at its own cost on a without prejudice basis. The project commenced in December 2018 but had to be sequenced over a long period of time in order to minimize disruption at the Hospital. The parties agreed to a Standstill Agreement dated 29-03-2019, which was subsequently varied on four occasions to protect their mutual positions. The provisions of the standstill agreement made clear that it did not preclude steps being taken under the DRP in the construction contract.

On 30-11-2021, Kajima Construction informed CAP that since its remedial works had now been largely completed, thus it has reasonably met all possible liabilities that could arise from the design and construction of the Hospital and that therefore, it no longer wished to extend the standstill period. However, the Trust informed CAP that the finished work contained “certain design and/or construction defects”.

Trust wanted CAP to remedy the defects but CAP asserted that the defects arose from the failure on the part of Kajima Construction to comply with its obligations under the Construction Contract and/or breach of its tortious duty. Therefore, CAP sought “damages” and/or “sums due” pursuant to the terms of the Construction Contract or in tort.

Relevant Clauses of the Construction Contract

  • Clause 9.7 of the Construction Contract provided that no claim, action or proceedings shall be commenced against Kajima Construction after expiry of twelve years from the Actual Completion Date of the works.

  • Clause 56 contained the agreed contractual machinery for resolution of disputes- a Dispute Resolution Procedure set out in Schedule 26, which would be the only contractually agreed route for dispute resolution.

  • Clause 68 stated that the courts of England and Wales shall have exclusive jurisdiction to hear and settle any action, suit, proceeding or dispute in connection with this contract, subject to the provisions of the Dispute Resolution Procedure.

  • Schedule 26 aka the Dispute Resolution Procedure, stated that procedure set out in the Schedule shall apply to any dispute, claim etc. except where it has been expressly excluded from this procedure; and the DRP shall not impose any precondition on any party or otherwise prevent or delay any party from commencing proceedings in any court of competent jurisdiction to obtain either.

  • Furthermore, Schedule 26 mandated that all Disputes are first to be referred to the Liaison Committee for resolution. Any decision of the Liaison Committee will be final and binding unless the parties otherwise agree. Schedule 26 also provided that the parties “may” refer the dispute to Mediation and Adjudication before dealing with “Court Proceedings”.

Observations: Upon perusal of the facts, contractual terms, relevant law, contentions by the parties and especially the precedents on arbitration, the Court observed that the precedents have not distinguished between mandatory obligations and conditions precedent for the purposes of deciding whether to enforce dispute resolution clauses prior to the commencement of litigation in court. It was noted that DRP, in so far as it concerns the requirement to refer disputes to the Liaison Committee can be properly interpreted as a condition precedent to the commencement of litigation.

As regards the DRP and its enforceability, the Court noted that in order to be enforceable, the Dispute Resolution Procedure aka DRP should be “sufficiently clear and certain by reference to objective criteria…“. However, Construction Contract, when read the Project Agreement, does not comply with the requirement of clarity. The Court reasoned that’

  • There was no meaningful description of the process to be followed. It is unclear as to how the Liaison Committee will “seek to resolve the Dispute”. It is also unclear as to how a dispute between CAP and Kajima should be referred to the Liaison Committee.

  • There is therefore no unequivocal commitment to engage in any particular ADR procedure. “Whilst the word “resolution” in the context of court proceedings means a final determination, it seems to me that it has a rather different meaning in the context of a dispute resolution process which is intended to achieve an amicable outcome. I cannot see how it is possible to “resolve” a dispute between two parties amicably when one is not involved in the process“.

  • There is unclarity as to the impact any decision of the Liaison Committee has on Kajima. The Court also pointed out that when the process of referral to the Liaison Committee comes to such an end such that the dispute is “not finally resolved” it is unclear when the condition precedent is satisfied i.e., it is unclear whether a resolution or decision is required before litigation may ensue.

  • The Court thus observed that although expressed as a condition precedent, the obligation to refer disputes to the Liaison Committee is not defined with sufficient clarity and certainty and therefore cannot constitute a legally effective precondition to the commencement of proceedings.

The Court also observed that the case gives rise to a novel point concerning the expiry of the limitation period, which arises only in the context of the exercise of the court’s discretion. However, in light of DRP’s lack of enforceability, Civil Procedure Rule 11(1) is not engaged. Thus, it is not an appropriate case for the intervention of the Court.

[Children’s Ark Partnerships Ltd. v. Kajima Construction Europe (UK) Ltd., [2022] EWHC 1595 (TCC), decided on 22-06-2022]


*Sucheta Sarkar, Editorial Assistant has prepared this brief.

Case BriefsSupreme Court

Supreme Court: In an issue revolving around the importance of the words “final and binding” in an arbitration agreement, the bench of Surya Kant* and Abhay S Oka, JJ has held that when the arbitration agreement luminously discloses the intention and obligation of the parties to be bound by the decision of the tribunal, the lack of express mention of the words “final and binding” does not mean that a valid arbitration clause does not exist.

The Court was deciding the case relating to a Development Agreement. When a dispute arose between the parties, the Appellant invoked the arbitration clause. Though the notice was duly served, the Respondents failed to respond to it, leading to the Appellant filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court.

However, the Respondents contended that the contract lacked the express wording, like “the parties agreeing in writing to be bound by the decision of an arbitral tribunal, necessary for it to be considered a valid and binding agreement to refer the disputes to arbitration.

The High Court agreed with the Respondent and held that the Appellant’s application under section 11 was not maintainable for want of a valid arbitration clause.

Disagreeing with the observation of the High Court, the Supreme Court held that the deficiency of words in agreement which otherwise fortifies the intention of the parties to arbitrate their disputes, cannot legitimise the annulment of arbitration clause.

The Court noticed that the subject-clause, in the case at hand, luminously discloses the intention and obligation of the parties to be bound by the decision of the tribunal, even though the words “final and binding” are not expressly incorporated therein. Going through the other parts of the arbitration agreement, the Court noticed that the intention of the parties was surely to refer the disputes to arbitration. Hence, in the absence of specific exclusion of any of the attributes of an arbitration agreement, the Respondents’ plea of non- existence of a valid arbitration clause, is seemingly an afterthought.

The Court observed,

“Even if we were to assume that the subject-clause lacks certain essential characteristics of arbitration like “final and binding” nature of the award, the parties have evinced clear intention to refer the dispute to arbitration and abide by the decision of the tribunal. The party autonomy to this effect, therefore, deserves to be protected.”

The Court stressed on the fact that UNCITRAL Model Law on International Commercial Arbitration, 1985 from which the Arbitration and Conciliation Act, 1996 originated, envisages minimal supervisory role by courts. When Section 7 or any other provisions of the Act do not stipulate any particular form or requirements, it would not be appropriate for a court to gratuitously add impediments and desist from upholding the validity of an arbitration agreement.

It was, hence, observed that it is imperative upon the courts to give greater emphasis to the substance of the clause, predicated upon the evident intent and objectives of the parties to choose a specific form of dispute resolution to manage conflicts between them. The intention of the parties that flows from the substance of the Agreement to resolve their dispute by arbitration are to be given due weightage.

[Babanrao Rajaram Pund v. Samarth Builders & Developers, 2022 SCC OnLine SC 1165, decided on 07.09.2022]


*Judgment by: Justice Surya Kant

Delhi High Court
Case BriefsHigh Courts

   

Delhi High Court: In a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, (‘A&C Act') challenging an order passed wherein the arbitrator rejected an application filed by the petitioner for amendment of the statement of claim, Prateek Jalan, J. dismissed the petition as non-maintainable and held that Section 23(3) of the Arbitration & Conciliation Act, 1996 vests discretion in the Arbitrator to reject an amendment application made at a belated stage and such an order cannot be challenged under Section 34 of Arbitration and Conciliation Act, 1996.

The Court remarked that “Factors which cloth the orders of the Arbitral Tribunal with the characteristic of finality, render them susceptible to challenge as interim awards under Section 34 of Arbitration & Conciliation Act, 1996

The Court essentially ruled that characteristics of an interlocutory order passed by an Arbitral Tribunal, having trappings of finality are the key to determine maintainability of petitions under Section 34 of Arbitration and Conciliation Act, 1996.

A suit was originally filed by the petitioner against three defendants, of whom the respondent was the principal defendant, and the other two defendants were arrayed as proforma defendants. By an order dated 07.11.2016, the suit, along with five other suits pending before the Court, were referred to arbitration before a former Judge of this Court.

In the arbitral proceedings between the parties, six proceedings have been taken up together by the arbitrator. The Petitioner in one of the six cases had claimed a decree of declaration for the Sale Deed dated 28.07.2010 registered on 29.07.2010 obtained by the Respondent from the Petitioner to be declared as void and cancelled. Vide amendment application dated 21.07.2017, the Petitioner sought amendment of the statement of claim. The Petitioner pressed for amendment by way of additional prayers for a decree directing the Respondent to transfer title of the property under dispute to the Petitioner.

The Respondent resisted the amendment, and the application for amendment was subsequently dismissed vide impugned order dated 04.11.2019 by the arbitrator under Section 23(3) of the A&C Act. The Arbitrator rejected the application as the same was filed belatedly in 2017 and further not pressed upon till 04.11.2019. The arbitrator, however, was sure to record in the impugned order that “expression of any view herein will not be treated as expression on the merit of the case.”

The Counsel for the respondent raised a preliminary objection with respect to the maintainability of the petition under Section 34 of Arbitration and Conciliation Act, 1996, directed against an order of the arbitrator, rejecting an application of amendment. The Respondent submitted that an interim interlocutory order does not have the trappings of an interim award as prescribed under Section 2(1)(c) of Arbitration and Conciliation Act, 1996, and thus, cannot be entertained by the Court.

Placing reliance on Container Corporation of India Ltd. v. Texmaco Limited, 2009 SCC OnLine Del 1594, the Court observed that in the facts of the present case, the arbitrator has proceeded only on the ground that the amendment was sought belatedly and did not adjudicate on the merits of the case. Therefore, the impugned order dated 04.11.2019 under challenge was not an interim award.

Thus, the Court held that the impugned order in the present case does not constitute an interim award, susceptible to challenge under Section 34 of the Act.

[Punita Bhardwaj v. Rashmi Juneja, 2022 SCC OnLine Del 2691, decided on 31-08-2022]


Advocates who appeared in this case :

Mr. A.K. Singla, Senior Advocate, Mr. Rahul Shukla and Mr. Akshit Sachdeva, Advocates, Counsel for the Petitioner;

Mr. Siddharth Batra, AOR, Ms. Shivani Chawla, Mr. Siddharth Satija and Mr. Akash Sachan, Advocates, Counsel for the Respondent.


*Arunima Bose, Editorial Assistant has put this report together.

Op EdsOP. ED.

   

Background

Arbitration is a “creature of consent”; parties consensually bind themselves to an arbitration agreement for the resolution of their disputes. It follows that generally, only the signatories to such an arbitration agreement should be bound by, and attached to, the arbitration that follows a dispute. However, the group of companies doctrine provides that, where a corporation has signed an arbitration agreement, it can be used to bind such a corporation's non-signatory affiliates if the “mutual intention” of the parties was to bind both the signatories and such non-signatories.

In Cox and Kings v. SAP India (P) Ltd. (Cox and Kings),1 after analysing the position of the group of companies doctrine in India, the Supreme Court made a reference to a larger Bench for the examination of this doctrine. The authors, by examining both majority and minority opinions, seek to showcase the insufficient reasoning in the majority opinion and argue in favour of the applicability of the group of companies doctrine in India.

Turning points — The Chloro Controls case, the 246th Law Commission Report and the 2015 Amendment

A pioneering attempt to bring the group of companies doctrine into the sphere of mainstream commercial arbitration was brought about by the ICC award in Dow Chemical v. ISOVER Saint Gobain (Dow Chemical).2 While relying on the general principles of international arbitration law, the Court in Dow Chemical case provided that “if the non-signatory company has effectively and individually participated in the conclusion, performance and termination of the respective contract, appeared as the actual party both to the contract and to the arbitration clause”, then it may be allowed to take advantage of the arbitration clause.3

The commercial jurisprudence that flowed from the Arbitral Tribunal was that notwithstanding the parties' distinct juridical identity, they would constitute a “group of companies”.

In India, the group of companies doctrine was first adopted and applied in Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc. (Chloro Controls).4 Chloro Control primarily did two things; first, it concretised the exceptional cases in which non-signatories may be subject to the arbitration agreement. The Supreme Court, in establishing these exceptional cases, provided that the parties must be held to the “touchstone of direct relationship to the party signatory to the arbitration agreement, direct commonality of the subject-matter and the agreement between the parties being a composite transaction.”5 This is the threefold test or the “mutual intentions” test. Second, it provided for the distinction in the language of Sections 456 and 87 of the Arbitration and Conciliation Act, 1996 (A&C Act). The Supreme Court, while distinguishing the language of Sections 45 and 8 of the Act, stated that “in Section 45, the expression ‘any person' clearly refers to the legislative intent of enlarging the scope of the words beyond ‘the parties' who are signatory to the arbitration agreement”.8 In doing so, the Court allowed non-signatory parties to be referred to arbitration provided they fulfil the “mutual intentions” test.

In 2014, shortly after the judgment laid down in Chloro Controls case9, the Law Commission of India, in its 246th Report sought to delve into the “definition of party” under the Act. The primary concern laid down by the Law Commission of India was that the existing definition was “restrictive” and implicates only signatory to an arbitration agreement.10 In accordance with the interpretation laid down in Chloro Controls case11 on the scope of Section 45 of the Act, the Law Commission recommended an amendment to Section 8 of the Act. The Law Commission noted that the language mentioned in Section 45 of the A&C Act i.e. “person claiming through or under [a party]”, is absent in Section 8 of the Act and the latter should accordingly be amended to cure this inconsistency between Parts I and II of the A&C Act.12 Moreover, the Law Commission of India recommended that an amendment be made “to the definition of ‘party' under Section 2(h)13 of the Act”.14 In 2015, the Indian legislature amended Section 8 of the Act in accordance with the Law Commission's recommendation.15 Post amendment, a reference to arbitration could be made “by a party to an arbitration agreement or any person claiming through or under him”.16

Subsequent refinements

The aforementioned developments were further revisited and refined by the Supreme Court in its subsequent decisions. In Ameet Lalchand Shah v. Rishabh Enterprises [Ameet Lalchand]17, the Supreme Court cited Chloro Controls case18 in conjunction with the 246th Law Commission Report and following the 2015 Amendment to Section 8 of the Act to hold that “various agreements could be resolved only by referring all the four agreements and the parties thereon to arbitration”.19

It is important to note that the application of the “mutual intentions” test did not remain confined to references to arbitration under Section 8 of the Act. Rather, in Cheran Properties Ltd. v. Kasturi and Sons Ltd. [Cheran Properties], the issue into consideration was whether a non-signatory could be bound by an arbitral award. Section 35 of the Act states that an arbitral award “shall be final and binding on the parties and persons claiming under them respectively”.20 By reaffirming the threefold test laid down in Chloro Controls case21, the Supreme Court stated that “[t]he group of companies doctrine is essentially intended to facilitate the fulfilment of a mutually held intent between the parties, where the circumstances indicate that the intent was to bind both signatories and non-signatories.”22 In this regard, the Supreme Court stated that the expression “persons claiming under them” indicates the legislative intention to bind non-signatories to the arbitral awards as well.

The group of companies doctrine was further refined and crystallised in MTNL v. Canara Bank [MTNL]. In this case, Indu Malhotra, J. made an attempt to harmonise the principle of separate legal personality with the group of companies doctrine.23 On one hand, she stated that “each company is a separate legal entity which has separate legal rights and liabilities” and that “the company entering into the agreement, would alone be bound by it”.24 On the other hand, with respect to the group of companies doctrine, she stated that,

10.3 [a] non-signatory can be bound by an arbitration agreement on the basis of the “group of companies” doctrine, where the conduct of the parties evidences a clear intention of the parties to bind both the signatory as well as the non-signatory parties. Courts and tribunals have invoked this doctrine to join a non-signatory member of the group, if they are satisfied that the non-signatory company was by reference to the common intention of the parties, a necessary party to the contract.

(emphasis supplied)

Indu Malhotra, J. seems to be explaining how the group of companies doctrine is not affecting the applicability of the separate legal identity principle i.e. the former does not entail assuming that separate entities are one and the same. Rather, the non-signatories are bound by the arbitration agreement because of the “mutual intentions” test, without having any impact on the separateness of the entities.

Recently, in ONGC Ltd. v. Discovery Enterprises (P) Ltd.25, D.Y. Chandrachud, J. examined the group of companies doctrine. Inter alia, he took into account Indowind Energy Ltd. v. Wescare (India) Ltd.26, Chloro Controls case27, Ameet Lalchand case28, Cheran Properties case29, and MTNL case30 and ruled that the following factors need to be considered in law for applying this doctrine:31

(i) the mutual intent of the parties;

(ii) the relationship of a non-signatory to a party which is a signatory to the agreement;

(iii) the commonality of the subject-matter;

(iv) the composite nature of the transaction; and

(v) the performance of the contract.

This view of the group of companies doctrine is erroneous because of the following reasons. The parties' “mutual intent” is not one of the factors, but the ultimate finding based on which the application of the group of companies doctrine is determined. Making it one of the factors unnecessarily and unreasonably convolutes the established “mutual intentions test”. Moreover, the underlying “mutual intentions” test is threefold. It comprises a direct relationship of the non-signatory with the signatory party, direct commonality of the subject-matter, and composite nature of the relevant transaction.

Furthermore, in Chloro Controls case32, the feasibility to perform the main agreement without the aid, execution, etc. of the ancillary agreements was considered as one of the sub-factors to the third element/factor i.e. the composite nature of the transactions involved. In this regard, making “performance of the contract” a separate factor leads to uncertainty in the application of the doctrine; this is especially because the application of this doctrine is heavily based on the intricate facts of each case.

Cox and Kings

Recently, the Supreme Court examined the application of the group of companies doctrine in India and made a reference to a larger Bench. In Cox and Kings case33, two views were put forth by the 3-Judge Bench of the Supreme Court.34

The majority view of N.V. Ramana, C.J. and A.S. Bopanna, J. which was authored by the former, was in disagreement of the applicability of the group of companies doctrine in India. On the other hand, Surya Kant, J. put forth a dissenting view. Surya Kant, J. albeit in support of the group of companies doctrine in India, also referred certain questions of law to a larger Bench for the purposes of clarity in the application of the same.

N.V. Ramana, C. J. criticised the group of companies doctrine by stating that a “joinder [of non-signatories] has the effect of obliterating the commercial reality, and the benefits of keeping subsidiary companies distinct” and that “[c]oncepts like single economic entity are economic concepts difficult to be enforced as principles of law.”35 However, the group of companies doctrine does not entail circumventing the principle of separate legal personalities. Nor does it entail applying the concept of a “single economic entity”. The Chief Justice, while arriving at this criticism, specifically focused on the obiter stated by Indu Malhotra, J. in MTNL case.36 Inter alia, she had cited previous International Chamber of Commerce (ICC) Arbitration cases to discuss the concept of “single economic entity;” however, as discussed in the preceding paragraphs, the ratio in this case was based on the concept of “mutual intent.” The Chief Justice's 's undue focus on the obiter, and not the ratio of MTNL case37 raises serious doubts about his conclusion opposing the application of the group of companies doctrine in India.

Moreover, the Chief Justice stated that:

50. [i]t is evident from the discussion above that the group of companies doctrine must be applied with caution and mere fact that a non­-signatory is a member of a group of affiliated companies will not be sufficient to claim extension of the arbitration agreement to the non­-signatory.38

(emphasis supplied)

Even this criticism is misguided as the relationship between the signatory with the non-signatory(ies) is just one of the factors that are taken into consideration while arriving at a finding of “mutual intent”.

The Chief Justice referred the following two questions of law to a larger Bench:

(a) Whether the phrase “claiming through or under” in Sections 8 and 1139 could be interpreted to include “group of companies” doctrine?

(b) Whether the “group of companies” doctrine as expounded by Chloro Controls case40 and subsequent judgments are valid in law?

In the opinions of the Chief Justice and A.S. Bopanna, J. the group of companies doctrine is not in lieu with international principles and takes away from the foundational principles of arbitration which were entrenched in consent.

The majority raised a rather critical concern that the doctrine's application was based more on economics and convenience rather than principles of law itself. This brings about an important question of whether convenience or consent and party autonomy is on a higher pedestal in the conception of legal doctrines such as the group of companies.

On the other hand, in his dissenting opinion, Surya Kant, J. took a more pro-doctrine stance. He correctly pointed out that:

92. … joining a third party to arbitration based on the convergence of a group of companies as a “single economic unit” is no longer the norm under the group of companies doctrine. Instead, the standard is premised primarily on implied consent drawn from the acts and conduct of an entity within the group of companies.41

He postulated that “a non-signatory may act duplicitously to represent itself as the driver of the contract while avoiding any liabilities arising from it by not signing the contract”. It may be understood that Surya Kant. J's understanding of the theory examines the intent of the non-signatory and whether or not that intent positions the non-signatory in the same position as a contracting entity.

In this light, he referred the following questions of law to a larger Bench:

(a) Whether the group of companies doctrine should be read into Section 8 of the Act or whether it can exist in Indian jurisprudence independent of any statutory provision?

(b) Whether the group of companies doctrine should continue to be invoked on the basis of the principle of “single economic reality”?

(c) Whether the group of companies doctrine should be construed as a means of interpreting the implied consent or intent to arbitrate between the parties?

(d) Whether the principles of alter ego and/or piercing the corporate veil can alone justify pressing the group of companies doctrine into operation even in the absence of implied consent?

Conclusion

The relevance of a doctrine such as the group of companies in Indian arbitration law is one that is undisputed. However, we are standing at international crossroads, where the requirement of consent and party autonomy seems to be directly conflicting and balancing the two within the landscape of arbitration has become more pertinent than ever.

One can only anticipate the direction that the larger Bench will take, however, greater clarity on the application of the doctrine will ensure that the judicial discretion in its application will be curbed.


† 3rd year law student at National Law University, Jodhpur. Author can be reached at <priyanshu.shrivastava@tradelawdevelopment.com>.

†† 3rd year law student at National Law University, Jodhpur. Author can be reached at <fatema.kinkhabwala@nlujodhpur.ac.in>.

1. 2022 SCC OnLine SC 570.

2. ICC Case No. 4131 of 1982 (interim award dated 23-9-1982).

3. Dow Chemical case, ICC Case No. 4131 of 1982 (interim award dated 23-9-1982).

4. (2013) 1 SCC 641.

5. (2013) 1 SCC 641.

6. Arbitration and Conciliation Act, 1996, S. 45.

7. Arbitration and Conciliation Act, 1996, S. 8.

8. Chloro Controls case, (2013) 1 SCC 641.

9. (2013) 1 SCC 641.

10. Law Commission of India, 246th Report on Amendments to the Arbitration and Conciliation Act, 1996 (August 2014).

11. (2013) 1 SCC 641.

12. 246th Law Commission of India Report (2014).

13. Arbitration and Conciliation Act, 1996, S. 2(h).

14. 246th Law Commission of India Report (2014).

15. Arbitration and Conciliation (Amendment) Act, 2015.

16. Arbitration and Conciliation (Amendment) Act, 2015, S. 8(1).

17. (2018) 15 SCC 678.

18. (2013) 1 SCC 641.

19. Ameet Lalchand case, (2018) 15 SCC 678, para 24.

20. (2018) 16 SCC 413.

21. (2013) 1 SCC 641.

22. Cheran Properties Ltd. v. Kasturi and Sons Ltd., (2018) 16 SCC 413, para 23.

23. (2020) 12 SCC 767.

24. (2020) 12 SCC 767, 778.

25. 2022 SCC OnLine SC 522.

26. (2010) 5 SCC 306.

27. (2013) 1 SCC 641.

28. (2018) 15 SCC 678.

29. (2018) 16 SCC 413.

30. (2020) 12 SCC 767.

31. ONGC Ltd. v. Discovery Enterprises (P) Ltd., 2022 SCC OnLine SC 522.

32. (2013) 1 SCC 641.

33. 2022 SCC OnLine SC 570.

34. 2022 SCC OnLine SC 570.

35. 2022 SCC OnLine SC 570, para 40.

36. (2020) 12 SCC 767.

37. (2020) 12 SCC 767.

38. Cox and Kings case, 2022 SCC OnLine SC 570.

39. Arbitration and Conciliation Act, 1996, S. 11.

40. (2013) 1 SCC 641.

41. Cox and Kings case, 2022 SCC OnLine SC 570.

Case BriefsSupreme Court

Supreme Court: While adjudicating an appeal relating to arbitration, the Division Bench of M. R. Shah* and B.V. Nagarathna, JJ., held that by entertaining the petition under Article 226 for executing an arbitral award, the High Court had virtually converted itself into Executing Court.

Modifying the impugned judgment and order, the Court expressed,

“We disapprove the entertaining of such writ petitions under Article 226 of the Constitution to execute the award passed by the Arbitral Tribunal/Court, without relegating the judgment creditor in whose favour the award is passed to file an execution proceeding before the competent Executing Court.”

In a land acquisition matter, where the original land owners had approached the Bombay High Court with the writ petition under Article 299 for seeking a writ of mandamus against NHAI (National Highway Authority of India) for the execution of Arbitral award instead of filing an execution petition before the appropriate executing Court and the same was allowed by the High Court, the Court was posed with the question whether such a process can be resorted to when the appropriate alternate remedy is available?

The land in question was acquired by the NHAI under the provisions of the National Highway Authority of India Act, 1988 in connection of which the amount of compensation came to be enhanced by the Arbitrator.

The Court noted though the NHAI had challenged the said arbitration award under Section 34 of the Arbitration Act, 1996 to the extent of the enhanced amount, which is still pending, there was no stay on the award. Therefore, the Court opined that by passing the impugned order/directions the High Court had virtually converted itself into Executing Court. The Court remarked,

“The High Court ought not to have entertained the writ petition under Article 226 of the Constitution seeking the reliefs to execute the award passed by the Arbitral Tribunal/Court when the award is to be executed by initiating an execution proceeding before the Executing Court concerned.”

Considering that the original land owners had an efficacious, alternative remedy to execute the award by initiating an appropriate execution proceeding before the competent Executing Court, the Court opined that the High Court ought to have relegated the original writ petitioners to avail the said remedy instead of entertaining the writ petition under Article 226 of the Constitution.

Disapproving the procedure adopted by the High Court, the Court cautioned,

“If the High Courts convert itself to the Executing Court and entertain the writ petitions under Article 226 of the Constitution to execute the award passed by the Arbitral Tribunal/Court, the High Courts would be flooded with the writ petitions to execute awards passed by the Arbitral Tribunal.”

Hence, the Court opined that the impugned judgment and order should be set aside and quashed, however, considering the facts in particular, and relying on the similar order passed by this Court in the case of NHAI v. Saraswatibai Chandrakant Shinde (SLA No. 12409 of 2022), the Court disposed of the matter with the following directions:

  • “The NHAI shall deposit 50 percent of the compensation amount awarded by the Arbitral Court, with the Executing Court within a period of four weeks.
  • The said amount shall be released to the landowners unconditionally.
  • The District Court, before whom the proceedings under Section34 of the Arbitration Act are pending shall make an endeavour to decide such proceedings within a period of six months from the next date of hearing before the said court.
  • The balance amount of compensation as per the Award to be passed under Section 34 of the Arbitration Act, shall be deposited by the NHAI with the Executing Court within four weeks after such determination. The said amount shall also be released by the Executing Court in favour of the land owners subject to the rights and remedies available to the parties in law.”

With the above observations and directions, the Appeal was disposed of. The impugned order was modified in the above terms.

[NHAI v. Sheetal Jaidev Vade, 2022 SCC OnLine SC 1070, decided on 24-08-2022]


*Judgment by: Justice M R Shah


Appearance:

For the NHAI: ASG Aishwarya Bhati

For the Respondents: Advocate Shirish K. Deshpande


*Kamini Sharma, Editorial Assistant has put this report together.

Case BriefsSupreme Court

Supreme Court: The Division Bench of M.R. Shah* and Sanjiv Khanna, JJ., reversed concurrent findings of the Arbitral Tribunal and the Delhi High Court rejecting the National Highway Authority of India’s (NHAI) application to file a counter-claim in a commercial dispute. The Court held, 

“When there is a provision for filing the counter-claim – set off, which is expressly inserted in Section 23 of the Arbitration Act, 1996, there is no reason for curtailing the right of the appellant for making the counter-claim or set off. If we do not allow the counter-claim made by the NHAI in the proceedings arising out of the claims made by the Contractor, it may lead to parallel proceedings before various fora.” 

Continuous Breach of Contract and Its Subsequent Termination  

NHAI and the respondent-contractor entered into an Engineering Procurement and Construction (EPC) Agreement (hereinafter “the Contract”) in respect of the improvement/augmentation of two laning with paved shoulders of National Highway 210 under National Highways Development Project (NHDP) PHASE-III.  

According to NHAI, the Contractor was in continuous breach of specific obligations under the Contract for which a cure period notice was issued calling upon the Contractor to cure the defaults within 60 days. When the Contractor failed to cure the defects pointed, a notice of intention to terminate the Contract was issued. Having found the Contractor’s reply totally unsatisfactory, the NHAI issued a termination notice under Clause 23.1.2 of the Contract.  

Commencement of Arbitration 

Aggrieved by the untimely termination of the contract, the Contractor invoked the arbitration clause. NHAI joined the arbitration and after two days of filing the Statement of Defence, it sent a letter to the Arbitral Tribunal seeking extension of time for filing the counter-claim which was rejected by the Tribunal, essentially on the ground that the procedure under Clauses 26.1 and 26.2 of the contract had not been followed by the NHAI and therefore, the counter-claim was beyond the scope of the arbitration agreement and adjudication of the said dispute was beyond the jurisdiction of the Tribunal.  

Particularly, the Tribunal held that the counter-claim was a dispute which needed to be first amicably settled by way of conciliation as mandated by Clause 26 and, only then it could be taken to arbitration.  

To challenge the aforementioned order, NHAI preferred the appeal under Section 34 of the Arbitration Act, 1996 before the Delhi High Court. The High Court dismissed the appeal and confirmed the order passed by the Arbitral Tribunal. 

Contentions of the Parties 

NHAI submitted that both in the termination notice as well as in the Statement of Defence, it had reserved its right to claim damages and stated that it would file its counter-claim separately. Hence, it could not be said that claim was raised by surprise or by way of counterblast. Further, the counter-claim was not a separate ‘dispute’ but rather a ‘claim’ and Clause 26 does not contemplate repeated invocation of the same procedure when there is an overlapping cause of action. 

Contesting the stand taken by NHAI, the contractor contended that mere reservation of rights would not entitle either party to bypass the contractually agreed mechanism under Clause 26. Since the EPC Contract does not contemplate parties raising claims by directly resorting to arbitration without going through the steps set out in Clause 26; i.e., Step 1: Notification of Disputes and Step 2: Resolution by amicable settlement.  

Factual Analysis  

Whether Counter Claim was a separate dispute?  

Under the contract, both the parties are given the opportunity to resolve the dispute amicably through conciliation, and thereafter the “Dispute”, which is not resolved shall have to be finally settled by arbitration. Noting that the cause of dispute was the termination of the contract by the NHAI, the Court stated,  

It may be true that in a given case, the “Dispute” may include the claims and/or counter-claims, but, at the same time, the main dispute can be said to be termination of the contract, which as observed hereinabove was required to be resolved through conciliation after following the procedure as above.”  

Hence, opining that NHAI’s request to file counter-claim was a “claim” and not a “dispute”, the Court held that both the Arbitral Tribunal as well as the High Court had failed to appreciate the difference between the expressions “claim”, which may be made by one side and “Dispute”, which by its definition has two sides.  

Whether NHAI bypassed the agreed procedure?  

The Court noted that from the very beginning, the NHAI reserved its right to claim damages, and even in the Statement of Defence, it claimed such a set off of Rs.1.23 crores and also specifically stated it reserved its right to file the counter-claim. Further, there was no delay at all on the part of the NHAI initially praying for an extension of time to file the counter-claim and/or thereafter to file the application under Section 23(2A) permitting it to place on record the counter-claim.  

The Court ruled that once it was established that the counter-claim was a “claim” and not a “dispute” there was no requirement to follow the procedure mentioned under Clause 26, much less a question to bypass the procedure. The Court said,  

“Once any dispute, difference or controversy is notified under Clause 26.1, the entire subject matter including counter-claim/set off would form subject matter of arbitration as ‘any dispute which is not resolved in Clauses 26.1 and 26.2’.” 

Therefore, the Court opined that not permitting the NHAI to file the counter-claim would defeat the object and purpose of permitting to file the counter-claim/set off as provided under Section 28 23(2A) of the Arbitration Act, 1996. 

Findings and Conclusion 

In the light of the above, the Court held that by such a narrow interpretation, the Arbitral Tribunal had taken away the valuable right of the NHAI to submit counter-claim; thereby negotiating the statutory and contractual rights of the NHAI and paving way for a piecemeal and inchoate adjudication. Similarly, the High Court had seriously erred by making a narrow interpretation of Clause 26 while confirming the order passed by the Arbitral Tribunal. 

Consequently, the Arbitral Tribunal order and the impugned judgment of the High Court were quashed and set aside. NHAI’s application to file the counter-claim was allowed. Additionally, the Court directed the time spent in litigation (the period between 18-07-2017 till 11-07-2022) be excluded from computing the period of the passing of the award under Section 29A of the Arbitration Act, 1996.  

[National Highway Authority of India v. Transstroy (India) Ltd., 2022 SCC OnLine SC 832, decided on 11-07-2022]  


*Judgment by: Justice M. R. Shah  

Appearance by:  

For NHAI: ASG Madhavi Diwan 

For the Contractor: Senior Advocate Nakul Dewan 


Kamini Sharma, Editorial Assistant has put this report together 

OP. ED.SCC Journal Section Archives

   

Events over the past decade have led to much debate and reflection on an important question at the core of dispute resolution in India — the arbitrability of fraud. In N. Radhakrishnan v. Maestro Engineers1 (“Maestro”), the Supreme Court had stood in the way of disputes being arbitrated if there was an allegation of fraud. This obviously led to much chagrin as the simple way to avoid a reference was to trump up an allegation of fraud and sidestep the law. Six years later, in 2016, an opportunity presented itself for course correction and the Supreme Court attempted to clear the way in A. Ayyasamy v. A. Paramasivam2 (“Ayyasamy”) without explicitly overruling Radhakrishnan1. In fact, both Sikri and Chandrachud, JJ. separately concluded that it would be overbroad to allow Radhakrishnan1 to be interpreted to refer to all types of fraud permitting an avoidance of arbitration and that it ought to be limited only to instances of serious fraud which would go to the root of the contract itself.

This clarification in Ayyasamy2 would not have been strictly necessary in all cases where there was an allegation of fraud if one traces the beginning of the jurisprudence on the subject which held the ground that the person accused of fraud has the right to redeem himself in a court of law. Conversely, the accuser of fraud could not himself refuse the reference on the grounds of fraud. For the purpose of tracing the roots, turn to the seminal case of Russell v. Russell3 from 1880 (“Russell”, also cited in Ayyasamy2). Since Russell4, there have been multiple judgments on the issue in India, most recently — Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd.5 (“Avitel”), Vidya Drolia v. Durga Trading Corpn.6 (“Vidya Drolia”) and N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.7 (“N.N. Global”). This article attempts to explore the issue of fraud and arbitrability through the lens of Russell4 and its application and evolution in the Indian jurisprudence.

THE GENESIS: RUSSELL4

In Russell4, partner W.A. Russell gave notice to the other partners — Henry Russell and Robert Crawford for the partnership to determine. This was permitted according to the partnership deed. As a counterblast, Henry Russell commenced an action against W.A. Russell alleging fraud, claiming the notice was void and sought an injunction against acting on such notice. W.A. Russell then invoked the arbitration clause of the partnership deed and filed a motion in court for the reference of all disputes to arbitration. Henry Russell objected to arbitration on the ground of fraud by W.A. Russell and requested for the continuance of his court proceedings. Both the issues were heard together by the Court. While refusing to grant an injunction, the Court held4:

… It must be an injury, as a rule, to the person charged with fraud to have it published, and I must say that I am by no means satisfied that the mere desire of the person charging the fraud is sufficient reason for the Court refusing to send the case to arbitration.

… that rule ought only to be applied, as a matter of course, without investigating the circumstances, in cases where the person charged with the fraud desires the enquiry to be public.

***

The next question … is … what foundation there is for the charges, … There must be sufficient prima facie evidence of fraud, not conclusive or final evidence, because it is not the trial of the action, but sufficient prima facie evidence.8

The two principles

Thus, there were two principles that broadly emerged:

(i) First, on an allegation of fraud, arbitration could be resisted if the person charged with the fraud wanted a public enquiry.

(ii) Second, there should be a prima facie case of fraud irrespective of who was resisting it for the Court to consider refusing a reference to arbitration.

For the sake of convenience, I will call it the Russell4 Principle 1 and Principle 2, respectively, though it really is circular for reasons explained below.

Principle 1 does not seem to have gotten its due place in the trajectory of arbitrability of fraud in India as compared to the other principles. The Chancery Division’s reasoning for Principle 1 was that anyone who faced an injury to his reputation had the right to get it cleared in public in open court and by a Jury. Jury trials represented trial by a society of peers where a not guilty verdict would exonerate the shame in a public fashion. Though Section 11 of the Common Law Procedure Act, 1854 of England9 provided a wide discretion to the Court to enter or refuse reference to arbitration, the same was understood to be exercised in exceptional cases once the parties had agreed to arbitrate.3 Jury trials were abolished in India in 1973 with the passing of the Code of Criminal Procedure, 197310 and now it is the Judge who rules on the evidence. Though still in public domain, the element of peers ruling on a person’s innocence is no longer available. Even so, Principle 1 has been recognised by the Indian Courts even after abolishment of jury trials and change in the laws in England11 until recently12.

While applying Principle 1, the Indian Courts have not been consistent. Two early High Court judgments which dealt with Principle 1 divergently are Manindra Chandra Nandy v. H.V. Low and Co. Ltd.13 and Narsingh Prasad Boobna v. Dhanraj Mills14. While the Calcutta High Court observed13 (and misapplied Principle 1)—

8. … provided a prima facie case of fraud is made out, the action will be allowed to proceed, although it is the party alleging the fraud who desires the public enquiry.15

The Patna High Court observed16:

… if the party resisting an application to stay a civil suit is the party making a charge of fraud, different considerations arise as the person charged does not desire trial by a civil court.16

One of the earlier Supreme Court decisions dealing with this principle of law was the case of Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak17 (“Abdul Kadir”). Here the reference was under Section 20 of the Arbitration Act, 194018 — a provision which gave expansive discretionary powers to the Court for the purpose of deciding whether a matter should be referred to arbitration. The Supreme Court recognised the application of Principle 1 to the facts of the case correctly but as the allegations of fraud were held not serious and like in Russell4 only based on suspicion, the matter was referred to arbitration.19

Thus, it is important to note that Principle 1 does not have an independent standing and is subservient to Principle 2. The test of Principle 2 (discussed below) also has to be met for Principle 1 to succeed. This gives rise to a peculiar situation. If there is a serious allegation of fraud, the reference to arbitration may fail (irrespective of who is resisting the reference) as the Court is likely to hold that it cannot be arbitrated. If a sufficient prima facie case of fraud20 is not made out by the accuser, then, even if the accused wishes to resist arbitration, the Court may hold that it is not a serious or sufficient charge and refer it to arbitration. It is for this reason, that it may be interesting to observe how Principle 1 has played out in the Indian courts.

PRINCIPLE 1 — THE STEPCHILD

Of the twenty-nine cases21 that were looked at where Principle No. 1 and/or the Russell4 judgment were discussed, in sixteen cases, it was the accuser of fraud who attempted to resist arbitration. Of those sixteen cases, eight times the Court refused to refer to arbitration holding that there was a prima facie case of fraud and/or serious fraud. Of the thirteen times the accused resisted arbitration, six times the Court refused to refer the matter to arbitration on the ground that the fact-situation prima facie pointed at serious fraud or that a civil court would be able to appreciate complex and voluminous evidence better than an arbitrator. It appears from these cases that the issue of fraud vexes the person charging the fraud quite often. Perhaps the reason is that they would like the accused to be held accountable in public and hence prefer a court trial. It may also be that if the accuser feels heavy evidence needs to be adduced in support of its claim, then a Court is a better forum. Conversely, it may well be that the person accused of fraud prefers the privacy of an arbitration to avoid public cynosure, especially if they have a weak case. Principle 1 in the long run up to Avitel22 seems to have lost steam and only plays a small supporting role in the reasoning of a Court while declining or entering a reference for arbitration. Even so, Russell4 is often cited for Principle 1 in decisions relating to fraud and arbitrability. Though Principle 2 does not trace its inception to Russell4, it is reiterated there and forms a strong basis of the verdict of the Chancery Division.

PRINCIPLE 2 — THE CHAMELEON

Principle 2 has gained a life of its own from a prima facie case of fraud in the 1880 judgment to a prima facie case of serious fraud in the Indian context23. This issue takes on a subjective form which has caused the courts to spend much time trying to define its contours. In Russell4, the allegation of fraud was made on affidavit and no details were provided. The Court held the allegation was a—

… statement of belief, sufficient on a motion of this kind to call upon the party for a denial, but useless for any other purpose.24

Thus, in Russell4 the Court referred the matter to arbitration because a prima facie case of fraud was not met. In the Indian context, the Courts have oscillated between a prima facie case of fraud and a prima facie case of serious fraud as grounds for refusing arbitration. Though really this difference was illusionary given that there was no objective threshold for what amounted to serious fraud. While Principle 2 came into the spotlight with the judgment of Abdul Kadir17 in 1962, it is really between 2009 and 2011 that a spate of judgments like Maestro,125 Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd.26 (“Afcons”) and Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd.27 (“Booz Allen”) cemented the importance of the issue of arbitrability of serious fraud28. In Maestro1, the Supreme Court accepted that malpractices of finance amounted to a serious allegation of fraud that could not be dealt with by the arbitrator. However, no cogent reason was provided as to why the arbitrator would not be competent enough to deal with the same. In Afcons26, the Supreme Court of India spelled out certain types of cases which it held to be not suitable for the process of alternative dispute resolution. This list included in Entry (iv) cases involving serious and specific allegations of fraud, fabrication of documents, etc. This was followed by Booz Allen27 where it clarified that actions in rem were outside the purview of arbitration. Though these judgments held that serious fraud was not arbitrable, in reality they were and are cited regularly to resist arbitration even in simpler cases.

It took only 6 years for the tide to turn for Principle 2.29 In Ayyasamy2, the Supreme Court held that mere allegation of fraud simpliciter may not be enough to nullify an arbitration agreement. It held that a court has to consider what the nature of the dispute is and then strict and meticulous enquiry into the allegations is needed. Only when the court is satisfied that the allegations are serious and of a complicated nature that the reference to arbitration should be refused. The Court clarified that serious fraud would include allegations which make a case of criminal offense30, allegations which are complicated and require appreciation of voluminous evidence, allegations of forgery/fabrication of documents, allegations of fraud against the arbitration agreement itself/fraud permeating the contract. The Court also held that allegations of fraud touching upon the internal affairs of the parties (with no implication on the public domain) could be referred to arbitration. The Supreme Court in Ameet Lalchand Shah v. Rishabh Enterprises31 (“Ameet Lalchand”) and Rashid Raza v. Sadaf Akhtar32 (“Rashid Raza”) followed Ayyasamy2 and also distinguished between serious and simple fraud. In N.N. Global7, the Court has gone as far as stating that the judgment in Russell4 is obsolete. Though the Court in N.N. Global7 does not distinguish between Principle 1 and Principle 2, the observation has to be perhaps read in light of Principle 2 as the Court prefaces the obsoletion with the observation that allegations of fraud no longer relate to the competence of the arbitrator and voluminous evidence. As Principle 2 is not unidimensional in its invocation, it would be useful to see how allegations of serious fraud have manifested in cases:

Suit for accounts: In Abdul Kadir17, the allegation was that the accounts were not made up to date, were incomplete and incorrect. On a closer look, the Court observed the allegations were based only on a suspicion. The Court held that such allegations on correctness of entries of accounts are often made in account suits but do not amount to serious fraud. In Maestro1, the Court while relying on Abdul Kadir17 for the ratio on serious fraud not being arbitrable, took a different turn on the appreciation of facts. The Court held that malpractice in account books and finances of the partnership could not be dealt with by an arbitrator. The position seems to have turned a full circle in Ayyasamy2 and Avitel22. In Ayyasamy2, the issue of signing a cheque without the consent of other partners was held to be an accounts issue and not one of serious fraud or involving any complex issue33. In Avitel22, the Supreme Court on a prima facie finding, allowed the relief of a full deposit in a Section 9 of the Arbitration & Conciliation Act, 1996 (“the Act”) proceeding to safeguard the pending enforcement proceedings under Section 48 of the Act. This was despite the objection of the respondent that the foreign award would not be enforceable under Indian laws as there were serious allegations of fraud including siphoning of funds. Thus, it can be said that inter-party accounting irregularities and siphoning of funds can be dealt with in arbitration.

Voluminous evidence better suited for Court: The Court in Maestro34 accepted the argument that when detailed material evidence (both documentary and oral) is required to prove malpractice, then the arbitrator would not be a competent authority. Even the Court in Ayyasamy2 observed that there could be complex cases which could only be tried by the Court due to voluminous evidence. This factor has caused much heartburn, as the question is often raised : Why cannot an Arbitral Tribunal conduct a commercial trial even if the matter is complicated? There seems to be little clarity on what matters may require such complex voluminous evidence and why a Tribunal cannot deal with the same, especially after the enactment of Section 26 and Section 27 of the Act. The international arbitration space is thriving with complex private disputes35. The old perception of ADR36 still manifests in contemporary Indian arbitral jurisprudence despite the enactment of a modern statute (the Act) and its consequent amendments. The Supreme Court in N.N. Global7 has called out on this issue while observing that

96. … Arbitrability of fraud is no longer an issue relating to the competence of the arbitrator, or dealing with voluminous evidence. …

***

116. … In contemporary arbitration practice, arbitral tribunals are required to traverse through volumes of material in various kinds of disputes such as oil, natural gas, construction, industry, etc.37

Public domain: If the allegation at hand, has a public element, it is unlikely the same can be arbitrated as a private dispute. In World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) Pte. Ltd.38, Part II of the Act was under consideration. The Supreme Court held that consideration of fraud was not relevant for the purposes of Section 45. Even so, the impugned order of the Bombay High Court made39 an interesting observation on the issue of arbitrability when it touches the public domain. It observed that when the issues of fraud have a bearing on the position of BCCI in the game of cricket, the involvement of the general public in the game and the television rights which are conferred for viewing the games by public, and also presence of BCCI being necessary, then, the matter is fit for an open public trial by a court of law. Thus, even an indirect public element may lead to a stay on arbitration. On the other hand, in Rashid Raza40, the Supreme Court held that the affairs of partnership and siphoning of funds do not concern the public domain and the dispute was arbitrable. Taking this further, the Court in N.N. Global7 held that allegations of fraud with respect to the invocation of bank guarantee are arbitrable as it arises from disputes between parties inter se and is not in the realm of public law. It would be interesting to see the same Court’s observations below in the case of criminal matters which it holds to be in the public realm.

Effect of parallel criminal proceedings: An interesting discussion in Avitel22 is about the effect a criminal proceeding has on a reference for arbitration. As the standard of proof is different in civil and criminal proceedings, the mere filing of a criminal case would not amount to the allegations of fraud being upscaled to serious in the civil proceedings. While the concept of finding of facts in civil and criminal matters not having a bearing on each other is trite law, it has been expounded in a crystal-clear manner in the context of reference to arbitration matters in Avitel22. Thus, both Afcons26 and Booz Allen27 may have to henceforth be read with a rider that that merely because criminal proceedings can be or have been instituted in respect of the same subject-matter, it would not mean that a dispute which is otherwise arbitrable, ceases to be so.41 However, it is to be kept in mind that the recent case of N.N. Global7 (a three-Judge Bench) after noting the observations of Ayyasamy2 (a two-Judge Bench), Vidya Drolia6 (a three-Judge Bench) and Avitel22 (a two-Judge Bench), and without departing from them, states that the criminal aspect of fraud, forgery or fabrication which have penal consequences and criminal sanctions can be adjudicated only by a court of law since it may result in a conviction, which is in the realm of public law. To this extent it would appear there is perhaps some pull back from Avitel22 if the observations were read in isolation without comprehending the context of criminal law. The matter though seems settled if one turns to Vidya Drolia6 (also a three-Judge Bench) where the Court has concurred with the Avitel22 view that Maestro1 “has no legs to stand on”42 and then proceeded to overrule it, stating that allegations of fraud can be the subject-matter of an arbitration if they relate to a civil dispute, leaving only the caveat that “fraud, which would vitiate and invalidate the arbitration clause, is an aspect relating to non arbitrability”43.

THE WAY AHEAD

While the above factors are not exhaustive and the outcome of each case will depend on its facts, they do provide a strong indication that courts are steadfast in permitting commercial fraud to be arbitrated. It goes without saying that any serious allegations of fraud cannot be based on mere suspicion for the court to consider refusing arbitration. In Avitel22, the Supreme Court while relying on Ayyasamy2, has tried to distill the various factors into a two-prong test for meeting the threshold of a serious allegation of fraud44. The first test is satisfied when the arbitration clause itself cannot be said to exist in a clear case in which the Court finds that the party against whom breach is alleged, cannot have been said to have entered into the agreement at all. The second test is where allegations are made against the State or its instrumentalities of arbitrary and fraudulent conduct which would require adjudication in a writ court.44 Though the intention to streamline the threshold for fraud by the two-prong test is well meaning, it is quite narrow. It is possible that litigants will rely on Ayyasamy2 to keep the door of serious fraud open a little wider. They will have further assistance in N.N. Global7 which observes that fraud not being arbitrable is a wholly archaic view.

Russell4 to Avitel22 and N.N. Global7, has been a long journey for arbitrability of fraud. While Indian courts have relied on the principles propounded in Russell4 to grapple with questions of fraud, the Supreme Court’s tests laid down in Ayyasamy2 and Avitel22 have attempted to forge touchstones for these principles. This will hopefully bring in some predictability on how courts will look at the issue of fraud and arbitration and is a progressive step towards strengthening the arbitration regime in India. This is also in keeping with the international trend of private resolution for inter-party disputes. In a country like India, where the case pendency is a staggering 3,78,96,456 cases45, and bound to get worse due to the Covid-19 Pandemic, the importance of ADR cannot be overemphasised. All efforts should be made by the courts to give ADR the impetus needed to thrive.

Why should not the childish quarrels of princes be settled through the arbitration of these learned men.” — Desiderius Erasmus…. sometime in the 1500s.46


* This article was originally published in the October 2020 Newsletter of Nani Palkhivala Arbitration Centre. As the Supreme Court has thereafter pronounced two important judgments—Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 and N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379 on the issue, the article has been updated in relevant paragraphs.

Partner, Khaitan & Co.

3 [1880] 14 Ch.D. 471, 474.

4 Russell v. Russell, [1880] 14 Ch.D. 471.

5 2020 SCC Online SC 656 – In this case, the main issue that the Supreme Court was called upon to address was, whether for the purpose of granting relief under Section 9 of the Arbitration Act, 1996 to the respondent, had the respondent made out a strong prima facie case in the pending enforcement proceedings under Section 48 of the Act in the Bombay High Court. It was the appellant’s case, that as there were allegations of serious fraud, the matter was not arbitrable and the award ought not to be enforced under Indian law. The Supreme Court held that on a prima facie basis and on balance of convenience the respondent had made out a case for interlocutory relief under Section 9 of the Arbitration & Conciliation Act, 1996.

4 Russell v. Russell, [1880] 14 Ch.D. 471.

8 Id, pp. 477 & 481.

9 Section 11, Common Law Procedure Act (UK), 1854. The amendments that took place in the law with the passing of the English Arbitration Act, 1934 and thereafter in 1950 and 1979, continued to give courts discretion and allowed them to grant stay. The real change in England came with the Arbitration Act, 1996. Under the previous statute (Arbitration Act, 1950), the courts could prevent tribunals from dealing with claims of fraud. This provision was repealed by Section 107(2) of the Arbitration Act, 1996.

3 Russell v. Russell, [1880] 14 Ch.D. 471, 474.

10 Code of Criminal Procedure, 1973.

11 See N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379.

12 The Court in N.N. Global, (2021) 4 SCC 379, states that the judgment in Russell, [1880] 14 Ch.D. 471 is dead. The same is discussed in detail below.

14 1942 SCC Online Pat 235 : AIR 1943 Pat 53. Though the principle was correctly applied, the civil suit was allowed to proceed as the Court held there was a prima facie case of fraud.

16 Narsingh Prasad Boobna v. Dhanraj Mills, 1942 SCC Online Pat 235 : AIR 1943 Pat 53.

18 Section 20, Arbitration Act, 1940 (now repealed).

4 Russell v. Russell, [1880] 14 Ch.D. 471.

19 See the discussion in Paras 50 & 51 of the 246th Report of the Law Commission of India (2014), which is also discussed in paras 22 and 23 of A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

20 Sufficient case of serious fraud in the Indian context.

21 Ivory Properties & Hotels (P) Ltd. v. Nusli Neville Wadia, 2011 SCC Online Bom 22; Punjab National Bank v. Kohinoor Foods Ltd., 2015 SCC Online Del 7351; Sandeep Soni v. Sanjay Roy, 2018 SCC Online Del 11169; Suvidhaa Info Serve (P) Ltd. v. Dakshin Haryana Bijli Vitran Nigam Ltd., Arbitration Petition No 224 of 2014 (O&M), decided on 16-10-2015 (P&H); Muthavarapu Venkateswara Rao v. N. Subba Rao, 1984 SCC Online AP 20 : AIR 1984 AP 200; RRB Energy Ltd. v. Vestas Wind Systems, 2015 SCC Online Del 8734; Pawan Kumar Gupta v. Vinay Malani, 2014 SCC Online Del 3370; Jansamma Regi v. Usha Mani, 2018 SCC Online Ker 7868; Rattan Polychem (P) Ltd. v. Reliable Insupacks (P) Ltd., 2018 SCC Online Del 11140; Kapil Chopra v. Haryana City Gas Distribution Ltd., 2014 SCC Online CLB 121; C.E. Constructions Ltd. v. Intertoll ICS India (P) Ltd., 2014 SCC Online Del 6485; Bharat Lal v. Haryana Chit (P) Ltd., 1998 SCC Online Del 381; C.S. Ravishankar v. C.K. Ravishankar, 2011 SCC Online Kar 4128 : (2012) 1 AIR Kant R 293; Nitya Kumar Chatterjee v. Sukhendu Chandra, 1976 SCC Online Cal 239 : AIR 1977 Cal 130; Bengal Jute Mill Co. Ltd. v. Lalchand Dugar, 1963 SCC Online Cal 4 : AIR 1963 Cal 405; General Enterprises v. Jardine Handerson Ltd., 1977 SCC Online Cal 196 : AIR 1978 Cal 407; Sudhangsu Bhattacharjee v. Ruplekha Pictures, 1954 SCC Online Cal 3 : AIR 1954 Cal 281; Sushanta Kumar Nayak v. Dilip Kumar Mohanty, 1987 SCC Online Ori 6 : AIR 1988 Ori 186; Subhash Chander Kathuria v. Ashoka Alloys Steels (P) Ltd., 1995 SCC Online Del 442 : (1995) 35 DRJ 319; S.K. Talim Ali v. Hindustan Petroleum Corpn. Ltd., 2020 SCC Online Ori 340; C.D. Gopinath v. Gorden Woodroffe and Co. (Madras)(P) Ltd., 1978 SCC Online Mad 207 : (1979) 92 LW 531; Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962 SC 406; N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72; Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710; Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee, (2014) 6 SCC 677; Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656; A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386; Manindra Chandra Nandy v. H.V. Low and Co. Ltd., 1924 SCC Online Cal 172 : AIR 1924 Cal 796; Narsingh Prasad Boobna v. Dhanraj Mills, 1942 SCC Online Pat 235 : AIR 1943 Pat 53.

22 Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656.

4 Russell v. Russell, [1880] 14 Ch.D. 471.

23 Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656; A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386; Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710.

24 Russell v. Russell, [1880] 14 Ch.D. 471, p. 481.

17 Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962 SC 406.

1 N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72.

25 N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72. The Supreme Court in Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656, states that the ratio in Maestro, (2010) 1 SCC 72, being based on a judgment of the 1940 Act and without considering Sections 5, 8 and 16 of the 1996 Act, cannot be applied as a precedent on the application of fraud to negate arbitration (para 31).

28 The Arbitration & Conciliation Act, 1996 does not specify what matters are not arbitrable.

1 N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72.

29 A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386, para 25.

2 A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

30 It is to be noted that in Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656, the Court has stated that the filing of a criminal case will have no bearing on the allegation of fraud. Thus, there appears to be some amount of ambiguity here.

7 N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379.

4 Russell v. Russell, [1880] 14 Ch.D. 471.

17 Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak, AIR 1962 SC 406.

1 N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72.

2 A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

22 Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656.

33 A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386, para 26.

34 N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72, para 20.

35 See <https://iccwbo.org/media-wall/news-speeches/icc-releases-2019-dispute-resolution-statistics/>; <https://www.siac.org.sg/images/stories/articles/annual_report/SIAC%20AR_FA-Final-Online%20(30%20June%202020).pdf>. — From the websites of the International Chamber of Commerce and the Singapore International Arbitration Centre. Last accessed 9-9-2020.

36 Alternate Dispute Resolution.

7 N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379.

37 Id, paras 96 & 116.

39 MSM Satellite (Singapore) Pte Ltd. v. World Sport Group (Mauritius) Ltd., 2010 SCC Online Bom 1375, para 58.

40 Rashid Raza v. Sadaf Akhtar, (2019) 8 SCC 710, para 5.

22 Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656.

26 Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24.

27 Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532.

41 Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656, para 42; See also : Swiss Timing Ltd. v. Commonwealth Games 2010 Organising Committee, (2014) 6 SCC 677; Ameet Lalchand Shah v. Rishabh Enterprises, (2018) 15 SCC 678.

7 N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379.

2 A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

6 Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1.

1 N. Radhakrishnan v. Maestro Engineers, (2010) 1 SCC 72.

42 Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1, para 73.

43 Id, para 78.

2 A. Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.

44 Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656, para 34.

7 N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., (2021) 4 SCC 379.

4 Russell v. Russell, [1880] 14 Ch.D. 471.

22 Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., 2020 SCC Online SC 656.

45 <https://njdg.ecourts.gov.in/njdgnew/index.php>. National Judicial Data Grid – Last accessed 8-3-2021. When the article was originally published in 2020, the data on pending cases was 3,43,17,238 cases as on 9-9-2020. The increase of over 35 lakh cases in a mere 6 months is a cause for concern.

46 Desiderius Erasmus, ADAGIA, Chil. IV, Centur. I. Prov. I, quoted in Henry S. Fraser, “A Sketch of the History of International Arbitration,” 11 Cornell LQ 179, 186 (1925-1926 : 2) <https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1236&context=clr> last accessed 9-9-2020.

Punjab and Haryana High Court
Case BriefsHigh Courts

Punjab and Haryana High Court: While dismissing the appeal preferred by the appellant challenging the order dated 12-12-2018 passed by the Additional District Judge, Chandigarh and for setting aside Sole Arbitrator’s award dated 14-06-2016 , Lisa Gill, J., held that the appellant has failed to make out a case for setting aside the Award.

Facts:

The respondent participated in the tender process for construction, quoting the lowest rates, which were accepted by the appellant. The respondent expressed their inability to initiate and undertake the allotted work. Fresh tenders were called because of this, and the work was given to another at a rate higher than on which the respondent was supposed to work. Due to all this, the appellant suffered a loss as he paid an extra amount. Hence, the appellant invoked the Arbitration clause and a Sole Arbitrator was appointed.

The Arbitrator rejected the claim of the appellant. It was observed that arbitration proceedings were maintainable according to the tender. It was observed that the appellant was charge-sheeted for wrongly changing the scope of work without invoking the clause of risk and cost of the respondent. Only the forfeiture of the earnest money was found to be valid and justified.

The petitions preferred by the appellant in the Court of Additional District Judge (‘ADJ’) were dismissed finding no merits. Hence, this appeal was preferred by the appellant under Section 34 of Act 1996. The ADJ declined to interfere in the matter as an Award under Section 34 of the Arbitration and Conciliation Act, 1996 (‘Act’) can be set aside only on the basis of specific grounds contained therein. The appellant was unable to make out a case for setting aside the Award dated 14-06-2016.

Arguments:

The counsel for the appellant submitted that the appellant’s claim for recovery was incorrectly rejected by the Arbitrator. Although the counsel was unable to deny that the scope of work was changed by the appellant without invoking the clause of risk and cost of the respondent. The impugned award was passed after the inquiry against the appellant was completed.

Analysis and Observation:

The Court relied upon a judgment of theSupreme Court in NTPC Ltd. v. Deconar Services Pvt. Ltd., 2021 SCC OnLine SC 498 wherein it was held that to merely show the existence of another reasonable interpretation or view on the basis of material on the record is not sufficient to allow for interference even if a separate view is possible which in any case is not the scenario in the instant case.

In the view of the above, the Court opined that the ADJ correctly declined to interfere in the matter.

The Court observed that “Clearly, the appellant has failed to make out a case for setting aside the Award dated 14.06.2016.”

“This Court is not to sit as a Court of Appeal and in case plausible and reasonable view has been taken by the Arbitrator on the basis of the evidence on record, the same is not to be interfered, even if a separate view is possible which in any case is not the scenario in the instant case.”

[Punjab State Cooperative Supply and Marketing Federation Limited v. B.D.S. Décor & Prefab (P) Ltd., 2022 SCC OnLine P&H 1857, decided on 14-07-2022]


Advocates who appeared in this case :

Mr. Hardik Ahluwalia, Advocate, for the Appellant.

Interviews

A science student turned advocate, Mr. Sanjay Bhasin is a designated Senior Advocate at the Allahabad High Court. Apart from having a 36 year long standing before the Court, he is a leading Arbitration Counsel in India.

He has been interviewed by Ayush Shukla, EBC/SCC Online Student Ambassador who is currently pursuing law from TNNLU.

 

1. What motivated you to pursue law as a discipline and a career. Was it an obvious choice for you, given that your father was an advocate?

No, it was not my obvious choice at all. I was a science student throughout and was interested in the same, but because I did not do well in my MSc, my father said I had no other option but to go for law. But while pursuing my law, I developed a great liking for it. So yes, it was not my first choice and was only my second-best choice, I did not want to get into the hassles of law, but somehow, I got involved in it.

Based on my interest in Science, I wanted to be a scientist or a lecturer. Still, destiny brought me here, and I have relished this period spanning from 1986-1987 that I have spent in the field of law.

2. Could you tell our readers about your experience in law school and what lessons you have learned in your law school that have been an integral part of your journey as a practitioner?

I was not that serious during my law school. I did my law at DAV College, where we only had two morning classes. So, I spent the rest of my day in labour courts, as I used to be a chauffeur to my father, who used to practise in the labour courts. So, throughout the day, I watched the proceedings before various authorities of the Labour Court. If one does this religiously, one will start picking up things from there itself.

But here, I always remembered my father’s lessons during those days, which have been with me throughout my life. He told me to maintain the profession’s integrity, always be honest and dedicated to the judicial system, and create your image through your hard work. He used to tell me that if you are hardworking, you will succeed. Whether or not you are going to succeed in that particular case or not, will depend on the merits of the case, but in any case, you should not be found in a situation where you did not do enough labour, or you did not present it well enough.

My teachers also taught the same lessons. They said that lawyers are otherwise taken to be liars, but they are not so, as whatever they say or present is based on the strength of the affidavits and documents exchanged between the parties, and based on those, only a lawyer takes its stand. So, integrity and honesty are the things that have been imbibed in me by my father and teachers, and I have been following that very religiously.

One more thing that I would like to advise all the students that my father used to tell me is to work on your oratory skills. One needs to practise oration. That practice of oration could only be for a short duration, like 5 minutes or 10 minutes a day. Like just read a newspaper aloud, as that will provide thrust to your voice, it will give clarity to what you speak, it will improve your pronunciation, and it will change your overall personality. So, everybody, who wants to be a practicing lawyer, should practice this.

Here I also remember the advice given to me by my senior, Justice Bhalla, who, as and when I joined him, was an Additional Chief Standing Counsel, and later on, he went on to become a Judge. He taught me that I should read one judgment a day and make notes of the same. So, I had a diary, where I used to note all the important points of the judgment, and I used to observe how those points have been dealt with in the judgment.

3. During your initial days in the field, how did you do research on a case? Today we have research tools like SCC Online, which has to an extent, made our job more manageable. And what can our generation learn from your initial days’ experience of researching, which we can inculcate in today’s time?

In the absence of present time research tools, we were solely dependent upon the digests and the commentaries. We had those yearly digests of Supreme Court, labour and industrial court cases, factory law journals, etc. Those digests and commentaries were prepared so that you could reach the particular case law you are looking for by referring to the index itself.

Personally, I think that the manual thing was quite beneficial because it gave us insights into the complete aspect of the section we were researching. Moreover, when going through these commentaries, you will find judgments from both sides, so you can always read the other view. Once you do that, you get an obvious idea of the provision because you must have read judgments from both sides. At present, I agree we can reach the judgment faster, but that much off reading is missing among the youngsters. As by that additional reading, we used to learn ten more things besides what you were searching for, which perhaps is now missing. So, I feel this is what the upcoming generation can inculcate in themselves.

4. You have had an illustrious career in the field of arbitration, so according to you, what are the reforms or changes that should be introduced in the current regime of arbitration in India to make it a more viable option for the resolution of disputes by parties in India?

A4. Coming to arbitration, you see, I started with labour courts, then ventured to service matters. I was appointed in the Service Tribunal for a brief moment and then appointed as Standing Counsel in High Court, where I served the State for 20 years with different Governments. The first arbitration case that came to me was somewhere in 2003, so for the last 20 years, I have been dealing with arbitration, contracts, and other matters.

What I have found in arbitration is that the arbitrator has been given unfettered powers, and there are very limited grounds, as have been enumerated in Section 34, based on which the arbitrator’s award can be challenged. The award cannot be challenged on merits, so the arbitrator’s words are final on merits. I find this one thing very arbitrary, as this gives unfettered powers to the arbitrator because if he gives an award in his prudence, it is to be accepted as it is unless there are any legal flaws in it or it is not in conflict with the public policy then it is binding upon the parties. So, he can go overboard; he can do anything without any framework to stop him. I agree there is this entire legislation, but despite that, he has so much power in him without any checks and balances. This, I feel, needs a little consideration and deliberation. Personally, I think there should be some sort of an appellate authority, like, for instance, NCLT where we have an appellate authority, NCLAT, so whatever happens in NCLT, there is a provision for appeal in NCLAT. Here, in the arbitration act, there is no such forum available. Of course, the act states that you can seek setting aside of the award under Section 34, but that is based on some limited grounds only.

Moreover, invariably every award is challenged. Like in almost 90% of the cases, the award is challenged. So, we are having litigation, and the idea behind arbitration was to reduce litigation, but we are actually added to the litigation because the case goes before the District Court in the first place, then it comes to the High Court, and at times people even come to the court in between the proceedings. Very recently, there was a challenge to the arbitrator’s order, invoking Article 227 of the Constitution of India, which is related to the power of superintendence, and the inherent power of the court, which we are still dealing with this matter, and the judgment has been reserved. So, there should be an appellate forum provided by the act, which is the one thing I would like to suggest.

The second thing that I would like to suggest is that the parties should be given some sort of right to seek a change of arbitrator. You see, an arbitrator is somebody who is supposed to be Caesar’s wife, beyond all doubts; here, I am not questioning the integrity of the arbitrator, but due to the unfettered power given to them by the act, there can be an angle of bias in the proceedings. Although an arbitrator is supposed to make disclosures, like he is not related to any of the parties in any way, but suppose one of the parties thinks that the arbitrator, who throughout the proceedings will be the same person, is biased or has developed a bias towards particular party during the proceedings. Then the award passed by him could be maligned by his prejudices, which he may have developed during the course of proceedings itself. So, for this, there should be some cure. That cure can be given in the form of some sort of rights to the parties for seeking a change of the arbitrator or institutionalising the whole thing. Once it gets institutionalised, the case does not go to the same person with whom the party could have some grounds (not in all cases). In this way, the parties will not feel that they have been deprived of justice. So, that is the little grey area, where the party, even during the proceedings, may feel that they will not receive justice from the arbitrator, and besides that, they are forced to continue. So, these are the two areas where I feel some work needs to be done on the legislative side.

5. Recently Chief Justice of India N.V. Ramana inaugurated the International Mediation and Arbitration Centre in Hyderabad, so could you tell our readers about the need for institutional arbitration, as inaugurated in Hyderabad, and how is institutional arbitration different from ad hoc arbitration?

So, you talked about mediation and arbitration centres. We also have it here in the High Court. Here, court-annexed mediations are referred to the centre. We also have arbitration chambers, but they are meant only to hold the arbitration proceedings. When I say institutionalisation, it actually means something like an arbitral court, where we have a number of arbitrators. When the matter is referred to the institution, it provides an arbitrator, and those arbitration proceedings are also held there.

Moreover, these institutions on the administrative side work upon and ensure that arbitration is carried out free from any biases and prejudices. In such an institution, there ought to be a facility for transferring arbitration matters conducted by one arbitrator to another arbitrator within the same institution. Here, the institution itself can be taken as an arbitral forum. The institution itself provides the arbitrator, who will not be static for one arbitration, facilitating the same arbitration matter before different arbitrators based on modus operandi, rules, and regulations.

6. The extravagant cost involved in arbitration proceedings has often been criticised, so what are your views on this issue, and what can be some possible solutions?

Yes, the cost involved in the disputes is stupendous. What is there in Schedule 4 was only indicative. Until Schedule 4 was inserted, the arbitrator was free to decide its fee. But now, once this schedule has been introduced, everyone has to stick with it. When we talk about Schedule 4, I am yet to understand its impact, as the schedule gives slabs of fees depending upon the sum of the dispute, and just below the schedule, you will find that 25% extra has to be paid in case there is only one arbitrator. Now, what does this mean, is the fees as have been specified in the schedule related to the cost of the whole arbitral panel, or is it the cost of one arbitrator. Based on the intent behind this provision, it actually means that if there is a panel of three arbitrators, then only the slab amount is to be given to the whole panel, which perhaps has to be divided among the three arbitrators. Otherwise, the type of fees given to an arbitrator, let’s suppose ten crores, if is to be given to an individual arbitrator, then it is a huge amount. Therefore, I do not find these figures irrational, as when High Court under Section 11 states that the fees have to be decided in accordance with the schedule, then it is also binding on the parties to follow it, and as far as the negotiation with the arbitrator on fees is concerned, that thing is not possible.

A possible solution to this can be that there should be some declaration that the fee prescribed in the schedule should be for the whole panel of three arbitrators. And in case there is only one arbitrator, then his fees should be one-third of what is prescribed in the schedule plus 25% of that amount.

7. What will be your advice to law students and practitioners looking forward to a career in arbitration?

A7. There is a lot of scope in arbitration. The law students and practitioners looking forward to a career in arbitration should be thorough with the Contract Act and the Arbitration Act. Nowadays, the Government has made it mandatory that every government contract invariably has to have an arbitration clause, so with this, the Government is trying to lighten the burden of the courts. Still, the Government has not been successful, which is one thing. There is another thing which I would like to say regarding the lawyers. Being a lawyer is a job; he has to handle the court, handle the clients, and handle the people around him to increase his clientele. It is a very engaging profession. The lawyer will find significantly less time for his family or any miscellaneous job. Moreover, for a young lawyer to get arbitration matters is in itself a job. So, I would suggest that young lawyers should first establish themselves in the eyes of their seniors so that their senior has confidence in them and give out cases of arbitration and others to young lawyers. Once this confidence is developed, they have to prove their worth by their dint of labour. Otherwise, what I perceive is that getting arbitration matters for a young lawyer is not an easy job.

8. We all know that you have been in the legal industry for over three decades, so what, according to you, are the skill sets that are essential for this profession, and how can a law student utilise their time in the law school to develop these skills?

I have talked about certain skills like oration practice and reading one judgment a day, which are some skill sets that one should develop. One more thing I may have missed out on, and it will cover up, is that you need to carry a smile throughout. You see, half of your job is done with politeness and smile; if you are polite in your submissions, if you are submissive in your arguments, half of your job is done. When I entered this profession, I was told by my teachers, my guru, my father, and others that you should learn three words, “Ji Sir; Yes Sir; Ha Sir”, nothing beyond this. Whenever a Judge says something, it must be any of these three things. One should never say “na” or no to anything; start with a “Yes My Lords” even if you do not agree with what the Judge said, or he may even be wrong in his proposition, then also you must start from Yes Sir or Yes My Lords and then put across your point, this is essential for a youngster. So never start with a no, always be submissive, and then very sweetly and softly take the Judge along with you with whatever you wish to say, because if you start with a no, then it is human psychology that he would become resistant to you, he may not be receptive to what you would be saying, but once you say yes, then he may be receptive to what you may be having to speak. Another thing will be never frown or show your anger in the court, even if you are. Never fight with your colleague on the other side of the dice. Always show respect to him and the court; the world would be yours. So, this is one mantra that I learned during the initial days of my practice.

9. Any final piece of advice for our readers.

Hard work and labour with every brief that comes. Here, I would like to share one thing. When I started practicing in the High Court, there was a perception among the people that I was an expert in the Labour Laws. But to be upfront and honest, I will say I learned Labour Laws in just three months, and those three months were on my first case, which I asked for from my father. Once he permitted me, I went through the entire pleadings, prepared my notes, and started working on the legal aspects of it. Once I started working on it, I was neck deep in Industrial Disputes Act. Once you start reading the case laws related to it, you get ten more case laws referred to in that particular case that you read, and so on. In this way, I had a great command of that topic. During those days, my schedule was such that I used to return at 7.00 p.m. from the courts, and then I used to do this work till around 2.00 to 2.30 a.m., that too when I was scolded by my mother to leave the work and go to sleep. But for doing that extra work, I never forced myself. I enjoyed the process throughout. As once you start enjoying it, you begin to imbibe it, appreciate it, and understand it. Once you do that, you will become a master of that particular thing. So, my final word would be that you can never achieve success without hard work.

Central Government Notification
Legislation UpdatesRules & Regulations

On 9-7-2022, Central Government notified Arbitration Council of India (Terms and conditions and salary and allowances payable to Chairperson and Members) Rules, 2022 to defines rules of appointment, qualifications and conditions of service of officers of Arbitration Council and applicable with immediate effect.

Key Points:

  • According to Sec. 43-M of Arbitration and Conciliation Act, 1996, In the Council of Arbitration, Chief Executive Officer is the one who is responsible for the day-to-day administration and an appointing authority.
  • As per Rule 6, any person who qualifies to be an officer, can be somebody who is-
    1. Officers of Central Government/ Courts/ Tribunals.
    2. More than the age of 45 years.
    3. Possessing a Master’s degree in Management or Economics or Public Administration or a Bachelor’s degree in Law from a recognised University or Institution.
    4. Holding the post of Joint Secretary or equivalent, Judicial Officer, or any other analogous post.
  • Term for which the CEO is appointed will be 3 years and his age should not have exceeded the limit of 65 years as per Rule 7.
  • Centre has decided the salary of the CEO at level 15, along with the allowances, etc.
  • Perquisites available to the CEO include pay, allowances, leave, provident fund, age of superannuation, pension and retirement benefits, medical facilities, etc. He is entailed to a house rent allowance. All the allowance is payable as per the pay scale of Group A in the Central Government.

*Shubhi Srivastava, Editorial Assistant has reported this brief.

Rajasthan High Court
Case BriefsHigh Courts

   

Rajasthan High Court: Ashok Kumar Gaur, J. found that the writ petition by the petitioner lacks merit and dismissed it stating that no award can be remitted back to the arbitrator where there are no findings on the contentious issues of the award.

The petitioner filed a writ petition challenging the order passed by the commercial court wherein the application filed under Section 34(4) of the Arbitration and Conciliation Act, 1996 (‘Act of 1996') was dismissed. The arbitral award of an earlier case was challenged by the respondent under Section 34 of the Act of 1996 in the commercial court. The petitioner moved an application under Section 34(4) of the Act of 1996 to adjourn the proceedings in the application filed by the respondent and asked to give an opportunity to the Arbitral Tribunal to resume the arbitral proceedings or to take such other action as in the opinion of the Arbitral Tribunal was required to eliminate the grounds for setting aside the arbitral award.

The main grounds raised by the petitioner in the application filed are as under:

  • The award of the Arbitral Tribunal omitted the adjudication on every issue to give findings on the issue separately.

  • Omitted to explain the words where “bare minimum principles of natural justice” and in “hyper technical ground” while setting aside the impugned termination.

  • Omitted the reasons for providing INR Rs.4,80,00,000/- against loss of business, reputation & goodwill and omitted to assign explanation for setting aside the counter claim of the respondent-applicant in the appeal.

  • The Arbitral Tribunal was required to be given an opportunity to eliminate the grounds for setting aside the award.

  • The bare perusal of the award showed that findings do not discuss and give the reasoning as to why the principles of natural justice were not followed and why the termination of the order was termed as hyper technical ground.

  • All the conditions as per the law laid down by Supreme Court in I-Pay Clearing Services Private Limited v. ICICI Bank Limited (2022) 3 SCC 121, were fulfilled by the petitioner by moving an application and as such the court below could not have dismissed the application on the reasons assigned in the impugned order.

  • As per law laid down in ‘I-pay case', (2022) 3 SCC 121, the discretion vested with the Court for remitting the matter to the Arbitral Tribunal ought to have been exercised and on bare reading of the award if there is any inadequate reasoning or certain gaps in the reasoning are required to be filled, if such application is filed, then it needs to be allowed.

The points raised by the Respondent were as follows-

  • The Court does not need to interfere by allowing a writ petition under Article 227 of the Constitution. If there is an inherent lack of jurisdiction, then only the Court under Article 227 of the Constitution of India can exercise the jurisdiction.

  • The present writ petition filed by the petitioner is not maintainable and proper remedy for the petitioner was to either file an appeal under Section 37 of the Act of 1996 or to take recourse under Section 13 of the Commercial Courts Act, 2015.

  • In view of the judgment passed by the Supreme Court in ‘I-pay case' (supra), the writ petition filed by the petitioner is liable to be dismissed.

  • The reliance placed by counsel for the petitioner on the judgments have all been considered by the Supreme Court which has found that all these judgments were not of any assistance to explain the scope of Section 34 (4) of the Act of 1996.

  • The scope of Section 34 (4), Act of 1996 has come to the conclusion that on application being filed under Section 34 (4), Act of 1996, it is always not obligatory for the Court to remit the matter to the Arbitral Tribunal and discretionary power under Section 34 (4), Act of 1996 is to be exercised where there is inadequate reasoning or to fill up the gaps in the reasoning in support of findings, which are already recorded in the award.

  • Under the guise of additional reasons and filling up the gaps in the reasoning, no award can be remitted to the Arbitrator where there are no findings on the contentious issues in the award.

The Supreme Court considered the scope of Section 34 (4) of the Act of 1996 in the case of I-Pay Clearing Services Private Limited v. ICICI Bank Limited (2022) 3 SCC 121 wherein it was observed

“19. The quintessence for exercising power under Section 34(4) of the Act is to enable the Tribunal to take such measures which can eliminate the grounds for setting aside the arbitral award, by curing the defects in the award.”

“21. Further, Section 34(4) of the Act itself makes it clear that it is the discretion vested with the Court for remitting the matter to Arbitral Tribunal to give an opportunity to resume the proceedings or not. The words “where it is appropriate” itself indicate that it is the discretion to be exercised by the Court, to remit the matter when requested by a party.”

The Court therefore held that the application under Section 34(4) of the Act of 1996 is required to be decided by the court by exercising its discretionary powers and same powers cannot be exercised under the guise of additional reasons and filling up the gaps in the reasoning and as such award cannot be remitted to the arbitrator or arbitral tribunal and particularly if there are no findings on the contentious issues in the award.

Thus, the Court held that the writ petition lacks merit and the same was dismissed accordingly.

[Eptisa Servicios De Ingenieria SL v. Ajmer Smart City Limited, S.B. Civil Writ Petition No.13488 of 2019, decided on 23-05-2022]


Advocates who appeared in this case :

Mr Ajatshatru Mina, Advocate, for the Petitioner(s);

Mr Rajendra Prasad, Senior Advocate, for the Respondent(s).


*Arunima Bose, Editorial Assistant has reported this brief.

Call For PapersLaw School News

The USLLS ADR Blog invites crisp and analytical submissions pertaining to Alternative Dispute Resolution Laws on a rolling basis.

About the University

Established in 2001, University School of Law and Legal Studies, Guru Gobind Singh Indraprastha University is located in Dwarka, New Delhi, India. An eminent institute, USLLS holds the 12th position in NIRF’s 2021 Rankings for law schools across India. It is the first University to be in the vicinity of the Supreme Court, Delhi High Court, various subordinate courts, commissions, tribunals and various monitoring offices of national and international voluntary organisations. USLLS aspires to open new vistas in the arena of law, legal studies, theoretical and clinical legal education through an incessant endeavour towards developing academic potential, critical analytical ability, advocacy, counselling and mediation skills so as to fully equip the students with learning which is intellectually stimulating, socially vital and professionally enriching.

About the Blog

The USLLS ADR Blog is an initiative of University School of Law of Legal Studies, Guru Gobind Singh Indraprastha University. We, at USLLS ADR Blog, believe that sustained academic deliberation is required to ensure that the field of Alternative Dispute Resolution Law grows continuously, and becomes the mainstream solution to disputes. Our aim is to provide a conducive platform that fosters discussions and deliberations pertaining to the field of ADR by academicians, researchers, students and practitioners. We hope to promote the culture of ADR and acquire the viewpoints of the various stakeholders in the field. In pursuance of that vision, we have also constituted a diverse Advisory Board consisting of extremely accomplished individuals in the field of ADR so as to enable the Blog to ensure that the viewpoints of the various stakeholders are addressed through the holistic functioning of the Blog.

The Blog received its Inaugural Message from HMJ Rekha Palli, Judge, High Court of Delhi. Additionally, our inaugural blog series features the articles of 12 esteemed legal professionals from around the world. To read their blog pieces or to know more about us, please visit our website at www.usllsadrblog.com.

Board of Advisors

The members of the Board of Advisors are: Mr. Ratan K. Singh (Senior Advocate and Arbitrator), Mr. Shashank Garg (Independent Counsel and Arbitrator), Mr. Divyakant Lahoti (Advocate-on-Record and Arbitrator), Mr. Thomas P. Valenti (Attorney and Conflict Resolution Specialist), Ms. Veena Ralli (Mediator and Organising Secretary, Samadhan – Delhi High Court Mediation & Conciliation Centre), and Dr. Nidhi Gupta (Associate Professor, NLU Jodhpur).

Submission Guidelines

We welcome all submissions pertaining to the field of ADR, subject to the following guidelines:

  1. Co-authorship up to two authors is allowed. Refrain from mentioning the name, institutional affiliation, or any other detail of the author(s) in the document to facilitate the double-blind review process.
  2. Submissions should be original and unpublished work of the author(s). Any form of plagiarism will result in an automatic rejection. Moreover, if the Turnitin similarity index reports over 20% similarity (after making the relevant exclusions such as bibliography, quotes, small matches etc.), then the submission shall be rejected.
  3. Submissions should be concise. They should range between 1000-2000 words. Longer posts may be published in parts subject to the editorial board’s discretion. The word limit is exclusive of endnotes.

General Formatting Guidelines

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  1. Citation Style
  • Method of Citation: Endnotes
  • Format of Citation: Bluebook 20th editionx
OpEd by Soumyaa Sharma
Op EdsOP. ED.

   

It is not so surprising to often see the Indian judiciary wearing a cloak of inquisitorial system of justice or be seen involved in activism to instate or reinstate justice and/or means of such justice. One such means, the alternative dispute resolution (ADR) has been majorly developed and promoted by judicial activism. Judiciary has proactively evolved ADR by giving it a true meaning and purport in terms of its implementation.

This article strives to show glimpses in past of judicial activism especially in terms of broadening the spectra of matters to deem fit for reference to ADR and in conclusion briefly discusses and predicts if similar trend of activism will exist in the near future in the light of the pending Mediation Bill, 20212 introduced in Rajya Sabha on 14-12-2021.

Noteworthy traces of such activism can be first seen in the judgment of Hussainara Khatoon v. State of Bihar3, wherein the “right to speedy trial” was recognised as being implicit in Article 21 of the Constitution4. To give effect to the said mandate waking up to the need of the hour, Parliament considered introducing various ADR mechanisms to strengthen the judicial system, which inter alia included:

(i) In 1994, amendment to the Legal Services Authority Act, 19875 was introduced to constitute and organise Lok Adalats.

(ii) In 1996, the Arbitration and Conciliation Act6 (A&C Act) was enacted repealing the obsolete 1940 Arbitration Act. Arbitration as a mode of ADR has gained recognition with the A&C Act being amended several times, noteworthily in 2015 and 2018.

(iii) Introduction of Section 897 dealing with court annexed ADR in the Civil Procedure Code, 1908 (CPC). The said amendment came in effect only on 1-7-2022.

(iv) In parallel to Section 89 CPC, in 1999 (w.e.f. 1-7-2002), Section 168 in the Court Fees Act, 1870 was introduced regarding refund of fees in matters referred under Section 89 CPC.

In the wake of Section 89 CPC, on 27-7-2002, the then Chief Justice of India, formally inaugurated the Ahmedabad Mediation Centre. The CJI called a formal meeting of the Chief Justices of all the High Courts of the Indian States in November 2002 at New Delhi to impress upon them the importance of mediation and the need to implement Section 89 CPC.9

Section 89 CPC, as vital as a statutory step it was, had serious shortfalls in terms of its implementation that were fixed by the Supreme Court. Section 89 CPC had anomalies that were identified by Supreme Court in a series of cases, which are discussed in subsequent paragraphs of this article. Interestingly, till date the legislature has carried out no amendment to Section 89 to fix these anomalies. But Section 89 is very well been used by courts to refer the matters through ADR, though only after the Court supplemented the wording of Section 89 with purposive interpretation. The Supreme Court in fact was aware of its need to step up, which was respectfully nothing short of being called as activism. The Court relevantly while fixing the anomalies stated that:10

9. If Section 89 is to be read and required to be implemented in its literal sense, it will be a trial Judge’s nightmare. It puts the cart before the horse and lays down an impractical, if not impossible, procedure in sub-section (1). It has mixed up the definitions in sub-section (2). In spite of these defects, the object behind Section 89 is laudable and sound. Resort to alternative disputes resolution (for short “ADR”) processes is necessary to give speedy and effective relief to the litigants and to reduce the pendency in and burden upon the courts.

The 2003 three-Judge Bench judgment in Salem Advocate Bar Assn. v. Union of India called as Salem Bar (1)11 finds a special notice in this regard. The Supreme Court in Salem Bar (1)12, directed for a committee to be appointed to frame model rules explaining the procedure for mediation. The amendment in Section 89 was made on the recommendation of the Law Commission of India and Justice Malimath Committee.13 The Law Commission of India, in compliance with the aforesaid judgment, drafted the consultation paper on ADR and Mediation Rules in 2003 which was adopted by several High Courts to formulate their separate Mediation Rules. Later, Justice Malimath Committee14 recommended making it obligatory for the court to refer the dispute, after issues are framed, for settlement either by way of arbitration, conciliation, mediation or judicial settlement or through Lok Adalat. It is only when the parties fail to get their disputes settled through any of the ADR methods that the suit could proceed further. The Chief Justice of India set up the Mediation and Conciliation Project Committee (MCPC) in 2005 for encouraging amicable resolution of disputes pending in the courts in accordance with Section 89 of the Code of Civil Procedure.

In Salem Bar (1)15, the Supreme Court upheld the validity of Section 89 with all its imperfections and referred to a committee, as it hoped that Section 89 would be implemented by surfacing the infirmities in it. Later in 2005, in another subsequent case of Salem Advocate Bar Assn. v. Union of India, known as the Salem Bar (2)16, recognised certain anomalies under Section 89 and gave purposive interpretation thereby making Section 89 CPC workable. The Supreme Court emphasised the need for ADR in Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd.17 (Afcons case). The judgment firstly acknowledged the anomalies in the understanding of Section 89 while referring to Salem Bar (1)18 and Salem Bar (2)19; and secondly it laid out guidelines for the courts to follow for the effective implementation of Section 89 CPC, which encourages parties to settle their disputes by means of ADR.

In Afcons case, the Court adjudged that reference to ADR is a must and mandatory under Section 89 CPC, “where it appears to the court that elements of settlement exist”20. Even though the Court in Afcons case21 was faced with the issue of adjudging whether mutual consent is necessary for arbitration, the Court made observations with regard to “mutual consent” required or not under all ADR methods recognised under Section 89 CPC. The Court held that mutual consent is required for arbitration and conciliation but not for Lok Adalat, mediation and judicial settlement. Further, an illustrative category of disputes which would be fit and not fit for reference to ADR were also observed.22 In the said list of cases, cases of criminal offences and that of serious and specific allegations of fraud, fabrication of documents, forgery, impersonation, coercion, etc. were held not fit for ADR reference. The Supreme Court in the recent judgments has clarified and limited the scope in cases of fraud. In 2021, the Supreme Court has clarified regarding non-arbitrability of cases involving fraud that “cases involving prosecution for criminal offences, it is also important to remember that the same set of facts may have civil as well as criminal consequences”.23

Through judicial activism the concept and use of ADR has been expanded tremendously. In precedents such as K. Srinivas Rao v. D.A. Deepa24 mediation/ADR was encouraged in matrimonial cases and criminal cases and accepting compromises even in the non-compoundable cases such as Section 498-A25 IPC (though with caution). The Court allowed quashing of complaints on the basis of settlement. Further the Court issued directions re mediation such as setting up pre-litigation desks/clinics; giving them wide publicity and making efforts to settle matrimonial disputes at pre-litigation stage.26 The Court observed:27

44.there exist elements of settlement, it should direct the parties to explore the possibility of settlement through mediation … In this exercise, there is no loss to anyone. If there is settlement, the parties will be saved from the trials and tribulations of a criminal case and that will reduce the burden on the courts which will be in the larger public interest.

The judicial courts have proactively allowed mediation in cases of compoundable offences such as Section 13828 of the NI Act.29 In the 2019 judgment of MTNL v. Canara Bank30 the Supreme Court, while invoking the doctrine of “group companies” permitted a non-signatory to an arbitration agreement to participate in the arbitration proceedings. The Supreme Court observed that a non-signatory may be bound by an arbitration agreement where the parent or holding company, or a member of the group of companies is a signatory to the arbitration agreement and the non-signatory entity on the group has been engaged in the negotiation or performance of the commercial contract, or made statements indicating its intention to be bound by the contract, the non-signatory will also be bound and benefited by the relevant contracts. In the instant case, the Supreme Court observed that there was enough factual background to suggest that the parties intended to bind the non-signatory party to the arbitration proceedings.

Needless to add, countless sets of judgments exist where the Court has stressed on restraint to be practised by the courts in cases of review of arbitral awards under Section 3431 of the Arbitration and Conciliation Act, 1996. These judicial precedents lineage starts from the judgment of Associate Builders v. DDA32 in 2014, followed by certain important judgments such as that of Ssangyong Engg. and Construction Co. Ltd. v. NHAI33 and coming to the judgment in Delhi Airport Metro Express (P) Ltd. v. DMRC34 wherein the Court has clarified that it may not interfere with the arbitral award merely because the other view appears more plausible. Even in one of another judgment, Welspun Specialty Solutions Ltd. v. ONGC Ltd.35the Court set aside the order of the High Court and the Single Judge interfering with the award under Section 34 of the A&C Act and upheld the judgment of the Arbitral Tribunal.

All these landmark cases indicate the heavy weight and trust that our judiciary entrusts with the ADR mechanisms such as arbitration.

In the 2019 judgment of Perry Kansagra v. Smriti Madan Kansagra36 the Supreme Court identified various kinds of disputes where ADR may be a better alternative than litigation, such as cases relating to trade, commerce and contracts including, inter alia, money claims arising out of contracts. Disputes relating to specific performance or disputes between insurer and insured, bankers and customers were also considered to be better resolved through an ADR mechanism rather than litigation.

In the judgment of M.R. Krishna Murthi v. New India Assurance Co. Ltd.37, the Supreme Court directed the Government to consider the feasibility of enacting a Mediation Act.

In background of such events, it is not tough to view the upcoming trend that judiciary might adopt if the pending Mediation Bill of 202138 is enacted in its present state, that has been introduced in Rajya Sabha on 21-12-2021. But will the same provide a wholesome law on mediation and will be putting rest to the era of judicial activism in matters of mediation? May be it is too early to say for sure but at the outset it can be seen that provisions of the Bill incorporate limited power to judicial courts to decide if the matter is fit for mediation and scope for reference. The Bill incorporates a proviso to Section 7, which states:39

Provided that nothing contained herein shall prevent any court, if deemed appropriate, from referring any dispute to mediation relating to compoundable offences or matrimonial offences connected with or arising out of civil proceedings between the parties.

The Bill provides a schedule to compartmentalise cases that are not fit for mediation40, which has inadvertently categorised cases such as that of fraud or criminal offences as not fit for mediation at all. In the few cases noted above this seems to be an obsolete view that has been redefined and yet the Bill fails to incorporate it.

Further, the Bill mechanically proposes to make pre-litigation mediation as mandatory41, and thereby not taking into account the most important criteria of success of any mediation i.e. mutual consent. And importantly the Bill leaves not much power with judicial courts to decide if the matter even if not in the category of “disputes not fit for mediation” may still be unfit for mediation. Only the power to grant some interim relief under Section 842 of pending Bill may be granted by the court or tribunal before commencement or during the mediation proceedings is possible. But in toto such a mechanical approach towards implementation of an ADR mechanism that too of mediation is bound to have its shortfall.

It is indicative that the Bill if passed in its present form indicates that it may eventually call for more activism on the part of the Indian judiciary in giving it purposive interpretation for its effective use in adjudging matters through ADR. It can be said that more surprises await to be unboxed where the judiciary can be seen in action with its fathomable and praiseworthy activism.


† Advocate. Author can be reached at <soumyaasharma@outlook.com>.

2. Mediation Bill 2021 (43 of 2021).

3. (1980) 1 SCC 93.

4. Constitution of India, Art. 21.

5. Legal Services Authority Act, 1987.

6. Arbitration and Conciliation Act, 1996 (26 of 1996).

7. Civil Procedure Code, 1908, S. 89.

8. Court Fees Act, 1870, S. 16.

9. Mediation and Conciliation Project Committee, Supreme Court of India, Delhi, Mediation Training Manual of India, p. 7, available at <https://main.sci.gov.in/pdf/mediation/MT%20MANUAL%20OF%20INDIA.pdf >.

10. Afcons Infrastructure Ltd. v. Cherian Varkey Construction Co. (P) Ltd., (2010) 8 SCC 24.

11. (2003) 1 SCC 49.

12. (2003) 1 SCC 49.

13. Delhi Mediation Centre, available at <https://delhicourts.nic.in/dmc/history.htm> (last visited on 12-5-2022).

14. Report of the Committee on Reforms of Criminal Justice System, (Vol. 1)(March 2003).

15. (2003) 1 SCC 49.

16. (2005) 6 SCC 344.

17. (2010) 8 SCC 24.

18. (2003) 1 SCC 49.

19. (2005) 6 SCC 344.

20. Afcons case, (2010) 8 SCC 24, at para 26.

21. (2010) 8 SCC 24.

22. Afcons case, (2010) 8 SCC 24, at paras 27-28.

23. Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd., (2021) 4 SCC 713.

24. (2013) 5 SCC 226.

25. Penal Code, 1860, S. 498-A.

26. K. Srinivas Rao, (2013) 5 SCC 226 at para 46.

27. K. Srinivas Rao, (2013) 5 SCC 226.

28. Negotiable Instruments Act, 1881, S. 138.

29. Dayawati v. Yogesh Kumar Gosain, 2017 SCC OnLine Del 11032.

30. (2020) 12 SCC 767.

31. Arbitration and Conciliation Act, 1996, S. 34.

32. (2015) 3 SCC 49.

33. (2019) 15 SCC 131.

34. 2021 SCC OnLine SC 695.

35. (2022) 2 SCC 382.

36. (2019) 20 SCC 753.

37. (2020) 15 SCC 493.

38. Mediation Bill, 2021.

39. Mediation Bill, 2021, S. 7.

40. Mediation Bill, 2021, First Schedule.

41. Mediation Bill, 2021, S. 6.

42. Mediation Bill, 2021, S. 8.

New releasesNews

Eastern Book Company released two books on arbitration titled Arbitration and Conciliation: A Commentary by RV Prabhat and Saurabh Bindal; and the 12th edition of Dr Avtar Singh’s Law of Arbitration and Conciliation revised by Saurabh Bindal. The book release took place in online mode on 24th May, 2022 in the revered presence of eminent personalities such as Justice AK Sikri, Judge  Singapore International Commercial Court and former judge, Supreme Court of India, Mr Sumeet Malik, Director at EBC; Mr Steven YH Lim, International Arbitrator and Barrister and Mr Steven Finizio, Partner at WilmerHale, London.

 The book launch was followed by a panel discussion on ‘The amendments in the Arbitration Act which shaped the contemporary face of arbitration law in India’. The event began with Ms Nilufer Bhateja, Associate Editor at EBC Publishing Pvt Ltd., giving a welcome address and introducing all the panelists. Following this, Mr Sumeet Malik, Director at EBC Publishing Pvt Ltd. addressed the viewers with insights on how the two books are a striking addition in the field of arbitration for both law students and legal professionals.

 The event progressed with a speech by the Chief Guest, Justice AK Sikri. He stated that foreword by Justice Fali S Nariman in the book ‘Arbitration and Conciliation: A Commentary’ by Saurabh Bindal and RV Prabhat is in itself a certification of paramount importance.  He also mentioned that the book has  gained appreciation from legal luminaries far and wide such as Senior Advocate Abhishek Manu Singhvi, Gary Born, Steven Lim and several others who are convinced that the book significantly captures the essence of evolution of arbitration law in India. Justice Sikri, upon being asked his reviews on the books, shed light upon the insights he found remarkable including the historical amendments in Arbitration and Conciliation Act, 1996.

 ‘Avtar Singh’s books has been an outstanding teacher for all students of law over a last few decades including me‘; says Justice Sikri.

Justice Sikri acknowledged that the book stands out since it discusses arbitration in exclusion of judicial practices. The book pans out the difference between arbitration and litigation and goes on to noting points of judicial intervention and review in the practise of arbitration. It is a matter widely known that even arbitration as an alternative dispute redressal mechanism leers away from litigation yet it cannot be completely excluded from the same hence discussing points of judicial intervention becomes rather a necessity which author has finally put through.’ quoted Justice Sikri.

 After the address of Justice AK Sikri, the forum was taken over by Mr Bindal who mentioned that his book ‘Arbitration and Conciliation: A Commentary’ enfolds case by case commentary and analysis of how arbitration law has transformed over the years. The floor was then taken over by co-author Mr RV Prabhat’s who had authored his first publication in association with EBC. Mr Prabhat acknowledged the immense support he has received from the editor, Ms Nilufer Bhateja and the team at EBC.In no time, I had my first book in my hand’, he added.

 Author RV Prabhat, upon being asked about his experience while writing the book added that, off late in the last 2 to 3 years, there has been a spur of  judgements by Supreme Court  significantly evolving the arbitration law especially post the amendment of 2015, 2019 and 2021. His endeavour in this book was to synthesize the law of arbitration and encapsulate with clarity the current position in law so as to separate the shaft from the grain.

Panel Discussion

How amendments in Arbitration Act are being interpreted by Judiciary

 The panel discussion began with Author and Moderator Saurabh Bindal putting forth a question to Justice Sikri that how are the amendments in the arbitration act are being interpreted by the Judiciary.  Justice Sikri answered  that hybrid nature of arbitration system, system driven by party autonomy in which the two parties choose their private arbitrators for out of court settlement. The parties while exercising their right to party autonomy, also show faith in the arbitral tribunal which will bring about a fair resolution standing upon the principles of equity and justice. Also, while we demarcate the need of amendments passed in the existing legislature, it is pertinent to note that they are based on UNCITRAL Model Law which is being adopted by close to 200 countries like UK, Singapore and many others have adopted the law while tweaking of some of the provisions. The question that arises here is why the same law is operated in a peculiar way in different countries for example the arbitration culture in Singapore is conducive to the stakeholders which is rightly demonstrated by the judgements of the courts in Singapore with the enforcement of the law.

 Furthermore, Justice Sikri added that the amendments of 2015 were passed by the legislature on the recommendation of Law Commission after experiencing the downfalls of 1996 act in certain judgements. ONGC v. Western Geco International Ltd. (2014) 9 SCC 263 and Bhatia International vs Bulk Trading S.A. (2002) 4 SCC 105  judgements called the law ‘muddied waters’. The judgements are not in ethos and do not stand up to the spirit behind the act due to the confusing interpretation. The purpose behind the 2015 amendment was to cure the defects which had appeared in the 1996 act and its interpretation in judgements either due to judicial pronouncement or because of the provisions per se. In the present scenario, the High Court and Supreme Courts in many judgments restrain their power when the discourse arises of interference with the arbitral awards.

How amendments in Arbitration Act are being interpreted by practitioners

 The next question turned the panel towards Mr Steven Lim on how does he perceive the amendments made in act  from the perspective of a lawyer who has been  practicing in Singapore. He was of the view that it was more a matter of mindset that needs to be adjusted, the problem is not primarily in the law since the model law has worked quite well in other jurisdictions. Further, he cited that how in Singapore, there have been amendments to the International Arbitration Act because the judiciary interpreted some very basic principles about how model law operated incorrectly. The fundamental error of courts perceiving that parties intend to override the national act by adopting international regime stems from lack of appreciation of how the model law operated.

‘Nobody is born an international arbitration practitioner’ quoted Mr Lim.  You have to learn it through experience and presence of mind. The amendments in India are seen as a part of the learning process which other arbitration friendly countries have gone through as well.

How India is viewed in the Global Arbitration Index

Subsequently, Mr Finzio was posed with the question on where does he see India in the global arbitration index, if there is any, through the modernized judgments by various courts including SC, like the recent one in which India recognized the concept of Emergency Arbitrators.

Going forward Mr Finzio averred that ‘What India needs to do next is to breathe a little bit. Let the developments settle in, do not constantly tinker.’ With the SC recognizing not just Emergency Arbitration in foreign seated arbitration, the Indian courts are making a huge leaps from the draconian law, by reinforcing the general aversion that interim measures are vital and interim measures can be directed from arbitrators or any authority appointed before the tribunals, which is a sign that India is at the front cutting edge of international arbitration by recognizing the concept and by becoming one of the few jurisdictions that’s wrestled with it.

All these manoeuvre display that this is the nation that is intellectual ready to deal with some of the most sophisticated problems; a nation that is in fine tuning with the foreign laws and model laws.and a nation that is willing to be on the leading edge while being in transformation from where it stood 10 years ago, emphasized Mr Finzio.

Impact of 2015 and 2021 amendments

In the same trail of discussion, Mr Prabhat mentioned that while 2015 amendment was the tectonic shift in the act and it had taken us strides ahead in matching with the international standard, the 2021 amendment had an unbecoming effect. India has always been two steps forward and one step backward in its approach to arbitration law, the author remarked. In light of 2021 amendment, it taken a step backward where initially the over cautious approach under the Arbitration Act ,1940 where the imprimatur of the court was the prerequisite to the enforcement of the arbitral award, that was done away with by the 1996 act. In fact, in conferring direct arbitrability with the arbitral awards, the 1996 act went a step ahead than the UNCITRAL Model Law which allowed an award debtor to resist the award both at the challenge stage as well as the enforcement stage and recognition stage. The 2021 amendment undermines this trajectory. The uncertainty injected by this amendment created more issue than it solves which may once again need clarification as per the author.

Justice Sikri, in concluding remarks, was in consonance with Mr Prabhat that the 2021 amendment is a regressive amendment because it nullifies the effect of 2015 Amendment. He reiterated that Indian High Courts and Supreme Court in last 8 to 10 years have bore an attitude that has been highly supportive of arbitration law and paved a way ahead and not scuttled the arbitration process. He agreed however that the 2021 amendment was not even needed.


The entire discussion can be seen below

 


Get your copy from the EBC Webstore:

  1. Arbitration and Conciliation, A Commentary by Saurabh Bindal and RV Prabhat: https://www.ebcwebstore.com/product_info.php?products_id=99097874
  2. Avtar Singh’s Law of Arbitration and Conciliation by Saurabh Bindal https://www.ebcwebstore.com/product_info.php?products_id=834

     

 

 

 

 

 

 

 

 

Interviews

Mr Tushar Agarwal completed his LLB from the Amity Law School, Amity University, Noida in the year 2015, and enrolled with the Bar Council of Delhi. Mr Agarwal also successfully completed a diploma course in “criminal justice” from Harvard University, United States.

His practice primarily focuses on criminal law, constitutional law and commercial arbitration. His chamber caters to all the needs of the litigants starting from legal opinion and legal drafting to presenting arguments before the court of law.

Mr Agarwal was one of the assisting counsels representing Dr Shashi Tharoor in a famous State v. Shashi Tharoor, Sessions Case (SC) No. 5/2019. He has also appeared in few pro bono cases with Senior Counsels representing Association of Victims of Uphaar Tragedy, Association of Victims of Meerut Fire Tragedy, etc. Mr Agarwal is currently handling few important matters relating to corruption, corporate frauds, moneylaundering and goods and services tax (GST) evasion being investigated by Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO), Enforcement Directorate (ED) and Directorate General GST Intelligence (DGGI) respectively.

He has been interviewed by Khushbu Sood, EBC/SCC Online Student Ambassador who is currently pursuing law from HPNLU.

 

1. To begin with, if I may request you to please share with our readers something about yourself, your journey in the profession and your early years.

I am a first generation lawyer from a small town of U.P. i.e. Meerut and shifted to Delhi in 2009 to chase and fulfil my dreams. I completed my LLB from the Amity Law School, Amity University, Noida in the year 2015, and enrolled with the Bar Council of Delhi. I have also successfully completed a diploma course in “criminal justice” from Harvard University, United States.

During my law education, I explored about my deep interest in criminal law and with God’s grace, I was fortunate enough to start my professional journey with one of the stalwarts of criminal law in India Mr Vikas Pahwa, Senior Advocate. I joined his chamber as Legal Associate which provided me a great exposure as I got an opportunity to assist him in variety of high profile cases across various legal forums in Delhi as well as outside Delhi. One case which I would like to mention is State v. Shashi Tharoor, Sessions Case (SC) No. 5/2019 wherein Mr Pahwa was representing Dr Shashi Tharoor and I assisted him at the initial stage of the case. So the right guidance and mentoring in early years helped me in laying down a strong foundation of my professional career.

 

2.  What inclined you towards the field of legal education? Do you reckon any specific incident that made you choose law as a career?

Law is considered to be one of the noblest profession. A lawyer is the only professional who is addressed as learned. So, with the knowledge of law, it is expected from a lawyer that he/she will use that knowledge in making people aware about their legal rights and also fight on their behalf before a court of law for protecting those rights. So, being a participant in fight for protection of legal rights of the people of your country, was the biggest motivation for me to practise this profession.

There is no specific incident that made me choose law as a career. I was curious since my school days to learn about the genesis of various laws implemented in India because I feel that having deep knowledge of law makes you more socially empowered.

 

3.  How did you shape at the law school? Please also share your interests and motivations. How did you navigate through your career path?

At law school, apart from academic sessions and classes, the participation in moot courts, mock trials and other extracurricular activities also helped me a lot in pursuing my studies with utmost dedication and interest. Such activities used to act as a refresher/stressbuster in the hectic college schedule. I had also been in the leadership teams of various college associations like moot court society, legal entrepreneurship cell, media society, etc. Such roles helped me in developing good quality leadership skills.

I had interest in taking up challenging leadership roles since my school days. Such leadership roles not only refine your personality but also provide an opportunity to polish your communication and interaction skills. The motivation behind pursuing law as a career and taking these leadership roles was the direct opportunity of interaction with the legends and renowned Judges and senior advocates who used to visit the college on various occasions.

Further a combination of right guidance from college teachers, mentoring by fraternity seniors, support from family and strong self-belief and hard work and blessings of God and elders, together helped me in pursing my career path in an effective and efficient manner.

4. How has your experience shaped you into the professional? How has your primary interests in criminal law, constitutional law and commercial arbitration, helped you set up your chambers?

The internships across my entire law degree with various advocates, senior advocates, law firms and Judges, helped me in exploring my interest into litigation and that too especially in criminal, arbitration and constitutional law. So pursuing my internships sincerely made my journey easy to formally start practising as an advocate.

  1. Starting your own chambers is a hardworking and tiresome task, do you think it is important to have some specialisation or should there be generalist approach?

 

In the initial days of independent practice through your own chamber, the biggest challenge is to build your face value in the fraternity and to convince the clients about your quality of services in order to retain them. It is very hard to get the relief from the court of law for your clients. So in these initial times, your work experience during trainings and internships plays a major role.

I religiously follow all the ethical and professional practices learnt from my seniors and continue to do hard work with utmost dedication. I spend good amount of time in reading judgments and doing legal research to update my knowledge. My updated legal knowledge and awareness helped me a lot in retaining the clients.

In my opinion, in initial few years of independent practice, one should be open to take up all sort of cases like civil, criminal, arbitration, etc. Once you start building your image in one sort of matters and start gaining a good command over that particular field of law, then a chamber can think of narrowing down its practice to only that matter which falls within its area of specialisation. The specialist approach in initial days limits a lawyer within a periphery which he becomes unable to cross in future.

 

  1. Since your recent achievement, please share your experience of being awarded with “Top 100 Lex-Falcon Award” in LexTalk World Global Conference in Dubai for his contributions in legal industry.

This award indeed was a milestone in my professional journey. These kind of awards and recognition not only enhances your visibility in the fraternity but also motivates you to continue to contribute towards your industry. This award gave me an opportunity to take my practice at global level by making good relations with advocates and counsels across the world.

 

     7.   What, according to you, has changed/modified in law, both in statutes and in the society.

In my opinion, the law with passage of time has become more dynamic. With more frequent and new technological, political and global developments, the requirement of repealing old and obsolete statutes has increased and enactment of new statutes keeping in view the current situation, has become necessary. Further with the passage of time, the awareness about law and status has increased in the society. The people have become more aware about legal rights and the ways to enforce them. But in my view, this increased awareness has also resulted into increased filing of cases before courts. Therefore the onus is on lawyers to guide their clients in a correct manner in order to avoid frivolous and baseless litigations.

     8.  Not many people are familiar with the concept “exhaustion of a search”. What are your views on it?

I guess, the concept of “exhaustion of a search” is a very subjective matter and it differs from individual to individual. The stage of exhaustion of a search for a researcher will never arise until and unless his/her purpose of research is not completed and all questions are not answered.

For example: while doing a research on a law point, finding a case law is not sufficient. One should also research about any executive ordinance or government notification or any report of Law Commission or any report of Parliamentary Committees, etc. in order to have a holistic view regarding that particular law point.

  9.   What advice would you like to give students of law in a post-COVID era where students are anxious about choosing career paths?

In my opinion, this pandemic is a temporary phase which has now almost come to its end. The legal work in courts and corporates has started gaining its original pace which was there before pre-COVID era. Therefore my sincere advice to all aspiring lawyers is that instead of getting disappointed and anxious, they should use their time to enhance their legal knowledge either by reading legal books, judgments or writing articles or pursuing online internships, etc. They should focus on exploring new areas like artificial intelligence in law, etc. They can also plan to go for higher studies.

There are endless opportunities floating in this legal ocean, one just has to look and wait for it with patience and grab the same once it knocks your door. I might be sounding very bookish and non-realistic, but after spending so many years in this profession I have learnt that patience, persistence and hard work are the only ways to climb the stairs of success.

   10.  Any advice you would like to give to the readers of SCC blog? Apart from this is there anything else that you would like to share with the readers of SCC Online?

To all the aspiring lawyers which are readers of SCC blog, my sincere advice would be that whenever you join any chamber as an associate, you should spend good amount of time in that office without making any haste to start independent practice. You should focus on learning art of legal drafting, courtcraft, style of arguments, case management, etc. from your senior because none of these arts can be learnt by reading books. I still remember the exact words of my senior-cum-mentor, who trained me, that “you cannot become Ram Jethmalani in 2 or 3 years of practice. You have to be patient and give adequate time to this profession if you want to achieve success”.

Calcutta High Court
Case BriefsHigh Courts

   

Calcutta High Court: Shekhar B. Saraf, J. upheld the award granted by the Arbitral Tribunal holding that the award holder should be secured for the entirety of the amount along with interest and other costs.

The petitioner had filed this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”) along with an application under Section 36(2) of the 1996 Act praying for stay of the award passed by the arbitral tribunal on 27-12-2021 where the respondent was entitled to a refund of Rs. 84.24 crores along with interest which it had deposited with the petitioner on 27-12-2006. Tribunal had also awarded a sum of Rs. 25,00,000/- towards reimbursement of litigation and arbitral costs.

The dispute between the parties had arisen out of an agreement to carry out a new township project for which the petitioner invited financial bids through a tender process. The financial bid of the respondent was accepted and the petitioner via letter dated 21-12-2006 issued a Letter of Award. Possession of 90.19 acres of land was handed to the respondent on 10-08-2007, however no lease deed was entered between the parties at the time of handing over of the possession. Even after a lapse of one year, the lease agreement for execution of work and the development agreement for the same were still not executed between the parties. Finally, in order to govern the relations between the parties a formal development agreement mentioning the terms and conditions were reduced in writing on 25-04-2008. Due to non-execution of the lease between the parties, the new township project was not commenced meanwhile, the petitioner demanded the remaining sums required to be paid by the respondent claimant. The respondent did not pay the remaining amount due to non-execution of the lease document. Finally, the petitioner terminated the development agreement due to nonpayment of the balance instalments constituting event of default by the respondent. Resultantly, arbitration clause was invoked for settlement of the dispute wherein the abovementioned order was passed by the Tribunal.

Senior Advocate appearing for the petitioner argued that the court has the discretion to decide the mode of security to be furnished by the petitioner. He stated that the land in possession of the respondent can be accepted as a valid security for granting stay of the arbitral award under Section 36 of the 1996 Act.

Advocate appearing for the respondent highlighted the default committed by the petitioner as per the development contract entered between them.

The Court perused the relevant clauses and provisions of law cited by the advocates and opined that proviso to Section 36(3) of the 1996 Act makes it clear that the Court must, while considering the stay application in proceedings under Section 34 of the Arbitration Act, have due regard to the provision for grant of stay of a money decree under the provisions of the Civil Procedure Code, 1908 (“CPC”). Order XLI, Rule 5(1) of the CPC grants the court discretion to stay the execution of a decree for ‘sufficient cause'.

The Court reiterated what was held in the case of Pam Developments (P) Ltd. v. State of West Bengal, (2019) 8 SCC 112 that the mandate of the amended Section 36 of the 1996 Act is such that the Court while considering an application for stay filed along with filing of quashing petitioner under Section 34 of the Arbitration Act can grant the stay subject to conditions as it deems fit. Section 36 also mandates recording of reasons for such stay being granted. The Court at the initial stage of proceeding, was satisfied that there does not appear to be any illegality, perversity or violation of any law on the face of the arbitral award as Arbitrator has duly considered the pleadings on behalf of the parties, and thereafter, framed issues and dealt with specific claims and counterclaims of the parties with reasons — hence, the award is a speaking award.

The petitioner was directed to deposit 50% of the arbitral award (including interest calculated till June, 2022) by way of cash security or its equivalent and the Registrar Original Side was directed to make a fixed deposit of the said amount with any nationalised bank and keep the same renewed till the disposal of the application under Section 34 of the Act or until further orders of Court. The remaining 50% of the awarded amount was directed to be secured by way of bank guarantee(s) of a nationalised bank by the petitioner to the satisfaction of the Registrar Original Side, High Court.

[Siliguri Jalpaiguri Development Authority v. Bengal Unitech Universal Siliguri Projects Ltd., I.A. G.A. No. 1 of 2022, decided on 22-06-2022]


Advocates who appeared in this case :

Mr S.N. Mookherjee, Senior Advocate, Mr Anirban Ray, Mr Raja Saha, Mr Chayan Gupta, Mr Sandip Dasgupta, Mr Saaqib Siddiqui, Mr Aviroop Mitra, Advocates, for the Plaintiff/Respondent;

Mr Siddharth Batra, Mr Ashish Shah, Mr Chinmay Dubey, Ms Moumita Chakraborti, Advocates, for the Respondent/Claimant.


*Suchita Shukla, Editorial Assistant has reported this brief.

Himachal Pradesh High Court
Case BriefsHigh Courts

Himachal Pradesh High Court: In the case where it was argued before the Court that the Arbitration and Conciliation Act, 1996 (for short “1996 Act”) does not provide for any remedy to challenge an arbitral order and was hence, against the “public policy of India”, Satyen Vaidya J. observed that,

“The term “public policy of India” carries within it innumerable facets. It is altogether a different thing to say that there is no immediate remedy available to the petitioners than to say that they have no remedy at all.”

The observation came after the Court noted that a party to arbitration proceedings has a remedy to challenge the award passed in such proceedings under Section 34 of the 1996 Act. An application was filed by the petitioners under Order 11, Rules 1 & 2 read with Section 151 of the Code of Civil Procedure (for short “CPC) seeking reply of the respondents, who are claimants before the Arbitrator, to the interrogatories formulated on behalf of the non-claimants/petitioner which was thereby dismissed. The grounds for dismissal were firstly, that the application was not maintainable before filing of written statement and secondly, that without the written statement of the petitioners herein on record, the application was premature as the relevance of the interrogatories could not be adjudged. Aggrieved by this, an instant petition was filed.

The Court observed that Section 5 of Arbitration and Conciliation Act, 1996 (for short 1996 Act) starts with a non obstante clause, strictly prohibiting intervention by any judicial authority in matters governed by Part-I of 1996 Act except where so provided in such part. The intent of legislature is loud and clear. By making the 1996 Act a complete Code and incorporation of provision like Section 5 thereof arbitral proceedings were not only kept independent but free from any unnecessary delays also. Thus, though Section 5 of the 1996 Act cannot be a clog on powers of constitutional courts, nevertheless such powers may also not be readily available.

Reliance was placed on SBP & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618, wherein it was observed

It is seen that some High Courts have proceeded on the basis that any order passed by an arbitral tribunal during arbitration would be capable of being challenged under Article 226 or 227 of the Constitution of India. We see no warrant for such an approach. Section 37 makes certain orders of the arbitral tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating his grievances against the award including any in-between orders that might have been passed by the arbitral tribunal acting under Section 16 of the Act. The party aggrieved by any order of the arbitral tribunal, unless it has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act.

… We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the arbitral tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution of India. Such an intervention by the High Courts is not permissible.”

The Court, hence, refrained from adjudicating on the merits of the impugned order as being not maintainable and held that“the arbitrator though having trappings of tribunal, yet the impugned order will not be amenable to challenge under Article 227 of the Constitution of India.”

[V. Kare Biotech v. Hemant Aggarwal, 2022 SCC OnLine HP 2972, decided on 21-06-2022]


Advocates who appeared in this case :

Subhash Sharma, Advocate, for the petitioner;

Sanjeev Kuthiala, Sr. Advocate and Anaida Kuthiala, Advocate, for the respondent.

SCC Part
Cases ReportedSupreme Court Cases

Civil Procedure Code, 1908 — Or. 41 Rr. 4 & 33, Ss. 96, 100 and Or. 20 R. 18 — Partition suit — Appeal — Non-appealing plaintiffs: Some of plaintiffs whose claim was denied by trial court and who had not challenged same by way of appeal before first appellate court, held, are entitled to relief in second appeal. In a partition suit, all parties stand on the same pedestal and every party is a plaintiff as well as a defendant. Position of plaintiff and defendant can be interchangeable. Trial court could grant relief even to non-appealing plaintiffs and make an adverse order against all defendants and in favour of all plaintiffs. Merely because trial court had not granted relief in favour of some of plaintiffs, would not come in the way in High Court allowing their claim. [Azgar Barid v. Mazambi, (2022) 5 SCC 334]

Constitution of India — Art. 226 — Maintainability of writ petition — Proceedings under SARFAESI Act: If proceedings are initiated under the SARFAESI Act and/or any proposed action is to be taken and the borrower is aggrieved by any of the actions of the private bank/bank/ARC, borrower has to avail the remedy under the SARFAESI Act and no writ petition would lie and/or is maintainable and/or entertainable. [Phoenix ARC (P) Ltd. v. Vishwa Bharati Vidya Mandir, (2022) 5 SCC 345]

Constitution of India — Arts. 32 and 226 — Issue as to legislative competence — Maintainability: Matter already standing determined by a Constitution Bench of the Supreme Court. [M.C. Mehta v. Union of India, (2022) 5 SCC 291]

Constitution of India — Sch. VII List I Entry 84 and List II Entry 51: State Legislature, held, has no legislative competence to levy tax on waste liquor after distillation which is not suitable for human consumption. [State of Orissa v. Utkal Distilleries Ltd., (2022) 5 SCC 326]

Criminal Procedure Code, 1973 — S. 190(1)(b) r/w Ss. 173, 193 & 319 and Ss. 161 & 164 — Taking cognizance of offence on basis of police report — Protest petition: Even after process has been issued against some accused on one date, held, process can still be issued by the Magistrate against some other person against whom there is some material on record, but whose name is not included as accused in the charge-sheet. Lastly, Magistrate or court need not wait till stage of S. 319 CrPC to exercise such power. [Nahar Singh v. State of U.P., (2022) 5 SCC 295]

Foreword to a book: A foreword to the book “Competition Law” by Cyril Shroff. Foreword to competition law by Cyril Shroff, (2022) 5 SCC (J-25)]

Foreword to a book: A foreword to the book “Criminal Law and Criminal Justice: An Introduction to the Writings by Justice M.N. Venkatachaliah, Foreword to Criminal Law and Criminal Justice: An Introduction to the Writings by Justice M.N. Venkatachaliah, (2022) 5 SCC (J-22)]

Foreword to a book: A foreword to the book “Transgenders and the Law” by Justice A.K. Sikri. Foreword to transgenders and the law by Justice A.K. Sikri, (2022) 5 SCC (J-28)]

Government Contracts and Tenders — Formation of Government Contract — Modes of entering into a Government Contract — Public Auction/Tender — Award/Non-award of contract — Judicial review: Author of the tender document, reiterated, is taken to be the best person to understand and appreciate its requirements. Thus, if the interpretation of such author is manifestly in consonance with the language of the tender document or subserving the purchase of the tender, the Court would prefer to keep restraint. Further, the technical evaluation or comparison by the Court is impermissible. Thus, even if the interpretation given to the tender document by the person inviting offers is not as such acceptable to the constitutional court, that, by itself, would not be a reason for interfering with the interpretation given, so long as such interpretation is not arbitrary or whimsical. [Agmatel India (P) Ltd. v. Resoursys Telecom], (2022) 5 SCC 362]

Petroleum and Natural Gas Regulatory Board Act, 2006 — S. 16 — Noti. dt. 12-7-2010: Directions regarding adjudication of pending and new applications by Board i.e. post S. 16 coming into force, issued. [Petroleum & Natural Gas Regulatory Board v. Indraprastha Gas Ltd., (2022) 5 SCC 292]

Petroleum and Natural Gas Regulatory Board Act, 2006 — S. 16 r/w S. 17 — “Deemed authorisation” clause under S. 16 proviso — Scope of — Deemed authorisation: If one reads S. 16 proviso in isolation, the inference undoubtedly would be that every entity which had started laying and building pipelines and networks was the recipient of the deemed authorisation clause i.e. the provision sought to retrospectively regularise activities by all entities, however, such a plain and facial construction is unacceptable. Thus held, S. 16 proviso is not unqualified. The “deemed authorisation” clause is subject to other provisions of Ch. IV and S. 17 is one such provision under Ch. IV. Further, the scheme of S. 17 intrinsically classifies the two i.e. Central Government authorised entities, and others and the underlying basis for this statutory classification is that only entities which had been cleared or authorised by the Central Government prior to the coming into force of the Act were deemed to have authorisation under the Act, and therefore, had to furnish certain details. As with regard to the others i.e. entities not authorised by the Central Government, fresh applications were necessary which were to be assessed by the Board on a case-by-case basis and in accordance with uniform standards. [Adani Gas Ltd. v. Union of India, (2022) 5 SCC 210]

Service Law — Promotion — Criteria/Eligibility — Length of service/qualifying service — Time-bound promotion — Entitlement to: Services rendered by employee on work-charge basis may considered for computing 12 yrs of service for grant of time-bound promotion (TBP). [State of Maharashtra v. Madhukar Antu Patil, (2022) 5 SCC 322]

Service Law — Promotion — Criteria/Eligibility — Qualification/Experience — Classification based on nature of experience — Validity of: Policy decision to provide incentive marks for specified work experience inside the State and not for such work experience from some other State due to work pattern peculiarities and socio-economic/geographical peculiarities of the State, held, not arbitrary. Courts should be slow in interfering with policy matters unless the policy is found to be palpably discriminatory and arbitrary. [Satya Dev Bhagaur v. State of Rajasthan, (2022) 5 SCC 314]

Service Law — Regularisation — Entitlement to regularization: In this case, respondents were appointed on contractual basis for period of 11 months (which was continued from time to time), on fixed salary for temporary project. Their employment was continued based on interim order of High Court. It was held that respondents were appointed on temporary unit which was not regular establishment and posts on which they were appointed and continued to work were not sanctioned posts. Hence, impugned judgment directing State to consider cases of respondents for regularisation sympathetically and if necessary, by creating supernumerary posts, held, unsustainable and without jurisdiction. [State of Gujarat v. R.J. Pathan, (2022) 5 SCC 394]

Territorial Jurisdiction of Courts in Domestic Arbitration: In this article, issue of territorial jurisdiction of courts in arbitrations in India has been discussed. Territorial Jurisdiction of Courts in Domestic Arbitration: The Saga of seat and venue continues by Arjun Krishnan and Ankur Singh, (2022) 5 SCC (J-1)]

Treatment of Personal guarantors under the Indian insolvency regime: This article seeks to delineate the position of personal guarantors under the Insolvency Code and to discuss the treatment of promoters as personal guarantees under the Indian insolvency regime in light of the judgment in Lalit Kumar Jain, (2021) 9 SCC 321 and other relevant decisions. General principles relating to the treatment of Personal guarantors under the Indian insolvency regime by Sriram Venkatavaradan and Saai Sudharsan Sathiyamoorthy, (2022) 5 SCC (J-8)]