"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well."

-Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Thursday, September 20, 2018

Specific Relief (Amendment) Act, 2018 Brought into Force from 1 October

We had done several posts on the Specific Relief (Amendment) Bill, 2018 and later Act.  See this post for a compilation of the past posts. On 19.09.2018, the Government of India has appointed 1 October 2018 as the date from when the new provisions would come into force. The Gazette Notification is available here.

Interesting times ahead. We'll keep readers posted on the developments. 

Tuesday, September 11, 2018

Change of Seat Should not be Easily Presumed on the Basis of Change of Venue

Recently, the Delhi High Court in the case of Ashiana Infrahomes Pvt. Ltd. v. Adani Power Ltd. had to decide on whether the parties agreed to transfer the seat.

The agreement provided:

10. Dispute Resolution Any dispute or differences relating to or in connection with the MoA shall be referred to the sole Arbitrator Mr. Puneet Saran son of Prem Vallabh Saran r/o F 22 Indraprastha CGHS Plot 114, Patparganj New Delhi, whose decision shall be final and binding on the Parties. The proceedings of Arbitration shall be in Gurgaon in accordance with the provisions of the Arbitration & Conciliation Act 1996 as amended up-to date.”

Disputes arose and the matter had to be referred to arbitration by the chosen arbitrator. Ashiana Infohomes challenged the arbitrator on the ground that the arbitrator was a consultant and an employee of Adani. The Delhi High Court, correctly, decided the petition on merits in favour of Ashiana Infohomes. However, the reasoning as regards jurisdiction appears to be erroneous.

As is apparent, the arbitration clause states that the “proceedings of Arbitration shall be in Gurgaon”. The first question is whether this is a choice of seat or place? The parties did not use the term “seat” or “place”. Although this uncertainty did not play a part in the outcome of the case on the jurisdicitonal aspect, it is advised to use the term "seat" or "place" in making the choice. 

Coming back to the facts, it appears that Adani had approached the Additional District Court, Gurgaon (as it was then) and the court held that since the 2015 amendments, the parties had to approach the arbitral tribunal for interim relief when the tribunal was already in place.

Later, the arbitrator commenced his proceedings and in a decision to decide the modalities of how to proceed with the arbitration, he is said to have stated that the venue of arbitration would be a particular address in New Delhi till the parties agree on some other venue. Later, in another decision, the arbitrator declared that the venue of the arbitration would be mutually decided.  These decisions were consented to by the parties. About 40 hearings were held in New Delhi.  

In the petition before the Delhi High Court, the question was whether in view of the decisions of the arbitrator and the hearings conducted, whether parties had agreed to transfer the seat from Gurgaon to Delhi? The Delhi High Court held:

20. In the facts of this case in my opinion, in view of the consent of the parties as recorded in the proceedings before the learned arbitrator dated 09.12.2014 and 19.12.2014 and the subsequent conduct of the parties i.e. that the proceedings that have all taken place in Delhi, the original agreement stating that the proceedings be held at Gurgaon have been given a go bye. In view of the agreement/conduct of the parties it is the courts in Delhi which would have jurisdiction. Delhi is now the seat of arbitration.”

On a perusal of the aforesaid Para, it appears that the court has decided that the parties had agreed to transfer the seat from Gurgaon to Delhi. With respect, this conclusion is wrong for the following reasons:

  • Once the arbitration clause is interpreted to mean that Gurgaon was the seat, the parties should be deemed to be bound by it.
  • The arbitrator did not state anything in his decisions regarding the change of seat. The decisions only refer to venue. This means that the parties and the arbitrator left the choice of seat in the agreement undisturbed.
  • Adani approached the Addl. District Court, Gurgaon for interim relief. But the details of the case are not given in the judgement of the Delhi High Court. On some digging out, it appears that Adani has filed Arb Petition No. 50/2014 for interim relief. The Petition was disposed of on 20.10.2016 (see order). The following conclusions can be drawn from the order:
    • Asiana did not raise any ground regarding the ADJ Gugaon not having jurisdiction.
    • Asiana did not raise any contention that Delhi was the seat
    • Most importantly, as on the date of the order of the ADJ Gurgaon (20.10.2016) several hearings were conducted before the arbitrator (as example there were two orders dt. 09.12.2014 and 19.12.2014 pursuant to hearings). Even then, Asiana did not raise jurisdiction at the end of the proceedings. It never did raise any arguments that the place of arbitration was transferred. Theoretically, nothings stopped Asiana from questioning jurisdiction even on the last day of the hearings before the ADJ that the seat was transferred.
  • The High Court stated that Gurgaon court was not the appropriate court and therefore Section 42 did not apply. This is clearly wrong. Section 42 applied and this exception did not apply because:
    • Even as on the date of the order of the ADJ, Gurgaon, there was no transfer of seat.
    • If the transfer had taken place vide the decisions in 2014, nothing stopped Ashiana from moving a petition for dismissal on the ground of lack of jurisdiction sicne the parties had changed the seat.
  • It is settled law that proceedings need not take place in the seat. In fact, there are several arbitrations were only some or at times none of the hearings take place in the seat.  The Delhi High Court had in fact quoted BALCO (which quoted Redfern & hunter) recognizing this aspects(See, Para 21 of the Delhi High Court’s decision). Despite this the Delhi High Court held that the seat was transferred.

As discussed above, the decision on jurisdiction is clearly wrong. While the decision was probably right on the eventual outcome that the named person could not act as arbitrator, the court has overlooked the ex post implications of this judgement. What this judgement does is to hold that if the arbitrator decides as a matter of procedure on a venue different from the seat and a substantial number of hearings are held in the venue, that would amount to a transfer of seat to the place of the venue. This is a dangerous conclusion and would result only in unsettling the distinction between seat and venue.  Transfer of seat cannot be so easily presumed merely on the basis of the discussions between the parties and the arbitrator in the hearings on the venue of arbitration. 

It is tempting to do justice to a party. But in a legal regime that follows the doctrine of precedents, doing justice by doing violence to the statute and settled principles will do more harm in the long run. Bhatia International was a clear example of such an outcome. 

Sunday, September 9, 2018

"The power to arrest is one thing whereas the justification for the exercise of it is quite another" : A critical look in the wake of arrest and detention of persons with critical opinion of Government

The power of the police to arrest and the involvement of the executive in the functioning of the police force came under scrutiny one more time in the present environment of action against certain targeted persons allegedly to overwhelm political dissent. The 177threport of the Law Commission of India, the third report of the National Police Commission, and the Indian judiciary ad nauseum has lamented the excesses by Indian police in the exercise of its power to arrest and detention.

In India, arrest is an action taken by the police, almost routinely with impunity, and often in utter disregard to the violation of the principles of the criminal procedure law thereby negating the rights of the person arrested. Arrest curtails multiple freedoms of the individual, particularly personal liberty and dignity assured also by the Indian Constitution.

The law on arrest and detention specify as to when the investigating officer can use the power to arrest a person. The text of the law but is replete with fluid lingoes. Sections 41 and 42 of the Criminal Procedure Code, 1973 contains expressions like reasonably suspected, reasonable complaint, and on receipt of credible information. These words give enough play for police officers and those who direct them to bend the norms of justice. When done in the context of silencing political dissent, it gains another dimension of adverse affect on democracy, which thrives on polyphony of opinions.

In ordinary circumstances that prevail in our country arrest of the suspect, detention and interview in search of evidence of a crime is the modus of police, unless the accused has economic or political sway. It is in this context that the apex court of India has on more than one occasion directed that arrest shall not be a matter of routine, (see Arnesh Kumar v. State of Bihar (2014) 8 SCC 273). Arrest by an investigation officer shall   be made only after due investigation and after reasonable satisfaction as to the genuineness of the allegation. Which means post arrest if a question is raised about the legitimacy of arrest, the investigating officer should have valid justification to support her action. The apex court has also underscored the proactive role of a magistrate when the accused is produced before her than making detentions 'business as usual' (see Joginder Kumar v. State of U.P (1994) 4 SCC 260). 

The callous manner of arrests in India is not a mere anecdotal argument. Data from the 2016 National Crime Records Bureau reveal non-essentiality of most of the arrests. From a total of 37,37,870 arrests recorded or offences under the Indian Penal Code, 32,71,262 charge sheets were filed. Of which only 7,94,616 reached conviction. This indicates the arrest and perhaps detention of nearly 79% was unwarranted to say the least. Read together with the fact that there is no independent and effective complaints redress mechanism against erring police officers escalates the gravity of the situation. Establishing the tortious liability of the state and of its officers is an insurmountable task for the ordinary citizen, given the judicial delays and multiple access constraints. 

In short, there is no disincentive for the police not to arrest and for the state to develop a policing system based on a policy that ensures scientific investigation of a case before arrest than resorting to arrest, detention, questioning and then finding evidence. Whereas the law is reverse, investigate, find evidence, arrest and then prove the same before judiciary. The potential to use police force according to the caprices of the political class is a good incentive to preserve the system as it is.   

Another dimension of arrest and detention is how even the judiciary frame the issue.  In Nandini Satpathy v. P.L Dani AIR 1978 SC 1025, the court projects the existence of a dichotomy between interests of society in having effective crime detection and the constitutional rights of the accused. This thought process helps to find justification for arrest and detention as a larger social need of crime detection. The securing of minimum right to the accused whereas is seen as a great balancing act at the benevolence of the judiciary. It is redundant and inadvisable to pitch these interests as rivals.  Contrarily both are the interests of the society at the same time. An efficient police force that does not require arrest and third degree modes as a default setting for crime investigation and is accountable to the people is the hallmark of a civilized nation. 

In the present scenario of arrest and attempted detention of activists, lawyers and academicians under the arguably intentionally ambiguous and questionable provisions of Unlawful Activities (Prevention) Act 1967, one pertinent question to be asked is whether the arrest was necessary at the first place. It is also important to examine whether the investigating officers have followed the procedure under the Act as well as the general directions on arrest given by the judiciary at various instances. If not, the arresting officers shall be made accountable for their action. There is nothing to celebrate in the Supreme Court order of reducing the rigour to house arrest, as it is also curtailment of liberty and dignity. What a citizen need is not the magnanimity of the Supreme Court but the justice due. An enquiry as to whether the arrests are legitimate, if not quash the same and make the officers pay the price is what justice demand. Few such actions against erring officers will go a long way in making the police independent of their assumed political masters. Such precedence will also help the police to dislodge itself from the overwhelming political pressure that today it has to shoulder.

The direct impact of arrest is dispossession of both liberty and dignity, which is a serious matter to be bartered away. Consequently the police officer's mantraon arrest as affirmed by the Indian judiciary is ‘the existence of the power to arrest is one thing whereas the justification for the exercise of it is quite another.’ 

Wednesday, September 5, 2018

Ghost Provisions: Who Will Exorcise Them Out?

Have a look at this post in the Law and Other Things blog on Ghost provisions. The post discusses ghost provisions in the recently proposed amendment to the Arbitration and Conciliation Act, 1996 and the recent amendment to the Specific Relief Act, 1963.

The post discusses the themes that have been recurrently discussed in this blog in the recent times. Happy Reading!