"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.

Friday, November 28, 2008

SC Judgments

Orders of the courts has to be speaking, there is a right to reason.
State of Haryana v. Surjit Singh, Criminal Appeal No. 195 of 2002. Date of Judgment 28-11-08
This case came before the SC as an appeal by the state on rejection of leave for appeal against the acquital order of the trial court. The order of the HC do not offer any reasons for the rejection for leave.
The court uses this occassion to educate the HC about how to deal with an application for leave.
1. Since reasons could offer clarity, an order of the court has to be speaking.
2. Justice requires that the court should offer reasons for its decisions which in turn will be indicative of the application of mind.
3. Reasoned order is a judicial imperative.
4. Reasons could substitute subjectivity to objectivity.
5. Since the order of rejection is appealable, not offering reasons makes the appellate procedure virtually impossible.
6. There is a right to reason and it is an indispensable part of the judicial system.
7. It is only when reasons are offered that affected party can know why the decision has gone against her.

Thursday, November 27, 2008

SC Judgments

Where does the (later) courts go wrong
Commnr. of Central Excise, Bangalore v. Srikumar Agencies, Civil Appeal No. 4872-4892 of 2000. Date of Judgment 27-11-08

While deciding an appeal the SC, today, made certain pertinent points on how a later court should read and apply a precedent. Deciding a case on an established precedent is an accepted legal process. How to read an earlier decision, is a critical issue. Should the context of the earlier case inform the later application of the ratio of the case, if so, how far and can the later court interpret the decision of the earlier court, are issues that seldom received attention.

In this case SC observes that ealrier decisions should be relied only after due regard is given to the context in which that decision is made. Matching of the factual situation is of utmost importance.

"Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context." Nor should judgments of the court be construed as statutes.

These positions of the court garner importance because of the way later courts keeps on expanding the scope of the ratio of earlier case, taken out of context, and thereby eroding the law. Widening the scope of the 'public policy' from Saw Pipes to DDA is an example to illustrate this tendency. Qualification given to a ground (patent illegality; that illegality of procedure should be patent affecting the rights of the parties) to set aside an award in Saw Pipes when reached DDA, became an independent ground in itself. DDA held that when an award affects the rights of the parties an award can be interfered with.

Wednesday, November 26, 2008

SC Judgments

What all will you expect the SC to do... even burning garlic
Union of India and Ors. v. M/s Exim Rajathi India Pvt. Ltd., Arising out of S.L.P.(C) No.11808 of 2006. Date of Judgment 26-11-08
Supreme Court had to decide what to do with fungi infested garlic from China
High Court allowed import after fumigation. Union of India approached the SC to reverse the order as the fungi could have long lasting effect on farming sector.
The issue is not whether the SC decided it right, but SC had to decide it!
Requirements of a Decision Based on Circumstantial Evidence
A. Yadhav v. State of Karnataka, Criminal Appeal No. 102 of 2001. Date of Judgment 25-11-08
When a Case is determined based on circumstatial evidence the degree of evidence is higher and the same is restated in this case as follows.
1. Where a case rests squarely on circumstantial evidence, the inference of guilt can be justified only when all the incriminating facts and circumstances are found to be incompatible with the innocence of the accused or the guilt of any other person.
2. The circumstances from which an inference as to the guilt of the accused is drawn have to be proved beyond reasonable doubt and have to be shown to be closely connected with the principal fact sought to be inferred from those circumstances.
3. Where the case depends upon the conclusion drawn from circumstances the cumulative effect of the circumstances must be such as to negative the innocence of the accused and bring the offences home beyond any reasonable doubt.
Dismissal of a Petititon on Technical Ground Will Not Operate as Resjudicata
State of U.P. &Anr. v. Jagdish Saran Agrawal & Ors. Civil Appeal No. 6757-6758 of 2008. Date of Judgment25-11-08
"The dismissal of the suit for non-prosecution was not a decision on merit. Consequently, the said order cannot operate as Resjudicata."

Monday, November 24, 2008


On Judicial Appointments, see here and here.

Courts and the Sanctity of Right to Property

Vagueness & Ambiguity- Distinction

Lawrence Solum has written in his Legal Theory blog on the distinction between Vagueness and Ambiguity. Also, see his post on the distinction between interpretation and construction.

Also see, Jeremy Waldron, VAGUENESS IN LAW AND LANGUAGE: SOME PHILOSOPHICAL ISSUES 82 Cal. L. Rev. 509 (1994)


Sunday, November 23, 2008

SC Judgments

Corrupt Practice in Elections: Standard of Proof vis-a-vis Interest of Democracy
Baldev Singh Mann v. Surjit Singh Dhiman. Civil Appeal No. 3700 of 2007 . Date of Judgment 21-11-08
The case came to SC as an appeal in Election Petititon alleging violation of S. 123 (7) of the RP Act, 1951. The ingredients of the offence are; one, obtaining or procuring of assistance for the furtherance of the prospects of the candidate and two, that the assistance has to be procured from a person who is in one of the category mentioned in the section.
The legal principles invovled are also two fold, the standard of proof is (almost) as that of proving a criminal offence, as it is considered as having a quasi- criminal nature and the burden of proof is with the petititoner. The consequence of the first positition is that mere preponderence of probabilities is not enough to prove the case.
The court has the difficult task of balancing the interersts; of purity of elections, the consequence of setting aside an election, and the expenditure involved.
On the standards set above, the SC found the instant case against the respondent as corrupt practice is not proved and affirmed the decsion of the Election Tribunal (HC).
It is absolutely true that the social cost involved in such kind of decisions makes the court slow and cautious.
The real question but is identifying the true nature of offence; is it criminal, quasi-criminal or civil in nature?
Section 123 gives the description and ingredients of corrupts practices. Section 100 makes corrupt practice a ground for declaring election as invalid. Section 123 does not prescribe any punishment. At the same time, Chapter III of Part VII, includes description and punishment for Electoral Offences, where punishments ranges from fine to imprisonment. Reading of S. 123 will not reveal any nature that requires it to be treated as criminal or quasi-criminal. The chapter heading is 'corrupt practices' and is made distinct from 'electoral offences.'
The next issue is the costs involved in declaring an election invalid. The answer lies in S. 101, which makes it clear that on proof that the returned candidate obtained votes using corrupt practice, candidate other than the returned candidate may be declared the winner. Then there is no question of re-election and costs.
The present stand of the court and the courts before it is doing a disservice to the right of free and fair elections, which is a basic structure of constitution to put it that way. The identification of the nature of corrupt practices as that of quasi-criminal in nature, therefore is uncalled for and is against the law.
The approach of courts being slow and reluctant to declare an election void cannot be appreciated when the blow is continously falling on the right to free and fair elections and damging the "purity of elections" to quote the court itself.

Saturday, November 22, 2008

SC Judgments

Balancing the Claims of the Victim and Accused in Reducing Sentence
Mangal Singh & Anr. v. Kishan Singh & Ors. Criminal Appeal No.1858 of 2008. Date of Judgment 21-11-08
Justice Aftab Alam in this judgment has flagged an aspect which gets unnoticed while courts compute the effects of delay in criminal trial. Ordinarily, the dealy is viewed from the effect it causes to the accused. In this judgment the court said that inordinate delay in the conclusion of criminal trial is deleterious both for the society and the accused. Reduction of sentence would also be justified in certain cases. But while doing so, courts should not be forgetful of the fact that in many cases the victims also suffer and may be more than the accused. It wont be justified to give all the benfits on account of delay in trial to the accused completely ignoring the claim of justice that is due to the victim of offence.
The point of view of the victim rarely gets judicial attention and this judgment is a change in that aspect. The fact of delay remaining unresolved is a disquieting factor
Distinction between Murder and Culpable Homicide Not Amounting to Murder
Md. Rafique @ Chachu v. State of West Bengal . Criminal Appeal No. 828 of 2006. Date of Judgment 21-11-08
Court raises the issue of complexities involved in distinguishing the offences of murder and culpable homicide not amounting to murder. There is an attempt to tender explanation by setting out certain guidelines. The court also bail themselves out by qualifying them as only "broad guidelines not cast iron imperatives". See, paragraphs 7 to 10 and 17 for the discussion.


Equal role for the Judiciary and the Executive in higher judicial appointments - Law Commission . See also here
Shell cannot drill off Alaska

Friday, November 21, 2008

SC Judgments

Another way to defeat the object of reservation
State of Karnataka & Ors. v. K. Govindappa & Anr. (S L P (C) No. 231 of 2007). Date of Judgment 20-11-08
Supreme Court today decided whether the post of a Lecturer in a particular descipline will be treated as a single isolated post forming a seperate cadre in itself or is part of the cadre of lecturers. The court held that a single post in a particular subject, here history, cannot be reserved under the roster policy as it will be treated as 100% reservation. By rejecting the argument that a single post of lecturer in one subject should be treated as against the cadre of the posts of lecturers, the SC have sliced down the reservations and institutions can now dodge the reservation policy by advertising series of single posts.
The issue in the case was the treatment of a single post of a lecturer for reservation. The roster policy requires certain number of posts to be reserved in each cadre. The final question then is how will you treat a single vacancy in a particular subject tought in the institution. Will you treat it as a single post of a History Lecturer (here, history lecturers as a cadre in itself) or as a post of history lecturer as a part of the cadre of lecturers of different faculties in an institution.
The court is of the view is that [i]n order to apply the rule of reservation within a cadre, there has to be plurality of posts. Since there is no scope of inter- changeability of posts in the different disciplines, each single post in a particular discipline has to be treated as a single post for the purpose of reservation within the meaning of Article 16 (4) of the Constitution. In the absence of duality of posts, if the rule of reservation is to be applied, it will offend the constitutional bar against 100% reservation as envisaged in Article 16(1) of the Constitution.
In effect a reserved category candidate have to wait till multiple posts of history lecturers are called for to avail the benefit of reservation. May be this is the way court is trying to make a dent into the reservation policies of states who visibly defy the court's dictum and take the reservation beyond the magical 50%, with impunity, if I may add.


Indian Express Editorial on 'Law and Finance' and the Indian Exception. The author refers to the foursome-LaPorta, Lopez, Shleifer and Vishny who have done extensive research in the field of 'Law and Finance'. Some of their papers can be found here. The paper on India that the author refers to can be found here.

Thursday, November 20, 2008

SC Judgements

M/s. Laxmi Rattan Cotton Mills Ltd. v. State of U.P. & Ors. CIVIL APPEAL NO. 6710 OF 2008 decided by S.B. Sinha & Cyriac Joseph JJ. on November 19, 2008
- Demand by employees for appointment in higher post and arrears of pay.
Haleema Zubair, Tropical Traders v. State of Kerala CIVIL APPEAL NO. _6707 OF 2008 decided by S.B. Sinha & Cyriac Joseph JJ. on November 19, 2008
- What amounts to 'sale' under the Kerala Sales Tax Act
Assessment of sales tax must be on sale of goods. There is no bar in law for the same assessee to carry out different businesses... The sine qua non or the condition precedent for passing of an order of assessment is transaction of sale. Professional service rendered does not constitute sale. Such a professional service rendered by a person attracts service tax, which is a different nature of tax, as has been held in Bharat Sanchar Nigam Ltd. and another v. Union of India and others [ (2006) 3 SCC 1 ].
Parag Construction v. State of Maharashtra & Ors. CIVIL APPEAL NO.6712 OF 2008 Lokeshwar Singh Panta & V.S. Sirpurkar JJ. decided on November 19, 2008.
- Challenge of land acquisition

SC Judgments

Principles of Interpretation While Interpreting Subordinate Legislation and Exemption Clause
M/s. G.P. Ceramics Pvt. Ltd. v. Commissioner, Trade Tax, UP. Civil Appeal No. 6709 of 2008 . Date of Judgment 19-11-08
1. A subordinate legislation is to be read in the context of the main enactment.
2. Where particular forms are provided, the requirements laid down in the form could be considered for proper construction of the provisions of the Rules and consequently the statutory enactment.
3. Eligibility criteria should be construed strictly. But once the applicant satisfies the criteria, the exemption notice should be construed liberally.

Wednesday, November 19, 2008

Municipal Corporation of Delhi v. Shashnak Steel Industries (P) Ltd.

Civil Appeal Nos. 6802-6806 of 2003 decided by S.H. Kapadia and B. Sudershan Reddy JJ. on November 17, 2008
The President of India (lessor) entered into an agreement with Mohan Co-operative Industrial Estate Ltd. (lessee) for the lease of an industrial plot. As per the lease, the indutrial plot was to be sub-leased at consideration fixed by the lessor. In furtherance of this agreement, the President of India (lessor) entered into a perpetual sub-lease with Mohan Co-operative Industrial Estate Ltd. (lessee) and M/s. Shashnak Steel Industries Pvt. Ltd. (sub-lessee). As per the Municipal Corporation of Delhi (MCD) the sub-lessee became liable to pay property tax as he became the "owner" of the demised property by virture of the sub-lease. The Court had to decide who was liable to pay property tax under Municipal Corporation Act, 1957for the assessment years 1982 to 1987.
The Delhi High Court rejected MCD's stand. The Supreme Court held:
1. The forms in which tenancies are created in India are not uniform and they do not conform to the precedents known to conveyancing; sometimes the words used are not precise and it is not easy to understand from the said words the intention of the parties in executing the documents. The nature of the tenancy created by any document must be determined by construing the document as a whole. [This is true- lease agreements, especially those entered into by the Government, are notoriously difficult to interpret.]

2. There was a lease deed dated 20.3.80 between the lessor and the lessee in the first instance under which the lessee Mohan Co-operative Industrial Estate Ltd. was given the authority to sub-lease on such premium and yearly rent as may be fixed by the lessor (President of India).

3. The sub- lessee had applied for the lease to the lessee, the lessee agreed to sub-let and the lessor (President of India through Delhi Administration) had agreed to confirm a perpetual sub- lease. Therefore, the lessor and not the lessee is the confirming party to the sub-lease between the lessee- Mohan Co-operative Industrial Estate Ltd. on one hand and M/s. Shashnak Steel Industries Pvt. Ltd. on the other hand.Therefore, there is no merit in the contention advanced on behalf of the Corporation that under the Deed lessor conferred leasehold rights to the sub-lessee to which the lessee was a confirming party. On the contrary, the said Deed indicates the lease was between the lessee and the sub-lessee to which the lessor was the confirming party.

4. The lessor is the confirming party because under the Deed in question rent and premium was revisable periodically and the determination of the revised/enhanced rent/premium was left to the lessor though rent and premium was payable by the sub-lessee to the lessee.

5. Great emphasis is placed by the Corporation on the fact that the sub-lessee was required to pay a sum of Rs.16093.60 as premium in addition to rent which according to the Corporation indicated purchase of leasehold rights. According to the Corporation on purchase of leasehold rights the sub-lessee became the owner thereof. We find no merit in this contention. If one looks at the Deed in question we find that the lessor has retained its right to determine periodically the rent payable and the premium chargeable. Both rent and premium was payable by the sub-lessee to the lessee. The sub- lessee had agreed to put up at its own expense a factory on the industrial plot within two years from dated 20.2.81. Under the Deed the lessor had to estimate the capital value (including the enhancement) as and when the unit came up. It appears from the Deed that lessor was entitled to a share in the enhanced value. The said Deed further stated that the lessor shall have a right to recover 50% of the unearned increase as and when the lessor gives permission to the sub- lessee to transfer, assign or part with the possession of the plot to any other member of the lessee society. All these terms indicate that under the Deed parties contemplated that on the unit coming up on the leasehold land there would be an accretion in the value. In our view, the provision for premium was only an additional source of revenue. Therefore, we do not find any merit in the contention advanced on behalf of the Corporation that on payment of premium the sub-lessee became the owner of the leasehold rights.

6. Further as rightly held by the High Court there are numbers of restrictions put on the sub-lessee which prevented the sub-lessee from full enjoyment of the leasehold rights.
7. In this case, we are concerned with the question of primary liability on the vacant land during the period 1982 to 1987. During that period the factory had not come up. Therefore, there was no question of enhanced value on account of accretion taking place during the said period.
8. Therefore, keeping in mind the restriction(s) placed on the sub-lessee we are of the opinion that this is a case of "letting". It is not the case of conferring ownership rights on the sub- lessee. Under the Deed, M/s. Shashnak Steel Industries Pvt. Ltd. remains a sub-lessee. In fact, there is forfeiture/re-entry provided for in the said lease. That right of forfeiture/re-entry can be effected either by the lessor or by the lessee which further shows that the sub-lessee is not in full enjoyment of the leasehold rights in the property in question.
9. For the aforestated reasons on interpretation of the perpetual sub-lease dated 20.2.81, we are of the view that the said Deed cannot be construed as a conveyance of leasehold rights in favour of M/s. Shashnak Steel Industries Pvt. Ltd. We are of the view that this case is that of letting. Therefore, we do not find any infirmity in the impugned judgment. We also agree with the view taken by the Delhi High Court that a bare perusal of the Deed would show that the condition imposed on the sub-lessee to pay tax is only as a matter of indemnification and it would not indicate ownership of the leasehold rights in favour of the sub-lessee.
10. The language of the said Section 120(1) suggests that the intention of the Legislature in fixing primary liability of property tax upon the owner of the land is to facilitate the collection of property tax. It is not unreasonable for the Legislature to impose the primary liability upon the lessor and to give him the right of recoupment. In this case, we are concerned only with the question as to whether the Corporation was right in imposing primary liability to pay property tax on the sub-lessee under Section 120(1)(c) of the said 1957 Act. Whether the liability was on Mohan Co- operative Industrial Estate Ltd., is not required to be gone into by us because that is not the case of the Corporation and also because the lease between the President of India and Mohan Co-operative Industrial Estate Ltd. dated 20.3.80 was not produced before us. We also do not know the basis on which premium was payable by the lessee to the lessor. On a bare reading of Section 120(1)(c), in the context of the Deed dated 20.2.81, we find that the said Deed did not operate as a conveyance and that the industrial plot was let out to M/s. Shashnak Steel Industries Pvt. Ltd. Since there was letting in favour of the said company, Section 120(1)(c) of the said 1957 Act did not apply.
For the aforestated reasons, we see no infirmity in the impugned judgment of the Delhi High Court. Accordingly, the civil appeal filed by the Corporation is dismissed with no order as to costs.

Tuesday, November 18, 2008


Hopes from democracy
The Hindu today has reported about a polling station where the number of voters and the poll staff is identical, six. The other notable feature, the highest perch of the manifestation of democracy, 5,500 metres above sea level, belongs to Thugsey Gompa. This news piece beautifully comprehend the hopes people have from democracy. The claims people have as expectations and the fringe benefits communities might get in the race of regional politics is interesting to read. May be more so, is the development the larger region experieinced due to the presence of military. Democracy is also talk of realisation of a "water pump" near, as it is the talk of self- determination.

PIL- Strictures by the Court

The Indian Express today is carrying a piece by Madhav Khosla on the recent rejection of a PIL by SC of ADR for directions to be issued to political parties to submit their income-tax returns. He takes the opportunity to critically analyse the shift in the approach of entertaining PIL by the supreme court and qualifies this rejection as innocuous.

The petition was rejected by the court, as per news paper reports, for reasons that the petititoner is taking the opportunity of forthcoming elections to gain mileage. The law mandates poltical parties to submit yearly return and the provision has the rationale of transparancy, which is very vital for any democracy. The sways of political parties while in government could be determined by the quarters from which funds flow into their account.

The PIL was for the issuance of a direction for performing a legal duty (S. 29 C of the RP Act 1951). Court refused to entertain the matter also citing that if a political party fails to submit a return, law will take its course as how it will treat a person when fails to file a return. Here the court failed to appreciate that the court themselves have given grand lectures on the corretalationship between political parties and democracy as to how sun should shine through the hallway of political parties to keep it disinfected. They forgot the vital distinction between person and political party in the context of democracy.

One could very well argue that it is not the duty of the court, but there should be other agencies to take care of the matter, and I thought it is exactly that ADR should be asking for. I deeply wish ADR or people who have access to information will bring out how many political parties have so far filed returns and what actions the IT authorities have taken on it.

The reading of the section shows that the only sanction would be that the parties will not get tax relief and it can be qualified as toothless.
(3) The report for a financial year under sub-section (1) shall be submitted by the treasurer of a political party or any other person authorised by the political party in this behalf before the due date for furnishing a return of its income of that financial year under section 139 of the Income-tax Act, 1961 (43 of 1961), to the Election Commission.
(4) Where the treasurer of any political party or any other person authorised by the political party in this behalf fails to submit a report under sub-section (3) then, notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), such political party shall not be entitled to any tax relief under that Act.

Section 29 C comes under the chapter heading, Registration of Political Parties. The live debate about the power of de-registration of political parties for non- compliance of provisions garners importance here. Lest, this condition of filing returns will remian a misnomer and only saving grace would be the CIC's order that returns of political parties are public documents coming under the purview of RTI.

Arbitration Agreement and Rules of Arbitral Institutions- Part I

Recently, I came across a post in a blawg titled, LAW AND LEGAL DEVELOPMENTS, a wonderful blog which I would recommend to anyone with interest in commercial law in general and arbitration, in particular. The post, titled, Interpretation of arbitration clause: Delhi High Court decision, was on interpretation of an arbitration clause by the Delhi High Court in the case of SIEL Ltd. v. Prime Industries (OMP 419 and 468 / 2006) (hereinafter "SIEL Case").

The facts, as noted by the Hon'ble Judge are:
SIEL entered into an agreement (referred to as the MoU) on 10.6.1994... The MoU was expressed as being valid for two years with a stipulation for renewal, for a further period through consent of parties; it could be terminated by either party giving notice, in writing. SIEL placed orders on the claimant to the extent of 1,562.975 MTs till March 1995. After that date it did not place any further order. The claimant alleged that it was aggrieved and issued a legal notice. It was alleged that the total quantity agreed to be lifted or purchased by SIEL was 5,000 MTs. Vanaspati for the first year and 6,000 MTs. Vanaspati for the second year... The MoU contained an arbitration clause in the following terms:
All disputes between the parties hereto arising out of this agreement shall be referred to an arbitrator appointed by Indian Council of Arbitration, New Delhi, and the provisions of the Indian Arbitration Act for the time being in force shall be applicable to such reference. Such reference will be decided as per the rules of Indian Council of Arbitration. The award decision so given shall be final and binding upon the parties.

Dispute arose between the parties and Prime wrote to Indian Council for Arbitration (ICA) with SIEL under the aegis of ICA. This was, in turn, informed to SIEL by ICA wherein it was stated:

As the amount involved in the dispute is stated to be Rs. 6,81,12,565/-, under the Rules of Arbitration of the Council, it has to be heard and determined by the arbitral tribunal of three arbitrators, unless the parties to the dispute agree to refer the dispute to sole arbitrator (rule 21(b). One each to be nominated by the parties and the third will be appointed by the Council, under its Rules. You are hereby required to forward the name of you nominee arbitrator from the panel of Arbitrators (copy enclosed) of the Council on or before 6th February 2000.
Under Rule 27 of the Rules of Arbitration of the Council, you are hereby required to deposit a tentative amount of Rs. 95,500/- towards the costs and expenses of the above arbitration on or before 6th February 2000. The cheque/draft for the amount may be sent in the name of The Indian Council of Arbitration. The deposit will be taken into account by the arbitral tribunal in apportioning the costs while making the Award. The Arbitrator or the Registrar will have power to call for further deposit, if necessary.

Prime wrote to ICA stating that the arbitration clause of the MOU contemplated a sole arbitrator. ICA changed its stand and wrote to SIEL stating:

Since both parties have agreed to refer the matter to an arbitrator i.e. sole arbitrator. We shall appoint the sole arbitrator on confirmation from the respondent also and in case both parties fail to forward the name of sole arbitrator by common consent... The respondent is directed to appoint the sole arbitrator with common agreement of the claimant for which the deposit will be Rs. 47,875/- by each party.

ICA appointed Mr. Justice K.N. Singh, Retired Chief Justice of India as the Arbitrator. SIEL moved an application before the latter stating that appointment of sole arbitrator by ICA was contrary to Rule 21-B of the ICA Rules and to Clause 18 of the MOU. It, therefore, sought for appropriate orders under Section 13(2) of the Act, on 21.8.2000. After considering the merits of the application, the Arbitrator rejected it, holding that the Tribunal was appropriately constituted in accordance with the arbitration agreement as well as in terms of the ICA rules.

Rule 20(b) of the ICA Rules states that where the claim is above Rs. 50 lacs, the dispute would be heard by a three- arbitrator tribunal, unless the parties agreed otherwise. It was contended by SIEL that the dispute had to be heard by an arbitral tribunal consisting of three judges. The Single Bench Court rejected Prime’s contention and held:

In plain words, the opening part of Clause 18 provides for appointment of a sole arbitrator and it confers authority on the ICA to appoint the arbitrator. The second part of Clause 18 relates to procedure and other matters in deciding the reference. The Rules framed by the ICA refer to many other matter also e.g. filing of claim petition, counter claim and administrative fee, place of arbitration etc. The expression 'reference will be decided as per the Rules of India Council of Arbitration' does not attract application of Rule 20 and 22(b) in view of the opening part of the Clause 18 of the agreement. If the agreement had stated that the dispute between the parties shall be settled by arbitration in accordance with the Rules of arbitration of the ICA, then Rule 20 and 22(b) would be applicable. But in the present case the language used in Clause 18 is quite different, under that clause, parties agreed for reference of the dispute to sole arbitrator who may be appointed by the ICA and they further agreed that the provisions of the Act and Rules of the ICA will be apply in deciding the reference.

Further, SIEL challenged the award rendered by the arbitrator on the ground that the procedure was violative of Section 34(2)(a)(v) of the Arbitration and Conciliation Act, 1996. SIEL brought the court’s attention to the fact that ICA had changed its initial stand of appointing three arbitrators and had instead appointed a sole arbitrator. The Delhi High Court reasoned in favour of the change of stand by ICA:

On a perusal of the various letters exchanged between the parties and the ICA, it is clear that the claimant as well as the respondent both had been given more than 30 days notice to nominate the sole arbitrator within mutual consent, but they failed to do so. The ICA extended the time for making the nomination of arbitrator, but even after five months of extended time, the parties failed to appoint sole arbitrator with mutual consent. Thereafter the ICA appointed sole arbitrator out of the panel maintained by it. The ICA in my opinion committed no illegality in appointing the sole arbitrator.

Counsel for SIEL argued:
1. The ICA itself had determined that since the Prime Industries Ltd.'s claim was in excess of Rs. 50 lakhs the dispute had to be referred to three arbitrators. However, without explanation it did a volte face and, contrary to Rule 21(b) without recording the consent of parties, constituted a Tribunal comprising of a Sole Arbitrator. Learned Counsel contended that the reference to an Arbitrator has to be understood as the dispute resolving mechanism rather than as a conscious agreement of parties to refer their disputes to a sole arbitrator.
2. Under Section 13(2) of the General Clauses Act, 1897, while interpreting an Act or Regulation a term in singular would include the plural and vice versa.

It was argued that the award had to set aside on the ground, inter alia, that the tribunal was illegally constituted.

Counsel for Prime stated:
1. The order of reference dated 2.7.1999 of the Delhi High Court clearly pointed to an express agreement by the parties for the resolution of their disputes by a Sole arbitrator.
2. Under the ICA Rules, particularly, Rule 8, the decision of the Arbitration Committee [constituted under Rule 3(a)] relating to interpretation of Rules or in procedural matter, was final and binding on the parties. Consequently, the ICA's position that the dispute was to be decided by a sole arbitrator could not be termed as illegal or contrary to agreement.

The Court acknowledged that “the procedure contemplated under Rule 21(a) is that all disputes where claims exceed Rs. 50 lakhs, are to be decided by a panel of three arbitrators, unless after notification of request for arbitration, the parties agree to refer the dispute to a sole arbitrator. In the facts of this case, that is undeniably, not the position. When Prime Industries sought for arbitration, ICA, through its letter, intimated that the arbitral tribunal would be of three members. However, it resiled from this stand, when the Prime Industries pointed out about the stipulation in Clause 18 being to an arbitrator.”

Thus, the court had to decide the meaning of “the expression an arbitrator even while there is an express advertence to ICA rules, which would govern the parties in this case.”

The Court held:
1. In interpreting such a document, the court has to follow certain basic canons of construction. First, the term or terms in question should not be read in isolation, but have to be considered in their contextual setting. After all, the parties, in such cases, set their own ground rules, which would be considered as norms binding them. The other consideration is that the interpretive process itself should not inject ambiguity to a term in a document, if it is otherwise plain in its meaning.
2. The Indian Iron and Steel Co. Ltd. v. Tiwari Road Lines.
MANU/SC/7707/2007, the Supreme Court underlined the importance of the courts respecting the mandate of the parties, in the following terms:
In the matter of settlement of dispute by arbitration, the agreement executed by the parties has to be given great importance and an agreed procedure for appointing the arbitrators has been placed on high pedestal and has to be given preference to any other mode for securing appointment of an arbitrator.
3. The court here cannot divorce the contextual setting of the term an arbitrator. It is set in an arbitration clause. Significantly, the parties did not use the widely used term Sole arbitrator or such like expression to manifest an intention that arbitration was to be by a single arbitrator.
4. Also, barring the letter written on behalf of the Prime Industries, in answer to the ICA's letter of 6-1-2000, there is nothing to support the ICA's assertion that the parties had agreed to a sole arbitrator, as mentioned in its letter of 30-1-2000. No doubt, CMC Ltd. is a judgment upholding the proposition that if parties express a clear intention to depart from the rules of ICA, or some other such body, they would be bound by it. Again, while reading such a judgment, the court cannot ignore the contextual facts. The arbitration clause was an elaborate one, where the parties' intention was more clearly expressed; the procedure prescribed by ICA was at variance from what was spelt out by the parties.The Orissa High Court, in Gayatri Projects Ltd. v. State Of Orissa Through The Executive Engineer, Heads Works Division, At/p. O. Samal, Dist. Angul. 2004-(2)-ARBLR 394 (Ori) had to deal with a somewhat similar situation where one party asserted that the expression an arbitrator meant the singular, and not a plurality of arbitrators, which was stipulated in the rules, of which the parties had made express mention, in the arbitration clause. The court dispelled the contention, in the following terms:
Para 25.2 of Section 5 of the agreement stipulates that either party may refer a decision of the adjudicator to 'an Arbitrator' within 28 days of the adjudicator's written decision. From the expression 'an Arbitrator', learned Counsel for the petitioner submitted that Arbitrator contemplated thereunder cannot be more than one Arbitrator and, therefore, as the Arbitration Tribunal which consists of three members is incompetent to adjudicate the dispute between the parties or to examine the correctness of the decision of the adjudicator. But aforesaid words 'an Arbitrator' occurring in Clause 25.2 of the said agreement has to be read along with other provisions stipulated in the said agreement. This expression 'an Arbitrator' cannot be detached from the context in which it occurs and hence the same cannot be interpreted in the vacuum. An interpretation of the expression 'an Arbitrator' has to be made in the light of other provisions of the agreement. The very next clause, namely, Para 25.3 occurring in Section 5 of the said agreement clearly stipulates that the Arbitration shall be conducted in accordance with the Arbitration procedure published by the institution named and in the place shown in the Contract Data, of the same agreement. Contract Data of the agreement clearly stipulates in an unambiguous language that the procedure followed by the Arbitration Tribunal shall be followed. I cannot lightly presume that the petitioner was ignorant about the existence of such Arbitration Tribunal or that it consisted of three members. This being the position, the expression 'an Arbitrator' must be held to include the Arbitration Tribunal also constituted by the Government under the provisions of the said Rules. If I accept this position, then I cannot allow the prayer of the petitioner to give a declaratory relief that such Arbitration Tribunal constituted under the said Rules consisting of three members is incompetent to adjudicate the dispute between the parties merely because it consists of more than one member.
5. The term “an arbitrator” is to be understood in the context of the parties' desire for arbitration; the parties further wanted the arbitration to be in accordance with the ICA rules, which envisaged that in such claims, the tribunal was to be of three arbitrators. This was also the initial understanding of ICA, which for inexplicable reasons, later stated that the parties had agreed to a sole arbitrator.
6. The court cannot overlook the fact that at the contract formation stage, the parties had access to ICA rules, which stipulated that such claims were to be adjudicated by three arbitrators. The parties, or one of them, proceeded to agree to arbitration, on the premise of decision by three arbitrators, as embodied in Rule 21(b) cannot be ruled out. As against this, the contentions of Prime Industries Ltd. that the term in Clause 18 is to be understood as an intention to have a sole arbitrator, are weaker. Not only is the evidence contrary to that understanding, but also the fact that the expression an arbitrator cannot be torn out of context; it would mean adjudication through arbitration, or simply, a generic reference to alternative dispute resolution through arbitration, in accordance with rules of ICA.

In view of the above reasons, the court is of opinion that SIEL has established that composition of the arbitral tribunal was not in accordance with the agreement between the parties, which incorporated Rule 21(b); the parties did not agree to decision by a sole arbitrator. As a result, SIEL's petition has to succeed.


SC on OBC Vacant Seats in IIT

Indian Express Editorial on PIL

SC Stay on Bhamasha Yojana Stay Order

Monday, November 17, 2008

SC Judgements

Prem Nath Motors Ltd. v. Anurag Mittal CIVIL APPEAL NO. of 2008 decided by Dr. ARIJIT PASAYAT & Dr. MUKUNDAKAM SHARMA JJ. on November 14, 2008 wherein it was held:

Section 230 of the Contract Act categorically makes it clear that an agent is not liable for the acts of a disclosed principal subject to a contract to the contrary.

Komalam Amma v. Kumara Pillai Raghavan Pillai and Ors. CIVIL APPEAL NO. OF 2008 decided by Dr. ARIJIT PASAYAT & Dr. MUKUNDAKAM SHARMA JJ. on November 14, 2008. It was held:
Maintenance, as we see it, necessarily must encompass a provision for residence. Maintenance is given so that the lady can live in the manner, more or less, to which she was accustomed. The concept of maintenance must, therefore, include provision for food and clothing and the like and take into account the basic need of a roof over the head. Provision for residence may be made either by giving a lump sum in money, or property in lieu thereof. It may also be made by providing, for the course of the lady`s life, a residence and money for other necessary expenditure. Where provision is made in this manner, by giving a life interest in property for the purposes of residence, that provision is made in lieu of a pre-existing right to maintenance and the Hindu lady acquires far more than the vestige of title which is deemed sufficient to attract Section 14 (1).


Preventive detention cannot be quashed for non-supply of papers: Supreme Court
Call to resist protectionism, revive Doha Round
New Nepal Constitution by May 2010
Anti-terror laws lose teeth in India: Official study
Set up national research mission: Pitroda to PM
Whose NREGS is it anyway?
Take part in court proceedings responsibly: SC to Maha Govt See here for a comment on the judgment
[City and Industrial Development Corporation v. Dosu Aardeshir Bhiwandiwala & Ors. CIVIL APPEAL NO. 6653 OF 2008 decided by S.H. Kapadia & B. Sudershan Reddy JJ. on November 14, 2008]

Friday, November 14, 2008

SC Judgments

There is nothing called ex-parte mandamus under Article 226
City and Industrial Development Corporation v. Dosu Aardeshir Bhiwandiwala & ors. Civil Appeal N0. 6652 of 2008. Date of Judgment 14-11-08
Writ remedy is a discretionary remedy and cannot be awarded as matter of course because the state has not submitted affidavit, there is nothing called an ex-parte mandamus decree.
Court expressed its displeasure and concern in the slipshod conduct of the state in this case. Sureme Court chided the High Court for its approach in coming to a conclusion based on the oral submission of AGP and reminded the duty of the HC while execising writ jurisdiction in the following words
"The court while exercising its jurisdiction under Article 226 is duty bound to consider whether :
(a) adjudication of writ petition involves any complex and disputed questions of facts and whether they can be satisfactorily resolved;
(b) petition reveals all material facts;
(c) the petitioner has any alternative or effective remedy for the resolution of the dispute;
(d) person invoking the jurisdiction is guilty of unexplained delay and laches;
(e) ex facie barred by any laws of Limitation;
(f) grant of relief is against public policy or barred by any valid law; and host of other factors."

Standard Corrosion Controls Pvt. Ltd v. Sarku Engineering Services SDN BHD

ARBITRATION APPLICATION NO. 6 OF 2008 decided on 11 November, 2008 by Markandey Katju J.

Standard Corrosion, an Indian Company, applied before the Supreme Court for the appointment of arbitrator under S. 11(5) of the Arbitration and Conciliation Act, 1996 ("Act") for resolving contractual disputes with Sarku Engineering Services SDN BHD (“Sarku”), a Malaysian Company.

ONGC awarded Sarku a contract for building 26 Well Unmanned Platforms. Sarku entered into a contract with subcontractor- Standard Corrosion on 21.2.2006. On 8.9.2006, Sarku terminated the Contract with Standard Corrosion under Article VII of he agreement on the ground that Standard Corrosion was unable to furnish the bank guarantee and feedback confirmation of Standard Corrosion’s readiness to work.

On 14.4.2007 Standard Corrosion invoked Article X, the arbitration clause in the agreement. The applicant also mentioned in the said letter that in the event the Sarku failed to send the list of eminent arbitrators as required by Standard Corrosion, the applicant shall approach the High Court to appoint the Sole Arbitrator. After several communications, Sarku stated that in "Article X of the Arbitration it was mentioned that in case of any dispute or difference between the parties regarding the contract, the matter should be settled, as far as possible, by mutual consultation and consent, failing which by arbitration to be held at Mumbai, applying the Arbitration Rules of the International Chamber of Commerce". Article X of the Agreement read:
"Arbitration: Any dispute or difference in view regarding this CONTRACT shall be settled, in so far as is possible, by mutual consultation and consent, failing which by arbitration to be held at Mumbai, India applying the Arbitration Rules of the International Chamber of Commerce by a single arbitrator"
Standard Corrosion applied before the Supreme Court under S. 11(5) of the Act. Markandey Katju J. held:

  1. The application is not maintainable as the applicant has not approached ICC Secretariat for the appointment of arbitrator. The Court held: "the applicant has to apply to the Secretariat of the ICC, as mentioned in the Arbitration Rules of the ICC, and it cannot approach this Court for appointment of an Arbitrator. No doubt, the arbitration will have to be held at Mumbai, but the entire procedure of appointment of the Arbitrator has to be in accordance with the Arbitration Rules of the ICC, which requires that first a request has to be made to the Secretariat of the ICC. The Court relied on the following decisions: Iron & Steel Co. Ltd. vs. Tiwari Road Lines 2007(5) SCC 703, Rite Approach Group Ltd. vs. Rosoboronexport 2006(1) SCC 206 etc.

  2. Standard Corrosion had also relied on Article IX of the Agreement, which read: "This CONTRACT shall be governed by the laws of India. The CONTRACTOR shall be responsible to keep itself informed and comply with all laws, rules, regulations, standards, codes and the like applicable to the WORKS, CONTRACTORS and its subcontractors and CONTRACTOR shall protect, indemnify and hold ONGC, SARKU, their AFFILIATES and associated companies and their stockholders, directors, agents, employees, and representative of each of the aforementioned parties harmless from and against all liabilities for any breach thereof attributable to CONTRACTOR or its subcontractors."Article IX has no relevance to the controversy in this case as it only says that the contract shall be governed by the laws of India. The laws of India would mean the Contract Act, Limitation Act, Specific Relief Act etc. Article/Clause IX does not deal with the procedure by which the arbitrator has to be appointed. That is governed by Clause X.
The Court dismissed the arbitration petition.


How Roosevelt checked the Supreme Court during the Great Depression
The present crisis and the way forward


An Inquiry into Judge's Conduct Open for Public Inspection Once completed- CIC. The decision of the CIC is available here.
Here the information was denied on the ground that "inquiry and investigation against an officer is an internal matter between the employer and employee and disclosure thereof is not in public domain." The CIC held:

"information with regard to public activity, which is an investigation, ordered by an institution as august as the High Court cannot be construed to be private activity. Moreover, we cannot agree that disclosing the results of investigation in which the name of the party investigated is cleared will tarnish the name of that party when such an action is compared to any effort to keep such information exempt from disclosure, which can only lead to the rise of the unwarranted suspicion and mistrust, implying concealment. On the other hand we agree that the remaining information could constitute breach of any confidentiality that may have been part of the understanding of investigators and witnesses in conducting this investigation. It will be open to CPIO therefore to sever such part of the information sought that is considered otherwise exempt by exercising severability u/s 10 sub-section (1) of the RTI Act, 2005"

Thursday, November 13, 2008

SC Judgments

New Grounds cannot be Raised in an Appeal Under Article 136
M.Venugopal v. Dy. Commissioner,Chitradurga District & Ors. Civil Appeal No(s). 6262 of 2003. Date of Judgment 06-11-08

Petitioner cannot raise a new plea, here of adverse possession, at this stage of appeal, which has not been raised in earlier stage as also when the original petititon is not amended to that effect.

Acquital of co- Accused No Reason for Acquital of All

Munna @ Pooran Yadav v. State of Madhya Pradesh. Criminal Appeal No. 1025 of 2006. Date of Judgment 4-11-08

No such law is laid down by this court that when the two other accused persons are acquitted (by giving benefit of doubt), the third one must be given the same benefit of doubt. Principle of parity is not available when incrimiating evidence is available against on of the accused.

Appreciation of Extra-judicial Confession

Mohd. Azad @ Samin v. State of West Bengal. Criminal Appeal No. 1729 of 2008. Date of Judgment 5-11-08

"22. An extra-judicial confession, if voluntary and true and made in a fit state of mind, can be relied upon by the court. The confession will have to be proved like any other fact. The value of the evidence as to confession, like any other evidence, depends upon the veracity of the witness to whom it has been made. The value of the evidence as to the confession depends on the reliability of the witness who gives the evidence. It is not open to any court to start with a presumption that extra-judicial confession is a weak type of evidence. It would depend on the nature of the circumstances, the time when the confession was made and the credibility of the witnesses who speak to such a confession. Such a confession can be relied upon and conviction can be founded thereon if the evidence about the confession comes from the mouth of witnesses who appear to be unbiased, not even remotely inimical to the accused, and in respect of whom nothing is brought out which may tend to indicate that he may have a motive of attributing an
untruthful statement to the accused, the words spoken to by the witness are clear, unambiguous and unmistakably convey that the accused is the perpetrator of the crime and nothing is omitted by the witness which may militate against it. After subjecting the evidence of the witness to a rigorous test on the touchstone of credibility, the extra-judicial confession can be accepted and can be the basis of a conviction if it passes the test of credibility."

Principles to be Followed While Interfering under Article 226 and Section 482 of Cr. P C at the Threshold of a Proceeding

State of Kerala v. Orison J Francis & Anr. Criminal Appeal No. 1723 of 2008. Date of Judgment 5-11-08

"8. The scope for interference at the threshold by exercising power under Section 482 of the Code has been succinctly stated by this Court in State of Haryana v. Bhajan Lal [1992 Supp(1)SCC 335]. In paragraph 102 it was stated as follows:
... principles of law enunciated by this Court ... in the exercise of the extraordinary power under Article 226 or the inherent powers under Section 482 of the Code which we have extracted and reproduced above, we give the following categories ... by way of illustration wherein such power could be exercised either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelised and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wherein such power should be exercised.

(1) Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2) Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3) Where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7) Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge."

Restatement of Appreciation of Circumstantial Evidence

Mula Devi & Anr. v. State of Uttarakhand. Criminal Appeal No. 1722 of 2008. Date of Judgment 4-11-08


Contradicting Signals

The Hindu, today has written an editorial on the efforts of reforming public institutions, especially the judiciary. The efforts of the CJI, though loudable, may be questioned on its sincerity, especially when one is reminded of the Supreme Court's reaction on calling for information on judges assets, as Judges’ Asset Declaration Before CJI Not for Public Eye
These are contradictory signals. A solemn effort to cleanse the system should be addressed at all levels and should be holistic, starting from the appointing process to accountablity.

SC Judgments

Preventive Detention Order and Interference by Courts before the Execution of the Order
Deepak Bajaj v. State of Maharashtra & Anr. Writ Petition (Crl.) No.77 of 2008
A detention order is passed against the petitioner for violation of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974. This petition is moved before the execution of the order. State raised the objection that the writ will not lie until the order is executed.
Articles 32 and 226 bestow untrammelled power to the judiciary to act in deserving cases but having the power and exercising the power is different. Court has developed certain principle of self restraint while exercising its jurisdiction by which “the courts insist that the aggrieved person first allow the due operation and implementation of the concerned law and exhaust the remedies provided by it before approaching the High Court and this Court to invoke their discretionary extraordinary and equitable jurisdiction under Articles 226 and 32 respectively.” Courts have the power and have exercised the power to review the detention order before it has been executed for the following reasons
1. The detention order is for a limited period and not allowing review before execution will frustrate the purpose
2. Courts have developed certain grounds on which detention order is reviewed and invalidated and they are not exhaustive.
3. Orders could be interfered when the court is satisfied
a. that the impugned order is not passed under the Act under which it is purported to have been passed
b. that it is sought to be executed against a wrong person
c. that it is passed for a wrong purpose d. that it is passed on vague, extraneous and irrelevant grounds or
e. that the authority which passed it had no authority to do so
The court found the present case as falling within grounds c and d, the reason being, relevant documents are not placed before the detaining authority to reach the decision of detention.
The interesting part of the judgment is the exposition its gives on how to read a precedent and how reading a judicial order is different from reading a statute. It also gives an appreciation about the value of right to liberty.

POTA- Relevancy of Confession by Co-accused
Gulam Mohd. @ Gulal Shaikh v. State of Gujarat . Criminal Appeal No. of 2008. (Arising out of SLP (Crl.) No. 4876 of 2006) . Date of Judgment 11-11-08
Court held that confession by a co-accused is of no relevance under Section 32 of POTA and not admissible.

Tuesday, November 11, 2008

SC Judgments

32 Years of Litigation and Yet to Arrive at Final Determination
Ishwaragouda & Ors. v. Mallikarjun Gowda & Ors. Civil Appeal No. 5878 of 2002. Date of Judgment 7-11-08

A cause of action that arose as a result of the operation of Karnataka Land Reforms Act. Two close relatives are claiming occupancy right on the same property. The issue has been handled by multiple forums and finally reached SC, interestingly, not for final determination, but to decide whether the HC was right in its holding about the jurisdiction. The road hasn't ended for the parties to reach a final decision, they have miles to go.

Electiricity - a 'Good' and the Nature and Freedom of the Supplier for Entering into a Contract for Supply of Electricity
Paschimanchal Vidyut Vitran Nigam Ltd. & Ors. v. M/s. DVS Steels & Alloys Pvt. Ltd. & Ors. Civil Appeal No.6565 of 2008 . Date of Judgment 7-11-08

Relevant Portion of the Judgment

"9. The supply of electricity by a distributor to a consumer is `sale of goods'. The distributor as the supplier, and the owner/ occupier of a premises with whom it enters into a contract for supply of electricity are the parties to the contract. A transferee of the premises or a subsequent
occupant of a premises with whom the supplier has no privity of contract cannot obviously be asked to pay the dues of his predecessor in title or possession, as the amount payable towards supply of electricity does not constitute a `charge' on the premises. A purchaser of a premises, cannot be foisted with the electricity dues of any previous occupant, merely because he happens to be the current owner of the premises. The supplier can therefore neither file a suit nor initiate revenue recovery proceedings against a purchaser of a premises for the outstanding electricity dues of the vendor of the premises, in the absence of any contract to the contrary.

10. ... When the purchaser of a premises approaches the distributor seeking a fresh electricity connection to its premises for supply of electricity, the distributor can stipulate the terms subject to which it would supply electricity. It can stipulate as one of the conditions for supply, that the arrears due in regard to the supply of electricity made to the premises when it was in the occupation of the previous owner/occupant, should be cleared before the electricity supply is restored to the premises or a fresh connection is provided to the premises. If any statutory rules govern the conditions relating to sanction of a connection or supply of electricity, the distributor can insist upon fulfillment of the requirements of such rules and regulations. If the rules are silent, it can stipulate such terms and conditions as it deems fit and proper, to regulate its transactions and dealings. So long as such rules and regulations or the terms and conditions are not arbitrary and unreasonable, courts will not interfere with them."

Restatement of the Principles to be Followed While Superior Court Sit in Appeal over the Acquital Order of the Lower Court

State of Haryana v. Krishan Criminal Appeal No. 915 of 2003. Date of Judgment 7-11-08

1. There is no embargo on the appellate court reviewing the evidence upon which an order of acquittal is based.

2. Generally, the order of acquittal shall not be interfered with because the presumption of innocence of the accused is further strengthened by acquittal.

3. The golden thread which runs through the web of administration of justice in criminal cases is that if two views are possible on the evidence adduced in the case, one pointing to the guilt of the accused and the other to his innocence, the view which is favourable to the accused should be adopted.

4. The paramount consideration of the court is to ensure that miscarriage of justice is prevented

5. In a case where admissible evidence is ignored, a duty is cast upon the appellate court to re-appreciate the evidence where the accused has been acquitted, for the purpose of ascertaining as to whether any of the accused really committed any offence or not

6. The principle to be followed by the appellate court considering the appeal against the judgment of acquittal is to interfere only when there are substantial reasons for doing so.

7. If the impugned judgment is clearly unreasonable and irrelevant and convincing materials have been unjustifiably eliminated in the process, it is a substantial reason for interference.


Liquidity Crunch and Hawala Money

IRDA to set up a committee to review regulations on Third Party Administrator companies

Monday, November 10, 2008


M/S COMED CHEMICALS LTD v. C.N. RAMCHAND (ARBITRATION PETITION NO. 17 OF 2007) decided by C.K. THAKKER, J on November 07, 2008

An MoU was signed between the M/s Comed Chemicals (Comed) and CN Ramchand (Ramchand) for “the development of products in the field of bio-industries and manufacturing and marketing of such products.” In consequence, Ramchand was appointed as Director (Technical) by Comed. Due to various grievances against Ramchand, including resignation before completion of the work undertaken by Ramchand in breach of the MoU, Comed initiated arbitration proceedings on August 12, 2005 as per Clause 12 of the MoU by appointing Ramesh H. Nanavati, a retired District Judge as arbitrator. Ramchand replied that he was not agreeable to the arbitrator proposed by the Company and instead proposed 3 names. When Comed filed a petition for appointment before the High Court, he contended that he was a British National. and therefore the arbitration would be `International Commercial Arbitration' as defined in Section 2(1)(f) of the Arbitration and Conciliation Act, 1996 (Act) and under Section 11(9) of the Act the Chief Justice of India (CJI) would have the power to appoint an arbitrator. The application was withdrawn and Comed filed an application before the CJI

The CJI’s designate had to decide 3 issues:
Whether the disagreement amounted to ‘dispute’?
Whether the Agreement came within the purview of ‘Commerce’?
Whether Clause was an arbitration Clause or an Expert Determination Clause?

The Court allowed the petition and held that the Clause 12 of the MoU which read as follows was an arbitration clause:

If there be any dispute pertaining to meaning of this MoU or of any nature, will be solved and decided by appointing an independent Arbitrator acceptable to all the parties and if not solved by him can be referred to court of law and for which the jurisdiction will be Vadodara.

Further, the Court, citing R.M. Investment & Trading Co. Pvt. Ltd. v. Boeing Co. & Anr., (1994) 4 SCC 541 and other judgments held:

It was held that the agreement to render consultancy service by the appellant to the respondent was `commercial' in nature and there was commercial relationship between the parties.

The Court went on to hold that if the Contract was a mere employment and the relationship between the parties was a master-servant relationship, the matter was inarbitrable. However

[I]f the respondent is engaged by the applicant Company to perform functions which are inextricably linked with functions which could be undertaken by a businessman or by a Company and such activities form an integral part of his activities, there is element of `commerce'. In that case, the provisions of the Act would clearly apply.
25. In the instant case, the respondent has been appointed as Director (Technical) and has been allotted 40% equity shares in the subsidiary Company (Comed Bio-Tech Ltd.). Over and above that, he was to be paid salary and other benefits in lieu of services rendered by him. Para 3 of the Agreement required the respondent to undertake certain responsibilities.
The applicant-Company wanted to venture into the field of bio-technology which was not previously chartered or traversed by it (novel bio-products). The respondent possessed special knowledge and to get the benefit of such research and expertise, an agreement had been entered into by the parties and respondent had been appointed Director of the subsidiary Company.
28. Now, it is well settled that a Director is not a mere employee or servant of the Company. Such Director may have to work also as an employee in a different capacity. I hold that the respondent was working in dual or double capacity, i.e. (i)as an employee, and (ii) as a Director. In the later capacity, however, he was the Chief Executive Officer of the subsidiary Company and had to look after all operational matters. The functions to be performed by him were supervisory and related to policy making decisions in the affairs of the Company, as observed by this Court in Ram Pershad. Any dispute between the applicant-Company and the respondent would, therefore, be covered by Clause 12 of the Agreement which provides for arbitration. Hence, the contention of the learned counsel for the respondent that the respondent was merely an employee and there was no element of business, trade or commerce has no substance and must be rejected.

The Court appointed Madhukar Fanse, retired Judge, City Civil Court, Ahmedabad as the sole arbitrator to decide the dispute between the parties

SC Judgements

Mukund Swarup Mishra v. Union of India & Ors. TRANSFERRED CASE NO.100 OF 2002 decided by C. K. Thakker & R. V. Raveendran JJ. on November 07, 2008 on irregularities in allotment of Petroleum Retail Outlets, LPG distributorship and SKO-LDO dealerships (Petrol Pump Scam)
Sachinda Nand Lal v. State Of Bihar (Now Jharkhand) CIVIL APPEAL NO. 6442 OF 2000 decided by C.K. THAKKER & D. K. JAIN on November 07, 2008 on enhancement of compensation under the Land Acquisition Act, 1894
KENDRIYA KARAMCHARI SEHKARIGREH NIRMAN SAMITI LTD., NOIDA v. STATE OF U.P. & ANR. CIVIL APPEAL NOs. 6850-6851 OF 2003 decided by C.K. THAKKER & D. K. JAIN on November 07, 2008 on enhancement of compensation under the Land Acquisition Act, 1894


Bharathidasan University Plans Networking of Libraries

Piracy Needs International Action

Banks Clogging Judicial System: Court Report

SC Judgments

Matrimonial - Women Beware, Being Career Oriented is Mental Cruelty!
Suman Kapur v. Sudhir Kapur Civil Appeal No. 6582 of 2008, Date of Judgment 7-11-08
A matrimonial affair reaching the SC for final verdict as appeal against the confirmation order of the HC of the grant of divorce by the trial court on the ground of cruelty [Section 13 (i) of Hindu Marriage Act]. Cruelty is not defined in the Act but through case laws it has been well established that it includes mental cruelty. The case also refers to a recent decision of the SC (Samar Ghosh v. Jaya Ghosh (2007) 4 SCC 511) in which a detailed explanation of mental cruelty is given.
The SC affirmed the decision of the HC finding mental cruelty on the part of the wife. By doing so the SC has added another dimension to mental cruelty, wife being career oriented. One could argue that it is cumulation of many facts, including the abortions allegedly without the consent of the husband, that made the court reach the decision of disallowing the appeal.
The HC found the attitude of the wife towards career objectionable and a threat to a "healthy married life", which could be read in the following words of the court. The court also found and added to mental cruelty that the wife's non belief in Indian social values.
"The High Court also observed that the appellant wanted to pursue her professional career to achieve success. In her written statement itself, she had admitted that she was very much interested in her career; that she was independent since 1979 and she was keen to live independent life."
By affirming the decision of the HC verbatim, the SC endorsed the approach and finding of the HC.
The remaining issue would be, will it be the same if the husband was career oriented and interested in the career!

Probate of Will and Later Compromise between Legatees - Legal Effect
Chandrabhai K Bhoir v. Krishna Arjun Bhoir. Civil Appeal No. 6575 of 2008 Date of Judgment 7-11-08.
The lagatees though initially raised objections on the probate of the will, reached a compromise and entered into a detailed statement of agreement as to the devolution of the property of the testator. The agreement was not honoured and hence the cause of action. The court had to decide the legal effect of the agreement of the lagatees which incidentally varies the terms of the will.
"A probate when granted binds the whole world. It is a judgment in rem. The Executor, therefore, has to administer the estate of the testator in terms of the Will and not on the basis of the settlement arrived at by and between the parties which would be inconsistent with the terms of the Will. In case of any conflict between the terms of the Will and the settlement, the former will prevail."

Impact of Delay and Latches on Writ Remedy
Virender Chaudhary v. Bharat Petroleum Corporation & Ors. Civil Appeal Nos. 6567-69 of 2008. Date of Judgment 7-11-08
1. A writ remedy is discretionary in nature
2. Court should be satisfied about the equity of granting a remedy
3. Dealay and latches are relevant factors to be considered
4. Though there is no prescribed period of limitation for filing a writ, it should be filed within a reasonable time.

Friday, November 7, 2008


Commissioner of Central Excise, Mumbai v. M/s National Organic Chemical Industries Limited CIVIL APPEAL NO.1130 OF 2003 decided on November 6, 2008 by Dalveer Bhandari & HS Bedi JJ.
The question before the Court was whether ethylene and propylene manufactured by the M/s National Organic Chemical Industries Limited and used in its factory in the further manufacture of the same goods would be entitled to the benefit of exemption from excise duty contained in notification no.217/86. Th Court answered the question in the affirmative.
(judgement available at www.judis.nic.in)

SSRN Articles

MH LeRoy, Crowning the New King: The Statutory Arbitrator and the Demise of Judicial Review

Judicial review of arbitration awards is highly deferential- but when does it become rubber stamping? Using original data, I find that federal courts vacated only 4.3 percent of 162 disputed awards. Nearly the same result was observed for a sub-sample of 44 employment discrimination awards under Title VII. By comparison, federal appeals courts in 2006 reversed 12.9 percent of 5,917 rulings made by civil court judges on the merits of legal claims. Why are the rulings of Article III judges scrutinized more than the awards of citizen-arbitrators? What does this mean when companies can avoid Article III court rulings by requiring employees to arbitrate their claims? Judicial review of awards based on statutory claims is inadequate, and undermines the constitutional role of federal courts. I explore these empirical findings from a historical perspective. English kings and merchants helped to fashion modern arbitration. Nearly 700 years ago, small merchants traded goods at fairs that operated under a royal franchise. Arbitrators improved the efficiency of these markets by adjudicating transactional disputes. This role was codified by the Statute of the Staple of 1353, where the king delegated his sovereign power to ensure the success of the fair. I point to two prominent junctures - in 1698, and again in 1925 - when lawmakers in England and the U.S. believed that court litigation hampered commerce. They enacted similar statutes to authorize courts to confirm disputed awards, unless these private rulings resulted from corruption or misconduct. This deference grew out of practical considerations. The parties had chosen the arbitrator, agreed to the private process, and bound themselves to an industry norm. Courts deferred so heavily to awards because William III wanted these merchant tribunals to be autonomous. His law, the 1698 Arbitration Act, did not allow courts to vacate awards for fact finding or legal errors. Great deference in its reviewing standards reflected the king's infallibility. My textual research shows that the FAA's reviewing standards descended from William III. I suggest that our law crowns today's statutory arbitrator with the king's mantle of infallibility. But this deference is too extreme for awards that rule on statutory claims. In Gilmer v. Johnson/Interstate Lane Corp., the Supreme Court ignored the commercial history of arbitration when it broadly approved a theory of forum substitution. Gilmer said that arbitrators may decide statutory claims, even if one disputant objects to the forum and wishes, instead, to be heard by a court. The result is that the ruling of the arbitrator is subject to a narrower standard for review than an Article III judge's order. Epitomizing this regal deference, a contemporary court said: "The arbiter was chosen to be the Judge. That Judge has spoken. There it ends." In textual and empirical analysis, I show that statutory arbitrations enjoy a presumption of royal infallibility. I conclude with two solutions for aligning the review of rulings by statutory arbitrators and Article III judges.
[Recommended for its historical analysis of the 1698 English Arbitration Act and the American Federal Arbitration Act]
Complex business contracts are notoriously difficult to write and read. Certainly, when litigation arises, courts scarcely have an easy time interpreting them. Indeed, contracts don't look at all as though they are written to tell a court what the parties want. Why can't smart, well-motivated lawyers do a better job? My article argues that they rationally don't try. I argue for a view of contracting in which parties aren't principally trying to set forth an agreement for a court to enforce. Rather, by leaving inartful language and ambiguity in the agreement, parties are bonding themselves not to seek precipitous recourse to litigation. The agreement entered into provides each party with grounds to bring a lawsuit if it so desires. Thus, if one party sues, the other party will virtually always have grounds to countersue. The complex transacting community has a norm against litigation in any event; bonding encourages and bolsters this norm, as well as norms of appropriate conduct throughout the contracting relationship. The contracting process, and the contract that results, thus serves importantly to create the parties' relationship and to set the stage for dispute-resolution consistent with preserving the relationship, as well as to keep available the backstop of enforcement if needed.

News and Views

Kerala Governor seemingly has taken note of the anguish of Keralites on one of the recent decision of the Central Government. Central Government had declared two Indian languages to be classical languages. They happened to be languages from southern part of India, and one, of Kerala's immediate neighbour's.
Some of the politicians, including the Chief Minister and certain cultural figures in Kerala could locate in this decision, centre's disregard towards the state. The CM raised his concern in the following words as per the news;
“We can understand Sanskrit and Tamil getting the status of classical language. What was the yardstick used when Kannada and Telugu were given that status and Malayalam was not? What will happen if the people of other States also start clamouring for classical language status for their respective languages.”
All these reactions highlight certain interesting issues
1. The ignorence of people who make such accusations
2. The intolerence when others are recognised
3. Blind imputation of political motives to anyting
At the outset, there are four clear parameters to declare a language as classical language. These are,
a. The language should have a history of at least 1000 years
b. The language should have ancient literature and texts
c. The language should have originality
d. The language and its literature should have an existence distinct from other modern languages
Interestingly, these conditions are not prescribed by the central government but by the Sahitya Akademi based on the recommendations of an expert panel. Nowhere it is said that Kerala has ever tried to impress the authorities about the classical status of the languages, where as the states of Karnataka and Andhra Pradesh and their respective Sahitya Akademies have esablished their case before the centre.
The language experts of malayalam themselves admit that the language has a history of only 700 years.
On an evaluation, it becomes very clear that the accusation levelled by the chief of state himself is misinformed and myopic. It is nothing but sheer intolerence and the incompetency to establish one's own case. Everything is another political weapon in the hands of a government which recently broke of from the ruling partnership at the centre. There is a saying in malayalam, "ishtamillatha achi thottathokke kuttam" (everything is wrong that is done by a wife fallen out of favour).


SBI Reduces Lending, Deposit Rates
Nod for Government-Industry Tie-up
PIL for a Direction to the Centre and the Maharashtra Government to Detain Raj Thackeray
RBI Will Allow Banks to Unlock Their Corporate Bonds for Cash
Indo-ASEAN FTA- Business Line Editorial
Hindu Editorial on Registration of Marriages

Wednesday, November 5, 2008


This EPW commentary on the perils of regionalism in the backdrop of recent Maharashtra imbroglio raises three major concerns.

1. The establishment of parallel government
2. Challenges to the federal character of the nation
3. The bearing of coalition government with decisive regional party participation

This commentary also integrates a touch of media criticism.

It is disquieting to find the responses of the Union Minister for Civil Aviation, Praful Patel of NCP hailing from the state and the validation given to it by the Congress Party. This aspect clearly highlights the pressure tactics regional parties play in coalition politics to swing the balance to their undue benefit.

The current incident is a severe blow to the federal nature of the nation where regional identities take on hostile masks. The nepotism of the Lalu Prasad condemnable though does not give justification for revving up regional factionalism. The action of Raj Thackeray is a sheer opportunism of a political bigot.

How legal system is going to react in the present situation will be the crucial aspect, since cases have been slapped on Thackeray. A proper investigation and prosecution will be the touchstone and rekindling of confidence of people in the legal system.