"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, December 26, 2008


Wednesday, December 24, 2008



The way laws are being made
The Hindu today carrys a news on the displeasure of the left parties on the way bills were passed in Parliament yesterday. Please also see the links of yesterday's post by Badri on parliamentary proceedings. The bills that were passed amongst others are the High Court and Supreme Court Judges (Salaries and Conditions of Service) Amendment Bill, Prevention of Corruption (Amendment) Bill, Compensatory Afforestation Fund Bill and the South Asian University Bill. All these bills were passed by voice vote with nil discussion among pandemonium, screaming for the blood of A.R Antulay. BJP was putting up a face of nationalism and patriotism by the fracas they were creating. What is forgotten there is the fact that it is equally patriotic to pay due attention to the law making process for which the legislature is primarliy responsible.
The bills that were passed have reach beyond the small poitical ends and populist voice that were staged in the Parliament. The way in which the treasury bench passed the bill were equally opportunistic and it is as if they got a walk over. In the end there is no attention is paid to what is going to be the law.

Tuesday, December 23, 2008

Proceedings in the Parliament

Rajya Sabha:
The links to Rajya Sabha proceedings on 22.12.2008 can be obtained here, here, here, and here.
Summary of discussions:
  2. THE APPROPRIATION (No.4) BILL, 2008 "to authorize payment and appropriation of certain further sums from and out of the Consolidated Fund of India for the services of the financial year 2008-2009, as passed by Lok Sabha, be taken into consideration.
  4. On the comments of AR Antulay in relation to the killing of ATS Chief.


  • The government is planning to make comprehensive amendments to the Insurance Laws. A Bill has been introduced in Rajya Sabha in this regard. [Yesterday, this blog had given the link to an article in yesterday's The Hindu]. Media reports on the Bill can be found here and here.

Monday, December 22, 2008

SCI Judgments

Complainant can question the granting of bail
Brij Nandan Jaiswal v. Munna @ Munna Jaiswal & Anr. Criminal Appeal No. 2087/2008. Date of Judgment 19-12-08
1. Complainant can question the order granting bail if the said order is not validly passed.
2. Bail may be cancelled not only for its misuse but may be tested on merits.
3. The complainant could question the merits of the order granting bail.
4. While granting bail, particularly in serious cases like murder some reasons justifying the grant are necessary.

On deciplinary enquiry

ROOP SINGH NEGI v. PUNJAB NATIONAL BANK & ORS. Civil Appeal No. 7431 of 2008. Date of Judgment 19-12-08

On proving a will

Lalitaben Jayantilal Popat v. Pragnaben Jamnadas Kataria & Ors. Civil Appeal No. 7434 of 2008. Date of Judgment 19-12-08

Civil Contempt

M/s. B.S.N. Joshi & Sons Ltd. v. Ajoy Mehta & Anr. Contempt Petition No. 245 of 2007 in Civil Appeal No. 613 of 2006. Date of Judgment 19-12-08

The court finds contempt, accepts the apology and grants substantive relief while disposing of contempt petition.

Awarding sentence below the statutory minimum

HARENDRA NATH CHAKRABORTY v. STATE OF WEST BENGAL. Criminal Appeal No. 2086 of 2008. Date of Judgment 19-12-08

The case arose under Essential Commodities Act and the appeal was admitted on sentence. The court held that India do not have any statutory sentencing policy (State of Punjab vs. Prem Sagar & Ors. 2008 (9) SCALE 590). The legislative scheme of sentence laid out in certain Acts, where legislative intent is clear should be applied though sentence less than the prescribed minimum may be imposed in exceptional circumstances.

Articles in Columbia Law Review

Market damages are the best default rule when parties trade in thick markets: They induce parties to contract efficiently and to trade if and only if trade is efficient, and they do not create ex ante inefficiencies. Courts commonly overlook these virtues, however, when promisors bundle services that are not separately priced. When the cost of completion is large relative to the “market delta”—the increase in market value—courts concerned with avoiding “economic waste” limit the buyer to the market value increase. This concern is misguided. Since the buyer commonly prepays for the service, a cost-of-completion award actually has a restitution element—the prepaid price—and an expectation interest element—the market damages. Courts fail to see the restitution issue and thus deny these damages more frequently than they should.
Human rights treaties play an important role in international relations but they lack a foundation in moral philosophy and doubts have been raised about their effectiveness for constraining states. Drawing on ideas from the literature on economic development, this Essay argues that international concern should be focused on human welfare rather than on human rights because of three advantages.


Article on Nigerian Supreme Court by Minabere Ibelema:"Supreme Court always right".

CJI on More Courts for Speedier Justice.

The Hindu Leaderpage Article by Joseph Stiglitz on the Future of Capitalism.

Amendments to Indian Insurance Law.

Friday, December 19, 2008

SCI Judgements

H.P. State Forest Company Ltd. v. M/s. United India Insurance Co. Ltd. CIVIL APPEAL NO. 6347 OF 2000 decided by DALVEER BHANDARI & HARJIT SINGH BEDI, JJ. on December 18, 2008. The Court has discussed the law on restraint of legal proceedings as contained in Section 28 of the Indian Contract Act, 1872. The relevant clause in the insurance contract that was alleged to have been in restraint of legal proceedings was:
6(ii) In no case whatsoever shall the company be liable for any loss or damage after the expiration of 12 months from the happening of the loss or damage unless the claim is the subject of pending actionor arbitration: it being expressly agreedand declared that if the company shalldeclaim liability for any claim hereunderand such claim shall not within 12calendar months from the date of thedisclaimer have been made the subjectmatter of a suit in a court of law then theclaim shall for all purposes be deemed tohave been abandoned and shall notthereafter be recoverable hereunder.
The Court held:
The clause before this Court in Food Corpn.case... can instantly becompared with the clause in the present case. The contract in that case said that the right shall stand extinguished after six months from the terminationof the contract. The clause was found valid because it did not proceed to say that to keep the right alive the suit was also required to be filed within six months. Accordingly, it was interpreted to mean that the right was required to be asserted during that period by making a claim to the Insurance Company. It was therefore held that the clause extinguished theright itself and was therefore not hit by Section 28 ofthe Contract Act. Such clauses are generally found ininsurance contracts for the reason that undue delayin preferring a claim may open up possibilities offalse claims which may be difficult of verification withreasonable exactitude since memories may havefaded by then and even ground situation may have changed. Lapse of time in such cases may prove to be quite costly to the insurer and therefore it wouldnot be surprising that the insurer would insist that if the claim is not made within a stipulated period, theright itself would stand extinguished. Such a clause would not be hit by Section 28 of the Contract Act.
C.R. Jayaraman & Ors. v. M. Palaniappan & Ors. CIVIL APPEAL NO. 993 OF 2002 decided by Tarun Chatterjee & Aftab Alam, JJ. on December 18, 2008 dealt with the question as to whether a temple was a private or public temple
Shanti Bhushan and Anr. v. Union of India and Anr. WRIT PETITION (CIVIL) NO. 375 OF 2007 decided by Dr. ARIJIT PASAYAT & Dr. MUKUNDAKAM SHARMA, JJ. on December 18, 2008 was a petition under Article 32 of the Constitution seeking appropriate declaration and issuance of a writ of quo warranto or any other writ or direction quashing the appointment of respondent No.2 ("R-2) as a Judge of the Madras High Court.
The allegation of the Petitioners was that R-2 was not appointed as a Permanent Judge by following the norms and such appointment is in violation of the law as declared by this Court in Supreme Court Advocates- on-Record Association & Ors. v. Union of India (1993 (4) SCC 441) and Special Reference No.1 of 1998 (1998 (7) SCC 739). The Petitioners contended that the opinion of the Chief Justice of India has to be formed collectively after taking into account the views of his senior colleagues and other Judges of the Supreme Court conversant with the affairs of the concerned High Court who are required to be consulted by him for the formation of opinion and no appointment can be made unless it is in conformity with the final opinion of the Chief Justice of India formed in the aforesaid manner.
The Counsel for Union of India argued that "more than 350 Additional Judges have been appointed as permanent Judges during the period from 1.1.1999 to 31.7.2007 by successive Chief Justice of India who had not consulted the Collegium while considering the cases of appointment of Additional Judges as Permanent Judges of the High Courts although the collegium was consulted at the stage of initial appointment as Additional Judge." It was further submitted that once the Government was satisfied that a suitable candidate was in fact appointed as an Additional Judge of the High Court, elaborate consultations as required for forming the opinion for appointment of an Additional Judge may not have considered necessary while considering the case for appointment as permanent Judge.
Further, it was argued that "in Advocates-on-Records Association's case (supra) in paras 466, 467 and 468 this Court had observed that though some aspects in S.P. Gupta v. Union of India and Anr. (1981 (Supp) SCC 87) have the approval of the larger Bench, yet the Executive itself has understood the correct procedure notwithstanding S.P. Gupta's case and there is no reason to depart from it when it is in consonance with the concept of the independence of the judiciary. Consequent to the judgment in Advocates-on-Record Association's case (supra) the memorandum of procedure was revised vide D.O. No.K-11017/9/93-US.11 dated 9.6.1994. Subsequently, on the basis of the opinion in Special Reference No.1/1998 the revised procedure was prescribed by Reference No.K-110017/13/98-U.S II dated 30.6.1999. Paras 11, 12, 13, 14, 15, 16, 17, 18 and 19 pertain to appointment of permanent Judges. It is therefore submitted that there is no infirmity in the appointment of respondent No.2 as a Permanent Judge. "
Finally, it was contended: "On true interpretation of Article 224(1) of the Constitution it can be said that Additional Judges are not intended to be re-appointed out of turn. It is submitted that on expiry of the term as an Additional Judge, he or she is entitled to be considered for appointment as a Permanent Judge. But in either case the procedure under Article 217(1) of the Constitution has to be repeated. An additional Judge who had worked for a period of his tenure has a weightage in his favour compared to a fresh appointee and any process of appointment while filling in a vacancy must commence with an Additional Judge whose tenure has come to an end and has led to the vacancy."
1. After stating the contentions of both parties, the court went on to hold the scope of judicial review was as held in Supreme Court Advocates-on-Record case. In this case, the court held:
Except on the ground of want of consultation with the named constitutional functionaries or lack of any condition of eligibility in the case of an appointment, or of a transfer being made without the recommendation of the Chief Justice of India, these matters are not justiciable on any other ground, including that of bias, which in any case is excluded by the element of plurality in the process of decision- making.
2. An Additional Judge cannot be said to be on probation for the purpose of appointment as a Permanent Judge. This position is clear from the fact that when an Additional Judge is appointed there may not be vacancy for a Permanent Judge. The moment a vacancy arises, the Chief Justice of the concerned High Court is required to send a proposal for appointment of the Additional Judge as a Permanent Judge along with material as indicated in para 13. The rigor of the scrutiny and the process of selection initially as an Additional Judge and a Permanent Judge are not different. The yardsticks are the same. Whether a person is appointed as an Additional Judge or a Permanent Judge on the same date, he has to satisfy the high standards expected to be maintained as a Judge. Additionally, on being made permanent, the effect of such permanency relates back to the date of initial appointment as an Additional Judge.
3. While making the recommendations for appointment of an Additional Judge as a permanent
Judge, Chief Justice of the High Court is not required to consult the collegium of the High Court
. Additionally, there is no requirement of enquiry by the Intelligence Bureau. The Chief Justice while sending his recommendation has to furnish statistics of month-wise disposal of cases and judgments rendered by a Judge concerned as well as the number of cases reported in the Law Journals duly certified by him. Further information required to be furnished regarding the total number of working days, the number of days the concerned Judge attended the Court and the days of his absence from Court during the period for which the disposal statistics are sent.
4. At the stage of appointment of either as an Additional Judge or a Permanent Judge, the Union Minister of Law, Justice and Company Affairs is required to consider the recommendation in the light of such other reports as may be available to the Government in respect of the names under consideration. The complete material would then be forwarded to the Chief Justice of India for his advice. This procedure is not required to be followed when an Additional Judge is appointed as a Permanent Judge.
5. Unless the circumstances or events arise subsequent to the appointment as an Additional Judge, which bear adversely on the mental and physical capacity, character and integrity or other matters the appointment as a permanent Judge has to be considered in the background of what has been stated in S.P. Gupta's case (supra). Though there is no right of automatic extension or appointment as a permanent Judge, the same has to be decided on the touchstone of fitness and suitability (physical, intellectual and moral). The weightage required to be given cannot be lost sight of. As Justice Pathak J, had succinctly put it there would be reduced emphasis with which the consideration would be exercised though the process involves the consideration of all the concomitant elements and factors which entered into the process of consultation at the time of appointment earlier as an additional Judge.
6. There are certain other factors which would render the exercise suggested by the petitioners impracticable. Having regard to the fact that there is already a full fledged participative consultation in the backdrop of pluralistic view at the time of initial appointment as Additional Judge or Permanent Judge, repetition of the same process does not appear to be the intention.
7. It is not in dispute that Union of India is the ultimate authority to approve the recommendation for appointment as a Judge. The Central Government, as noted above, has stated that in view of the practice followed in implementing the memorandum, once the Government on being satisfied that a suitable candidate who was earlier appointed as an Additional Judge is suitable for appointment as a permanent Judge, the elaborate consultation has not been considered necessary. It is of significance to note that some of the Hon'ble Judges who were parties to the judgments relied on by the petitioners while functioning as a Chief Justice of India have not thought it necessary to consult the Collegium as is evident from the fact that from 1.1.1999 to 31.7.2007 in more than 350 cases the Collegium was not consulted. It means that they were also of the view that the practice/procedure was being followed rightly. Therefore, the plea that without consultation with the Collegium, the opinion of the Chief Justice of India is not legal, cannot be sustained.
8. But at the same time we find considerable substance in the plea of the petitioners that a person who is not found suitable for being appointed as a permanent Judge, should not be given extension as an Additional Judge unless the same is occasioned because of non availability of the vacancy. If a person, as rightly contended by the petitioners, is unsuitable to be considered for appointment as a permanent Judge because of circumstances and events which bear adversely on the mental and physical capacity, character and integrity or other relevant matters rendering it unwise for appointing him as a permanent Judge, same yardstick has to be followed while considering whether any extension is to be given to him as an Additional Judge. A person who is functioning as an Additional Judge cannot be considered in such ircumstances for re-appointment as an Additional Judge. If the factors which render him unsuitable for appointment as a permanent Judge exist, it would not only be improper but
also undesirable to continue him as an Additional Judge.

Thursday, December 18, 2008

End of Law and Economics?


[Law and Economics has been one of the most difficult areas for me when I was doing my masters at NUJS, Kolkata. I had not even heard of Law and Economics when I was doing my LLB at SDM Law College, Mangalore. My Jurisprudence course in Mangalore was obsolete. It stopped with HLA Hart- it did not go further. The same course is taught every year in that college. This is a very sorry state of affairs. I think something should be done about this. In my previous post I had provided a link of Delhi University LLB programme's course contents. Something similar ought to be done by all the prominent law schools so that students from other law colleges can also have an opportunity to learn Law properly.]


SCI Judgements

M.V. UMANG & ORS. v. KAMLA KANT DUBE (DEAD) THR. LRS. CIVIL APPEAL NO. 5191 OF 2002 decided by R.V. RAVEENDRAN & J.M. PANCHAL, JJ. on December 16, 2008.
This is a case relating to claim of additional compensation by an employee. The significant feature of this judgement is that the matter was referred to mediation by the Supreme Court. The parties had settled the matter in Delhi High court Mediation and Conciliation Centre. A settlement agreement was filed by the Delhi High court Mediation and Conciliation Centre before the Supreme Court and the matter was disposed of accordingly. Here, we note a difference between mediation and arbitration, which has the force of a decree by virtue of Section 36 of the Arbitration and Conciliation Act, 1996. Section 36 reads:
Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the court.
Even a settlement agreement made before the Conciliator has the force of a decree by the virtue of the following provisions:
74. Status and effect of settlement agreement. -The settlement agreement shall have the same status and effect as if it is an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal under section 30.
30. Settlement. (1) It is not incompatible with an arbitration agreement for an arbitral tribunal
to encourage settlement of the dispute and, with the agreement of the parties; the arbitrat tribunal may use mediation, conciliation or other procedures at any time during the arbitral proceedings to encourage settlement.
(2) If, during, arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.
(3) An arbitral award on agreed terms shall be made in accordance with section 31 and shall state that it is an arbitral award.
(4) An arbitral award on agreed terms shall have the same status and effect as any other arbitral award on the substance of the dispute.
However, the mediated settlement agreement had to be deposited before the court. Why shouldn't a mediated settlement agreement have the same status as a settlement agreement before a conciliator?

Wednesday, December 17, 2008

Are National Law Schools/ Universities Hegemons?

The Law department of Delhi University has published its course contents and case material in its website http://www.du.ac.in/llb-prog.html. Why can't the National Law Schools/ Universities do the same? Why can't they atleast publish the reading list so that Non-National Law School/ University students can also use them? When India talks about Knowledge, Intellectual Property and Hegemony, why do the National Law Schools/ Universities do this?

Historical Imagery, Legitimation and Lex Mercatoria

The Current Issue of Law and Contemporary Problems contains an article on Historical Imagery, Legitimation and Lex Mercatoria. An interesting read.
This article illustrates twin points. First, far from being an extrinsic display of erudition, historical imagery about the ancient law merchant is employed to legitimate modern notions as to what the governance of international business transactions should be. Second, such historical imagery is almost as diverse as the divergent conceptions and agendas within the mercatorist coalition. A close examination of mercatorist historical narratives will allow us to scrutinize the efforts at legitimation and to better understand the normative agenda and the structure of arguments employed in the lex mercatoria discourse.
[This article (and my previous readings on the subject) makes me wonder if there was a "lex mercatoria" in India in the ancient and the medieval times. India, as we have read in history, was famous for sea trade with many nations in the ancient as well as medieval times. Can anybody throw light on this aspect?]

Contract Law as Power-Conferring as well as Duty-Enforcing

Gregory Klass, Three Pictures of Contract: Short Version

This essay presents in short form the main argument in Three Pictures of Contract: Power, Duty and Compound Rule, 83 N.Y.U. L. Rev. (forthcoming 2008), available at SSRN: http://ssrn.com/abstract=1033116. The essay will appear in the online publication, The Legal Workshop.The article argues that contract law is unusual in that it is at one and the same time both, in Hart's terms, a duty-imposing and power-conferring rule. While most laws are of either one type or the other, an analysis of contract law shows how a single set of legal rules can be designed to both impose duties on persons and grant them the power to change their legal obligations. The analysis casts new light on contract law, supporting pluralist theories of the practice. It also adds to the general theory of normative powers, as it describes a new distinction between pure power-conferring rules and what I call "compound rules" like the law of contract.

Have We Failed to Appreciate Fuller Better?

Here is the link to a great article by Nicola Lacey on how we have underappreciated Lon Fuller and on how we have viewed Fuller from within the narrow cage of analytical philosophy. I have been a big fan of Fuller, not only for his views on legal philosophy but also on ADR [Lon L. Fuller, The Forms and Limits of Adjudication 92 Harv. L. Rev. 353 (1978)] and Contract Remedies [L. L. Fuller & William R. Perdue, Jr., The Reliance Interest in Contract Damages: I, 46 Yale L.J. 52 (1936); The Reliance Interest in Contract Damages: II, 46 Yale L.J. 373 (1936)]. Nicola Lacey's book on HLA Hart is fascinating. A must read for all those who are interested in legal theory.
Just over half a century ago, Harvard Law School provided the setting for a debate between the two most influential British and American legal theorists. H.L.A. Hart, Professor of Jurisprudence at Oxford, was invited to give the Law School's annual Holmes Lecture. Hart took this opportunity to enunciate the kernel of his emerging theory of legal positivism, staking out his claim to be the 20th Century successor to Jeremy Bentham and John Austin. Lon L. Fuller, Carter Professor of General Jurisprudence at Harvard, and a man who had long ploughed a rather lonely jurisprudential furrow as a scholar and teacher committed to exploring the morality of law, demanded a right to reply. The rest, as they say, is history. In this paper, I revisit that history, and give it a somewhat different interpretation from the one which it has generally received. My argument is that Fuller was at an inevitable disadvantage in the debate. Because of Hart's agenda-setting position, the terms of the debate are those of analytic legal philosophy: and the reception of the debate has, understandably, both interpreted and evaluated Fuller's argument largely in terms of criteria internal to that discipline. But while Hart's Holmes lecture can justly be seen as exemplary of his broader contribution, Fuller's most original interventions in legal scholarship originated not so much in a philosophical view but rather in a broader socio-legal and interdisciplinary interpretation of legal institutions and processes. Though Fuller might have drawn on this broader work to raise questions about Hart's approach, he did not do so as effectively as he might have done. Hence the salience to Fuller's reputation of his role as Hart's natural law opponent marginalises some important strengths of his scholarship. I preface this argument with a historical and biographical sketch: introducing the protagonists and their intellectual and personal preoccupations; setting the scene for the debate in terms of contemporary legal scholarship and legal education; and providing a richer context in which to assess the debate's overall significance for legal scholarship today.

Friday, December 12, 2008

SCI Judgements

Maharashtra State Judges Association & Ors. v. The Registrar General, High Court, High Court of Judicature at Bombay & Anr. WRIT PETITION (C) NO. 211 OF 2007 under Article 32 of the Constitution decided by K. G. BALAKRISHNAN CJI, R. V. RAVEENDRAN & J. M. PANCHAL, JJ. on DECEMBER 11, 2008
The following issues were involved in this case:
"The Maharashtra State Judges Association and some District Judges, have sought the following directions to the respondents:
(i) to make an uniform single cadre of District Judges by merging theposts of District Judges, Addl. District Judges, City Civil Court Judges, 2
Chief Judge and Addl. Chief Judges of Small Cause Court, with effect from13.11.1991 or alternatively with effect from 31.3.1994 (or furtheralternatively from 1.7.1996) with inter-se seniority being determined withreference to the date of entry into service in the said posts.
(ii) to withdraw the Maharashtra Judicial Service (Seniority) Rules 2007(for short the `Rules') and make rules in regard to seniority, in conformitywith the decision of this Court, by having a single uniform cadre of DistrictJudges (by merging the aforesaid multiple categories of posts) with effectfrom 13.11.1991 or 31.3.1994 or 1.7.1996; or in the alternative, to quash thesaid Rules in particular the proviso to Rule 4(1) of the said Rules.
(iii) to withdraw the draft gradation list of District Judges circulated on30.3.2007 and make the said list as on 13.11.1991, or 31.3.1994 or 1.7.1996on the basis of entry of the Judicial Officers in the cadre as DistrictJudges/Addl. District Judges/City Civil Court Judges/Chief Judge and Addl.Chief Judges of Small Court."
Punj Lloyd Limited v. Corporate Risks India Pvt. Ltd. CIVIL APPEAL NO. 1026 OF 2007 decided by TarunChatterjee & Harjit Singh Bedi, JJ. on December 11, 2008 involved the question as to whether the National Consumer Disputes Redressal Commission "was justified in dismissing the complaint in limine on the ground that the case involved disputes and questions which were contentious before issuing any notice to the respondent and without even prima facie going into the merits of the case."
State of Bihar & Ors. v. Pandey Jagdishwar Prasad CIVIL APPEAL NO.7237 OF 2008 decided by TARUN CHATTERJEE & AFTAB ALAM, JJ. on DECEMBER 11, 2008 wherein it was held:
It has been held in a catena of judicial pronouncements that even if by mistake, higher pay scale was given to the employee, without there being misrepresentation or fraud, no recovery can be effected from the retiral dues in the monetary benefit available to the employee.

SSRN Articles

In the last several years, the idea that international investment arbitration should become more transparent has gained wide acceptance. A number of NGOs have successfully drawn upon the public character of trade and foreign investment disputes to gain access to the proceedings as amici curiae. But why should amicus curiae briefs be important in the context of investment arbitration? Is the government (especially one that is democratically elected) not the guardian of the public interest? It is assumed that mere presence of the government as a party to the arbitration ought to assure the public that "its case is in good hands" and that the public interest will be strenuously defended. But is the public so assured? Should it be so assured? Using the foregoing as the point of departure, this paper aims to contribute to the ongoing debate about the desirability of accepting or rejecting amicus briefs in investment arbitration by enumerating, justifying and analyzing the benefits of accepting such briefs.
The "Weberianism" of the modern age derives from the influence of three theoretical concepts in Weber's work. First, Weber described the development of "logically formal rationality" in governance as central to the rise of Western capitalist democracy. Second, Weber posited that Protestant religious ethics had helped to promote certain economic behaviors associated with contemporary capitalism. Third, Weber identified the rise of bureaucratic governance, as the primary means of realizing logically formal rationality, as distinctly modern. This essay examines the influence of these basic insights on discourse on legal reform in developing countries. The prioritization of legal and institutional reforms to achieve "good governance" seems to be part of a larger intellectual shift to the problems and challenges of "governance" in a globalizing world. Transmitters of Weberian analysis in this milieu, however, have at times elided important nuances in Weber's own thought -- nuances that, if incorporated, might have significant implications within development discourse. The paper's objectives are: first, to conduct an intellectual history that shows how one of the greatest sociologists influenced an increasingly important area of law reform in the age of globalization; second, to surface critiques arising within that field of law reform; and third, to suggest that there may be some connection between the two. In that sense, the paper seeks to make a contribution to two discourses: to enrich the study of the history of legal thought the reception of an important thinker has shaped contemporary law and policy in a relatively understudied field in the academy; and at the same time to underscore and contextualize policy critiques that have arisen in an increasingly important field of practice.

Wednesday, December 10, 2008


MCOCA not an option yet, but no problem keeping Kasab in custody - The existing provisions of the IPC and special laws are capable of keeping the sole alleged terorist in custody to facilitate investigation- the news . This need to inform the evergreening debate about more tougher laws to combat terrorism, whenever terrorist attack occures.

SC Judgements on Arbitration

Many arbitration judgements by the SCI these days- nothing of the eyebrow-raising sort though... (Thank god for that!!!)
Speech and Software Technologies (India) Pvt. Ltd. v. Neos Interactive Ltd. Arbitration Application No. 22 of 2007 decided by J.M. Panchal, J. on December 05, 2008. Case pertains to appointment of arbitrator under S. 11(6) of the Arbitration & Conciliation Act, 1996
M/s. Universal Insulators & Ceramics Ltd. v. U.P.Power Corporation Ltd. & Anr. CIVIL APPEAL NOS.7186-7189 OF 2008 decided by R. V. Raveendran & D. K. Jain, JJ. on December 5, 2008. This case relates to a dispute that arose in 1985 and remains unresolved even today. The Court has appointed an arbitrator for another round of arbitration and litigation.

Monday, December 8, 2008

SC Judgments

Appreciation of circumstantial evidence and principles to be followed while sitting in appeal over an aquital order of the lower courts
State of Goa v. Pandurang Mohite, Criminal Appeal Nos. 598-599 of 2002 . Date of Judgment 8-12-08

Sunday, December 7, 2008


Marriage void under Hindu law if spouse misrepresents religion
British citizenship rules tightened
Another TV channel gets notice

SC Judgments

Silence is Golden and a Human Right - SC on Noise Pollution
Farhd K. Wadia v. Union of India & Ors., Civil Appeal No. 7131 of 2008. Date of Judgment 5-12-08

Dismissing an appeal against the rejection of a petition for certiorari, seeking direction to the Maharashtra Government to grant permission for music concert in “silence zone” (as per Rules 2 (e) and 2(f) The Noise Pollution (Regulation and Control) Rules, 2000,) the SC reminds us about the value of silence.
Interference by the court in respect of noise pollution is premised on the basis that a citizen has certain rights being `necessity of silence', `necessity of sleep', `process during sleep' and `rest', which are biological necessities and essential for health. Silence is considered to be golden. It is considered to be one of the human rights as noise is injurious to human health which (sic) is required to be preserved at any cost.
The court highlights the judgment of the Calcutta High Court in Om Birangana Religious Society v. State of West Bengal [decided on 11th August, 1998] and the guidelines issued therein
"(a) There will be complete ban on the use of horn type loud-speakers within city residential areas and also prohibit the use of play back of pre-recorded music etc. through such horn type loud- speakers unless used with sound-limiter.
(b) In cultural functions which are live functions, use of such pre-recorded music should not be used excepting for the purpose of announcement and/ or actual performance and placement of speaker boxes should be restricted within the area of performance facing the audience. No sound generating devise should be placed outside the main area of performance.
(c) Cultural programmes in open air may be held excepting at least before three days of holding Board/ Council Examinations to till examinations are completed in residential areas or areas where educational institutions are situated.
(d) The distance of holding such functions from the silence zones should be 100 meters and in so far as Schools, Colleges, Universities, Courts are concerned, it will be treated as silence zones till the end of the office hours and/ or the teaching hours. Hospitals and some renowned and important Nursing Homes will be treated as silence zones round the clock."
The present appeal was rejected on a technical ground. The rejection of permission to conduct the concert by the Government was because of the decision of the HC of Bombay on 25.09.2003 in a PIL filed by Dr. Yeshwant Trimbak Oke & Ors. Which sought direction to the State to curb noise pollution in general in the city of Mumbai and particularly during the festive seasons. The present appellant is not a party to that suit and nor has the petitioner of the PIL is impleaded in this proceedings. Therefore when “[t]he High Court in the earlier public interest litigation, being Writ Petition No. 2053 of 2003, admittedly passed an order of injunction. If the said order was required to be modified or clarified and/or relaxation was to be prayed for and granted in regard to Rang Bhavan, the appellant should have filed an application in the said proceeding. An independent public interest litigation to obtain a relief which would be contrary to and inconsistent with the order of injunction passed by the court was not maintainable. Inter alia, the doctrine of comity or amity demands the same.”

Saturday, December 6, 2008


Redefining the role of the state - Editorial of The Hindu
From accounts to accountability - A pathological examination of shifting the payment of wages under NREGA through banks, by Jean Drèze and Reetika Khera
Kandahar hijack: passengers to get compensation - The compensation is awarded under the Consumer Protection Act

Friday, December 5, 2008

SC Judgments

Its all in the cause tilte - the (non- existence of ) difference between Arts. 226 and 227 of the Constitution of India in certain aspects
State of Madhya Pradesh & Ors. v. Visan Kumar Shiv Charan Lal , Civil Appeal No. 7134 of 2008. Date of Judgment 5-12-08
The HC of Madhya Pradesh refused to entertain an appeal under Letters Patent. The reason was that it was hit by Clause 15 of the Letters Patent, since the order appealed against is presumed to be made under Art. 227 of the Constitution.

The order (by the Labour Court under under Section 10 of the Industrial Disputes Act, 1947) appealed against was filed under both Articles 226 and 227.

Clause 15 prescribes as follows
“… [A]n appeal shall lie to the said High Court … from the judgment (not being ajudgment passed in the exercise of appellate jurisdiction in respect of a decree or order made in the exercise of appellate jurisdiction by a Court subject to the superintendence of the said High Court, and not being an order made in the exercise of revisional jurisdiction …) of one Judge of the said High Court or one Judge of any Division Court …"
The clause do not provide for an appeal against an order which is passed in the exercise of appellate jurisdiction. The HC in this case has presumed the order of the Single Judge to be one under appellate jurisdiction as Article 227 is there in the cause title and rejected the appeal.
SC in this case attempted a mapping of the principles that offer guidance in the issue and held that the HC went wrong in rejecting the appeal.
The principles are given below;
‘1. The pleadings in the writ petition, nature of the order passed by the learned Single Judge, character and the contour of the order, directions issued, nomenclature given the jurisdictional prospective in the constitutional context are to be perceived. It cannot be said in a hypertechnical manner that an order passed in a writ petition, if there is assail to the order emerging from the inferior tribunal or subordinate Court has to be treated all the time for all purposes to be under Article 227 of the Constitution of India
2. It cannot be put in a state jacket formula that any order of the learned judge that deals with an order arising from an inferior tribunal or the subordinate court is an order under Article 227 of the Constitution of India and not an order under Article 226 of the Constitution.
3. An order in a writ petition can fit into the subtle contours of Articles 226 and 227 of the Constitution in a composite manner and they can coincide, co-exit, overlap imbricate.
4. When the High Courts have exercised jurisdiction to command a writ of certiorari or to exercise supervisory jurisdiction under Article 227 … the distinction between the two jurisdictions stands almost obliterated in practice. Probably, this is the reason why it has become customary with the lawyers labelling their petitions as one common under Articles 226 and 227 of the Constitution, though such practice has been deprecated in some judicial pronouncement.
5. The broad general difference between the two jurisdictions are
a. Firstly, the writ of certiorari is an exercise of its original jurisdiction by the High Court; exercise of supervisory jurisdiction is not an original jurisdiction and in this sense it is akin to appellate, revisional or corrective jurisdiction.
b. Secondly, in a writ of certiorari, the record of the proceedings having been certified and sent up by the inferior court or tribunal to the High Court, the High Court if inclined to exercise its jurisdiction, may simply annul or quash the proceedings and then do no more. In exercise of supervisory jurisdiction, the High Court may not only quash or set aside the impugned proceedings, judgment or order but it may also make such directions as the facts and circumstances of the case may warrant, maybe, by way of guiding the inferior court or tribunal as to the manner in which it would now proceed further or afresh as commended to or guided by the High Court. In appropriate cases the High Court, while exercising supervisory jurisdiction, may substitute such a decision of its own in place of the impugned decision, as the inferior court or tribunal should have made.
c. Lastly, the jurisdiction under Article 226 of the Constitution is capable of being exercised on a prayer made by or on behalf of the party aggrieved; the supervisory jurisdiction is capable of being exercised suo motu as well.’

SC Judgement

A recent SC judgement on arbitration was reported here. The case pertains to simultaneous continuance of a civil and criminal proceeding. The details of the case are set below.
M/s Sri Krishna Agencies v. State of A.P. & Anr. CRIMINAL APPEAL NO. 1792 OF 2008 decided by ALTAMAS KABIR & MARKANDEY KATJU, JJ. on November 11, 2008.
Facts: A dispute between M/s Sri Krishna Agencies and the State of AP was pending before the arbitral tribunal. The said dispute was relating to an agreement between the parties. In relation to the said dispute, the Respondent had apparently issued three cheques for Rs. 5 Lakhs each to the Appellant but had issued orders to stop payment to the Appellant.
The Appellant had filed before the IInd Additional Chief Metropolitan Magistrate, Hyderabad, under Section 138 of the Negotiable Instruments Act. Subsequently, the Respondents approached the Andhra Pradesh High Court for quashing the above proceedings on the ground that arbitration proceedings were pending between the parties, which the High Court granted.
On appeal, the Supreme Court held that the High Court was wrong in quashing the said proceedings because:
  1. When a cheque was dishonoured "separate liability arose in terms of Section 138" of the Negotiable Instruments Act and the arbitration proceedings and the proceedings under Section 138 arise from separate causes of action.
  2. The Supreme Court in Trisuns Chemical Industry vs. Rajesh Agarwal and Ors., (1999) 8 SCC 686 has held:

We are unable to appreciate the reasoning that the provision incorporated in the agreement for referring the disputes to arbitration is an effective substitute for acriminal prosecution when the disputed act is an offence. Arbitration is a remedy for affording reliefs to the party affected by breach of the agreement but the arbitrator cannot conduct a trial of any act which amounted to anoffence albeit the same act may be connected with the discharge of any function under the agreement. Hence, those are not good reasons for the High Court to axe down thecomplaint at the threshold itself. [The Court also held that quashment of FIR or a complaint in exercise of inherentpowers of the High Court should be limited to very extreme exceptions ]

Hence the Supreme Court concluded that "there can be no bar to the simultaneous continuance of a criminal proceeding and a civil proceeding if the two arise from separate causes of action."

Thursday, December 4, 2008

SC Judgments

Guidelines for the use of inherent power of the court under section 482 of Cr. P.C
Mahindra & Mahindra Financial ServicesLtd. and Anr. v. Rajiv Dubey, Criminal Appeal No. 1966 of 2008. Date of Judgment 4-12-08

The power under the section is designed to prevent abuse of the process of courts and also to secure the ends of justice. Though it is impossible and unadvisable to lay down comprehensive guidelines or formulae, offering illustrative contingencies would be of help. In this judgement the SC offers certain guiding principles, quoting from an earlier determined case. [State of Haryana v. Bhajan Lal (AIR 1992 SC 604)]

“(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."

Technicality and incompetents wins at the cost of environment
Gujarat Pollution Control Board v. M/s Nicosulf Industries & Export Pvt. Ltd. and Ors. Criminal Appeal No. 9 of 2002. Date of Judgment 4-12-08

An interesting case which portray the hair splitting arguments on technicality (as to who is competent to file a complaint) and the difference between the “power to sanction a complaint” and “power to authorise the complaint” under sections 49 and 11-A of the Water (Prevention and Control of Pollution) Act, 1974.

The incompetent way in which the Gujarat Pollution Control Board collected and processed the sample opened up an easy route of escape to the allegedly polluting firm.

Was thinking about the accountability of the officers of the Board, who has acted carelessly (or deliberately carelessly).

Designing a remedy
Kashiben Chhaganbhai Koli v. State of Gujarat, Criminal Appeal No. 1967 of 2008. Date of Judgment 4-12-08

The SC in this appeal found a way to design a remedy which is legally correct at the same time not oblivious of reality.

The court rejected the appeal and affirmed the conviction order of the lower court but ingeniously devised a method to show compassion towards the accused who, according to her counsel, is unable to walk due to recent paralytic attack.

Court granted the appellant three months time to surrender herself, as the counsel proposed the plan of approaching the Governor for reduction of sentence under Article 161 of the Constitution.

SSRN Articles

There are some extremely good articles at SSRN on arbitration and contract law. Abstracts of some of the articles are given below.

As the title suggests, this article focuses on choice-of-law problems surrounding domestic parties who chose international law to govern their disputes. This phenomenon is becoming more and more common and is creating a great deal of confusion in many sectors of the legal community. At the same time, legislation to deal with the issue has not kept pace. This article discusses the problem, its eccentricities, and how several different attempts have been made to deal with the problem. It also looks at an illustrative case, Grecon v. Horner, from the United States Court of Appeals for the Fourth Circuit, in order to illustrate the problem and the results-oriented approach that I advocate.
Mauricio Gomm Santos Sr. & Smith II, Addressing the New York Convention's Latest Challenge: Enforcing Annulled Foreign Awards
After the case of TermoRio v. Electranta, it appears that American courts have a stronger direction regarding the enforcement of arbitral awards annulled in the country of origin. The TermoRio court decided that it could not enforce in the United States an arbitral award annulled in the country of origin unless there are extraordinary circumstances or evidence of fraud. For parties seeking to enforce annulled awards, TermoRio will be an obstacle. But there still may be various avenues for enforcing annulled awards, and this article analyzes some of them.

[The decision which the authors referred to can be found here]

Wednesday, December 3, 2008

SC Judgements

Royal Education Society v. LIS (India) Construction Co. Pvt. Ltd CIVIL APPEAL No. 7012 OF 2008 decided by Lokeshwar Singh Panta & Aftab Alam, JJ. on December 02, 2008

Tuesday, December 2, 2008

Law Commission Reports

[For those who do not have any time to read the entire report (myself included!) here are the conclusions and recommendations:
6.1 Issuing a cheque which is dishonoured is crime in India. But we hardly see any people being punished for bouncing of cheques. People are dissuaded to trust bank cheques. This all because courts in India are awefully overburdened with dishonoured cheque cases.

6.2 Legal experts are unanimous in their opinion that the present system of criminal jurisprudence is destined to fail if the backlog of cases is not substantially reduced. Recently, the Law Commission of India mooted the concept of “plea-bargaining” – pre-trial negotiations between the accused and the prosecution in which if the accused agrees to plead guilty for the
charges leveled against him he would get in exchange certain concessions as a quid pro quo, by taking a lenient view by the courts, particularly in cases of lesser gravity. Actually, the courts have been practically following such a practice, for several years, now.

6.3 A speedy trial is not only required to give quick justice but it is also an integral part of the fundamental right of life and liberty, as envisaged in Article 21 of the Constitution of India.

6.4 The Law Commission of India is of the firm opinion that considering the alarming situation of the pendency of cases and the constitutional rights of a litigant for a speedy and fair trial, the Government of India should direct the State authorities for setting up of Fast Track Courts in the country, which alone, in the opinion of the Law Commission, will solve the perennial problem of pendency of cases, which are even summary in nature.

6.5 The Law Commission is of the view that the backlog of cheque bouncing cases need to be speedily disposed of through this measure lest litigants may lose faith in the judicial system. The commercial circles should have confidence that we have quite faster judicial system.

6.6 We, accordingly, recommend as under:
(a) Fast Track Courts of Magistrates should be created to dispose of the dishonoured cheque cases under section 138 of the Negotiable Instruments Act, 1881;
(b) The Central Government and State Governments must provide necessary funds to meet the expenditure involved in the creation of Fast Track Courts, supporting staff and other infrastructure.

Two alternatives are available to the Government of the day. One is to seek a reconsideration of the three judgments aforesaid before the Hon’ble Supreme Court. Otherwise a law may be passed restoring the primacy of the Chief Justice of India and the power of the executive to make the appointments.

Monday, December 1, 2008

SC Judgments

Appreciation of circumstantial evidence- principles restated
Baldev Singh v. State of Haryana, Criminal Appeal No. 320 of 2007. date of Judgment 1-12-08
"(1) the circumstances from which the conclusion of guilt is to be drawn should be fully established. The circumstances concerned `must' or `should' and not `may be' established;
(2) the facts so established should be consistent only with the hypothesis of the guilt of the accused, that is to say, they should not be explainable on any other hypothesis except that the accused is guilty;
(3) the circumstances should be of a conclusive nature and tendency;
(4) they should exclude every possible hypothesis except the one to be proved; and
(5) there must be a chain of evidence so complete as not to leave any reasonable ground for the conclusion consistent with the innocence of the accused and must show that in all human probability the act must have been done by the accused."
To this, court adds that the onus is on the prosecution to prove that the chain is complete and prosecution cannot rely on any false defence or plea for securing conviction on circumstatial evidence.

Power of appellate court while determining an appeal agaist the order of acquittal in a nutshell.

Batcu Venkateshwarlu and Ors. v. Public Prosecutor High Court of A.P. Criminal Appeal No. 1159 of 2001. Date of Judgment 1-12-08

"(1) An appellate court has full power to review, reappreciate and reconsider the evidence upon which the order of acquittal is founded.

(2) The Code of Criminal Procedure, 1973 puts no limitation, restriction or condition on exercise of such power and an appellate court on the evidence before it may reach its own conclusion, both on questions of fact and of law.

(3) Various expressions, such as, "substantial and compelling reasons", "good and sufficient grounds", "very strong circumstances", "distorted conclusions", "glaring mistakes", etc. are not intended to curtail extensive powers of an appellate court in an appeal against acquittal. Such phraseologies are more in the nature of "flourishes of language" to emphasise the reluctance of an appellate court to interfere with acquittal than to curtail the power of the court to review the evidence and to come to its own conclusion.

(4) An appellate court, however, must bear in mind that in case of acquittal, there is double presumption in favour of the accused. Firstly, the presumption of innocence is available to him under the fundamental principle of criminal jurisprudence that every person shall be presumed to be innocent unless he is proved guilty by a competent court of law. Secondly, the accused having secured his acquittal, the presumption of his innocence is further reinforced, reaffirmed and strengthened by the trial court.

(5) If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court."

SC Judgements

Union of India v Parmal Singh & Ors. Civil Appeal Nos. 2319-2327 of 2001 decided by R.V. Raveendran and Lokeshwar Singh Panta, JJ. on 25.11.2008.

Case relates to payment of interest due to delay in payment of compensation for acquisition of requisitioned property. The Court held:

When a property is acquired, and law provides for payment of compensation to be determined in the manner specified, ordinarily compensation shall have to be paid at the time of taking possession in pursuance of acquisition. By applying equitable principles, courts have always awarded interest on the delayed payment of compensation in regard to acquisition of any property. When a requisitioned property is acquired, as possession had already been taken from the landholder, the compensation becomes payable from the date of acquisition. When a property is requisitioned, the land owner is compensated for the denial of possession by paying compensation based on the rent it would have fetched had it not been requisitioned. But once the property is acquired, the rent is stopped, as compensation based on open market value becomes payable against acquisition. Therefore while interest is payable, it is not awarded from the date of requisition (taking over of possession) but only from the date of acquisition. This principle has been recognized and applied by courts consistently. Whenever the Arbitrator or High Court increases the compensation for the acquired land, the increase relates back to the date of acquisition as they are merely doing what the Special Land Acquisition Officer ought to have done in the first instance. Therefore, interest is awardable on the increased amount also from the date of acquisition. The said general principle will not apply in two circumstances. One is where a statute specifies or regulates the interest. In that event, interest will be payable in terms of the provisions of the statute. The second is where a statute or contract dealing with the acquisition specifically bars or prohibits payment of interest on the compensation amount. In that event, interest will not be awarded. Where the statute is silent about interest, and there is no express bar about payment of interest, any delay in paying the compensation or enhanced compensation for acquisition would require award of interest at a reasonable rate on equitable grounds. We are fortified in this view by the enunciation in Satinder Singh v. Umrao Singh MANU/SC/0292/1961, which has been reiterated in Hirachand Kothari v. State of Rajasthan 1985 (Supp.) SCC 17.
[The Respondent's land was requisitioned in 1963. The same land was acquired in 1965. The Special Land Acquisition officer, Meerut, determined the compensation which was not to the satisfaction of the Respondent. Therefore the matter was referred to arbitrator as per the concerned statute. Award for compensation was made by the arbitrator on 16.3.1979. Writ was filed by the Respondent for increasing the compensation. the Allahabad decided the matter and gave the Order on 1.4.1999. An appeal was filed to the Supreme Court which decided the matter on 25.11.2008. Thus, it has taken decades to resolve a simple land acquisition compensation dispute. Solutions for such delays, anyone?]

Recent Judgements

BLB Institute of Financial Markets Ltd. v. MR. Ramakar Jha OMP 241/2008 decided by Reva Khetrapal, J. of the Delhi High Court on 22.09.2008

The petitioner Company entered into an employment contract between with the Respondent. Petition was filed for seeking interim relief against the Respondent thereby preventing him from joining any other employment or engaging directly or indirectly in any business similar to that of the petitioner for the remaining period of his employment. [The agreement in question contained a peculiar termination clause: "As committed above, Mr. Ramakar Jha shall work with the company for 5 years with 3 years as minimum compulsory period, but in case of some extra ordinary situation, if Mr. Jha decides to quit his job after the completion of the compulsory period, then he can do so by serving a prior notice of at least 6 months in writing to the company."]

The contentions of the parties as contained in the Judgement are herebelow:
(a) a negative covenant restraining the right of the employee, during the subsistence of his service contract, to engage in any business similar to, or competitive with that of the employer, cannot be said to be a covenant in restraint of trade and, therefore, hit by Section 27 of the Contract Act.
(b) Even de hors the law, in equity jurisdiction, it is not open for the respondent to state that the relief prayed for by the petitioner of restraining the respondent from joining any other employment or engaging directly or indirectly in any business similar to that of the petitioner for the remaining period of his employment, is unjustified.(c) A contract of service is essentially a contract of trust and faith and the material resources, infrastructure, etc. of the employer cannot be allowed to be used by a rival, through the conduit of an employee divulging the confidential systems developed and used by the petitioner, and that too during the subsistence of the employee's service agreement with the employer.
(a) Section 9 of the Arbitration and Conciliation Act, 1996 cannot be invoked by the petitioner to claim interim relief as the aforesaid provision does not empower the Court to grant interim measures save those which are necessary for the preservation of "property".
(b) The consequences for the breach of the negative covenant are not contained in the contract and, as such, the said covenant cannot be enforced.
(c) The negative covenant relied upon by the petitioner is in restraint of trade and, therefore, hit by Section 27 of the Contract Act.
In the Petition before this Court, the Court had to firstly decide whether a Section 9 relief as prayed can be claimed. In this regard, the Delhi High Court held that it had the power to issue the interim injunction as prayed for by the Petitioner because:
1. Sub-clause (e) of Clause (ii) of Section 9 clearly stipulates that the Court shall have the power to order "such other interim measure of protection as may appear to the Court to be just and convenient"
2. "the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it". There is no reference in the said Sub-clause to any property, whether movable or immovable.
3. To curtail the width and magnitude of the said clause so as to make it applicable only to movable and immovable property, in my view, would be wholly unjustified, apart from being in violation of all canons of interpretation. Clearly, the provisions of Section 9 of the Act must be allowed to go to the rescue of the petitioner, who has already invoked the arbitration clause.
The contention of the learned Counsel for the respondent that since the consequences for the breach of the negative covenant are not contained in the contract and in view of the fact that no penal consequences, either of a civil nature or of a criminal nature, are spelt out for the aforesaid breach, the said negative covenant cannot be enforced, is, to my mind, equally specious and unsustainable in law
On the contention that the Covenant contained in this agreement is in restraint of trade, the Court, relying on Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd. (1967) 2 SCR 378, Superintendence Company of India (P) Ltd. v. Sh. Krishan Murgai (1981) 2 SCC 246 and Percept D'Mark (India) (P) Ltd. v. Zaheer Khan and Anr. (2006) 4 SCC 227, held:
Finally, as regards the submission of the learned Counsel for the respondent that the covenant in the instant case is a negative covenant, which is in restraint of trade and the said covenant cannot, therefore, be enforced against the respondent, in my considered opinion, the Supreme Court in Golikari's case and in Murgai's case has unambiguously laid down the law in respect of negative covenants which are hit by Section 27 of the Contract Act and those which are valid under the said Act... Considerations against restrictive covenants are different in cases where the restriction is to apply during the period after the termination of the contract than those in cases where it is to operate during the period of the contract. Negative covenants operative during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded as restraint of trade and therefore do not fall under Section 27 of the Contract Act.
In the instant case, indubitably the respondent is in breach of the negative covenant contained in his service agreement, during the subsistence of his service agreement with the petitioner, and the doctrine of restraint of trade cannot therefore be held to apply. The respondent must, accordingly, in my opinion, be held to be bound by the terms of his service agreement, at least till such time as the arbitrator renders his award on the dispute between the parties.
The petitioner has thus made out a prima facie case for the grant of interim relief under Section 9 of the Act, restraining the respondent from seeking employment with any business rival of the petitioner or with any organization dealing in Stock Market/Capital Market/Financial Market Education Institute.
The balance of convenience also tilts in favour of the petitioner, as the petitioner cannot be monetarily compensated, if any of its trade secrets or information relating to its courses, course materials and business is divulged by the respondent to any other organization carrying on a business akin to that of the petitioner.
Irreparable injury would also undoubtedly be caused to the petitioner's business, if such an eventuality occurs.
In view of the aforesaid conclusion, the respondent is restrained, during the pendency of the arbitration proceedings before the Arbitrator, from joining any employment or engaging directly or indirectly in any business or associating himself in any capacity with any organization dealing in Stock Market/Capital Market/Financial Market Education Institute or serving whether as principal, agent, partner or employee or in any other capacity, either full time or part time in any business whatsoever similar to that of the petitioner. The respondent is further restrained from divulging to any other business/firm or company any of the secret processes or information relating to the courses, course material and business of the petitioner as per the proprietary, confidential systems developed and used by the petitioner. The respondent is also restrained from joining any competitor of the respondent and from alluring or enticing any of the existing employees of the petitioner to join any other business/firm or company