In House Counsels as Judicial Members in Tribunals such as NCLT and NCLAT

 Please refer to the recent decision of the Hon'ble Supreme Court of India in SBI v. The Consortium of Mr. Murari Lal, 2024 INSC 852, where it has been held:

"183. The Members often lack the domain knowledge required to appreciate the nuanced complexities involved in high-stake insolvency matters in order to properly adjudicate such matters. It has been noticed that the benches of NCLT(s) and NCLAT don’t have the practice of sitting for the full working ours. They are particularly lacking in the capacity to manage the growing number of cases and giving undivided attention required in such matters. There are serious issues in the manner in which the insolvency matters are listed. There is no effective system in place before the NCLTs for urgent listings."

Since liberalisation and globalisation, and after the advent of national law schools, there has been a considerable expansion in the legal profession. One such set of legal professionals are the in house counsels. They are not just legal professionals but also combine as excellent management professionals.

Unfortunately, the Indian legal system has not been able to tap this excellent resource for selection in tribunals and courts. On the one hands higher courts such as High Courts and Supreme Court keep complaining about the lack of professionalism in the tribunal members but on the other hand, excellent and well-qualified professionals are, it is understood, not eligible for being appointed as judicial members of tribunals. It appears as per the current state of law that they are at the most eligible for appointment as technical members.

In this background, the following two solutions could possibly be considered: One, In house counsels could be considered for selection as technical members, in the short run, so that the tribunals are equipped with people who understand not only the mechanics of law but also of business, and two, in the long run, the relevant statutes/ rules can be amended to enable appointment of in house counsels as judicial members of such tribunals.

Role of Academics and Law Practice in Law Reform: A few Thoughts

Whenever the law is not entirely clear on a subject, the judge is called upon to clarify the law. When the law is clear, the judge has to apply the law to facts straightaway. But when the law is not clear, it is an entirely different ball-game:

The judge faces a lot of constraints when faced with law that is not entirely clear: the judge is burdened and constricted by the facts before her. Another constraint is the submissions made by the advocates, in aiding the court in clarifying the law. Another important constraint is the temporal constraint that the judges faces considering the sheer volume of work that the judge is called upon to do in quick time. Another constraint is the precedents. The judge is bound by the doctrine of precedents to comply with the precedent. These constraints may have the effect of the judge in not dealing with a particular facet of law. 

But how should the legal system address this problem? Precedential system is costly. It cannot be expected that a larger bench would immediately deal with that facet of law. To give an example, Bhatia International was decided in 2002. It was only a decade thereafter, in 2012, that BALCO overruled Bhatia. In that decade, Bhatia created havoc and resulted in an unclear law with lawyers making tons of money owing to the lack of clarity and parties, unfortunately, suffering. The SC in BALCO had to rely on the prospective overruling doctrine to ensure that no further confusion is created.

It is at this juncture that the academic machinery's role comes into the picture. The academician's dharma is to critically evaluate the judgement not only on the law that the judge has discussed but also on the points that that judge has not discussed. By "academician", it is not only the law university that is meant but also the law practitioner who dons the academician's role in critically evaluating the decision. 

As compared to the judge, the academician is relatively in a better position. She can sit in the comforts of a University with time on her side and a library at her beck and call. Consequently, it is the sacred duty of an academician to engage in critically evaluating the law and the judgment.  

In critiquing the law, the words of HM Seervai, quoted at the top of the Practical Academic blog, are pertinent: "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 mus lead to the discovery of right reasons, or better reasons than I have been able to give, and the cause is served just as well."

The law practitioner's duty then begins. She is duty-bound to critically evaluate the criticism by the academician, take it and present it before the court in another case, or rarely, in the very case the court decided. It is then left to the court to examine whether the judgment was correctly decided.

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

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

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

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

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

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

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

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

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

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

The Debate on the Law Commission's Questionnaire on the Uniform Civil Code: Some Comments

This post pertains to Questionnaire published by the Law Commission of India about reforming personal laws and the uniform civil code. The post is in two parts (both published in this post). The first part of the post attempts to answer the questionnaire. The second part of the post discusses a more serious aspect about the role of the Law Commission of India.

I: Responses to Law Commission's Questionnaire

[Disclaimer: This post represents the author's, and not the blog's view, on the questionnaire. The lead co-author, who is an expert in constitutional law (and this author is neither an expert on constitutional law nor on personal laws), we're sure, has a more nuanced perspective to the entire issue.]

The questions in the Commission's questionnaire are in italics.

1. Are you aware that Article 44 of the Constitution of India provides that “the State shall endeavour to secure for the citizens a Uniform Civil Code throughout the territory of India”? 

Yes. This matter requires further initiatives for the following reason:

The Directive Principles of State Policy (hereinafter “Directive Principles”) have been enshrined in the Indian Constitution primarily in order to promote social and economic justice. As per Article 37, these Principles shall be “fundamental in the governance of the country” and the Constitution of India has mandated “the State to apply these principles in making laws.” In the course of the Constituent Assembly debates, several members opposed to the idea of a uniform civil code, it was observed that a uniform law applicable to all would promote national unity and, at the same time, no legislature would forcibly amend personal law if people were opposed to it. 

At this juncture in Indian polity, considering the opposition to a complete disregard to personal laws and bringing in a uniform civil code it its stead, a civil code on aspects hitherto covered by personal laws may be a drastic move and may lack legitimacy. As noted by the Constituent Assembly, ultimately, the citizens should be subjected to one civil code. Hence, introduction of a Uniform Civil Code should be a gradual process. At the same time, personal laws are being regarded as biased, especially against gender. Many a time, personal laws operate harshly against a particular gender, which is against the Constitution of India. These realities must be kept in mind in a debate on the subject. 

Broadly, the reforms towards a Uniform Civil Code should be a two-step process. The first step should be bring about comprehensive reforms to personal laws thereby eliminating all aspects which discriminate against a particular gender and bringing them in line with the fundamental rights and the Constitution of India. The first step includes codification of customary practices in each personal laws and ensuring a uniform code under each personal law. Once sufficient reforms are achieved, the second step is to introduce a Uniform Civil Code.

Q. No. 2 regarding the ambit of a Uniform Civil Code does not arise in view of Answer to Q. No. 1. However, if introduced it should cover all aspects presently covered by personal laws. 

3. Do you think the existing personal laws and customary practices need codification? 

Personal laws and customary practices should be codified to bring clarity in them and prevent uncertainty in application. Codification will be very helpful in bringing such practices in line with the Constitution.

4. Will the Uniform Civil Code or the codification of personal laws and customary practices bring about gender equality?

Yes. Both per se cannot strictly bring about gender equality. But a UCC or codification will help bring certainty to these laws and practices and will enable ease of testing them for constitutional consonance. 

5. Should the Uniform Civil Code be optional?

As stated in answer to Q. No.1, in the two-step process, neither should be optional. The first step in codifying and reforming personal laws and the second step in bringing about a Uniform Civil Code. 

6. Polygamy, polyandry and similar customary practices should be banned as they are not in tune with the current circumstances. 

Reforming personal laws should include these aspects as well.

7. Triple talaq operates harshly against women and should be abolished in toto.

8. Do you think that steps should be taken to ensure that Hindu women are better able to exercise their right to property, which is often bequeathed to sons under customary practices?

None of the three options suggested by the Commission are appropriate. Following are the measures that could be adopted:

It is true that in many families, the testator bequeaths immovable property to sons rather than daughters. This author had the opportunity to deal with a similar case. While it is acknowledged that this is predominantly a social issue, a few safeguards in law could be taken: A provision should be introduced in the Indian Succession Act, 1925 to the effect that any bequest denied to a female heir but made to a male heir on the ground that the testator spent money and resources in getting her married or such similar reason should be void.

Another measure that could be adopted is that wills which deny benefit to a female heir but which grant the benefit to a male heir should be viewed as a suspicious circumstance per se. This would be rule of evidence than a substantive legal rule. This principle should be statutorily recognized so that the burden lies on the propounder to establish that there were sufficient reasons to deny the female heir of the bequest. 

9. Do you think that a two-year wait period for Christians violates Christian women’s right to equality?

Yes, it does. The wait period should be made uniform across all religions. The present two-year wait period operates as a source of corruption. Judges at their option apply decisions of certain High Courts (Kerala, the Karnataka and Bombay [Nagpur Bench] High courts) reading the two year waiting period as one year. 

10. Do you think that there should be a uniform consent age for marriage across all personal laws?

Yes. Consent is a matter of body and mind and has very little to do with which religion a person belongs to.

11. Do you agree that all religious denominations should have common grounds for divorce?

c. Not necessarily, However, the grounds should be the same for men and women. 

12. Would a uniform civil code address the problems of insufficient maintenance?

Yes it would. Even if the (suggested) first step to codify and reform personal laws is implemented as a first step, the law on maintenance should be able to adequately address the problem of insufficient maintenance. This is because maintenance is more a matter of economic security to ensure that the woman leads a dignified life and is not at all a matter of religion. 

13. How can compulsory registration of marriages be implemented better?

a. Temples, churches, mosques and other religious places which conduct marriages should be obligated to counsel the parties to the marriage to get their marriage registered.

b. Before issuing identity cards such as Aadhar Card, licence, ration card or documents such as passports, etc., the husband or the wife or the parent, as the case may be, applying for the said document, should furnish proof of marriage registration irrespective of the religion. 

14. What measures should be taken to protect couples who enter into inter-religious and inter-case marriages?

a. Special Marriage Act should be made simpler. Registration offices should not insist on producing marriage cards or receipts of proof of marriage, which they do in case of such marriages, even though the Act does not strictly mandate it. The Registration offices should, instead be offices where marriage is conducted in the presence of sufficient witnesses.

b. Where such marriages take place or registrations take place, the same should be adequately videographed and documented.

c. Special Protection Homes should be introduced in such cases where the bride and the groom fear their safety. Suitable counselors should be appointed. Special training should be given in trades and crafts to them and suitable economic opportunities such as jobs in self-help groups, etc. should be facilitated. 

15. Would a uniform civil code infringe an individual’s right to freedom of religion?

No, it would not. If a uniform criminal law does not infringe an individual right’s to freedom, a uniform code will not infringe on an individual right to freedom of religion. Further, Constitution of India is supreme and anything that conflicts with the Constitution cannot remain above the Constitution. However, as stated in response to question no. 1, this is not the appopriate time for bringing about a uniform civil code. 

16. What measures should be taken to sensitise the society towards a common code or a codification of personal law?

Firstly, the codification and reforms to be brought out should be from the specific communities themselves. Such codes should come from the communities themselves. Secondly, Law Commission should assess each such code for their constitutional compatibility with jurists and experts well-versed with each personal law and thrash out all outstanding issues and thereby reform and codify personal laws. 

Once these reformed and codified personal laws are implemented and their success gauged, introduction of a Uniform Civil Code will become a legitimate exercise.

Part II: Shouldn't Law Commission be Made an Independent Statutory Body?

The recent attack by certain sections of certain religions vehemently attacked the Law Commission's questionnaire. Among other allegations, the prominent one was that the questionnaire was an attempt by the Government-in-power to target certain religious communities. Irrespective of the validity of such a criticism, such comments reflect poorly on the Law Commission. The Commission is supposed to be a prestigitous body instrumental in initiating, discussing and suggesting reforms in law. Such allegations lower the image of the Commission. Another aspect is that the task of the Commission inherently involves the possibility of criticising the Government-in-power's laws and testing their effectiveness. Often the views of the Commission can (and at times, should) be in contradiction with the Government's views. For these reasons, the Law Commission must be an independent statutory body. It is time for a suitable legislation for making the Law Commission a statutory body and ensuring its independence and competence by a suitable process constituting it and laying down its framework. 

(P.S. Forgive us readers for not posting Part II of Sasan Power. We are in the process of completing the second part (Part II will deal with the MP High Court decision) and we will also post the concluding part hopefully by next week. Lots to post on, especially the recent decision of the Supreme Court on arbitrability of disputes involving allegations of fraud. )

Corrupt Cricket- a Sports fraud

India has suddenly woken up to the fact of deficient laws to deal with spot fixing/match fixing in the wake of recent IPL events of fraud. Presently the offence is booked under Sections 409 of the Indian Penal Code. Advocate Kaleeshwaram Raj has written in Malayala Manorama Daily (vernacular) about the possibility of using Section 415, 418 and 120 of IPC as well and suggested these to be more appropriate than Section 409. He has also pointed out the mention in Delhi Police Act Section 108 about 'cheating at games' as an offence under section 415 of IPC.

Mapping of laws world over on sports fraud like match fixing points to two major kinds of approaches.

1. Certain Jurisdictions treat this as a general offence and bring it under fraud and cheating
2. Others treat this as specific offence of sports fraud and prescribes punishments for it

India belong to the frrst category. Within European Union itself, jurisdictions differ in dealing with sports fraud. Majority of nations in EU have addressed sports fraud within the band of corruption, especially private corruption. ( See here for details on European Law on sports fraud). Australia has come out with a policy on Match-fixing in sports. It has proposed a law in March this year with a punishment up to 10 years imprisonment for the offence. 

Kapil Sibal has vouched for introduction of law in the Monsoon Session of the parliament. It would be beneficial if the government starts with a policy statement on sports fraud, define the jurisprudence and approach and then turn the same into law than knee jerk reactions of legislation which may prove deficient the very next day. 

The Potency of a Reverse Swinging Yorker

"What’s the use of law research? Even if there is good research, that doesn’t get translated into law reform. So what’s the point?"

This flurry of questions was what I had to face last night from a friend of mine for which I had no answers. Without knowing that the stumps I was trying to protect were broken into minutely thin shards sized ultra vires rei familiaris oculum and noticing the tomblike silence on the other end of the line, the friend had to say: “I know you don’t agree with me but this is my experience”. I had to swallow my pride and meekly concede: “I am not clear on where I stand so I’ll not enter into a debate.” The friend’s opinion about the futility of legal research in India has been irking me since then. 

I thought my tame surrender to the yorker was endemic probably due to my inability to get into a verbal duel without warning. So I tried to put another friend of mine in the same spot. We were chatting (on google) about what guys of our age speak often- future law life (yeah we are lawyers at the fag end of our youth). My friend wanted to become an academic. Gleefully, I sharpened my knifes and typed: “What’s the point in being an acad? Academicians have hardly contributed to law reform in India.” For a few minutes, I didn’t see the usual chatbox message “XYZ is typing”. Trying to regain his senses after being hit on the helmet by a Harold Larwood bouncer, my friend replied: “I didn’t expect this provocation”. I knew he was standing on the precipice, on the verge of falling into oblivion. He did. This was how: “Even prominent academicians like ABC, DEF, are of the same opinion”!

I was stunned at the capitulation of my friend who breathes, eats and sleeps legal research. I still fail to give in because of my optimism about how legal research can lead to law reform. Am I right, or do you think I am suffering from cognitive dissonance? 

See, Adam Liptak, When Rendering Decisions, Judges Are Finding Law Reviews Irrelevant, New York Times (19.03.2007) who bowled a similar reverse swinging toe-crusher and the responses (and reactions) to Liptak by Althouse, Berkeley Jurisprude,& Indiana Law Blog

Costs in Litigation and Arbitration (Part II)

In the last post, we had stated that the law on costs in litigation and arbitration requires reforms. The purpose, which would be achieved through a series of posts, was to provide pointers for a proper costs policy. We had, in the previous post, pointed a few problems with the costs policy. Before we look at further critique on the existing law, we jump one step ahead (for the time being) and analyse the potential of a proper costs policy and its influence on frivolous litigation. Once we are through with that, we would move on to offer further critique on the costs policy and offer pointers for reform.

One of the ways of filtering unmeritorious litigation is by imposing costs on a litigant filing such a case. An example would be the number of applications filed for appointment of arbitrator under S 11 of the Arbitration and Conciliation Act, 1996 when parties had previously agreed on a specific procedure which one of them failed to follow (S 11 provides a mechanism when the parties-chosen appointed procedure fails). Though some High Courts in the past have imposed costs on unmeritorious petitions [Larsen and Toubro Ltd. v. Sunfield Resources Pvt. Ltd MANU/MH/0880/2005; A & A Restaurant v. Dwarikajeet Restaurant 2005(1) Arb. LR 526 (All.); T.K. Aggarwal v. Tara Chand Jain 2005(Suppl.) Arb. LR 13 (Del.). In v/o Tvazhpromexport v. Mukand Ltd. 2005(3) Arb. LR 406 (Bom.)] the Court ordered the Petitioner to pay the Respondent’s costs even when the award was partially set aside), it would seem that the courts have imposed costs only in exceptional cases; non-imposition of costs on the basis of results has been the norm and imposition of costs, an exception [See, for example, the following cases where petition for setting side was dismissed but no costs levied: Delhi Jal Board v. Reliance Diesel Engineering 2005(3) Arb. LR 602(Del.); Avinash Bawa v.State of Himachal Pradesh 2005(Suppl.) Arb. LR 184 (HP); Ennore Port Trust v. Hindustan Construction Co. 2005 (Suppl.) Arb. LR 129 (Mad.)(DB); Union of India v. Pradeep Vinod Construction Co. 2005(Suppl.) Arb. LR 33 (Del.); Hindustan Copper Ltd. V. Bhagwati Gases Ltd. 2005(3) Arb. LR 622 (Rajasthan); Kanha Credit & Holding Pvt. Ltd. v. Janacim Electronics 2005(1) Arb. LR 338 (Del.); Krishna Bhagya Jal Nigam Ltd. V. G. Harishchand 2005(Suppl.) Arb. LR 470 (Kar.)(DB); Union of India v. Deccan Enterprises 2006(4) Arb. LR 444 (Del.); Haryana State Agricultural Marketing Board v. Dharam Puri 2006(3) Arb. LR 285 (P & H); Delhi Development Authority v. Manohar Lal 2006(1) Arb. LR 132 (Del.)]

For a long time, academicians have argued that the costs to borne by the parties influence the incentive to file suits [See, for example, STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OF LAW, note 146, at 429 (2004); Avery Weiner Katz, Indemnity of legal Fees, in, BOUDEWIJN BOUCKAERT & GERRIT DE GEEST (EDS.), ENCYCLOPEDIA OF LAW AND ECONOMICS (VOLUME V: THE ECONOMICS OF CRIME AND LITIGATION) 63- 94 (2000)], the rationale being that the decision whether to file an appeal or a suit is an economic question [Steven Shavell, Suit, Settlement and Trial: A Theoretical Analysis under Alternative Methods for the Allocation of Legal Costs, 11 J. Legal. Stud. 55, 58 (1982)]. The general opinion seems to be that the plaintiff will sue if the expected cost is less and the expected benefit is more. If so, an increase or a decrease in the cost or benefit would alter the plaintiff’s incentive to sue. In the past, fee shifting has been used in USA to increase or decrease the number of suits on certain laws. Hence fee shifting has the potential of becoming a potent device in reducing the number of reckless suits like petitions under S 11 to appoint arbitrators when there was nothing wrong about the agreed scheme or reckless challenge to arbitral awards.

There are primarily two models of fee shifting: (1) American Rule, (2) English Rule. In American Rule, the parties bear their own costs of the litigation and the costs are not imposed on the basis of success in the suit. Under the English Rule, the losing party bears the cost of the winning party. The assumption is that the probability of winning is 50 %. If so, under the American Rule, the plaintiff would sue where cost (Direct costs such as attorney fee, court fee and indirect fee such as the time spent on pursuing a suit and so on) incurred is lesser than the benefit received.

If, EC (Expected Costs) > EB (Expected Benefit), the plaintiff would not sue;
Conversely, if the EC < EB the plaintiff would sue.

Under the English Rule, a plaintiff would sue if the probability of winning is equal to or more than 50 % and the benefit, which is the sum of benefit received from the Defendant and the fee incurred by the plaintiff, outweighs the cost, the plaintiff would sue. Under the American Rule, even if the Plaintiff loses, litigation expenses incurred by the Defendant would not be imposed on him. Therefore, the plaintiff would sue if there is a remote possibility of winning. In the English Rule regime, the plaintiff might not sue if the probability of winning the case is less than 50 % because the expected cost might overweigh the expected benefit if he loses. Therefore adopting the English Rule would minimise the incentive to sue provided the probability of winning is less than 50 %. In the subsequent post on this topic, we will look at other models of fee shifting.

Scope of Jurisdiction to Award Interim Measures Vis-à-vis Third Parties (Part IV)

 In the previous posts (see here, here and here), we had dealt with the issue of the power of arbitrator to order Interim Measures against third parties under S 17 of the Arbitration and Conciliation Act, 1996 (Act). This post and the following ones would deal with the power of the court to order interim measures under S 9 of the Act.

The question as to whether a court has under S. 9 of the Arbitration and Conciliation Act, 1996 the power to pass an order against non-signatories to the arbitration agreement if such orders are in relation to arbitral proceedings before it has been answered both ways by the High Courts of India. In the absence of any binding decision of the Supreme Court of India (SCI) on this point, seeking orders under S 9 against third parties for whatever reasons is like walking on a tight-rope blindfolded. The court may decide on way or the other. 

The purpose of this endeavour is to point out reasons in support of the contention that courts have the power to pass orders under S 9 against third parties. We would start off by completing the chain of events that took place in the case of Cadre Estate Pvt. Ltd. v. Salochna Goyal W.P.(C) 2782/2010 and C.M. No. 5556/2010 (Stay). We had, in the previous posts on this topic, explained the scope of the power of an arbitrator under S 17 through the said decision of the Delhi High Court. We had also stated that we would be using the same case for explaining the scope of power of a court under S 9.

Before we start off with the facts in the said case, this blawgger would like to acknowledge that this series of posts was inspired by a guest post in the Lex Arbitri blog by Mr. Naravane on the issue that is the leitmotif of this post. There was a discussion in that blog on the subject (see the comments section in the post).

Since we had already addressed certain facts in the above mentioned case, we will repeat only some relevant ones for this post:

“30.09.2008:     An agreement to sell was executed between Saroj Kumar Bagaria (Bagaria) and Salochna Goyal (Goyal) by which Bagaria agreed to sell a property (Disputed Property) for consideration. Goyal alleged that she had paid Earnest Money Deposit in respect of the Disputed Property.

31.12.2008:     A Tripartite Agreement was entered into between CEPL, Saroj Kumar Bagaria (Bagaria) and the Punjab National Bank (PNB) by which CEPL purchased the Disputed Property.

Goyal alleged that Bagaria, CEPL and PNB had colluded and had wrongfully denied Goyal of the right to the said property. Dispute arose under the Agreement to Sell."

At this stage, Goyal filed a petition under S 9 of the Arbitration and Conciliation Act, 1996 (Act) for interim measures. Bagaria, PNB, CEPL, Standard Chartered Bank (SCB), and Punjab National Bank (PNB) were made respondents to the petition for interim relief to protect her rights under the Agreement to Sell.

31.03.2009:     The Delhi High Court, where the petition was filed, ordered: “The petitioner in this petition under Section 9 of the Arbitration and Conciliation Act, 1996 made respondents No.2, 3 and 4 as party to this petition who are not parties to the agreement to sell. It is submitted by counsel for the petitioner that the petitioner does not press these respondents No.2 [CEPL], 3 [SCB] and 4 [PNB] as parties to this petition and their names may be deleted from the array of parties. Accordingly, names of respondents No.2, 3 and 4 are hereby deleted from the array of parties.”

Comment:

It appears that the Delhi High Court might have stated that persons who are not parties to the Agreement to Sell cannot be made parties to a petition under S 9. Hence, Goyal was probably forced to agree to delete Respondents 2-4 as parties to the petition under S 9.

Essentially what has happened here is a case where the High Court has not afforded Goyal the right to pursue the remedy of interim relief against Respondents 2-4 (assuming Goyal was entitled to it. See the previous post on this topic where the law pertaining to the right to interim injunction despite the doctrine of lis pendens becoming applicable is briefly discussed). Subsequently, she had obtained the said relief from the arbitrator even against Respondents 2-4, who were not parties to the Agreement to Sell even though the arbitrator had, as we have argued in our previous post on this topic, absolutely no jurisdiction to do so!

This is a typical case where the court should have exercised its jurisdiction correctly and passed interim measures against even Respondents 2-4, if Goyal could establish that she was entitled to it. What might happen in this case is this: CEPL, the petitioner in the writ petition, would approach the appropriate court under Section 37 of the Act and invalidate (rightly so) the interim order passed by the arbitrator against CEPL (and Respondents 3 and 4 too probably). Goyal would be left remediless! More on this in the next post.

Costs in Litigation and Arbitration

Sections 35, 35A and 35B of the Code of Civil Procedure, 1908 deal with the law pertaining to costs. The said sections read:

“35. Costs
(1) Subject to such conditions and limitations as may be prescribed, and to the provisions of law for the time being in force, the costs of and incident to all suits shall be in the discretion of the Court, and the Court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.
(2) Where the Court directs that any costs shall not follow the event, the Court shall state its reasons in writing.

35A. Compensatory costs in respect of false or vexatious claims or defenses
(1) If any suit or other proceedings including an execution proceedings but excluding an appeal or a revision any party objects to the claim of defence on the ground that the claim or defence or any part of it is, as against the objector, false or vexatious to the knowledge of the party by whom it has been put forward, and if thereafter, as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part, the Court if it so thinks fit, may, after recording its reasons for holding such claim or defence to be false or vexatious, make an order for the payment to the object or by the party by whom such claim or defence has been put forward, of cost by way of compensation.
(2) No Court shall make any such order for the payment of an amount exceeding three thousand rupees or exceeding the limits of it pecuniary jurisdiction, whichever amount is less:
Provided that where the pecuniary limits of the jurisdiction of any Court exercising the jurisdiction of a Court of Small Causes under the Provincial Small Cause Courts Act, 1887 (9 of 1887) or under a corresponding law in force in any part of India to which the said Act does not extend and not being a Court constituted under such Act or law, are less than two hundred and fifty rupees, the High Court may empower such Court to award as costs under this section any amount not exceeding two hundred and fifty rupees and not exceeding those limits by more than one hundred rupees :
Provided, further, that the High Court may limit the amount or class of Courts is empowered to award as costs under this Section.
(3) No person against whom an order has been made under this section shall, by reason thereof, be exempted from any criminal liability in respect of any claim or defence made by him.
(4) The amount of any compensation awarded under this section in respect of a false or vexatious claim or defence shall be taken into account in any subsequent suit for damages or compensation in respect of such claim or defence.”
“35B. Costs for causing delay
(1) If, one any date fixed for the hearing of a suit or for taking any step therein, a party to the suit--
(a) fails to take the step which he was required by or under this Code to take on that date, or
(b) obtains an adjournment for taking such step or for producing evidence or on any other ground,
the Court may, for reasons to be recorded, make an order requiring such party to pay to the other party such costs as would, in the opinion of the Court, be reasonably sufficient to reimburse the other party in respect of the expenses incurred by him in attending the Court on that date, and payment of such costs, on the date next following the date of such order, shall be a condition precedent to the further prosecution of—
(a) the suit by the plaintiff, where the plaintiff was ordered to pay such costs,
(b) the defence by the defendant, where the defendant was ordered to pay such costs.
Explanation.--Where separate defences have been raised by the defendants or groups of defendants, payment of such costs shall be a condition precedent to the further prosecution of the defence by such defendants or groups of defendants as have been ordered by the Court to pay such costs.
(2) The costs, ordered to be paid under sub-section (1), shall not, if paid, be included in the costs awarded in the decree passed in the suit; but, if such costs are not paid, a separate order shall be drawn up indicating the amount of such costs and the names and addresses of the persons by whom such costs are payable and the order so drawn up shall be executable against such persons.”

As interpreted by the Supreme Court in Ashok Kumar Mittal v. Ram Kumar Gupta (January 2009)], following are some of the salient features pertaining to the above provisions:

• Awarding costs is the discretion of the court.
• The court discretion is subject to (a) limitations imposed by laws, and (b) provisions of law in force.
• Purpose of these provisions is to “recompense a litigant for the expense incurred by him in litigation to vindicate or defend his right.
• When the plaintiff has already paid the prescribed court fee, it is doubtful if costs should be imposed in favour of the state in litigation between two private parties.
• The law on costs so far as civil procedure is concerned is contained in Ss 35 and 35A. Hence, the inherent power of the court cannot be exercised to grant costs contrary to the said provisions.

Finally, the court lamented that the law on costs was “wholly unsatisfactory” as it does not deter vexatious litigation. The court held:
 

“Whether we should adopt suitably, the western models of awarding actual and more realistic costs is a matter that requires to be debated and should engage the urgent attention of the Law Commission of India.”

The court is correct in pointing out that the costs issue ought to be the subject of any immediate effort at litigation reform. Curiously, the National Litigation Policy (June 2010) of the Ministry of Law and Justice did not address this aspect. Perhaps the Ministry thought the issue was fit for the Law Commission to deal with. The Law Commission has, so far, not addressed this issue (atleast there is no report on this issue in the recent past).

This post is intended to identify a few of the many aspects that might have to be addressed to formulate a proper costs policy.

Awarding Costs is Discretionary: The courts have been consistent in maintaining that awarding of costs as per S 35 is at the discretion of the courts. [Ashok Kumar Mittal v. Ram Kumar Gupta]

S 35(2) is crucial in the interpretation of S 35. Though S 35(1) states that costs are subject to court discretion, S 35(2) seems to state that awarding costs ought to be the norm, and when the court digresses from the said norm, reasons should be given. [Disclaimer: I not sure if the drafting history of this provision supports this interpretation but there is no reason for the drafters to provide for this requirement unless they feel that awarding costs should be the rule.] There is nothing novel in this interpretation. In United Commercial Bank v. Satish Chandra Ghosh (AIR 1991 Gau 59), for instance, Justice BP Saraf, stated:

“Section 35 of the Civil Procedure Code deals with the power of the Court to award costs. Under the said section, the award of the cost is within the discretion of the Court. But the discretion must be exercised judicially on the basis of the well established legal principles. The Court cannot just refuse to award costs on its whim. The normal rule is that costs shall follow the event. Where a departure is to be made from the said rule, there must be good reasons. Sub-section (2) of Section 35 of the Civil Procedure Code specifically provides that where the Court directs that any costs shall not follow the event, it should state its reason in writing. From a conjoint reading of Sub-sections (1) and (2) of Section 35, it is clear that discretion of the Court in the matter of awarding of costs is very limited. In the normal course… the liability to pay the costs normally follow the event. There must be reasons to deviate from this normal rule.”

A random survey of Supreme Court cases in 2010 revealed that in many cases, the court  has not complied with the requirement of Section 35(2). Some of them are listed below:

Case	Bench	Court
State of Himachal Pradesh v. Siri Dutt (Dead) by L.Rs. and Ors.	G.S. Singhvi and Asok Kumar Ganguly, JJ.	Supreme Court of India
Md. Nooman and Ors. v. Md. Jabed Alam and Ors	Aftab Alam and R.M. Lodha, JJ.	Supreme Court of India
Subhan Rao and Ors. v. Parvathi Bai and Ors.	G.S. Singhvi and Asok Kumar Ganguly, JJ.	Supreme Court of India

Courts should ensure compliance with S 35(2) and provide cogent reasons for not awarding costs. Courts, at times, provide vague and inadequate reasons (such as “in view of the facts and circumstances there shall be no order as to costs”) for not awarding costs. Such practice should be stopped. The discretion to disallow costs must be, as Justice Saraf would say, based on “good reasons”.

Part II to follow

Surprising... they seems to be ready to give up liberty for security!

Selvi v. State of Karnataka, Criminal Appeal No. 1267 of 2004, Date of Judgment 05/05/10

The Constitutional Law Society of NUJS conducted a panel discussion on 23^rd of this month on three aspects of this decision; constitutional, procedural and evidence law and national security dimensions. I had occasion to present certain constitutional issues of the case and open the floor for discussion. This gave me a chance to read the case closely to appreciate some of its finer points which I presume have not got much attention of Constitutional Scholars.

The debate about this judgment so far has been mainly surrounded on the concerns of the national security as to how the now disallowed Narcoanalysis, Polygraph Test and BEAP could have helped to prevent and detect terrorist activities. For many, this is a chance lost to diffuse the ‘ticking bombs.’

It was surprising to find students’ responses that perceive liberty and security as binary opposites. It was disheartening to hear them arguing for giving up their liberties for apparent threats against security. Was wondering whether paranoia has struck that hard on this generation!

Anyway, I am not at it specifically. The case to me gave some interesting vantage points. Ultimately, the court held that compulsory brain-mapping and polygraph tests and narcoanalysis were in violation of Articles 20(3) and 21 of the Constitution. The highlights of the case, for me, are the following

1. Radiation of constitutional rights into statutes, including procedural laws
2. Reiteration of Maneka position that rights are not islands. The impugned tests have to pass not only the test of Art. 20 but of Art. 21
3. The explicit use of substantive due process in the reasoning
4. Interpretative tools used; the court has liberally quoted and allowed to be persuaded by foreign judgments. Quoted even a Israeli Supreme Court Decision
5. Debunking the notion that security is at the cost liberty
   

To be Contd...

The Clarion Call for Reforms in Legal Education

Part I

It was heartening to read Mr. Veerappa Moily, Union Minister for Law and Justice, some days back in Indian Express on yesterday’s need for reforms in legal education. He, in this piece, place the issue in perspective and underscore that gone are the days where legal education was catering to the single segment, bar and marginally to academia. The institutional and curricular designs of legal education remain majorly of those bygone days that he thinks to save any institution from obsoleteness, timely and regular reforms are integral.

The conceptualisation about the function of legal education, per him, should be akin to the contribution science has made to the advancement of the society. He visualizes development of ‘global lawyers’ to cater to the needs of trade, commerce, industry as well as bench and the bar. He also sees the relevance of legal education as the axis of governance, rule of law and democracy. This is an echo of the outlook of the National Knowledge Commission (NKC) (Page, 79).

NKC’s roadmap for reforms ranges from regulatory environment to curriculum development. To be more specific they are;

1. New Regulatory Mechanism: Handing over the regulatory baton from the Bar Council of India (BCI) to a new regulatory mechanism is the primary need. A twenty five member Standing Committee for legal education comprising of representatives of BCI, judges, academics, trade, commerce and industry, economists, social workers and students is to deal with the entire gamut of legal education.

2. Independent Rating System: Rating could be used to benchmark quality and as an indicator for awarding and continuing of accreditation

3. Curriculum Development: Autonomy to develop curriculum is the way forward. Multidisciplinary approach interwoven with contemporary and cutting edge issues is expected to be the highlight of the curriculum

4. Examination System: A continuing system of examination with project and viva and reorienting the approach of evaluation which will test the analytical, writing and communicative skills.

5. Attracting and Retaining Talented Faculty: Incentivisation and imaginative career development schemes to attract and retain talented minds. Removing fetters for practice of law for teachers is a recommendation so that the perceived divide between classroom teaching and practice of law is mended.

6. Development of Research Tradition: Serious efforts to be undertaken to develop a culture of research. Methodologies such as having an academic component on research skills, rationalising teaching load of teachers to free their time for research, enhancing library facilities, and incentivising research are suggested.

7. Centre for Advanced Legal Studies and Research (CALSAR): Four regional institutions with a network between to carry out research on contemporary issues and to provide advise for the Government. To be established.

8. Financing Legal Education: Fees is considered as the major source of revenue. Autonomy in fixing of fees with certain guidelines is the prescription. Public private partnership, the way forward.

9. Dimensions of Internationalisation: Imbibing the spirit of developments in international arena of legal education and legal profession and understanding the domestic law in a comparative perspective. This is to be achieved through partnership and collaborative ventures.

10. Technological Assistance in Legal Education: Use of technological advancement in the development of legal education. Digitalisation and networking to share the resources is the suggested mode.

The Minister has not made any particular suggestions of his own but is seemingly endorsing the reports submitted by the agencies appointed by the Government to look into the higher education sector, namely the Yashpal Committee and National Knowledge Commission. It also needs to be borne in mind that change in the legal education primarily is in the court of Ministry of Human Resources. Mr. Kapil Sibal has already started acting on these reports and have a catena of legislation on table, in the pipeline, and in the closet.

What intrigued me as a part of the legal education fraternity is the identification of law schools as the islands of excellence, which is far from reality. True, it started as a refreshing change in the deteriorating environment of legal education and carried an aura of distinction and superiority but this claim today is far from reality. The law schools are ailing from similar maladies of the rest. The law schools maintain the rank mostly on the past glory and recruitments. For recruiters it is nothing but relative best available in the market. I am not oblivious of the individual merit of the students and certain teachers in the law schools but they are “the islands” in law schools today. The same is true with any traditional institutions imparting legal education, sparks are there as well. The differentiating factor then is the exposure a student of law school gets in terms of infrastructure, resources and opportunities. These opportunities are in the form of moot invitations, internships, exchange deals, visiting faculties from foreign universities, library resources, relatively more regular classes, courses catered to the needs of the market and continuing examination system. Ostensibly this is a picture perfect system. The ensuing question is how come law schools do all these whereas other institutions of legal education cannot. Autonomy is the answer in the forefront.

To be continued...