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MAY 2020. Vol. XIII, Issue V
®
INDIAN LEGAL IMPETUS
GURUGRAM
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EDITORIAL
Dear Friends,
Hope you are all safe. We are pleased to present the May, 2020 edition of our monthly newsletter “Indian
Legal Impetus”. In this edition we have covered recent developments, case laws and issues relating to various
discipline of laws in India and the measures taken by our legal system in view of the Covid-19 pandemic.
With respect to the current pandemic, the first article provides a precise compilation of all procedural rules for
e-filing and virtual hearings issued by the various judicial forums in Delhi starting from the Apex Court and
Delhi High Court to the National Consumer Dispute Redressal Forum (NCDRC) and the National Company
Law Tribunal (NCLT) in their sincere attempt to keep the litigation processes ongoing during this pandemic.
Manoj K. Singh The next article focuses on the provisions of FIDIC in relation to the impact of the current Covid-19 pandemic
Founding Partner on construction contracts and enlists important provisions relating to mitigation of loss, recovery of costs,
termination in light of exceptional event, etc.
In the field of arbitration laws, the next article takes into account the stringent approach of the Apex Court
in refusing enforcement of foreign awards in India on the ground of public policy in reference to a recent
judgment of Vijay Karia and Ors. Vs. Prysmian Cavi E Sistemi SRL and Ors. The Hon’ble Supreme Court upheld
that contravention of a provision of law is insufficient to invoke the defence of public policy when it comes
to enforcement of a foreign award. Contravention of any provision of an enactment is not synonymous to
contravention of fundamental policy of Indian law, which refers to the principles and the legislative policy on
which Indian Statutes and laws are founded. Further, it is necessary to bear in mind that a foreign award may
be based on foreign law, which may be at variance with a corresponding Indian statute.
The next article relates to a critical analysis of the amendments made to the arbitration act to ensure
independence and impartiality of arbitrators and recent judgments to ensure the same.
The next article makes a comparison of dispute resolution by way of domestic arbitrations in India versus
adjudication of disputes by way of commercial litigation especially after the enforcement of the Commercial
Courts Act, 2015 and highlights the drawbacks of domestic arbitrations which pull down the purpose of it as a
means to speedy and timely resolution of disputes.
In relation to international law, the next article covers the provisions relating to “use of force” under the UN
Charter and the restrictions on its use with the only exception of self-defence to maintain international peace.
The next article relates to the legal provisions in India relating to sharing of obscene content online which came
into light recently in view of the page called “Bois Locker Room” created on the popular social media platform,
Instagram. The Article covers the offences recognized under the Information Technology Act, 2000, Protection
of Children from Sexual Offences Act, 2012 and Indian Penal Code in view of the same.
The COVID19 pandemic has stressed the law makers to revive the business sentiments in India. Our next
article deals with the idea of Pre-packed Packages deal under the Insolvency and Bankruptcy Code, 2016. Going
forward with the business law aspect, the next article of ILI deals with a different facet of IBC where we explore
the Concept of relinquishment of security interest under the Code.
The next article in line deals with the possible future of the world wide future of currency as we deal with
the future of trading cryptocurrency in India. Lastly for this edition we bring along a food for thought for
IP enthusiast wherein we explore the possibilities of reimagining culture in the era of Digital Creativity and
Copyright Law.
I hope that our esteemed readers find this information useful and it also enables them to understand and
interpret the recent legal developments. I welcome all kinds of suggestions, opinion, queries or comments
from all our readers. You can also send in your valuable insights and thoughts at newsletter@singhassociates.in
Thank You.
Singh and Associates 1
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Volume XIII, Issue V
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2020 © Singh & Associates
www.singhassociates.in
2 Singh and Associates
Managing Editor Editor Published by
Manoj K. Singh Mr. Palash Taing Singh & Associates
Advocates and Solicitors
and
Ms. Divya Harchandani
Contents
1. Steps taken by the Judicial forums in Delhi during Covid-19
situation 04
2. The COVID-19 Effect on Construction Industry: What does the FIDIC
say? 07
3. SUPREME COURT’S VIEW ON THE LIMITED SCOPE OF REFUSING
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA 10
4. Independence & Impartiality of Arbitrator- Scheme under the
Arbitration & Conciliation Act, 1996 13
5. Commercial Courts or Arbitration: An unpopular opinion on why
opt for commercial civil courts over domestic arbitrations in
India 15
6. Use of Force: Scope under International Law 18
7. LEGAL PROVISIONS IN INDIA AGAINST SHARING OF OBSCENE CONTENT
ONLINE IN LIGHT OF THE BOIS LOCKER ROOM INCIDENT 21
8. PRE-PACKAGED RESOLUTIONS: INSOLVENCY AND BANKRUPTCY 24
9. CONCEPT OF RELINQUISHMENT OF SECURITY INTEREST UNDER THE
INSOLVENCY AND BANKRUPTCY CODE, 2016 26
10. FUTURE OF TRADING OF CRYPTOCURRENCY IN INDIA 29
Singh and Associates 3
Steps taken by the Judicial forums in Delhi during
Covid-19 situation
Ayush Srivastava
The outbreak of the novel COVID-19 was identified as irrespective of the limitation prescribed under
“public health emergency” of international concern by general law or special law whether condonable
the World Health Organization on 30th January 2020. or not shall stand extended w.e.f 15th March
No discipline of work has escaped from the impact of 2020 till further order(s).
Covid 19, which is continuing to gravely affect the
economic and legal framework of various countries. It yy 6th May 20204 : Suo Moto Writ Petition for
is expected that in near future, our judicial system will cognizance for extension of limitation wherein
be flooded with innumerable cases related to issues all periods of limitation prescribed under the
such as “delays in implementation, rationalization of Arbitration and Conciliation Act, 1996 and
manpower, closure of business units, disruptions in under section 138 of Negotiable Instrument Act
supply chains and non-performance of contracts”, 1881 shall be extended with effect from 15th
resulting in additional load over already pending cases March 2020 till further orders. In case, the
in the system. limitation has expired after March 15, 2020 then
the period from 15th March 2020 till the date on
This article covers the compilation of major working which the lockdown is lifted in the jurisdictional
orders issued by different judicial forums to cope up area where the dispute lies or where the cause
with the problems which arose during Covid-19 of action arises shall be extended for a period of
pandemic, to keep the forums functioning while 15 days after the lifting of lockdown.
maintaining the integrity of Indian Judicial System. yy 15th May 20205 : Supreme Court to function
during its summer vacation from 18th May 2020
to 19th June 2020.
SUPREME COURT OF INDIA16th March 20201
Supreme Court in its Suo Moto Writ Petition passed yy 16th May 20206 : Supreme Court exempted the
order pertaining to contagion of Covid-19 virus in advocates from wearing heavy upper body
prison directing to maintain a self-isolation cell in clothings like coat, chapkan, or gown and they
prison to control the spread of the disease. may wear the dress as prescribed under the Bar
Council of India Rules with plain white band
ensuring proper decorum before virtual courts.
yy 23rd March 20202 : Guidelines issued by the
hon’ble Chief Justice of India directing that yy 23rd May 20207 : Supreme Court issued
benches must hear matter only of extreme guidelines in respect of appearance slip wherein
urgency, after application has been filed by the slip has to be sent in fixed format through
Advocate-on-record/ party-in person registered email ids of respective advocate on
containing synopsis of extreme urgency at record.
mention.sc@sci.nic.in; For the purpose of Video
Conferencing, “VIDYO” application must be HIGH COURT OF DELHI23rd March 20208
downloaded by all the practitioners.
yy 23rd March 20203: Suo Moto Writ Petition filed
4 https://main.sci.gov.in/supremecourt/2020/10787/10787_2020_31_6_
for cognizance for extension of limitation 21961_Order_06-May-2020.pdf
wherein period of limitation in all proceedings, 5 https://main.sci.gov.in/pdf/cir/16052020_091316.pdf
1 https://main.sci.gov.in/pdf/LU/16032020_100611.pdf 6 https://main.sci.gov.in/pdf/cir/17052020_080734.pdf
2 https://main.sci.gov.in/pdf/cir/23032020_153213.pdf 7 https://main.sci.gov.in/pdf/cir/23052020_102453.pdf
3 https://main.sci.gov.in supremecourt/2020/10787/10787_2020_1_12_ 8 http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/
21570_Order_23-Mar-2020.pdf PublicNotice_L07R5UBQP6N.PDF
4 Singh and Associates
Functioning of High Court as well as subordinate court not exceeding five pages including proper
suspended till 04 April 2020; For matters related to index of authorities and complete citation 2)
extreme urgency, Registrar maybe contacted for Hon’ble court may hear oral arguments through
arrangement of hearing through video conferencing; video-conferencing, with advance notice.
Lockdown/suspension of work shall be treated as
closure within Section 4 of Limitation Act and thus yy All counsels with above noted instructions shall
limitation of any court will not run within this time. send scanned copy of jointly signed application
to the designated email i.e. consent-listing.
dhc@gov.in with complete particulars of the
yy 13th April 20209 : Office Order cancelling case, names, mobile numbers and email IDs of
summer vacation of this court and subordinate all such counsel.
court wherein the court shall function during
the entire month from 01 June 2020 to 30 June yy 8th May 202012: Filing of Non-urgent/ordinary
2020 matters in both fresh and pending matters can
be done through linkhttp://dhcefiling.nic.
yy 22nd April 202010: Filing/Mentioning of Urgent in:8080/DHC_NONURG/).
Matters before the designated Registrars/Joint
Registrars would now be only through clickable yy 25th May 202013: Advocates during video
link https://tinyurl.com/y7se5gl2 OR conferencing are exempted to wear gown,
http://164.100.68.118:8080/DHC_FILING/. coats and are expected to adhere to rest of the
dress code as prescribed by the Bar Council of
yy from 10:30 am to 12:00 noon on all working India rules.
days. Court has started a Helpline Number
“14611” to receive any complaint with regard to
deficiency in visual acuity or audibility NATIONAL GREEN TRIBUNAL23rd March
experienced by participants during the video 202014
conferencing proceedings.
Minimum essential staff to be present in court
yy 26 April 2020 : Matters related to The
th 11 premises. The remaining staff shall work from home.
Protection of Women from Domestic Violence Only urgent hearing matters to be heard.
Act 2005, Matrimonial matters (including the
matters relating to maintenance, visitation NATIONAL COMPANY LAW TRIBUNAL22nd
rights and custody), Eviction matters based on March 202015
bonafide requirement, All Criminal Appeals/
Revisions/Petitions in which convict is in No oral arguments to be heard and the counsel must
custody, MACT Appeals involving death and send written arguments as prescribed. With respect to
permanent disability, Petitions under sec 9 and extension of time in matter regard to IBC-2016 matters
sec 34 of Arbitration and Conciliation Act 1996, extension of time, approval of resolution plan and
Quashing of criminal case based on settlement liquidation will not be construed as urgent matters and
through Mediation, Ex parte matters, may be will be taken up as soon as regular benches start
heard during suspended functioning of the working.
court with consent of all the parties. yy 7th April 202016 : For matters being held by
video conferencing, it is appealed to file Joint
yy These matters would be taken up for disposal,
subject to the following conditions wherein 12 http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/
matters should be fit for final hearing - 1) Each PublicNotice_6Z5FPGU4KB2.PDF
side has to send point-wise written submissions 13 http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/
PublicNotice_VE72H4RN544.PDF
9 http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/ 14 https://greentribunal.gov.in/sites/default/files/office_orders/Office%20
PublicNotice_GCFF7BU81K5.PDF Order%20dated%2023.03.2020.pdf
10 http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/ 15 https://nclt.gov.in/sites/default/files/Feb-All-PDF/notice%20dated%20
PublicNotice_JHPEXF09ATR.PDF 22.3.2020.pdf
11 http://delhihighcourt.nic.in/writereaddata/Upload/PublicNotices/ 16 https://nclt.gov.in/sites/default/files/Feb-All-PDF/Notice%20over%20
PublicNotice_5U75WWGF7N8.PDF written%20submissions.pdf
Singh and Associates 5
Memo of Written Submissions wherein Execution Applications, Execution Appeals,
applicant has to file brief facts in five to ten lines Review Applications and all other Miscellaneous
with reliefs thereto and serve the same to Applications shall stand extended with effect
opposite party along with its application. After from March 15, 2020.
which the opposite party, in return, shall brief
their defence and serve the same to applicant yy 23rd April 202021: The extension of the period
within 24 to 48 hours. Following this both the of limitation with effect from March 15, 2020,
parties shall jointly draft the points for shall also be applicable to the filing of Written
determination by NCLT, based on which both Version(s)/ Written Statement (s)/ Reply to be
the parties shall separately set out reasons filed by opposite Party after receipt of notice(s)
supporting their respective stands in two to issued upon admission of Complaint(s).
three lines on each of the points for yy 2nd June 202022: Matters will be held via video
determination. The applicants shall first set out conferencing from 15th June 2020 till further
their reasons in bullet points, and then the orders. Also, matters which are filed w.e.f June
opposite party shall set out their reasons in 03, 2020, parties have to submit digitalized files
bullet points. This Joint Memo along with (at ncdrc@nic.in) along with physical copies.
relevant material papers/documents duly
signed by both the parties and the counsels, be
filed one day before the date of hearing or at
least six hours before hearing. In the event, that ***
the situation demands grant of ad-interim relief
by NCLT even before filing this Memo, non-
filing of this Memo will not become hindrance
to NCLT in granting such relief.
yy 5th May 202017: Summer vacation falling in
month of May/June/July of respective NCLT
benches stands cancelled and benches shall
function during the said period.
yy 12th May 202018: A record of default from an
Information Utility has to be compulsorily filed
along with new petitions u/s 7 of the IBC.
NATIONAL CONSUMER DISPUTE REDRESSAL
FORUM16th March 202019
Matters with extreme urgency which include matter
related to immediate stay of the execution proceedings,
matter in which stay of arrest warrants or recovery
certificates has been issued or any matter which Listing
officer thinks can be of urgent nature will only be heard.
yy 24th March 202020: The period of limitation for
filing Complaints, Appeals, Revision Petitions,
17 https://nclt.gov.in/sites/default/files/Feb-All-PDF/order1.pdf
18 https://nclt.gov.in/sites/default/files/Feb-All-PDF/Record%20of%20
default%20from%20Information%20Utility.pdf
19 http://ncdrc.nic.in/pdf_Files/circular16032020.pdf 21 http://ncdrc.nic.in/pdf_Files/OfficeOrder23042020.pdf
20 http://ncdrc.nic.in/pdf_Files/officeOrder24032020_1.pdf 22 http://ncdrc.nic.in/pdf_Files/OfficeOrder02062020.pdf
6 Singh and Associates
The COVID-19 Effect on Construction Industry: What
does the FIDIC say?
Palash Taing
The outbreak of the COVID-19 disease was completely The COVID-19 pandemic qualifies as a “force
unforeseen and a devasting phenomenon, which is majeure” event under the 2017 FIDIC Red Book1.
negatively affecting various industries across the Pursuant to Clause 18 of the Red Book, a force majeure
globe, and the Construction industry is not an event is an event that is a) beyond the parties’ control;
exception. However, the legal implications on this b) was not reasonably foreseeable by either of the
industry in the wake of the pandemic vary from country parties; c) could not reasonably have been avoided
to country and will depend on the terms of the contract once having arisen; and d) was not substantially
between the parties. As far as the standardization of attributable to either of the party. The spread of
contracts in construction and engineering is concerned, COVID-19 or any other world pandemics are not
FIDIC (short for International Federation of Consulting specifically listed by name among the list of Exceptional
Engineers, an acronym for its French name Fédération Events in the FIDIC book, however the COVID-19
Internationale Des Ingénieurs-Conseils) standard pandemic fits easily within the general definition of an
contracts are being followed in many multiple Exceptional Event.
international jurisdictions including India. While a lot
has been expressed by various governments across the Shall the affected party provide
world and the situation due to COVID-19 still not
completely under control, there are multiple issues
notice of an Exceptional Event to the
arising out of these contractual obligations. other party(ies)?
Once an Exceptional Event occurs, it is imperative for
At the present stage (as on May, 2020), COVID-19 is not the affected party to follow the contractual notice and
rendering construction projects altogether impossible mitigation provisions. A party prevented from
to complete. However, the pandemic has caused a slow performing any of its obligations must give notice to
down in their completion thereby causing delay and the other party of the Exceptional Event, detailing the
disruption. Till now the pandemic has not altogether impact of the event on performance2. Notice must be
rendered the completion of construction projects given within 14 days of the date when the party
impossible, though there is a considerable slow-down, became aware (or should have become aware) of the
delays and disruptions in the sector. The supply chain Exceptional Event and it should be delivered in
disruptions due to extended lockdowns caused may accordance with Clause 1.3. While the notice period is
projects to stop but with an intention to resume work generally uniform, the exact timing of the required
at a later date. notice may vary substantially based on the facts and
circumstances of each particular contract, e.g., when
Many countries, including India had ordered a the COVID-19 pandemic prevented a particular
lockdown which forced businesses to stop working. In performance.
India there was a full lockdown till 3rd May 2020, post
which some services were allowed to resume. Due to What are the consequences of
the restrictions, the entire construction activity came
to a halt during the lockdown period. In this article, we providing notice of an Exceptional
attempt to discuss a number of practical considerations Event?
that may arise, in the light of the Covid-19 pandemic
Once the notice is provided, the affected party, either a
under a standard form construction contract – such as
contractor or an employer, may suspend its
the FIDIC Red Book.Is COVID-19 a force majeure event
under FIDIC contracts?
1 Clause 18 of the FIDIC Red Book
2 Sub-clause 18.2 of Clause 18 of the FIDIC Red Book
Singh and Associates 7
performance as long as the Exceptional Event prevents are infrequent, a contractor should analyze whether
the performance. COVID-19-related government restrictions caused the
accrual of additional costs.
Steps to be taken by a contractor to
mitigate such effects of an When can a contract be terminated
Exceptional Event due to an Exceptional Event3?
The affected party is not excused from performing Sub-Clause 18.5 of FIDIC provides that either party may
obligations that are not prevented by the Exceptional terminate the contract (upon notice) if an Exceptional
Event. Hence, the crucial threshold question for a Event causes a delay of 84 continuous days or multiple
contractor is whether COVID-19 is the actual cause of delay periods totaling more than 140 days. In such
the delay, suspension of work or increased cost. The cases, the affected party/ contractor is then entitled to
pandemic will not have a uniform impact on contractors’ recover certain costs specified in Clause 18.6 of the
obligations. A contractor will need to show that it FIDIC Contract Red Book. Any part of the advance
sought to mitigate the effects of the pandemic which payment not yet repaid by the contractor becomes
caused delays. Under Sub-Clause 18.3 each party needs immediately payable to the employer under Clause
to use all reasonable means to minimize any delay in 14.2.34 of the FIDIC Contract.
the performance of the contract.
Payments continue after notice of an Dispute5 arising due to the impact
Exceptional Events caused by COVID-19
The occurrence of an Exceptional Event does not in and While a general assertion that COVID-19 can qualify as
by itself excuse the parties’ payment obligations. an Exceptional Event should not be seriously contested,
there are project-specific issues that may lead to
Will the contractor be entitled to disputes. For example, there may be disputes about
recover costs? the impact on the project and its “critical path,”
mitigation measures, and whether a contractor is
While the occurrence of an Exceptional Event can
entitled to costs and losses incurred.
trigger an extension of the time to perform, entitlement
to recover costs and losses incurred as a result of
In the event a dispute arises, FIDIC provides for 2 tiers
COVID-19 is less certain. A contractor would be able to of dispute resolution:
recover costs in relation to some types of Exceptional
Events, e.g., a war or strike where the construction is 1) A Dispute Adjudication/Avoidance Board (DAAB)
occurring. By contrast, a contractor will not be entitled
to recover costs arising in relation to other Exceptional 2) ICC arbitration (upon failure of DAAB)
Events, such as natural catastrophes. As the Red Book
As mentioned above, the decision of DAAB is a pre-
does not expressly address costs in the context of
requisite for a party(s) to approach for an ICC
global pandemics, it is less certain how costs will be
arbitration. In the instances wherein DAAB makes a
treated in light of COVID-19.
decision, the parties shall comply with it or serve a
Notice of Dissatisfaction (NOD) within 28 days. In case
The FIDIC also contains other provisions that may
the dissatisfied party/ parties fail to serve such NOD
impact costs. A contractor can rely on Clause 13.7,
within the stipulated time frame, the decision of DAAB
which provides for an entitlement to price adjustments
becomes final and binding upon the parties. Further, in
if a contractor can identify changes in the laws of the
cases where a party fails to comply with any such final
country of construction that result in increased costs.
decision of the DAAB, the other party can initiate ICC
Clause 1.1.49 provides that “laws” means “all national
arbitration to enforce it.
(or state or provincial) legislation, statutes, acts,
decrees, rules, ordinances, orders, treaties, international
3 Sub-Clause 18.5 of FIDIC Contract: Termination
law and other laws and regulations and by-laws of any
4 Clause 14.2 of FIDIC Contract deals with Advance Payment
legally constituted public authority.” While such claims 5 Clause 20 of FIDIC Contract deals with Dispute Resolution
8 Singh and Associates
Author’s Analysis
Under FIDIC contracts, the COVID-19 pandemic and
associated governmental actions should qualify as an
Exceptional Event. Depending on each project under
dispute, different issues will arise in different projects
in the coming days and years. Therefore, it shall be
imperative to review each and every contract
individually and consider the unique facts. In order to
mitigate the damages caused/ or to be caused due to
COVID-19, the parties, especially the affected party
should follow all procedural requirements for declaring
and dealing with an exceptional event and even
termination in certain cases. Some governments are
offering aid to businesses negatively affected by the
COVID-19 situation. Even in the cases where a
contractor may have no contractual or legal entitlement
to compensation for prolongation costs due to work
being significantly delayed or impaired, state aid may
be available to defray some of the ongoing costs
incurred, or otherwise provide a financial respite.
Employers may also be entitled to the benefit of these
state aid measures6.
***
6 https://www.whitecase.com/publications/alert/covid-19-current-impact-
construction-engineering-projects
Singh and Associates 9SUPREME COURT’S VIEW ON THE LIMITED SCOPE OF REFUSING
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS IN INDIA
Divya Harchandani
The hon’ble Supreme Court, in a recent judgment of and Ravin entered into a Joint Venture Agreement
Vijay Karia and Ors. Vs. Prysmian Cavi E Sistemi SRL and (hereinafter referred to as “JVA”) with Respondent No. 1,
Ors.(MANU/SC/0171/2020), upheld that a foreign award i.e. Prysmian Cavi E Sistemi SRL - a company registered
cannot be refused enforcement in India even if it is in under the laws of Italy (hereinafter “Prysmian” or
violation of FEMA guidelines and that the refusal to a “Respondent no. 1”). By this JVA, Prysmian acquired a
foreign award for being contrary to the public policy of majority shareholding (51%) of Ravin’s share.
India under Section 48 of the Arbitration and Consequently, multiple disputes arose between the
Conciliation Act, 1996 (“the Act”) could be granted only parties relating to management of the company and
in very exceptional circumstances. Respondent no.1 invoked arbitration under Clause 27
of the JVA.
The present appeal was filed under Article 136 of the
Constitution of Indian against a judgment of a Single Clause 27 of the JVA provided for resolution of disputes
Judge of the Bombay High Court dated 07.01.2019, by between the parties by arbitration in London, as per
which four final awards made by a sole arbitrator in the Rules of Arbitration of London Court of International
London under the London Court of International Arbitration LCIA) by reference to a sole arbitrator
Arbitration Rules (2014) (hereinafter referred to as the appointed by LCIA.
“LCIA Rules”) were held to be enforceable against the
appellants in India. ARBITRAL AWARD PASSED BY THE TRIBUNAL
The Tribunal passed the First Partial Award limited to
Before proceeding to the facts of the case, it is important
interpretation of JVA clauses and jurisdiction and
to emphasize that, no challenge was made to the
observed that the dispute relating to registration of
aforesaid award under the English Arbitration Law,
Ravin trademark was beyond the jurisdiction of this
though available. It was only when the award was
arbitration and governed by the arbitration clause in
brought to India for enforcement that objections were
trademark licenses.
raised under Section 48 of the Act. Unlike Section 37 of
the Act, which provides an appeal against either setting
The Second Partial Award dealt with the merits of the
aside or refusing to set aside a ‘domestic’ arbitration
claims wherein the Tribunal held that the appellants
award, the legislative policy so far as recognition and
were in material breach of the JVA terms on account of
enforcement of foreign awards is concerned is that an
interference with the proper and effective functioning
appeal is provided against a judgment refusing to
of the CEO, failure to attend management meetings,
recognise and enforce a foreign award but not the
preventing passing of board resolutions, creating false
other way around (i.e. an order recognising and
records, and encouraging employees to go on strike,
enforcing an award) under Section 50 of the Act.
amongst other grounds. The Tribunal also addressed
Therefore, the appellants have appealed against the
the counter claims filed by the appellants along with
said judgment under Article 136 of the Constitution of
the statement of defence including the acquisition of
India.
ACPL, a competitive business of cables of Ravin by
Prysmian in breach of the JVA, direct sales by Prysmian
FACTUAL BACKGROUND in India, breach of confidentiality by the CEO. The
The appellants, i.e. Appellant No. 1 Shri Vijay Karia, and counter claims filed by the appellants were rejected by
Appellants No. 2 to 39 (who are represented by the Tribunal while observing that there was no credible
Appellant No. 1) are individual, non-corporate evidence for any loss or diversion of business from
shareholders of Ravin Cables Limited (hereinafter Ravin after acquisition of ACPL. Further, expert
referred to as “Ravin”). On 19.01.2010, the appellants evidence established that both Ravin and ACPL worked
10 Singh and Associatesin very different spaces of cables. The counter claims meaning and would be breached only if a fair hearing
for direct sales and breach of confidentiality were also has not been given to the party and no opportunity
rejected due to failure of the appellants to show any given to deal with an argument. Further, poor reasoning
material breach of JVA on these grounds. The Tribunal by which a claim or material issue is rejected does not
further observed that the appellants did not oppose fall into the class of non consideration of material
the appointment of the CEO, yet obstructed her at issues. While considering the case of the appellants
every turn after she was appointed. and the cross-case of the respondent, the Tribunal had
adverted to pleadings, evidence and has given detailed
Thereafter, by way of the Third Partial Award the findings as to why the appellants were in material
Tribunal held the appellants to be the defaulting breach of the JVA. This being the case, it cannot be said
parties under the JVA and held that all rights conferred that this material issue has not been answered by the
to the appellants, specifically Mr. Karia under the JVA Second Partial Final Award. This ground, therefore,
ceased to be effective. Consequently, by way of the does not fall within any of the stated pigeon-holes
fourth and final award the Tribunal ordered the under Section 48 of the Act.
appellants to transfer the shares held by them at a
discounted rate to the Respondent No. 1 (the Claimant) THE SCOPE OF “PUBLIC POLICY” ARGUMENT
and also pay the total cost of arbitration.
It was argued by the counsels of the appellant that by
ordering the sale of shares at a 10% discount of the fair
ARGUMENTS UNDER ARTICLE 136 IN THE market value arrived at by Deloitte, FEMA and the Rules
SUPREME COURT AGAINST IMPUGNED made thereunder would be breached, resulting in the
ORDER DATED 07.01.2019 award being contrary to the public policy of India.
While adjudicating upon this argument, the apex court
The counsels on behalf of the appellants challenged relied upon the judgment in Renusagar Power Plant Co.
the enforceability of the award under Section 48 of the Ltd. v. General Electric Co. MANU/SC/0195/1994 : (1994)
Act by contending that the Tribunal failed to adjudicate Supp (1) SCC 644, which states that contravention of a
upon the counter claims of the appellants relating to provision of law is insufficient to invoke the defence of
material breaches of JVA such as incorporation of a public policy when it comes to enforcement of a
competitive company of cables in India , efforts to oust foreign award. Contravention of any provision of an
the appellant from the JVA, attempt to register the enactment is not synonymous to contravention of
Ravin trademark in their own name, ignorance of fundamental policy of Indian law. The expression
material evidence and admissions, etc. and that the Fundamental Policy of Indian law refers to the principles
award was in contravention of the Foreign Exchange and the legislative policy on which Indian statutes and
Management Act, 1999, by directing sale of shares at a laws are founded. Further, it is necessary to bear in
discount. It was further contended that if any dispute mind that a foreign award may be based on foreign
was not adjudicated upon, or parties not treated law, which may be at variance with a corresponding
equally, the award was liable to be set aside. Indian statute. And, if the expression “fundamental
policy of Indian law” is considered as a reference to a
The respondents argued that any interference in the provision of the Indian statue, the basic purpose of the
merits of the case are outside the scope of Section 48 New York Convention to enforce foreign awards would
and that the award has already dealt with all the issues stand frustrated.
and disputes raised between the parties.
The apex court further observed that if a particular act
SCOPE OF REFUSING ENFORCEMENT OF violates any provision of FEMA or the rules framed
FOREIGN AWARDS UNDER SECTION 48 thereunder, permission of the Reserve Bank of India
may be obtained post-facto if such violation can be
The apex court considered multiple judgments relating
condoned. Neither the award, nor the agreement
to the scope of Section 48 and non consideration of
being enforced by the award, can, therefore, be held to
material issues and violation of public policy as a
be of no effect in law. This being the case, a rectifiable
ground to set aside foreign awards and observed that
breach under FEMA can never be held to be a violation
the expression “unable to present his case” under
of the fundamental policy of Indian law. For these
Section 48 (1) (b) cannot be given an expansive
Singh and Associates 11reasons the argument of award being in violation of
FEMA and contrary to public policy of India was held to
be bereft of any merit.
JUDGMENT
The court held that given that the jurisdiction under
Article 136 of the Constitution is itself limited, and
given the fact that the apex court’s time was
unnecessarily taken by a case which had already been
dealt with by four exhaustive awards on merits and
also by the impugned judgment of the Bombay High
Court, the appeal shall be dismissed with costs of INR
50 lakhs.
CONCLUSION
The judgment signifies a progressive step towards the
enforcement of foreign awards in India. The heavy cost
imposed by the court on the appellants for “flinging
mud on a foreign award” establishes a warning against
frivolous litigations to avoid enforcement of foreign
awards, especially without having challenged the
award in the seat of arbitration. The judgment also
reiterates the principle of minimal interference of
courts in the merit of arbitral awards.
***
12 Singh and AssociatesIndependence & Impartiality of Arbitrator- Scheme
under the Arbitration & Conciliation Act, 1996
Shashi Gupta
Independence, impartiality & neutrality of the arbitrator arbitrator falls in any one of the categories specified in
is essential for fair, free & unbiased arbitral proceedings the Seventh Schedule, he becomes “ineligible” to act as
while adhering to the principal of natural justice. On arbitrator. Once he becomes ineligible, it is clear that,
December 31, 2015, the Arbitration and Conciliation under Section 14(1)(a), he then becomes De Jure unable
(Amendment) Act, 2015 was passed (with effect from to perform his functions in as much as, in law, he is
October 23, 2015) to ensure improved efficiency of regarded as “ineligible” and in that case there will be no
international commercial arbitrations in India. The need to follow the challenge procedure as prescribed
aspect of mutuality, independence & impartiality has under section 13 under the Act. Then the mandate of
been given special emphasis under the scheme of arbitrator shall be terminated, and he shall then be
amended Arbitration Act. The 2019 amendment to substituted by another arbitrator under section 14(1)
Arbitration & Conciliation Act 1996 (the Act) also of the Act. On the contrary, if the disclosure falls within
inserted an Eighth Schedule prescribing general norms the grounds stated in the Fifth Schedule which gives
applicable to the arbitrator emphasizing on the rise to justifiable doubts as to the arbitrator’s
impartial and neutral stand of the arbitrator in the independence or impartiality, the appointment of such
proceedings. arbitrator may be challenged before the Arbitral
Tribunal under section 13. If a challenge is not
A specific provision requiring disclosure by the successful, the Tribunal must then continue the arbitral
arbitrator regarding his impartiality was added to proceedings under section 13(4) and make an award
Section 12 of the Act in 2015. As per the provision, any and the same can be challenged only under section 34
person who is approached for his possible appointment of the Act.
as an arbitrator must disclose in writing any direct or
indirect, past or present relationship with the parties, The three-judge bench of Supreme Court in TRF
counsel, subject-matter and outcome of arbitration, Limited Vs Energo Engineering Projects Limited
whether financial, professional, business or any other [(2017) 8 SCC 377] has strengthened the statutory
kind, which is likely to give rise to justifiable doubt as to mandate of independent, impartial & neutral arbitrator.
the independence & impartiality or which would affect The apex court has held that if an arbitrator becomes
his ability to devote sufficient time to the arbitration ineligible by operation of law, he cannot nominate
and his ability to complete the entire arbitration within another as an arbitrator. The hon’ble court even went
the period of twelve months. The disclosure is required ahead and stated, “once the infrastructure collapses,
to be made by such a person as per the form prescribed the superstructure is bound to collapse.”
under the Sixth Schedule. Hence, the onus is upon the
arbitrator to make true and correct disclosure. On the The TFR judgment has again been discussed in the
basis of such disclosure it shall be determined whether recent judgement of hon’ble Supreme Court in Perkins
any such circumstances exist or whether it falls under Eastman Architects DPC vs HSCC (India) Limited
any of the grounds enshrined in Fifth Schedule or (26.11.2019 - SC): [MANU/SC/1628/2019], wherein
Seventh Schedule. Courts vide following judgments the court while resolving the issue of unilateral
have also strengthened the Act for its effective appointment of arbitrator by one party, heavily relied
implementation to ensure impartial and neutral on TFR judgment and held that a person having an
arbitrator. In a recent judgment by the hon’ble Supreme interest in the dispute or in the outcome or decision
Court in, HRD Corporation vs. GAIL (India) Limited thereof, must not only be ineligible to act as an
[MANU/SC/1066/2017], it was observed that if the arbitrator but must also not be eligible to appoint
person falls under Schedule Seven, the ineligibility anyone else as an arbitrator.
goes to the root of the appointment, Section 12(5) read
with the Seventh Schedule makes it clear that if the
Singh and Associates 13In a recent case at the Delhi High Court, in Arvind of “de-jure” ineligibility shall be decided by the court.
Kumar Jain vs. Union of India (04.02.2020-DEL.HC): Second, if the disclosure falls under Fifth Schedule,
[MANU/DE/0357/2020], the prime issue was that the then the challenge will lie before the arbitrator himself
petitioner wanted the respondent to agree to the under section 13 of the Act which indirectly goes
appointment of a Gazetted Officer (JAG/SAG) of the against the principal of natural justice “nemo judex in
respondent/Railways as the arbitrator by waiving causa sua,” which allows the arbitrator to become judge
Section 12(5) of the Act. The hon’ble court ruled out of his own ability & competence. Third, the gravest
the appointment of the Gazetted Railway Officer as question, what if the disclosure made is “vague/
the arbitrator in view of apprehensions regarding the arbitrary/unclear” in nature? What if the arbitrator
impartiality of the arbitrator proposed to be appointed hides such existing circumstances as enlisted in
and also stated that the respondent cannot compel the schedule five & seven? In that case the whole scheme
petitioner to furnish a waiver from the applicability of falls flat.
section 12(5) of the Act.
Despite all the efforts the Act still requires effective
Post the 2015 amendment, the Delhi High Court took a measures and changes to encourage and facilitate
robust approach to ensure appointment of an a reformed & more independent system of fair &
independent & impartial arbitrator, as the court in unbiased dispute resolution in the interest of
Dream Valley Farms Private Ltd. & Anr v. Religare
justice and basic fairness for India to become a
Finvest Ltd. & Ors. [2016 SCC OnLine Del 5584] held
that a misleading declaration defeats the very purpose
hub of International Commercial Arbitration.
of the amended act, the conduct of the arbitrator in
withholding at the very outset the true information
about his appointment in a number of matters by the
same party defeats the very purpose of the Act. Such ***
conduct of the arbitrator is unbecoming and doesn’t
behoove an Arbitrator who is expected to be impartial
and independent.
In the recent judgment of the Bombay High Court, in
Swarmal Gadodia vs Tata Capital [2019 SCC
OnLineBoM 849], the issue of a vague and ambiguous
disclosure made by the arbitral tribunal was discussed.
In this case, the appointed arbitrator not following the
scheme of the Act, had not disclosed the fact that he
was appointed arbitrator in a number of ongoing
arbitration proceedings by the same party. The
arbitrator even had fixed arrangement of payment
from the party. The court ordered the respondent
company to ensure compliance of the procedure set
out under the Arbitration and Conciliation Act and to
ensure that appointed arbitrator shall disclose to the
other party, the exact number of ongoing arbitrations
he is a part of.
Conclusion
By analyzing the scheme of the aAct and judgments
discussed above, three lacunae are apparent. First, the
Act doesn’t prescribe any procedure for removal of
arbitrator by court, but by the parties vide mutual
agreement or the Arbitral Tribunal itself. Only the issue
14 Singh and AssociatesCommercial Courts or Arbitration: An unpopular
opinion on why opt for commercial civil courts over
domestic arbitrations in India
Palash Taing
and
Moonmoon Nanda
The process of adoption of domestic arbitrations as an etc.]. These tribunals are set up to adjudicate a certain
alternative dispute resolution mechanism has not set of disputes which are arising out from specific
gathered a significant pace even with multiple statutes.
amendments to the Arbitration and Conciliation Act,
1996 (“the Act”). Scenario prior to 2015 and 2019
amendments to the Act
Ground realities
Arbitration, by way of an alternative tool to dispute
In India, the culture is still not “dispute resolution by resolution, was seen as a solution to resolve disputes
way of arbitration”. The Arbitrators (generally retired outside of the traditional courts. Commercially also,
Judges) and the Advocates assisting arbitrators too, arbitration is considered as an alternate mechanism to
usually take up multiple matters in courts and multiple resolve contractual disputes. At the time of introduction
arbitrations, whether on the same day or otherwise. At of arbitration in the system, it was thought that
times it has been observed that the timelines set in arbitration would not only resolve the high pendency
these arbitrations by the Act and by the presiding but would be an alternate, efficacious, speedy and a
arbitral tribunal are taken lightly, particularly by the cost effective dispute mechanism system as compared
parties and at times even by the arbitrators also. In to traditional courts.
certain arbitration proceedings, it has been observed
that there is no real consequence to non-compliance But in contrast to the above stated basic understanding,
of timelines. The scenario is much different in an the Arbitration Act, 1940 turned out to be a massive
international arbitration, whether ad-hoc or failure, since it was neither cost-effective nor
institutional. In this article, we put forth a question expeditious. This statute was overhauled and the
whether a domestic arbitration achieves the particular Arbitration and Conciliation Act, 1996 was brought in,
legislative purpose of being a tool for speedy and which was based on the internationally accepted
pocket friendly (alternative) dispute resolution UNCITRAL model. Yet, until the amendments in the
mechanism or, maybe not? Are the commercial civil year 20151 and later in 20192 were effected in the
courts a better option being more efficient and cost Arbitration and Conciliation Act, the process of
effective than domestic arbitration in India? conducting and completing arbitration proceedings
under this statute was a time-consuming process. This
Need for arbitration was majorly attributable to the fact that the previous
Under the Code of Civil Procedure, 1908, the civil courts Act did not prescribe a time limit to conclude the
usually adjudicate every dispute between the parties arbitration. The parties had to approach courts for
(usually 2 or more). With time, the number of disputes various issues including urgent interim orders prior to
coming before these courts have increased, the appointment of arbitrators, for appointment and
litigation has become more diverse and complex in replacement of an arbitrator and for enforcement of
nature. Under the Constitution of India, the Parliament the final orders/award of the arbitrator. Not only this, in
can pass specialized statutes to create specialized certain cases even the enforcement of an interim order
tribunals/ courts and agencies to be set up for effective
dispute resolution between the parties [For example:-
1 Arbitration and Conciliation (Amendment) Act, 2015 dated 31.12.2015
NCLT (National Company Law Tribunal), CAT (Central
w.e.f. 23rd October, 2015
Administrative Tribunal), NGT (National Green Tribunal)
2 Arbitration and Conciliation (Amendment) Act,2019 dated 09.08.2019;
Singh and Associates 15passed by the Arbitral Tribunal was practically also Further, while the Legislature sought to make things
difficult to enforce. simple with the arbitration mechanism in practice, the
arbitral tribunals tend to complicate certain issues
Apart from the time factor, Arbitration was a costly which are not envisaged by the Act itself. It is observed
affair with Arbitral Tribunals charging almost upto that some of the Ad Hoc or Institutional Arbitral
10%-30% of the value of the claimant’s claim as Arbitral Tribunals reluctantly adhere to the schedule pertaining
fee. to the fee and tend to provide an absurd interpretation
(to the IV Schedule). At times this is done with an
The 2015 & 2019 Amendments to the Act intention to charge the maximum arbitral fee from the
parties. However, it is usually the Schedule IV, which
However, with the recent two amendments dated 23rd
was fundamental to the amendment, was and is not
October, 2015 (the 2015 amendment) and 9th August,
adhered to at all and conveniently bypassed, especially
2019 (the 2019 amendment), the Legislature sought to
by the erstwhile hon’ble judges of the court of record.
cap the arbitral fee on the basis of a fixed percentage of
slab3. With regard to making it a time bound exercise,
In certain instances, it has been a matter of concern for
the Legislature has attempted to make the entire
both parties as well as the courts that some of the
arbitral process simpler and faster by effectively
orders passed by the arbitral tribunal are contrary to
bringing about an outer time limit of one year, (and an
court judgments related to a restriction in charging
extension provision for upto six months further) to
arbitral fees under the Schedule IV of the Act. This
conclude the arbitration4. With the new Amendment
happens even though several arbitrators are cognizant
Acts in force, the Arbitrators are now given teeth to
of the prevailing judgments9. The arbitrators continue
their powers and also the freedom to enforce the
to charge arbitral fees as per their own whims and
interim orders of arbitral tribunals.
fancies, which makes it a costly affair for the litigating
parties. Any such order relating to the Fee Schedule
For instance, the Arbitration Tribunal is well within its
passed by the arbitral tribunal cannot be challenged
power and mandate for imposition of monetary costs
by contesting parties until the final adjudication of the
on a party to the proceeding after looking at the
arbitration. This challenge can be, at the most be made
conduct of the litigant and other factors, if such tribunal
via a petition under Section 34 of the Arbitration and
thinks fit5.
Conciliation Act, 1996 to the appellate court. By that
time, the litigant would have been compelled to pay
Still Far from a Perfect Act the fee so arbitrarily determined by the arbitrator.
However, what the amendments still fail to effectively
address is that the process of appointment of The unfortunate situation is that the affected party has
arbitrators6, replacement of an arbitrator7, extension of to not only bear the fee of the arbitral tribunal, but also
time period for conducting the arbitration proceedings8, the legal fee to be paid to the Counsel/ Advocate/ Law
determination of multiple appeals from certain orders firm representing such party plus the legal expenses
of the arbitrators and enforcement of the final order is towards arrangement of the arbitral venue charges
still vested with civil courts. Even though it is a time and the eventual stamping fee of the arbitral award
bound statute, still it is seen that courts take their time which is 0.1% of the value of the Arbitral Award so
in adjudication. rendered. These costs build-up to unforeseen costs
which parties to arbitration do not account for before
committing to the process of such arbitration
3 Section 11(14) read with the Schedule IV of the Arbitration and Conciliation proceedings. It can therefore, be noted that arbitration
Act, 1996; is still some way from being a pocket friendly and a
4 Section 29A of the Arbitration and Conciliation Act, 1996; cost effective Alternative Dispute Resolution
5 Section 31A of the Arbitration and Conciliation Act, 1996; mechanism.
6 Section 11(5) and Section 11(6) of the Arbitration and Conciliation Act,
1996;
Further, arbitrators are required to mandatorily disclose
7 Section 14 and 15 of the Arbitration and Conciliation Act, 1996 and HRD
Corporation v. GAIL India Ltd.; [2018 (12) SCC 471]
their interest, whether financial or otherwise, in the
8 Section 29A(3) and Section 29 A(4) of the Arbitration and Conciliation Act, 9 DSIIDC v. Bawana Infra Development Pvt. Ltd.; 2018 (4) ArbLR 168 (Delhi)
1996;
16 Singh and Associatessubject matter of the dispute. This also at times, is not or even several hundred crores. Clearly, approaching
adhered to, either in letter or in spirit by arbitrators, the court in such cases is a particularly cheaper
despite specific requests. To compound problems, approach.
arbitrations seldom conclude within a time period of
one year, as set out in the statute. The practitioners Further, after the respective parties to the dispute file
who are not arbitration centric, are also particularly their pleadings including the claims and defence, a
reluctant to trigger the “fast track arbitration” process. case for summary judgment could be made out and
final orders could be passed if the court feels that the
The only redeeming factor however is that if an appeal defence raised is frivolous. If such court is of the opinion
is preferred against the award, the courts do not get that an order of summary judgment cannot be made
into a full-blown fact-finding enquiry and have a and the defence is somewhat tenable, parties could be
particularly restricted approach. However, the problem directed to proceed to evidence, subject to the deposit
still is that the restricted approach does not find of the monies or a security deposited with the court.
resonance in every court of the country. Additionally, This is particularly comforting to the person initiating
years are spent on having the appeals adjudicated. the case as the money so deposited could be withdrawn
if eventually the litigant succeeds.
On the same day as the 2015 Amendment was brought
into effect i.e. 23.10.2015, the Legislature also The courts have also started to convene case
promulgated the Commercial Courts Act, 2015, with management hearings where a fixed, disciplined, and
the endeavor to set up commercial courts to adjudicate well-followed time schedule, subject to heavy penalties,
commercial disputes expeditiously. What in fact is drawn up in every commercial case for every possible
constitutes to be a commercial dispute is defined in the stage. Thus, if this is simply followed, there would be
statute itself, for eg, A dispute relating to trading of expeditious adjudication and disposal of cases. Besides
goods etc. is a commercial dispute. this, a litigant does not have to approach two different
forums for the purposes of summoning (calling)
Commercial Disputes Handled in witnesses for evidentiary depositions, unlike in
Courts vis-a-vis Arbitration arbitrations.
In the newly introduced Commercial Courts Act, a pre- Further, unlike the process of arbitration, neither does
litigation mediation is mandatory, which implies that the litigant have to pay for the costs of venue nor does
the parties have to essentially sit across the table to he have to pay an additional stamp duty of 0.1% of the
sort out their issues and negotiate with the help of a value of the final order.
third person in a non-binding process. The timeline for
this pre-litigation mediation is 90 days. It has been Opinion
found that some disputes are actually resolved through
this process. In cases where the prescribed pre- In the authors’ opinion, therefore, if the commercial
litigation mediation fails, the parties can initiate a claim courts convene, conclude and adjudicate in a
essentially praying for the interim urgent relief along streamlined manner, approaching commercial courts
with the main relief sought in a common claim petition. would have greater benefits and myriad advantages
However, the same is not possible under the mechanism rather than going through the tedious process of
provided under the Arbitration and Conciliation Act, if arbitration. This would also be a way for the courts to
a tribunal has not been constituted. revamp and upgrade themselves to show that not all
cases are pending for a period of 10-15 years and courts
Additionally, while the arbitration fee is about 5-10% are performing at par with the leading international
(at a minimum) of the value of the claim of the claimant, jurisdictions such as the United Kingdom, Singapore
the court fee payable by the aggrieved party in case of and the United States of America.
approaching the court in places like Delhi is roughly
1% of the value of the claim. Some places like
Ahmedabad and Bombay have a capped court fee of a
meager Rs. 75,000 and Rs. 3,00,000 respectively, even if ***
the adjudication of the dispute involved several crores
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