Shardul Amarchand Mangaldas & Co

New Delhi

Updates

Banking

Changes to merchant discount rate framework: impact on stakeholders
India | 02 March 2018

The Reserve Bank of India and the Ministry of Electronics and Information Technology recently established a new regulatory framework for setting limits on and payments of merchant discount rates and encouraging digital payments. Rates will now be determined based not only on the basis of transaction value, but also on turnover. However, in its effort to curb transaction costs for merchants, the government risks imposing significant charges on other system participants.

Licences for pre-paid payment instruments temporarily suspended
India | 23 December 2016

The Reserve Bank of India (RBI) recently issued a press release stating that given the rapid changes to the payments solutions space, it was in the process of reviewing the regulatory framework governing pre-paid payment instruments. The RBI also stated that it will grant no new licences for the issue of pre-paid payment instruments until the end of February 2017. This temporary suspension will not apply to applications made by new small finance banks and payment banks.

Supreme Court rules on post-dated cheque given as security for repayment of loan instalment
India | 23 December 2016

The Supreme Court recently held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act. While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 138, the court explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction.

Employment & Benefits

Reducing minimum period of unemployment to withdraw provident fund accumulations
India | 22 August 2018

The Central Board of Trustees of the Employees' Provident Fund Organisation recently approved a proposal to permit provident fund members to withdraw 75% of their accumulations after a period of one month of continuous unemployment instead of two months. The proposal would come into effect when the Employees' Provident Funds and Miscellaneous Provisions Act and the Employees' Provident Funds Scheme are amended.

Code on Wages soon to be introduced
India | 28 March 2018

The new Code on Wages 2017 was recently introduced in Lok Sabha and is currently pending approval. The code seeks to integrate, amend and simplify the four central labour laws in order to reduce the multiplicity of definitions given under various labour legislation and foster a conducive labour environment by facilitating ease of compliance, thereby promoting the establishment of more organisations and creating more employment opportunities.

Increase in gratuity limit
India | 15 November 2017

The Payment of Gratuity Act 1972 is a form of social security legislation which prescribes a scheme for the payment of gratuity. For the private sector, gratuity is capped at Rs1 million, whereas central government employees can receive gratuity of up to Rs2 million. There is a proposal to increase the cap for the private sector in order to align it with the central government. Although this is a step forward in ensuring better benefits to eligible employees, it will increase employers' financial burden.

Disabilities Act and role of private employers
India | 04 October 2017

The federal government recently enacted a new act in order to empower disabled individuals and ensure their inclusion in the education and employment spheres. Although the government is primarily responsible for ensuring that disabled individuals receive equal treatment under the act, private organisations have also been made accountable for various obligations.

Social security obligation for outbound employees
India | 28 June 2017

With the growing landscape of global businesses, there is a constant need to deploy employees for international assignments not only for skill development, but also for the business needs of the organisation. In order to abate similar obligations in a host country, India has entered into social security agreements (SSAs) with many countries. SSAs offer various benefits, such as the totalisation of benefits and exemption from dual contributions of social security.

Right foot forward: 2016 amendments to maternity benefits
India | 15 March 2017

The Maternity Benefit (Amendment) Bill 2016 was recently passed by the upper house of Parliament. Key changes include enhanced maternity leave, the introduction of maternity leave for adopting and commissioning mothers and new remote working provisions. The amendments are undoubtedly a positive step towards promoting diversity and the increased participation of women in the workforce in the manufacturing and service industries.

Insolvency & Restructuring

Status of 'other' creditors under Insolvency and Bankruptcy Code 2016
India | 08 September 2017

The Reserve Bank of India recently directed several banks to start insolvency resolution proceedings against a list of identified companies, including Jaypee Infratech Limited, a leading real estate development company. The case has highlighted the need for the Insolvency and Bankruptcy Code 2016 to recognise a wider class of creditors that can initiate an insolvency proceeding and participate meaningfully in such process. It has also emphasised the important role that financial creditors play.

Litigation

Specific Relief (Amendment) Bill 2017: step towards new jurisprudence
India | 19 June 2018

In order to keep pace with rapid economic growth, the Specific Relief (Amendment) Bill 2017 proposes to introduce provisions to facilitate the enforcement of contracts. Among other things, the bill proposes to remove the courts' discretionary power to decree specific performance, permit substituted performance by a third party, set up special courts for dealing exclusively with suits relating to infrastructure claims and prevent the courts from granting injunctions in contracts relating to an infrastructure project.

Supreme Court issues two important consumer law judgments
India | 13 March 2018

The Supreme Court recently issued two judgments regarding consumer law. In the first, the Supreme Court held that the courts should take a pragmatic view of consumers' rights considering their relative disadvantage with regard to suppliers of goods or services. In the second, the court held that, in the context of a vehicle insurance policy, the mere failure of the vehicle owner to intimate the insurer immediately after the theft of the vehicle should not bar settlement of genuine claims.

Contract law: three most important Supreme Court judgments
India | 06 March 2018

In an important recent case regarding contract law, the Supreme Court held that the commercial courts should not seek to interpret the implied terms of a contract. In a second notable case, the court examined whether an increase in coal prices (due to a change in Indonesian law) could be cited as a force majeure event by certain power-generating companies that were sourcing coal from Indonesia. Finally, the court also recently issued an important decision in a suit for damages and wrongful termination.

Criminal law: most important Supreme Court judgments in 2017
India | 27 February 2018

The most important criminal law Supreme Court judgments in 2017 included a case which held that Section 45 of the Prevention of Money Laundering Act 2002, on the grant of bail, violates the right to equality and right to life. Elsewhere, the court clarified the criteria for quashing criminal proceedings and issued certain guidelines in order to prevent the misuse of Section 498A of the Penal Code.

Supreme Court rules on consumer rights and arbitration agreements
India | 13 February 2018

A division bench of the Supreme Court recently decided to examine the correctness of a judgment by the National Consumer Disputes Redressal Commission (NCDRC), New Delhi. The NCDRC had held that, among other things, consumer disputes cannot be settled by arbitration. This decision begs the question whether the line of reasoning preferred by the NCDRC is likely to invite more critical scrutiny by the Supreme Court.

Public interest litigation: Supreme Court issues landmark judgments
India | 06 February 2018

Throughout 2017, the Supreme Court issued judgments on public interest litigation cases. These include reviewing the way in which senior advocates are designated, determining whether to constitute a special investigation team and establishing fast-track courts for criminal cases.

Constitutional law: recent Supreme Court cases
India | 30 January 2018

In 2017 the Supreme Court delivered several significant judgments which have far-reaching importance in the field of constitutional law. In particular, in one case, the court set aside the practice of talaq-e-biddat, while in another it held that the right to privacy was an intrinsic part of the right to life and other freedoms guaranteed under the Constitution.

Retrospective application of Prevention of Money Laundering Act
India | 11 July 2017

The Karnataka High Court recently issued a judgment which dealt with the retrospective application of the Prevention of Money Laundering Act 2002. The court held that a person cannot be tried for an offence under the act for the period when the offence was not inserted in the schedule of offences under the act. This would deny the writ petitioner the protection offered by Article 20(1) of the Constitution.

Contractual penalty clauses: Supreme Court weighs in
India | 27 June 2017

In 2015 the Supreme Court settled the law on contractual penalty clauses. In essence, the term 'contractual penalty clause' refers to a clause in a contract whereby a party in breach of an obligation under the contract is required to pay the other party an amount which is greater than the reasonable proportion of the damage or loss suffered due to such breach.

Supreme Court rules on special judges' power under Prevention of Corruption Act
India | 30 May 2017

The Supreme Court recently dealt with the question of whether a special judge designated to deal with cases under the Prevention of Corruption Act 1988 is empowered to try offences which do not fall within the act. The court held that that there is no prejudice to a trial before a special judge duly appointed to oversee cases that fall under the act if the object of doing so is to try connected cases before the same court.

Supreme Court rules on segregation of grounds in detention order
India | 14 March 2017

The Supreme Court recently clarified and reaffirmed the legal position surrounding the existence and severability of multiple grounds contained in a detention order passed under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act 1974. The Supreme Court addressed the scope of the definition of 'grounds' in a detention order, holding that grounds are the basic facts on which an order is based in light of subsidiary facts or further particulars.

Supreme Court rules on post-dated cheque given as security for repayment of loan instalment
India | 20 December 2016

The Supreme Court recently held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act. While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 138, the court explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction.

Class actions under Companies Act
India | 15 November 2016

Although the concept of class action was first introduced into law by way of Section 245 of the Companies Act 2013, it only recently came into force. Specifically, Section 245 has introduced the concept of specialised class action by a company's shareholders and depositors. The enactment of Section 245 is likely to have far-reaching effects on the legal regime as, in addition to empowering shareholders and depositors, it will affect how companies conduct their affairs.

NCLT: a new beginning
India | 27 September 2016

The Ministry of Corporate Affairs recently notified, among other things, the constitution of the National Company Law Tribunal and the National Company Law Appellate Tribunal and the dissolution of the Company Law Board. This marks an important step towards facilitating business in India, as it seeks to consolidate jurisdiction for various aspects of corporate litigation.

Court rules on appointment of arbitrator under special circumstances
India | 26 June 2012

The Supreme Court recently ruled that, despite an express clause providing for an arbitrator, the court can appoint an independent and impartial arbitrator under special circumstances. Through this ruling, the court struck a balance to the extent that it could not ignore the appointment of an arbitrator whom the parties have chosen under the terms of the contract, unless the arbitration would otherwise be rendered void.

Supreme Court clarifies rules on transfer of immovable property
India | 14 February 2012

The Supreme Court of India recently observed that it has become common practice to effect transfers of immovable property by way of sale agreement, general power of attorney or will transfers in order to evade payment of duties, taxes and other fees payable on transfer and registration. This judgment confirms that a valid transfer of immovable property can occur only through a registered deed of conveyance.

Court rules on single arbitration sustained between multiple parties
India | 31 January 2012

The Supreme Court recently clarified the eligibility of a single arbitration proceeding between multiple parties in disputes that arise from the same cause of action. The court considered that it would be proper and just to rule that when one party has a claim jointly against a second and a third party, and when there are provisions for arbitration in respect of both other parties, there can be a single arbitration.

Court rules on reference to arbitration despite final settlement
India | 17 January 2012

The Supreme Court recently ruled that disputes or claims regarding payment of work can be raised and referred to arbitration after the party raising such claims has received payment on a final bill issued for the works. Such disputes can be raised even if the party made no objection in respect of such payments at that time, provided that it was not precluded by any clause of the contract from seeking settlement of claims.

Validity of arbitration agreement in unregistered instrument
India | 20 December 2011

In a recent judgment the Supreme Court opined on the question of whether an arbitration agreement contained in an unregistered (but compulsorily registrable) instrument was valid and enforceable. The decision is of interest to parties dealing with immovable property transactions, as it confirms that parties should be vigilant about the statutory requirements of registering and stamping an instrument.

Court rules on non-suiting of party due to grant of interim relief
India | 13 December 2011

In a recent case, the Supreme Court considered the nature of reliefs that a court may grant at an interim/interlocutory stage and reiterated its stance that an interim order cannot be such that it would non-suit one of the parties at this stage, and would therefore take the form of a final relief.

Enforcing foreign awards: Supreme Court widens scope of 'public policy'
India | 22 November 2011

The Supreme Court recently examined the scope of the expression 'public policy' under the Arbitration and Conciliation Act 1996, in relation to the setting aside of a foreign arbitral award. Accepting a wider definition of 'public policy', the court considered the arbitral award on the basis of patent illegality. This is likely to lead to inevitable complexities and delays in the process of enforcing a foreign award in India.

Supreme Court clarifies when an arbitration clause can be invoked
India | 15 November 2011

The Supreme Court recently confirmed its view that once a party has finally and fully settled its disputes with another and received the benefits under the settlement, that party cannot later invoke the arbitration agreement in respect of the dispute. The court argued that this would amount to blowing hot and cold at the same time, contrary to the doctrine of estoppel by election.

To what degree should courts intervene when referring matters to arbitration?
India | 01 November 2011

The Supreme Court recently reiterated the settled principle of law that when deciding whether an arbitral procedure is to be set into motion, the chief justice must examine and record that a satisfactory arbitration agreement exists between the parties. Only when satisfied that such an agreement exists can the chief justice allow the application and appoint either an arbitral tribunal or a sole arbitrator, as the case may be.

Supreme Court examines scope of Arbitration Act
India | 18 October 2011

In a recent decision the Supreme Court ruled that in an international seated arbitration governed by an international arbitral institution, Section 42 of the Indian Arbitration and Conciliation Act 1996 was applicable only at the pre-arbitral stage, when an arbitrator had not been appointed. This decision makes international arbitration friendlier for parties who have in the past been subjected to prolonged court litigations in India.

Supreme Court clarifies arbitrator's power to award interest
India | 27 September 2011

A Supreme Court ruling recently clarified that where a contract specifically prohibits it, arbitrators do not have the power to grant interest. However, the court ruled that where an agreement between the parties does not prohibit the granting of interest, a party claimed interest and such dispute is then referred to the arbitrator, the arbitrator has the power to award interest pendente lite (ie, pending litigation).

No-claims certificates: court rules on survival of arbitration clauses
India | 28 June 2011

The Supreme Court recently considered whether, after furnishing no-claims certificates and receiving payment for a contractor's final bill, any arbitrable dispute between the parties survives or whether the contract can be considered discharged. The court ruled that in such cases the consequences of discharge of the contract must be considered and decided by the Chief Justice under the Arbitration and Conciliation Act.

Courts' duty when non-party to arbitration agreement is impleaded under Section 11
India | 19 April 2011

The Supreme Court recently made an important pronouncement on the scope of the duty of the courts when a person that is not a party to the arbitration agreement is impleaded under a Section 11 petition under the Arbitration and Conciliation Act 1996.

Must loss resulting from breach of contract be proven?
India | 22 March 2011

In Sudhir Gensets Ltd v Indian Oil Corporation Ltd the Delhi High Court ruled on Sections 73 and 74 of the Contract Act 1857. The court held that the loss suffered by a party due to breach of contract need not be proven where parties have specifically agreed certain points regarding the compensation in the contract.

Supreme Court rules corporate body can be prosecuted for criminal offences
India | 01 March 2011

The Supreme Court has ruled on the question of corporate liability for criminal offences, holding that a company cannot claim immunity from criminal prosecution on the grounds that it does not have the necessary mens rea (ie, 'guilty mind') to commit a criminal offence, or that the punishment prescribed for such an offence includes imprisonment.

Court rules on automatic dissolution of partnership on death of one partner
India | 01 February 2011

The Supreme Court has ruled that on the death of a partner of a firm comprised of only two partners, the firm is dissolved automatically; this is notwithstanding any clause to the contrary in the partnership deed. The Partnership Act defines a 'partnership' as a contract between more than one person. Therefore, if in a firm comprised of only two persons as partners one dies, the contract comes to an end.

Court clarifies jurisdiction of arbitral tribunal in relation to scope of contract
India | 18 January 2011

The Supreme Court has reaffirmed the principle that an arbitral tribunal, pending adjudication before it, cannot go beyond the scope of the contract. The court held that in the event that any award of the arbitral tribunal is found to be in violation of the express provision contained in the contract which is the subject matter of the proceeding, such award would be beyond the jurisdiction of the tribunal and thus would merit interference.

Supreme Court rules on limitation period for setting aside an award
India | 21 December 2010

A recent Supreme Court decision laid out how to calculate the limitation period, under Section 34 of the Arbitration and Conciliation Act, for cases where a prosecution is initially brought before the wrong forum. The court decided that provided the delay is in good faith, the total limitation period can be extended by up to 30 days over the standard three months.

Supreme Court rules on doctrine of lis pendens and registration of documents
India | 07 December 2010

The Supreme Court recently discussed and reviewed the law relating to the doctrine of lis pendens with regard to Section 47 of the 1908 Registration Act. This provides that no fixed property can be transferred while an action relating to it is pending before a court of law. The court clarified that the legal fiction created by virtue of Section 47 does not circumvent the operation of lis pendens.

When is an arbitration agreement contemplated between parties?
India | 23 November 2010

In a recent case the Supreme Court considered whether a guarantor for a loan that is not a party to the loan agreement containing the arbitration agreement that has been executed between the lender and the borrower can be made a party to a reference to arbitration regarding a dispute over repayment of such loan and subjected to the arbitration award.

Court prohibits reference to arbitration after contract has been fully discharged
India | 16 November 2010

In a recent case the Supreme Court considered whether the parties could invoke an arbitration clause when the principal agreement had been fully and finally discharged. After an in-depth discussion, the court held that once the parties to a contract have confirmed in writing that the contract has been fully and finally discharged and no claim or dispute is outstanding, the matter cannot be referred to arbitration.

Court allows assignment of debts between banks
India | 02 November 2010

In ICICI Bank India Ltd v Official Liquidator of APS Star Industries Ltd the principal question for consideration by the Supreme Court in a batch of civil appeals was whether the assignment of debts between banks was an impermissible activity under the Banking Regulation Act 1949 and whether, as a result, all executed contracts of assignment of debts were illegal.

Power of arbitral tribunal to award interest when contract contains express bar
India | 26 October 2010

In a recent case the Supreme Court made an important pronouncement concerning the power and scope of an arbitral tribunal to award interest pendente lite (pending litigation) when the contract between the parties to the arbitration agreement contains an explicit and express bar on the grant of interest.

Supreme Court clarifies scope of Order 10, Rule 2 of Code of Civil Procedure
India | 12 October 2010

A recent case examined the scope of Order 10, Rule 2 of the Code of Civil Procedure. The Supreme Court considered the ambit of the rule, the issue of confronting defendants with partially covered documents and the correctness of invoking Section 340 of the Code of Criminal Procedure in regard to answers given by a party in an examination by the court under the rule.

In the absence of an arbitration agreement, can courts refer parties to arbitration?
India | 28 September 2010

The Supreme Court was recently faced with the question of whether the court, in the absence of an arbitration agreement between the parties, was competent to refer the parties to arbitration under Section 89 of the Code of Civil Procedure 1908. The court held that unless both parties consent to such referral, the courts cannot refer the parties to arbitration under Section 89.

Supreme Court rejects writ proceedings when alternative statutory remedy available
India | 21 September 2010

A recent case considered whether the alternative statutory remedy available to a borrower under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 can be bypassed, and writ jurisdiction of the High Court under Article 226 of the Constitution be invoked instead, in order to restrain a bank from taking coercive action against the borrower's properties in the event of payment default.

Supreme Court rules on priority of national versus state law
India | 07 September 2010

The Supreme Court recently considered whether the sections of the Bombay Sales Tax Act and the Kerala General Sales Tax Act which create a first charge on the property of a dealer or other person liable to pay sales tax are inconsistent with the provisions of two national pieces of legislation for the recovery of debt and the enforcement of a security interest.

Compensation received for delay amounts to capital receipt under Income Tax Act
India | 31 August 2010

The distinction between revenue and capital under the income tax law is fundamental. Ordinarily, tax is levied on income, but not on capital profits. The issue of whether a particular receipt is capital or income derived from business is frequently presented to the courts and depends on the particular facts and circumstances of each case.

Supreme Court intervenes in the appointment of an arbitrator
India | 17 August 2010

The Supreme Court recently intervened to appoint an independent sole arbitrator in a dispute between two companies even though the contract provided for the appointment of an employee as the arbitrator. The court confirmed that if any circumstance exists to create a reasonable apprehension about the impartiality or independence of the agreed or named arbitrator, the court has the discretion not to appoint such a person.

Supreme Court clarifies arbitrator's power to act beyond the scope of a contract
India | 10 August 2010

The Supreme Court recently issued an important decision concerning an arbitrator's authority to pass an award that is contrary to the terms of a contract executed between the parties. The case involved a dispute between two companies related to increased labourers' wages which was resolved by an arbitral tribunal, but overturned by the Supreme Court.

Supreme Court rules on acting in concert
India | 03 August 2010

The Supreme Court has clarified when two persons can be said to be 'acting in concert' for the purpose of the Takeover Code. The court held that for two or more persons to meet the criterion, a target company on one hand and two or more persons on the other must come together with the shared objective or purpose of acquiring shares in a target.

When can a high court entertain a second appeal?
India | 06 July 2010

In a recent case the Supreme Court made an important pronouncement concerning the scope of maintainability of a second appeal before the high court. The Supreme Court was of the opinion that a second appeal under Section 100 of the Code of Civil Procedure 1908(2) is maintainable only on a substantial question of law and not on facts.

Court rules that non-signatory third party is not bound by arbitration agreement
India | 22 June 2010

The Supreme Court of India recently held that a third party that was not a signatory to an arbitration agreement would not be bound by such an agreement. The court held that if an arbitration clause is found in an agreement between two parties, it cannot be considered binding on a person who is not a signatory to the original agreement.

Court rules on validity of contracts entered into by unincorporated companies
India | 15 June 2010

In a recent case the Supreme Court of India held that an unincorporated company could not enter into a contract, and that consequently it could not enforce a contract entered into before its incorporation, including a dispute resolution mechanism provided therein, as it did not exist on the date on which the contract was agreed. This judgment has a wide range of implications for companies that enter into pre-incorporation contracts.

No restriction on free transferability of public limited company shares
India | 27 April 2010

The Bombay High Court recently upheld the principle of free transferability of a public limited company's shares. The primary issue before the court concerned the arbitrator's jurisdiction and his determination on the valuation of the shares. The petitioner contended that the arbitrator had exceeded his jurisdiction in deciding the date on which the valuation had to be determined.

Can recourse to expensive arbitration be limited?
India | 23 March 2010

In a recent case it was held, while observing that the financial burden caused by arbitration proceedings is a legitimate concern, that the expression 'all disputes' in an arbitration clause does not mean that once the arbitration clause is invoked, the remedy of arbitration is no longer available in respect to other disputes that might arise in the future.

Inference of existence of arbitration agreement from correspondence
India | 02 March 2010

The Supreme Court recently made an important pronouncement concerning the scope of determination of the existence of an arbitration agreement from correspondence between the parties under the Arbitration and Conciliation Act 1996. It opined that the existence of an arbitration agreement can be inferred from a document signed by the parties or any other means of communication which provide a record of the agreement.

Affirmative vote does not amount to 'control'
India | 23 February 2010

In a recent landmark judgment the Securities Appellate Tribunal held that an affirmative vote given to an acquirer under a share subscription and shareholders' agreement executed between the acquirer and the target did not bestow on the acquirer control over the target. This decision interprets and determines the term 'control' in the context of takeovers of public listed companies in India.

Mandate of arbitrator terminated for failure to publish award
India | 26 January 2010

In a recent case the Supreme Court made an important pronouncement concerning the scope for termination of the mandate of an arbitrator under the Arbitration and Conciliation Act 1996. The court was of the opinion that the mandate of the arbitrator stood terminated on account of his failure to publish the award within the timeframe fixed by the parties to the arbitration.

Does an Arbitration Clause Printed on an Invoice Constitute an Agreement?
India | 05 January 2010

A dispute arose between two parties pertaining to a sum of Rs885,951 plus interest in respect of a balance owed for cloth allegedly supplied to the respondent. On referral to arbitration, the issue for consideration was whether the existence of an arbitration agreement printed on the invoice could be inferred without proof that the invoices had been exchanged with or delivered to the respondent.

Appointment of Substitute Arbitrator under Section 15(2) of the Arbitration Act
India | 08 December 2009

In a recent case the Supreme Court made an important pronouncement concerning the scope and applicability of Section 15(2) of the Arbitration and Conciliation Act 1996. The court was of the opinion that the mandate contained in Section 15(2), which postulates the appointment of a substitute arbitrator, must be applied in accordance with the arbitration clause agreed between the parties.

Are Courts Bound to Refer Disputes to Arbitration?
India | 17 November 2009

The Supreme Court of India recently addressed the question of whether courts are bound to refer a dispute to arbitration where there is an express provision to that effect. It concluded that a civil court's power to refuse to stay a suit in light of an arbitration clause and on the existence of certain grounds is within the purview of the Arbitration and Conciliation Act 1996.

Termination of Contract and Survival of Arbitration Clause
India | 20 October 2009

In a recent case the Supreme Court addressed the question of whether an arbitration agreement survives the termination of the main contract. In its judgment the court discussed the legal positions of different jurisdictions and concluded that an arbitration clause will survive once the contract containing the clause has come to an end or been terminated.

Court Holds That Arbitrator Cannot Award Damages Based on Own Experience
India | 15 September 2009

The Delhi High Court has reiterated the established principle that an arbitrator is bound by the contract between the parties and cannot act in a whimsical manner when deciding claims. The court held that an award based on the arbitrator's experience cannot be upheld.

Supreme Court Rules on Incorporation of Arbitration Clause by Reference
India | 08 September 2009

The Supreme Court has ruled on its interpretation of Section 7(5) of the Arbitration and Conciliation Act 1996 and the issue of whether an arbitration clause contained in a main contract can be incorporated by reference into a subcontract where the subcontract provides that it "shall be carried out on the terms and conditions as applicable to the main contract".

Appeal Court Upholds Decision on Jurisdiction to Grant Interim Relief
India | 25 August 2009

The Division Bench of the Delhi High Court recently upheld the decision of the single bench of the high court regarding the jurisdiction of Indian courts to grant interim relief in international commercial arbitrations. This decision sets an important precedent as it clarifies the competence of Indian courts to exercise jurisdiction in international commercial arbitrations and restricts judicial intervention in the arbitral process.

Court Rules in Favour of Arbitration Act Despite Foreign Governing Law
India | 11 August 2009

In a recent case the designate judge of the chief justice of India ruled that unless specifically excluded by the agreement between the parties or by implication, the provisions of Part I of the Arbitration and Conciliation Act 1996 will apply to international commercial arbitrations, even where the governing law is a foreign law.

Jurisdiction of Indian Courts to Grant Interim Relief
India | 14 July 2009

The Delhi High Court recently issued a landmark decision on whether Indian courts have jurisdiction to entertain and grant interim relief in petition under Section 9 of the Arbitration and Conciliation Act 1996 in cases where the agreement between the parties provides that the law governing the contract, the court's jurisdiction and the place of arbitration are all outside India.

Supreme Court Gives State Debts Priority Over Rights of Secured Creditors
India | 07 July 2009

The Supreme Court recently held that statutory first charge rights created by state legislation on the property of the dealer or any other person liable to pay sales tax will take precedence over central legislation that provides for recovery of debts and enforcement of security interests. This ruling will have a substantial impact on the rights of banks, financial institutions and other secured creditors to recover their dues.

Whose Court Is It Anyway? Assessing the Choice of Courts in Contracts
India | 16 June 2009

The Supreme Court recently had to consider whether the ouster clause in an agreement was applicable in ascertaining the competent court for making an application for reference under Section 20 of the Arbitration and Conciliation Act 1940. The court held that if the contracting parties agree to vest jurisdiction in one court to try any dispute which might arise, such agreement would be valid and binding on the parties.

Supreme Court Rules in Karnataka Power Transmission Case
India | 12 May 2009

In a recent decision the Supreme Court arrived at a finding that an electricity consumer falls within the definition of a 'consumer' in Section 2(o) of the Consumer Protection Act 1986 and that any deficiency in the service provided to such a consumer can be raised before the consumer forums established under the act.

Supreme Court Rules on Determination of Validity of Arbitration Agreements
India | 05 May 2009

In a recent case the Supreme Court ruled that since the Arbitration and Conciliation Act 1996 mandates no particular form of arbitration agreement, the correspondence exchanged between the parties can be used to determine their intention to arbitrate and consequently such correspondence can be used to determine the validity and enforceability of an arbitration agreement.

High Court Continues to Uphold Liberalist Approach in Allowing Pre-trial Amendments
India | 07 April 2009

In a recent decision the High Court continued to uphold its liberalist approach in allowing pre-trial amendments provided that the prerequisites, including the preservation of the existing cause of action and the appellant's defence, are satisfied. The decision shows that the courts will continue to construe pre-trial amendments liberally in view of the settled decisions of the Apex Court.

Full and Final Satisfaction When Challenging the Appointment of Arbitrators
India | 10 March 2009

The Supreme Court recently made an important pronouncement regarding full and final satisfaction in the context of Section 11 of the Arbitration and Conciliation Act 1996. The court ruled that pursuant to a Section 11 application, a claim for appointment cannot be rejected on the grounds that the party had executed a settlement agreement or discharge voucher if the validity of the agreement or voucher is disputed by the other party.

High Court Judgment May Adversely Affect Flow of Foreign Direct Investment into India
India | 03 March 2009

In a recent case the Bombay High Court observed that the transfer of share capital from one non-resident company to another non-resident company with the sole intention of acquiring interests in India would amount to a transfer of capital assets and would hence be liable for capital gains tax. This judgment sends powerful signals which may adversely affect the flow of foreign direct investment into India.

State Debts to Take Precedence over Unsecured Third-Party Debts
India | 24 February 2009

In a recent case the Supreme Court of India had to decide whether realization of tax liability would have priority over secured debts due in terms of a statutory enactment. While the Supreme Court acknowledged the principle of priority of state debts under common law, it clarified its scope as being applicable only against unsecured debts or claims.

Supreme Court Rules on Arbitration between Companies Incorporated in India
India | 17 February 2009

The Supreme Court has ruled that if two companies are incorporated in India, an arbitration between such parties cannot be an international commercial arbitration as defined under the Arbitration and Conciliation Act 1996. Even if the central management and control of such companies are exercised outside India, they will not be permitted to derogate from substantive Indian law.

Digital Evidence: An Indian Perspective
India | 10 February 2009

The proliferation of computers, the social influence of information technology and the ability to store information in digital form have all required Indian law to be amended to include provisions on the appreciation of digital evidence. The legislative amendments that have introduced the admissibility of both electronic records and paper-based documents are reflected in recent court decisions.

White Collar Crime

Retrospective application of Prevention of Money Laundering Act
India | 24 July 2017

The Karnataka High Court recently issued a judgment which dealt with the retrospective application of the Prevention of Money Laundering Act 2002. The court held that a person cannot be tried for an offence under the act for the period when the offence was not inserted in the schedule of offences under the act. This would deny the writ petitioner the protection offered by Article 20(1) of the Constitution.

Supreme Court rules on special judges' power under Prevention of Corruption Act
India | 29 May 2017

The Supreme Court recently dealt with the question of whether a special judge designated to deal with cases under the Prevention of Corruption Act 1988 is empowered to try offences which do not fall within the act. The court held that that there is no prejudice to a trial before a special judge duly appointed to oversee cases that fall under the act if the object of doing so is to try connected cases before the same court.

Supreme Court rules on segregation of grounds in detention order
India | 13 March 2017

The Supreme Court recently clarified and reaffirmed the legal position surrounding the existence and severability of multiple grounds contained in a detention order passed under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act 1974. The Supreme Court addressed the scope of the definition of 'grounds' in a detention order, holding that grounds are the basic facts on which an order is based in light of subsidiary facts or further particulars.

Supreme Court rules on post-dated cheque given as security for repayment of loan instalment
India | 19 December 2016

The Supreme Court recently held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act. While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 138, the court explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction.