TIME IS THE ESSENCE OF A CONTRACT

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Time is the essence of a contract is an expression in a contract which means that the performance by one party at or within the period specified in a contract is necessary to enable that party to require performance by the other party.

The meaning of time is essence is that the parties have agreed to perform at a given time agreed in a contract and shall not extend the specified time in a contract. In case a contract does not expressly provide this phrase then in that case time is not the essence of a contract.

Time is the essence is specified in Section 55 of The Indian Contract Act, 1872, “When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.

When time is the essence in construction contracts the standard rule is that the parties have agreed to perform their obligation as per the time specified in a contract and there shall not be any extension of time. Whereas, if time is not the essence of the contract, the court allows the parties to a contract perform at some other time than agreed upon.

In real estate sector, time is the essence of a contract when the parties have expressly intended to include it in the terms of a contract. Thus, it shows the intention of the parties to contract to consider “time is the essence” a significant term of the contract.

Intention of parties to contract is imperative to signify whether time is the essence or not to a contract, therefore, as also held by the Supreme Court of India in M/S Citadel Fine Pharmaceuticals vs M/S Ramaniyam Real Estates Pvt. Ltd. and Ors. (2011) 9 SCC 147, 

the stipulation as time being of the essence of the contract was specifically mentioned in clause 10 and the consequences of non-completion are mentioned in clause 9. So, from the express terms of the contract and the commercial nature of the transaction and the surrounding circumstances make it clear that the parties intended time in this case was intended to be of the essence of the contract.

If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.

A contract becomes voidable if the promisor fails to perform within the specified time in a contract and the promisee is entitled to compensation from the promisor for any loss incurred by such failure.

However, in case a contract becomes voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss suffered by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.

Thus, if the parties do not expressly illustrate any intention to make time is the essence of contract then the promisee is not entitled to claim compensation on loss incurred due to promisor’s failure to perform his obligations as per contract.

Taruna Verma

Senior Associate

 

AMAZON INDIA LENDING PLATFORM

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Amazon India, one of the ecommerce companies in India, has recently launched a platform whereby multiple lenders may offer loan to sellers registered with Amazon (Sellers) and the Sellers can select any particular lender based on the terms and conditions of the loan and get their loan disbursed. This program is known as Seller Lending Network (Program). Amazon has further clarified that it would only act as a facilitator for the Lenders and the Sellers.

The Program was launched with the object of assisting the Sellers at various stages of their business cycle. As per Amazon India, the primary reason behind the failure of a business or the incapacity to purchase raw material and inventory, etc is the lack of working capital.

Therefore, Amazon India has so far associated with six lenders under the Program, namely, Capital First, Capital Float, Bank of Baroda, Aditya Birla Finance, Yes Bank and FlexiLoans (Lenders).

Herein, Amazon India has planned to select only those profiles of Sellers which match the interest of the Lenders and thereafter, send the selected Sellers an invite, thereby giving details about the Program. Interested Sellers may then opt for the Program and apply for loan at Amazon’s Seller Central, a platform where the Sellers are registered with Amazon.

The Lenders may approve the loan of a Seller based on their performance, sales history and any other criteria. Upon approval of the loan, the amount would be lent directly to the Seller by the Lender. The entire procedure of disbursement of loan may take two to three days.

In order to ensure that Sellers make a timely repayment of loans to the Lenders, Amazon India has reportedly planned to provide for repayment of a percentage of amount earned by the Seller, through Amazon, directly to the Lender.

This Program may also prove to be beneficial to Amazon India as the Sellers who obtain loans under the Program, would utilize the loan amount to purchase raw materials and inventory to manufacture and sell products through Amazon or to develop their products and thereby improve their business.

This Program may prove to be a breakthrough as it takes into consideration the financial issues and obstacles that small and medium businesses face at various stages of business cycle and may help them to reestablish their business in this highly competitive market.

 

 

 

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

DAM SAFETY BILL 2018 APPROVED BY UNION CABINET

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On 13th June 2018, the Union Cabinet chaired by the Prime Minister Narendra Modi approved the proposal for enactment of Dam Safety Bill, 2018 in the Parliament.

The Dam Safety Bill, 2018 shall examine the cause of any major dam failure. It has been promulgated to address issues concerning dam safety such as regular inspection of dams, emergency action plan, comprehensive dam safety review, adequate repair and maintenance funds for dam safety and safety manuals for existing and new dams in the country.

National Dam Safety Authority (NDSA) will act as a regulatory body which shall be operative to implement the policy, guidelines and standards for dam safety in the country and create database of existing dams as proposed in the Bill.

The NDSA will investigate dam failures and have the authority to fine the States if found negligent in implementing safety procedures.

The Bill comprises of uniform measures to ensure safety of dams adopted which will be adopted by all States and Union Territories. The purpose of the Bill is also to help in eliminating potential risk of floods during heavy rainfall that causes major disaster to environment. Therefore, it will also help in safeguarding human life, animal and property from floods.

The Bill will also provide constitution of a National Committee on Dam Safety which shall evolve dam safety policies and recommend necessary regulations as may be required for the purpose.

The Dam Safety Bill lays onus of dam safety on the dam owner and includes penal provisions for commission and omission of certain acts.

Taruna Verma

Senior Associate

MAN LOSES SHARE IN PROPERTY FOR MISTREATING STEP-MOTHER

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Pritish Natvar Sanghi, the son, had petitioned the High Court of Judicature at Bombay challenging the order of the SDO whereby the SDO declared transfer of 50% share by the Respondent No.1, the father, to the petitioner in respect of his flat, at Brooklyn Hills Co-operative Housing Society, as illegal.

The case of Pritish Natvar Sanghi v. Natvar Keshavlal Sanghvi and Anr. was decided by the High Court of Judicature at Bombay on 4th June, 2018, upholding the order of the SDO.

The Petitioner’s mother, Respondent No. 1’s wife, died in 2014. Subsequently, the Respondent No. 1 remarried. To this, the Petitioner and his wife desired that 50% share in the property of Respondent No. 1 be transferred in their name. The Respondent No. 1, to maintain peace in the family, made a gift deed on 23rd May, 2014 in favour of the Petitioner transferring 50% share in the property of Respondent No. 1.

The Respondent No. 1 alleged that after the transfer was made in favour of the Petitioner, the Petitioner and his wife started ill-treating the second wife of the Respondent No. 1. As a result, the Respondent No. 1 and his second wife were compelled to live separately in a rented accommodation.

The Respondent No. 1 moved the SDO under sections 5 and 23 of the Maintenance and Welfare of Parents and Senior Citizens Act, 2007 (hereinafter the “Act”) for maintenance and declaration of the gift deed as void.

Clause (1) of Section 23 of the Act states that where any senior citizen who, after the commencement of this Act, has transferred by way of gift or otherwise, his property, subject to the condition that the transferee shall provide the basic amenities and basic physical needs to the transferor and such transferee refuses or fails to provide such amenities and physical needs, the said transfer of property shall be deemed to have been made by fraud or coercion or under undue influence and shall at the option of the transferor be declared void by the Tribunal.

The Petitioner, before the SDO, took the stand that he is willing to let the Respondent No. 1 stay with him in the flat but not his step-mother. Consequently, the SDO revoked the gift deed in favor of the Petitioner, after which the Petitioner moved the High Court of Judicature at Bombay.

The High Court of Judicature at Bombay held that since the gift deed was made at the request of the Petitioner and his wife, they were under an obligation to not mistreat the Respondent No. 1 and his wife after the transfer of 50% share in the property. The High Court while holding that it was incumbent upon both the Petitioner and the wife to look after the Respondent No. 1 and his second wife, upheld the order of the SDO, finding no error in the same and dismissed the petition.

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

Approval by the Parliament of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018

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The Parliament had, in 2015, come out with the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act (hereinafter “Act”) in 2015. The Act provided for the establishment of Commercial Courts at the District level and Commercial Divisions in High Courts which have ordinary original civil jurisdiction. The Act further provided for setting up of the Commercial Appellate Divisions in High Courts to deal with appeals from the Commercial Court/Commercial Division. This was done to ensure speedy adjudication of matters relating to commercial disputes.

Since, it was felt that the Act of 2015 did not ensure a speedy legal recourse, the President of India gave his assent to The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018 (hereinafter “Ordinance”), which was published in the Official Gazette of India on May 03, 2018. The amendments in the Ordinance have been incorporated with a view to enlarge the scope of commercial courts in India. The amendments will also act as a catalyst towards improving India’s ranking on the ‘Ease of Doing Business Index’ as released by the World Bank (Ease of Business Report).

The amendments brought to the Act of 2015 by way of the Ordinance, 2018 are as follows:

  1. It reduces the pecuniary jurisdiction of the Commercial Courts and the Commercial Divisions of the High Court. Under the Act of 2015, Commercial Courts and the Commercial Divisions of the High Court could entertain matters, including Intellectual Property Rights matters, of Rupees 1 crore and above. However, the Ordinance, 2018 reduces it to Rupees 3 lakhs and above.

  2. The Act of 2015 specifically barred the constitution of Commercial Courts for the territory over which the High Court has ordinary original civil jurisdiction. The Ordinance, however, permits the states, after consultation with the concerned High Court, to set up Commercial Courts at the District Judge Level for territories where the High Court has ordinary original civil jurisdiction.
  3. Consequently, Section 9 of the Act of 2015 which deals with ‘transfer of a suit if counterclaim in a commercial dispute is of Specified Value’ and corresponding section 12(e) of the Act of 2015 have also been deleted.
  4. The state governments have additionally been given powers to establish Commercial Appellate Courts at the District Judge Level, except in territories where the High Courts exercise ordinary original civil jurisdiction, to entertain appeals from the judgment/order of a Commercial Court below the level of a District Judge.
  5. Appeals from the Commercial Courts at the District Judge Level and from the Commercial Division of a High Court will lie to the Commercial Appellate Division of that High Court.
  6. The Ordinance of 2018 creates a separate chapter for “Pre-Institution Mediation and Settlement” and mandates pre-institution mediation as a remedy to be exhausted by the plaintiff prior to filing a suit, which does not contemplate any urgent interim relief under the Act of 2015.

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

DATA PRIVACY IN PAYMENT SYSTEM OPERATIONS IN INDIA

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In the recent times, a number of companies including Google, Whatsapp and such other global giants have reportedly shown interest to venture into the digital wallets or digital payment space. Since after the demonetization phase in 2016, the Government of India has been actively promoting and encouraging the use of online payment systems, online banking and payment transactions, etc in a bid to digitize the economy.

Therefore, there is a rising need to regulate and adopt safety and security measures the online payment systems as they hold private and significant data of the users. Thus, the Reserve Bank of India (RBI), by virtue of its powers under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007, has recently issued a Notification dated 06.04.2018 mandating all payment system operators to store data related to payment systems operated by them within the country latest by 15.10.2018. This would enable RBI to have unfettered access to all payment data stored with the payment system providers, intermediaries, third party vendors and other entities in the payment ecosystem for supervisory purposes and also to reduce risks of data breaches. As per the Notification, such data should include the full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction. For the foreign leg of the transaction, if any, the data can also be stored in the foreign country, if required.

Upon completion of the storage of data, an audit should be conducted by the empaneled auditors of the Computer Emergency Response Team- India, the nodal agency for responding to computer security incidents as and when they occur, to certify the completion of such data storage activity by the system providers. The System Audit Report (SAR) so prepared by the auditors and approved by the board of directors of the system provider company has to be submitted to the RBI on or before 31.12.2018.

In this regard, the RBI has recently communicated to the payment system providers seeking details of their preparedness to comply with the mandate issued under the Notification. Reportedly, Paytm and PhonePe have stated that they are fully compliant with such mandates. But some have raise concern stating that RBI would be able to regulate the systems of those service providers who have their data stored in the servers in India, but the consumer data with global companies willing to do business in this sector stored in servers outside India, may not be monitored by RBI. So in such a case the manner in which such data can be kept safe and secure is unclear.

 

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

DELHI HIGH COURT RULES CIVIL AVIATION REQUIREMENT DOES NOT LIMIT SCOPE FOR COMPENSATION IN CASE OF DENIAL OF AIRCRAFT BOARDING

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The case of Pallav Mongia v. Union of India & Anr., decided on 2nd February, 2018 by the Delhi High Court, is one of denied aircraft boarding after confirmation of tickets.

The petitioner had challenged paragraph 3.2 of the Civil Aviation Requirement (hereinafter “CAR”), which deals with denied boarding. The petitioner, in the instant case, was denied aircraft boarding from Delhi to Patna due to overbooking of flights despite the petitioner booking the tickets well in advance and reaching the airport on time.

Paragraph 3.2 of CAR makes a provision for voluntary giving up of seats by the passengers where the number of passengers who have been given confirmed bookings for travel and who have reported for the flight well within the specified time ahead of the departure of the flight, exceed the number of seats available.

It also provides for compensation to passengers who have been denied boarding against their will.

It is stated therein that this practice of overbooking of flight to a limited extent is followed by the airlines to reduce the possibility of flights departing with unoccupied or empty seats because of ‘no shows’ by passengers having booked tickets.

Paragraph 3.5 of CAR stipulates financial compensation to the passenger in cases where the passenger has been denied boarding against his will. It also offers the passengers the choice between the following kinds of compensation:

  1. Refund of air ticket at the price it was purchased
  2. A flight to the first point of departure
  3. Alternate transportation under comparable/alternate mode of transport (whenever applicable), to the final destination.
  4. Alternate transportation under comparable/alternate mode of transport (whenever applicable), to the final destination at a later date at the passenger’s convenience, subject to availability of seats.

The petitioner had challenged the jurisdiction of the Director General of Civil Aviation (DGCA) to issue the impugned Civil Aviation Requirement and also questioned the scope of the same in as much as it restricted the amount/options of compensation to be awarded to a passenger. The Delhi High Court held that not permitting a passenger holding confirmed tickets to board a flight would definitely amount to deficiency of service for which the passenger is entitled to seek compensation/damages. The CAR does not limit the scope of compensation and the passenger is well within his rights to move against the defaulting airlines for seeking compensation. Holding the petition as misconceived, the Delhi High Court deemed it unnecessary to examine the question whether the DGCA had the jurisdiction to issue the CAR.

The Delhi High Court ruled that “a plain reading of paragraph 3.2 indicates that the DGCA has recognized that certain airlines follow the practice of overbooking of flight; however, the same cannot be read to mean that the DGCA has permitted the airlines to do so. And, it certainly cannot mean that such practice has the sanction of law.”

The Delhi High Court concurred with the suggestion of the learned counsel for Air India that it is open for the petitioner to seek fair compensation from Air India, as has been done in many a cases before the National Consumer Disputes Redressal Commission against various airlines.

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

Supreme Court Rules Absence of Permit is Statutory Breach under the Motor Vehicles Act, 1988

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The Supreme Court, in the case of Amrit Paul Singh & Anr. v. TATA AIG General Insurance Co. Ltd. & Ors., decided on 17th May, 2018, has held that plying of the transport vehicles in public without permit is a statutory breach and if such vehicles get involved in an accident, the insurer will be absolved of liability to pay.

In the present case, the offending truck had hit a motorcycle and resultantly caused the death of driver of the motorcycle. A claim petition was preferred by the legal representatives of the deceased under section 166 of the Motor Vehicles Act, 1988 before the Motor Accident Claims Tribunal, Pathankot claiming compensation to the tune of Rs. 36,00,000/-.

The Motor Accident Claims Tribunal held that since the truck was being plied without permit, a statutory breach of policy conditions under the Motor Vehicles Act, 1988 had occurred and therefore, the insurer is not liable to pay compensation. The   Tribunal directed that an amount of Rs.   15,63,120/- shall be paid by the insurer along with interest at the rate of 9% from the date of award till its realization and the same be recovered from the owner and driver of the vehicle.

Aggrieved, the owner of the truck filed the appeal before the Punjab and Haryana High Court. The Punjab and Haryana High Court upheld the order of the Tribunal.

The Supreme Court also rejected the contentions of the owner and upheld the orders of the Tribunal and the High Court and ruled as follows:

In the case at hand, it is clearly demonstrable from the materials brought on record that the vehicle at the time of the accident did not have a permit. The exceptions under   Section   66   of   the   Act cannot be taken aid of in the course of an argument to seek absolution from liability. Use of a vehicle in a public place without a permit is a fundamental statutory infraction.  We are disposed to think so in view of the series of exceptions carved out in Section 66. The situations carved out in the said section 66 cannot be equated with absence of license or a fake license or a license for different kind of vehicle, or, for that matter,   violation   of   a   condition   of   carrying   more   number   of passengers.   It does not require the wisdom of the “Tripitaka”, that the existence of a permit   of   any   nature   is   a   matter   of   documentary   evidence. Nothing has been brought on record by the insured to prove that he had a permit of the vehicle. In such a situation, the onus cannot be cast on the insurer. Therefore, the Tribunal as well as the High Court were correct in directing that the insurer was required to pay the compensation amount to the claimants with interest with the stipulation that the insurer shall be entitled to recover the same from   the   owner   and   the   driver. The said directions are in consonance with the pay and recover principle.

 

Surabhi Aggarwal

Senior Associate

The Indian Lawyer

DELHI HIGH COURT: NO GENDER DISCRIMINATION UNDER POCSO ACT, 2012

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On Wednesday, 30th May, 2018, the Delhi High Court has held in Jabbar vs. State, that the Protection of Children from Sexual Offences (POCSO) Act, 2012 is a gender-neutral law and that every child under the age of 18 is covered under it.

In its recent judgement the Delhi High Court upheld the conviction of a man for sodomising a 6 year old boy and sentenced him to rigorous imprisonment of 15 years under POCSO Act.

The Bench comprising of Justice S.P. Garg and J. C. Hari Shankar stated that the POCSO Act does not discriminate between a male and a female child victim as sexual offences.

The Trial Court had convicted the Accused of committing an aggravated form of penetrative sexual assault on a six year old boy. The conviction has been made under section 6 of the POCSO Act.

The Trial Court convicted the Accused under Section 6 of the POCSO Act for committing an aggravated form of penetrative sexual assault on a 6 year old boy.  The minimum punishment under section 6 of the POCSO Act is 10 years. The Court sentenced the Accused for 15 years of rigorous imprisonment as 10 years would be insufficient in the present case due to severity of the offense.

The Bench held that, “The jurisprudence that has developed, with respect to the testimonies of girl-victims, as witnesses would, therefore, apply, so far as the POCSO Act is concerned, mutatis mutandis to boy-victim.”

The Appellant Jabbar filed an Appeal at the Delhi High Court. The Court perused the evidence on record and confirmed the Trial Court findings on Jabbar’s conviction.

Delhi High Court further held that “The right to breathe free, in the open air, is a constitutional guarantee, preambly promised to every Indian denizen, and, for the citizenry of the country, stands sanctified by Article 21 of the Constitution of India. Permanent extinction of said right, for life, must, therefore, necessarily visit only the most hardened of offenders, in the most extreme cases. The ―quality of mercy, unstrained, must always temper the hard scales of the law, if a just balance is to be achieved”

Thus, the Court in its decision has reiterated the observations made by the Supreme Court in the PIL filed by advocate Alakh Alok Srivastava, demanding death penalty for child rapists, that the Court does not discriminate in the testimonies made by a boy or a girl under the POCSO Act, stating that the Act is gender neutral in nature.

Taruna Verma

Senior Associate