SUPREME COURT REITERATES PRINCIPLES OF EFFECT OF GOVERNMENT NOTIFICATIONS

The Supreme Court has in a matter of Union of India and Others vs M/S G S Chatha Rice Mills & Anr. passed a Judgment dated 23-09-2020 pertaining to whether #Government #notifications issued in the e-#Gazette under the Customs Tariff Act 1975 would have #retrospective effect on goods #imported prior to the #publication of such notification.

In the aftermath of Pulwama Terrorist Attacks that happened on 14-02-2019, the Union Government had issued a Notification dated 16-02-2019 (Notification) around 20:46 hours under Section 8A of the Customs Tariff Act 1975 (the Customs Tariff Act), thereby inserting a new tariff entry pertaining to #customsduty of 200% on all goods originating or exported from the Islamic Republic of #Pakistan to India. The purpose of issuing the Notification was to discourage imports from Pakistan to India. A copy of the said Notification is attached below:

But the Customs Authorities at Attari sought to enforce the enhanced customs duty on importers who had already presented their bills of entry before the said Notification was notified in the e-Gazette. As a result, the aggrieved importers had challenged the said action of the Customs Authorities before the High Court of Punjab and Haryana.

The High Court passed an Order dated 26-08-2019 and held that as the importers had already presented the bills of entry and completed the process of “self-assessment” before the said Notification was issued, so the enhanced customs duty would not be applicable to them. Aggrieved by the Order of the High Court dated 26-08-2019, the Union of India filed an appeal before the Supreme Court.

The Apex Court made the following observations in this case:

1- Section 15 of the Customs Act 1962 (the Customs Act) provides that the rate of customs duty and tariff would be determined at the rate and valuation “in force” “on the date on which” bill of entry with respect to imported goods is presented/filed electronically on the custom automated system and self-assessed by the importer under Section 46 of the Customs Act 1962.

2- Regulation 4 of the Bill of Entry (Electronic Integrated Declaration and Paperless Processing) Regulations, 2018 (the 2008 Regulations) provides that the bill of entry is deemed to have been filed and self-assessment is deemed to have been completed, when the importer enters the electronic integrated declaration in the Customs Automated System and thereafter, a bill of entry number is generated by the Indian Customs Electronic Data Interchange System.

3- As per Section 7 (1) (c) of the Information Technology Act 2000, the date, time and details of receipt or dispatch of electronic record is crucial for maintenance of an electronic record.

4- Thus, the customs duty is leviable at the rate prevailing on the date of electronic filing of declaration and electronic generation of bill of entry number.

5- Section 8A of the Customs Tariff Act provides that the Central Government may increase the import duties in certain circumstances which render it necessary to exercise such emergency powers. But the Legislature has not authorised the Central Government to have retrospective effect of exercise of such emergency powers under the Act.

6- Further, the concerned officer may re-assess the duty under Section 17 (4) of the Customs Act, only if the self-assessment is not correctly processed.

7- But in this case, the importers had properly carried out declaration and self-assessment on the basis of the rate of duty which prevailed at the time of presentation of bill of entry, i.e. prior to the time when the enhanced rate was notified.

8- Thus, as the self-assessment of duty was correctly processed in terms of the rate which was in force on that date and at that time, the Customs Authorities could not have re-assessed the duty.

Therefore, the Apex Court while dismissing the Appeals held that in the scheme of the Customs Act, Customs Tariff Act and the 2018 Regulations, the time at which the notification is published under Section 8A of the Customs Tariff Act 1975 would have relevance.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

WHETHER A DEBT IN THE BALANCE SHEET IS ACKNOWLEDGEMENT FOR EXTENTION OF LIMITATION

The Three Members Bench of National Company Law Appellate Tribunal, New Delhi (#NCLAT), vide its Judgment dated 25.09.2020 in the case of Bishal Jaiswal v. Asset Reconstruction Company (India) Ltd and Another [CA (AT) (Ins) No. 385/2020] opined and held that Judgment rendered by Five Hon’ble Members of this Appellate Tribunal in the Case of V. Padamakumar vs. Stressed Assets Stabilization Fund (SASF) & Anr [CA (AT)(Ins)No. 57/2020] (V. Padma Kumar Case) requires reconsideration with respect to whether reflection of #debt in a #balancesheet is ‘acknowledgement of debt’ for the purpose of Section 18 of the #Limitation Act 1963 (Limitation Act).

Section 18 of the Limitation Act uses the term ‘acknowledgement’ to mean an admission of an existing liability in lieu of which the period of limitation is extended.

Brief facts of the instant case are that the Corporate Power Ltd (Corporate Debtor) had availed the loan from the Infrastructure Finance Co. Ltd., (Consortium Lenders or Banks) for setting up 1080 MW coal-based plant at Chandwa of Latehar District in the State of Jharkhand in two phases. The Corporate Debtor has availed loan facilities aggregating to Rs.5997,80,02,973/- (Rupees Five Thousand Nine Hundred Ninety-Seven Crore Eighty Lakhs Two Thousand Nine Hundred Seventy-Three only) from Consortium Lenders and loan agreements have been executed between the Corporate Debtor and the Consortium Lenders.

However, the Corporate Debtor failed to repay the dues under the facilities granted by the Banks. The Banks had assigned the debt in favour of Asset Reconstruction Company (India) Ltd (Financial Creditor). Therefore, the Financial Creditor has filed the Application under Section 7 of the Insolvency and Bankruptcy Code 2016 (IBC).

NCLT Decision: The National Company Law Tribunal, New Delhi (NCLT) has admitted the Application on the ground that the debt and default are not under-challenge and with respect to the issue of limitation of the said Application it observed that in the Balance Sheet the Corporate Debtor, admitted its liability, which was signed prior to the expiry of three years from the date of default. It is an acknowledgement of debt in terms of Section 18 of the Limitation Act and is therefore, not barred by Limitation. Being aggrieved with the said decision the Corporate Debtor filed the Appeal before the NCLAT.

Contentions: The Corporate Debtor (Appellant) contended before the NCLAT that the Application is barred by Limitation. The account of the Appellant was declared as Non-Performing Assets on 28.02.2014. The Application under Section 7 of the IBC was filed in December 2018, i.e. after a delay of almost five years. Therefore, the Corporate Debtor’s Balance Sheet cannot be considered as an Acknowledgement under Section 18 of the Limitation Act, 1963 and this Section cannot be applied in Insolvency Cases.

It relied on the V. Padama Kumar Case (Supra) wherein the issue was considered explicitly by the Five Hon’ble Members of the NCLAT and it was held that the Books of Accounts are to be prepared as per Section 92 of the Companies Act, 2013. Therefore, it cannot amount to an acknowledgement for Section 18 of the Limitation Act. The acknowledgement to extend the period of limitation should be voluntary and cannot be given under the compulsion of law or with the threat of any penalty or punishment.

However, the Financial Creditor contended that it is settled law that the entries made in the Balance Sheet of the Company amounts to an acknowledgement of debt under Section 18 of the Limitation Act, for the same he placed reliance on the law laid down by Hon’ble Supreme Court in various Judgments. It further contended that the issue framed in the V. Padama Kumar Case (Supra) was not whether Section 18 of Limitation Act is applicable to Insolvency Cases? The issue formulated in the said case was whether Section 18 of the Limitation Act, 1963 could be applied to the facts of the present case which deal with Insolvency?

NCLAT Decision

During the course of arguments, a Judgment rendered by Five Hon’ble Members of NCLAT in V. Padma Kumar Case (Supra) has been cited. After hearing the contentions of the Parties the NCLAT in the instant case made the following issue and decided that:

“Hon’ble Supreme Court and various Hon’ble High Courts have consistently held that an entry made in the Company’s Balance Sheet amounts to an acknowledgement of debt under Section 18 of the Limitation Act, 1963, in view of the settled law, V. Padmakumar’s Case requires reconsideration.”

It is further held the following essential reasons for reconsideration of V. Padma Kumar’s (Supra) Judgment:

  1. There is consistent view of the Hon’ble Supreme Court and various High Courts that the entries in the Balance Sheet of the Company are to be treated as an acknowledgement of debt for the purpose of Section 18 of Limitation Act and the majority view in V. Padma Kumar’s Case (Supra) is contrary to settled law.
  2. In V. Padama Kumar’s Case (Supra) minority view is in the line of settled law that Balance Sheet of the Company be treated as acknowledgement of debt for the purpose of Section 18 of the Limitation Act. In the majority Judgment no reasons have been assigned for disagreement with this view.
  3. In V. Padama Kumar’s Case (Supra), it is discussed that the Balance Sheet of the Company is prepared pursuant to Section 92 of the Companies Act, 2013 and filing of Balance Sheet/Annual Return being mandatory under Section 92 (4) of the Companies Act, 2013, failing of which attracts penal action under Section 92 (5) and (6) of the Act. And that the Balance Sheet is a Financial Statement.
  4. In V. Padama Kumar’s Case (Supra) it is held that the Balance Sheet is required to be prepared under the obligation cast under Section 92 of the Companies Act, 2013. Therefore, Acknowledgement should be voluntary and cannot be given under compulsion of law or with the threat of any penalty/punishment. It is also important to note that Hon’ble Calcutta High Court in the case of Bengal Silk Mills Co. v. Ismail Golam Hossain Ariff, [(1961) SCC Online Cal 128] and Hon’ble High Court of Delhi in the case of South Asia Industries (P) Ltd. vs. Krishna Shamsher Jung Bahadur Rana and Ors. MANU/DE/0372/1972 held that merely on the ground that the Balance Sheet of the Company is prepared under the compulsion of law or in discharge of statutory duty cannot be held that the Balance Sheet of the Company cannot amount to an acknowledgement of liability.

Therefore, the NCLAT declined the contentions of the Corporate Debtor that Section 18 of Limitation Act is not applicable to Insolvency Cases. It finally held that V. Padma Kumar’s (Supra) Judgment requires reconsideration. Thus in view of the aforesaid reasons the Three Members Bench of NCLAT referred the matter to a Bench of Five Hon’ble Members of this NCLAT.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

SUPREME COURT HOLDS EMPLOYER LIABLE TO PAY WORKMAN COMPENSATION IN CASE OF ACCIDENT

A Three Judge Bench of the Hon’ble #SupremeCourt comprising of Justices Sanjay Kishan Kaul, Aniruddha Bose and Krishna Murari passed a Judgment dated September 23, 2020 in the case of Beli Ram v. Rajinder Kumar & Anr. Civil Appeals Nos. 7220-7221 of 2011 and held that if a valid #drivinglicense of an #employee has expired, the #employer is #liable under the Workmen’sCompensationAct, 1923 and not the employee or the #insurance company.

In this case, the First Respondent who was gainfully employed by the Appellant, met with an accident on 20.5.1999, and as a result of which he was 20 per cent permanently disabled. Subsequently, a Petition was filed on 17.2.1999 by the First Respondent under the Workmen’s Compensation Act, 1923 before the Commissioner, Sadar, Bilaspur seeking compensation of an amount of Rs. 5,00,000/- from the Appellant and the Insurance Company which had insured the vehicle. The Commissioner on 8.12.2004 awarded compensation of Rs. 94,464/- for the injuries suffered and Rs. 67,313/- towards the medical expenses of the First Respondent. The Commissioner ordered that amount awarded as compensation shall carry interest at 9% and which was to be paid by the Appellant whereas the compensation amount was mulled on to the Insurer. Aggrieved by the said Order, Appeals were filed in the High Court of Rajasthan.

High Court’s View

An important issue that was raised before the High Court related to the validity of the driving license of the First Respondent at the time of the accident. The said driving license which expired on 6.9.1996 was endorsed by the Superintendent of R&LA Office, Udaipur and there was no endorsement for renewal thereafter. Thus, the First Respondent was employed as the driver of the Appellant for almost three years without the license being approved.

Thus, the High Court while taking into account the non-validity of the driving license passed a Judgment dated 3.3.2009 and held that that the Insurance Company is absolved of any liability and it is the Appellant who is guilty of material breach of Insurance Policy. Furthermore, the High Court while placing reliance on Section 4 of the Workmen’s Compensation Act, 1923 (the Act) opined that there is no provision under the said Act for payment of medical expenditure incurred by the claimant for the treatment. The monthly wages at the time of the accident was Rs.4500/- and as per the provision of the Act, the maximum amount of wages permissible under the said Act for the purpose of determining the compensation could be Rs. 2000/-. The said compensation was to be paid within 30 days of the accident and the amount could be recovered from the insurance company if it was established that the insurer was liable to indemnify the insured.

However, the Appellant breached the provisions of the Act and therefore, was held to be liable to pay interest and penalty of 50 per cent.

Aggrieved by the Order of the High Court, an Appeal was filed in the Apex Court. The question of law involved in the present Appeal was if a valid driving license has expired, whether it will absolve the insurer from his/her liability.

Contentions of the Appellant

The main contention of the Appellant was that he being the insured had exercised reasonable care at the time of the employment and had properly verified the driving license of the First Respondent and that liability can be fixed on him only if he had the knowledge that the license was fake or invalid and he still permitted the First Respondent to drive. The Appellant further stated that it was the responsibility of the First Respondent to get his license renewed and that there was negligence on his part.

Verdict of the Supreme Court

The Supreme Court while deciding the case opined that it is the employer who has to take basic care of verifying the driving license and to check the validity and the renewal of the driving license. The Court observed that there was a gross negligence on the part of the Appellant as the driving license was not renewed for a period of three years.

Further, the Apex Court held that there was a lack of reasonable care on the part of the Appellant, as being a lawful employer he was under a responsibility to check the validity and the timely renewal of the driving license and that too in respect of a commercial vehicle like truck in the present case. The Appellant is, therefore, liable as he permitted the driver to drive with an expired license and that too for a period of three years.

Further, this was a case of claim under the Workmen’s Compensation Act, 1923 and not the Motor Vehicles Act, thus, the Apex Court held the Appellant-Employer liable as he did not exercise reasonable care in verifying and renewing the license of his Employee. The Apex Court did not fasten any liability on the Employee and the Insurance Company in this case. The Appeals were accordingly disposed off.

Suchitra Upadhyay

Associate

The Indian Lawyer

SUPREME COURT HAS HELD THAT EXTENSION OF PERIOD UP TO WHICH DELAY CAN BE CONDONED IS NOT THE SAME AS EXTENSION OF LIMITATION PERIOD

A Three Judge Bench of the #SupremeCourt comprising of the CJI SA Bobde and his companion Judges, Justices A.S. Bopanna and V. Ramasubramanian passed a Judgment dated September 18, 2020 in the case of Sagufa Ahmed & Ors. v. Upper Assam Plywood Products Pvt. Ltd. & Ors. Civil Appeal Nos. 30073008 of 2020 and held that any period beyond the #prescribedperiod, during which the Court or Tribunal has the discretion to allow a person to institute the proceedings, cannot be taken to be “prescribed period”.

In this case, the Appellants claimed that they held 24.89% of the shares of Upper Assam Plywood Products Private Limited (First Respondent). The Appellants moved the Guwahati Bench of NCLT for the winding up of the Company, which was dismissed vide an Order dated 25.10.2019. Thereafter, they applied for a certified copy of the NCLT dated 25.10.2019, on 21.11.2019. However, it was received by them on 19.12.2019. An appeal was supposed to be filed on or before 18.03.2020, however, the Appellants made a delay and the same was filed on 20.07.2020.

Therefore, an Appeal was filed along with an Application for Condonation of Delay on 20.07.2020. Subsequently, by an Order dated 04.08.2020, the Application for Condonation of Delay was dismissed by the National Company Law Appellate Tribunal (Appellate Tribunal) on the ground that the delay cannot be condoned beyond a period of 45 days. As a consequence, the Appeal was also dismissed. Hence, the Appellants moved the Apex Court, challenging the Order passed by the Appellate Tribunal dismissing the application for condonation of delay as well as the Appeal.

The Appellants made the following two contentions:

  1. Firstly, that the Appellate Tribunal erred in computing the period of limitation from the date of the Order of the NCLT which is absolutely contrary to Section 421(3) of the Companies Act, 2013.
  2. Secondly, that the Appellate Tribunal failed to take note of the Lockdown as well as the Order passed by this Hon’ble Court on 23.03.2020.

On the first contention, the Supreme Court observed that the Appellants received the copy of the Order on 19.12.2019, and they had a period of 45 days to file an appeal i.e. this period expired on 02.02.2020.

By virtue of proviso to Section 421(3), the Appellate Tribunal was empowered to condone the delay up to a period of 45 days. This extended period expired on 18.03.2020. The Bench observed that the nationwide Lockdown was imposed on 24.03.2020 and that the Appellants had sufficient time to file the appeal on or before 18.03.2020.

The Hon’ble Supreme Court of India vide Order dated 23.03.2020 in Suo Moto Writ Petition (Civil) No. 3 of 2020 extended the period of limitation for filing any proceeding w.e.f 15.03.2020 until further orders. Clarifying the same, the Apex Court said that the said Order extended only “the period of limitation” and not the period up to which delay can be condoned in exercise of discretion conferred by the Statute. The Apex Court opined that such an Order was passed for the benefit of the litigants who could not initiate proceedings within the period of limitation prescribed by general or special law due to the Pandemic and the Lockdown imposed in the country. Further, placing reliance on Section 10 of the General Clauses Act, 1897 and Section 4 of the Limitation Act, the Court held that the expression “prescribed period” cannot be construed to mean anything other than the period of limitation.

Hence, dismissing the Appeal, the Supreme Court held that extension of period up to which delay can be condoned is not same as extension of period of limitation. Thus, the Appellants cannot take the benefit of the Order dated 23.03.2020, which provided for extension of period of limitation only.

Suchitra Upadhyay

Associate

The Indian Lawyer

LEGALIZATION OF DOCUMENTS EXECUTED ABROAD

INTRODUCTION

In the present age, trans-border transactions have become common across the globe. There is therefore a requirement that countries recognise each other’s legal systems and documents executed in their respective countries. In order to simplify this process, several countries have entered into conventions for recognising documents signed in each other’s countries. Where countries have entered into a #convention, the convention along with the laws of the receiving country will be taken into consideration when receiving documents. But there are instances where countries have not entered into agreements or conventions and in such cases, the laws of the countries receiving the documents has to be taken into account.

A) Reciprocating countries:

If the foreign national is executing the document/affidavit in any of the following reciprocal countries, with which India has #reciprocal arrangement to recognise their notarial acts, then he has to get the document/affidavit #notarised in such country. Currently, the following are recognised as reciprocating countries for the purpose of #recognition and #enforcement of #notarialacts:

  1. United Kingdom, the Isle of Man and Channel Islands comprising Guernsey and Jersey
  2. Hungary
  3. Belgium
  4. New Zealand
  5. Ireland

Additionally, if the country is also a Party to the Hague Apostille Convention 1961, then, the document also has to be #apostilled in keeping with the Hague Apostille Convention 1961.

B) Non- Reciprocating countries:

1- If the foreign national is executing a document/affidavit in non-reciprocal countries, then he has to get it notarised and consularized, i.e. obtain Embassy Legalization by the Consular Office of India located in such country.

Additionally, if the country is a Party to the Hague Apostille Convention 1961, then, the document also has to be apostilled first, and then consularised.  

2- If the foreign national is executing a document/affidavit in non-reciprocal countries and non-Apostille Member countries, then he has to get it notarised and consularised by the Consular Office of India located in such country. 

The aforesaid position has been recognised by the #courts and the Delhi High Court has re-affirmed in the case of Crocodile Int. vs Lacoste 2007 SCC OnLine Del 1690 that in case of a non-reciprocal country, notarial act can be authenticated by the Consular Office.

3. In some cases such as a Power of Attorney that has come from overseas there may be a requirement for adjudication by the District Magistrate of the concerned District where the Power of Attorney is to be used.

Indian Laws regarding legalisation of foreign documents:

1) The Diplomatic and Consular Officer (Oath and Fees) Act, 1948

Section 3: Powers as to oaths and notarial acts abroad

(1) Every diplomatic or consular officer may, in any foreign country or place where he is exercising his functions, administer any oath and take any affidavit and also do any notarial act which any notary public may do within a State; and every oath, affidavit and notarial act administered, sworn or done by or before any such person shall be as effectual as if duly administered, sworn or done by or before any lawful authority in a State.

(2) Any document purporting to have affixed, impressed or subscribed thereon or thereto the seal and signature of any person authorised by this Act to administer an oath in testimony of any oath, affidavit or act, being administered, taken or done by or before him, shall be admitted in evidence without proof of the seal or signature being the seal or signature of that person, or of the official character of that person.

Note:

  1. Embassy- Generally, Embassies are diplomatic missions sent to non-Commonwealth countries to handle major diplomatic issues such as negotiations, represent the host country in the foreign nation where Embassy is situated, to maintain foreign relations and provide assistance to traveling citizens. The highest official in the Embassy is known as ambassador.
  2. Legation- A smaller version of Embassy is known as a Legation where the diplomatic mission is headed by a minister.
  3. High Commission- High Commissions are diplomatic missions sent to Commonwealth countries. The highest official in the High Commission is known as High Commissioner.
  4. Consulate- Whereas, a Consulate is a smaller version of an embassy and is generally located in the larger tourist cities of a country, but not the capital. Consular offices handle minor diplomatic issues such as issuing visas, aiding in trade relationships, and taking care of migrants, tourists, and expatriates.

2) Notaries Act 1952

Section 14: Reciprocal arrangements for recognition of notarial acts done by foreign notaries

If the Central Government is satisfied that by the law or practice of any country or place outside India, the notarial acts done by notaries within India are recognised for all or any limited purposes in that country or place, the Central Government may, by notification in the Official Gazette, declare that the notarial acts lawfully done by notaries within such country or place shall be recognised within India for all purposes or, as the case may be, for such limited purposes as may be specified in the notification[1].

3) Oaths Act 1969

Oaths Act 1969 provides that witnesses, interpreters and jurors may take oath or give affirmation before persons authorised by law to administer oath. Further, in cases of oaths and affirmations for the purpose of affidavits to be filed in judicial proceedings, even High Courts can administer oath and in case of other affidavits, even State Government may administer oath. This Act has repealed the earlier, Indian Oaths Act 1873.

[1] http://legalaffairs.gov.in/sites/default/files/Reci.Arrang.-Notary.pdf

Judgments regarding legalisation of foreign documents:

The Delhi High Court has in a case of Crocodile Int. vs Lacoste 2007 SCC OnLine Del 1690 held that in case of a non-reciprocal country, notarial act can be consularised by the Consular Office.[1]

The Court further held as follows:

16. the Diplomatic or Consular Officers were empowered to administer oath and to take any affidavit and also to do the notarial act which a Notary Public may do in the State where the Diplomatic or Consular service is functioning. The documents notarised by such officers were, therefore, deemed to be validly notarized in India. The Court has, in our opinion, rightly held that even though there might be no reciprocity between India and another country under Section 14 of the Notaries Act, 1952, the notarial acts of the Notaries in the foreign country could be given legal recognition by the courts and authorities in India.

The Supreme Court of India in a case of Jugraj Singh and Another vs Jaswant Singh and Others (1970) 2 SCC 386 passed the following Judgment dated 16-03-1970 and recognised the Power of Attorney executed by the Principal which was notarised in the United States of America. The Power of Attorney was not accepted by District Court and the matter went in Appeal to the High Court of Punjab which also did not allow the Appeal. However, the Supreme Court overruled the Judgments and recognised the Power of Attorney as a legal document as it had been validly executed and notarised in the United States. The Apex Court held as follows:

8. The second power of attorney however does show that it was executed before a proper Notary Public who complied with the laws of California and authenticated the document as required by that law. We are satisfied that that power of attorney was also duly authenticated in accordance with our laws.

11. It therefore follows that the second power of attorney was a valid document and it authorised Mr. Chawla to execute the document…

[1] https://www.mondaq.com/india/trademark/808114/law-on-notarization-of-foreign-documents-in-india-a-trademark-law-perspective

Conventions regarding legalisation of foreign documents:

1- Convention Abolishing the Requirement of Legislation for Foreign Public Documents 1961

As per the Convention Abolishing the Requirement of Legislation for Foreign Public Documents (Hague Apostille Convention) 1961, Apostille is done for personal documents like birth/death/marriage certificates, affidavits, power of Attorney, etc and educational documents like degree, diploma, matriculation and secondary level certificates etc. Any document Apostilled in one member country is acceptable in all the other member-countries[1]. India is a member of the Apostille Convention.[2]

Sushila Ram Varma

Chief Consultant

The Indian Lawyer


[1] https://mea.gov.in/apostille.htm

[2] https://www.hcch.net/en/states/hcch-members

KFCRI Associate at Mediation Practice – Accreditation Course – 2nd October 2020

About KFCRI:

Kovise Foundation Conflict Resolution International (KFCRI) is a first of its kind institution providing ADR Practice Accreditation in all aspects of ADR as well as maintain a functioning administrative centre to manage and empower Dispute Resolution Mechanisms used by clients worldwide. KFCRI , under the aegis of KOVISE FOUNDATION to disseminate the required Research and Development of Conflict Resolutions thereby facilitating peace and economic balance with effective resolution of all categories of disputes in socio, economic and political arena worldwide administering Alternate Dispute Resolution (ADR) Mechanism with Institutional Framework along with long term capacity building programmer seeding globally.

About the Course:

KFCRI is offering the Maiden accreditation course for interested candidates to become “Associate at Mediation Practice (AMP-KFCRI)”.

The “Associate at Mediation Practice (AMP-KFCRI) Accreditation Course”, details are as follows:

Date:   2 nd  October 2020, Friday
Time: 09:30 am – 06:30 pm,
Venue: Zoom Meetings, Online 

On confirmation, the candidates have to register their details and pay the course fee:

i) Associate Level Course Fee: INR 5,000

ii) Annual Membership Fee: INR 2,500 (Upon successful completion of examination)

iii) This fee shall be considered as “CONTRIBUTION” or “DONATION” and is entitled for claiming exemption u/s 80G of the Income Tax Act, 1961.

On registration via this link https://kfcri.org/associate-mediation.php we shall write to with the payment instructions.

If you have any queries, email us at kfcri.adr@gmail.com or connect with Suvethan. G.S (+91 9042343543) or Sharukumar. S.I (+91 9003184869) or Shanmuga Dev ( +91 7358579597) or Suman Bhalaji R V (+91 9042060043) . 

Our Website: www.kfcri.org

SUPREME COURT REAFFIRMS THE LAW GOVERNING RECOGNITION AND ENFORCEMENT OF FOREIGN AWARDS

The Three-Judge Bench of the Supreme Court has in a recent case of Government of India vs Vedanta Ltd and Others., passed a Judgment dated 16-09-2020 and reaffirmed the law governing #recognition and #enforcement of #foreignawards in India.

In this case, the Government of India had executed a Production Sharing #Contract (the Contract) with the Respondent Companies to develop and explore the Ravva Gas and Oil Fields (located about 10 to 15 kms offshore in the Bay of Bengal). But soon thereafter, certain disputes arose between the Parties regarding development costs and the Respondent Companies initiated #arbitration proceedings against the Appellant in Kuala Lumpur, Malaysia, which was to be governed by the Laws of England.

The Arbitral Tribunal passed an Award dated 18-01-2011 and held that the Respondent Companies were entitled to charge development costs incurred during execution of the Project from the Appellant.

Thereafter, the Respondents filed an Application for Enforcement of the Foreign Award dated 18-01-2011 (the Foreign Award) under Section 47 and 49 of the Arbitration and Conciliation Act, 1996 (the Act) before the Delhi High Court. Whereas, the Appellant filed an Application for resisting the Enforcement of the Foreign Award under Section 48 of the Act on several grounds including that the Foreign Award was in conflict with public policy of India and that it contained decisions on matters beyond the scope of the submission to arbitration.

But the High Court dismissed the Appellant’s Application and allowed enforcement of the Foreign Award, vide Order dated 19-02-2020. Hence, the Appellant filed this Appeal before the Apex Court challenging the Delhi High Court Order.

The Supreme Court made the following observations regarding enforcement of foreign awards under the Act:

1- The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, New York (the Convention) provides that parties to the said Convention would not discriminate foreign arbitral awards against domestic awards and would ensure that such foreign awards are recognised and enforced in their jurisdiction in the same way as that of domestic awards.

2- Thus, Part II of the Act provides for recognition and enforcement of New York Convention awards and also those awards that are passed in countries with which India has reciprocal arrangements to recognise and enforce foreign awards.

3- Under Part II of the Act, enforcement of foreign awards in India can take place only after the court is satisfied that the foreign award is enforceable as a deemed decree under Section 49 of the Act.

4- For the said purpose, the court would first adjudicate the evidence filed by the party seeking recognition and enforcement of foreign award under Section 47 of the Act that includes the original arbitration agreement, original and certified copy of foreign award, etc.

5- Further, in case, a petition is filed challenging the foreign award under Section 48 of the Act, then the court would also adjudicate the said petition to determine whether the foreign award is struck by any of the grounds for rejection of enforcement. The limited conditions on which the enforcement of a foreign award may be refused are that if the parties to agreement were under some incapacity, or if the agreement was invalid, or if the other party was not given proper prior notice about arbitration proceedings, or if the award contains decisions on matters beyond the scope of the submission to arbitration, etc. The court may further refuse enforcement on the ground that the subject-matter is not capable of settlement of arbitration or if it is contrary to public policy of India.

6- The Court reiterated that an award would be contrary to public policy of India in the following cases:

  • If the enforcement would be contrary to the fundamental policy of Indian law
  • If the enforcement would be contrary to the interests of India
  • the enforcement would be contrary to justice or morality

In such cases, if by upholding the award it would shock the public conscience or would be clearly injurious to the public good or would be wholly offensive to the ordinary reasonable and informed member of the public, then the court may refuse to enforce the award. For instance, if the award is obtained through corruption or fraud, or undue means, then the award would be set aside.

But in this case the Appellants could not establish that there was violation of any procedural formality, which constitutes the integrity of alternate dispute resolution process. Also, there is no evidence to show that the Foreign Award is in conflict with the basic notions of justice or public policy of India. Thus, the Apex Court upheld and confirmed the Order of Enforcement of Foreign Award passed by the Delhi High Court on 19-02-2020.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

SUPREME COURT MODIFIES THE AMOUNT OF PENALTY ON STAMP DUTY

The three Judges Bench of the Supreme Court in the case of Trustees of H.C. Dhanda Trust v. State of Madhya Pradesh & Ors. [Civil Appeal Nos. 3195-319 6 of 2020], vide its Judgment dated 17.09.2020 modified the Order of the Collector of Stamps that imposed a penalty which was 10 (Ten) times of deficient #stampduty. The #SupremeCourt held that imposition of penalty of ten times is not automatic nor can be mechanically imposed under the provisions of Indian Stamp Act, 1899 (the Act).   

The facts of this case pertain to Late Mr. H.C. Dhanda, who by his #Will created a #trust called H.C. Dhanda Trust and put his immovable properties in Trust under the Will (“Appellant”). All Trustees under the Will were the executors of the Will. After the death of Mr. H.C. Dhanda, a resolution was passed by the Board of Trustees to transfer and vest area by executing a Deed of Transfer with a site plan from the trustees to beneficiaries by registering the same. Thereafter, Deed of Assent dated 21.04.2005 was executed between the Trustees/Executors on the one hand and the legal heirs of Late Mr. H.C. Dhanda and the title was transferred forever in the favour of the Legatee under the Will.

A Notice was issued by the Collector of Stamps; District Indore to the Appellant, informing them that the Deed of Assent dated 21.04.2005 was not properly stamped and stamp duty was payable. The Notice further stated asked the Appellant to show cause as to why the Collector of Stamps should not impose a penalty i.e. ten times of the deficit stamp duty which was Rs. 1, 62, 82,150/-.

Background of Proceedings

The Trust filed its objections against the Notice. The Collector of Stamps however passed an Order dated 22.09.2008 and held that there was a deficit duty to the extent of Rs.1, 28, 09,700/- and also imposed ten times penalty i.e. Rs.12, 80, 97,000/-. The Order called upon the Trust to deposit amount of Rs.14, 09, 06,700/- within thirty days. Aggrieved against the Order of Collector, Reference Application was filed by the Appellant before the Board of Revenue, Madhya Pradesh, Gwalior. The Board of Revenue, vide its Order dated 25.10.2011 upheld the Collector’s Order dated 22.09.2008.

Being aggrieved by the Order dated 22.09.2008 the Appellant filed a Writ Petition No.8888 of 2011 in the High Court of Madhya Pradesh. Whereby, the Learned Single Judge of the High Court, vide its Judgment dated 30.03.2017 dismissed the Writ Petition. Thereafter, an appeal was also filed by the Appellant before the Division Bench of the High Court against the said Judgment dated 30.03.2017. The Division Bench also dismissed the Writ Appeal, vide its Judgment dated 04.09.2017 holding it as not maintainable.

Aggrieved against the aforesaid two Judgments of the High Court, the Appellant approached the Supreme Court of India through the present Appeal. The Supreme Court issued a notice to the Collector of Stamps (“Respondent”).

Contentions before the Supreme Court

  1. It was contented on behalf of the Appellant that the penalty imposed by the Respondent was wholly illegal. It was contended that no reason has been given by the Respondents as to why maximum penalty of ten times was imposed on the Appellant while determining the stamp duty. The Respondents have not exercised their jurisdiction in reasonable and fair manner and imposition of ten times penalty on the Appellant deserves to be set aside.
  2. It was contended on behalf of the Respondent that the nature of the Deed of Assent was a gift and the Collector has rightly determined the deficiency in the stamp duty and levied ten times penalty. It was further contended that there was clear intention of the Appellant to evade the payment of the stamp duty which clearly called for imposition of ten times penalty.

Issue before the Supreme Court

Whether the imposition of ten times penalty by the Collector of Stamps under Section 40 of the Indian Stamp Act, 1899 was validly imposed or not.

Supreme Court Judgment

To decide the aforementioned issue the Hon’ble Supreme Court of India considered the language and contents of the Order dated 22.09.2008 passed by the Respondent in conjunction with Section 40(1)(b) of the Act, which provides that if the Collector is of opinion that such instrument is chargeable with duty and is not duly stamped, he shall require the payment of the proper duty or the amount required to make up the same, together with a penalty of the five rupees; or, if he thinks fit, an amount not exceeding ten times the amount of the proper duty or of the deficient portion thereof.

The Supreme Court interpreted the language of the provision to observe that the purpose of penalty generally is a deterrence and not retribution. When a discretion is given to a public authority, such public authority should exercise such discretion reasonably and not in oppressive manner. The reason such as fraud or deceit in order to deprive the Revenue or undue enrichment are relevant factors to arrive at a decision as to what should be the extent of penalty under Section 40(1)(b).

In this regard, the Supreme Court also read the Section 35(a) of the Act, which provides that instruments not duly stamped are inadmissible in evidence and it further observed that neither imposition of penalty of ten times under Section 40(1) (b) is automatic nor can be mechanically imposed. The concept of imposition of penalty of ten times of a sum equal to ten times of the proper duty or deficiency thereof has occurred in other provisions of the Act as well.

Held

In light of the aforesaid observations the Supreme Court relied on the case of Peteti Subba Rao vs. Anumala S. Narendra, 2002 (10) SCC 427 , wherein it was held that it is only in the very extreme situation that penalty needs to be imposed to the extent of ten times. Thus, the Supreme Court partly allowed the Appeal and modified the Order dated 22.09.2008 passed by the Collector of Stamps into five times penalty i.e. Rs.6,40,48,500/- from ten times penalty of Rs.12,80,97,000/-.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

SUPREME COURT UPDATES

  1. SUPREME COURT DISCUSSES WHETHER SECTION 302 IPC BE APPLIED IN A CASE OF SINGLE INJURY

Background: An Appeal was filed before the #SupremeCourt by the Appellant against the Impugned Judgment and Order dated 18.01.2017 passed by the Madurai Bench of the High Court of Judicature at Madras in Criminal Appeal (MD) No. 122 of 2016. The High Court dismissed the said Appeal and confirmed the Judgment and Order of conviction and sentence passed by the learned IV Additional District and Sessions Court, Tirunelveli in Sessions Case No. 354 of 2012, convicting the Appellant herein under Section 302 IPC.

Relief Sought: To convert the conviction from Section 302 IPC to Section 304 Part II IPC.

Issue: Whether the conviction ought to have been under Section 304 Part II or Section 302 IPC.

Supreme Court Observation: That there is no hard and fast rule that in a case of single injury, Section 302 IPC would not be attracted. It depends upon the facts and circumstances of each case. The nature of injury, the part of the body where it is caused, the weapon used in causing such injury are the indicators of the fact whether the accused caused the death of the deceased with an intention of causing death or not are various factors based on which conviction is made. It cannot be laid down as a rule of universal application that whenever death occurs on account of a single blow, Section 302 IPC is ruled out. Considering the totality of the facts and circumstances of the case and more particularly that the Accused inflicted the blow with a weapon like knife and he inflicted the injury on the Deceased’s vital part of the body, it is to be presumed that causing such bodily injury was likely to cause the death. Therefore, the case would fall under Section 304 Part I of the IPC and not under Section 304 Part II of the IPC.

Held: The Appeal is allowed in part. The Impugned Judgment and Order passed by the High Court confirming the conviction of the Accused for the offence punishable under Section 302 IPC is hereby modified from that of under Section 302 IPC to Section 304 Part I IPC. [Citation: Stalin v. State, 2020 SCC Online SC 723, decided on 09-09-2020]

  1. GUJARAT HIGH COURT: ADVOCATE YATIN OZA’S UNCONDITIONAL APOLOGY REJECTED

Brief: Grievances may exist but they can always be conveyed in a better language. Systems can be improved but imputations should not unnecessarily be made. In connection with, Mr Yatin Narendra Oza, who is also the President of the Gujarat High Court Advocates’ Association, was stripped off from his Senior Advocate’s Designation. This has been done after Advocate Oza had levelled charges of corruption against the Registry of the Gujarat High Court. The Court cited Rule 26 of the High Court of Gujarat (Designation of Senior Advocates) Rules 2018, which states “In the event a Senior Advocate is found guilty of conduct which according to the Full Court disentitles the Senior Advocate concerned to be worthy of the designation, the Full Court may review its decision to designate the person concerned and recall the same”. [Citation: Yatin Narendra Oza v. High Court of Gujarat, 2020 (SCC Online SC 724), order dated 09-09-2020.]

Lakshmi Vishwakarma

Associate

The Indian Lawyer

BRIEF UPDATE: SUPREME COURT REITERATES SIGNIFICANT PRINCIPLES OF MAINTENANCE

The 3 Judge Bench of the #SupremeCourt has in a recent case of Abhilasha vs Parkash and Others passed a Judgment dated 15-09-2020 and reiterated the following principles of #maintenance of #wife, #children and #parents under Hindu Adoptions and Maintenance Act, 1956 (the Act) and the Criminal Procedure Code 1973 (#CrPC):

1- That Section 125 CrPC provides that a person is liable to maintain the following people who are unable to maintain themselves:

i) His wife,

ii) Minor child,

iii) Child who has attained majority, excluding a married daughter, having physical or mental abnormality or injury, and

iv) Father and mother.

2- That the 1956 Act provides that a #Hindu Man/Woman is liable to maintain the following people:

(i) A Hindu wife shall be maintained by her husband during her lifetime except in cases where she is unchaste or ceases to be a Hindu by conversion to another religion.

(ii) A Hindu wife shall be maintained by her father-in-law, after the death of her husband, if she is unable to maintain herself.

(iii) A Hindu is responsible, during his or her lifetime, to maintain his/her minor child, unmarried daughter, aged or infirm parents including a childless stepmother, all of who are incapable of maintaining and supporting themselves.

3- That in view of the provisions of maintenance under CrPC and the 1956 Act, the Supreme Court observed that the scope of maintenance under the 1956 Act is larger than that contemplated under Section 125 of CrPC. Under Section 125 CrPC, generally, summary proceedings are initiated for immediate relief and under the 1956 Act, proceedings are initiated for larger claims.

4- Therefore, the Supreme Court observed that the Appellant in this case is an unmarried Hindu daughter who is unable to maintain herself. But there is no physical or mental abnormality or injury, as required under Section 125 CrPC. So, she may take recourse under Section 20 (3) of the 1956 Act to claim maintenance from her father till the time she is married.

To read more on this Judgment, please find the Judgment dated 15-09-2020 attached below:

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer