SUPREME COURT SEEKS GOVERNMENT REPLY ON THE VALIDITY OF ITS ORDER DATED 29.03.2020

Introduction

The nationwide #lockdown imposed to curb the outbreak of Corona virus is an action regulated by the Disaster Management Act, 2005 (the ‘Act’). The World Health Organization (#WHO) has declared the present situation as pandemic on 12.03.2020.

The provision of the Act, 2005, was invoked on 24.03.2020, after which the Prime Minister, Narendra Modi, announced the nation-wide lockdown, from 25.03 2020 and this has been extended till 17.05.2020.

Measures of the Government

In India, a review of the current situation demands immediate measures by the Government to control the spread of this Pandemic. In respect of which earlier an Order dated 24.03.2020, was passed by the National Disaster Management Authority in exercise of its power under Section 6(2) (i) of the Act, [Order no. 1-29/2020-PP (pt. II)]. Thereby, all the States and Union Territories (UTs) declared invocation of Section 2 of the Epidemic Diseases Act, 1897, which makes advisories issued by the Ministry of Health Welfare/State/UTs legally enforceable.It also issued guidelines to Ministers/Departments of Government of India, State/Union Territory Governments and Authorities for strict implementation to prevent the spread of COVID-19 in the country.

Thereafter, the Government issued Order dated 29.03.2020, under Section 10(2)(l) of the Act, to deal with the situation and for effective implementation of the lockdown measures, and to mitigate the economic hardship of the migrant workers. Wherein, the Government also directed that“All the employers, be it in the industry or in the shops and commercial establishments, shall make payment of wages of their workers, at their work places, on the due date, without any deduction, for the period their establishments are under closure during the lockdown;”

Government Order under Disaster Management Act, 2005

It is significant to understand the object and purpose of the Act, 2005 which is to manage #disasters, including preparation of mitigation strategies, capacity-building and more. Directing employers to not reduce or pay full wages/salaries to their employee’s is not within the powers of the Government under Section 10(2) (l) of the Act. The Act is applicable to provide for the effective management of disasters and for matters connected therewith or incidental thereto. Section 10(2)(l) of the Act, is reproduced here for reference;

10. Powers and functions of National Executive Committee.—(2) Without prejudice to the generality of the provisions contained in sub-section (1), the National Executive Committee may—

(l) lay down guidelines for, or give directions to, the concerned Ministries or Departments of the Government of India, the State Governments and the State Authorities regarding measures to be taken by them in response to any threatening disaster situation or disaster;

It appears that the Government wants to reduce the suffering of workers due to the lockdown. Though the intention maybe appreciable all decisions of the Government to balance the situation rather than target one part of the society. The Government while passing the Order missed the hardship which can be faced by the employers/establishments due to enforcing of such directives. The industry which was already plagued by a global crisis in the last few months is further burden by the current lockdown. The Government should have kept this in mind before passing Order dated 29.03.2020. Every decision has two sides of the coin. Every debit entry has a corresponding credit entry. But the Government did not consider side of the employer while issuing the aforesaid advisories.

Impact of Government Order dated 29.03.2020

The scope of the Act is regulation over disaster management and empowers committees to frame plans to control disasters. A bare reading of the provisions of the Act would show that powers have not been vested with either the State or the Central Government to direct private employers to pay wages during a disaster when the #employees are not working.

As a result,a writ petition was filed before the Hon’ble Supreme Court of India on 21.04.2020 namely Ludhiana Hand Tools Association v Union of India and Others. The validity of Government Order dated 29.03.2020 under Section 10(2)(l) of the Act, was challenged under Article 32 of the Constitution of India,before the Hon’ble Supreme Court of India by various other private firms, association and establishments, separately. The Petitions are seeking an appropriate writ for setting aside or quashing of Government Order dated 29.3.2020 issued by Ministry of Home Affairs, Government of India, under Section l0(2)(l) of the Act, only to the limited extent wherein the private establishments are directed to pay full #salaries to all workers/employees, contract or casual workers during the period of COVID-19 lockdown.

The following legal issues were raised in the various Petitions before the #SupremeCourt;

  1. Whether Disaster Management Act, 2005 empowers Central Government to issue directions to private establishment for payment of full wages/salary during a disaster under Section 10(2)(l) of the Act.
  2. Whether under the Act, the Government of India can direct private establishments to pay full wages, when Industrial Disputes Act, 1948, provides for payment of 50% wages under similar circumstances.
  3. Whether the Impugned Government Order violates Article 14 and l9 of the Constitution of India.
  4. Whether Government of India issued the Government Order dated 29.03.2020 in undue haste and without considering the financial ability of private establishments to bear the burden of full wages during the period of lockdown.

A three-judge Bench, led by Justice N.V. Ramana, passed an Order dated 27.03.2020 in one of the matter namely FicusPax Private Limited v. Union of India and Others, wherein it allowed Solicitor-General, Mr Tushar Mehta, appearing for the Government, to file his response to a batch of petitions filed by several companies challenging the constitutional validity of the Government Order dated 29.03.2020, which mandates that industry, shops and commercial establishments, without exception, pay their workers without any deduction during COVID-19.

Conclusion

To conclude, it is imperative to say that the language of the Act and in particular Section 10(2) (l) of the Act has nothing to do with payment of salaries/wages, much less mandating private establishments to pay salaries against no work.Whether private establishments can be compelled to pay full salaries when no work is done, is a question to be decided. Further such an Order curtails the employers’ fundamental right to trade or business under Article l9(1)(g).

It should not be overlooked that the nationwide lockdown is for an undefined period. This situation presents several challenges for both the employers and employees. It is irrational to treat all private establishments alike irrespective of the profit and loss incurred by them or their revenues and turnover. A private establishment suffering loss with huge debts to repay cannot be equated with an establishment earning profits. There is no rational for treating them alike.The Order must be examined afresh as it is impossible to comply with.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

FORCE MAJEURE: ITS RELEVANCE AND APPLICABILITY TO CONTRACTS

What is force majeure?

The #Pandemic, #Covid-19, has seen to a rise in #forcemajeure cases. What is force majeure is a question that pops up often in several minds. Typically, force majeure would mean an unforeseen and unstoppable event that prevents parties from performing their obligations under a #contract. It is sometimes also known as an act of God.

It can also be explained as an event that could not have been anticipated or controlled and effects the contractual performance by the parties making it #impossible or impracticable to continue with the contract. The event is temporary in nature. However, the affected parties must ensure that they have taken all measures under the contract to mitigate the damage.

Is force majeure clause mandatory in a contract?

A force majeure clause is not mandatory in a contract. Generally, a force majeure clause incorporates all presumed events that the parties have identified. It is a possibility that a force majeure clause may not contain all presumed events as events like the Pandemic are new to the world. However, the use of epidemic would probably suffice in such a clause for invocation of force majeure during Covid-19.

It can only be invoked if there is a provision in the contract that has listed out the particular force majeure event. Therefore, many contracts contain a force majeure clause that limits damages or excuses performance when an “act of God” or circumstances beyond the parties’ control, prevent either party from fulfilling its obligations.

However, courts typically construe force majeure clauses narrowly and literally and it will only excuse performance, if the contract expressly includes the particular event. In order for COVID-19 to be considered as a force majeure event, it should explicitly contain a specific reference to a “pandemic,” “3epidemic,” “virus,” “disease,” “#quarantine,” “#lockdown”, “travel restriction,” or “state of emergency”, “national emergency”.

In many force majeure clauses, many of these words would not have been included, as the Pandemic is unique in its nature. However, that is not to say that all the above words should be there in the clause. Even the use of one of the words would suffice for invocation of force majeure. It is now a given that post-Pandemic, all force majeure clauses will have to be well-worded and should include all situations that are unforeseen, unstoppable and beyond the control of the parties.

What happens if there is no force majeure clause in the contract?

The Supreme Court of India has held that force majeure clauses have to be narrowly construed; many instances of invocation of force majeure may not fall within the force majeure clause. However, that is not to say that in the event of impossibility to perform one’s contractual obligations due to an unforeseen and unstoppable event that is beyond the control of the parties, there is no remedy.

In such cases, parties can plead frustration of contract under Section 56 of the Indian Contract Act 1872 and seek discharge. The Section provides that where a party to a contract finds it impossible to perform its obligations due to some event which is unforeseen and unstoppable and prevents it from performing its obligations, then such a contract will be deemed to be frustrated. In an important Judgment of the Supreme Court Satyabrata Ghose vs Mugneeram Bangur & Co., and Another 1954 SCR 310,the Apex Court held that the word ‘impossible’ does not have to be taken only in its literal sense and can mean impracticability of performance from the point of view of the parties. Essentially, frustration would be deemed to have occurred when it makes the performance impossible as it strikes the very root of the matter.

In M/S. Alopi Parshad & Sons, Ltd vs The Union of India AIR 1960 SC 588, the Petitioner sought to invoke force majeure as the price of ghee that had to be supplied had gone up substantially. The Court, however, declined to give relief to the Petitioner as it held that commercial impossibility or hardship was no ground for discharge from contractual obligations.

In another important case of The Naihati Jute Mills Ltd vs Hyaliram Jagannath AIR 1968 SC 522, the Supreme Court once again referred to ‘frustration’ and relied upon the English law of frustration. It further held that a party can be absolved from performance of its part of contract, if it is impossible to perform.

In the most recent Supreme Court Judgment of Energy Watchdog vs Central Electricity Regulatory Commission (2017) 14 SCC 80,the invocation of force majeure was again taken up. In the said case, the Petitioners held that they were invoking the force majeure clause, as there was a change in the laws of Indonesia, which made the price of coal go up. Thus, making it impossible for the Petitioner to fulfill its obligations under the contract. The Supreme Court was of the view that merely because the price of a basic raw material had gone up, the contract could not be deemed to be frustrated. It observed as follows:

37. It has also been held that applying the doctrine of frustration must always be within narrow limits. In an instructive English judgment namely, Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH, 1961 (2) All ER 179, despite the closure of the Suez Canal, and despite the fact that the customary route for shipping the goods was only through the Suez Canal, it was held that the contract of sale of groundnuts in that case was not frustrated, even though it would have to be performed by an alternative mode of performance which was much more expensive, namely, that the ship would now have to go around the Cape of Good Hope, which is three times the distance from Hamburg to Port Sudan. The freight for such journey was also double. Despite this, the House of Lords held that even though the contract had become more onerous to perform, it was not fundamentally altered. Where performance is otherwise possible, it is clear that a mere rise in freight price would not allow one of the parties to say that the contract was discharged by impossibility of performance.

38. This view of the law has been echoed in ‘Chitty on Contracts’, 31st edition. In paragraph 14-151 a rise in cost or expense has been stated not to frustrate a contract. Similarly, in ‘Treitel on Frustration and Force Majeure’, 3rd edition, the learned author has opined, at paragraph 12-034, that the cases provide many illustrations of the principle that a force majeure clause will not normally be construed to apply where the contract provides for an alternative mode of performance. It is clear that a more onerous method of performance by itself would not amount to a frustrating event. The same learned author also states that a mere rise in price rendering the contract more expensive to perform does not constitute frustration.

What events are not force majeure?

Generally, the parties to a contract may give an inclusive list of force majeure events such as act of God (earthquake, tsunami, floods, tide, storm, hurricane, tornado, cyclone), war, insurrection, riot, civil commotion, strike, explosion, fire, break down of machinery, epidemic, government regulations,radioactive contamination etc. However, there is no uniform set of events that constitute force majeure.

Instead, force majeure remains a flexible concept that permits the parties to add presumed/expected events that correspond to their unique course of dealings.

However, events that have been self-induced by the parties to cause breach of contract will not fall within the definition of force majeure.

Similarly, events that show commercial adversities or impossibilities that adversely affect parties or cause a commercial loss will not be accepted as a force majeure condition or a condition for discharge from contract.

Is notice mandatory for invocation of force majeure?

The parties that are taking the plea of force majeure must do so by giving a notice of the force majeure event at the earliest, to the other party, during the pendency of the event. Failing which it will not be deemed to be invocation of the force majeure clause.

What is the result of invocation of force majeure?

The force majeure event may either suspend or terminate the contract. It may also allow the aggrieved party to excuse the performing party’s performance, till the time such as the event continues. However, such an excuse would not be deemed to be a waiver of its rights under the contract. It would also allow the parties to re-negotiate the contract, if they so wish to.

How should a force majeure clause be drafted?

1- The parties while drafting a force majeure clause should bear in mind that the suspension of work or termination of the contract should be within a particular time frame.

2- The clause that is drafted should have an all inclusive list of events or circumstances that could impede a party from performing one or more of its contractual obligations.

3- The clause should clearly set out that the event must be unforeseen, unpredictable and beyond the reasonable control of either party and that such an event would make performance of obligation impossible. 

4- The clause should also set out that the party invoking the clause is relieved from its duty to perform its obligations and from liability for damages for the breach of contract.

5- Another important point that should be added in such a clause is that any party who knew that performance was impossible yet who has availed of any monetary benefit from the signing of the contract, should refund the said monetary benefit.

6- The clause should also include a provision regarding invocation by written notice at the earliest possible time, upon the occurrence of the event.

7- And lastly, the parties may have a clause that allows for extension of time for performance in case of a force majeure event or renegotiating the contract.

Sushila Ram Varma

Chief Legal Consultant

The Indian Lawyer & Allied Services

WILL THE INDO-JAPANESE ALLIANCE ATTAIN THE NEXT LEVEL

#Japan enjoys tremendous goodwill and esteem globally for their efficiency and skill sets. However, in #India there is a special affinity towards Japan for several reasons.

Japanese #companies that had set up businesses in India have done extremely well.

The Prime Ministers of both countries have created the Indo-Japan Strategic and Global Partnership to ensure economic growth for both countries. They have announced “Japan and India Vision 2025 Special Strategic and Global #Partnership Working Together for Peace and Prosperity of the Indo-Pacific Region and the World”, a Joint Statement that would serve as a guide post for the “new era in Japan-India relations.”

India has established the “Japan Plus” Office in the Ministry of Commerce and Industry as early as October 2014, as a “one-stop” location for resolving problems faced by Japanese companies.

India has been the largest recipient of Japanese Official Development Assistance (ODA) #Loans in the past decades. Delhi Metro is one of the most successful examples of Japanese cooperation through the utilization of ODA. Japan has pledged to cooperate on supporting strategic connectivity linking South Asia to Southeast Asia, through the synergy between ”Act East” policy and ”Partnership for Quality #Infrastructure.”

In terms of human resource development in the manufacturing sector in India, Japan has announced its cooperation of training 30,000 Indian people over next 10 years in the Japan-India Institute for Manufacturing (JIM), providing Japanese style manufacturing skills and practices, in an effort to enhance India’s manufacturing industry base and contribute to “Make in India” and “Skill India” Initiatives. JIM and the Japanese Endowed Courses (JEC) in engineering colleges will be designated by Japanese companies in India, and this is a good example of cooperation between the public and private sectors. In summer 2017, the first four JIMs started in the States of Gujarat, Karnataka, Rajasthan and Tamil Nadu, and the first JEC was established in the State of Andhra Pradesh. Since then, four more JIMs and one JEC have started. Those institutes are also expected to give more Indian students the ambition to study the Japanese language.

During the period of April 2000 to December 2019, Japan has #invested an amount of approximately USD 33,080.56 Million in India. 

Companies in India

There are around 1,441 Japanese companies registered in India. These companies have around 5,102 business establishments spread across various states like Karnataka, Tamil Nadu, West Bengal, Delhi, Mumbai and Gujarat.  List of these Japanese companies in India is attached.

Sectors

India and Japan have been collaborating with each other in the following #sectors:

1. Steel and Iron-Ore Industry

2. Infrastructure

3. Construction

4. Forest and Disaster Management

5. Automobile, Trains and Locomotives

Some of the important Indo-Japanese ongoing projects are as follows:

1. Clean India Project (Swachh Bharat Abhiyaan) –

This Project aims to maintain overall cleanliness of the streets, roads, and public properties in India.

The Japan International Cooperation Agency (JICA), a Japanese Governmental Agency in India, has funded a total of 25 water and sanitation projects in India, thereby disbursing loans of approximately USD 7 Billion, as on 30-01-2020.

2. Ganga Rejuvenation Project –

JICA has extended loans of approximately USD 105 Million for improvement of water quality of River Ganga at Varanasi in 2015.

3. Development of North-Eastern parts of India –

India and Japan have collaborated for road and highway connectivity improvement projects, biodiversity conservation and forest management projects, etc in the North-Eastern parts of India.

Future plans

1- Japan plans to collaborate with India in the field of artificial intelligence, internet of things and 5G technologies.

2- India and Japan have planned to collaborate in the agriculture and food processing sectors, in order to improve farming productivity and decrease harvest and post-harvest losses.

3- India and Japan have also planned to strengthen bilateral cooperation in the defence equipment and technology sector. There have been interactions between both the countries with regard to cooperative research in the field of Unmanned Ground Vehicle (UGV), Robotics and US-2 amphibian aircrafts, etc.

4- Both countries have planned to strengthen cooperation in exploring outer-space activities, such as the Joint Lunar Polar Exploration Mission.

5- Both countries have committed to explore the possibilities for collaboration in the areas of sustainable and renewable forms of energy, food and water security, environmental protection, cyber security based projects, etc.

6- Further, Japan has committed to contribute to the Make-in-India and Skill India Projects of India, for the purpose of making India, a manufacturing destination for companies across the globe.

Sushila Ram Varma

Chief Legal Consultant

The Indian Lawyer & Allied Services

And

Team, The Indian Lawyer & Allied Services

SUPREME COURT APPROVES “VIRTUAL COURT CONCEPT” BUT CAUTIONS UNLIMITED AND UNREGULATED PUBLIC ACCESS

In the time of #Pandemic, it has become vital that the administration of #justice must be done keeping in mind the health concerns of both the legal community and the public. Access to justice is fundamental to preserve the rule of law in the democracy envisaged by the Constitution of India. The present challenges due to the outbreak of #COVID-19 have to be addressed, while protecting the constitutional commitment of delivery of justice to those who are aggrieved.

This is not a matter of discretion but of duty. Indeed, #courts throughout the country, particularly at the level of the Supreme Court and the High Courts have employed video conferencing for dispensation of justice.

Accordingly, the Hon’ble Supreme Court has recently released its Report on “Open Court Hearings” dated 02.05.2020. In which, it strongly defended its “#virtualcourts system”, by saying that the institutional requirement was to ensure the “administration of justice” in the face of recent Pandemic. The Apex Court, which is hearing only urgent matters through video conferencing claimed that has it, has heard matters for 22 days up till May 1, 2020.

In addition, the Supreme Court has already taken suomotu cognizance for swiftly switching onto the new technology and protocol for ensuring that administration of justice remained uninterrupted. By its Order dated 06.04.2020 passed in the matter of, In Re: Guidelines for Court Functioning through Video Conferencing during COVID19 Pandemic [Writ(Civil) No.5/2020],where several directions were issued and observations were made to be followed by the High Courts and subordinate judiciary.

The Supreme Court in reply to criticism levelled against the possible extension of virtual hearings beyond the lockdown, states that public access to an open court system cannot be “unlimited and unregulated”.In light of this, it is significant to move our attention to the leading Judgment of the Supreme Court in the matter of virtual hearings. It was first given recognition in Swapnil Tripathi vs Supreme Court of India, [2018 SCC OnLine SC 1667, decided on 26-09-2018] whereby,the Bench comprising of Chief Justice Dipak Misra, Justice A.M. Khanwilkar and Justice Dr D.Y. Chandrachud decided in favour of live streaming of cases of constitutional or national importance before a Constitution Bench of the Supreme Court.It also laid down the Guidelines to administer the live court hearings for the first time.

In this case the Supreme Court made a reference to Section 327 CrPC and 153-B CPC which deals with provisions regarding open court hearings. In the Court’s opinion use of technology for the live court proceedings could be a way forward. By providing virtual access of live court proceedings to one and all, it ensures the right of access to justice and public trial, along with right to know the developments of law for litigants.

However, it was also opined that while doing so regard must be had to the fact that just as the dignity and majesty of the Court is inviolable. The issues regarding privacy rights of the litigants or witnesses, in case of live streaming of proceedings may not be desirable as it may affect the cause of administration of justice itself. These are matters which need to be identified and a proper regulatory framework must be provided under Article 145 of the Constitution. Justice Dr D.Y. Chandrachud,delivered a separate concurring opinion wherein he formulated Model Guidelines for the broadcasting of the proceedings in the said Judgment.

A beginning has already been made. Several High Courts in India have issued detailed Guidelines on the use of videoconferencing. Accordingly, at a time when social distancing is being emphasized as the only way to slow down the spread of COVID-19, the spectre of crowded court premises continues to haunt litigants, lawyers and Judges alike. This is an apt moment to partially explore, experiment, and adopt the viability of electronic courts.

As a result, the Apex Court is planning to improve its e-filing system by reducing the number of people queuing up at counters to file cases or to draw circles on the ground so that people can stand in them at a distance. Also, the number of lawyers allowed to go inside the court per party in a case would be restricted to three, and only lawyers for the first six listed cases will be allowed to go in. 

Conclusion

Thanks to the COVID-19 Pandemic which is a grave threat to the human race. ‘Virtual court system’ is here to stay. It will force the society, governments and countries to change the ways in which work as well as leisure is undertaken. The silver lining is that adopting technology for dispute resolution in an online format, will lead to significant saving in cost and time for parties.

This could be an opportune time to explore the opportunity of bringing the mainstream litigation and regularizing appearances and arguments by lawyers via videoconferencing. No doubt, an expert committee would need to be constituted to examine the feasibility. But even the biggest technological advances will not be effective without addressing the fundamental issues that plague the Indian Judicial system.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer

‘MUTUAL WILL’ BECOMES EFFECTIVE ON THE DEATH OF EITHER OF THE JOINT TESTATORS

The Hon’ble High Court of #Delhi vide its Judgment dated 25.04.2020 has recently passed a significant ruling in the matter of Vickram Bahl & Anr. Vs. Siddhartha Bahl [CS(OS) 78/2016 & IAs No.2362/2016], holding that the rights in favour of the ultimate beneficiary under the mutual #Will accrue on the demise of either of the #executants and during the lifetime of the other #executant of the mutual Will.

The brief facts of the case involve Mrs. Sundri Bahl (‘second Defendant’) and Late Wing Commander N N Bahl who had executed a joint Will dated 31.03.2006. According to the Will, if one of the executors dies, the entire property shall go to the other executant. Here, Mr. Wing Commander N N Bahl had predeceased the second Defendant. Accordingly, after the demise of one spouse, the entire property is to “rest” with the other spouse and no one else shall have the right or interest in the share of the deceased’s share and after the #demise of both of them, their eldest son, grand-daughter (daughter of eldest son) and younger son will be absolute owners of their respective shares as detailed in the Will.

On the demise of Wing Commander N.N. Bahl, the second Defendant became the sole owner of the property and was entitled to deal with the property. Consequently, the second Defendant instituted a suit for recovery of possession of the portions of the property in possession of the eldest son and his daughter. This suit was pending before the Court of Additional District Judge, Delhi.

As a result of the above Suit the eldest son of the Testators and his daughter (the Plaintiffs) had filed a #suit against his mother and brother inter alia seeking the relief of permanent injunction against his mother and brother (Defendants) from dis-possessing them from their respective share of the Suit property as per the said Will.

The two issues were put forth before this Court. The first one was whether the Will executed on 31.03.2006 qualifies as a mutual Will and the second with respect to the effect of Section 14(1) of the Hindu #Succession Act, 1956 (‘the Act’) on such bequeathal.

It is imperative to refer to the meaning of a mutual will under law. Accordingly, in the case of Kochu Govindan Katmal v. T.T. Lakshmiamma, [1959 AIR 71] the Hon’ble Supreme Court of India stated the meaning of a joint or mutual will which is as follows:

“A will is mutual when the two testators confer upon each other reciprocal benefits as by either of them constituting the other his legatee that is to say when the executants fill the roles of both testator and legatee towards each other. But where the legatees are distinct from the testators, there can be no position of a mutual will.”

Resultantly, in response to the first issue, the Bench comprising of Justice Rajiv Sahai Endlaw read the clauses of the Will and held that as evident from the language of the document that it contains an agreement. It further held that once such an agreement is found and the Will is found to be with respect to joint property and the Will of #Testators is contained in the same document, the same qualifies as a mutual Will. The Second Defendant, having accepted the said Will and after taking advantage thereunder cannot deal with the property, contravening her agreement with her deceased husband and is bound by the same.

The Bench while propounding the law in this regard, held that “the rights in favour of the ultimate beneficiary under the mutual Will are crystalized on the demise of either of the executants and during the lifetime of the other executant of the mutual Will”, and the beneficiary does not have to wait till the death of both the executants, to enforce his rights. Accordingly, the Bench held that mutual Will shall come into effect after the death of either of the joint executants.

With regard to the second issue, the Hon’ble Court held that for applicability of Section 14(1) of the Act, possession of the property by Hindu female on the date of commencement of the Act is sine qua non.

Section 14 in The Hindu Succession Act, 1956 states as follows;

14. Property of a female Hindu to be her absolute property.—

(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner. 

(2) Nothing contained in sub-section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property.

It was also held that it is incumbent for the Hindu female to plead that the subject property was bequeathed to her in lieu of a pre-existing right and since in the present case the second Defendant has not pleaded, so she cannot claim an absolute right to the suit property under Section 14(1) of the Act.

The Court finally held that “the principle of, a mutual Will coming into effect and binding  also on the testator who may still be alive, on the death of one of the two testators, is well enshrined in the Indian Law.” Resultantly, the Decree was passed, in favour of the Plaintiffs and jointly and severally against the two Defendants.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer

GOVERNMENT MEASURES TO ENSURE SUSTAINABLE DEVELOPMENT OF GLOBAL ECONOMY

Recently, around 28-04-2020 to 01-05-2020, the #Government of India discussed the importance of regional and global #cooperation to effectively deal with the #Covid19 #Pandemic crisis, with various #G20 member countries and other #countries such as Thailand, Bangladesh, and Myanmar. These countries have mutually agreed to form a coordinated #global response in the following manner:

1- Owing to the Pandemic and the #Lockdown situation across the world, various households, companies, Government departments, business entrepreneurs, etc, have been relying on #digital mode of communication and transactions.

Thus, the Government of India has assured that the Information Technology (IT) and IT Enabled Services (#IT-ITeS) industry would develop softwares and applications to build an effective and safer #cyberspace.

2- The Covid19 crisis has caused disruptions in #supplychain and as a result, there have been cases of shortage of essential commodities, such as agricultural and processed food items, in some countries. Thus, the Government has encouraged Indian industrialists and exporters to #export certain commodities to such countries in the near future and has ensured adequate incentives for the same.

3- India has assured various countries across the world including Thailand, Indonesia, Canada, Bangladesh, and Myanmar, to maintain the supply of medical products, pharmaceutical requirements, and/or other commodities in order to mitigate the impact of the Pandemic.

4- India and Thailand have expressed interest for collaboration of researchers, scientists and innovators of both countries.

5- India and Canada have agreed to collaborate in the field of #research and development, and technology, for developing #vaccine, and/or other remedies, to resolve the COVID-19 issue.

Further, these measures may also provide opportunity to both small-scale and large-scale #businesses in the country to manufacture, supply and export essential commodities to other countries and thereby, generate #revenue and employment opportunities in the country.

Thus, the aforesaid large-scale cooperation efforts, technological advancements and continuous supply chain management may help countries to soon revive the global economy and resolve the Covid19 issue.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

ROLE OF VIRTUAL ARBITRATION DURING THE COVID-19 PANDEMIC

In the light of the onset of #Covid-19, resulting in physical #distancing for an indeterminate period, in-person activities have become impossible. In person court hearings and #arbitrations has become impossible. However, when one door closes another always opens.

Due to such restrictions, the framework of in-person arbitrations seems the next best alternative method viz., #videoconferencing or virtual hearings. #Virtualarbitration as the name suggests means a resolution of disputes by using technology. Such virtual hearings will have to comply with several laws and in particular the #InformationTechnologyAct, 2000. Under the current challenging circumstances, it seems there is no option but to explore virtual arbitration and courts to ensure access to justice and adjudication of disputes.

As the #lockdown in India has been increased by several weeks people are now looking at alternate ways of resolving their legal issues as the pandemic continues indefinitely. There is now a scramble for exploring options to use #technology to reduce physical interface and maintain distancing. One such option that is being looked at very seriously by the Indian Legal System is advent of virtual hearings be it arbitrations or court proceedings.

The #SupremeCourt has already paved the way for virtual courts vide its guidelines for Courts functioning through video conferencing on 06.04.2020. Though virtual courts were being used as an experiment it is a system that will stay. Though #virtualcourts may not be a panacea in every case it can be considered as a viable option for some types of matters where the evidence is not very difficult to handle. Currently it seems the only viable option.

Currently the most effective, efficient and accessible platform for dispute resolution is arbitration. It is a device whereby the settlement of a question, which is of interest for two or more persons, is entrusted to one or more other persons; the arbitrator(s), who derive their power from a private agreement, not from the authorities of a State, and who are to proceed and decide the case on the basis of such an agreement.

This available avenue for adjudication of disputes can be conducted virtually. Such virtual arbitrations can be conducted either fully or in piecemeal depending on the parties and the arbitral tribunal. As parties are allowed to make their own rules for conducting arbitration they can decide whether they should use virtual arbitration for the entire dispute or only for preliminary issues.Such virtual adjudications will save time and money. It will also lead the way for simplifying the process as interface time can be reduced. It will also restrict adjournments and delays in the matter.

The use of technology as part of legal proceedings is ordinary. In many jurisdictions we have seen some witnesses providing evidence remotely by video-conferencing. As India, is digitally very advance, entrepreneurs can come up with a number of online platforms which are capable of hosting a virtual hearing. Such platforms also allow sharing of documents and its review by the parties. The virtual arbitrations can be done through virtual break out rooms and private chat features, either for one-to-one conversations or as a group is also available on such platforms.

Though, virtual arbitration provides a number of advantages such as low costs and saving of time it is not the ultimate solution. It cannot be denied that virtual hearings will not be appropriate in all circumstances. Some factors which make virtual hearings probably unviable are:

Lengthy Hearing: Anyone who has participated in a lengthy video conference will attest that it is more difficult to maintain focus virtually than it is meeting in person. Delays and disruptions, possibly arising from technology failures, may be amplified over a prolonged period.

Atmosphere for witnesses: Witnesses tend to be more relaxed giving evidence by video link. Where a witness’s evidence is contentious, the cross-examiner might be unfairly disadvantaged by not being able to see the witness in the flesh and to be seen in the flesh by them. This cuts both ways, with a party’s own witnesses and also their opponent’s witnesses.

Sitting hours: In a cross-border dispute with various time zones, some or all parties may be forced to sit at unsociable hours, potentially creating an imbalance.

Availability of internet: A fast, reliable and secure internet connection for each participant is a necessity. While this is ordinarily taken for granted in many parts of the world, internet performance is not guaranteed during this pandemic as telecommunication networks come under increasing strain.

The pandemic has now opened a new avenues and virtual arbitration is being considered as a valuable option. The ability to design a flexible dispute resolution process and to anticipate what issues may arise in a virtual setting has to be examined carefully.Parties to a legal proceeding should weigh up all the factors and work out what is best for them.

Reference

  1. https://main.sci.gov.in/supremecourt/2020/10853/10853_2020_0_1_21588_Judgement_06-Apr-2020.pdf

Lakshmi Vishwakarma

Associate

The Indian Lawyer & Allied Services

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer & Allied Services

RBI ISSUES MEASURES TO REVIVE THE ECONOMY OF INDIA

On 17-04-2020, the Reserve Bank of India (#RBI) issued certain measures to revive the struggling economy of India. The Governor of RBI, Shri. Shaktikanta Das, announced the following measures, through an online address, to overcome various challenges that have arisen due to the #Covid19 outbreak and the #Lockdown situation in the country:

1- Targeted long-term repo operations:

The RBI would provide long term #loan of Rs. 50,000/- Crores to banks, so that small and mid-size corporates, non-banking financial #companies (NBFCs), micro finance institutions (MFIs), etc, can avail funds from #banks.

2- Refinancing facilities for financial institutions:

In view of the prevailing financial crisis due to Covid19 outbreak, the RBI has recently reduced the rate at which it lends money to commercial banks, i.e., #RepoRate, to 4.4%, on 27-03-2020. This is to encourage commercial banks to borrow more money from RBI and re-finance it to third-party borrowers.

The RBI has decided to provide a Refinance Facility of Rs. 25,000/- Crores to the National Bank for Agriculture and Rural Development (NABARD) at prevailing Repo Rates. This would enable #NABARD to provide funds to regional rural banks (RRBs), cooperative banks and MFIs, at affordable credit rates and terms.

Further, the RBI would provide a Refinance Facility of Rs. 15,000/- Crores to the Small Industries Development Bank of India (SIDBI) at prevailing Repo Rates. This would enable SIDBI to provide funds to third party borrowers, at affordable credit rates and terms.

Additionally, the RBI would provide a Refinance Facility of Rs. 10,000/- Crores to the National Housing Bank (NHB) at prevailing Repo Rates. This would enable NHB to provide funds to housing finance companies (HFCs), at affordable credit rates and terms.

3- Reduction of Reverse Repo Rate

In view of the prevailing financial crisis due to Covid19 outbreak, the RBI has recently reduced the rate at which it borrows money from commercial banks, i.e., the Reverse Repo Rate, to 3.75%. This would encourage commercial banks to provide loans and make investments in productive sectors of the economy, rather than provide loans to the RBI.

4- Increasing the limit of #loans to States and UTs

The RBI has increased the limit of temporary loan facilities that State Governments and Union Territories (UTs) Governments can avail from RBI, i.e. Ways and Means Advances (WMAs), by 60%. This would encourage them to undertake measures to contain and prevent the spread of Covid19 Pandemic in their respective States and UTs.

5- Extension of review and resolution period

The RBI has directed lenders to review and resolve the borrowers’ non-performing account (NPA), within 30 days of default of repayment, which has now been extended by 90 days, in view of the Coronavirus crisis.

6- Restriction on distribution of dividend

The RBI has directed scheduled commercial banks and cooperative banks to refrain from distributing dividends out of profits earned in 2019-20, until further orders. This would enable banks to preserve capital and support the economy.

7- Lowering of Liquidity Coverage Ratio requirement

Liquidity ratios measure a bank’s ability to meet the short-term financial obligations and liquidity disruptions in the market. But due to the prevailing cash crunch in the society, the RBI has reduced the Liquidity Coverage Ratio requirement for scheduled commercial banks from 100% to 80%.

8- Loans to commercial real estate projects

The RBI has allowed NBFCs to provide loans to commercial real estate projects, where the commencement of operations have been delayed due to reasons such as outbreak of Covid19, which are beyond the control of the promoters of such projects.

Thus, the RBI has issued the aforesaid measures to maintain adequate liquidity in the system, ease the financial stress and facilitate the normal functioning of the markets, during these challenging times. Further, Prime Minister, Shri. Narenda Modi, said that these RBI measures would help to improve credit supply in the economy and would also help small businesses, micro, small and medium enterprises (MSMEs), farmers and the needy, to deal with the outcome of the Covid19 crisis. 

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

SUPREME COURT HOLDS THAT MORTGAGED PROPERTY CAN BE REDEEMED ONLY BY PROCESS OF LAW

A #mortgage is a #transfer of one’s interest in immovable #property as a #security for a #loan. A person lent money with or without security. The essential feature of a mortgage is that it is a conveyance of legal interest in a property, with a provision for #redemption i.e., upon repayment of loan, the conveyance shall become void. The provisions related to mortgage are contained in Sections 58 to 61 of the Transfer of Property Act, 1882 (#TPA).

The most important, fundamental and basic right possessed by the mortgagor is the right to redeem the mortgage. This right is not merely a contractual right, it is a legal/statutory right given to the mortgagor by Section 60, of TPA. This section allows the mortgagor to #redeem his property without any impediment.

Meaning of redemption: The property mortgaged is only a security for the payment of the money lent; the mortgagor is entitled to get back his property on payment of the principal and interest after the expiry of the due date for the repayment of the mortgagee money. This right of the mortgagor is called the right of redemption. It involves two things:-

  • Re-transfer of the interest which had been originally transferred to the mortgagee, and
  • Delivery of the possession.

Right of redemption is a statutory right of a mortgagor. Hence, it may be extinguished the way it has been provided under Section 60, TPA. Accordingly, a mortgage can be extinguished either by act of the parties or by a decree of a court.

Recently, a two Judge Bench of #SupremeCourt of India, passed a Judgment dated 17.04.2020, inCivil Appeal 4594 of 2010 titled as Shankar Sakharam Kenjale (Died) through LRs v Narayan Krishna Gade and another holding that the principle of right to redeem a mortgage can be extinguished only by a process known to law.

The brief facts of the case, pertains to an inam/watan land which was governed by the Bombay Hereditary Offices Act, 1874.The original watandar put one Ramchandra as a permanent tenant of the land in 1947, who mortgaged the land for the period of 10 years, to the Appellants herein. During the said period, the Bombay Paragana and Kulkarni Watans (Abolition) Act, 1950 was passed, which abolished all watans and resumed the land to the Government (Abolition Act). The said Act, empowered the holder of the watan to seek re-grant of the land upon payment of the requisite occupancy price. The original watandar did not apply for re-grant on the ground that he was in possession of the land, and he got the re-grant eventually. The Mortgagor filed a suit for redemption of mortgage and recovery of possession of the land upon receipt of the mortgage money. In result, the Trial Court dismissed the suit, holding that the Mortgagor’s right to redemption was extinguished by the Abolition Act. Thereafter,first appeal against the said order of the Trial Court was dismissed and in second appeal before the High Court was allowed. The High Court hold that the Mortgagor’s right to redemption was not lost.

Consequently, the instant appeal before the Supreme Court was filed against the judgment dated 08.06.2009 passed by the High Court of Judicature at Bombay in Second Appeal No. 439 of 1987 (Impugned Judgment). Vide the Impugned Judgment, the High Court set aside the findings of the Trial Court and the First Appellate Court and directed the Trial Court to draw a preliminary decree of redemption of mortgage in favour of the Respondents herein.

The Bench of Supreme Court dismissed the said appeal, upholding the reasoning of the High Court. Following the principle that the right to redemption can be lost only by way of process of law, the Apex Court relied on the precedents covering the same issue namely Jayasingh Dnyanu Mhoprekar and Another v. Krishna Babaji Patil and Another, [(1985) 4 SCC 162] and Namdev Shripati Nale v. Bapu Ganapati Jagtap and Another, (1997) 5 SCC 185.

The Court observed that the right of redemption is invaluable in the sense that it cannot be denied to the mortgagor even though he may by express contract abandon his right to redeem the property. It also observed that equity insists upon the principle that a mortgage is intended merely to afford security to the lender and thus an agreement which prevents redemption is void. The right of redemption cannot be taken away.

The Judgment emanates from the legal principle applicable to all kind of mortgages that “Once a mortgage always a mortgage’’.  A mortgagor’s right to redeem the property, and the subject of the mortgage, has been recognized as fundamental to the transaction of a mortgage. If the right to redeem the property is denied to the mortgagor, the same would amount to appropriation of the title by the mortgagee.This would result in the infringement of the right of the mortgagor and would, therefore, tend to frustrate the transaction.

In view of the above the Court held, that the denial of a right to redeem the property, or delaying the exercise of this right to redeem for an extensive period, or creating other contractual barriers against the exercise of the right to redeem, cannot be acceptable in equity or in law. Accordingly, the instant appeal was dismissed.

Lakshmi Vishwakarma

Associate

The Indian Lawyer

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer

VERIFY NEWS ON COVID19 BEFORE PANIC

In recent times, Indians have shown #nationalpride by cooperating with the Prime Minister’s directions of obeying complete #Lockdown. Such a #nationalist approach by a greater majority of Indians displays unity and #patriotism at its best. It is truly commendable that a nation having a population of 1.3 Billion people have been united in fighting the #Pandemic. By all counts, India has done very well in fighting the Pandemic, as our figures of #Covid19-positive patients are very low compared to most countries. The death rate is also low and most of the deaths have been in cases, where patients already have some major disease and Covid19 has only aggravated the situation culminating in death.

However, despite this great display of national pride and patriotism, there are a few who have enjoyed in being mischief makers and in spreading false news about the Pandemic. Sadly, the #socialmedia, which is such a powerful tool in today’s world, has been misused by few people in spreading false, bogus, misleading and #confusingnews, without realizing the repercussions. One cannot overrule that some of this #falsenews is the outcome of a vicious mind that is doing it intentionally, maliciously and knowingly to create panic and frustration in people.

However, it is also possible that some of the false news may not have been posted with mala fide intentions, but is the result of ill-informed people, who have not been able to sift the wheat from the chaff. It is possibly the work of people who believe ignorance is bliss and they are smart to create news and send incorrect information for the fun of it. Such #pranksters should know that they are liable under the law for spreading fake news and incorrect information.

It is time that people know that the law does not permit spreading of such false news and knowledge regarding the Pandemic. People indulging in such nefarious activities must know that they are liable under Section 505 of the Indian Penal Code 1860 as amended thereof (IPC) that makes them accountable and they can be prosecuted against. Under the #IPC, such persons can be prosecuted and can be imprisoned for up to three years or with fine or with both.

The Pandemic falls under Section 3 of the Epidemic Diseases Act 1897 as amended thereof. This means that any person spreading false news, rumors or knowledge regarding the Pandemic, is liable to be punished under the law and can be #prosecuted for up to 6 months of #imprisonment or #fine, which can run into thousands of Rupees.

Section 54 of the Disaster Management Act 2005 as amended thereof, also makes such persons liable to be proceeded under the law. This Section states that any person who makes or circulates a #falsealarm or warning about a disaster or its severity or magnitude, thereby, causing panic amongst public, shall be punishable with imprisonment of up to one year or with fine.

In recent times, the Cyber Crime Cell has been picking up people who have been using the social media to spread false news or spread of untested treatments and diets regarding the Pandemic. Even news agencies including the big names have been reprimanded for spreading false and unverified news regarding Covid19.

This Article has been written in public interest with a request to fellow Indians to show the same level of national pride and patriotism that has been shown in dutifully following the Lockdown by abstaining from spreading false news and rumors that can increase the panic and frustration in the mind of the masses.

There is no doubt that the Lockdown has been difficult, yet the unity of Indians has made the Lockdown a huge success and has ensured that Covid19 does not become a national #disaster in our country. The Author implores fellow Indians to abstain from spreading false news and rumors in #nationalinterest.

Sushila Ram Varma

Chief Legal Consultant

The Indian Lawyer & Allied Services