VOL III                                                      ISSUE NO. 14                                April 03, 2018          

In This Issue

India: Enforceability of Foreign Arbitral Awards

cbecThe Hon’ble Delhi High Court vide its recent judgement, in the case of Daiichi Sankyo Company Limited vs. Malvinder Mohan Singh and Ors., reiterates the enforceability of the awards passed by arbitral proceedings seated overseas

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India: Supreme Court orders Bengaluru restaurants with live bands to obtain licenses from police

Supreme-courtRecently, the Hon’ble Supreme Court of India, while upholding ‘The Licensing and Controlling of Places of Public Entertainment (Bangalore City) Order 2005’ held that ‘in our considered view, it is the prime duty, rather statutory duty, of the police personnel/administration of every state to maintain and give precedence to the safety and the morality of the people and the state.

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India: BCI sub-committee Rules in favor of Legislators

ngt The Bar Council of India constituted a four member expert committee, in response to a plea made to it to debar MPs and MLAs from practicing as advocates. The committee has responded with its report in which three out of four members have ruled in favor of MPs and MLAs.

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India: Enforceability of Foreign Arbitral Awards

 

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Source : www.delhihighcourt.nic.in

 

The Arbitration and Conciliation Act, 2015, (hereinafter referred to as the “Act”) has been enacted with a view to monitor the arbitral proceeding being conducting at domestic as well as international levels. The Act regulates the enforceability of foreign awards.

 

The award enforceable under Part II of the Act is binding upon the parties thereto. Such award would not be enforceable as per the provisions of Section 48 of the Act, if at the time it was passed

  1. either party is under some incapacity;

  2. either party was not given any proper notice regarding the appointment of the Arbitrator;

  3. the award itself comprises of decisions beyond the scope of the Arbitration;

  4. the agreed procedure for Arbitration was not followed;

  5. the award is set aside/ suspended by the competent authority before its enforcement;

  6. the subject-matter of the dispute is not capable of settlement by arbitration under the laws of India;

  7. the enforcement of the award would be contrary to the public policy of India.

In a recent judgement dated January 31, 2018, in the case of Daiichi Sankyo Company Limited vs. Malvinder Mohan Singh and Ors[1]. , the Delhi Court discussed the enforceability of foreign award.

 

Brief facts

 

M/s. Daiichi Sankyo Company Limited (hereinafter referred to as “Daiichi Sankyo”) purchased the total stake of Singh brothers in Ranbaxy Limited for INR 1,980,000,000 under the share purchase and subscription agreement. Disputes arose between the parties when Daiichi Sankyo alleged fraud and concealment of facts. As agreed between the parties the dispute was referred for Arbitration at Singapore whereby an award of INR 35,620,000,000 was passed in favor of Daiichi Sankyo who filed the petition for the enforcement of the said award.

 

Singh Brothers challenged the enforcement of the said award because of the following reasons:

  1. falling within the preview of non-enforceable awards as per Section 48 of the Act;

  2. Damages being contrary to Section 19 of the Contract Act, 1872 (hereinafter referred to as “Contract Act”);

  3. Consequential damages awarded were beyond the jurisdiction of the Arbitral Tribunal;

  4. Claims were barred by limitation;

  5. Interest on awarded damages amounts to awarding of multiple damages;

  6. Award against minors is not enforceable.

Judgement

 

The High Court of Delhi vide judgement dated January 31, 2018, upheld the enforceability of the award with the exception of non-applicability of the provisions of the said award on minors.

 

Ratio

 

The Court discussed the applicability of foreign awards in accordance with the provisions of Part II of the Act and arrived at the below stated conclusions:

  1. Applicability of Section 48 of the Act – It was observed that the enforceability of foreign award could only be refused if the same is against the fundamental policy of India, interest of India or justice/ morality. The Act does not give an opportunity to have a “second look” at the foreign award at the stage of enforcement. Review of foreign award on merit is not permissible. While considering the enforceability of foreign awards, the Courts do not exercise appellate jurisdiction. Since the case does not fall within the purview of any of the conditions stated under Section 48 of the Act, the said award was held enforceable.

  2. Damages contrary to Section 19 of the Contract Act – It was held that according to the provisions of Section 19 of the Contract Act, the party should be placed in the same position in which they would have been if the representations made were true. Since losses were suffered by Daiichi owing to fraudulent actions of the Singh Brothers, damages awarded were not contrary to Section 19 of the Contract Act.

  3. Consequential damages were beyond the jurisdiction of the Arbitral Tribunal – It was observed that the damages awarded could be said to be beyond the jurisdiction of the Arbitral Tribunal as consequential damages are to be considered in view of punitive, exemplary, multiple damages and not the losses.

  4. Claims were barred by limitation – It was held that the Court could not go into the finding of the Arbitral Tribunal. Therefore, the findings that limitation period commences only when the party could have with reasonable diligence discovered claimable action against the opposite party. The Court while rejecting the said contention, observed that the findings of the Arbitral Tribunal could not be held contrary to the fundamental policy of Indian law.

  5. Interest on awarded damages amounts to awarding of multiple damages – It was observed that there was no absolute bar on award of interest by the way of damages and that the same was permissible if usage/ contract/ provision of law justified such interest.

  6. Award against minors is not enforceable – It was held that minor could not be held guilty of perpetuating fraud either by himself or through agent and any such act committed by the natural guardian could not bind him/ her. Fundamental policy in India seeks to protect the interests of the minor.

Conclusion

 

Enacted with the aim of facilitating the mechanism of dispensing justice, the Act encourages settlement of disputes through alternate dispute resolution mechanism. While covering the aspect of domestic arbitrations, the Act also covers the validity and binding effect of the foreign seated arbitrations. The Court vide the said judgement seeks to repose the faith in the enforceability of foreign arbitral awards.

 

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[1]O.M.P.(EFA)(COMM.) 6/2016

 

 

 

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India: Supreme Court orders Bengaluru restaurants with live bands to obtain licenses from police

 

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Source : www.supremecourtofindia.nic.in

Recently, the Hon’ble Supreme Court of India, while upholding ‘The Licensing and Controlling of Places of Public Entertainment (Bangalore City) Order 2005’ held that ‘in our considered view, it is the prime duty, rather statutory duty, of the police personnel/administration of every state to maintain and give precedence to the safety and the morality of the people and the state. Indeed, both are important and lie at the heart of the doctrine that the welfare of an individual must yield to that of the community.’ As a result of this ruling, Restaurants in Bangalore will now have to obtain a license if they want to display "live band music", "cabaret dance" and "discotheque".

 

Brief Background

 

  • Karnataka Live Band Restaurants Association (hereinafter referred to as ‘the Appellants’) is a registered association under the Karnataka Societies Registration Act, 1960 and Rules framed thereunder. The Association is formed by people who are engaged in the business of running restaurants in various parts of the city of Bangalore.

  • The restaurant owners also display live band music, cabaret dance performances and discotheque in their restaurants for entertaining the customers.

  • Section 31 of the Karnataka Police Act, 1963 (hereinafter referred as ‘the Act’) sanctions the Commissioner and the District Magistrate to make orders to regulate traffic and to preserve and control public places. Thus, the Commissioner/District Magistrate of Bengaluru issued an order in the year 1989 called "Licensing and Controlling of Places of Public Amusements (Bangalore City) Order, 1989" (hereinafter referred to ‘the 1989 Order’).

  • As per the 1989 Order the restaurant owners displaying ‘Live Band Music’ were asked to obtain the licenses for running their restaurants and for displaying Live Band Music.

    Writ Petition before the Karnataka High Court (1989)

    • Aggrieved by the above order, the restaurant owners filed a writ petition in the High Court of Karnataka.

    • The contention of the restaurant owners was that the Live Band Music was for entertainment purposes only, hence not an activity covered under Order 1989. Further, they stated that these restaurants could not be treated as a place of "Public Amusement" as defined under Section 2 (14)of the Act, but at best could be treated as a place of “Public Entertainment” as defined under Section 2 (15) of the Act.

    • The Single Judge Bench agreed with the contentions of the restaurant owners and quashed the order of the Commissioner. However, the Division Bench in an appeal set aside the order of the Single Judge and allowed the appeal filed by the State of Karnataka.

  • Thus, aggrieved by the order of Division Bench the restaurant owners filed a Special Leave Petition before the Supreme Court.

  • An order was passed on November 11, 2002 which held that restaurants playing live band come under the ambit of ‘Public Entertainment’ and restored the order of the Single Judge.

  • Due to this order, the Police Commissioner, Bangalore issued another order in 2005 called ‘The Licensing and Controlling of Places of Public Entertainment (Bangalore City) Order 2005’, (hereinafter referred to as ‘the 2005 Order) under Section 31 of the Act. This regulated the running and the functioning of the restaurants displaying Live Band Music, cabaret dance performance and discotheque in the restaurants.

    Writ Petition before the Karnataka High Court (2005)

    • Again, aggrieved by the 2005 Order, the Karnataka Live Band Restaurants Association filed another writ petition in the Karnataka High Court and challenged t he legality and validity of the 2005 Order.

    • The Single Judge was of the view that since the Commissioner did not comply with the procedure laid down in Section 31 of the Act before issuing the Order inasmuch as he did not invite any objections from the public at large, the 2005 Order is bad in law. Thus, the Commissioner of Police was directed to treat the 2005 Order as ‘draft Order’ and granted an opportunity to the public at large to file their objections as provided in the Act to the proposed draft 2005 Order and then to proceed in the case in accordance with law.

    • It was also held that since Live Band Music was not being displayed for a long period in the restaurants, no prejudice would be caused to the restaurants’ owners, if they do not display the Live Band Music for a further period of two months.

    • Distressed by this order of the Single Judge, the Karnataka Live Band Restaurants Association along with some restaurants owners filed intra Court appeal before the Division Bench. The Division Bench dismissed the appeal.

  • Aggrieved by the Division Bench order another SLP was filed in the Supreme Court of India. The said appeal was allowed in part by an order dated December 12, 2005. Additionally, the restaurant owners were permitted to run their restaurants with display of Live Band Music until Rules are framed. Three conditions were obligated on the restaurants’ owners:

    • The proposed display of entertainment will not be used to promote public gambling or the game house, and it shall under no circumstances be used for promotion of prostitution and narcotic substances;

    • The restaurant owners will not organize or allow any performance or shows, which are immoral, obscene or indecent and will ensure that there is no obscenity or indecency in dress, movement or gesture and will ensure that the performers does not expose their person; and

    • The restaurant owners shall not permit any obscene or objectionable posters or pictures to be exhibited in their restaurants.

 

 

  • Pursuant to this, the restaurant owners gave the undertaking that they would not allow these three things to occur in their restaurants. /span>

  • On December 9, 2005, the Commissioner of Police issued the 2005 Order, after ensuring the compliances as directed by the Supreme Court.

  • Karnataka Live Band Restaurants Association again challenged the constitutional validity of this order in the Karnataka High Court.

  • The challenge to the 2005 Order was based mainly on two grounds:

    • The Licensing Order, 2005 violates Article 14 of the Constitution, is discriminatory in nature, and thus not legally sustainable.

    • It infringes the Appellant's fundamental right guaranteed under Article 19(1)(g) of the Constitution and hence ultra vires the provisions of the Constitution.

  • The Single Judge by order dated February 09, 2007 dismissed the Appellant's writ petition. Consequently, thereof, the 2005 Order was upheld.

  • An appeal against the abovementioned order was filed in the Division Bench of the Karnataka High Court. Wherein, the Division Bench passed an order (hereinafter referred to as ‘the impugned order’) dismissing the appeal and upholding the order of the Single Judge Bench.

  • Aggrieved by the impugned order the Appellants filed the present appeal against the State of Karnataka (hereinafter referred as ‘Respondent No. 1’).

Issues

 

Whether the 2005 Order issued by the Commissioner is legal under Section 31 of the Act?

Appellant’s Contentions

  • The Appellant submitted that the display of Live Band Music in restaurants was an activity for the entertainment of the audience. Thus, by necessary inference it is not an activity of nature that could be brought under the four corners of Section 31 of the Act, so as to regulate its functioning by the impugned 2005 Order.

  • Further, the Appellant stated that it is not necessary to take license for displaying Live Band Music in their restaurants and such activity can be performed in the restaurants even without the license under the 2005 Order, as was being done by them till 2005.

  • It further contended that the act of the Commissioner of Police is violative of principle of equality enshrined in Article 14 and 19 (1) (g) of the Constitution.

  • It also submitted that the conditions create a discrimination between two similar restaurants without any reasonable classification as it requires one restaurant owner to obtain the license and exclude other similar restaurant owners from obtaining the license.

Respondent’s Contentions

  • The Respondent supported the reasoning and conclusion arrived at in impugned judgment and contended that the appeal has no merit.

Court’s Decision

  • The Court examined Sections 2 (14), 2(15) and 31 of the Act and Clauses 2 to 18 of the 2005 Order.

  • Highlighting two legal maxims, “Salus Populi Supremo Lex[1] and "Salus Republicae Supremo Lex"[2], held that it is the prime duty, rather than a statutory duty, of the Police personal/administration of every State to maintain and give precedence to the safety and the morality of the people and the State.

  • The Court analyzed the Article 14 and Article 19(1) (g) of the Constitution and also reiterated that reasonable restrictions that can be imposed on Article 19(1) (g).

  • The Court was of the opinion that the 2005 Order, does not suffer from any legal infirmity and is therefore constitutional. The reasons behind this opinion were:

  • It considered Section 31 a valid piece of legislation. Moreover, the Commissioner of Police was duly empowered to issue order in respect of the matters specified therein and it acted accordingly. Thus, no fault can be found as far as the source of power of the Commissioner of Police to issue the 2005 Order is concerned.

  • The Appellant's business activity, viz., running of the restaurants and display of Live Band and two others fall under the expression "Public Entertainment".

  • Since the performances that are displayed in a restaurant where public has an access and, therefore, in the larger public interest, these performances have to be controlled, regulated and supervised by imposing reasonable restrictions in law under clause (6) of Article 19 (1).

  • Conditions specified in Sub-clauses (a) to (l) of Clause 7, Clause 8 and Clause 9 of the 2005 Order are well-conceived conditions in public interest. These conditions ensure the safety and the welfare of the Public who regularly visits such restaurants to take food and witness the live performances of the artists in the restaurants.

  • The 2005 Order has rightly provided a check on the powers of the licensing authority in granting or refusing the license in as much as the licensing authority is now required to give reasons for rejecting the license.

  • Thus, the Court held that the 2005 Order does not suffer from any arbitrariness or unreasonableness nor does it infringe the fundamental right of the Appellant guaranteed under Article 19 (1)(g) of the Constitution of India. In other words, in our considered view, both the Courts below were justified in upholding the 2005 Order as being constitutional and legal.

 

 

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[1]the safety of the people is the supreme law

[2]safety of the State is the supreme law

 

 

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India: BCI sub-committee Rules in favor of Legislators

 

Logo-of-Bar-Council

Source : www.barcouncilofindia.org

 

 

A BJP Delhi Spokesperson had earlier made a plea to the Bar Council of India (hereinafter referred to as the ‘BCI’) through a letter to consider debarment of Members of Parliament (hereinafter referred to as ‘MPs’) and Members of Legislative Assembly (hereinafter referred to as ‘MLAs’) from practicing as advocates as they are public servants already and cannot sail in two boats at the same time. In response to the letter, the BCI, on December 26, 2017, constituted a four member expert committee, comprising of advocates B.C. Thakur, R.G. Shah, S Prabhakaran.

 

The committee has responded with its report in which three out of four members have ruled in favor of MPs and MLAs. In the said report, the majority of three members held that ‘For that matter, all kinds of legally regulated professions like medicine and law, howsoever demanding they may be, are compatible with public services/duties. Ideally, all these professions, with some aberrations here and there, exist to serve the people. We should not forget the fact that lawyers like Mahatma Gandhi,  Bal Gangadhar  Tilak,  Dr. Ambedkar,  Jawahar  Lal  Nehru,

 

 

 

Dr. Rajinder Prashad, Lala Lajpat Rai, Rajgopalachari, C.S. Dass have played important and crucial role in our freedom struggle while they were practicing advocates. There is no valid reason as to why services of an advocate, who happens to become an MP/MLA, should not be available to general litigant public who are aggrieved by any act/deed of the government.’ One S Prabhakaran was of the opinion that Members of Parliament (MPs) and Members of Legislative Assembly (MLAs) should not practice as advocates because of office of profit and conflict of interest.

 

The committee took into consideration the case of Dr. Haniraj L. Chulani v. Bar Council of Maharashtra & Goa, which was highlighted in the letter, and stated that the legal profession is not regulated by any professional Regulatory Authority, as is the case in the medical profession. In addition, the case was not related to Rule 49 of the Bar Council of India Rules; rather, it is of the Rules framed by the State Bar Council of Maharashtra and Goa.

 

According to the recent reports, Ashwini Upadhyay has filed a writ petition in the Supreme Court challenging the permission to an individual to perform the dual role of a lawyer and a legislator on grounds of conflict of interest and violation of BCI rules. It would be interesting to look for updates in the matter considering the parties involved.

 

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