Dispute Resolution Newsletter – 2nd Edition – February

LANDMARK JUDGMENTS: UNDISPUTE!

We are excited to welcome all readers, to our unique newsletter:

Un-Dispute!

In this Issue

• Indian Stamp Bill
• Uniform Civil Code
• Power & Role of SEBI as decided in Adani Hindenburg Case
• Bilkis Yakub Rasool Case
• Moratorium not applicable to promoters / directors of a company in Excecution Proceedings
• Intent to arbitrate – one of the most important essentials of Arbitration Agreement

Fun Fact:

Did you know that as per the The Indian Treasure-Trove Act, 1878 if a person finds treasure in India which is valued more than Rs.10/-.(USD 0.12), the person is bound to report the treasure to the Collector and deposit the treasure in the nearest Government treasury. Failure to do so may lead to imprisonment for 1(one) year and/or payment of fine.

INDIAN STAMP BILL

Recently, the Government of India proposed to replace the Indian Stamp Act, 1899 with the Indian Stamp Bill, 2023 as the provisions of the Indian Stamp Act, 1899 did not contain provisions for digital e-stamping and a lack of uniform legislation for all Indian States regarding payment of stamp duties as 6 States were following their respective stamp legislations and rules.

Highlights:

• Applicability: Section 1 of the Bill specifically mentions that the provisions of the Bill shall apply to whole of India.
• E-stamp: The Bill provides for the provisions of electronic stamp which means and electronically generated impression denoting the payment of stamp duty by electronic means or otherwise under Section 2(18) and digital signature under Section 2(17).
• Increased Penalties: The Bill also proposes to increase the maximum penalty to Rs. 25,000/- (USD 300) and Rs. 1000 (USD 12) per day for contravening the provisions of the law as per Section 72 of the Bill.
• Duty Payable: The Bill specifically mentions that the mode and manner of payment of duty shall also be regulated by the provisions of the Act.
• Undervalued Instruments: The Bill has made provisions for dealing with under-valued instruments, which provides that where an instrument is under-valued then the registering authority after registering the instrument shall refer the same to the Collector for determination of the value.

The Bill is certainly a welcome step in India’s stamping regime. The Bill attempts to prescribe a new stamping regime that is uniform to all the Indian states. Further, the inclusion of e-stamp within the definition of impressed stamp also ensures that digital e-stamping is also covered under the ambit of the new Bill, and the same is in consonance with the technological advancements within the country. Government corporations like Stockholding Corporation of India Ltd. have already started providing service of downloading e-stamp certificate directly from their website after payment of requisite stamp duty.

UNIFORM CIVIL CODE

In a historic move, the State of Uttarakhand has pursued change by alignment of the Article 44 of the Constitution of India, thereby joining the league with the State of Goa in implementing the Uniform Civil Code (UCC). This groundbreaking development marks a significant departure from the existing legal framework, where personal laws based on religious affiliations have long dictated matters of marriage, divorce, inheritance, and adoption.

Highlights –

• Standardized Legal Framework: The UCC aims to establish a consistent legal structure governing crucial areas such as marriage, divorce, inheritance, and property rights, applicable to all citizens regardless of their religious backgrounds.
• Equal Rights: The core objective of the UCC is to ensure that all individuals, irrespective of gender or religion, enjoy equal rights in marriage, maintenance, adoption, succession, and divorce.
• Equal Inheritance Rights: Under the UCC, both men and women are entitled to equal shares of inheritance, particularly concerning ancestral properties.
• Prohibition of Polygamy: The UCC explicitly forbids polygamous marriages and recognizes marriages only when neither party has a living spouse at the time of marriage.
• Compulsory Registration of Marriages: Marriages that take place after the implementation of the UCC must be registered within 6 months of marriage.
• Regulation of Live-in Relationships: The UCC introduces regulations for cohabiting couples, requiring them to register their relationships with district authorities. This ensures legal recognition and protection for both partners and any children born from such relationships.
• Legitimate Children and Maintenance: Under the UCC children born out of live-in relationships are legitimate children and women can claim maintenance from their partner in case she is deserted from the Court where they last cohabited.

The implementation of a UCC in Uttarakhand signals a departure from tradition, sparking both enthusiasm and debates on the potential implications for cultural diversity, religious autonomy, and gender equality across the country. This is a significant law that has been implelemted by the State of Uttrakhand in line with the Hon’ble Supreme Court’s view on the importance of implementation of a Uniform Civil Code through it’s judgements in Mohd. Ahmed Khan v. Shah Bano Begum and Ors,[1] and Smt. Sarla Mudgal, President, Kalyani & Others v. Union of India.[2]

[1] Mohd. Ahmed Khan v. Shah Bano Begum and Ors, MANU/SC/0194/1985
[2] Smt. Sarla Mudgal, President, Kalyani & Others v. Union of India, MANU/SC/0290/1995

03, JANUARY

Vishal Tiwari v. Union of India, (2024) 242 Comp Cas 464 Ors.^[1]

In the Adani-Hindenburg controversy as discussed in the case of Vishal Tiwari vs Union of India wherein several writ petitions were filed that involved allegations of stock manipulations by the Adani group of companies, as raised by the Hindenburg Research, the Hon’ble Supreme Court held that it saw no grounds to intervene in the regulations established by SEBI and transfer the investigation to a Special Investigation Team (SIT). Additionally, the bench emphasized that relying solely on a third-party report, such as the Organized Crime and Corruption Reporting Project (OCCRP), without verification, is insufficient to justify transferring the investigation from SEBI to SIT. While declining to transfer the probe, the bench clarified that reports from third-party organizations could serve as input but should not be considered conclusive evidence to question SEBI’s investigation.

The Hon’ble Court was of the opinion that SEBI had completed 22 investigations out of 24 investigations and hence directed SEBI to complete the remaining 2 investigations. This judgement signifies the importance of SEBI as a regulatory body and is a positive development keeping in mind the growing the stock market of the Indian Economy and the impact on the Dalal Street.

04, JANUARY

S.V. Samudram v. State of Karnataka, 2024 SCC OnLine SC 19^[2]

In the present case, a contract was awarded to the Appellant for construction. Disputes arose between the parties that ultimately led arbitration as per their Contractual Agreement. Upon conclusion of the arbitral proceedings, the Arbitrator found the Respondents liable for various issues and passed an award in favour of the Appellant. The Respondent preferred an Appeal under Section 34 of the Arbitration and Conciliation Act, 1996 by the before the Ld. Civil Court. The award was modified by the Ld. Civil Court by reducing the compensation awarded to the Appellant. Hence, Appellant appealed to the Karnataka High Court, under Section 37(1) of the Arbitration and Conciliation Act, 1996 and the decision of the Ld. Civil Court was upheld which led the Appellant to Appeal before the Hon’ble Supreme Court. The Hon’ble Supreme Court, allowing the Appeal, dismissed the orders passed by the Ld. Civil Court and the Karnataka High Court. The Hon’ble Court emphasized that the power of Courts under Section 34 and Section 37 of the Arbitration and Conciliation, Act, 1996 is limited to setting aside the arbitral award only and not for the modification of the same.

08, JANUARY

Bilkis Yakub Rasool v. Union of India, 2024 SCC OnLine SC 25^[3]

The landmark judgment of the Hon’ble Supreme Court quashed the remission granted by the Gujrat State Government under Section 432 of the Criminal Procedure. The brief facts of the case are that the in 2002, the Petitioner was raped and her family was killed by a mob. The investigation was transferred by Hon’ble Supreme Court upon the request of the Petitioner to the CBI at first and then to the Bombay High Court which held the Accused guilty of murder of the Petitioner’s family members and the rape of the Petitioner.

In 2022 remission was granted by the Gujrat High Court. Hence, the Petitioner challenged the remission granted by the High Court of Gujrat to the convicts under Section 432 of the Criminal Procedure, 1973. The Hon’ble Supreme Court observed that to be able to grant remission, the Appropriate Government is the government is the state in which the convicts are tried. Further, the Appropriate Government must seek the opinion of the convicting judge before granting the remission under Section 432(2) of the Criminal Procedure, 1973. Therefore the Hon’ble Court observed that in the present case the Gujrat Government was not the appropriate government since the accused were convicted in Maharashtra. Consequently the Writ Petition under Article 32 of the Constitution of India was allowed in favor of the Bilkis Yakub Rasool.

10, JANUARY

Kalpataru Projects International Ltd. v. Municipal Corpn. of Greater Mumbai, 2024 SCC OnLine Bom 66^[4]

In this present case, the Bombay High Court’s judgment addresses a dispute arising from a construction project between the parties. The question of consideration was whether the dispute resolution clause of the General Conditions of Contract constituted an arbitration agreement. The High Court held that the dispute resolution clause did not qualify as an arbitration agreement because it lacked explicit references to arbitration or arbitrator appointment, and its original title emphasized “Finality of Decision and non-arbitrability.”
This decision serves as a crucial reminder of the importance of clear and explicit language in contract clauses, especially those related to dispute resolution, highlighting that mere finality and binding nature of a decision do not necessarily imply an intention to arbitrate. This judgement is in backdrop of the judgements as held by the Hon’ble Supreme Court in the cases of Bihar State Mineral Development Corporation and Another v/s. Encon Builders (I)(P) Ltd.^[1] and Jagdish Chander v. Ramesh Chander & Ors,^[2] wherein the essential elements of an arbitration agreement are as follows:-

• There must be a present or a future difference in connection with some contemplated affair.
• There must be the intention of the parties to settle such difference by a private tribunal.
• The parties must agree in writing to be bound by the decision of such tribunal.
• The parties must ad idem (be in agreement).

[1]Bihar State Mineral Development Corporation and Another v/s. Encon Builders (I)(P) Ltd, (2003) 7 SCC 418
[2]Jagdish Chander v. Ramesh Chander & Ors, (2007) 5 SCC 719.

17, JANUARY

Ansal Crown Heights Flat Buyers Assn. (Regd.) v. Ansal Crown Infrabuild (P) Ltd., 2024 SCC OnLine SC 64^[5]

In the present case, the Hon’ble Supreme Court addressed the issue that whether an execution proceeding could be initiated against the directors of a Company in case a Moratorium which is enforced under Section 14 of the Insolvency and Bankruptcy Code, 2016. The facts of the case are the Appellants (homebuyers) filed an execution seeking completion of a project from a developer through the National Consumer Disputes Redressal Commission (NCDRC). However, the NCDRC held that a moratorium has been imposed on the directors and officers of the Respondent-Builder and denied the execution against the directors and officers of the Respondent-Builder. Hence an Appeal was filed before the Hon’ble Supreme Court wherein the Hon’ble Court referring to its judgment in Anjali Rathi and Ors. vs Today Homes and Infrastructure Pvt. Ltd. and Ors. [1] held in case a Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 is imposed against a Company, the directors/officers cannot take shield under the same in case an execution is filed against the directors/officers provided that they are otherwise liable to abide by and comply with the order. Thereby allowing the Appeal, the case was remitted back to the NCDRC for fresh consideration.

[1] Anjali Rathi v. Today Homes & Infrastructure (P) Ltd., 2021 SCC OnLine SC 729

29, JANUARY

Ajitsinh Chehuji Rathod v. State of Gujarat, 2024 SCC OnLine SC 77 ^[6]

In the instant case, the Appellant was convicted under Section 138 of the Negotiable Instrument Act, 1881, for issuing a dishonored cheques by the Trial Court. The Principal Sessions Judge and the Gujrat High Court dismissed the subseqent Appeals filed by the Appellant to challenge the order of the trial court. Hence, an Appeal was preferred to the Hon’ble Court challenging the order of the Gujrat High Court that upheld the decision of the Trial Court. The Hon’ble Supreme Court held that certified copy of a document issued by a Bank is itself admissible under the Bankers’ Books Evidence Act, 1891 without any formal proof thereof. Hence, in such a situation, the certified copy of the specimen signature maintained by the Bank can be procured with a request to the Court to compare the same with the signature appearing on the cheque by exercising powers under Section 73 of the Indian Evidence Act, 1872. In the present case the Appellant made no efforts to examine the bank official with respect to the genuineness of his signatures during trial. Hence, the presumption was in favor of the Complainant and the Appeal was dismissed.

The Hon’ble Supreme Court in this landmark case removed the vagueness and ambiguity enunciated in the Section 19(1) of the Prevention of Money Laundering Act, 2002 (PMLA) regarding the rights of arrested persons.

The Petitioners in the present case contended that they were not communicated their grounds of arrest and were neither shared their Enforcement Case Information Report (ECIR). This disabled them from applying for bail under PMLA, 2002 since the law requires them to challenge that there exists a reasonable offence against them.

The Court held that when the Enforcement Directorate makes the arrest under PMLA, they must necessarily furnish the grounds of arrest to the accused in written format and failure to do so is untenable as per Article 22(1) of the Constitution of India. The Supreme Court reiterated the emphasis on personal liberty of the accused and the importance of upholding the rule of law, and due process.

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[1] Vishal Tiwari v. Union of India, (2024) 242 Comp Cas 464
[2] S.V. Samudram v. State of Karnataka, 2024 SCC OnLine SC 19
[3] Bilkis Yakub Rasool v. Union of India, 2024 SCC OnLine SC 25
[4] Kalpataru Projects International Ltd. v. Municipal Corpn. of Greater Mumbai, 2024 SCC OnLine Bom 66
[5] Ansal Crown Heights Flat Buyers Assn. (Regd.) v. Ansal Crown Infrabuild (P) Ltd., 2024 SCC OnLine SC 64
[6] Ajitsinh Chehuji Rathod v. State of Gujarat, 2024 SCC OnLine SC 77