LANDMARK JUDGMENTS: UNDISPUTE!
We are excited to welcome all readers, to our unique newsletter:
Un-Dispute!
Vikrant Rana
Managing Partner
In this edition, we illuminate the 2023 year in a nutshell with strategic landmark case laws and innovative judgments that define our practice, solidifying our reputation as leaders in the field.
Nihit Nagpal
Partner Dispute Resolution
Editorial Team
In this Issue
• Conviction wrong when Criminal case compounded between parties.
• Due Process to be followed in departmental inquiries.
• Expert Speak! On First Law regulating Artificial Intelligence!
• The Rights of LGBTQ+ in Indian context.
• Legal Relationship of non-signatories to Arbitration.
Fun Fact: A kite flying session (without legal permit) can actually cost you a crore AND up to 2 years as per Section 10 of Aircraft Act!
JANUARY
1. TATA Sons Pvt. Ltd. (Formerly TATA Sons Ltd) v. Siva Industries and Holdings Ltd & Ors.[1]
The Hon’ble Supreme Court was faced by a myriad of questions in this Arbitration Case such as applicability of time-limit in Section 29A of Arbitration and Conciliation Act, 1996 to International Commercial Arbitrations; and whether Section 29A has retrospective application. Apart from deciding upon the factual questions such as whether the Joint Venture Agreement was breached by the Respondent? And whether the dispute resolution clause is enforceable considering the inequality of bargaining power during contract negotiation?
The Supreme Court held that the scope and extent of remedial legislations such as Arbitration and Conciliation Act, 1996 have to be liberally interpreted. In the light of 2016 Amendment, the Section 29A has expressly excluded its application from International Commercial Arbitration. This is to limit the interferences of Courts and allow International Institutions of Arbitration to function independently. This was also held to be valid retrospectively as procedural laws apply retrospectively unless they impose new obligations qua transactions already concluded.
FEBRUARY
1. B V Seshaiah v. State of Telangana Special Leave Petition[2]
In this case, the Hon’ble Supreme Court overruled conviction of the accused in a cheque bounce case under Section 138 of the Negotiable Instrument Act, 1881. As per the facts of the case, both the parties entered into a Memorandum of Understanding (MoU) for amicable settlement of the case, however, the party promising to withdraw the case, failed to file the compromise petition. Upon failure to do the same, the Telangana High Court convicted the accused.
The Hon’ble Supreme Court however overruled the conviction and held that the High Court cannot override the MoU agreed between the Parties which compounded the case.
MARCH
1. State Bank of India and Others v. Rajesh Agarwal and Others[3]
In this interesting case, the Joint Lenders Forum (JLF) led by State Bank of India debarred certain borrowers in consonance with the provisions of Master Directions on Fraud. The borrowers contended that they ought to have been notified by the JLF in accordance with the Principles of Natural Justice while the JLF contended that Master Directions on Fraud is not a coercive action but is a pre-emptive measure in public interest.
The Hon’ble Supreme Court decided that Master Directions on Fraud which allowed for debarring of the borrower is akin to civil death or blacklisting of the borrower, hence, before declaring the borrowers’ accounts as fraudulent, the borrower must be given an opportunity to be heard and the decision classifying the accounts as fraudulent must be a reasoned order in order to ensure the arbitrariness is in check.
APRIL
1. N.N. Global Mercantile Private Limited v Indo Unique Flame Ltd and Other[4]
The Supreme Court opened a pandora’s box while deciding this landmark case. In this case the Supreme Court held that an unstamped arbitration agreement is not a contract enforceable by law as per the ambit of Section 2(h) of the Indian Contract Act, 1872.
The Supreme Court further elucidated that the payment of requisite stamp fee can happen after impounding of the arbitration agreement, by the High Court or the Supreme Court which is seized of the matter at the stage of appointment of arbitral tribunal.
This judgment overruled the earlier decision in NN Global I (202I) which had held that the enforceability of the unstamped arbitration agreement is still a valid agreement and only the enforcement of rights may not be proceeded with.
The recent decision is very significant as it would lead to considerable gains for the government revenue though it does have a chance to make the arbitration proceeding lengthier!
MAY
1. Aureliano Fernandes v. State of Goa and Others[5]
The Hon’ble Supreme Court noted that lack of implementation of the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act of 2013 (POSH Act) despite a decade since its enactment.
In the present case, the Goa University conducted an inquiry against the Appellant and after conducting the said inquiry, the appellant was removed from service. However, the Appellant contended that the manner of inquiry violated various principles of natural justice such as Audi Alteram Partem and Nemo Judex In Causa Sua. The Appellant was not allowed to have any legal representation and the proceedings were preponed without allowing Appellant any time to prepare his legal reply.
Despite the High Court holding the entire chain of events and subsequent removal of appellant as proper, the Supreme Court in this case took strong exception and held that “tearing hurry” in concluding the proceedings against the appellant cannot deemed to be legal. The Supreme Court referred the case back to internal committee of the University for fresh proceedings.
The Hon’ble Supreme Court further passed directions to Central and State institutions, to ensure the effective implementation of PoSH Act.
JUNE
“The European Parliament passed the proposal regulating the development, functioning and operations of Artificial Intelligence. The EU is the first jurisdiction to roll out a comprehensive legislation in this regard, with active multi stakeholder consultations such as academia, industry tech giants, and general public.
The draft proposal envisages obligations upon AI creators in various categories such as unacceptable risk, high risk, Generative AI; the obligation is also imposed upon AI model creators for detailed summaries of training data.”
Furthermore, regarding the utility of AI in Arbitration, an important issue which has been flagged by Claudia Salomon ICC International Court of Arbitration President is what happens if the Arbitrator is AI. It would definitely increase the speed of decision making. Since AI is based on available data decision making becomes dependant statistical likelihood rather than getting justice on the facts of the case.
She has identified five problems with AI based decision making:
1. Bias
2. Opacity
3. Sufficiency of the data set
4. Outdated Data
5. Need for Reasoning
JULY
1. ARG Outlier Media Pvt. Ltd. v. HT Media Ltd.[6]
The Hon’ble Delhi High Court has discussed in this case that the arbitral award cannot be avoided execution merely because the Arbitration Agreement was unstamped. It held that during the proceeding under Section 34 of the Arbitration and Conciliation Act, 1996, the Court is not an appellate court hence there is no power to impound the unstamped document and the jurisdiction/grounds are limited to set aside the arbitral award.
This judgment reinforces the judicial tendency to avoid interfering with the arbitral proceedings and award based merely on technical grounds.
AUGUST
1. Ashok Shewakramani & Ors. v. State of Andhra Pradesh and Anr.[7]
This case relating to the liability of the accused under Section 141(1) of the Negotiable Instruments Act (NI Act), the Hon’ble Supreme Court held that in order to hold the accused-appellants liable, it is necessary to prove that the accused-appellants “were in charge of and were responsible for the conduct of the company.”
However, when the Appellants are neither signatories of the negotiable instrument nor in charge of the company, their liability would be severely limited. Further, it was “apparent that the words ‘was in charge of’ and ‘was responsible to the company for the conduct of the business of the company’ cannot be read disjunctively and the same ought be read conjunctively in view of use of the word ‘and’ in between.”
This judgment is crucial to stop the general trend to coerce the opposite party by involving individuals who were not directly related to the case, in order to extort and compound the case through settlement.
SEPTEMBER
1. Pankaj Bansal v. Union of India and Ors.[8]
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.
OCTOBER
1. Supriyo v. Union of India[9]
On October 17, 2023 a five-judge bench of the Hon’ble Supreme Court of India declined to grant legal recognition to the same-sex marriages throwing the ball in the court of the legislative wing of the Indian polity, i.e., the Parliament.
The Supreme Court held that in the exercise of the power of judicial review, the Court must steer clear of matters, particularly those impinging on policy, which fall in the legislative domain. Hence, amendment to already existing legislations would be outside the rule of law and scope of power of Supreme Court.
The Supreme Court passed directions to Union Government to create a high-powered committee to examine concerns of same-sex couples.
The case has been submitted again to the Hon’ble Supreme Court under the review jurisdiction of the Court for reappraisal of the petition.
NOVEMBER
1. Arjun Gopal v. Union of India [10]
As a measure of further clarification to various orders and judgments relating to the issue of air and noise pollution, the Hon’ble Supreme Court clarified that the directions sent by the Hon’ble Supreme Court have the applicability beyond the festive season and are not specifically applicable only to any limited geographical region.
This clarification of temporal and spatial applicability is a positive step in the right direction as it brings to fore the need for sustained efforts to contain the menace of air and noise pollution.
DECEMBER
1. Cox and Kings vs SAP India Pvt Ltd[11]
The Honb’le Supreme Court in this case discussed the legal relations between non signatories of an arbitration agreement. The Court applied the ‘Group of Companies Doctrine’ holding that all the parties who can be bound by the clear legal obligations between different non signatories can be made party to the arbitration proceedings.
This judgment is a progressively nuanced decision which took into considerations principles like alter-ego, third party legal identity, estoppel etc. and decided that “the signature of a party in an agreement is the most profound expression of consent of a person to submit to jurisdiction. However, the corollary that persons who have not signed aren’t part of the agreement may not always be correct.”
Our Gratitude to the Readers
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[1] Arbitration Case (Civil) No 38 of 2017 on 5 January 2023
[2] (CRL) NO.7099/2018) on 1 Feb 2023
[3] 2023 SCC OnLine SC 34 on 27 March 2023
[4] 2023 SCC OnLine SC 495 on 25 April 2023
[5] Civil Appeal No. 2482 of 2014 on 12 May 2023.
[6] 2023 SCC Online Del 3885 on 4th July 2023
[7] Criminal Appeal No. 879 of 2023 on 3rd August 2023
[8] Criminal Appeal Nos. 3051 – 3052 of 2023 on 19th September 2023
[9] Writ Petition (Civil) No. 1011 of 2022
[10] 2023 SCC OnLine SC 1475 on 7 November, 2023
[11] Arbitration Petition (Civil) No. 38 of 2020 on 6 December 2023