"I realise that some of my criticisms may be mistaken; but to refuse to criticize judgements for fear of being mistaken is to abandon criticism altogether... If any of my criticisms are found to be correct, the cause is served; and if any are found to be incorrect the very process of finding out my mistakes must lead to the discovery of the right reasons, or better reasons than I have been able to give, and the cause is served just as well." -Mr. HM Seervai, Preface to the 1st ed., Constitutional Law of India.

Thursday, September 18, 2014

Three Judge Bench of SCI Decides Comprehensively on "Court" under the Arbitration & Conciliation Act 1996

A Three Judge Bench of the Supreme Court has comprehensively decided on "court" in the Arbitration and Conciliation Act, 1996 in the case of State of West Bengal v. Associated Contractors (10.09.2014). Previously, a two judge Bench of the Supreme Court of India was to consider the question as to which court will be a Court for the purposes of deciding an application under Section 34 of the Act for setting aside arbitral awards. The same was referred to the Chief Justice of India for constituting a larger bench in view of the conflicting views of judgements.

After hearing the matter, the three judge Bench, through Rohington Nariman, J. laid down the following as regards the issues pertaining to the appropriate Court for filing application in view of Section 2(1)(e)(which defines "Court"), Section 42 and other provisions of the 1996 Act:

" (a) Section 2(1)(e) contains an exhaustive definition marking out only the Principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction in the State, and no other court as "court" for the purpose of Part-I of the Arbitration Act, 1996.
(b) The expression "with respect to an arbitration agreement" makes it clear that Section 42 will apply to all applications made whether before or during arbitral proceedings or after an Award is pronounced under Part-I of the 1996 Act.
(c) However, Section 42 only applies to applications made under Part-I if they are made to a court as defined. Since applications made Under Section 8 are made to judicial authorities and since applications Under Section 11 are made to the Chief Justice or his designate, the judicial authority and the Chief Justice or his designate not being court as defined, such applications would be outside Section 42.
(d) Section 9 applications being applications made to a court and Section 34 applications to set aside arbitral awards are applications which are within Section 42.
(e) In no circumstances can the Supreme Court be "court" for the purposes of Section 2(1)(e), and whether the Supreme Court does or does not retain seisin after appointing an Arbitrator, applications will follow the first application made before either a High Court having original jurisdiction in the State or a Principal Civil court having original jurisdiction in the district as the case may be.
(f) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are made under Part-I.
(g) If a first application is made to a court which is neither a Principal Court of original jurisdiction in a district or a High Court exercising original jurisdiction in a State, such application not being to a court as defined would be outside Section 42. Also, an application made to a court without subject matter jurisdiction would be outside Section 42."

The decision can be downloaded from this link (pdf)

Criminals have a better chance to be a Minister in India! - Reveries

The Indian PM got his math correct; people returned 34% of the representatives with criminal records and he gave back 27% of them as their ministers. The ADR and NEW analysis shows that candidates charged with crime actually fare better at elections than ‘clean’ candidate. It is also noted that candidate with criminal cases tend to be given ticket repeatedly. (See, here, page 16) When the political and criminal graphs are intricately connected, it is better to be a criminal if not already. It was Thomas Jefferson, who said; 'The Government you elect is the Government you deserve.”

Even with NOTA, if one third of our representatives at center are with criminal records, something is seriously ailing our democracy.  The lofty eloquence of the SC in its August 27th, 2014 judgment in Narula is of little consequence. Narula poses a vital issue; does democracy means freedom to choose without restrictions. Constitution of India and Representation of People Laws places skeletal regulation on qualification to contest elections. Legislation is slightly more expressive with regard to disqualification to represent.  For being a minister, much lesser are the requirements. One need not even be a representative for the first six month of ministerial berth. Non-prescription of qualification is both liberating and a slippery slope. Perhaps the ominous disquiet expressed by Dr. Rajendra Prasad, the President of the Constituent Assembly, in the context of laying down qualification for representatives that it is impossible to articulate yardsticks for measuring moral virtues of human beings, that it will remain the short coming of our constitution remain true as ever.

The fundamental question to ask is, where in democracy shall the screening be placed? Or is it a case that we should question the basic assumptions taken. Should there be a screening of persons who shall contest election at all. Is there anything inherently evil in criminals/ people with criminal background being elected, if people prefer them to be their representatives? After all, Robin Hood was of the mass. Good and evil are always constructed on the scales we use. I leave this discussion for later.

In the circle of democracy that we practice, we have already 'democratically formed' certain rules and regulations regarding representation. These rules presently hold that person convicted of an offence of specified categories are not qualified to be representing others in legislative bodies and therefore occupy ministerial position as well (see, B.R Kapur). There is no rule prohibiting any person charged with an offense from neither contesting nor holding ministerial position.

Now the game changes into the realm of constitutional convention, implied limitation, political proprietary, trust, morality, legitimate expectation to prevent tainted from becoming a minister Most of these terms in party politics scenario is oxymoronic and call for a hearty laugh.

The central issue remains, why do people elect tainted persons? The right to information wave was a relief that it brought a hope that the flow of sunlight will be the best disinfectant. Despite that MPs with crime records increased by 4% from last House in Center. Efforts to check criminalization of politics have been perpetual. The pages written by official commissions are enough to bury the all the criminals. Law Commission in its 244th report, of which ink is yet to dry, has spent its time and energy to collate required legislative changes on disqualification of elected representatives.  In reality, Nitin Gadkari and Uma Bharati rules, so also 10 others in central government, some even with charges of murder and rioting.

It is natural then to raise questions about democracy itself. Or as frequently hear, India’s maturity to handle democracy. Often failures are blamed on democracy as a choice of governance but it is overlooked that success of democracy needs existence of collateral liberal institutions, public spaces and deliberations. Public memory is known to be short. In a nation like India where survival is the primary issue which is further complicated with boundaries set by cast, religion and region, conscious efforts need to be taken to make public memory alive.  Development of a collective consciousness is the backbone of any social co-existence and is primal for democracy.   

The deluge of “breaking news” and unreal melodramatic soap operas, which gives voyeuristic pleasure, is degenerating this public space. Social media is gradually reduced into narcissist selfies, shaping a community inept for democratic living.


Democracy is a poor system of government at best; the only thing that can honestly be said in its favor is that it is about eight times as good as any other method the human race has ever tried. Democracy's worst fault is that its leaders are likely to reflect the faults and virtues of their constituents — a depressingly low level, but what else can you expect?” (Robert A. Heinlein, in Stranger in a Strange Land ).”

Democracy is all what we have. Let us work with it. The significance of media, universities and civil society organizations are here.

Saturday, September 13, 2014

Bombay High Court Follows Swiss Timing Instead of Maestro Engineers

We had noted in a previous post (Is this the End of N. Radhakrishnan v. Maestro Engineers? Swiss Timing v Organising Committee) the decision of the Supreme Court in Swiss Timing v Organising Committee, Commonwealth Games (May 2014: SC) where a Single Judge of the Supreme Court refused to follow a decision of a Two Judge Bench of the Supreme Court in N. Radhakrishnan v. Maestro Engineers (2009: SC) on the ground that it was rendered per incuriam

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Maestro Engineers was a decision by two judges of the Supreme Court while Swiss Timing was by a Single Judge. Therefore, the issue as to whether a Single Judge could effectively end the reign of a two judge precedent was expected to be canvassed while citing Swiss TimingIn Avitel Post Studioz Ltd v. HSBC PI Holdings (Mauritius) Ltd., a Division Bench of the Bombay High Court had the occasion to consider the binding force of Maestro Engineers. Therefore, the Court followed Swiss Timing and followed the ruling in Swiss Timing that Maestro Engineers was indeed rendered per incuriam despite the fact that one of the contentions was that Maestro Engineers prevailed over Swiss Timing due to the larger bench strength in Mestro Engineers. . 

It may however be noted that a Single Judge of the Calcutta High Court in Guiness Securities Limited vs Geeta Dilip Vyas has taken note of Swiss Timing but has leaned in favour of Maestro Engineers although he has not conclusively ruled on the issue. According to the Judge:

"In the instant case, there is no challenge to the existence of the arbitration agreement, or the agreement containing the arbitration clause. The arbitration is a mode of resolution of a dispute agreed by the parties. If the agreement is vitiated by fraud or by misrepresentation then it goes to the very root of the matter. Arbitration is consensual. A claim founded on the agreement containing an arbitration clause if is a product of fraud, the ratio of India House Hold and N. Radha Krishnan could apply." (emphasis supplied)

It is going to be interesting as to how the courts would deal with Swiss Timing. Going by the Supreme Court's pro-arbitration record in the past since 2012 (BALCO), Swiss Timing would probably be the end of Maestro Engineers

Thursday, August 28, 2014

Part V of the Comments on the Law Commission's 246th Report: Amendment to Arbitration and Conciliation Act, 1996

We continue with our endeavour of commenting bit by bit on the Law Commission's 246th Report proposing amendments to the Arbitration and Conciliation Act 1996.

Form and Content of Arbitration Agreement:
The amendments as regards Section 7 of the 1996 Act concerning arbitration agreement can be grouped into two aspects:

(1) Amendment to S 7(1) recommending addition of "concerning a subject matter capable of settlement by arbitration" clarifies that the arbitration agreement should be in respect of a dispute that is arbitrable.

(2) Section 7 has been amended to include the amendments introduced into the UNCITRAL Model Law in 2006 regarding form and content of the arbitration agreement. Clauses 3A, 3B and its Explanation are imports from the Model Law. 

These amendments further dilute the form requirement of arbitration agreement by bringing it in line with international practice. These amendments to form requirements have also been recommended to be added in several jurisdictions. See, for instance, What Constitutes an "Agreement in Writing" in International Commercial Arbitration? Conflicts Between the New York Convention and the Federal Arbitration Act, 48 Stanford Journal of International Law 47, 89-90 (2012). Further it is only logical that the amendments introduced to the Model Law are incorporated in the 1996 Act considering that the latter was adopted from the former. 

While  the idea of incorporation of the 2006 amendments is good, it is to be noted that the proposed amendments to S. 7 are in a haphazard manner. For instance, Cl. 3A states what constitutes a written arbitration agreement but Cl. 4 also states what constitutes a written arbitration agreement although both cover different aspects. Hence, it would do good to merge Clauses 3A and 4.

Amendments on Reference by Court of a Dispute to Arbitration:
The amendments to Section 8 are important primarily because they would go a long way in reforming the existing law and eliminating confusions. These amendments deal with four different aspects:

(1) Amendments to S 8(2) address a practical problem. Often, only one of the contracting parties retain the original contract/ arbitration agreement while the other(s) retain a copy of the same. Hence, the the amendment empowers the applicant to submit a copy of the arbitration agreement accompanied by an affidavit calling upon the other party to produce the original/ duly certified copy in possession of the other party.

(2) What amounted to "first statement on the substance of the dispute" was confusing. The proposed amendment provides in an Explanation that a pleading filed in relation to an interim application shall not be a first statement on the substance of the dispute. Thus, this would mean that even if such a pleading does not even refer to the existence of an arbitration agreement, nevertheless court would refer a matter to arbitration if the first pleading on the substance of the dispute mentions its existence.

(3) Section 8 has been amended to refer to arbitration only those parties who were parties (or those claiming under them) to the arbitration agreement. Further, the proviso states that no reference can be made where necessary parties to the action are not parties to the arbitration agreement. This clarifies the Sukanya Holdings decision of the Supreme Court and at the same time eliminates misuse of the holding by impleading a party in the action when it is not "necessary" to do so. The determination as to whether a party is a necessary party would be as per the provisions contained in Order 1 Rule 10(2) of the Code of Civil Procedure, 1908.

(4) The second proviso to Section 8 would state that the judicial authority will not refer the matter to arbitration if it finds that the arbitration agreement does not exist or is null and void. Unlike Section 45, the amendment restricts refusal to refer only on the grounds that the arbitration agreement does not exist of that the arbitration agreement is null and void but not on the grounds that the same became inoperable or incapable of being performed. Thus, in the latter two cases, the court need not finally determine the question. Further, it states that the scope of the decision making is only "prima facie". Thus, if the authority is prima facie satisfied that the arbitration agreement exists or is not null and void,  the same is sufficient to refer the matter to arbitration which shall determine the question de novo and in full. If the authority finds that the arbitration agreement does not exists or that it is null and void, the determination of the judicial authority is final. However, the amendment also proposes to make an order refusing reference to arbitration as an appealable order under S. 37(1)(a).

This amendment has the potential to cause confusion on when a judicial authority would be prima facie satisfied and might require judicial exposition akin to Boghara Polyfab.

Previous Parts of the topic under discussion can be read from the following links: Part IPart IIPart III, Part IV.
More on the Report in the next few posts.
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