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Application of principles of natural justice

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This article has been written by Thimmaiah Codanda Mandanna, pursuing a Certificate course in Arbitration: Strategy, Procedure and Drafting, and has been edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.​​ 

Introduction

The Honourable Supreme Court of India is the most prestigious court in the country and deals with legal cases and proceedings on a daily basis, addressing varied legal issues that crop up under the different branches and facets of the legal sphere or landscape of our country while always keeping the principles of natural justice in mind to ultimately meet justice in a fair, transparent, and impartial manner. Every citizen of India, including foreigners (in certain cases or situations), looks up to the Supreme Court of India as a beacon of hope or a hallmark of justice when their respective legal proceedings or cases are brought before the ambit of the Supreme Court. Hence, it is paramount that the Supreme Court of India, when adjudicating upon a particular matter, always follow the principles of natural justice when passing an order or judgement. However, with that being said, it is first important to understand what natural justice is and thereafter how its respective principles are applied by authorities in power, more specifically the Supreme Court of India, while administering justice. I shall make an attempt to address the same via this article below.

Natural justice

Natural justice is a concept of common law that can trace its origins to the Latin word ‘Jus Naturale’, which means natural law. In simple parlance, this is a philosophical system of moral principles that are based on human nature and moralistic ideals of right and wrong rather than on legislation, judicial action, or statutes, and in the technical sense, it would be synonymous with fairness. Natural justice aims to prevent any form of arbitrariness or injustice  towards its citizens by authorities in power. The respective Court(s) have evolved the principles of natural justice to keep a check on themselves, which acts as safeguards while exercising powers in order to prevent any form of abuse of power and ultimately  ensure justice is delivered effectively.

Principles of natural justice

As per traditional English law, natural justice can be classified into two principles, which are as follows:

  1. Nemo Judex In Causa Sua, and
  2. Audi Alteram Partem

Nemo Judex In Causa Sua

Nemo Judex In Causa Sua means the rule against bias. This is the first principle of natural justice, which says that no man can be a judge in his own case, and any deciding authority while deciding a case must act in an impartial and neutral manner. This principle ensures that justice must not only be done but must be seen to be done. It is pertinent to note here that the rule against bias must be adhered to by authorities administering justice in any form to instil confidence in the general public towards the legal system of the country. 

Further, the concerned authority must apply his/her mind objectively and in an impartial manner and, in any event, must not be influenced by any kind of bias while passing an order or judgement. There are different kinds of bias, which shall be discussed hereinafter, that may affect the decision making process of a concerned authority and, when not recognised or acted upon via recusing oneself from looking into the matter placed before it, will render the said order or judgement passed thereafter null and void as it will be against the aforementioned principle of natural justice.

The different kinds of bias are as follows:

Personal bias

This kind of bias originates from the relationship between the adjudicating authority and the parties. The concerned adjudicating authority could be a relative, friend, business associate, etc., or may have some sort of personal liking, dislike, or inclination against a party to a case. In such a scenario, the adjudicating authority would be biased towards one party and prejudiced against another.

However, it is imperative to note that if there are elements of personal bias which are apparent to the adjudicating authority while passing an order or judgement, the following tests-

  1. The reasonable suspicion of bias test; and 
  2. The real likelihood of bias test may be conducted and proven by the aggrieved party to challenge the order or judgement of the adjudicating authority. 

The former test is mainly for outward appearance, wherein justice must be prima facie done, and the latter primarily focuses on the Court’s own evaluation of the probabilities.

Pecuniary bias

This kind of bias arises when the concerned authority has a financial or monetary interest in the subject matter of the dispute. For instance, the concerned authority has accepted a certain amount of bribe to sway it towards passing a favourable order or judgement against the person.

In the landmark case of Dimes vs. Grand Junction Canal (1852), a public limited company filed a suit against a landowner pertaining to the interests of the company. The Lord Chancellor who decided the case was a shareholder in the company and resultantly gave relief to the company. The House of Lords, upon becoming aware of this fact, quashed his decision on account of the pecuniary interest of the Lord Chancellor in the Company.

Subject matter bias

This kind of bias arises when the adjudicating authority has a general interest in the subject matter of the dispute, either directly or indirectly. To understand better, we see that in the case of  Gullapalli Nageswara Rao Etc. vs. The State of Andra Pradesh & Others (1959), the Apex Court held that “the decision of upholding the scheme of nationalisation of motor transport by the Government Secretary to be invalid, was due to his interest in the subject matter, as he was the one who had initiated the process of nationalisation.”

Audi Alteram Partem

Audi Alteram Partem means the rule of fair hearing, hearing the other side, or letting the other side be heard as well. This is the second most important principle of natural justice, which requires that the other side in a dispute be given a reasonable, fair, and equal opportunity to present his/her case and be heard impartially.

Under this principle, it also gives the other party the right to respond to any allegations and evidence levelled against them, including the right to appoint an attorney of one’s choice to represent oneself thereafter in a court  of law or institution constituted under the legal statute. The right to a fair hearing has also been recognised under Articles 14 and 21 of the Indian Constitution. Therefore, any decision that violates the principle of Audi Alteram Partem can be quashed by an adjudicating authority for being against the principles of natural justice.

Components that constitute the principle of fair hearing

Components of the rule of fair hearing are:

Notice: A notice must be served on the person by the competent authority before any kind of decision can be taken against the said party in the dispute. This enables the party in receipt of the notice to make suitable arrangements to defend themselves against any charges levelled against them as per the said notice. Further, before the initiation of a hearing, in addition to the charges mentioned in the notice, the said notice must also contain the time, date, place, and jurisdiction under which the case is filed. If anything is found to be absent from any notice, it will not be treated as valid.

Hearing: As stated, both parties must be given an equal opportunity for a fair hearing. Any decision passed by an adjudicating authority in violation of this essential requirement would be treated as invalid. In the case of Fateh Singh vs. the State of Rajasthan and Ors. (1994), it was held that “if a person gets a reasonable opportunity of being heard or a fair hearing, it is an essential ingredient of the principle of audi alteram partem.

Evidence: This is a very important component under the principle of fair hearing, wherein the competent authority must appreciate the evidence placed before it by both parties. To reiterate, the parties must be given an equal opportunity to present their evidence before the concerned adjudicating authority, which must weigh the credibility and reliability of the same equally. In the case of Subhas Chandra Paul vs. University of Calcutta And Ors. (1969), the Calcutta High Court held that there was a violation of natural justice insofar as evidence of witnesses had been heard behind the candidate’s back, which was not known to him.

Cross examination: The parties must be able to cross examine a witness in order to establish the truth based on the facts and circumstances of the case. This is, however, possible only if the same is permissible under the applicable law. (i.e., certain statues may prevent cross examination in the interest of natural justice.)

Representation by an attorney/lawyer: This is also a very important component of the principle of fair hearing, wherein the parties must be allowed to be represented by a lawyer/attorney of their own choice before the court of law. In certain cases, before administrative authorities, the right to be represented by a lawyer is not considered unless the said right to representation is specified in the statute itself. Further, even if a statute is silent about legal representation, in certain scenarios, a legal advisor may be afforded to a party if, for example,  the concerned party is illiterate, there is a question of law that requires due interpretation, or the matter is extremely technical in nature.

Conclusion

To conclude, the Honourable Supreme Court of our country, in a series of judgements, has relied on the importance of applying the  principles of natural justice  in order to have a progressive legal system. Furthermore, the principles of  natural justice as enumerated above are the guiding force for the Supreme Court of India when passing any orders or judgements, solely to ensure that justice is delivered to the common man impartially and in a fair manner.

References

  1. Principles of Natural Justice – Meaning, Basics And Essential Components (lawcorner.in)
  2. https://articles.manupatra.com/article-details/Natural-Justice
  3. https://www.iilsindia.com/study-material/887805_1629032848.pdf
  4. https://byjus.com/free-ias-prep/principles-of-natural-justice/#:~:text=The%20primary%20aim%20of%20the,present%20in%20the%20Indian%20constitution
  5. https://www.readcube.com/articles/10.2139%2Fssrn.3622103

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All you need to know about the force majeure clause in a contract

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This article has been written by Sunita, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.

It has been published by Rachit Garg.

Introduction

When a contract is entered into between any two parties but the contract cannot be completed due to an Act of God, non-performance of the contract will not attract legal consequences. There are certain external forces that are beyond the control of the party, and hence the contract cannot be fulfilled. This clause is called the force majeure Clause.

What is force majeure clause

Force Majeure is derived from French Law, which means “Superior Force”. It is a clause in an agreement or contract whereby the non-performing party is exempted from any legal consequences if the non-performance of the contract is beyond the human’s control to fulfil the contract. Normally, any contract has a liability clause, which states that in the event of non-performance of the contract, the party has to bear the injunction charges, penalties, fines, etc. for non-performance of the contract. But if there is an Act of God, e.g., a storm, hurricane, epidemic, pandemic, floods, earthquakes, war, political unrest, civil disorder, labour strikes, etc., the party who has failed to fulfil the contract is exempt from paying such damages. The Force Majeure Clause covers natural disasters as well as catastrophes created by humans.

When a person enters into a contract with another person for some lawful consideration, it becomes binding on both parties to fulfil the contract. But if one party is unable to complete his/her part of performing the contract due to an unforeseen event, then the Force Majeure Clause comes to the rescue of the non-performing party. This unforeseen event can be a storm, hurricane, epidemic, pandemic, flood, earthquake, war, or political unrest. There is an Act of God over which the party to the contract is unable to perform his part of his / her part of fulfilling the contract. In such an event, the party who is unable to perform the contract is not liable to pay any damages, penalties, or injunction charges to the other party. Basically, it is a protection for the non-performing party from the legal consequences that may arise due to non-fulfillment of the contract.

How force majeure cause in India applied

The Indian Contract Act, 1872, does not define the Force Majeure Clause. But it’s essence can be seen in Section 32 and 56 of the Indian Contract Act, 1872, which state that:

Section 32 states that

Enforcement of Contracts contingent on an event happening: 

The performance of the contract depends on the event, which is uncertain. 

Contingent contracts to do or not do anything if an uncertain future event happens, cannot be enforced by law:

 If any uncertain event occurs, the fulfillment of the contract depends on either doing it or not doing anything. 

Unless and until that event has happened: 

The contingent event has to happen, and only then can it be invoked. 

d. If the event becomes impossible, such contracts become void: 

If an unforeseen event makes it impossible to complete the contract, such contracts will become void.

Section 56 states that an agreement to do an act impossible in itself is void

 

For example, if a person makes an agreement with another person for the smuggling of goods, which is forbidden by law, the agreement will automatically be null and void.

However, if the parties have failed to insert a force majeure clause, the party in default can still  claim relief under Section 56 of the Indian Contract Act, 1872, and have to prove in a court of law that the unforeseen event made it impossible for the party to fulfil the contract.

What are the conditions of force majeure clause

There are two main conditions that need to be fulfilled in this clause :

1. The event must be an unforeseen one.

2. This unforeseen event makes it impossible to perform the contract.

The most common example of this unforseen event is Covid-19. During Covid-19 pandemic, it was virtually impossible to deliver the goods to domestic as well as international markets. As there was lockdown in many states within India and in many countries, this clause became a major relief to the party that failed to perform their contracts.

Essentials of a force majeure clause

All contracts must have a Force Majeure Clause, which can relieve the non-performing party, in the event of an unforeseen event. Indirectly, it is an exemption to the contract, whereby a non-performing party benefits from all the legal consequences due to the non-performance of the contract.

In order to claim relief from this clause, the following essentials are required:

  1. The events must be eternal, unavoidable, and unforeseen for both parties concerned.
  2. Due to this, the performance of the contract becomes highly impossible.
  3. All possible steps are taken by the parties to perform the contract.

4. The non performing party is unavoidable, in a court of law, in the event that it makes it impossible for fulfilment of the contract.

Conflicts with force majeure clause

The Force Majeure Clause conflicts with Pacta sunt servanda. It’s a Latin word, which means agreements must be kept. So ideally, one cannot escape the liability of non-performance of the contract. The best option considered is that instead of going to court, it’s settled mutually by giving time for the performance of the contract to the defaulting party.

Time is the most important factor in determining the applicability of the Force Majeure Clause. Due to lockdowns in many countries during Covid-19, international trade was affected. It became practically impossible for the parties to deliver the goods on the domestic and international markets. Since it’s an act of God, suppliers must have benefited from this clause by not fulfilling the contract. But the same clause cannot be applied now, as there’s no lockdown in any country. Hence, time is crucial in deciding whether the Force Majeure Clause is applicable or not.

Although it is necessary to insert a force majeure clause explicitly, if the parties have failed to do so, the party can claim relief under Section 56 of the Indian Contract Act, 1872, where the party will have to prove that due to the unforeseen event, it has become impossible for the party to perform, leading to frustration of the contract. 

Important case laws

Satyabrata Ghose v. Mugneeram Bangur & Co.,1954 SCR 310

In this case, the Supreme Court held that the word “impossible” has not been used in the sense of physically or literally impossible.

The Divisional Controller, KSRTC v. Mahadeva Shetty :

It holds that the expression ‘Act of God’ signifies the operation of natural forces free from human intervention, with the caveat that every unexpected natural event does not operate as an excuse from liability if there is a reasonable possibility of anticipating their happening. It held that the expression ‘Act of God’ signifies the operation of natural forces free from human intervention, with the caveat that every unexpected natural event does not operate as an excuse from liability if there is a reasonable possibility of anticipating their happening. 

Conclusion

The Force Majeure Clause in a contract should be properly worded. Precise words such as floods, storms, epidemics, pandemics, hurricanes, war, political unrest, etc. should be mentioned and worded properly. Words such as natural disasters can be looked at from a broader perspective. If any of the acts are missed, the court may give the benefit of the doubt to the other party.  A carefully drafted contract with a good Force Majeure Clause enhances the beauty of the contract and goes a long way.

Suggestions

  1. If a contract is entered between two parties, laws of the country must be kept in mind before drafting any contract, and the possible areas of conflict in a contract must be decided while finalising the contract, e.g., place of delivery, date of full payment, collection of delivery by a third party, etc.
  2. List out all such events that fall under unforseen events or that are coming under the category of “Act of God” to claim relief from the force majeure clause. The suits are easily mitigated if a properly drafted contract is entered into between the parties.
  3. The terms of the contract can be re-negotiated with the party, e.g., payment, extension of the time for delivery, etc., for the completion of the contract. This will help protect the contractual interests of both parties.

References

  1. The Contract Act, 1872
  2. https://corporatefinanceinstitute.com/resources/accounting/force-majeure/
  3. https://www.law.cornell.edu/wex/force_majeure 
  4. https://acrobat.adobe.com/link/review?uri=urn:aaid:scds:US:6731b93e-4930-39e0-889b-b34f7ea1571
  5. https://acrobat.adobe.com/link/review?uri=urn:aaid:scds:US:6731b93e-4930-39e0-889b-b34f7ea1571 
  6. https://www.venable.com/insights/publications/2011/02/understanding-force-majeure-clauses 
  7. https://blog.ipleaders.in/what-is-the-force-majeure-clause-in-a-contract-and-what-care-should-you-take-while-drafting-it/ 
  8. https://www.thehindubusinessline.com/opinion/columns/slate/all-you-wanted-to-know-about-force-majeure/article31834792.ece
  9. https://www.investopedia.com/terms/f/forcemajeure.asp 

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An analysis of the Hindu Adoptions and Maintenance Act, 1956

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This article has been written by Aprajit Jain pursuing Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho and has been edited by Shashwat Kaushik.

it has been published by Rachit Garg.

Introduction 

I will now analyse the Hindu Adoption and Maintenance Act, 1956, and walk you through the legal process, validity, and consequences of adoption under this Act. The procedures involved in the adoption of a child by a Hindu adult, as well as the analysis of the provisions related to maintenance. What are the problems and issues that are raised or arise from this law, and what are the suggestive steps that can be taken to address those issues? The entire analysis will be divided into two parts: Adoption and maintenance.

Position before Hindu Adoptions and Maintenance Act, 1956

Before the introduction of this Act, provisions related to adoption were governed by Hindu law, which was not codified and standardised. According to the old provisions, only sons could be adopted, Illegitimate sons and orphans could not be adopted; women were not allowed to adopt. Therefore, with the enactment of this Act, all these issues were addressed, and the legal process of adoption by a Hindu adult and the obligation related to maintenance to various family members were streamlined. 

Relevance of Hindu Adoptions and Maintenance Act, 1956 

It is critical to note that this act is applicable only to Hindus, Sikhs, Jains, and Buddhists and not to anyone else, such as Christians, Muslims, Jews, or Parsis. If a non-Hindu wants to adopt a child, then he/she can do so by applying under the Guardians and Wards Act, 1890. Although the Honourable Supreme Court in the landmark judgement of M/S Shabnam Hashmi vs.  Union of India, 2014 held that the Juvenile Justice (Care and Protection of Children) Act, 2000, is a secular law and  any person can adopt as per its provisions irrespective of his/her religion, 

The concept of adoption is prevalent in Hindu law, as described by Manu, the great Hindu Guru. In Hinduism, having a son is very important in order to keep the lineal order in existence. Hindus also believe that a person’s soul can reach heaven only when he lights the funeral pyre of the deceased and performs various rites related to death. Therefore, in order to ensure the existence of a son, they go for the adoption of a male child from a different family and endow them with the status of a real son. This practice gives adoption a religious as well as a social sanction. As per this tradition, people who did not have children or had only daughters were interested in adopting sons, thereby giving rise to the Hindu Adoptions and Maintenance Act, 1956. 

As far as maintenance is concerned, it is clearly defined in the Act in an inclusive manner. It is something that is paid by a husband to his wife if she is unable to maintain herself during the course of marriage or upon divorce or separation. The provisions of maintenance are provided for by many Indian laws. Also, there is a personal duty to provide for maintenance due to the parties’ relationship. Such relations include wives, children, and old parents. It is basically a social security measure provided by this act. This altogether provides for the relevance and importance of this law in our society. 

Adoption in Indian Law 

In the entire law, the word ‘adoption’ is not defined, and it derives its meaning from the interpretation of the essence of the provisions of this act and relevant Judicial pronouncements. One such notable case was Basavarajappa vs. Gurubasamma And Others, 2005 where the Honourable SC held that on adoption, a person who has been adopted gets transplanted into an adopting family with the same rights as a natural born son. 

Adoption process in India

The process of adoption in India is very lengthy and complicated because it requires compliance with two acts, namely the Hindu Adoption and Maintenance Act, 1956, and the Juvenile Justice (Care and Protection of Children) Act, 2015, along with the rules and regulations under these acts. Now both of these laws have separate processes for adoption. The process as per the JJ Act is as follows: 

  • The Central Adoption Resource Authority (CARA), under the Ministry of Women and Child Development, maintains the database of adoptive children. 
  • The prospective adoptive parents are required to register themselves online and upload all the necessary documents. After that, a home visit will be conducted by a worker from a specialised adoption agency. 
  • Adoptive parents are referred to as having the profile of legally free children, and they are required to reserve the child within 48 hours. 
  • Now matching of the child with the adoptive parents is done within 20 days. 
  • Within 10 days of the adoption of a child by adoptive parents, a petition is filed by specialised adoption agencies with the adoptive parents as co-petitioners in a designated court.
  • The court shall dispose of the case within 60 days after an in-camera hearing. Court proceedings are required, as stated in law, in order to determine the willingness of the parents to adopt.
  • After the court order, the adoption will be approved and will be binding upon the parents.

The process of adoption in the Hindu Adoption and Maintenance Act of 1956 is simple as it requires a ceremony for adoption, an adoption deed, or a court order, which is sufficient to obtain rights in adoption.

Issues involved in the adoption process 

  • The number of children registered in the CARA (2200) is very small as compared to the number of parents (28000) who are waiting for their turn to be referred to them for adoption. This is an emotionally exhausting process for adoptive parents, because of which they lose hope of adoption. 
  • There is a lack of coordination among various agencies, as there are also state-level agencies governing the adoption process. No survey takes place regarding the orphaned and abandoned children, forcing them to stay in orphanages. 
  • Lack of awareness regarding the changes in the JJ Act.
  • Recently, an order passed by the government said that all the cases pending before the court regarding adoption will now be transferred to district magistrates. Thereby authorising the DMs to issue orders related to adoption. The authorities are unaware of the fact that DMs are already overloaded with district-related issues. Also, the adoptive parents are now unaware of the process and how it will proceed now that all the cases are required to be transferred from the courts to the district magistrates. 
  • A financial challenge is another concern in the adoption process. If you are adopting a child through a private agency, then be ready to pay an exorbitant amount, which is again a challenge for those adoptive parents who really need a child for whom they can care and shower their love.

Gaps and loopholes in the law 

As the law is applicable only to Hindus, anyone who wants to adopt a child has to follow a different procedure. Therefore, the act is biassed towards non-Hindus who want to have an adoptive child. This provision has been left for the Interpretation of the court, which the court did in one of the cases. In the case of Jose Solomon & Anr vs. Central Adoption Resource Authority & Anr (2021), the Delhi High Court held that even if adoption is done by someone who is a non-Hindu but the parents have maintained the child in a good and responsible manner, the adoption will be a valid adoption. 

The provisions of Section 11 are arbitrary in the sense that they say that if the adoption is of a son, then the adoptive father or mother by whom adoption is made must not have a Hindu son, grandson, or great-grandson. It means that if the son converts his religion to any other religion to which this act does not apply, such as Muslim, Jewish, Parsi, or Christianity, then such adoptive parents can adopt a son even if they have such a child who is a non-Hindu by reason of such conversion. The very essence of this act, which says that it is applicable to Hindus, is somewhat diluted here with the entry of a non-Hindu. This provision can be misused, as in order to adopt a child, a person can influence his son to convert to his religion. 

The provisions of Section 11 have to be read with reference to the provisions of the Hindu Marriage Act, where it is said that if a child is born out of a void/voidable marriage, then it will be a legitimate child. Therefore, in order to determine the legitimacy of the Hindu Marriage Act, it has to be referred to. This leads to duplication of law and multiple interpretations. 

Section 11 says that if the adoptive parents have a legitimate child or already have an adopted child, they cannot adopt another child. It focuses only on legitimacy or illegitimacy, which is not defined in this act. This flaw leads to a situation where an adoptive parent has a  stepson who may or may not be a legitimate child, but since the act is silent on this point, in such a situation they can adopt a child because the provision focuses only on a legitimate child. 

Suggestions related to adoption issues

There are a large number of children that are living in orphanages and child care institutions in our country, which can be added to the registry of CARA and fill the gap in the number of children and parents willing to adopt.

  • Coordination should be established between various state level agencies as well as Central level authorities. 
  • The flaws in the law should be corrected, and the arbitrary provisions should be repealed.
  • Where certain provisions require interpretation with reference to other acts, such as Hindu Marriage Act of 1955 and the Juvenile Justice (Care and Protection of Children) Act, 2015, those provisions should be merged.
  • Definitions of certain terms such as adoption and legitimate or illegitimate should be clearly defined.
  • Children with disabilities are left behind and not adopted. The number of adoptions of such children is far less than that of normal children. This issue needs to be addressed in the present scenario, where the government is focusing on children with such disabilities and providing them with a sense of dignity in our society.
  • There are no processes and procedures for following up on the child who is given into adoption to see whether he/she is taken proper care of. Although a period of 2 years of follow up is provided for in the regulation, that needs to be expanded on the basis of the age of the child given in adoption.
  • The entire approach related to the adoption process should be changed from parent-centric to child-centric. For that, consolidation of multiple laws dealing with adoption can play a vital role.
  • Involve external agencies and experts and ask for their opinions.

Concept of maintenance under Hindu Adoptions and Maintenance Act, 1956 

The concept of maintenance is covered in Chapter III, Sections 18 to 28, of the Hindu Adoption and Maintenance Act, as well as Sections 24 and 25 of the Hindu Marriage Act of 1955. Although maintenance is defined in the Hindu Adoption and Maintenance Act of 1956. It states that maintenance includes all the basic needs of life, such as food, clothing, shelter, education, and medical attendance and treatment. In the case of an unmarried woman, it includes all reasonable expenses, including those related to her marriage. Until marriage, maintenance is to be provided. 

Recipient of maintenance

Now the question arises to whom is maintenance to be provided? 

So, the Act specifically talks about the maintenance of a wife, a widowed daughter-in-law, children, and elderly parents. Section 18 of the act talks about maintenance during the subsistence of marriage to be provided to the wife only. Whereas Sections 24 and 25 of the Hindu Marriage Act talk about maintenance during the pendency of court proceedings related to Sections 9 to 13 of the said Act where proceedings related to restitution, judicial separation, or divorce are going on and marriage is either declared void or has ended and either of the parties do not have an independent source of income, final alimony and maintenance are to be provided after the end of the proceedings, respectively. 

Under the Hindu Marriage Act, such maintenance can be provided to either the husband or wife because it focuses on providing the maintenance to the weaker party in the dispute. 

Reasons for the concept of maintenance under Hindu Law 

We all know that for a long time now, our society has been a patriarchal society, which is evident from many provisions of Hindu law that favour the mindset of a patriarchal society. Hindu law has been facing criticism from many academicians and researchers for a long time now because there is no doubt that the landscape of our society has changed to a great extent, which requires incorporation and necessary changes in the redundant provisions of the law.

The existence of a patriarchal society does not provide equal status and position to women in the domains of social life and events such as marriage, family decision-making, etc. Women do not have an equal say in decisions related to social aspects of life, whether in the institution of marriage or otherwise. Therefore, in order to address the sexism inherent in personal Hindu law, the concept of maintenance has arisen and is embedded in the provisions of the Hindu Adoption and Maintenance Act, 1956.

The roles and responsibilities that a woman fulfils in a marriage and the sacrifices she makes in her career in order to provide for her family and children are to be respected, and economic individuality and independence are necessary to be provided to her to respect her identity. All these arguments necessitate the concept of maintenance under the Act.

Issues involved in the provisions of maintenance under the law 

  • There are various laws that provide for the maintenance of a Hindu wife, sons, daughters, and aged parents, such as the Special Marriage Act of 1954, the Hindu Marriage Act of 1955, the Divorce Act of 1869, and many more. These multiple laws provide for different conditions, multiple interpretations, and multiple conditions that need to be addressed.
  • Secondly, as per Section 22 of the Hindu Adoption and Maintenance Act of 1956 which provides for the amount of maintenance under the Act, the conditions that determine the amount of maintenance are specified. This provision is left entirely to the discretion of the court to decide, and it is highly subjective in nature. 
  • No provision is there for the maintenance of the child who ceases to be a Hindu. As soon as a child converted to another religion, he lost all his rights to maintenance under the act. 
  • As per Section 19 of the Act, a widowed daughter-in-law is entitled to maintenance from her father-in-law but there is no provision in this Act or in Section 125 of the Code of Criminal Procedure of 1973 that provides for maintenance where the husband is alive but is missing, absconding, or deserting her. Although she can file for divorce, she cannot claim maintenance from her in-laws. 
  • The widowed daughter-in-law cannot claim maintenance from her mother-in-law even when she has sufficient means to provide for maintenance because the law specifically gives responsibility to the father-in-law who may not be alive to provide maintenance. Although the court has dealt with this issue in the case of Janki vs. Nand Ram (1888), where the obligation to provide for maintenance is given to those who inherited the property of the father-in-law.

Suggestions related to maintenance issues 

  • The Act should be amended in light of the fact that the religious freedom of the child should be protected when he ceases to be a Hindu for the purpose of maintenance under the Act.
  • The much awaited Uniform Civil Code envisaged by Article 44 of the Constitution of India should be brought into force as soon as possible in order to address the confusion and duplicity of provisions embedded in these laws.
  • The parliament should bring about necessary changes to the law through amendments and address these issues so that one doesn’t have to approach the court of law and follow the lengthy legal process.
  • A new provision should be inserted that clearly specifies the legal and moral obligations of the husband under the law, thereby giving it legal sanctity. 
  • Emphasis should be laid upon the alternative modes of settlement such as arbitration, mediation, and conciliation so that the precious time of the court can be saved and the underlying issue can be sorted out amicably.

Conclusion

There is no doubt about the fact that laws evolve over a period of time; they are a reflection of the views, beliefs, acts, and perceptions of the people living in society. The Hindu Adoption and Maintenance Act is no exception to this. While going through the provisions of the Act, I came across certain provisions that seemed redundant to me, as pointed out in the article. Although I understand that there are certain authorities that are created under the Act because of certain International commitments made by us, such as CARA, which is created out of the Hague Convention on Intercountry Adoption. But since it is a personal law that has a direct impact on the social life of an Individual, the effort has to be made in order to reduce the process and procedures associated with it, as pointed out in the case of the adoption process in India. This is because it has a direct impact on the life of a person, which affects his family, his social standing, his emotional persona, and other social actions. We have an image of a procedure-oriented system where a person has to go through a lot of processes in order to get his work done. This element leads to a negative and cynical attitude towards the lawmakers, which in turn leads to a loss of faith in the government. 

These laws have been enacted for a long time now, and there is a need to continuously review and amend them to ensure that they make sense and remain relevant in the present social geography of India. Our social structure is changing. We are going through a transitional phase in our society, from a joint family to a nuclear family. People have more aspirations now than they ever had. Gender equality is another area that is to be taken into consideration while amending personal laws. All in all, I can conclude that the law cannot influence society; rather, it has to be influenced by the changes taking place in society as far as these interpersonal issues are concerned. 

References

  • https://www.thehindu.com/news/national/explained-the-tedious-process-of-adoption/article65 879614.ece  
  • https://www.thehindu.com/society/why-are-adoption-rates-so-low-in-india-where-thousands-o f-children-live-in-child-care-institutions/article65237205.ece  
  • https://www.lawyersclubindia.com/judiciary/js-anr-vs-central-adoption-resource-authority-anr 2021-christian-couple-wrongly-adopts-under-hindu-adoption-act-delhi-hc-declares-them-ado ptive-parents-as-they-took-good-care-of-child-5382.asp  
  • https://iussp.org/sites/default/files/event_call_for_papers/Religion%20and%20Gender%20Bi as_IUSSP.pdf  
  • https://www.researchgate.net/publication/342877380_MORALITY_DEPENDENCY_AND_M AINTENANCE_PLIGHT_OF_WOMEN_UNDER_HINDU_LAW 
  • http://ijrar.com/upload_issue/ijrar_issue_20543409.pdf

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Writ jurisdiction and contractual obligations of the state

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This article has been written by Ronak Ruia, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho, and has been edited by Shashwat Kaushik.

It has been published by Rachit Garg.

Introduction

Under Article 32 of the Indian Constitution, which provides a remedy for the protection of fundamental rights by granting authority to the Supreme Court to issue a writ and to the High Court under Article 226 of the Constitution, a writ petition may be filed when a person’s fundamental rights are being violated. The two most essential purposes of writs are to safeguard the principle of natural justice and protect fundamental rights. 

Writs can be issued when something is not in accordance with the procedural law or when an arrest is made under the law, which itself is unconstitutional. Thus, a writ petition can be filed, for instance, on behalf of the person through Habeas Corpus, wherein  the person is held unlawfully. It is a procedural remedy and provides protection from unlawful detention, but it does not uphold other rights, such as the right to a fair trial.

Moreover, there are five different types of writs. They are:

  1. Writ of Habeas Corpus,
  2.  Writ of Mandamus,
  3.  Writ of Quo Warranto,
  4.  Writ of Certiorari, and
  5.  Writ of Prohibition.

The primary purpose of a Writ is that it is used to assist the people in defending their rights against judicial orders; the higher authority provides alternatives for the harm caused; and justice is administered and not obstructed. Writs are generally used by people who cannot afford legal services and have faced illegal detention by police authorities.

Types of writs

The Supreme Court of India is the protector of fundamental rights; it has wide powers through the writs. 

Habeas Corpus

The meaning of Habeas Corpus is ‘to have a body of’. It is to enforce fundamental rights to protect individual dignity against unlawful detention. The Supreme Court and the High Court can issue writs against private and public authorities. There are a few instances where Habeas Corpus is not applicable. They are when the detention is lawful; when the preceding is for contempt of the legislature of the court, the detention is outside the jurisdiction of the Court.

Mandamus

The meaning of mandamus is command. It is ordered to the public officials who failed to perform their duty in order to resume the work. Besides public officials, mandamus can be issued against any public body or corporation, an inferior court or tribunal, or the government for the same purpose. Mandamus cannot be issued against a private individual; it can’t be issued against the president or state governor, nor against the Chief Justice of the High Court.

Certiorari

Certiorari means to be certified and to be informed. It is issued by a higher court to a lower court or tribunal to transfer the case. In other words, under this writ or authority, it is also issued by the Appellate Court to obtain information on the case. It was first found in England by the queen’s bench, which ordered judges of inferior courts to present certain records. The writ was abolished in 1938, but the High Court justices retained it. There is no regular means of appeal, particularly in reviewing systems.

Quo Warranto

Quo Warranto means by what authority or warrant. It is issued by the court to inquire about the legality of a person’s claim to a public office. There are certain scenarios when Quo Warranto would be allowed; 

  1. If the office is a public one and is created under the law.
  2. It has real substance and is substantive in nature.
  3. The usurper whose authority is being contested must still be in place when the claim is made.

Prohibition

The Writ of Prohibition means “to prohibit, restrain, prevent, or forbid.” This writ primarily ensures that when the subordinate court is acting outside its jurisdiction, has exceeded its authority, or to prohibit a court from doing something. The court can issue a Writ of Prohibition against it. It is applicable to judicial and quasi-judicial organisations and cannot be made applicable to statutory bodies, agencies, or private individuals. 

Writ of mandamus and contractual liability of the state

A writ of mandamus is issued to the public authority when it fails to do the duty entrusted to it by law. Under this writ, the nature of duty is looked into over the identity of the authority against whom it is sought. Further, the remedies under Articles 32 and 226 of the Constitution are public law remedies and can be restored to ensure the public authorities discharge their duties in their respective areas. 

Does writ petition stand against a breach of contract against the state

There are many judgements passed by the Hon’ble Supreme Court and High Courts that have allowed writ petitions against the breach of statutory contracts only when fundamental rights are violated.

Violation of principle of natural justice

In the case of the Managing Director, Uttar Pradesh…vs. Vinay Narayan Vajpayee (1980), The employee’s dismissal order was overturned by the Supreme Court on the grounds that, given the facts of the case, he should have been given the opportunity to question the witness called by the management against him, and that doing otherwise would have gone against the principles of natural justice. Moreover, the employee in question worked for a statutory corporation and was denied the opportunity to do so.

On violation of Article 14 of Constitution of India and arbitrariness of the state  

No one can be discriminated against; anyone and all should be treated equally. In simpler terms, there should be non-arbitrariness to attain the rule of law and ensure a state that is fair and reasonable.

In the cases of Bidhannagar (Salt Lake) Welfare Assn. vs. Central Valuation Board and Ors.  (2007) and Grand Kakatiya Sheraton Hotel and Towers Employees and Workers Union vs. Srinivasa Resorts Ltd. (2009), the Supreme Court stated that a statute can only be ruled ultra vires on the grounds of complete unreasonableness rather than hardship. Thus, under Article 14, the Act might be contested as being arbitrary, unreasonable, and outside of its authority. 

In the case of M/S Galaxy Transport Agencies and Ors. vs. M/S New J.K. Roadways, Fleet Owners, and Transport Contractors and Ors. (2020), the expert valuation of practical tender when it comes to technical evaluation is not to be second guessed by the writ court unless arbitrariness and mala fide tender authority are alleged, and the interpretation should not be second guessed by the court in the judicial review proceedings. Therefore, it is imperative to note that whenever there is a violation of Article 14 of the Constitution, a writ is maintainable not only against the state but also against private parties because the right to equality is available to all citizens and non-citizens of the state and is the same duty of the state; hence, it cannot be against a non-statutory contract.

Principle underlying contractual liability of the state

The primary principles of contractual liability are reasonableness, fairness, and public interest. Article 14 anticipates the principle of reasonableness, which is legally and conceptually a fundamental element of equality or nonarbitrariness, and it must describe every State Action, whether it be under the authority of law or in the exercise of official power without the creation of regulation. 

In the case Maharashtra Chess Association vs. Union of India Ors. (2019), the Supreme Court discusses the powers of the High Court under Article 226 and states that the High Court may enforce fundamental rights under Part 3 of the Constitution of India for any purpose. To put it in simple terms, a citizen may seek out the writ jurisdiction of the High Court where their fundamental rights are infringed, which may be in many situations. There are several judgements that are paradigmatic in the approach of the court in the exercise of its writ jurisdiction in matters of contractual disputes within the State and its Authorities.

The power to issue writs in any direction is included in Article 226 of the Constitution of India, where the courts have tended not to interfere in matters governed by the Indian Contract Act. However, in the event of breach of contract and specific performance for injunctions in private law, there arise contractual disputes.

Thus, the objective is to safeguard the government and not saddle it with obligations that are made from savings funds. Hence, if the contract is invalid, the government can ratify it, make a notification, and make it valid. The government can enter into contracts under Articles 298 and 299, but it has to fulfil certain essentials for the purpose of entering into contracts. However, all contracts are made to exercise the power of the state and are executed on behalf of the president, but neither the president nor the governor should be liable.

Conclusion

To conclude, Article 299 of the Constitution of India talks about contracts being made in the exercise of the Union and being expressed and made by the President or the Governor of the State. All such contracts need the assurance that the property made in the exercise of the power shall be executed on behalf of the President in such manner as he may direct and authorise. Thus, neither the President nor the Governor shall be liable in respect of any contract or assurance made for the purpose of the execution of the Constitution. 

Moreover, the Supreme Court and the High Court have resolved this problem in various judgements based on the other party to the contract; every contract with the state does not constitute a breach of contract for whatever reason. But first, we have to prove that the contract is a statutory law that is bound by law, thereby making all the violations that the writ jurisdiction can invoke.

References

  1. www.taxguru.in
  2. www.blogipleaders.com
  3. www.legalserviceindia.com
  4. www.indiankannon.org
  5. www.scconline.blog

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‘AMUL’ trademark row : all you need to know

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This article is written by Ankita Pal, pursuing Diploma in Intellectual Property: Prosecution, licensing and litigation ( June-01-2023 ) and has been edited by Oishika Banerji (Team Lawsikho). 

This article has been published by Sneha Mahawar.  

Introduction

Amul is a brand name across India and all over the world. It comes from the first letters of Kaira’s earlier name (Anand Milk Union Limited). The Kaira District Cooperative Milk Producers Union Limited, is the registered proprietor of the Trademark “Amul”. To know about “Amul Trademark Row” we must first understand what a trademark is all about. As per Section 2 (1) (zb) of Trade Marks Act, 1999, trademark is a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include shape of goods, their packaging and combination of colours. This article discusses the Calcutta High Court decision in Kaira District Cooperative Milk Producers Union Limited vs Maa Tara Trading Co and Others (2021), where Maa Tara Trading Co (defendant), had allegedly infringed the registered trademark of Kaira’s by offering candles under the mark “Amul” and also committed the torts of passing off. It not only usurped the well known trademark of “Amul” but also adopted a similar writing style as that of the registered trademark.

Facts of the case

Sometime in the month of February 2020, the plaintiff who is the registered proprietor of the Trademark ‘AMUL’, came to know that candles under the mark ‘AMUL’ were offered on a complimentary basis with purchase of cake at a famous cake shop at Kolkata. Subsequently, the plaintiff located the shop and obtained a larger pack of candles bearing the mark of ‘AMUL’. The plaintiff was unaware of the association of the other party with the brand name ‘AMUL’ therefore the plaintiff had called upon the other party to provide details with respect to their association. 

The defendant knowingly, fraudulently and deliberately adopted the well known trade mark including a deceptively similar writing style only to take undue advantage of the reputed brand name by making undue profits. Therefore the plaintiff filed a suit for perpetual injunction restraining the defendant for infringement of trademark and passing off. Nobody appeared from the defendant’s side. They had not even filed a Written Statement despite publication of notice on 20.06.2022 and 22.06.2022 in the English daily newspaper “The Statesman” and in Bengali daily newspaper “Bartaman”. 

Thereafter Counsel for the plaintiff prayed before the Court that the suit must be decreed invoking Order 8 Rule 10 of CPC. For invoking the provisions under Order 8 Rule 10 of CPC, the Court must consider the veracity in the plaint. Based on the documents placed by the plaintiff before the Court, it is a clear case of infringement of trademark which is dealt with in Section 29 of Trademark Act 1999

In the present case, it clearly shows a similarity in the mark of the parties. The Court is of the view that the defendant has infringed the registered trademark of the plaintiff under section 29 (4) (a) (b) (c). It applied the decisive test for checking deceptive similarity as laid down in Cadila Health Care Ltd vs Cadila Pharmaceuticals Ltd. The Court is of the view that such usage by the defendant would lead to loss of revenue as also that of goodwill of the plaintiff. The suit is a commercial suit within the definition of Commercial Court. It was the clear intention of the legislature that these kinds of cases must be decided expeditiously and if the defendant fails to pursue the case, the Court should invoke the provisions of Order 8 Rule 10. Resultantly, defendant did not file Written statement and Court being satisfied by the averments made in the plaint supported by documents, it decreed the suit in plaintiff’s favour.

Loopholes in the Calcutta High Court’s decision

Court relied upon Section 29(4) of Trademark Act, 1999. It considered Section 29(4) (a) which relates to discerning a similarity between the impugned and registered trademark. Section 29(4) (b) requires the goods to be of non-similar nature, which is also satisfied. However the Court, rather than considering section 29 (4) (c ) which states that use of mark without due cause is detrimental to the distinctive character of the registered trademark, jumped to the term “passing off” to establish trade mark infringement.  The court’s reliance on Cadila Healthcare Ltd vs Cadila Pharmaceuticals (2001), focuses on the context in which the mark has been used and does not pertain to its effect.

Three ingredients that are needed to establish passing off has been laid down in Reckitt & Colman Products Ltd vs Borden Inc  (1990), namely, goodwill or reputation of the plaintiff’s goods, misrepresentation by defendant leading or likely to cause people to believe that goods are of plaintiff’s and plaintiff has suffered or is likely to suffer damage as a consequence. The court ended up using the test of passing off to evaluate trademark infringement whereas both were separate claims. The Calcutta High Court faltered in applying, passing off and not considering or satisfying the provision laid down in Section 29 (4) (c) of the Act of 1999 for trademark infringement.

There is a difference between passing off and infringement. Claim for passing off is a common law remedy whereas in case of infringement it is a lawful remedy. To prove passing off, it is not only sufficient to show that the marks are deceptively similar but also the mark should cause confusion and mislead consumers. Whereas to prove infringement, the mark must be same or deceptively similar to the certified mark.

Precedents delivered on similar grounds : an insight

  1. In Hamdard National Foundation India vs Sadar Laboratories (2022), the Delhi High Court restrained Sadar Laboratories from manufacturing and selling beverages under the trademark named ‘Dil Afza’ as it has a phonetic similarity with ‘Rooh Afza’. The Court observed that the trademark ‘Rooh Afza’ is prima facie a strong mark requiring a high degree of protection as it has acquired immense goodwill. 
  2. In Lacoste S.A vs Suresh Kumar Sharma (2020), Lacoste S.A had appealed for a permanent injunction against Suresh Kumar Sharma in Delhi District Court. Suresh Kumar Sharma was selling shirts carrying the brand name “Lacoste”, violating and passing off the trademark. Court was of the view that Suresh Kumar Sharma had no right to use the label ‘Lacoste’ and that his actions contributed to enrichment in the general public. Therefore the Court ordered a permanent injunction to prohibit Suresh Kumar Sharma from using the name ‘Lacoste’.

Grounds for trademark infringement

  1. One of the grounds of trademark infringement is the “detrimental” impact of the impugned mark on the reputation or distinctiveness of the trademark. In this case, the Court has concluded the speculative harm to AMUL’s reputation. It did not evaluate the position of defendants in their domain and their products.
  2. Section 29 (4) provides for “unfair advantage” as another ground for trademark infringement. In L’Oreal vs Bellure (2009), the court of law had construed unfair advantage as free-riding which means that junior is unduly benefitting from goodwill and investment of senior’s brand. There has to be a direct advantage being reaped rather than a mere possibility. As per Raymond Ltd vs Raymond Pharmaceuticals (2016), the gain must be substantial. In the Amul trademark case, the usage of the trademark ‘AMUL’ would largely be immaterial considering the distribution by the manufacturers. As opposed to passing off, Section 29 (4) states that there must be direct and substantial harm to the goodwill of the trademark or undue benefit gained by a junior of that degree.
  3. The concept of Section 29(4) has been structured in a manner to preserve trademark infringement and there must not be application of passing off. Considering Section 10(3) of Trade Marks Act, 1999, one needs to show that there has been unavoidable compulsion of usage to invoke “due cause”. As per Nestle India Limited vs Mood Hospitality (2010), the court stipulated that there must be an explanation for usage of the trademark.

Conclusion

Court failed to apply Section 29 of the Trademarks Act 1999, robustly, by glossing over sub-clause (c). Court considered passing off as enough to constitute a case for trademark infringement. Therefore to call it a case of trademark infringement, without applying all the elements, has an unjustified impact on the competition which is something that courts need to be cautioned about.


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Doctrine of frustration

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This article is written by Rishabh Soni, a 3rd-year law student, Amity Law School Delhi; and Monesh Mehndiratta, of Graphic Era Hill University, Dehradun. He discusses the doctrine of Frustration under the Indian Contract Act of 1872.

It has been published by Rachit Garg.

Introduction

Frustration in general scenario means defeated and this term has been widely used in agreements and contract between parties. The term frustration is being used to deal with unsuccessful transactions which could not be completed due to any reason. In law of contracts doctrine of frustration has emerged as one of the most common issues which have arrived to deal with failed contracts.

Have you ever entered into a contract? If you have, you might be aware that a contract creates mutual rights and obligations between the parties wherein they are bound to perform their duties. 

What if a party fails to perform its duties? In this case, this surely amounts to breach of contract and the party will be liable. But what would happen if a particular circumstance renders it impossible for the parties to perform their duties? Such situations are usually out of the control of the parties and when such events occur, the contracts are said to be ‘frustrated’. This concept where the agreement becomes due to incapability or impossibility of being performed is called the doctrine of frustration. 

The present article explains the doctrine of frustration. It provides the evolution of the doctrine and its position in India along with the reasons and effects of a contract being frustrated. But before dealing with the doctrine, the article explains the meaning of a contract, its essentials and the relevance of the doctrine in a contract. It further explains the relation between the force majeure clause and the doctrine and provides recent case laws on the doctrine. 

Meaning of contract

A contract, in simple terms, can be understood as an agreement in writing made between the parties which creates mutual rights and obligations between them. It binds the parties in a relationship where both of them promise to fulfil their duties and obligations. The failure to perform the obligations can have consequences and leads to breach of contract. 

contract drafting

In India, the Indian Contract Act, 1872 deals with contracts and other aspects related to it. The term ‘contract’ is defined under Section 2(h) of the Act as “agreement which is enforceable by law”. However, it also provides that “agreement which cannot be enforced by law will be void” under Section 2(g) of the Act. 

Illustration: (i) A contracts to sell his house to B on payment of Rs. 10,00,000. B made the payment at once. Now, A is bound by the contract to sell his house to B.

(ii) A contracts with B to give him Rs 50,00,000 provided that B has to kidnap X. This contract involves illegal activity and cannot be enforced by law as it is unlawful and hence it will be void. 

Essentials of a valid contract

  1. There must be an offer from one person and acceptance by the other. 
  2. Both the parties must have the intention to enter into a legal relationship. 
  3. The parties must be competent to enter into a contract which means they must be major, of sound mind and not disqualified from entering into a contract by any other existing law in force. This is given in Section 11 of the Act. 
  4. There must be a lawful consideration and a lawful object. According to Section 23, the object is considered lawful when:
    1. It is not forbidden by law.
    2. It does not defeat any provision of any other law.
    3. It is not fraudulent.
    4. It does not involve any injury to any person or property.
    5. It is moral or not contrary to public policy. 
  5. There must be free consent of the parties to enter into a contract. This means that the consent of the parties must not be obtained by coercion, fraud, undue influence, mistake or misrepresentation. (Section 14)
  6. The terms of contract or agreement must be clear and certain. (Section 29
  7. The agreement must not be void or unenforceable. 
  8. It must be capable of being performed (Section 56)

Evolution of doctrine of frustration

The origin of the doctrine of frustration can be traced back to the principle of absolute liability forming the basis of contracts in England. It is usually believed by the courts that the parties to a contract must fulfil their obligations in any situation and are absolutely liable for the same. This theory of absolute liability was laid down by the court in the case of Paradine v. Jane (1647). In this case, a person was sued for arrears of rent. He argued that he was evicted and kept out of possession of the land which was beyond his control. This is why he couldn’t receive the profits from the land from which he anticipated that he would get the profit and pay the rent. However, he was still held liable for not paying rent due to the theory of absolute liability. 

In order to rectify and avoid the deficiencies of the theory of absolute liability, the concept of doctrine of frustration was introduced. The court for the first time recognised this doctrine in the case of Atkinson v. Ritchie (1809) wherein it was held that loading of a British ship on a foreign port is impossible due to outbreak of war between the two countries and hence, the contract is frustrated. Further, in the case of Taylor v. Caldwell (1863) defendants were discharged from their liabilities mentioned in the contract as it stood frustrated because it was impossible and incapable of being performed due to external factors. 

Another big step was taken by the English courts in the development of the doctrine in the case of Krell v. Henry (1903). In this case, there was a contract to hire a flat for the coronation of King Edward VII but the coronation was cancelled. The court held that the plaintiff cannot claim the rent because the coronation was cancelled which was the foundation of the contract and hence, the contract stands frustrated. This case made the doctrine applicable to those contracts where the primary and commercial object of entering into a contract is destroyed. 

Over the years, the following factors have been recognised that render the performance of a contract impossible: 

  • Subject matter is destroyed. 
  • When the party to a contract dies or becomes incapable of performing the obligations. 
  • Outbreak of war.
  • Intervention of government which makes the contract illegal or unlawful.
  • Change in circumstances. 
  • Delay in performance of contract where it is barred by limitation. 

Position of doctrine in India

Indian law is mostly inspired by common law and eventually, it has inherited the concept of absolute liability. So, the doctrine of frustration acts as an exception to the theory of absolute liability. In India, the Indian Contract Act of 1872 deals with contracts and other aspects related to it. The term ‘frustration of contract’ is not defined anywhere in the Act. However, Section 56 of the Act makes the agreement that is impossible or incapable of being performed void indicating towards doctrine of frustration.

In England, the doctrine was recognised by courts and not mentioned in any statute unlike India which according to the Supreme Court is a positive rule of law. This was held in the case of Satyabrata Ghose v. Mugneeram Bangur and Co. (1954). The Court has held that the doctrine in India is also applicable in cases where the contract cannot be performed due to reasons or factors beyond the control of parties which means that it is applicable only in cases of subsequent impossibility. Further, in the case of Punj Sons Pvt. Ltd. v. Union of India (1986), the court held that the contract which required the supply of milk containers with tin coating, was frustrated because the tin ingots were unavailable. This clearly shows that restricting the scope of Section 56 and excluding cases of construction would be futile and defeat the whole purpose of the doctrine.

Doctrine of Frustration

As general rule parties to contract are having an intention towards the fulfillment of their part and in case of breach, party breaching is liable to compensate for the same. But an exception to this rule is laid down in Section 56 of the Indian contract act 1872. Section 56 deals with the doctrine of frustration as being acts which cannot be performed. Under this doctrine a promisor is relieved of any liability under a contract in the event of the breach of contract and contract will be deemed to be void.

Section 56 is based on the maxim “ les non cogit ad impossibilia” which means that the law will not compel a man to do what he cannot possibly perform.

The basis of the doctrine of frustration was explained by Supreme Court in the case of Satyabrata Ghose v. Mugneeram in which Justice Mukherjee held that the basic idea upon which doctrine of frustration is based is that of the impossibility of performance of the contract and the expression frustration and impossibility can also be used as synonyms.

According to the dictionary meaning, the term ‘frustration’ means “feeling of being annoyed on not achieving something you wished”. In terms of contract, it is a situation that makes the performance of a contract impossible and hence, the contract becomes frustrated. One of the essentials of a contract is that it must be capable of being performed. Section 56 of the Indian Contract Act, 1872 makes an agreement that is impossible and incapable of being performed void. 

It provides that:

  • An agreement which is incapable of being performed is itself void. 
  • A contract to do something which afterwards becomes impossible is void. If a contract contains performance of an act which becomes impossible to be performed or unlawful after it is made due to some unforeseeable circumstance or event, then it becomes void. 
  • The promissor must compensate for non-performance of the contract. If the promissor promises to do an act which he knew or he might have known is impossible, must compensate the promissee for the non-performance of the act.

Another similar provision to doctrine of frustration is Section 32 of the Indian Contract Act, 1872 which deals with contingent contracts. Both the provisions are based on performance of the contract however, both are different in their sense. Contingent contracts are those which are dependent on fulfilment of a particular condition or a future event and if the condition is not fulfilled, the contract stands dissolved. Doctrine of frustration on the other hand makes the contract void when the said act is impossible or incapable of being performed for reasons outside the control of parties. 

Features of the doctrine

  • According to English Law, there are certain conditions that must be fulfilled in order to make the doctrine of frustration applicable. These are:
    • A valid contract must be subsisting between the parties.
    • Any act under the contract or any part of it must not be fulfilled. 
    • The contract becomes incapable of being performed due to reasons outside control of parties. 
  • The cause of frustration must not be self induced or due to negligence of parties. 
  • It applies to the whole performance of the contract and not to any part thereof. 
  • Frustration of a contract is considered as a mixed question of law and fact.
  • The contract is terminated once it is frustrated. 
  • While declaring a contract frustrated, courts must consider the common intention of both the parties. 

Effects of the doctrine

The following are the effects or consequences of the doctrine of frustration:

  • The doctrine terminates the contract automatically. 
  • It puts an end to the rights of parties to a contract. 
  • It discharges the parties from their obligations and duties. 
  • If the promissor knows that the contract or agreement is incapable of being performed or he is likely to know the same, he or she must compensate the other party for non-performance of the contract. 

Force majeure clause and doctrine of frustration 

Force majeure or ‘Act of God’ is an unforeseeable event which makes the performance of a contract impossible. Such an event can not be foreseen or controlled by the parties. In order to deal with such situations, the contracts usually contain a force majeure clause which discharges the parties from their obligations in any such situation. This is quite similar to the doctrine of frustration and whenever the force majeure clause is invoked, it is dealt in pursuance with the doctrine of frustration or Section 56 of the Indian Contract Act, 1872. 

The following are the essentials of a force majeure clause:

  • There must be an event which makes the performance of the contract impossible.
  • It must be inevitable. 
  • It must be unpredictable and unforeseeable.
  • The situation which leads to invocation of force majeure clauses must not be a result of either party’s act but a supervening act which cannot be foreseen by the parties. 
  • In order to take defence of this clause, all the conditions precedent must be fulfilled. 
  • The party taking the defence of force majeure clause must take necessary precautions to minimise the loss suffered by the other party to a contract. 

In the absence of a force majeure clause in a contract, the parties are free to avail the doctrine of frustration embodied in Section 56 of the Act. In such a situation where the parties have resorted to the doctrine of frustration they can take the benefit of the principle of restitution according to which if a party received any benefits under the contract which later becomes frustrated, such benefit or profit must be returned. However, in case of force majeure clause, the consequences enlisted therein are followed. 

Application of doctrine of frustration to lease deeds

It has been mentioned above that where there is no force majeure clause in a contract, the parties can avail the benefits of doctrine or frustration but the question to be considered is whether the doctrine applies to lease deeds as well. The Supreme Court has dealt with this issue in various cases where the contract dealt with rights and obligations of parties in a lease deed. 

The Supreme Court in the case of Raja Dhruv Dev Chand v. Raja Harmohinder Singh (1968), held that the doctrine is not applicable to lease deeds. This is because Section 108(B)(e) of the Transfer of Property Act, 1882 deals with such a situation in cases of lease deeds. It provides that if a leased property or a part of it is destroyed or is unfit for use due to fire, flood, violence or any other reason enumerated in the Section, the lease can be avoided at the option of lessee. This was reiterated by the Supreme Court in the case of Sushila Devi v. Hari Singh (1971) wherein the court held that the doctrine is only applicable to contracts and not lease deeds. 

Position of commercial impossibility in India

According to the settled principle “Pacta sunt servanda”, a party is absolutely liable to fulfil the obligations in a contract and must perform its duties. However, doctrine of impracticability or impossibility is an exception to this general rule. The doctrine provides that where a contract becomes impossible to perform due to any unforeseeable event that occurred after the contract was made or before its formation, the parties would be discharged from their obligations and liabilities. This is what the doctrine of frustration means. However, the doctrine of frustration requires that such events which render a contract impossible to be performed, must be beyond the control of parties to a contract. Such instances could be death of either party, natural disaster, any legislation enacted by the government, war and many more. 

In India, Section 56 of the Indian Contract Act, 1872 mainly recognizes subsequent impossibility where a contract which once could be performed is rendered incapable of being performed due to the happening of any event beyond the control of parties to a contract. However, it does not cover commercial impossibility or impracticability. A contract may be performed theoretically but may not be profitable to any of the parties. It may be unprofitable or cause monetary loss to either of the parties. In such circumstances, parties cannot be discharged from their contractual obligations. Loss of money is not considered a valid defence unless there are exceptional circumstances. It can be said that commercial impracticability only exists in the form of impossibility of difficulty which renders a contract impossible to be performed due to any unforeseeable event outside the control of parties to a contract. 

Difference between breach of contract and frustration of contract

Breach of contract and doctrine of frustration are two concepts related to contract. When a party to a contract fails to fulfil the obligations or omits to perform an act which was supposed to be performed, it leads to breach of contract. While doctrine of frustration is applied when the contract becomes incapable of being performed due to reasons beyond the control of parties to a contract. To betters understand the two concepts, let us understand the difference between the two:

S. No.  Doctrine of frustration  Breach of contract 
It arises when the contract cannot be performed or becomes impossible to be performed due to factors outside the control of parties to a contract.  When a party to a contract omits to do an act enumerated in the contract or does an act contrary to the contract, it leads to breach of contract. 
No such liabilities are to be paid if a contract is frustrated.  The party breaching the contract has to pay compensation to the other party. 
No remedies are available where the contract becomes void due to the doctrine of frustration.  There are certain remedies for the breach of contract. 
Once the contract stands frustrated, the parties are discharged from their obligations.  The parties can mutually decide to perform their duties as per the contract. 
The contract becomes void due to the doctrine of frustration.  The contract becomes voidable due to breach of contract. 
Where the contract becomes incapable of being contract and it is clear that the parties are discharged from their liabilities, there is no need to take the recourse of a suit.  One party can sue the other for breach of contract. 

Recent case laws

National Agricultural Coop. Mktg. Federation of India  v. Alimenta S.A. (2020)

Facts of the case

Criminal litigation

In this case, a contract was signed between the National Agricultural Coop. Mktg. Federation of India (NAFED) and Alimenta S.A. according to which a certain amount of commodity was to be delivered to Alimenta by NAFED. However, due to the cyclone, it was only able to deliver a part of the decided quantity of the commodity. The parties extended the contract and added the clause that the remaining quantity could be delivered next year. 

Due to a hike in the price of commodities because of failure of crops in the US, the government refused to export the commodity and hence, the contract could not be performed as a result of which the other party took the recourse of arbitration for the default in the contract. The arbitral award was passed in the favour of Alimenta which was converted into a decree by the High Court. However, aggrieved by the decision, NAFED challenged the decision in the Supreme Court. 

Issues involved in the case

  • Whether there was a default on the part of NAFED?
  • Whether the contract stands frustrated due to restrictions by the government?

Judgement of the Court 

The Supreme Court in this case laid down a distinction between contingent contracts and contracts that are frustrated. The court observed that in contingent contracts, the contract becomes impossible of being performed due to exigencies mentioned in the agreement and the consequences mentioned therein are followed. However, if the exigencies due to which the contract became incapable of being performed is not mentioned in the agreement and is beyond the control of parties, it leads to doctrine of frustration. 

It was held that in the present case, the contract was solely dependent on the policy of export laid down by the government and hence, is within the scope of Section 32 of the Indian Contract Act, 1872. This made the contract between the two null and void and so parties were discharged from their contractual obligations. 

R. Narayanan v. Government of Tamil Nadu (2021)

Facts of the case

In this case, the petitioner was a bidder and licensee of one of the shops that he had taken from the respondent. He also paid the licence fee one year in advance but then due to the outbreak of COVID-19, he suffered financial losses and was not able to renew the licence even though it was mentioned in the contract. He filed a petition to waive off the licence fee for the period of lockdown and partially for the subsequent period. 

Issues involved in the case

  • Will the lockdown due to the outbreak of COVID-19 be treated as a force majeure event?

Judgement of the court 

While dealing with the issue at hand, the Madras High Court laid down the distinction between force majeure clause and doctrine of frustration. The court observed that frustration occurs when the contractual obligations become incapable of being performed due to factors outside the control of parties and the agreement becomes void. On the other hand, in case of force majeure, a party is excused from performing the obligations while the contract continues to exist and for which the party invoking the force majeure clause must serve a notice on the other party as soon as possible. Therefore, the court in this case held that the lockdown period is a force majeure event and the licence fee to be paid by the petitioner for the said period must be waived off. 

Energy Watchdog v. Central Electricity Regulatory Commission (2017)

Facts of the case

In this case, a public notice was issued by Gujarat Urja Vikas Nigam Limited (GUVNL) in order to invite proposals for the power supply. The same was done by Haryana Utilities. Both of them selected Adani enterprises for the supply of power and entered into an agreement. Due to a hike in the price of export of coal from Indonesia, a petition was filed by Adani Enterprises in the Central Regulatory Electricity Commission requesting to discharge them from the obligations of performing the contract due to the doctrine of frustration. The commission refused to do so which was challenged in the Supreme Court. 

Issues involved in the case

Whether the doctrine of frustration is applicable in this case?

Judgement of the court

The court in this case held that the hike in prices of export of coal from Indonesia does not make the contract incapable of being performed and so the contract cannot be frustrated. There are alternative methods or steps to fulfil the obligations mentioned in the agreement and so the doctrine of frustration is inapplicable in this case. 

The doctrine of frustration is however applicable only in 2 cases

  • If the object of the contract has become impossible to perform

               Or

  • An event has occurred making the performance of the contract to be impossible beyond the Control of promisor.

Illustration

A, a resident of India entered into a contract with B, a resident of China for the export of 550 heavy Trucks. Initially, 100 Trucks were delivered, later war was announced between India and China and the government of India suspended all the business transactions with China. Now after this contract has become void.

  1. A and B contract to marry each other. Before the time fixed for marriage A dies and therefore the said contract between A and B will become void as one party to a contract has died.

The condition necessary for the application of Section 56

  • There exist a valid and subsisting contract between the parties:- Existence of a valid contract is the foremost condition for the application of Section 56. The valid contract includes a contract entered in between competent persons and which is followed by some consideration.
  • There must be some part of the contract which is yet to be performed:- Section 56 will have applicability only if there is some part of the contract which is yet to be performed and without performing it the ultimate purpose of the contract is not fulfilled.
  • The contract after it is entered into becomes impossible of performance:- Another important condition for the application of section 56 is that the contract after it has been entered into has become impossible to perform and cannot be performed and therefore contract stands void.

Generally, frustration of contract can be in the following cases

  1. Death or incapacity of a party:- Where a party to the contract has died after entering into contract or the party is incapable of performing the contract, in such a situation the contract will be void ( Robinson v Davison).
  2. Frustration by virtue of legislation:- Where, a law promulgated after the contract is made, makes the performance of the agreement impossible and thereby the agreement becomes void ( Rozan Mian v Tahera Begum).
  3. Frustration due to change of circumstances:- This particular situation deals with those cases where there was no physical impossibility of performance of the contract, but because of the change in circumstances, the main purpose for which the contract was entered has been defeated.

Initial vs Subsequent Impossibility

Initial impossibility:- The object of making any contract is that the parties to contract would perform their respective promises, and where the contract is impossible to perform the parties would never enter into it. Initial impossibility deals with those cases where the contract was impossible to perform from the very beginning. For example, If a married man knowing that he cannot marry again promises to do so, then he is bound to compensate the other party.

Subsequent impossibility:- It deals with cases where the contract was possible to perform when it was entered but because of some event, the performance has become impossible or unlawful and therefore it discharges the party from performing it. For example, If A purchased Tickets from B for watching a cricket match and he pays 50% as an advance. If the match is cancelled then A can not recover from B as the cancellation of match was beyond the control of A.

Doctrine of frustration is applicable only in cases of Subsequent impossibility and where the contract was impossible to perform from the very beginning, where this doctrine has no application, Moreover this doctrine will also not be applicable in cases where there was a mere delay in performance and contract can still be performed.

Conclusion

Doctrine of frustration as enshrined in Section 56 of the Indian contract act 1872 deals with those cases where the performance of contract has been frustrated and the performance of it has become impossible to perform due to any unavoidable reason or condition. This doctrine is treated as an exception to the general rule which provides for compensation in case of breach of contract. But section 56 only deals with cases of subsequent impossibility as opposed to cases of initial impossibility.

The doctrine of frustration is a concept of English or Roman law. It was incorporated in the Indian law because laws in India are mostly inspired by the common law. The doctrine makes any contract or agreement which is incapable of being performed or becomes so after it is made, void and hence, discharges the parties from their liabilities mentioned in the contract. It is impliedly mentioned in the Indian law in Section 56 of the Indian Contract Act, 1872. 

Usually, no compensation is to be given in case the contract stands frustrated but where one of the parties to a contract knew or was likely to know that the said act is unlawful or impossible of being performed, the other party must be compensated. Also, where one party has received any benefits due to the contract which later becomes impossible then the party must return the benefits so received. It must be noted that the courts in India have narrowed down the scope of the doctrine by excluding the cases where the events that rendered the contract incapable or impossible of being performed could be contemplated by the parties. It is suggested that the doctrine must be applied to all the cases of impossibility and frustration for the expansion and development of the doctrine. 

Frequently Asked Questions (FAQs)

Which provision deals with doctrine of frustration in India?

The term ‘frustration’ or ‘frustration of contract’ is neither mentioned nor defined anywhere in the Indian Contract Act, 1872. However, Section 56 of the Act makes the agreement which is incapable of being performed, void, thus, impliedly mentioning about the doctrine of frustration. 

What do you mean by contingent contracts?

Those contracts which are dependent on fulfilment of a particular event or happening of any future event are called contingent contracts. These are given in Section 32 of the Act. These are enforceable only on the happening of a particular future event while doctrine of frustration renders the contract void because it is incapable of being performed.  

What is the difference between force majeure clause and doctrine of frustration?

Both the force majeure event and doctrine of frustration make the contract impossible to be performed due to factors outside the control of parties. However, the force majeure clause is usually mentioned in the contract and so are its consequences. In absence of any such clause, the parties can resort to the doctrine of frustration. 

What is the basic idea behind Section 56 of the Indian Contract Act, 1872?

Section 56 of the Act is based on the maxim ‘Lex non cogit ad impossibilia’ which means that the law cannot force a man to do something which is impossible. 

References 


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How can a business organisation make optimal choices 

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This article has been written by Ritesh Singh pursuing Diploma in Corporate Law & Practice: Transactions, Governance and Disputes and has been edited by Oishika Banerji (Team Lawsikho). 

This article has been published by Sneha Mahawar.

Introduction 

A business organisation can be owned and organised in many ways, each having its own advantages and disadvantages which are required to be analysed by the business owner’s for select the optimal structure of business which suits the organisation according to their needs. The decision regarding the form of organisation is crucial as it determines the entrepreneur’s power, control, risk, responsibility, and the allocation of profits and losses. It is essential to carefully consider all the factors before making a long-term commitment to a particular form of business. The selection of a suitable form of business organisation is a critical entrepreneurial choice that significantly influences the success and growth of a business. It affects the distribution of profits, the level of risk associated with the business, and other relevant factors.

Once a form of business organisation is chosen, it can be challenging and cumbersome for businesses to switch from one form to another form, as it requires winding up and dissolution of the existing organisation. Conversion process involves complex issues and procedures that can waste time, effort, and money and closure of  a business leads to the loss of opportunities, capital, and employment. The amount of risks and liabilities, as well as the owners’ ability to bear them, are also important considerations in selecting the appropriate business entity.

Therefore, to make an optimal choice of the form of business organisation should be made after careful consideration of all aspects and check for the suitability of each form of business with the entrepreneur’s business ideas. Several factors need to be taken into account when selecting the appropriate form of business organisation. These factors include the division of profits, control, risk, legal formalities, flexibility, and other relevant considerations. It is essential and advisable to thoroughly analyse and assess all these aspects during the planning stage and choose the right form of organisation that aligns best with the business’s nature and requirements. Since the decision to choose a business organisation takes place at both stages, first at the initial stage of starting a business and at a later stage to meet growth and expansion needs, it is essential to address this issue at both the stages of business priorly in order to reduce risks and liabilities,and avoid wastage of time, effort and money.  This article analyses as to how a business organisation can make optimal choices for its betterment. 

Why is it essential to choose the right structure of a business organisation 

While choosing the right structure of a business organisation, it is essential to check the needs of the entrepreneur and look for various factors which are required to be assessed while selecting the particular type of business organisations. Factors which are required to be checked are stated below as follows: 

  1. Legal and regulatory compliance: Different business structures have different legal and regulatory requirements. Selecting the appropriate structure ensures compliance with relevant laws and regulations, reducing the risk of penalties, fines, or legal issues.
  2. Liability protection: Certain business structures, such as limited liability companies (LLC’s) and corporations, offer personal liability protection to the owners. This means that their personal assets are protected in case of business debts or legal claims. Choosing the right structure can help safeguard personal finances and assets.
  3. Tax implications: Business structures have varying tax implications. Some structures, such as sole proprietorships and partnerships, pass business income and losses through to the owner’s personal tax returns. Others, like corporations, are subject to separate taxation. By selecting the right structure, businesses can optimise their tax strategies and potentially reduce their tax burden.
  4. Funding opportunities: The choice of business structure can impact a company’s ability to raise capital. For example, corporations can sell shares of stock to raise funds from investors. Certain structures may also be eligible for government grants, loans, or other financing options. Selecting the appropriate structure increases the chances of accessing the desired funding sources.
  5. Scalability and growth potential: Different business structures offer varying levels of scalability and growth potential. Some structures, such as corporations, allow for easier transfer of ownership and investment opportunities, facilitating expansion. Others may be more suitable for small, owner-operated businesses. Choosing the right structure aligns with the growth aspirations of the business.
  6. Management and decision-making: Business structures determine how decisions are made and how the organisation is managed. Structures like partnerships involve shared decision-making, while corporations have a more structured hierarchy. Selecting the appropriate structure ensures that the organisation’s management and decision-making processes align with the owners’ preferences and goals.
  7. Perpetuity and succession planning: Certain business structures, such as corporations, have perpetual existence, meaning they can outlive their founders. This can be advantageous for long-term planning and succession purposes. Choosing the right structure allows for effective succession planning and ensures the continuity of the business beyond the current ownership.

In summary, selecting the right structure for a business organisation is crucial as it impacts legal compliance, liability protection, taxation, funding opportunities, scalability, management, and long-term planning. By considering these factors and aligning the structure with the business’s goals and requirements, entrepreneurs can set a solid foundation for their venture’s success and growth.

Types of business organisation

  1. Sole Proprietorship- It is a form of business organisation, wherein one person owns all the assets of the business. To form a sole proprietorship, there are no legal formalities required except the appropriate licensing to conduct the business.The proprietor reports income or losses from the business along with his personal income tax return.
  2. Partnership firm- Partnership firms are created by drafting a partnership deed among the partners. Partnership deeds are registered to make a partnership firm and such firms are governed by the Indian Partnership Act, 1932. According to Section 464 of the Companies Act, 2013 it empowers the Central Government to prescribe the maximum number of partners in a partnership firm but the number of partners cannot be more than 100. The Central Government has prescribed the maximum number of partners in a firm to be 50 vide Rule 10 of the Companies (Miscellaneous) Rules, 2014. Thus, in effect, a partnership firm cannot have more than 50 members”. 
  3. Hindu Undivided Family (HUF)-  A Hindu family can come together and form a HUF. HUF is taxed separately from its members. Businesses can select HUF and can save taxes by creating a family unit and pooling it in assets to form a HUF. HUF has its own PAN and files tax returns independent of its members.
  4. Limited Liability Partnership (LLP)- Limited Liability Partnership is an alternate corporate business entity that provides the benefits of limited liability of a company but allows its members the flexibility of organising their internal management on the basis of a mutually-arrived agreement, as is the case in a partnership firm, introduced in India by way of Limited Liability Partnership Act, 2008. 
  5. Co-operative Society- A cooperative organisation is an association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic end through the formation of a democratically controlled organisation, making equitable distributions to the capital required, and accepting a fair share of risk and benefits of the undertaking.
  6. Section 8 of the Companies Act, 2013 – The provision deals with the companies established for promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object. Provided the profits, if any, or other income is applied for promoting only the objects of the company and no dividend is paid to its members.
  7. One Person Company- An OPC means a company with only 1 person as a member shareholder. He can make only 1 nominee and  shall become a shareholder in case of death or incapacity of original stakeholder.
  8. Private company- Private company is a company which has the following characteristics: 
  • Shareholder’s right to transfer shares is restricted. 
  • Minimum number of 2 members in the company.
  • Number of shareholders is limited to 200.
  • An invitation to the public to subscribe to any shares or debentures or any type of security is prohibited.

       9. Public Company- A public company is a company which has the following  characteristics:

  • Shareholders’ right to transfer shares is not restricted.
  • Minimum 7 members.
  • An invitation to the public to subscribe to any shares or debentures or any type of security is permitted.

How to select an optimal business structure and factors governing suitable form of a business organisation 

Factors governing the suitable form of business organisation:

  1. Nature of business activity: The nature of business activity carried out by a business organisation plays a key role while selecting the type of business structure of such organisations. In small trading businesses, rendering of personal services preference of sole proprietorship is predominant. Partnerships are suitable in all those cases where sole proprietorship is suitable provided the business is carried on a slightly bigger scale. For example finance, trading and real estate industries prefer partnership forms of organisation. For large scale businesses, company and LLP are more suitable forms of business organisation. 
  2. Scale of operation: If the scale of operation is too small,sole proprietorship or one person company (OPC) is preferred, if the scale is modest, LLP or partnership is preferable and if the scale is large,company form is suitable for such business organisations accordingly. 
  3. Time, cost and regulatory framework of incorporating different forms of business organisations: Another reason while selecting the appropriate business structures for entrepreneurs is the amount of time required to incorporate such entities and the amount of cost involved while incorporating such different entities
  1. Sole proprietorship:  In case of sole proprietorship, no incorporation is required as it is not considered different from its owner and whereby no separate documentation is executed and it is immediately active and running subject towards obtaining any business licence required to commence such business.
  2. Partnership: In case of partnership, a stamped partnership deed is required for ensuring enforceability and only the cost of partnership agreement is borne by the partners and no incorporation process is required to be followed.
  3. Limited Liability Partnership (LLP): It requires a detailed incorporation and filing process which includes an execution of stamped LLP agreement. It requires more cost and time as registration is required with ROC and also LLP has statutory compliance requirements which are required to be fulfilled. But the compliance is less than those of companies. 
  4. Company: While incorporating a company, a detailed incorporation and filing process is to be followed along with filing of Articles of Association, Memorandum of Association and is required to be submitted to ROC. It takes more time to incorporate and needs professionals to draft the constitutional documents (MOA & AOA) properly and has statutory and annual compliance under the Companies Act, 2013, which are duly required to be followed.

4. Capital requirements: Capital is an important factor which affects the choice of business organisation, depending on the capital requirements of the business organisation the entities can select their business structure accordingly. In cases where entities require huge capital it should be organised as companies, whereas enterprises requiring smaller investments can opt for sole proprietorship or even as partnerships. Companies are viable as an option  in order to attract investors and raise capital as investors are assured with limited liability,easy accessibility and ownership can be transferred to other investors.

5. Amount of risk and liability: Risk and liabilities of an organisation depends on its size, the smaller the size of the business, the proportional risk and liability of such entities is much smaller. In case of sole proprietorship, the amount risk is small, the sole proprietor is personally liable for all the debts of the business to the extent of his entire property.In case of partnership, partners are individually and jointly responsible for the liabilities of the partnership firm.whereas in case of Companies and LLP creditors can only force payment of claims only to limit of the company’s and LLP assets.

6. Tax implications: Tax is an extremely important factor for business organisations while selecting their appropriate structure as it directly impacts the post-tax retained earnings of the business and distribution of money to its owners. In case of sole proprietorship, the income is added to its owner’s personal income and personal income tax is applied to it. The highest rate of tax is applicable only to the portion of the income which crosses a specified threshold (for the assessment year 2022-2023 the highest rate is 30 percent plus 4% health and education cess when the income exceeds 10 lakhs). Whereas LLP and companies are taxed at the same flat rate of 30 percent of their profits. In companies, distribution of dividends attracts dividend distribution tax (DDT) of around 20 percent on the profit that is paid to shareholders which reduces the total income of shareholders. In case to benefits of limited liability and lower tax rates together, an LLP is much suitable as a form of business organisation in such cases due to lower statutory and compliance requirements than companies.

  1. Division of profit: Profitability of a business organisation is essential for its existence and has a huge impact on the selection of a business organisation.An entrepreneur who intends to keep all the profits of the business will prefer sole proprietorship, but his personal liability is also unlimited. Whereas, in case of partnership, the profits are distributed among the partners of the firm post payment of all taxes. In case of companies, the profits are distributed among the shareholders in proportion to their shareholding and the rate of dividend is decided by the board of directors through the approval of shareholders. Companies can also issue bonus shares, ESOP’s to its employees. In case of a listed company, the equity shares are tradable on the stock exchanges,which enables the shareholders to exit the company at their own discretion.
  2. Transferability of ownership: In case of sole proprietorship, no perpetual succession is allowed. With the death of the sole proprietor, the business ceases to exist. In partnership, ordinarily upon the death of a partner, the partnership firm is automatically dissolved under Section 42 of the Indian Partnership Act,1932.
  3. Independence: If an entrepreneur wants freedom in business with little intervention from the government he should go with sole proprietorship or partnership, as LLP and company are subject to strict government regulations and are required to follow statutory and annual compliances.

Why do entrepreneurs prefer to incorporate companies

Reasons why entrepreneurs prefer to incorporate companies as a choice of their business   organisation:

  1. Limited liability on all shareholders of the company and liability extends only to the proportion of shareholding held by the shareholder. 
  2. Perpetual succession.
  3. Ease of raising investments and obtaining loans from foreign as well domestic investors and banks
  4. It provides employees stock option plans(ESOP’s) as an incentive to employees.
  5. Provides easy exit options to investors at their own discretion.
  6. Provides flexibility of administration and divergence between ownership and management.
  7. In a case where an entrepreneur intends to increase his scale of operation of his business.

When should you not incorporate a company

Reasons when not to incorporate a company are provided hereunder:

  1. Just for the purpose of getting affiliation of Pvt Ltd: Often entrepreneurs think that it’s better to incorporate a company with a name of ‘private limited’ than as proprietor or a partnership firm to increase the credibility of their business among people. But incorporating a company leads to various compliance requirements apart from the credibility.
  2. Just for limited liability not considering the scale of operations: Often entrepreneurs tend towards limited liability and not assess their business scale.When the company’s scale of operation is too small there is no need to incorporate a company just for the sake of limited liability and such entities can prefer sole proprietorship or partnership as choice of business structure of such organisations.
  3. Non-disclosing nature: If you don’t want to disclose your turnover, profitability as public information, do not select a company as a choice of your business organisation as such information is easily accessible from the MCA’s website.

Conclusion

Every business structure has its own advantages and disadvantages and it really depends upon the choice of entrepreneur to select the optimal choice of business structure for his business organisation taking in consideration of all the factors like the amount of risk and liabilities, tax implications, scale of operation, the nature of business activity carried out the business, division of profit and look for all the statutory compliance and regulatory framework required to be fulfilled by business organisation. Structuring a business as sole proprietorship firm is applicable for small scale operation of business and it requires no incorporation and documentation except to obtain the business licence required for such business. It can be started immediately and incurs less cost and time to start a proprietorship firm. Whereas, structuring a business has a partnership, is tax efficient and relatively more flexible, but it is risky to go for partnership due to the risk of personal liability of promoters. A LLP is more preferable with certain kinds of business such as law firms or a business in its initial phases as in LLP there is difficulty to raise capital from large investors and inability to access cheap foreign loans. A company is preferred in case the business organisation needs to increase its scale of operations to a large extent, raise capital or borrow loans from domestic and foreign banks. In such cases, a company can be the optimal structure for such a business organisation. It may not always be a best idea to incorporate a company due to increased tax implications and excessive record keeping, filing and compliance requirements, it may not be a suitable choice to structure every business as a company from the beginning. Thus, it entirely depends on the needs and objectives of the business organisation and after analysing all the factors a suitable choice of business organisation must be selected.

__________________________________________________________________________________________________

of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

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Phone Pe v. Bharat Pe : are vernacular wordplay generic

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This article has been written by Purvi Mehta pursuing Diploma in US Corporate Law and Paralegal Studies and edited by Oishika Banerji (Team Lawsikho). 

This article has been published by Sneha Mahawar.      

This article provides us an insight to the generic battle between Phone Pe and Bharat Pe thereby highlighting the necessary aspects of it. It is necessary to be acknowledged with the fact that PhonePe is a company which provides services of digital payment and finance and is accepted as a payment medium, whereas, BharatPe is a fintech company which deals with small merchants in India by offering QR codes which are used for UPI payments, financing a small business and a swipe machine for accepting cards. It is available for free through the QR codes. PhonePe can be used by anyone as it is not targeted to a certain area of society, whereas BharatPe cannot be used by everyone. While there are many such differences between these two giant ‘Pes’, our article behaves as a case analysis for the readers to be aware about the interesting generic wordplay between two fintech setups. 

Facts of the case 

In the case of PhonePe Pvt. Ltd vs. Ezy Services & Anr (2021), a single-judge bench of the Delhi High Court delivered a judgement in a commercial suit that was filed to decide whether the plaintiff was in its legal powers to demand for a permanent injunction on BharatPe for using the suffix ‘Pe’ in their trademark ‘BharatPe’. 

In this case, the plaintiff had filed a suit against the defendant to seek a permanent injunction for using the suffix ‘Pe’ which was identical to the plaintiff’s trademark Phone Pe. Both the companies provide online payment services. Although, the plaintiff provides these services for individuals and merchants whereas the defendant provides these services to merchants only. 

The Delhi High Court refused to grant a permanent injunction against BharatPe and held that generic words or descriptive words like ‘Pe’ does not give the exclusive right to the owner to use the word as he wants. There is an exception to this rule. If there is any evidence to prove that such a generic word has acquired a secondary meaning in the commercial sphere through its continuous use, such a word can be denoted as distinctive. Therefore, this exception was held to be a substantial aspect by the Court in this case.

Issue involved in the case 

Can PhonePe demand a permanent injunction of BharatPe from using ‘Pe’ in its suffix?

Arguments on behalf of the plaintiff

  • The Plaintiff had started using the mark ‘PhonePe’ since 2015 and ‘BharatPe’ had started using from 2018 which gave the plaintiff’s trademark ample time to establish their goodwill in the market.
  • The app has been downloaded over ten crore times.
  • Transliteration of the Devanagari “पे” as “Pe” is an innovative word to the brand name and would be translated as “Pay”.
  • The word ‘phone’ is an ordinary word and adding ‘Pe’ to it makes it an advancement which makes it different from others and plays a major role in the name “PhonePe”.
  • The trademark had over time gained goodwill and reputation which had also been seen in partnerships, advertisements and in VIVO IPL 2019 and was endorsed by several celebrities.
  • The “BharatPe” app provides similar services as to what “PhonePe” provides and that they can be downloaded from the same platforms that is the Apple App Store and Google Play.
  • The defendants purposely started using the mark “BharatPe” in 2018, and by that time the “PhonePe” brand was built and was very well established.
  • The word ‘Pe” emphasises their brand and that being the common feature between the two trade marks amounts to the similarity between the two. 
  • The use of the word “Pe” as a suffix is bound to come to a consumer’s mind while seeing the two on the same platforms and as an impression of the same connection.
  • The plaintiff had contended that their services are the same as that of the defendant and that they had copied their trademark ‘Pe’ which counts as infringement of trademark.

Arguments on behalf of the defendant

  • The plaintiff was not the registered user of the words, “Pe”, the Devanagari “पे” or “Pay”. The registration had been acquired on the whole word i.e. “PhonePe”.
  • “BharatPe” was acquired and used from 2016 and later the domain name <www.bharatpe.com>  was registered on 15.11.2017 in the name of its founder and the services began in 2018 with bona fide interest.
  • The “BharatPe” mark was coined by the defendants and also the services that they provide are different from “PhonePe”. The ideology behind it was to provide a QR code for merchants to provide an easy payment method, which would work for all the customer unified payments interface (UPI)- based applications, such as Whatsapp Pay, Samsung Pay, Paytm, PhonePe and Google Pay.
  • The defendants also used the tagline “Bharat pe sab chalta hai”.
  • It had more than 50 lakhs downloads by the end of the year 2020.
  • The Trade Marks Registry issued the first examination report for registration of the “BharatPe” marks and it did not cite any of the plaintiff’s marks, for raising issues under Section 11 of the Trade Marks Act, 1999, as the plaintiff had not filed a trademark for the specific word “Pe”. 
  • They relied on the list of trademarks which were registered before the “PhonePe” mark of the plaintiff, such as “Phone Pe Store”, “Phone Pe Deal” and “Phone Pe Crore”, etc. These marks claimed user prior to the plaintiff and hence, the plaintiff could not claim exclusivity on the suffix ‘Pe’.
  • The suffix was merely a spelling mistake of the word ‘Pay’, and that it is an invented word. They do not give any enforceable rights.
  • The suffix ‘Pe’ was similar to the services and trade and was also laudatory to the services provided by the plaintiff so as to enable the customer to make payments through the plaintiff’s application.

Court rulings and observations

While resolving the issue of trademark infringement, the Delhi High Court considered the issue of similarity between PhonePe and BharatPe for deciding whether to grant an injunction to the plaintiff by considering and analysing multiple judgements by various Courts:

  1. The Anti- Dissection Rule:

The Anti- dissection rule says that a trademark should not be compared in part but as a whole. The Hon’ble High Court referred to a landmark judgment in the case of Kaviraj Pandit Durga Dutta Sharma v. Navaratna Pharmaceutical Laboratories  (1964) where the court upheld the Anti-dissection rule. The court observed that the registered mark should not be dissected with the intent to the conflicting mark. The Court was not convinced on the plaintiff’s argument that the word or the suffix ‘Pe’ made a dominant feature of the plaintiff’s trademark and hence, the court ruled that “Phone Pe” and “BharatPe” were composite marks and such comparison should not be done by keeping the trademark separate, in fact the mark should be considered as a whole and the plaintiff could not claim rights over the suffix ‘Pe’, as it was a spelling error of the word ‘Pay’, therefore no infringement could be claimed over this. 

  1. Does the dominant mark test apply in this case? 

The court had observed that there was no separate registration on the word ‘Pe’, hence, it could not claim trademark infringement on the same. The infringement in this case does not come in the picture merely because of the similarity between the non-essential, and the composite mark which is unregistered. This principle of separate registration was mentioned in the case of South India Beverages (2014) by the Delhi High Court and the relation between the two principles were explained. The division bench relied on a passage from McCarthy on trademarks and unfair competition, which was cited in the case of Stiefel Laboratories (2014), which stated that “the rationale for the rule is that the commercial impression of a composite trademark on an ordinary prospective buyer is created by the mark as a whole, not by its component parts. However, it is not a violation of the anti-dissection rule to view the component parts of conflicting composite marks as a preliminary step on the way to an ultimate determination of probable customer reaction to the conflicting composites as a whole”. 

  1. Non-exclusivity of descriptive or generic marks:

It was observed that the party could not claim exclusivity over a mere descriptive or generic mark which was in fact not filed for a trademark. Although, the Court agreed on the exception to this principle in cases where the generic or descriptive mark had acquired secondary or peculiar meaning. The Court had dived into the case of Marico Limited (2020), wherein the court had clearly explained the idea of the acquired secondary meaning of a descriptive mark. This case also discussed the nature and character of a misspelt word when used as a trademark.

Conclusion

In 2021, “PhonePe” had filed an Intellectual Property infringement suit against “BharatPe” for registration of the trademark “PostPe” and other variations. The judgement was apparently in the favour of “BharatPe” which has spent a lot of money for marketing and publicising its BNPL product. Recently, “BharatPe” MD Ashneer Grover launched a gaming platform “CricPe” which also uses the suffix ‘Pe’ and contended that there is no monopoly on the suffix ‘Pe’ which also includes “PhonePe”. This gaming platform will pay cricketers and that is a whole different service. Thus, it was held that no exclusivity could be claimed by the plaintiff merely over the suffix ‘Pe’. Hence, from the judgement it can be deciphered that permanent injunction cannot be granted against the defendant for trademark infringement. This judgement provides a primer on the trademark infringement and its legal principles and provides a detailed understanding of the trademark laws and legal principles.   

References

  1. https://lawessential.com/ip-case-laws/f/bharatpe-v-phonepe-who-owns-pe?blogcategory=IP+-+Case+Laws
  2. https://www.lakshmisri.com/insights/articles/rule-of-anti-dissection-v-rule-of-dominant-feature-a-legal-conundrum/#

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All you need to know about divorce alimony

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This article is written by Manya Manjari, a student at the Indian Institute of Management, Rohtak. Divorce is the process by which married couples can part ways and be separated. This article will discuss one of the most important aspects of divorce, which is alimony.  

This article has been published by Sneha Mahawar.     

Introduction

India ranks lowest on the global divorce rate indexes. “The divorce rate in India is lower than 1%” as per reports by the BBC. If a person wants to terminate their marriage, they have a legal right to do so and can also request alimony from their spouses. In India, there are five major laws that govern alimony, which include the Hindu Marriage Act of 1955, the Muslim Personal Law, the Indian Divorce Act, 1869, the Parsi Marriage and Divorce Act of 1936, and the Special Marriage Act of 1955. 

What is a divorce

Divorce is the legal process that provides a formal ending to a marriage. The stigma associated with divorce, worries about family reputation, and cultural beliefs frequently influence factors in divorce. However, there is a progressive change in the attitude of society towards more acceptance and support for those who file for divorce to exit unsatisfactory or abusive unions. There is a rising awareness and understanding that divorce may be necessary in some situations, but orthodox and conservative beliefs continue to rule in many parts of India.

What is divorce alimony

Alimony comes from the Latin word “Alimonia”, meaning sustenance. The monetary support given by one spouse to the other following a divorce is referred to as divorce alimony. It is meant to make the adjustment to single life more accessible and assist the financially dependent spouse in maintaining a respectable standard of living. As agreed upon by the separating spouse or established by the court, alimony is often given every month in the form of lump sum payments or recurring installments.  

For instance, when one spouse earns much more than the other or when one spouse has given up their profession or education for the sake of the marriage or family, divorce alimony is meant to correct any financial imbalances that may exist between the couples. Alimony is of two types; Pendente lite, also known as interim or temporary alimony. This alimony has its reference in section 24 of the HIndu Marriage Act 1955. It is awarded during the divorce process and is intended to sustain the financially dependent spouse until the divorce is finalised. The temporary alimony is intended to keep things as they are and meet pressing financial requirements. 

Section 25 of the Hindu Marriage Act 1955 mentions the long-term or permanent alimony, which may be granted when the court finds that one spouse needs continued financial support after the divorce is finalised. It is typically given when there is a large gap in the spouses’ earning potential or financial resources and the dependent spouse requires financial support to maintain the same standard of living as they did during the marriage.

Who can ask for alimony

Traditionally, wives who were dependent for money on their husbands received the majority of alimony payments. However, the situation has changed, and now, based on their specific situations, both men and women can ask for alimony. The primary determinants of alimony eligibility are the seeking spouse’s financial need and the paying spouse’s financial capacity. The length of the marriage, income inequality, financial necessity, ability to earn, employability, age, contributions to the marriage, and child custody and support are some of the characteristics that might affect alimony payments.

However, one of the major points of concern is that no marriage or divorce act other than the Hindu Personal laws, has provisions for the maintenance of the husband. Not even the Special Marriage Act, which is secular, gives the husband the right to claim maintenance.

Under Hindu Marriage Act, 1955

The amount of alimony is not predetermined by law and may be expressed as a fixed sum per week or month. There are two types of alimony. Temporary alimony is payable for a set amount of time or until one of the parties passes away, whichever occurs first. Many variables, including the length of the marriage and the financial situation of both parties after the divorce, determine it. 

Permanent alimony, on the other hand, is a continuing debt that lasts until the beneficiary remarries or passes away. Even though the monthly payments seem manageable, over time they can add up to become one of the biggest financial commitments.

Under Hindu personal laws, alimony is governed primarily by the Hindu Marriage Act, 1955. Section 24 of the Hindu Marriage Act does not include a specific formula for calculating interim maintenance. Interim maintenance can be claimed at the end of the dispute in the form of alimony as well. However, the following considerations affect the quantity of such maintenance:

  1. The length of the marriage
  2. The financial condition and behaviour of both spouses are discussed.
  3. The capability of the spouse requesting maintenance to earn.
  4. Education and support are necessary for all children.
  5. Other requirements of the claimant. 

The Bombay High Court decided that Section 24 of the Hindu Marriage Act, 1955, deals with finding a reasonable sum for interim maintenance in the case of Dinesh Mehta v. Usha Mehta (1978). Consequently, determining a reasonable amount requires establishing a compromise between many conflicting claims. 

In the case of State of Jharkhand v. Sandeep Kumar  (2004), it was held that no distinction has been made under Section 24 of the Act regarding a wife’s right to maintenance preferred under Section 12 (voidable marriages) or Section 13 (divorce) of the Act about maintenance pendente lite and expenses of the proceeding.

In the case of Manokaran v. Devaki, AIR (2003), it was held that the wife can request maintenance pendente lite at any time while the divorce is still pending if she can prove that she does not have enough of a separate source of income to maintain herself.  

If the husband can demonstrate that he has no independent source of income, he is also entitled to maintenance pendente lite under Section 24. However, the spouse must persuade the court that he is unable to work and support himself because of a physical or mental condition.

According to Kanchan v. Kamalendra (1993), it was decided that the husband could not be allowed any maintenance because he was physically healthy and did not suffer from a mental illness, and the only reason he was claiming the amount was to discourage the wife from taking a divorce.
Within the scope of Section 25 of the Hindu Marriage Act, permanent alimony or maintenance is mentioned. The provision states that the court has the power to compel the respondent (either the husband or the wife) to provide for the applicant’s maintenance and support for a period that does not exceed the applicant’s lifetime. To decide a fair amount, the court considers various elements, including the income and assets of both parties, their behaviour, and other pertinent facts. If necessary, a charge on the respondent’s real estate could be used to ensure the payment.

After the court has issued an order, if either party’s circumstances change, the court may, at either party’s request, justly modify, vary, or revoke the order.
The court may, upon the request of the other party, modify, vary, or rescind the order in a just manner if the party who was awarded maintenance under this section remarries, or, in the case of the wife, does not remain chaste, or, in the case of the husband, engages in sexual activity with another woman outside of marriage.

Although the enactment’s Section 25 does not specifically refer to “permanent alimony,” the name clarifies that it is intended to address the idea of permanent alimony. Since Hindus in India did not have a divorce law, the idea of “permanent alimony” is not indigenous to our nation. However, the concept of “permanent alimony” was taken from English law when the Hindu Marriage Act 1955 was drafted, which included provisions for divorce among Hindus.

In light of this, the provision for continuing alimony is truly essential for granting a judgement of judicial separation, divorce, or annulment of marriage, and this also seems to be the evident position from Section 25. The provision for permanent alimony is something that comes after the decree granting substantive relief and is incidental to it because Section 25 contemplates the making of a provision for it at the time of passing the decree or at any time afterwards.

Under Hindu Maintenance and Adoption Act, 1955

The Hindu Maintenance and Adoption Act, 1955 also known as HAMA, also has a provision for permanent alimony. Section 18 of the HAMA gives the wife the power to claim financial support from her husband in the following cases: 

  • If the husband abandons the wife without a valid reason, without her knowledge or agreement, against her desires, or if he wilfully neglects her, she will be entitled to alimony.
  • If the husband has treated his wife so cruelly that she has a reasonable fear of damage or injury from living with him,
  • if the husband has a living second wife.
  • If the husband regularly maintains a relationship with a concubine elsewhere or keeps one in the same home where his wife dwells.
  • if the husband converted to a new religion and lost his Hindu identity.
  • If any other valid reasons support the claim of the husband living separately. 

Under Muslim Personal Laws

According to Islamic law, a man must support his wife, any minor children, and any dependent relatives from whom he can inherit. The main purpose is to support persons who are unable to maintain themselves, which includes needs like food, clothing, shelter, and education. It is usual for Muslim spouses to provide their wives with kharcha-i-pandan, a special allowance. According to the Pollock and Mulla commentary on Muslim law, it alludes to the wife being reimbursed for the cost of a betel box, which she may do in court.

In accordance with Muslim law, a husband is always obligated to provide for his wife, regardless of whether they have made any formal agreements to this effect. Unless the marriage is null or otherwise irregular, the requirement of maintenance or alimony is present. 

Muslim women can claim alimony under two Acts which are- the  Muslim Women (Protection of Rights on Divorce) Act, 1986 and Code of Criminal Procedure 1973. The provisions for alimony under CrPC are the same for everyone, regardless of religion.

Under the Muslim Women (Protection of Rights on Divorce) Act 1986

Section 3 and Section 4 talk about the alimony provisions. 

A divorced Muslim woman is entitled to a reasonable and fair maintenance payment from her ex-husband under Section 3 of the Protection of Muslim Women (Rights on Divorce) Act, 1986. An appropriate amount of mahr or dower, the sum decided upon at the time of marriage or thereafter defined in the marriage contract, is included in this clause. The maintenance payment may also cover any assets or properties given to the woman during the marriage.

A divorced Muslim woman is entitled to a monthly payment known as a “maintenance allowance” for support and maintenance throughout the period of iddat, which is the waiting period following divorce, according to Section 4 of the Act. According to the Act’s terms, the former husband pays the maintenance allowance.

These regulations are designed to make sure that Muslim women who have recently divorced from their spouses receive maintenance and financial support from them. It acknowledges women’s right to fair and appropriate alimony, including the amount of dower and maintenance throughout the iddat term, to support themselves after a divorce. By introducing legal protections for Muslim women’s rights in divorce situations, the Act seeks to protect and support them.

The most landmark case in regards to alimony provisions for Muslim women is Daniel Latifi v. Union of India. A writ petition challenging the constitutionality of the Muslim Women (Protection of Rights on Divorce) Act, 1986, was filed under Article 32 of the Constitution, and the petitions were combined into a Public Interest Litigation (PIL). The court made the following observations:

  • The court ruled that a Muslim husband is still liable for his divorced wife beyond the iddat period, as stated in Section 3 of the Act. Even after the iddat time has passed, the husband must continue to support his wife and make plans for her future.
  • The Act also stipulates that a Muslim woman who has divorced her husband is entitled to maintenance from the family members listed in Section 4. These family members would be entitled to her estate in the event of her passing.
  • The Act creates a wakf board to take care of the woman’s maintenance if none of the relatives are able to do so. A magistrate may order the board to pay for her maintenance.

A Muslim woman can lose her right to maintenance under these conditions.

  • If she blatantly deserts the marital residence and her spouse.
  • If she elopes with a different man.
  • If she is behind bars.
  • If she ignores reasonable instructions from her husband.
  • If she consents to the divorce to facilitate the second marriage of her husband.

It should be kept in mind that the wife must be faithful, follow his reasonable instructions, and perform her married duties for the husband to be obligated under Muslim law to provide for his wife. In Muslim law, the husband is required to support his wife regardless of her earning potential or other circumstances, in contrast to other religious laws and actions where only dependent women are qualified for the right to maintenance.

Under Muslim law, men do not have a specific claim to maintenance, they can claim maintenance only under certain circumstances that are decided by the court. 

Under Indian Divorce Act, 1869

Indian Divorce Act,1869, people professing Christianity can claim alimony. Chapter IX of the Act talks about the alimony provisions. Section 36 of the provision gives the court the authority to decree child support and custody. Its main points are as follows:

  • During the course of the divorce process, the court has the power to issue orders for either spouse’s or children’s support.
  • The amount of maintenance that one spouse would be required to pay to the other once the divorce is granted might also be decided by the court.
  • The court has the authority to determine the custody arrangement, including visitation privileges, maintenance payments, and educational costs, in situations where the children’s custody is in dispute.

Section 37 deals with the ability of the court to impose alimony and maintenance orders that last a lifetime. The main points of the section are as follows:

  • The court has the power to order the payment of alimony and maintenance to the wife or the husband permanently in any divorce procedure.
  • Various criteria, including spouses’ financial situation, their needs and commitments, the length of the marriage, and any other pertinent facts, may be taken into consideration by the court when determining the amount of alimony and maintenance.
  • If the petitioner (either the wife or the husband) is found to have committed any matrimonial offence, the court may also take into account how the parties behaved throughout the marriage and reduce or deny alimony and maintenance payments.
  • Depending on the case’s specifics, the court may mandate the payment of alimony and maintenance in a single lump sum or in ongoing installments.
  • If the financial situation of either party changes after the initial judgement is made, the court may alter or vary the amount of alimony and maintenance.
  • By seizing the respondent’s assets or income, among other methods, the court can make the respondent pay alimony and maintenance.

These sections are not gender neutral and focus mainly on women. The courts may make exceptions based on the case basis to provide maintenance for men.  

Under Parsi Marriage and Divorce Act 1936 

The Parsi Marriage and Divorce Act, 1936 gives Parsi people the choice to ask their spouse for maintenance through both legal and illegal means. A wife has the right to request both alimony pendente lite (temporary alimony while marital litigation is pending) and permanent alimony under the Parsi Marriage and Divorce Act. During the course of the case, the court may order alimony up to one-fifth of the husband’s net income. The ability of the spouse to pay, the assets of the partner, the behaviour of the parties, and other pertinent variables are all taken into account by the court when calculating the permanent maintenance amount. 

Pendente lite (interim) and permanent maintenance are covered in Section 39 and Section 40 of the Parsi Marriage and Divorce Act, respectively. The Hindu Marriage Act’s Section 24 and these sections are comparable. According to Section 40, the court may order the defendant to provide a one-time or recurring payment for the plaintiff’s maintenance and support. The defendant’s income and assets, the plaintiff’s assets, the parties’ conduct, and other pertinent considerations are taken into account by the court while determining the suitable sum. If required, the court may impose a charge on the defendant’s personal or real property to secure payment.

Any maintenance order may be changed, altered, or revoked by the court, depending on the situation. 

Under Special Marriage Act, 1955

The Special Marriage Act is a secular act that allows people of any religion to get married. It also has provisions for alimony and maintenance. Alimony pendente lite, or interim support while the case is pending, is a topic covered under Section 36 of the Special Marriage Act. The wife might apply to the court if the district court finds that she does not earn enough money on her own to maintain herself and pay for the costs of the case. The husband will be required to pay the costs of the case as well as a fair weekly or monthly sum to the wife during the proceedings, with the court considering the husband’s income. The goal is to guarantee the wife has sufficient financial backing throughout the legal process.

Section 37 of the Act concerns alimony and maintenance that is paid permanently. The husband may be ordered by the court, which has jurisdiction under this Act, to provide for the wife’s maintenance and support. This can take the form of a claim placed against the assets of the husband, a one-time payment, or a series of payments that won’t last longer than the wife’s lifetime. To calculate a fair amount, the court considers a number of variables, including the wife’s  assets, the husband’s assets and financial capacity, their respective conduct, and other pertinent facts.

The district court may, upon the request of either party, modify, vary, or revoke the order if there is a change in the circumstances of either party and the court has issued an order. If the financial or personal circumstances significantly change, this provision allows for amendments to be made.

Additionally, the court may, like the provisions of any other personal law, alter, vary, or revoke any orders imposed in favour of the wife at the husband’s request if it discovers that she has remarried or is not living chastely. According to this clause, the husband may ask the court to change or revoke the maintenance order under specific circumstances. Although one of the major points of concern in the Act is that, despite being such a progressive Act in nature, it has provisions only for the maintenance of the wife and not for the husband. 

Under the Code of Criminal Procedure, 1973

The Code of Criminal Procedure, 1973 (CrPC), lays down provisions for maintenance.  The provisions of the CrPC apply to all communities in India, making them essentially secular, secure, and inclusive in nature. They also cover all castes, creeds, and religious beliefs. The provisions of Section 125 of the CrPC are enforceable regardless of the personal law employed to direct and control the respective persons concerned. The processes outlined in Section 125 of the CrPC, however, are of a summary character and apply to all people without respect to caste, creed, or religion. The particular personal laws of members of other religions permit maintenance requests, and the procedures governed by these laws are civil.

What are the grounds for fixing divorce alimony

  • When alimony is paid irregularly: Alimony is established at 25% of the husband’s entire monthly income when it is paid irregularly or monthly. In one of its rulings, the Supreme Court of India said that this benchmark level of 25% is likewise reasonable and proper. However, it’s crucial to keep in mind that alimony does not have any established guidelines because every case has unique circumstances and facts. 
  • When alimony is paid in one single sum: The divorce alimony guidelines state that there is no predetermined benchmark amount for one-time settlement alimony. It is paid as a flat payment and can be as much as 1/5th or 1/3rd of the husband’s total net assets. 
  • If the wife is working and making a decent income: If the wife is generating a good income in addition to her husband, both of their incomes are taken into account. The court determines whether or not to award alimony to the wife based on these details. If so, the court also decides the amount after taking all relevant information into account. 
  • If the husband’s income is lower than his wife’s: If his income is lower than his wife’s or if he doesn’t work at all, a Hindu husband may ask his wife for alimony. These situations are uncommon. 

What can the wife claim after separation

A wife after divorce has legal rights that protect her best interests and guarantee her financial stability. 

  1. The exclusive ownership of her possessions, such as jewellery, insurance policies, bonds, and fixed deposits (FD), is one of these entitlements. 
  2. The woman also has the right to reclaim any jewellery or property that was given to her by her family, even though it is now in her in-laws possessions. The husband or his family may be held responsible under the terms of personal laws if any wrongdoing or inappropriate behaviour is shown during the return of the jewellery.
  3. The wife also has the right to file claims against assets that belonged to both through joint ownership. 
  4. When a property is solely registered in the husband’s name despite the wife’s significant contributions to its purchase or maintenance, she must present proof of those efforts. The wife can prove her involvement and, thus, her right to a just share of the property.
  5. The wife can also claim to reside in the marital home until divorce is finalised. After divorce, she can also claim a place of residence for herself and children, if any. In  B.P. Achala Anand v. S. Appi Reddy and Others (2005), the Supreme Court determined that the wife had a legal right to her husband’s support and protection as well as the right to remain in the marital home. This includes having the option to switch residences in certain situations.

Limitations on the Wife’s Claims Following the Divorce

  1. Husband’s Investments: The wife has no control over any investments her husband makes in his name, including possessions like jewellery, money, and other real estate.
  2. Husband’s Insurance plans: The wife cannot make a claim against insurance plans for which payments have been made in the husband’s name.
  3. Gifts and Contributions: Unless the husband helped pay for gifts, the wife retains sole ownership of these assets even after divorce. But if the husband has made contributions, he might be entitled to his fair portion.
  4. The Wife’s Right to Remain in the Marital Residence: Personal laws provide the Wife’s right to live in the marital residence. She is entitled to protection and the right to reside in her husband’s home. She retains the right to live separately as part of her maintenance rights in cases where she is forced to do so because of the husband’s behaviour or reluctance to make accommodations for her.
  5. Maintenance Entitlement: The wife is entitled to maintenance, which includes the cost of a place to live. This entitlement also applies to a divorced woman.

What are the ways in which alimony can be avoided

A couple can avoid alimony payments by applying for the following: 

  1. Settling divorce stipulations prior to marriage:  one can set divorce conditions by putting in place an agreement, preventing their spouse from requesting support from them.
  2. Higher-income claim:  proving this might be difficult, however, one can claim that their spouse earns more than they do to disqualify them from receiving support based on circumstances of their cases.
  3. Negotiation with ex-spouse: one might attempt to negotiate a reduction or elimination of alimony payments with their ex-spouse. However, this strategy is frequently unpopular and ineffective.
  4. New partner or companion: In some states, if the recipient spouse starts a new relationship or moves in with a new companion, alimony may no longer be necessary. This may apply during separation but not following a divorce.

Case laws

Kulbhushan Kumar v. Raj Kumari and Anr (1970)

Facts 

In this case, the husband and wife were married in May 1945 but later fell out of love. A daughter was born in August of 1946. The wife requested maintenance in 1951 via registered letter, and in 1954 she filed a maintenance lawsuit. The husband’s salary was about Rs. 700 per month, and he also made extra money from his private practice.

Issues 

  • Fixing how much maintenance should be paid to the wife and daughter.
  • Considering whether the wife’s inheritance from her father qualifies as income for maintenance purposes.

Judgment

According to Section 23(2) of the Hindu Adoptions and Maintenance Act, 1956, the High Court determined that the wife should receive Rs. 250 in monthly maintenance. The income-tax authorities set a cap on this sum at 25% of the wife’s total income. Maintenance for the girl was established at Rs. 150 per month. The Supreme Court determined that the wife’s money from her father should be treated as a gift and not income when determining maintenance. There was no proof that the wife received any inheritance from her father. The support amount was then decided by the Court. When determining the 25% cap on the husband’s salary, deductions for income tax, the mandatory provident fund, and other costs associated with the husband’s professional car maintenance were allowed.

Mohd. Ahmed Khan v. Shah Bano Begum and Ors. (1985)

Facts 

In this case, Shah Bano Begum and Mohd. Ahmed Khan were wed in 1932, and the couple had five kids together. Mohd. Ahmed Khan married a younger woman for a second time after a few years of marriage. Shah Bano Begum and her kids were evicted from their matrimonial house in 1975. Initially promising to pay her Rs. 200 per month in maintenance, Mohd. Ahmed Khan stopped doing so in 1978. Shah Bano Begum responded by filing a petition in Indore under Section 125 of the Criminal Procedure Code (Cr.PC), asking for maintenance of Rs. 500 every month. Mohd. Ahmed Khan divorced Shah Bano Begum by saying triple talaq throughout the proceedings. She was given a Rs. 25 maintenance payment each month by the Indore Magistrate. In 1980, Shah Bano Begum filed a petition with the High Court of Madhya Pradesh asking for an increase in the maintenance payment to Rs. 179 per month. Although the Respondent, Mohd. Ahmed Khan, filed a special leave plea in the Supreme Court opposing the ruling after the High Court ruled in her favour.

Issues 

  1. Whether Shah Bano Begum is entitled to maintenance from Mohd. Ahmed Khan after divorce?
  2. If personal law conflicts with Section 125 of the Cr.PC, which should take precedence?
  3. Whether the amount of maintenance awarded by the lower courts was reasonable?

Judgment

The Supreme Court denied Mohd. Ahmed Khan’s request for a special leave of absence. The five-judge panel ruled that when personal law and Section 125 of the Criminal Procedure Code clash, the latter shall take precedence. The payment of maintenance to a divorced woman who cannot support herself, however, was not in dispute in the current case. The Court emphasised that it is against humanity to only provide maintenance during the Iddat period (the waiting time following a divorce) and not beyond that point. This is particularly true for a woman who is unable to support herself. It was decided that it was immoral and wrong for a husband to leave his wife or a divorced woman unsupported. The court further decided that a husband’s commitment to support his wife cannot be waived simply by paying the meher (dowry). If not, the husband’s duty to pay maintenance remains in effect. This proves to be the most important decision for maintenance provision in India. 

Rajesh v. Sunita & Ors. (2018)

Facts 

In this case, the revisionist Rajesh has appealed a court decision that sentenced him to 12 months of imprisonment for failing to pay his wife Rs. 91,000 in arrears of maintenance. The revision petitioner claims that because the legislation only permits a maximum of one month of  imprisonment, the order should be reversed.  The respondents believed that the revisionist should serve one month in civil prison for each month of default. Not to absolve one of responsibility, but to enforce payment, was reiterated as the goal of imprisonment. Each month of non-payment might result in a sentence from the court, with the obligation lasting until the debt is paid in full.

Issues

The legal issue raised was whether imprisonment should be given to the applicant just on the grounds of failure to pay maintenance. 

Judgment 

It was held that “if the husband fails to pay maintenance, then the defaulter, i.e., the husband, has to suffer imprisonment on each default to pay the maintenance. The first and foremost duty of the husband is to maintain the wife and the child. He may beg and borrow.” This judgement was much criticised but it set forth a definite precedent that the defaulter must pay maintenance if they have people dependent on it. 

Conclusion

Court rulings and other actions have restored the rights of women, but their full efficacy won’t be attained unless fundamental attitudes are changed. Despite the fact that maintenance should benefit both husbands and wives equally for the sake of society as a whole, many women continue to be denied their legal maintenance entitlements. To produce a noteworthy and fruitful result, it is essential to ensure that the law is implemented correctly and following the legal criteria.

FAQs

Is there any difference between maintenance and alimony?

The phrases alimony and maintenance are mentioned in almost all personal laws. While maintenance may be paid monthly, annually, or in a series of instalments determined by the court, alimony is a one-time payment delivered to either the husband or wife. Furthermore, alimony is typically mentioned when both parties agree to divorce. When one partner files for divorce and the other contests it in court, maintenance is awarded.

Is alimony amount taxable?

The amount of alimony received is not taxable as a capital gain. However, any interest earned on investments made with the money received for alimony is subject to taxation.

Can alimony be claimed under any other Act?

Yes, alimony can also be claimed under the Domestic Violence Act 2005 and several other laws, but the provisions mentioned above specifically talk about alimony following separation and divorce. 

Is the husband liable to pay alimony if the wife is earning?

Yes, the husband is liable to pay alimony if the wife is earning. However, depending on the facts and circumstances of the cases, this is subject to change depending on various factors like The length of the marriage, the financial condition and behaviour of both spouses, the capability of the spouse requesting maintenance to earn it, and the education and qualifications of the wife.

Is the husband liable to pay if the wife remarries?

No, the husband has no liability to pay the alimony to his wife after she remarries; however, if there are children that belong to him, he will be made liable to pay for the alimony to support that child in education throughout until they become adults, and in the case of a female child, until her marriage. 

What is the remedy if the husband does not pay the alimony?

If the husband refuses to pay the alimony, he will be given a deadline by which he must make up for the missed payments. Additionally, if they continue to default on their payments, they may be imprisoned for the period of time that is typically set by the court. 

References 


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Amazon-Future dispute: NCLAT upholds CCI’s order against Amazon 

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This article has been written by Taniksha Gupta pursuing Diploma in M&A, Institutional Finance and Investment Laws (PE and VC transactions) and has been edited by Oishika Banerji (Team Lawsikho).

This article has been published by Sneha Mahawar.

Introduction

Recently, the National Company Law Appellate Tribunal (NCLAT) rejected Amazon’s plea challenging the decision of the Competition Commission of India (CCI) to suspend the approval of a deal between Amazon and Future Coupons. This resulted in an imposition of a fine of Rs. 200 crore on Amazon and an additional fine of Rs. 50 lakhs. Through the deal, Amazon acquired a 49% stake in Future Coupons Pvt Ltd (FCPL), a subsidiary of Future Group, which owns 7.3% shares in Future retail. The deal was approved by CCI in 2019, which suspended its own approval back in December 2021. This article deals with the Amazon-Future dispute thereby focusing on the NCLAT Order that upheld the CCI’s Order.  

An overview of the case

The three issues that are primarily dealt in this article are: 

  1. Why was the deal initially approved and later suspended? 
  2. Why did the NCLAT uphold the CCI’s order? 
  3. Was there any other deal that created further issues? 

To understand the whole matter, let’s go back to September 2019, when Amazon and Future Coupons entered into a deal through which Amazon acquired a 49% stake in Future Coupons, as discussed above. Another deal that played a significant role in the whole matter is the deal between Reliance and Future Group. This was at a time in August 2020, when Future Group was on the verge of bankruptcy, in furtherance of which it signed an MoU with Reliance Retail for the sale of its customer retail for INR 24, 713 Cr. 

The issue in the case

The issue lies at the core of both deals. The Amazon-Future deal gave birth to the claim of Amazon stating that the deal mentioned a list of 30 entities with whom the Future Coupons could not transact any of its retail assets, one of which was Reliance Retail. As a rationale for putting such a limitation, Amazon stated that the purpose of the investment was the business potential of Future Coupons to create long-term value and provide a return on the investment made by Amazon. 

In furtherance of the above restriction, Amazon became aggrieved by the Reliance-Future deal of 2020. Since the Amazon-Future deal specified that any disputes would be arbitrated under Singapore International Arbitration Centre (SIAC) Rules, Amazon initiated arbitration proceedings at the SIAC, seeking a restriction on the Reliance-Future deal. From SIAC, Amazon came back with an interim order asking Future to restrict the Reliance-Future deal. However, the matter didn’t end here. It seemed that it had just started! 

Parallel to the Amazon proceedings, Future Retail Ltd. (FRL) filed a suit before the Delhi High Court against Amazon for tortious interference in the scheme for the sale of assets, wherein the findings of the single judge came soon after the SIAC order and were diametrically opposite to the interim award. After this, a series of cases were filed by both parties against each other, including appeals to the division benches and a special leave petition before the Apex Court. 

While all of this was happening, the CCI sent a show-cause notice in July 2021 to Amazon over the deal stating that it was a misrepresentation of interests and concealment of material facts. The move was taken after different stakeholders including an independent director of Future Retail and the Confederation of All India Traders (CAIT) pointed out that Amazon had not clearly disclosed to the CCI- its intention to take strategic control over FRL. 

Judgment and analysis

It was found out that Amazon said that the rationale for the investment was the business potential of Future Coupons, which would create long-term value and return on the investment made by Amazon. However, Amazon’s internal correspondence disclosed a letter sent by Amazon India’s head of legal affairs to Amazon founder Jeff Bezos on July 18, 2019, seeking approval to close the deal. The mail stated that Amazon would use a “twin-entity investment” structure to invest in Future Retails Limited due to foreign investment policy restrictions. This prompted Amazon to invest in the promoter firm, Future Coupons Pvt Ltd instead of directly infusing capital into Future Retails Limited. 

CCI’s order stated that the emails revealed that Future Coupons was merely a vehicle for Amazon to acquire the interest of Future Retail. In furtherance of these findings, CCI imposed a penalty of Rs. 200 Crore on Amazon for failing to notify the details of its ‘combination’ as required by law. CCI also imposed a separate penalty of Rs. 2 Crore for suppressing the actual scope and purpose of the combination. 

Present scenario of the case

Aggrieved by the CCI’s order, Amazon, the American e-commerce giant, challenged it before the NCLAT. NCLAT concluded its hearing in April 2022, over Amazon’s plea after all parties filed revised notes of submissions along with relevant citations before the registry. Finally, on June 13, 2022, the two-member bench of NCLAT comprising Justice M Venugopal and Dr Alok Kumar Mishra upheld the CCI’s order. NCLAT slightly modified the orders of CCI in its order, and said the penalty of Rs. 1 crore each imposed was “on the higher side” and reduced it to Rs 50 lakh each as per Sections 44 and 45 of the Competition Act, 2002 directing Amazon to pay Rs. 1 crore within 45 days calculated from the date of passing of judgment. Along with this, NCLAT also upheld the penalty of Rs. 200 crore imposed by CCI on a direct subsidiary of Amazon, for failure to notify the combination in the requisite terms in accordance with Section 6(2) of the Competition Act, 2002. 

What was Amazon’s say in the matter

During the argument before the NCLAT, Amazon stated that all the agreements regarding the purchase of a 49% stake in FCPL were disclosed before the CCI and nothing was hidden. It further said that the Commission conducted a competition assessment of the deal and it was held that there was no appreciable adverse effect on the competition. Amazon also argued that the initial approval order was a speaking order or one which explains the rationale behind the order. 

Did the tribunal affirm the CCI’s power in the matter

Well, it did. CCI’s power of putting an earlier order in abeyance was given validity by the NCLAT stating that “CCI has residual power to revoke, modify, alter any previous order passed by it in abeyance based on misstatement or misrepresentation of facts”. The 2019 approval was granted as it was only the “proposed transaction” and not the “business transaction”, the CCI stated, by reiterating that it possesses the “requisite power” to annul an order if the same was procured by means of fraud or misrepresentation. 

Is this the end of the Amazon-Future dispute? Will Amazon go to a higher court

Though an Amazon spokesperson didn’t specify that the company would challenge the NCLAT’s order in a higher court, as per legal observers, the e-commerce giant would surely appeal in due course of time. Alternatively, Amazon could also take the route of filing a fresh form under competition law rules and regulations to seek fresh approval in line with the CCI and NCLAT judgments. Moreover, the NCLAT’s order may also have some impact on the number of cases filed by the Future Group and Amazon against each other before the Delhi HC and the Apex Court. 

Does the order make any impact on the Future-Reliance deal? 

The most interesting part is that the deal which initially created all these disputes i.e. the Reliance-Future deal was called off by Reliance Industries Ltd. in April 2022 stating the rejection of the scheme by the secured creditors of FRL. Thereby, Reliance had to face no immediate implication on its deal with Future Retail due to the NCLAT’s order. 

Conclusion

Looking at the matter from the point of view of arbitration law, the parties, at one point, also went to Apex Court, wherein the Honorable Court changed the whole scenario of the concept of Emergency Arbitration (EA) by giving recognition to the emergency awards passed in an Indian-seated arbitration under Section 17 (Interim measures ordered by arbitral tribunal) of the Arbitration and Conciliation Act, 1996 Act and holding that an appeal under Section 37 (Appealable orders) is not maintainable against enforcement of an order of emergency arbitrator under Section 17.  When it comes to the NCLAT’s order, the decision is indeed a significant one in the context of competition law and regulatory procedure in India. The fate of Amazon in the matter would act as a caution for all other companies to seek CCI’s approval in line with regulatory compliance. The scope and importance of disclosures have been highlighted by the order. One of the roles of the CCI is to prevent activities that may adversely affect fair competition, in furtherance of which CCI was seen taking active steps in the Amazon-Future matter. The scope of the CCI’s powers is also highlighted in the matter, wherein it was affirmed by the tribunal that the CCI could keep an approval in abeyance, as it did, in this case, thereby implying that CCI can suspend its approval under exceptional circumstances. CAIT, welcoming the move said that any move to captivate Indian e-commerce and retail trade by anyone will not succeed under any circumstances.

What remains to be seen now is what will be the next steps of Amazon, instead, if there will be any!


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/lawyerscommunity

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