Notable judgments on offences against public tranquility

October 25, 2021

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This article is written by Oishika Banerji of Amity Law School, Kolkata. This article discusses the landmark judgments on offences against public tranquility under the Indian Penal Code, 1806.

Table of Contents

Introduction

The term “public tranquility” refers to public peace, and therefore any activity carried out by a group of individuals which results in distortion of peace within the society is referred to as an offence against the public tranquility. The Indian Penal Code, 1860 identifies offences against public tranquility which lays down provisions for “offences against public tranquility” spread over Section 141 to 160 of the Code of 1860. The Indian Penal Code categorizes offences against public tranquility into five classes namely:

Unlawful assembly;
Rioting;
Assembly of five or more people when dispersion have been ordered;
Affray;
Promotion of enmity between different classes of people.

All of these offences are responsible for hampering public peace, and order in society. While unlawful assembly as defined under Section 141 of the Indian Penal Code, 1860 signifies a group of five or more individuals with a common object to use criminal force to affect the maintenance of peace and order, rioting under Section 146 relates to using of violence, or any kind of force by an unlawful assembly, or by any member who is part of the assembly. Fighting in a public place resulting in disturbance of public peace is referred to as the offence of affray under Section 159 of the Code. Promotion of hatred among groups on grounds of religion, residence, language, place of birth, etc will amount to an offence against public tranquility under Section 153 A. With this overview concerning the offences surrounding public tranquility, this article aims to explain each of these offences by means of judgments delivered by the Indian Courts, and the interpretation provided by them concerning the provisions of these offences over the years.

Notable judgments on offences against public tranquility

A list of ten judgments relating to the offences against public tranquility has been explained hereunder focusing majorly on the ratio-decidendi of the same.

Amrika Bai v. State of Chhattisgarh (2019)

The Supreme Court of India in the case of Amrika Bai v. State of Chhattisgarh (2019) took into account the ingredients of Section 141 of the Indian Penal Code, 1860 that deals with unlawful assembly. The facts of the present case involved the deceased getting involved in an attack by a group of accused and the appellant because of his cattle jumping on the door of the appellant’s house which led to the latter abusing the former thereby resulting in the death of the deceased individual. Because of this attack, the appellant had suffered several injuries as well. The issue that arose, in this case, was whether the involvement of the appellant who was unarmed at the time of the attack on the deceased amounted to her being a part of the unlawful assembly under Section 141 of the Code of 1860 or not.

The Bench of Justices I Banerjee, M M Shantanagoudar, and N Ramana observed that as the role of the appellant in the attack appeared to be doubtful, she could not be considered to be a member of the unlawful assembly because of the lack of a common objective among the members which itself has been the foremost requisite of an unlawful assembly. The Apex Court further went ahead to state that the intent behind the law governing unlawful assembly clears that mere presence of a person in an unlawful assembly could not render that individual to be a part of the same under Section 141 of the Indian Penal Code, 1860. Hence, in this case, the Court ruled out that the appellant would not be charged under the provision of the offence of unlawful assembly.

Bilkis Yakub Rasool v. State of Gujarat (2019)

The case of Bilkis Yakub Rasool v. State of Gujarat (2019) brought before the Apex Court concerned the Godhara train incident that took place in the state of Gujarat in 2002. The appellant, in this case, was a gang-raped victim of the 2002 rioting who had lost her family in brutal attacks which was a part of the riot. When the case was brought before the Supreme Court in 2019, the appellate aged 40 years was surviving with her daughter, born after the incident, without bare necessities such as shelter, clothing, food. The issue before the court was whether the appellant could be compensated, and get justice under Section 147 of the Indian Penal Code, 1860.

Taking into account the sufferings of the appellant in the present case, the Supreme Court made the following observations:

A compensation of Rs 50 lakhs was to be awarded to the appellant;
The Court ordered the Gujarat government to take stringent disciplinary actions against the police officials who refused to carry out their duty of extending help to the appellant when was required to;
The Court directed the state government to provide a government job to Bilkis Rassol within two weeks of the enforcement of the judgment taking into account the conditions in which the appellant and her daughter were living.

Thus the amount of compensation to be granted to the aggrieved party in cases of rioting depends on the merits of the case and therefore differs from one case to the other.

Re: Destruction of Public & Pvt. Properties v. State of A.P. & Ors (2009)

The Supreme Court of India in the case of Re: Destruction of Public & Pvt. Properties v. State of A.P. & Ors (2009) laid down certain guidelines which intended to force preventive mechanisms that are to be adopted in cases of public rioting resulting in damaging of both public, and private properties. While presiding over a suo motu proceeding involving several instances of mass destruction of both public and private properties in the name of bandhs, hartals, agitations, and other like instances, a Bench of Justices Arijit Pasayat, Lokeshwar Singh Panta, and P. Sathasivam took a note of the established connection between tort, and criminal law. While the purpose that underlines criminal law is to safeguard the public interest thereby punishing wrongdoers, tort law functions with a purpose of vindicating the rights of an individual and compensating the victim for loss, injury, or any kind of damage suffered by them.

Along with the ten guidelines that the Court provided, it was observed that the assessment of the damages that have been caused should be carried out on the basis of the electronic media or private video evidence, followed by which the prosecution must separately prove that the destruction caused to the public, and private properties were the consequence of direct actions caused during the protest. The Apex Court in this present case restricted the State government from unilaterally deciding exemplary damages to be awarded to the aggrieved individuals on grounds that in order to reach a conclusion concerning damages to be awarded, there must be an application of judicial minds, and not by amere administrative authority.

P.S. Kirubakaran v. Commr. of Police, Vepery (2021)

The case of P.S. Kirubakaran v. Commr. of Police, Vepery (2021) brought before the Madras High Court concerned advocates indulgence in criminal activities that constituted a part of unlawful assembly. The facts of the case involved a group of advocates being responsible for the destruction of properties, forcible possession of those properties thereby disturbing the peace, and order in the region. It was further laid down in the petition submitted before the Court that the police officials who witnessed such activities did not take appropriate measures to curb the same on grounds that the men involved in the unlawful assembly included advocates. Throwing light on such instances becoming frequent during the current lockdown period, the High Court ordered the police officials to provide proper protection to the petitioner’s property and prepare a report incorporating the names of the advocate involved in such unlawful activities. This report would further serve as a basis for the Court to draw the attention of the Bar Council of Tamil Nadu and Pondicherry to take relevant action against those advocates.

Patricia Mukhim v. State of Meghalaya & Ors (2021)

The Supreme Court of India while dealing with the case of Patricia Mukhim v. State of Meghalaya & Ors (2021) took into account Section 153 A of the Indian Penal Code, 1860 which deals with the offence of, “promoting enmity between different groups on grounds of religion, race, place of birth, residence, language, etc., and doing acts prejudicial to maintenance of harmony or enmity between groups of individual” by means of a recognized social media platform, Facebook. The appellant, in this case, had posted unreasonable hatred on Facebook from his account which amounts to speech crime as observed by the Court, which is punishable under Section 153 A of the Code of 1860. Taking a note on freedom of speech and expression being a valuable fundamental right under Article 19(1)(a), the Apex Court could not ignore the reasonable restriction imposed on the fundamental right to safeguard the sovereignty and the integrity of the nation.

The Court further went ahead to observe that the intention beneath the list of offences inclusive within Section 153 A of the Code has to be judged primarily by the language of the writing of the provision and the circumstances in which it was written and enforced. The interpretation of this Section cannot be done on the basis of strongly worded and isolated passages in order to prove the charge. The issue that was to be decided by the Court, in this case, was whether the post made on Facebook was a reflection of the intention of the appellant to promote community hatred, or not.

Concluding its observation, the Apex Court opined that the Facebook post by the appellant read entirely as a pleading for equality of non-tribals in the State of Meghalaya. Therefore, there was no intention on the appellant’s part to initiate community hatred. As there appeared to be a clear absence of the essential ingredients of Section 153 A, the appellant cannot be detained on grounds of inciting people with such community background to be part of violence.

Gadadhar Guru and Anr. v. State of Orissa (1989)

The case of Gadadhar Guru and Anr. v. the State of Orissa (1989) which appeared before the Orissa High Court concerned Section 159, and 160 dealing with affray, and punishment for affray respectively. The Court laid down three necessary ingredients that serve as essence of affray stating that an offence of affray can take place only if these elements are abided by, namely:

Two or more people involved in a fight,
The fighting must be witnessed in a public place, and
The consequence of such fighting must cause disturbance of public peace.

In this present case, the first two ingredients were followed but there was no evidence available that could show that the third essential of the offence of affray took place. Hence, the petitioner was discharged from the charge of the affray.

State v. Faisal Farooq (2020)

The case of State v. Faisal Farooq (2020) brought before the Delhi High Court was based on the Delhi Riots incident. The respondent in the present case who being an educationalist was involved in educating different sections of the population, and managing several schools, was arrested under various provisions of the Indian Penal Code, 1860 including Section 153 A and Section 155 on grounds of he being a part of the rioting, without any proper investigation. For such illegal action, the respondent sought redressal. Observing that no prima facie case could be made out against the respondent in the present instance, and the illegal and mala fide actions taken by the police officers without thorough investigation could not be responsible for holding the respondent under the concerning provisions. Hence bail was granted to the same.

Manzar Sayeed Khan v. State of Maharashtra & Anr (2007)

The Supreme Court of India in the present case of Manzar Sayeed Khan v. State of Maharashtra & Anr (2007) took into account that the intention to cause disorder or influence the people to take up violence has to be considered as the sine qua non of the offence under Section 153 A of Indian Penal Code, 1806, and the burden of proof to show the prima facie presence of mens rea, or the intention of the mind on the accused part lies on the prosecution of the case. In this case, the appellant had written, and published a book that was charged with contributing violence under Section 153 A of the Code. Quashing the charges compiled against the appellant, the Apex Court observed that the intention and the language of the book needs to be taken into consideration to determine whether hatred towards a specific community has been promoted or not.

Vinod Dua v. Union of India & Ors (2020)

The Supreme Court of India in the present case of Vinod Dua v. Union of India & Ors (2020) was hearing a writ petition under Article 32 of the Indian Constitution. The petitioner, in this case, was accused of making bizarre allegations in one of his shows on YouTube against the Hon’ble Prime Minister of our nation. Alleging that the government had been involved in spreading misinformation among the public regarding PPE Kit, the petitioner himself was charged with spreading malicious news about the government and associated authorities. He was further held responsible for creating panic among the citizens of the nation thereby contributing directly to the disturbance of public peace. The Apex Court quashing the FIR filed against the petitioner observed that disagreement with the government and its policy will not amount to community violence in any way. Any kind of dissent raised by an individual within his professional capacity will be protected under Article 19 (1) (a) of the Constitution.

Bijumon v. State of Kerala (2018)

The case of Bijumon v. State of Kerala (2018) was brought before the Kerala High Court concerned the grant of anticipatory bail to the accused who was charged with committing the offence laid down under Section 153 A of the Indian Penal Code, 1860. The charge arose as a consequence of an online news item concerning the prospective war between Islam and the Christian religion that had been published. In this case, the Court highlighted the negative influence of social media which although has revolutionized communication, but it increases the scope of commission of crimes. Dismissing the petition for anticipatory bail, the Court held that Article 19(1)(a) of the Constitution comes with a set of reasonable restrictions which uphold the integrity of the country, and therefore the petitioner could not be protected taking into account the offence he had committed.

Conclusion

In recent times of pandemic, cases on offences against public tranquility have seen steady growth. With the COVID-19 virus spreading its claws with different traits on a frequent basis, misinformation about the pandemic has been in the discussion because of social media platforms. The Karnataka High Court in a recent case of Mohammed Mujeeb v. State (2020) denied bail to an accused individual involved in creating insecure feelings among the general public on religious grounds thereby urging people to get involved in spreading the virus instead of controlling it. This case shows how the judiciary has been involved in safeguarding and maintaining public peace, and order during unconventional circumstances which instead is the only way to give effect to the substantive law regarding ensuring public tranquility under the Indian Penal Code, 1860. Thus, judgments delivered by the courts become an essential tool for restoring peace, order, and security in a nation.

References

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The doctrine of frustration and force majeure in commercial leases during COVID-19 : a critical appraisal

Shoronya Banerjee

October 25, 2021

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This article has been written by Indrasish Majumdar an intern at LawSikho. This article has been edited by Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

A contract is an agreement between two or more parties that creates obligations that are legally enforceable or recognized by law. Unforeseen or supervening events, i.e., occurrences that are unexpected or cannot be predicted in advance by either of the parties or eventually release the parties from their contractual duties, may have an impact on the execution of these obligations. The principle of frustration is a doctrine enumerating a particular instance of contract discharge due to an inability to fulfill it. The word frustration is not defined under the Indian Contract Act of 1872. The frustration of purpose, as defined by Black’s Law Dictionary, is “the doctrine that if a party’s principal purpose is substantially frustrated by unanticipated changed circumstances, that party’s duties are discharged and the contract is considered terminated.” Courts in India argued that the term contract frustration is an elliptical expression. The frustration of the adventure or the business or practical aim of contract” is a more complete and precise statement.

This concept is a tool for reconciling the norm of absolute contracts with a specific exception that is required in certain situations in the interest of justice. The concept falls within the scope of Section 56 of the Contract Act since it dissolves the contract due to the supervening inability or illegality of the agreed-upon Act.A contract is also considered frustrated under Section 32 when the condition on which the contract is based is not met or cannot be met due to impossibility. Nonetheless, the concept is linked with Section 56 in Indian law. Section 32 only applies when contracts are fulfilled and parties are relieved of their duties per the provisions of the relevant contract. Section 56 applies when contracts are discharged and parties are relieved of their duties as a consequence of subsequent impossibility caused by external forces and causes.When addressing the doctrine’s legal implications, the courts have used the words ‘frustration’ and ‘impossibility to perform’ interchangeably.

Doctrine of frustration and force majeure in India

To establish whether the intervening event rendered the performance impossible under Section 56, it is necessary to set out several criteria used by the courts, including the newly created multi-factorial approach. Courts in India and England have recognized a variety of circumstances that may or may not invalidate a contract. The issue of whether the supervening event is a frustrating event is one of degree, that is, how much the supervening event has impacted performance.

While much is being said around the world about the ramifications of COVID-19 (the World Health Organization’s declared pandemic) in terms of global economic collapse, reduced productivity, economic downturn, lay-offs, and so on, businesses are also concerned about their operating costs, the consequences of terminating existing service, lease, and rent agreements, and so on. Rent reduction is one such element that all renters are looking forward to keeping their businesses afloat during the current global financial crisis. As a result, the invocation of the force majeure provision in the lease deeds is a source of concern for both landlords and renters. The purpose of this article is to restate the present legal situation of the concept of frustration in India in light of the COVID-19 crisis.

Force majeure clause and the doctrine of frustration: a legislative insight

The doctrine of frustration was originally founded in English law on the concept of implied contract, which meant that the parties to a contract had impliedly agreed that if the execution of the contract became impossible or unlawful, the parties would be released from the contract. The concept was founded on the idea that, in contracts in which the performance is conditional on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the person or thing’s perishing shall excuse the performance.

When an agreement is entered and is capable of being executed, but then becomes impossible to perform due to an event that a party could not help stop or the act for which the agreement was entered becomes illegal, the contract itself becomes void, or to put it another way, the contract becomes frustrated. The contract’s parties are dismissed. The notion of contract frustration is mostly founded on the contract’s inability to be performed.

Contractual provisions for doctrine of frustration and force majeure

In India, the debate is somewhat limited since Section 56 of the Contract Act itself incorporates the concept of frustration. As a result, the issue of contract discharge must be examined within the framework of Section 56 of the Contract Act. However, it cannot be completely ruled out that the concept of frustration, as understood in English law, falls beyond the scope of Section 56 of the Contract Act. The concept of frustration under Section 56 of the Contract Act was extensively addressed by the Supreme Court of India in the case of Satyabrata Ghose vs. Mugneeram Bangur & Co and has subsequently been adopted throughout India. In Satyabrata Ghose’s case (supra), the Supreme Court stated that the doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and therefore comes within the scope of Section 56 of the Indian Contract Act.

While discussing contract frustration, it’s worth noting the distinction between Section 32 and Section 56 of the Contract Act. The following is a reproduction of Section 32 of the Contract Act: “Contracts to do or not do anything if an uncertain future event does not happen, cannot be enforced by law until and until that event happens. Such contracts become void and unenforceable if the occurrence becomes impossible.”

Section 32 assumes two things. (i) The contingent contract is only binding if an uncertain event occurs; and (ii) if the event on which the agreement is conditional, which the parties anticipated at the time of forming the contract, becomes impossible, the contract is rendered void.

In this paper, we are concerned with the second half of Section 32 of the Contract Act in this article. The second part states that if the event becomes impossible, the contract is rendered null and void. Therefore, under Section 32 of the Contract Act, if the specified event on which the contract is dependent becomes impossible, the contract becomes invalid, whereas under Section 56 the parties did not contemplate any such occurrence while entering into the contract, which may revoke the agreement.

Judicial interpretation

On a simple reading of Section 56 of the Contract Act, it is clear that the section contemplates some impediment or illegality of the execution of the act that the parties had not anticipated. It begs the question, what is such an inconceivable act that would result in contract frustration? Courts in both India and England have ruled that the term impossibility in Section 56 of the Contract Act must be construed realistically rather than literally. Thus, even if it is not an absolute impossibility, a contract would fall within the scope of Section 56 of the Contract Act if the contract has fundamentally altered, which the parties had not anticipated at the time of the agreement. This principle was affirmed in Satyabrata Ghose’s case (above), Inder Persad v. Campbell, and other English Court decisions.

Section 56 of the Contract Act, on the other hand, may not be applied in cases of (i) self-induced frustration and (ii) when parties have explicitly stated in a contract that the contract would remain notwithstanding such intervening events.

The following criteria must be met in order to show that a contract has been frustrated:

There must be a valid and ongoing contractual relationship;
There must be some part of the contract that is yet to be executed;
The part of the contract that has yet to be executed should become unattainable or illegal; and that the impossibility should be due to an incident that the promisor could not help deter.

In Alopi Parshad & Sons Ltd v Union of India, the court analyzed a circumstance to have rendered the performance of the contract impossible. The facts of the case were limited to Section 56 but the reasoning is very much relevant to the application of Section 32 on contract cases as well. The court ruled that the defense of frustration cannot be taken unless the performance becomes impossible or unlawful on account of an event. Nothing under Indian law enables a court to absolve a party from the contract’s specific terms due to changes in circumstances wholly outside the contemplation of the parties since the time the contract was drafted. Merely because the contract became difficult to perform can’t be included in the doctrine of frustration.

Force majeure in commercial leases

Due to the economic slowdown, people across the nation have been unable to bear the financial losses which have resulted in the default in payments. Amid the crisis, one more area that faces the same difficulties is the lessors and lessees. The shutdown of numerous businesses since the initial lockdown in March 2020, as well as the ensuing economic slump, has heightened tensions between commercial property lessors and lessees. On the one hand, lessees are unable to meet the payment obligations on time or at all due to financial lockdown and shutting down of business premises completely. Lessors, on the other hand, are finding it difficult to waive or postpone rent owed to them, whether due to lease rental lowering or landlords experiencing a revenue loss.

In the light of such recent developments, what we aim to analyze in this section is the impact of the COVID-19, an event beyond the control of the parties causing loss to both. We will try to understand the specific provisions of the Transfer of Property Act (TPA)and establish how they interact with the provisions of the contract act to reach a conclusion in the situation. Meaning, the final objective of this section is to find whether the obligations, payment or otherwise, can be avoided in the case of a force majeure event such as the COVID one.

How does TPA interact with contract law provisions on force majeure?

The closest any provision in the TPA comes to the force majeure is Section 108 B(e). The section in whole discusses the rights and liabilities of lessor and lessee,and this provision specifically lays down a situation when the lessee upon their discretion renders the lease agreement void and can thus get out of following the obligations under the agreement. It lists down occurrences of some events for this right to be utilized by the lessee. When an unforeseen event destroys either the entire or material part of the property; or an unforeseen event that makes the property substantially and permanently unfit for the purpose for which it was let, the lease can at the option of the lessee become void.

By unfolding the provision we realize that the section has two crucial requirements, first that the property subject to the lease shall be left unfit for the purpose it was leased, and second the lessee reserves the right to terminate the lease agreement and the same does not automatically terminate by the act of law.Therefore, the lease may continue by itself until the lessee determines otherwise, but the option to continue the deed still remains reserved with the lessee.Unlike Section 56, which dissolves the contract immediately and inexorably when a frustrating event happens, discharge under Section 108(e) occurs only when the lessee chooses to terminate the lease. The lessee bears the burden of proof in either case, proving that a major component of the property has been destroyed or that the property has been rendered ‘substantially and permanently unsuitable for use’ by the lessee.

If a lessee can demonstrate that the criteria in Section 108 B (e) are satisfied, simply refusing to pay rent will not excuse the lessee from their responsibilities. The lessee must notify the lessor of their intention to exercise his discretion under Section 108 B (e) to terminate the lease. It’s crucial to remember that relief under Section 108 B(e) nullifies the whole agreement, so a lessee can’t keep using the property and must immediately return back vacant possession to the lessor. In a case where the lessee fails to hand over the property their liability to pay the rent shall be reinstated.

Interplay of force majeure and lease agreements

One of the very first discussions on doctrine of force majeure and lease agreements was done by the Supreme Court in Raja Dhruv Dev Chand v Harmohinder Singh.In this case, the appellant who before the partition of India leased a land which later became a part of Pakistan, and the appellant migrated to India. Thus, appellant applied for a decree for refunding of the rent paid towards the lease agreement contending that the covenants of the agreement became impossible to fulfill due to the partition and therefore the contract shall be terminated.

The court ruled that Section 56 of the Contract Act has only a limited application in the cases of complete transfer under the lease agreements. A lease covenant to do an act that becomes impossible or unlawful after the contract is formed due to an occurrence that the promisor could not prevent becomes invalid when the conduct becomes impossible or unlawful. However, on the account of this impossibility the entire transfer between the lessor and the lessee does not become void. Further, the court suggested that to terminate the entire contract the requisites of Section 108 B(e) shall be fulfilled as it is the only limited application of force majeure on transfer of cases.

The reason being that in leases of immovable property, the possession of property is transferred to the lessor in return for rent that the lessor in commercial leases may earn from the use of the leased premises itself. In a lease, where the possession of the property has been obtained by the lessee, is an executed contract. Therefore, any argument with respect to inability to pay rent hardly matters because doctrine of frustration applies only where the contract is executory and not executed. Let us understand it with the aid of an illustration. Where A promises B under the lease agreement to transfer the possession of her property, but before the property could be transferred it was acquired by the state for construction of a highway. In this case, the doctrine of frustration under the contract law may apply as the performance of the contract is rendered impossible by an act of law. However, where the possession has been obtained, the contract has been executed now the lessee has an absolute liability to pay the rent unless the property is rendered unfit for use under Section 108 B(e).

In T. T. Lakshmipathi v. P. Nithyananda Reddy, the Supreme Court clarified the issue of whether section 56 of the Contract Act applies to lease agreements, holding unequivocally that only section 108(B)(e) of the TPA does. The notion of force majeure is recognized in Section 108(B)(e). For this provision to be used, three conditions must be met:

(a) irresistible force must exist,

(b) the property must be rendered substantially and permanently unsuitable for the purpose, and (c) the lessee must notify the lessor that the lease deed has become void.

The Supreme Court further decided that a tenant’s temporary non-use of the property owing to whatever reason does not enable the tenant to use this section. This section places the onus on the lessee to establish the irresistible force due to lockdown, and that this lockdown has rendered the property permanently unfit for the purpose for which it was leased out. Therefore, it is crucial to see whether the lockdown imposed by the COVID-19 pandemic can be qualified as such an irresistible force that the court discusses in the above judgment.

Impact of COVID on lease agreements

From the above judgment, we understand that onus is on the lessee to prove that lockdown was an irresistible force that rendered the property unfit for use. The primary contentions have been that the property leased by the lessees was rendered inaccessible due to the lockdown, and thus they were unable to use it and carry out the business for which it was let. In the above judgment that we discussed, the court held that Section 108 B(e) cannot be utilized until and unless there is total damage of property that is permanent in character. As a result, we conclude renters’ temporary non-use of property owing to government-enforced lockdowns cannot be used as a basis for refusing to pay rentals.

Now even if the property is rendered inaccessible for a period of time during the lockdown, it does not become unfit for the purpose of carrying out any business. The matter regarding the impact of COVID on lease agreements has been categorically decided by the Delhi High Court in Ramanand v Dr Girish Soni.In this case, the court considered an application regarding the non-payment of rents by the tenants across the country, owing to the financial losses due to the COVID lockdown imposed by the government. The court acknowledged that in hundreds of cases throughout the country, the question of whether the lockdown entitles renters to a waiver or exemption from rent payment or rent suspension is sure to emerge.

First of all, the court considered the application of Section 32 on the lease agreements. The basic concept is that if the contract has a clause allowing the tenant to request a rent waiver or suspension, the tenant is entitled to it. The contract’s force majeure provision may potentially constitute a Section 32 contingency, allowing the renter to argue that the contract is void and relinquish the premises. If the renter intends to keep the premises and there is no condition providing for a grace period, the rent or monthly charges must be paid.

Further, it was observed that in absence of such a specific clause in the agreement, the tenants may try to invoke frustration due to an event rendering the performance of the contract impossible. Section 4 of the TPA allows that the provisions which relate to contracts are to be taken as part of the Indian Contract Act, 1872. However, it would be farfetched to construe that all the provisions of the contract act shall be read into the guidelines of TPA. There exists an evident distinction between an executory lease agreement governed under Section 56 of the Indian Contract Act and completed conveyance that can be frustrated only under Section 108 B(e).

Therefore, express terms of Section 56 do not apply to completed agreements. The court unequivocally laid down that Section 56 cannot be used to claim the waiver, suspension, or exemption from rent payment since a lease is a completed transfer despite the fact that the lessee is still required to pay monthly rent. Thus, for the frustration of the lease agreement only Section 108 B(e) can come to rescue and financial difficulty as to the payment of rent does not account for a reason to frustrate the contract by the tenant or get out of the liability to pay for the leased property.

Even where the lessee is able to prove that provision of TPA is applicable to their situation, the rent cannot be waived relying on such a section. The lease agreement terminates only when the lessee chooses to. As long as the lessee does not give notice to the lessor to terminate the contract, the lease agreement continues and the obligation to pay stays.

Further, let us discuss a situation where Section 56 has a direct application on the lease agreement, say the possession has not been handed over or where hypothetically section applies instead of provisions of TPA. Now due to the COVID, the premises have become inaccessible and due to lockdown the markets have been nose-diving and causing severe loss to the lessees of the premises. This has been contended to be the impossibility that makes the lessees unable to meet the obligations to pay rent under the lease agreement.

However, all the listed issues will merely qualify as commercial difficulties, which is not a practical impossibility towards meeting the obligations under the agreement. Such difficulties cannot be reliance for allowing any relief for the frustration of the contract or application of force majeure. The force majeure clauses in the agreement or even the impossibility of the execution of the contract is construed in very narrow terms, so only where the performance of the contract itself is impossible due to practical difficulties can a contract be frustrated or obligations be avoided.

Similarly, commercial difficulties in terms of financial constraints due to the plummeting economy and loss in the market is not a practical difficulty that can allow a lessee to not meet the payment obligations under the contract. Before, even if the lease agreements were not bound to be governed under Section 108 B(e), even then the lessees could not be allowed to avoid obligations to pay the rent under the lease agreements.

A comparison from the foreign jurisdiction

In a recent judgment in the US by the Illinois court, it was held that the payment obligations under the lease agreement can be excused, if the force majeure clause within the agreement does not expressly preclude it. It held that “Landlord and Tenant shall be absolved from performing their obligations under this Lease if and only if the performance of any of their obligations is prevented or delayed, retarded or hindered by an act of God, laws, governmental action or inaction, orders of government or civil or military or naval authorities, or any other cause, similar or dissimilar to the foregoing, not within the reasonable control of the party. Force Majeure shall not be used due to a lack of funds.”

In another judgment, the court dismissed the petition made for exemption in the payment of rent under the lease agreement. The reasoning however is that non-monetary obligations only can be excused if force majeure applies and that the COVID does not provide enough protection to absolve a part of their payment obligations under the agreement. English law, on the other hand, follows the same procedure as India does, i.e. in presence of a force majeure clause the same can be invoked, and in its absence rent obligations cannot be excused to the party.

An analysis of the legal position makes us realise that it is very similar across all the jurisdictions. Only when an act under the lease is rendered impossible to perform due to the occurrence of the force majeure, the obligations of the parties can be excused. English law has the same stance as India, there is no comparison to draw. While we look into the discussed rulings in the US we see that lack of funds or any form of commercial difficulty even in the US does not excuse the payment of rent. Therefore, Indian law follows the popular stand where a party does not escape their liabilities even if the property leased is yet perfect for the usage, and there is nothing that constrains the use of the property.

Conclusion

The project work was an attempt to understand the impact of the Coronavirus pandemic on the commercial lease agreement because in courts across the country several matters had come up and even been dismissed, which expected the courts to give them relief from payment of rent in the wake of COVID. COVID has plummeted the economy of the entire planet and India especially struggled a lot due to the heavy caseload due to its humongous population.

Hence, in the light of these issues, it was material to research the effects the COVID may have on meeting obligations under the lease agreements. To accomplish the desirable task, the project has first scrutinised the provisions related to both doctrine of frustration and force majeure and traced the history and interpretation of the provisions for their due application on the commercial lease agreements.

For a contractual duty to be avoided or the agreement is frustrated due to the happening of an event it is mandatory, that the happening of the event has rendered the performance of the contractual obligation impossible and the same cannot be performed in any other reasonable way. Further such impossibility shall be a practical barrier and not mere difficulty and financial constraints. Further, we understood the frustration doctrine that has evolved under the Transfer of Property Act in the form of Section 108B(e). However, further research suggested for the invocation of the said section, there shall be permanent damage to the leased premises that renders it unfit for the purpose it was leased out for.

Due to the direct application of only said TPA provision, the application of the contract law provisions related to both the doctrines have been subsided. Therefore, the proposition shall be analyzed in the light of only law around the transfer of property. It is unlikely that any property could have suffered any damage, much less of the permanent kind, for the lessee to invoke Section 108B(e). Further, even where the provisions of contract law could apply, a mere defense of financial hardship cannot be argued as to the cause of impossibility in payment of the rent, which is the contractual obligation.

Therefore, it shall be concluded from the above research that either in the light of provisions of the Contract Act or the provisions of the Transfer of Property Act, force majeure or frustration cannot be invoked to escape the contractual liabilities to pay the rent under a lease agreement and the lease agreement cannot be terminated unless the leased premises has sustained any permanent damage which renders the premises unfit for the expected use.

References

Applicability of Force Majeure in Commercial Lease Agreements Amid Covid-19’ (IndiaCorpLaw, 02 June 2020) <https://indiacorplaw.in/2020/06/applicability-of-force-majeure-in-commercial-lease-agreements-amid-covid-19.html> as accessed on 17 October 2021.
Andrew C. Smith, Anne C. Lefever & ors, ‘Tour de Force: What Constitutes an Act of God, and Other Developments in Force Majeure Law’ (Pitsbury, 15 June 2020) <https://www.pillsburylaw.com/en/news-and-insights/tour-de-force-what-constitutes-act-of-god-force-majeure-law.html> as accessed on 19 October 2021.
Malcom Macfarlane, ‘COVID-19 – leases and the law of frustration and force MAJEURE’ (Wedlake Bell, 31 March 2020) <https://wedlakebell.com/covid-19-leases-and-the-law-of-frustration-and-force-majeure/> as accessed on 19 October 2021.

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Everything you need to know about the anti-competitive agreements in the pharmaceutical industry in India

Oishika Banerji

October 25, 2021

This article has been written by Swaroopa V Royadu pursuing the Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

If the vaccine developed during this pandemic was under the control of only a few pharmaceutical industries and if those pharmaceutical industries had made an agreement amongst themselves to sell the vaccine for a much higher price or would have made an agreement among themselves to sell those vaccines to only a few rich people then what would have happened? A very large number of the world’s population would have suffered for not getting a vaccine even during such crucial times! Thanks to the legal systems of every country that regulates such illegal and unethical business practices, we all had access to the vaccines. This article will help you to understand everything about Anti-Competitive agreements in the Pharmaceutical Industry in India. To understand the article in better way, it is essential to understand

The Competition Act 2002 [in brief]
Role of pharmaceutical Industries in India.

The Competition Act 2002

The Competition Act 2002 was enacted by the parliament of India; it replaced “The Monopolies and Restrictive Trade Practices Act 1969”.

The main purpose and objective of Competition Act 2002 is to carry fair and healthy competition in a market. The Act also emphasizes on preventing adverse effects on competition, the Act helps to promote and sustain competition in the market and also provides guidelines to promote and protect the interest of the consumers and avoid monopoly in business, the Act also controls illegal and unethical business practices in a market.

The prohibitions laid down by the Competition Act 2002

Anti-competition agreement:

Anti Competition agreements are the agreements that restrict the competition or remove the competitors from the market, such agreements are unlawful.

Prohibits abuse of Dominant position:

When any person or company or organization, who is in a dominant position tries to control its competitors, consumers, and misuse its position, it is called the misuse of dominant position .

Regulates the combination:

If there are any mergers, acquisitions with the intention of acquiring assets, shares, taking of voting rights, taking control of management and then to control the market, then such combinations are prohibited.

Competition Commission of India was formed to deal with all the matters relating to Competition laws at state and Central level.

Section 3 of the Competition Act deals with Anti competitive agreements. No enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India. Such contracts are always void.

What kind of agreements are called an anti competitive agreement or how one determines if the agreement is anti-competitive?

Agreement that directly or indirectly determines purchase or sale prices.
Agreements that limits or controls production , supply, market, technical development or investment
Agreements that share markets or share/divide geographical areas of market or divides the goods or services, divides the customers.
Agreements that directly or indirectly result in bid rigging or collusive bidding.

These are all Anti competitive agreements.

Role of pharmaceutical industries in India

Pharmaceutical Industry is a part of the health care sector. The main functions of the Pharmaceutical Industry are producing, developing, discovering, supplying and marketing medical drugs with the aim to cure and protect consumers, vaccinate the needy and to protect all the patients with necessary drugs.

Pharmaceutical regulation means a combination of legal, administrative and technical measures that the government takes to ensure the safety, efficiency, and quality of medicines along with providing accuracy of product information. The pharmacy sector in India is regulated under The Pharmacy Act 1948.

How are the drugs supplied from manufacturer to final patients?

Anti-competitive agreement in the pharmaceutical sector when two or more pharmaceutical companies enter into an agreement which leads to adverse effects on competition in the market such agreements are anti-competitive agreements. For example: In order to make profit in one particular market, the competing pharmaceutical companies may fix the price of drugs through an agreement, through agreement they may limit the production of drugs, which in turn increases the price of drugs and help such pharmaceutical companies to make profit. Anti competitive agreement can be either
a. Horizontal agreement: These are the agreements among the competitors at the same level. This includes price fixing, bid rigging, market allocation or market sharing, reducing supply of drugs.
Example : Agreement between retailer and retailer
b. Vertical agreements: These are the agreements among the businesses at different levels of the market chain. This includes tie-in agreements, exclusive supply agreements, exclusive distribution agreements, resale price maintenance, refusal to deal.
Example: Agreement between Manufacturer and retailer, agreement between stockist and hospitals etc.

Effect of anti-competitive agreement

1.]Pay for delay: To understand this concept it is important to understand the 2 categories of drugs
a. Generic drug and Branded drug: A Generic drug is a medication that is similar to branded name drugs in dosage form, quality, performance, safety, and strength.
b. Branded drugs are the one which are been developed by pharmaceutical companies after making sufficient investment in Research and development and they are approved by FDA after checking the details of newly invented drug.Pay for delay is an agreement by which the branded name manufacturer pays an agreed amount of money to the generic manufacturer with a promise obtained from the generic manufacturer that it will not enter into the market with their cheaper medicine for a prescribed period.
2.] Collusive agreement: These agreements are made between chain systems, from apex pharmaceutical companies to over the counter. The manufacturer gives huge incentives to Doctors, pharmacies, wholesalers, retailers to sell their products. Most doctors being attracted to huge gifts and incentives prescribe irrational prescription of costly medicine though it would not be needed. Consumers in such situations have very few options to buy the medicine prescribed by doctors or chemists. Such collusive practices also take place between drug companies, retailers, medical representatives etc
3.] Bid rigging[ Antitrust agreement] : Bid rigging in general is a situation where different pharmaceutical companies who are competitors agree or make an agreement on who should win a bid. As a result of this the other pharmaceutical companies may withdraw from bidding, quote higher bidding prices, specify terms that are unacceptable, or they may even refrain themselves from bidding for their own personal benefits. The competitors may further agree upon themselves to have sub-contract between themselves, they may take turns to win a bid, they may agree to share production among themselves and share profits etc.As a result of such practice, the government which procure various types of drugs to hospitals for public interest have to pay higher price for the drugs
4.] Price Fixing: When different pharmaceutical companies who are competitors agree to fix, maintain, and control the price of drugs it is called price fixing of drugs.Most of the people in India are below the poverty line. They even struggle to get their basic human needs met. So the government of India tries to make certain medicines more affordable to such a class of people by listing essential medicines in the list of National List of Essential Medicines. As these are essential drugs these come under price control via the Drug Price Control Order. The consequence of this price control results in shutting down production of few medicines, fraudulent activities, price fixing which ultimately affects consumers.
5.] Market Sharing or Division of market: Pharmaceutical companies who are competitors make an agreement among themselves to divide sales territory into various geographical area or size or they divide the customers to make profits. Example. Company A makes an agreement with company B that it will sell its drugs in south Delhi and company B will sell its drugs in North Delhi. In this scenario both the companies don’t have any competitors in their respective area.
6.] Production Control : Here, it is important to understand the meaning of cartel. Cartel is an association of manufacturers with the purpose of maintaining the prices at higher level and thus restricting the competition.Under production control, pharmaceutical industries make agreements among themselves to reduce the production or manufacturing of drugs with the intention to increase its demand in the market and subsequently increase its price.
7.] Exclusive supply – When a pharmaceutical company restricts the purchaser from acquiring any goods or services from anyone other than the seller or any other person is called exclusive supply agreement.
8.] Exclusive Distribution – Exclusive distribution is a kind of distribution where a manufacturer or supplier authorizes only one distributors to distribute or supply drugs in specific region. Such distributors are sole authorized seller of those specific drugs. Exclusive distribution agreements that limit, restrict or withhold the supply of any drugs or medicine fall under category anti-competitive agreement.
9.] resale price maintenance – This refers to the imposition of a condition by a seller fixing the price at which his purchaser may resell the goods. Such conditions will create a clog on the free play of the market forces which alone will determine the prices at which goods are sold.
10.] Tie-in -agreement – This is a method under which the buyer is forced to buy the second product which is tied with the main product. Example : a person buying medicine for weight loss has to compulsory buy a weighing machine.
case laws on anti-competitive agreementBelgaum District Chemist and Druggist Association V/S Abbott India Limited , Karnataka In this case Belgaum District Chemist and Druggist Association [the informant] alleged that Abbott India limited [opposite party 1 or op1] and Geno Pharmaceutical [ opposite party3 or op3] stopped supplying essential medicines to some of its members on the ground that they have to obtain No objection certificate from All India organization of chemist and Druggist [opposite party 4 or op4] or from Karnataka Chemist and Druggist Association[ opposite party 2 or op2]. As a result of this the supply of medicine was restricted. The first investigation report of Director General made the following findingsOp4 and Op2 have indulged in action practice which are anti competitive in natureIt was observed that there was a violation of Section 3(3)(a) and section 3(3)(b) of Competition Act 2002Investigation further revealed that Op4 had an understanding with some pharmaceutical associations with the means of agreements and memorandum of understanding for the appointment of stockists. It was further revealed that trade margin of retailers and stockiest were fixed by these association in connection with Op4 and charges were collected by these associations for those who want to introduce new medicine in any territory, policy to supply medicines was such that there was no direct supply of medicine to any doctors , nursing homes or anybody who are not been approved by Op4.It was found memorandum of understanding was in contravention of section 3(3) and has put limits on supply of pharmacy products.It was also concluded that the norms and guidelines adopted by Op4 regarding appointment of new stockists and fixing trade margins amount was in contravention of section 3(3)(a)and section 3(3)(b) of Competition Act 2002.The Commission asked the Director General to make some supplementary investigation on determination of price and limiting /controlling of supply of medicine.The Director General reiterated that memorandum of understanding between Op4 and few pharmaceutical Associations form guidelines for fixing margins and appointment of new stockists.On issue of limiting and controlling of supply of medicine it was observed
a. Firstly : New or additional stockists should get no objection certificate form state chemist or Druggist Association to enter the market.
b.Secondly : New drugs are introduced in territory only after paying product information service[PIS] or prescribed product information index[PPII]With respect to determination of margin of wholesale price and retail price it was found that with respect to non- scheduled drugs it was fixed at the time of PIS or PPII approved by Op2. Effect of fixing margins also affects the sales price of non scheduled medicine.Report of investigation was sent to all the parties for submitting their written objections. After considering objections, reply to objections and oral hearing from all the parties the following issues were raised.
Issues of the case:
1.] Whether the conduct of Op4 pursuant to its agreements/MOUs entered with other pharmaceutical Associations is in contravention of section 3(1) read with 3(3) of the Act or not?Op4 Was held not guilty after verifying evidence.
2.] whether op2 was
a. Mandating NOC prior to the appointment of the stockist by pharmaceutical companies? Op2 was held liable
b. Mandating pharmaceutical companies to pay PIS before launching of new drug With respect to PIS and PPII it was held in the absence of any material suggesting compulsion on the pharmaceutical companies to seek PIS/PPII publication, before introducing the drugs in any territory, mere offering of PIS/PPII services cannot be regarded as limiting or controlling supply of drugs. Accordingly, no contravention of section 3(3)of Act is established against op2
c. Prescribing PPII thereby determining the trade margin of the wholesalers and retailers? Op2 was held liable for determining the trade margin of wholesalers and retailers. Court ordered commission directs Op2 to cease and desist from indulging in the practice of mandating NOC requisite for appointment of stockist and fixing of trade margins for retailers and wholesalers which was held anti competitive. While considering the issue of imposition of penalty, the Commission takes into account the peculiarity of facts and totality of circumstances involved. The Commission notes that recently a penalty of Rs. 860321/- was imposed upon OP-2 in a matter involving similar allegations i.e. NOC practice for appointment of stockists (Case No. 71/2013 titled M/s Maruti & Company versus Karnataka Chemists & Druggists Association & Others). The period of contravention in the said case was subsequent to the period of investigation in the instant matter. In view of these, the Commission refrains from imposing any monetary penalty in the present case. Nevertheless, it is clarified that any future repetition by OP-2 of the conduct that are found herein as a contravention of the provisions of Act, will be taken seriously and proceeded with in accordance with the provisions of the Act.

Conclusion
As we all know, India is the largest provider of generic medicine in the globe and holds 20% share globally in supply by volume. India also ranks 3rd worldwide for production by volume and 14^th by value. So it becomes absolutely necessary to regulate pharmaceutical industries in India. If the pharmaceutical companies are not regulated properly, then the unethical practices and illegal practices will surely reduce the economic growth and overall development of our country.

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The role of ‘IT law’ in settlement of ODR’s – a case study

Oishika Banerji

October 25, 2021

This article has been written by Gayathri pursuing the Introductory Course – Legal Writing For Blogging, Paid Internships, Knowledge Management and Editing Jobs from LawSikho. This article has been edited by Aatima Bhatia (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

Online dispute resolution (ODR) is a branch using technology for the resolution of disputes of parties involving negotiation, mediation, arbitration or a combination of the above by augmenting the innovative technologies in the process. The techniques of resolution in which the parties have full procedural control on methods and the third party is in control of the process and the (Rule C, 2007) outcome. The primary method of resolving the dispute is complemented with Information and Communication Technology (ICT) (Cortes P, 2009). The procedures like filing at initial stages, the appointment of neutral, process of evidentiary, oral hearings if needed, discussions and the rendering of binding settlements from beginning to end, respecting the due process of ADR principles are all online.

Origin & development of ODR Mechanism

The Internet is a vital facilitator in today’s communication. The emergence of the Internet took place in 1968 by the US military network called ARPANET. In 1990, the Defence Advanced Research Projects Agency (DARPA) — transformed from ARPA by completing the development of a network for civilians. US federal institutions managed the Internet till it acquired the status of a public good in 1991 (Russell A. L, 2014; Salus P, 1995) and grew to the most powerful medium in the 21st century. The network fulfills many functions such as being a source of information, a communications tool and a global trading platform and has also become the engine for introducing modern technological solutions.

The Internet has an important role in public life, including law. Its fast development is causing many positive phenomena. This has also highlighted the non-compliance of the legal framework with new realities (which comes in the scope of intellectual property rights). The global character of the Internet changed the approach regarding the access of information impacting the copyright and press law. In the absence of territorial boundaries, the private international laws became outdated and necessitated the introduction of new regulations ((Directive on electronic commerce, 2000). The non-compliances of settlements in the national & international commerce forced us to look at the statutory frameworks and out of court settlements in case of any disputes. The online dispute resolution evolved in the process.

The Indian government of the day feels that the method promises from its adoption of the Digital India scheme. The necessity of ODR emerged in the early 1990^s next in 1992 as the ban on internet commercial activity was removed in the United States. The disputes became proportional to the online commercial activities which needed to be resolved fairly. In 1996 a conference on online dispute resolution was sponsored by ‘The National Centre for Automated Information Research (NCAIR)’, that led to an experimental project with the Virtual Magistrate. Subsequently in 1997 the Centre for Information Technology and Dispute Resolution was established & E-bay requested for the building of the ODR system. This pilot project was a great success. This is confirmed by data that show a constant increase in the number of internet users in India.

Cases pending in courts of India

As per the National Judicial Data Grid (District & Taluka Courts of India) (https://njdg.ecourts.gov.in/njdgnew/index.php) (National Judicial Data Grid, 2021), Table 2 & Figure 2 depicts the pending Civil & Criminal cases as on 14.10.2021. However, it may be noted that the majority of the Pending Civil cases of 26.65% can be addressed by the alternate methods of the judiciary and the criminal cases should be addressed by the judiciary only. The process relaxes the over – pressured courts.

Information Technology – its components & its law

IT integrates the acquisition of data, its storing, processing & the information dissemination at various utilization levels with the help of computers & communication technology. The information accessibility is restricted using the technologies. Suitable amendments in the laws were made in the Information Technology Bill 1999, by Government of India to encourage ecommerce trading that led in the creation of the legal rights & the obligations. After the Presidents accent it evolved as the Information Technology Act 2000. Further with the amendments in the Indian Penal Code, the Indian Evidence Act, 1872, the Banker’s Book Evidence Act, 1891 and the Reserve Bank of India Act, 1934 and for matters connected therewith or incidental thereto, gave an exponential growth of e-commerce business.

Table 1- Internet Users Worldwide & in India
		No. of users in (x 1000) millions			No. of users in (x 1000) millions
Sl.No	Year	World	India	Sl.No	Year	World	India
1	1995	0.016	–	15	2009	1.802	0.0810
2	1996	0.036	–	16	2010	1.971	0.1000
3	1997	0.070	–	17	2011	2.267	0.1250
4	1998	0.147	0.0014	18	2012	2.497	0.1370
5	1999	0.248	0.0028	19	2013	2.802	0.2500
6	2000	0.361	0.0055	20	2014	3.079	0.3250
7	2001	0.513	0.0070	21	2015	3.366	0.3750
8	2002	0.587	0.0165	22	2016	3.696	0.4621
9	2003	0.719	0.0025	23	2017	4.208	0.5000
10	2004	0.817	0.0392	24	2018	4.313	0.5500
11	2005	1.018	0.0506	25	2019	6.000	0.6500
12	2006	1.093	0.0400	26	2020	6.900	0.7000
13	2007	1.319	0.0420	27	2021	7.875	0.8000
14	2008	1.574	0.0600	28	2022	…	…

Table 2- Pending Cases in Indian District & Taluka courts as on 14.10.2021
Sl.No	Particulars	Pending Cases
	Span	Civil	Criminal	Total
1	0 to 1 Year	3567237	9839556	13406793
2	1 to 3 Years	3215286	8212014	11427300
3	3 to 5 Years	1622145	4460640	6082785
4	5 to 10 Years	1591704	4345945	5937649
5	10 to 20 Years	545364	2140293	2685657
6	20 to 30 Years	114299	362353	476652
7	Above 30 Years	36280	63650	99930
	Total	10692315	29424451	40116766
	Percentage	26.65	73.35	100

Structure of the IT Act 2000

The Act comprises 13 chapters having 90 sections. Sections 91 to 94 deals with the Information Technology Act, 2000 and conjointly read with the Amendments of The Indian Penal Code 1860, The Indian Evidence Act 1872, The Bankers’ Books Evidence Act 1891 and the Reserve Bank of India Act 1934). The Act deals with authentication of electronic records, digital signatures, electronic signatures etc. & elaborate procedures for certifying authorities (for digital certificates as per Information Technology Act -2000 and replaced by electronic signatures amendment in the Act of 2008). The offence of data theft and the adjudication process and appellate procedures are discussed. Some of the well-known cybercrimes and lay down the punishments are also described. The concept of due diligence, the role of intermediaries and some miscellaneous provisions are described. Rules and procedures are laid down in a phased manner. Further the definition of private and sensitive personal data and the role of intermediaries, due diligence were made in April 2011.

Online Dispute Resolution- an integrated model

This is receiving growing interest in the dispute resolution and legal arenas. The literature published to date highlights the great promise offered by ODR processes and its unique boundary-less cyber characteristics. Nevertheless, even proponents recognize that, as with any emerging phenomenon, there are inevitable pitfalls and challenges to consider when evaluating ODR’s potential societal contribution in both general and specific ODR procedures. As with traditional dispute resolution procedures, ODR researchers have been attempting to develop a clear and measurable set of criteria.

Standard criteria for evaluating ODR

The negotiation theory is divided into six categories, as depicted in Figure 3 are used to develop new criteria in ODR evaluation & assess the advantages and disadvantages for the removal of blocks if any.

Four critical dimensions of ODR

An essential building block is to provide a theoretical framework for ODR assessment from conventional face-to-face dispute resolution and to develop hypotheses for core dimensions, distinguishing from one form to another and is depicted in Figure 4.

Theoretical framework for assessing ODR: applying bargaining and negotiation theory

Number permutations & combinations of themes emerge from the standard criteria of bargaining which leads to five central ODR dimensions. The existing ODR literature has not attempted to incorporate the various evaluation criteria into a coherent and integrated framework. The overall bargaining & negotiation theory is depicted in Figure 5.

ODR : usage of Artificial Intelligence & fuzzy logic

Online resolution methods of disputes become necessary with the development of e-commerce, which applies information and communications technology, taking place partly or entirely online. Using the ADR process the disputes are resolved from cyberspace as well as outside it. For resolution four parties have to be incorporated: initiating party (a claimant), a respondent, a neutral party and a technology-based intermediary. The ODR process is initiated by a party when requested to start a new dispute resolution. Initiating party provides information about other participants, who are subsequently informed and asked if they are willing to participate. With the mutual agreement of all the parties involved, the system gathers information and details about the dispute, such as monetary values, the expectations and feelings of parties, and the documents as evidence. Due to the involvement of emotions involved, this phase is the hardest for autonomous ODR providers. Next all collected information is analysed and the system (human or technology) determines the result. The technologies are used for finding the solution of the dispute. Lastly the award is presented to the parties. The algorithm and strategy are studied for further improvement.

The procedure of ODR

ODR mostly consists of mediation (as per 74 % of ODR providers), arbitration (as per 40 % of ODR providers), negotiation, client counseling or their combination. The procedures differ in the degree of control of the parties. With e-Negotiation (electronic negotiation) the parties are in full control during the process, deciding whether the outcome is accepted or rejected. On the other hand, settling the dispute in court gives the parties almost no control over the outcome.

The parties are suggested to start with negotiation, if necessary, continue with mediation and finally arbitration. If the dispute is still not resolved, the failure is reported and another

Table 3 AI Application used for different Legal areas
Sl. No	Process	AI Applications
1	Electronic discovery	Catalyst, DISCO, OpenText
2	Contract analysis	Kira, RAVN, Seal, LawGeex, Leverton, eBrevia
3	Legal research	ROSS, RavelLaw, Judicata, CaseText
4	Document automation	PerfectNDA
5	Analytics & Prediction	Lex Machina, Premonition, RavelLaw
6	Electronic billing	Brightflag, Smokeball
7	Intellectual property	SmartShell, ANAQUA Studio, TrademarkNow

Table 4 AI Application used for ODR Legal areas
Sl. No	System Category	AI Applications
1	Virtual mediation rooms	ECODIR, Mediation room, Mediationline
2	Expert systems	CODR
3	eNegotiation	Family_Winner, Inspire, SmartSettle, AssetDivider
4	Decision support systems	Split-Up
5	Information systems	Notgoodenough.org
6	Blind bidding	CyberSettle
7	Document management	Negoisst
8	Customized systems	eBay
9	Arbitration systems	Word & Bond

Conclusion & recommendations

With the exponential growth of e-commerce that led to the global consumer transactions on the internet also raised in disputes between the parties from different jurisdictions. Innovative mechanisms such as ODR that include techniques of arbitration, mediation are extremely useful. This dispute resolution in India (http://legalreferee.com/) is in its infancy stage but it is gaining prominence with the enactment of the Information Technology Act, 2000 as legal recognition is given to e-commerce and e-governance. The reformulation of arbitration laws in accordance with UNCITRAL Model led to the successful ODR system encouraging e-commerce and timely dispute resolution. As the participation of users are governed by the contract the alternate dispute resolution should be included in the contract. The Consumer Protection Bill 2015, which includes provisions for mediation, sees the proper and impartial procedural follow up. ODR is the best alternative way as it reduces the loss of time often that causes loss of opportunities. It also ensures the smoother functioning of the whole process. As a result, ODR with the sophisticated tools is a good resource for dispute resolution.

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Relationship between intellectual property laws and the EU regulation

Sneha Mahawar

October 25, 2021

This article is written by Vanya Verma from O.P. Jindal Global University. This article talks about the intellectual property laws in Europe and their recent developments while covering the relationship between the IPRs and the European Union Regulation.

Table of Contents

Introduction

Intellectual property rights (IPRs) are rights that give their owners the ability to prevent others from using an intangible item they own. Examples of IP rights include patents, copyrights, trademarks, trade secrets, industrial designs, databases, and other sorts of intellectual property rights. The exclusive rights given to the IPR owner are defined by specific legislation. A copyright holder, for example, can prevent others from copying a creative work such as a book or a photograph. Similarly, the owner of a patent right has the authority to prevent others from exploiting the invention described in the patent.

IPRs in Europe and recent developments

Patents

Patent reform: the unitary patent

The European Commission is working on putting together a patent package. It will establish a European patent with unitary effect and a new patent court when it comes into force. The unitary patent is a legal title that will provide uniform protection in all participating nations in a single step, resulting in significant cost savings and reduced administrative difficulties. A Unified Patent Court will be established as part of the package, which will provide a single, specialised patent court with exclusive jurisdiction over European patent litigation.

Utility model

A utility model is a registered right that allows the owner to utilise a technical invention exclusively. Utility models are frequently referred to as “petty patents” or “innovation patents” in various nations. The Commission examines the economic impact of utility model legislation, even though there is no EU-wide utility model protection. Utility model protection is not available across the EU, unlike trademark and design protection.

The Commission published a proposal for a Directive on the Protection of Utility Models in 1997, following multiple consultations. The proposal was updated in 1999, however, due to difficulties in obtaining an agreement, work on the proposal was halted in March 2000. A Community patent was granted priority. In 2006, the Commission finally withdrew the proposal.

Supplementary protection certificates

Supplementary protection certificates (SPCs) are a type of intellectual property that act as an add-on to a patent right. SPCs were formed by EU legislation to compensate for the loss of patent protection for pharmaceutical and plant protection products as a result of the extensive testing and clinical studies required before regulatory marketing approval. In the interests of public health, the EU wants to ensure adequate protection for these items while also encouraging innovation in these areas to produce smart growth and jobs.

Biotechnological inventions

Directive 98/44/EC on the legal protection of biotechnological inventions harmonises the rules on the scope and restrictions of patent protection for biotechnological inventions in the EU. Biotechnological inventions are items that contain or are made up of biological material, or processes that produce, process, or use biological material. Patentable inventions meet the general requirements for patentability, which include novelty, inventiveness, and industrial applicability.

Enhancing patent exploitation

A promise to strengthen the economic exploitation of intellectual property rights is included in the Innovation Union Communication, which provides a medium-term plan for innovation in the EU. A Staff Working Document titled “Towards enhanced patent valorisation for growth and jobs” was published to fulfil this commitment.

IP for industrial innovation

The ‘Exploitation of IP for Industrial Innovation’ study examined the design of a policy instrument that increases the chance of new business development based on the acquisition of external IP, such as unused patented inventions. It was shown that by focusing on awareness and transaction costs, a policy instrument may be established to boost the usage of external IP by small and medium-sized firms (SMEs).

The proposed policy aims to:

Help SMEs acquire external IP.

Raise awareness, and give tools to SME advisory and support organisations.

Raise awareness among SMEs.

Recent developments in patents in the EU

Patent systems are under pressure, not only in Europe but also in other countries. Patent applications and patent grants at the European Patent Office (EPO) have increased far faster than R&D inputs in the OECD countries, just as they did in the US.

In a report (FTC 2003) published by the US Federal T rade Commission, some of the welfare implications of these developments were examined. Patents have become an impediment to innovations in certain sectors, according to the findings of the investigation. Given the likelihood of such consequences, it is not surprising that patent reform has risen to the top of the public policy agenda in the United States. Changes to the US patent system have also been advocated by several other advisory bodies. To address the difficulties, the US Patent and Trademark Office (2003) published a Strategic Plan. Several large firms and Small and Medium-Sized Enterprises (SMSEs) have joined these organisations in their quest for patent reform.

Patent offices have responded to the challenge of rising workload in a variety of ways. The United States Patent and Trademark Office (USPTO) appears to have prioritised patent processing speed and “patent-granting.” Even while the EPO has permitted longer pendencies to occur, it is now under increasing pressure to reduce them, even though the number of applications is increasing. As the pressure to reduce the backlog of applications has increased, the standards used to evaluate patents in Europe may have dropped, providing even more incentives for applicants to file new applications. To maintain options in an increasingly complicated environment, applications are growing more sophisticated and include more claims. This development appears to have resulted in a vicious cycle of declining quality. Patent examiners and practitioners in patent departments are currently complaining about increased workload.

Copyright

Rights of an individual

Copyright protects your intellectual property in EU countries for 70 years after your death or 70 years after the death of the last surviving author in the case of a joint authorship work.

The duration of copyright protection outside of the EU, in any country that has signed the Berne Convention, might vary, but it must endure at least 50 years after the author’s death.

Registration can be important if one wishes to prove the existence of their work at a certain moment.

The following exclusive rights are granted to an individual as a result of copyright protection:

Economic rights – ensuring that one has control over their work and that they are compensated for its use through the sale or licencing of it.
Moral rights- are typically used to safeguard one’s right to claim authorship (right of attribution) and to reject having one’s work modified (right of integrity).

How to obtain copyright protection

One does not need to go through any formal application process if one generates literary, scientific, or creative work because one automatically has copyright protection that begins the moment one creates their work.

You may, however, need to inform others that you are the author of that piece. One can attach a copyright notice with their work, such as the wording “all rights reserved” or the symbol ©, as well as the year when it was created.

EU copyright legislation

The EU copyright law is made up of 11 directives and two regulations that aim to harmonise the fundamental rights of the writers, performers, producers, and broadcasters.

EU copyright law eliminates national disparities and ensures the level of protection required to stimulate creation and investment in creativity by establishing harmonised standards. Harmonized standards encourage cultural diversity and improve access to digital content and services for consumers and businesses across Europe.

The EU’s regulatory framework for copyright and neighbouring rights (acquis)

Satellite and Cable Directive– Directive on the coordination of certain rules concerning copyrights and rights related to copyright applicable to satellite broadcasting and cable retransmission, 27 September 1993.
Database Directive– Directive on the legal protection of databases, 11 March 1996.
InfoSoc Directive– Directive on the harmonisation of certain aspects of copyright and related rights in the information society, 22 May 2001.
Resale Right Directive– Directive on the resale right for the benefit of the author of an original work of art, 27 September 2001.
Rental and Lending Directive– Directive on rental rights and lending rights and on certain rights related to copyright in the field of intellectual property, 12 December 2006.
IPRED– Directive on the enforcement of intellectual property right, 29 April 2004.
Software Directive– Directive on the legal protection of computer programs, 23 April 2009.
Term Directive– Directive revising the earlier 2006 Directive on the protection of copyright and some related rights, 27 September 2011.
Orphan Works Directive– Directive on certain permissible uses of orphan works, 25 October 2012.
CRM Directive– on collective management of copyright and related rights and multi-territorial licencing of rights in musical works for online usage in the internal market, 26 February 2014.
Directive implementing the Marrakesh Treaty in the EU– Directive on certain permitted uses of certain works and other subject-matter protected by copyright and related rights for the benefit of people who are blind, visually impaired, or otherwise print-disabled, 13 September 2017.
The regulation implementing the Marrakesh Treaty in the EU– Regulation on the cross-border exchange between the Union and third countries of accessible format copies of certain works and other subject-matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print-disabled, 13 September 2017.
Portability Regulation– Regulation on the cross-border portability of online content services in the internal market, 14 June 2017.
DSM Directive– Directive on copyright and related rights in the Digital Single Market, 17 April 2019.
Satellite and Cable II– Directive on the exercise of copyright and related rights in connection with certain online broadcasting organisations, transmissions and retransmissions of television and radio programmes, 17 April 2019.

Recent developments in copyright in the EU

The European Union Copyright Directive, passed in 1993, was a key step toward more harmonisation in Europe. The period of copyright protection was increased to 70 years as a result of this Directive (after the death of the author or creator). This option lasted longer than the Berne Convention’s time limit. The community patent (explained below) also reinstated copyrights that had previously lapsed into the public domain retroactively. The directive substantially prioritised the rights of the content producers over those of the users in this regard.

The European Parliament and Council Directive 2001/29 / EC of May 22, 2001, on the harmonisation of some aspects of copyright and related rights in the information society, represented the next stage in European harmonisation. The Directive was the European application of the WIPO Copyright Treaty, which was signed in 1996. This law, known as the EU Copyright Directive, was once again the topic of extensive and contentious public debate. The Directive includes robust copyright protection as well as a requirement for the EU member countries to establish legal protection for Digital Rights Management (DRM) systems.

In several member nations, such as Germany and France, the Directive is still being translated into national legislation. The Finnish Parliament approved the 2005 amendments to the Finnish Copyright Act and the Penal Code. These discussions have also been centred on the concept of “fair use.” In many countries, copyright legislation is accompanied by doctrines that allow specific uses of the copyrighted work to be exempted from protection. Excessive copyright protection can theoretically be used to suppress civil liberties such as the right to free speech, which is why certain exclusions are in place. “Fair use” is relevant, for example, when a critic of a literary work cited passages to comment on the work. The Directive gives EU member countries a lot of latitudes when it comes to defining various kinds of “fair use.”

Trademarks

European Union Trademark

Signs, specific words, designs, letters, numerals, colours, the shape of items, or the packaging of goods or sounds are all included in the EU Trademark.

Your trademark must be distinct and not describe the specifics of what you sell to be effectively registered.

You can register three types of trademarks: individual marks, certificate marks, and collective marks.

Individual marks are used to identify one company’s goods or services from those of its competitors. One or more legal or natural persons can register and own individual marks.
Collective marks are used to identify a collection of firms or members of an association’s goods and services from those of its competitors. Only associations of manufacturers, producers, service providers, or traders, as well as legal persons governed by public law, can register collective marks.
Certificate marks are used to show that goods or services meet the certifying institution’s or organization’s certification requirements. Any natural or legal person, including institutions, agencies, and bodies governed by public law, can register a certification mark.

Need to register an EU Trademark for business

Building a great brand is critical to business success, and preserving that brand is essential for long-term growth. The following are the primary advantages of registering a trademark:

Protect the value of your brand and the money you’ve invested in it.
Defend a trademark against a competitor’s usage;
Establish your rights;
To avoid misunderstandings and fraud;
Create a valuable asset;
Increase the value of your intel
lectual property by monetizing it.

Registration of a trademark in the EU

You can choose from a four-tier system for registering trademarks in the EU, depending on your company’s needs:

Regional level: In Belgium, the Netherlands, and/or Luxembourg, if you want to protect your brand. A trademark application can be filed with the Benelux Office of Intellectual Property (BOIP).
National level: If you wish to protect your brand in just one EU Member State, where your company is already based or where you want to do business in the future, a trademark application can be filed with the relevant national IP agency.
European level: If you wish to protect your brand in more European Union Member States. A trademark application can be filed with the European Union Intellectual Property Office (EUIPO).
International level: If you want to extend your protection to any country that has signed the Madrid Protocol, you can do so. A trademark application can be filed with the World Intellectual Property Organization (WIPO).

EU Trademark reform

A trademark can be registered in the European Union (EU) as a European Union Trade Mark (EUTM) at the European Union Intellectual Property Office (EUIPO) or as a national trademark at the intellectual property offices of the individual EU Member States. With modifications beginning in 2016, the European trademark system underwent a major transformation, which is explained below:

The EUTMR refers to the EU Trade Mark Regulation (Regulation (EU) 2017/1001), which includes EUIPO-related costs. The Regulation became effective on March 23, 2016. (or, for a few provisions, on October 1, 2017).
The European Union’s delegated rule on trademarks (EU) 2018/625.
The European Union Trade Mark Implementation Rule (EU) 2018/626.

The Trade Marks Directive (Directive (EU) 2015/2436) (the Trade Marks Directive) and national legislation of the EU Member States were to implement the Directive at the national level before January 15, 2019, except administrative cancellation proceedings, which must be introduced by January 15, 2023.

Benefits of registering a trademark

Your brand will be protected and enforced throughout the European Union once it has been registered.

In all current and future EU Member States, the owner has an exclusive right to use an EU trademark for ten years.

Recent developments in the trademark in the EU

The European Parliament and the Council adopted Rules (EU) 2015/2424 revising the Community Trademark Regulation (the Amending Regulation) on March 23, 2016.

The Amending Regulation changed the Office’s name to the European Union Intellectual Property Office, as well as the name of the trademark handled by the Office to the European Union trademark and the trademark fee structure. Changes were also made in the examining procedures, absolute grounds, objection and cancellation, relative grounds, and appeals. An overview of the changes is provided here.

The secondary legislation consists of the Delegated Regulation (EU) 2018/625, which supplements the Regulation (EU) 2017/1001, and the Implementing Regulation (EU) 2018/626, which establishes precise regulations for putting Regulation (EU) 2017/1001 into effect.

The secondary legislation includes comprehensive transitional provisions that specify when the new procedural rules will apply to cases (Transitional Provisions).

The legislative reform process recognises the European Union Trade Mark (EUTM) system’s success, showing that the system’s basic principles have stood the test of time and continue to satisfy corporate needs and expectations.

Geographical indications

How products are protected

Names of products registered as GIs are legally protected against imitation and misuse within the EU and in non-EU countries where a particular protection agreement has been negotiated as part of the EU’s system of IPRs.

Each EU country’s competent national authorities take the appropriate actions to preserve the registered names within their territory for all quality schemes. They should also take steps to prohibit and stop the illegal manufacture and selling of products with such a brand.

Non-European product names can also be registered as GIs if their country of origin has a bilateral or regional agreement with the EU that includes mutual protection.

eAmbrosia (the official database of EU GI registrations) may be used to look up GIs that have been applied for and entered into Union registers. The GI view portal can be used to look for both EU and non-EU GIs that are protected under agreements.

Geographical indications and the EU Trade Policy

Due to an increase in the number of infractions around the world, the EU supports better international protection of geographical indications. Protecting EU geographical indications is a priority for the EU in international and bilateral negotiations.

Proposals of the Commission with regard to the EU system of geographical indications

A geographical indication (GI) is a distinguishing mark used to identify a product whose quality, reputation, or other attributes are linked to its place of origin.

The Commission has recently opened a public consultation on its proposal to revise the rules on geographical indications (GIs) for agricultural products. While the current GI schemes for agricultural products are fundamentally sound, the Action Plan commits to strengthening the GI system by improving IP enforcement, empowering producer groups to protect their valuable rights, reducing internet theft, improving sustainable production under the GI schemes, and better tailoring schemes to producers in all sectors, as outlined in the Commission’s Farm to Fork Strategy.

In addition, the Commission plans to address the current fragmentation of GI protection for non-agricultural products such as Murano glass, Solingen cutlery, and Donegal tweed. Producers of industrial and handcrafted products in the EU are unable to guarantee the link between product quality and geographical origin, making such products less appealing for investment and more costly to safeguard across borders. It has issued an assessment that includes future possibilities and invites stakeholders to submit feedback.

Other types of IPR’s

As we have covered copyright and patent protection, there have been controversial debates in other areas of IP as well. This decision was made without much debate, and many observers believe that the quick adoption of database protection was a mistake. To date, there is no empirical evidence that the Directive has a favourable impact on database production operations.

Even if a complicated parallel world of national, European, and international systems still exists, trademarks and industrial designs might be considered an area where European harmonisation has been extremely successful. Trademarks are rarely discussed in public policy discussions since they do not pose any specific challenges to competition or innovation policy. With Council Regulation No 40/94 on December 20, 1993, the European Union established the Community Trade Mark Right (CTMR), which grants its owner a uniform right that is valid in all EU Member States. The Office of Harmonization for the Internal Market (OHIM) was also established as the CTMR’s central registration office. Owners of trademarks have access to a unified legal system, which includes a court of the first instance and a final instance for appeals. OHIM also serves as the registration office for unregistered (since 2001) and registered (since 2003) design rights in the EU which have been harmonized as well.

Conclusion

The future design of European IPR regulations faces three significant difficulties. Harmonization is the first among them. There is an obvious need for coming to truly European IPR policies and institutions if the EU is to become a zone where innovation may take place without being hampered by national obstacles. A focus on balance is a second crucial necessity. Scientists have disputed in an empirical and theoretical work the simplistic belief that more and stronger IPRs are always advantageous for innovation. Consumer’s fair use rights must be considered seriously in order to maintain a balance in copyrights. The public domain should be strengthened in an age where user-generated talent is becoming increasingly important. Third, IPRs granted through an assessment procedure should be of high quality, in the sense that they should provide legal certainty rather than uncertainty.

The European Patent Office, in particular, should strive to grant high-quality patent rights that are based on strict standards for novelty and inventive steps. Many users of the system, contrary to certain reports, welcome a move to stricter criteria. A new balance between business and private, non-commercial interests is needed in the realm of copyrights. For Europe to fulfil its high goals in the sphere of innovation, a free flow of ideas and information must be maintained. In the field of patents, a focus on quality and strict standards is essential to counter rising trends toward systematic exploitation. To strengthen both systems, it’s important to remember that they’re designed to serve all European citizens, not just a select group of stakeholders or users.

References

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Standing up to the international desirability : evolution of arbitration in India

Sneha Mahawar

October 25, 2021

This article has been written by Indira Yadav, and Tejasvi Jat, a 3rd-year student at the Institute of Law Nirma University.

Introduction

“Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often the real loser — in fees, and expenses, and waste of time. As a peace-maker, the lawyer has a superior opportunity of being a good man. There will still be business enough.” – Abraham Lincoln

The increase in global trade, investment, and cross-border transactions, has made the ‘Arbitration’ synonymous with dispute resolution in the international commercial world. It is an alternative manner of dispute resolution in which parties’ consent upon submitting their disputes to an arbitrator instead of resorting to court proceedings. The resulting decision is binding on both parties.

Since its inception, the Arbitration regime in India went through several changes. Arbitration as a mechanism of dispute resolution not only saves time and money but also provides for party autonomy and flexibility of the proceeding, therefore it holds great importance in the commercial world. Nowadays Every investor before investing in a country looks at its Arbitration mechanism and if the legal system and government of that country is environment friendly or not.

The present article discusses the development of arbitration in India over time and discusses how India can become a promising hub in the field of arbitration.

History

Arbitration is a manner of dispute resolution that is not new in India, there have been several instances in ancient times wherein various such mechanisms were deployed for dispute resolution, for example, Kulani (village council), Sreni (corporation), and Puga (assembly). Mahajans and Chambers were other such bodies to resolve commercial matters. Further, there were panchayats for arbitration that worked under the courts of law.

Modern arbitration law in India can be traced with the introduction of the Arbitration Act in 1899, which was basically derived from the English Arbitration Act, 1899. This was the first instance wherein arbitration was recognized by law as an alternative method of dispute resolution in India. Even though it was only applicable to the three presidency towns in India i.e., Calcutta, Madras, and Bombay. After that the Code of Civil Procedure, 1908 was enacted in India. It had Section 89 and Schedule II concerning arbitration, which made it widely applicable over other parts of British India.

Since all these acts- the Arbitration act, 1899, provisions of the code of civil procedure, 1908 were found to be very technical and impractical, and so The Arbitration Act of 1940 was enacted to replace the existing framework. This was based upon the English Arbitration act of 1934. Quite comprehensive in nature with regards to domestic arbitration but did not deal as to how the execution of foreign arbitral awards would take place. Subsequently, three new acts(English Arbitration Act, 1950, Arbitration Act 1975, and Arbitration Act 1979) were enacted with the previous ones being repealed but Indian Arbitration law has been unchanged during this duration.

Working under the Act of 1940 was nowhere near satisfactory and it could not achieve its desired aim. As Justice D.A. Desai said in the case of Guru Nanak Foundation v. Rattan Singh and Sons (1981):

“How the proceedings under the Act are conducted and without an exception challenged in Courts, has made lawyers laugh and legal philosophers weep. Experience shows and law reports bear ample testimony that the proceedings under the Act have become highly technical accompanied by unending prolixity, at every stage providing a legal trap to the unwary. Informal forum chosen by the parties for expeditious disposal of their disputes has by the decisions of the Courts been clothed with ‘legalese’ of unforeseeable complexity.

While India was facing troubles in establishing an effective arbitration regime, the international arbitration law was also going through transitions. In 1923 the International Chamber of Commerce introduced the Geneva Protocol on Arbitration Clauses, popularly known as ‘the 1923 Protocol’. It aimed at ensuring that the Arbitrational awards given in one country are enforceable in other countries too. But this protocol proved to be insufficient in the Execution of Foreign Arbitral Awards, and subsequently, the ‘Geneva Convention of 1927’ was introduced. India was a signatory to both these protocols in giving effect to the same, it enacted the Arbitration (Protocol and Convention) Act, 1937. But these conventions made the process of international arbitration much more complicated and difficult to go ahead with.

To address these complexities involved, the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards was adopted in New York (or more popularly known as ‘the New York Convention’) and came into effect from 7th June 1959. India became a signatory to this convention on 13 July 1960 and subsequently enacted the Foreign Awards (Recognition and Enforcement) Act, 1961 to give effect to the same. Therefore India then had three legislations in its framework concerning Arbitration:- Protocol and Convention Act, 1937, the Arbitration Act, 1940, and the Foreign Awards (Recognition and Enforcement) Act, 1961.

Due to the various complications in the existing legal framework of Arbitration and the occurrence of economic liberalization in 1991, the need for an updated legal framework of dispute resolution was felt to attract foreign investment and provide a comfortable business environment. With this aim Arbitration and Conciliation Act, 1996 came into effect in India repealing all the Arbitration Act 1940. The Arbitration and Conciliation Act, 1996 was based on UNCITRAL Model Law on International Commercial Arbitration, 1985. It consolidated and amended the law related to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards, and also defined the law relating to conciliation. The main purpose of The Arbitration and Conciliation Act, 1996 was to impart a speedy and cost-effective dispute resolution mechanism that will have the same effect as the decree of the court and minimize the intervention and supervision of the judiciary.

The Arbitration And Conciliation (Amendment) Act, 2015

The Arbitration and Conciliation Act, 1996 was introduced to make India a powerful hub for arbitration but sadly it suffered the same infirmities it aimed to cure. Working under it was very expensive, prolonged as there was no time limit to complete the arbitration procedure in the 1996 act and there was an extreme intervention of the courts at every stage. Also, if an Arbitral award was challenged in the court under Section 34 of the act, there would be an automatic stay on its execution making it inexecutable and further prolonging the process.

Further, the judgment of the Supreme Court in Bhatia International v. Bulk Trading S.A. and Another (2002) gave rise to a controversy as it held that the “Part I” of the act unless expressly or impliedly excluded will apply to the arbitrations with a seat outside India. This judgment was overruled in the landmark case of Bharat Aluminium Co v. Kaiser Aluminium Technical Services Inc. (BALCO),(2012) that put rest to the ongoing debate and it was held by the court that In case of International Commercial Arbitration (ICA) seated outside Indian courts do not have jurisdiction to grant interim relief and only when parties seek to enforce such judgment in India and it has been passed in line with part II of the Act of 1966, the jurisdiction of Indian courts will apply to the awards granted in ICA.

For resolving the above-mentioned concerns eminent lawyers, jurists, and legal experts of the country were asked to send their recommendations concerning the functioning of the act by the Ministry of Law and Justice. Thereafter a committee was formed under the chairmanship of Hon’ble Justice (Retd.) A.P. Shah to suggest amendments in the Act of 1996. After the committee gave its suggestion, The Arbitration, and Conciliation (Amendment) Act, 2015 was passed by the Parliament to amend the 1996 act for the first time. The Arbitration and Conciliation (Amendment) Act, 2015 made some significant changes to the act which were as follows.

Appointment Of Arbitrators-

The parties can request SC or HC to appoint the arbitrator and the appointment of such arbitrator should be completed within 60 days from the date of application.
The fifth and Seventh schedules were added on the ineligibility of arbitrators keeping in mind the IBA Guidelines on Conflict of Interest.

Interim Reliefs

Section 9, Court assistance in taking evidence (Section 27) and Appeals (specifically, clause (a) of sub-section (1) and sub-section (3) of section 37) was made applicable to the International commercial arbitrations, whether seated in India or outside India.
The interim relief granted by Arbitral tribunals seated in India was given the same status as the order of the court under the new Section 17 and parties with foreign seated arbitration were given liberty to ask for aid from Indian courts.
Once an interim relief is granted the Arbitration proceedings must begin within 90 days or within such further time as granted by the court.

Time-Bound Procedures

A strict timeline of 12 months was imposed to complete the arbitration proceedings seated in India. Additional 6 months can be provided for the disposal of the case with the permission of the court. If the arbitration proceeding has been completed within 6 months the tribunal will be eligible for extra fees and in case of delay beyond a specified period the fees of the tribunal will be reduced by up to 5% with each month.
Also, a provision for fast-track disposal had been inserted by the amendment to complete the proceedings within 6 months.
The application challenging the arbitrational award must be disposed of within 1 year.

Reduced Cost

The ‘Cost follow the event’ regime had been introduced by inserting Section 31A. Under this regime the court or Arbitration tribunal was empowered to decide the costs needed to be paid and when to be paid by the losing party including fees and expenses of the arbitrators, courts and witnesses, legal fees and expenses, administrative costs of the institution, and any other costs incurred about the arbitral or court proceedings and the arbitral award.

Challenge Against The Arbitral Awards

The definition of ‘court’ under Section 2 was amended to include only HC in the case of International Commercial Arbitration.
There shall not be an automatic stay on the execution of the arbitral award once a challenge has been filed under Section 34.
The grounds for challenging an ICA in case it is seated in India had been reduced by the 2015 amendment.
Section 36 had been replaced with the new Section 36 in which if the time to challenge an arbitral award has been already elapsed in such case the arbitral award will be enforced as per the provisions of Code of Civil Procedure 1908, in the same manner as the decree of the court.

The Arbitration and Conciliation (Amendment) Act 2015 gave rise to a new issue, that is whether Section 36(2) applies to the pending proceedings under Section 32 on the date of enforcement of The Arbitration and Conciliation (Amendment) Act 2015. The court in the case of Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd.(2018) the court held that Section 36 (2) applies to the pending proceedings under Section 32 on the date of enforcement of The Arbitration and Conciliation (Amendment) Act 2015, as it is procedural.

Further, the Law Commission Report recommended the use of the words ‘seat’ and ‘venue’ instead of ‘place’ of arbitration to keep in line with the international usage but it was not incorporated in the 2015 amendment. In the case of BGS SGS Soma JV v. NHPC Ltd (2019)the Supreme court held that the place of arbitration whether it is called seat or venue is the place, courts of which have the exclusive jurisdiction over the matter unless otherwise is indicated.

The Arbitration And Conciliation (Amendment) Act, 2019

Though the amendment of 2015 brought several improvements in the arbitration mechanism of India, it failed to address the issue of lack of institutional arbitration in India. Therefore, on 13th January 2017, a High-level committee was formed under the leadership of Justice B.N. Sri Krishna, Retired Judge, Supreme Court of India to promote Institutional arbitration in India and suggest ways in which India can become a robust hub of domestic and international arbitration.

To inculcate the changes suggested by Justice B.N. Sri Krishna committee The Arbitration and Conciliation (Amendment) Act, 2019 came into force and introduced the following changes:

It introduced the Arbitration Council of India, which would have the powers like grading arbitral institutions, recognizing professional institutes that provide accreditation to arbitrators, issuing recommendations and guidelines for arbitral institutions, and taking steps to make India a hub of domestic and international arbitrations. (This provision has not been notified yet)
It empowered the SC and HC to grant the power of appointing arbitrators to the arbitral institutions which have been accredited by the Arbitration Council of India. (This provision has not been notified yet)
The 2015 Amendment Act imposed a strict timeline of 12 months, to complete the proceedings on arbitrations seated in India, to be started from the date of inception of proceedings before an arbitral tribunal. The 2019 amendment sought to change the start date of this time limit to start once the pleading has ended. The time limit of 12 months can further be extended by 6 months with the consent of the parties. However, the pleadings must be completed within 6 months.
The 2019 amendment act did not impose any time limit on International Commercial Arbitration for the completion of arbitration proceedings.
Further, it contained an express provision on confidentiality of arbitration proceedings and immunity of arbitrators.
The 2019 amendment act introduced minimum qualifications for an arbitrator under the Eight Schedule.
Also, Section 87 of the 2019 Amendment Act stated that the 2015 Amendment Act, which came into force on 23 October 2015 will only apply to those arbitration proceedings that have begun either on or after 23 October 2015. This section was in contravention to the decision given by the Supreme Court in the case of Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. (2018) and against the objective of the Amendment Act, 2015.

Further, in the case of Hindustan Construction Company Limited v. Union of India, (2019) Supreme Court struck down Section 87 introduced by the 2019 Amendment Act as Manifestly Arbitrary.”

The Arbitration And Conciliation (Amendment) Act, 2021

The Arbitration and Conciliation (Amendment) Ordinance, 2020 was promulgated on November 4, 2020, and replaced by The Arbitration and Conciliation (Amendment) Act, 2021. The Arbitration and Conciliation (Amendment) Act, 2021 gained Parliamentary assent on March 10, 2021incorporated the amendments in the 2020 Ordinance. This amendment brought 2 changes:

It removed the controversial Eight Schedule and Section 43J from the act which was added by the 2019 Amendment Act. The Eight Schedule stated the extensive qualifications for the accreditation of arbitrators which was against the principle of party autonomy in arbitration.
It added a proviso to Section 36(3) which states that “where the Court is satisfied that a prima facie case is made out that,—

(a) the arbitration agreement or contract which is the basis of the award; or

(b) the making of the award,

was induced or affected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under section 34 to the award.”

This provision has been given retrospective effect and deemed to be effective from October 23, 2015, i.e., from the same date as the commencement of The Arbitration and Conciliation (Amendment) Act, 2015.

A comparison with the arbitrational regime of Singapore and the United Kingdom

Institutional or Ad-hoc Arbitration

In India most of the arbitrations are ad-hoc and the UNCITRAL Arbitration Rules are being used in international ad-hoc arbitrations.

In Singapore, Institutional arbitration is given preference and SIAC rules are the first choice of the majority of parties, whereas ICC rules are the most preferred alternative. For ad-hoc arbitration, UNCITRAL Arbitration Rules are being preferred by most of the parties.

United Kingdom practice is the same as Singapore in this regard.

Duration

In all three jurisdictions, the time limit is almost the same. Further Singapore extends the choices like documents-only hearing and expedited procedure of arbitration under the SIAC Rules as well as early dismissal of the claim. In the United Kingdom, international arbitration is likely to take an average time of one to two years.

Foreign Arbitrators

In all three Jurisdictions, there is no restriction on the appointment of foreign arbitrators.

Domestic and International Arbitration

In India, all the arbitrations whether national or international if seated India is governed by Part I of The Arbitration and Conciliation Act, 1996.

In Singapore Arbitration Act (AA) governs domestic arbitrations and International Arbitration Act (IAA) governs international arbitrations.

In the United Kingdom, English Arbitration Act governs both national and international arbitration.

Arbitrability

India acknowledges the concept that certain disputes are non-arbitrable. However, The Arbitration and Conciliation Act, 1996 does not define any criteria to decide what is non-arbitrable. In India, the power to decide the non-arbitrability of a dispute resides with the arbitration tribunal and according to Section 8(1) and 11(6A) of the above-mentioned act, the courts are only empowered to examine the existence of an arbitration agreement.

In Singapore, every dispute is arbitrable unless it will be against the public policy of Singapore to arbitrate a dispute.

In the United Kingdom, some disputes such as disputes relating to criminal law and planning laws cannot be referred to arbitration. Generally, it is on the tribunal to decide the arbitrability of a case but in some cases, courts may also decide.

Multi-tier Clauses

In India, a multi-tier clause is a clause that necessitates different levels of dispute resolution as a pre-condition before filing arbitration is binding on the parties. In Singapore and the United Kingdom to such multi-tier clauses are binding.

Role of Courts in the Appointment of Arbitrators

In India, the court can only interfere in the appointment of arbitrators if the parties are unable to appoint the sole arbitrator or both the arbitrators are unable to choose the third arbitrator. In English Arbitration Act, 1996 the procedure is the same as in India in case the parties are unable to reach an agreement.

In Singapore, the President of the Court of Arbitration of Singapore International Arbitration Centre appoints an arbitrator where the parties are unable to agree on the joint nomination of arbitrators.

Disclosure of Conflict by Arbitrators

According to Section 12 of the Indian Arbitration Act, 1996, a person when approached for being an arbitrator, is bound to disclose in writing any circumstances that are likely to put a question mark on his impartiality and independence. The appointment of the arbitrator can only be challenged if the circumstances are such that induce doubts regarding his independence or impartiality or in case he does not possess the requisite qualifications agreed upon by the parties.

The grounds for challenging the appointment of arbitrators under Singapore Arbitration law are the same as in India. In Singapore the obligation to disclose the conflict of interest is continuing one i.e., the person who is approached for his appointment as arbitrator is bound to disclose any conflict of interest at that point of time as well as in the course of arbitration if such circumstances arise which may create doubt on his impartiality and independence.

In the case of the United Kingdom, the arbitrator is bound to disclose any prior interest at the earliest opportunity. If the arbitrator fails to discharge his obligation the parties can challenge his appointment in any forum agreed by them in the contract and if they have already exhausted that remedy, in the court.

Suggestions for further development

India needs full-time arbitration lawyers. In India, arbitration is always given second preference by lawyers. Mostly they give their time to arbitration hearings after court hours and therefore could not give proper time or attention to these proceedings. Though we have some good arbitration centers like Delhi International Arbitration Centre (DIAC), Nani Palkhivala Arbitration Centre (NPAC), Mumbai Centre for International Arbitration (MCIA), etc. But still,no arbitration center in India is comparable to Singapore International Arbitration Centre (SIAC), International Criminal Court (ICC), London Court of International Arbitration (LCIA), etc. The main reason behind it is that we do not have permanent arbitrators in India like SIAC had a world-renowned arbitration Gary born.
India needs to minimize its judicial intervention because once an arbitration matter gets stuck in the court, it can not be determined how much time it will take to be resolved. The 2021 amendment which provides for an unconditional stay on the enforcement of the award in case prima facie observation of the court is that fraud or corruption is involved in its granting, is a setback for the Indian arbitration regime as it will give the excuse to every judgment- debtor to circumvent their obligation just by alleging fraud and corruption. This will again increase the intervention of the court in the arbitration proceedings.
To make arbitration in India more robust we are in dire need of establishing an arbitration bar that will discuss the existing concerns related to arbitration in India and address the troubles faced by arbitration practitioners.
There are members from the government in New Delhi International Arbitration Centre and Arbitration Council of India. There is no such intervention of the government in the other arbitration centers of the world including ICC, SIAC, LCIA. This can hamper the process of delivering justice as to a great extent the awards will depend on the government in such cases and therefore the process of arbitration must be free from government control.
There is an absence of awareness among the citizens of India regarding the process and benefits of arbitration. The arbitration institutes of India are required to hold campaigns and conferences like SIAC and ICC to encourage people to embrace arbitration instead of litigation. Also, law students should be trained and encouraged to pursue arbitration as a full-time career.

Conclusion

The recent amendments in Arbitration and Conciliation Act, 1966 have made significant changes in the ever-evolving arbitration regime of India. Certainly, these amendments can be regarded as notable positive steps towards the aim of making India a global hub of Arbitration, in the same league as countries like Singapore and the UK. Indian legislature and courts have shown a pro-arbitration approach by their conduct and there is an exciting and prosperous future waiting for India in the field of Arbitration. However, India still has a long way to go before becoming a world guru in the field of arbitration but with this positive approach towards arbitration, India will soon achieve its objective.

References

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Tracing criminal procedural jurisprudence in India with special reference to F.R. Sebastian Vadakkumpadan v. Shine Varghese

Sneha Mahawar

October 25, 2021

This article has been written by Aditya Joshi.

Table of Contents

Abstract

A diocese, a bishop’s pastoral district, blends the theological and temporal affairs with those of a Christian Church. It makes the decision to sell some of its properties. A couple of office bearers are proposed to sell the land, but they are accused of misappropriation. A few members of the church voice their dissatisfaction, and at least four of them go to the police or the judge. A qualified trial court takes cognizance of such a lawsuit and agrees to prosecute the case. Others, on the other hand, continue to file police reports. They came before the High Court of Kerala after the police reportedly failed to report a crime. They say that only cops can solve the case. The writ petition is granted by a learned Single Judge, and the police follow the judicial directive and report a crime. The distressed officials challenge this course in the appeal. Can the contested decision be upheld? Are there any effective possible options open to the complainants, given that the public-law remedy is the last resort in private matters? are the questions to be dealt with. The concerned case analysis scrutinizes a recently decided judgment by the High Court of Kerala.

The article focuses on the dilemma of the petitioners in the country who are yearned to initiate the criminal proceedings but often lose their patience by the smarmy state of the criminal procedure in the country. The commentary analyses the ambit of police officials in filing FIR with special reference to the Lalitha Kumari Case, it also specially carve out the alternative remedies available to the petitioners in case they feel that their complaint is being ignored by the Officials.

Introduction

In the Christian Church, a Diocese is a territory under the pastoral care of a bishop that blends theological and secular affairs. It makes the decision to sell any of its properties. In the present case a couple of office bearers are allowed to sell the land, but they are accused of misappropriation. At least four members of the church contact either the police or the judge. A qualified criminal court takes cognizance of such a lawsuit and agrees to prosecute the case. Others, on the other hand, continue to file police reports. They came before the high Court of Kerala after the police reportedly failed to report a crime. They assert that only cops can solve the case. The writ petition is granted by a learned Single Judge, and the police follow the judicial directive and file a criminal case. The aggrieved office bearers challenge the decision in the appeal. Is it possible to uphold the challenged decision? Are there any effective potential options open to the complainants, as the public-law solution is always the last resort in private matters? These are the major questions to be addressed in this Analysis.

From a couple of years ago, the Diocese had a plan to establish a medical college for which in the year 2015 the diocese guided by one of its core members named Shine Varghese decided to buy some land of approx. 60 crores including 5 individual lands. Most parts of this purchase were made possible through a hefty bank loan. Time passed and the project did not resulted that fruitful for the diocese as it was expected. After seeing the debt mounting and things against their financial ambits the diocese with a consensus decided to sell some of their properties and land in order to repay the loan and stabilize their financial conditions. For this pivotal task, the diocese decided to appoint 2 of its senior members including F.R Sebastian Vadakkumpadan and F.R Joshy as they were experienced in financial matters of the Diocese. The diocese pre-decided certain criteria for the sale and ordered that the interim body will not sale the lands until the board allows it to do so. Per Contra, both the appointed members violated certain norms of the decided criteria and were found selling the properties even before the board commanded them to proceed for the same. After the finding, the Diocese reviewed these allegations and they were found to be true, in consonance to this several members of the Diocese decided to file a police complaint against the accused. The Complainants reached the court after finding that the respective police officials of the district are not filing the complaint against both the accused because of some higher officials. After reviewing the Writ Petitions and previous judgements court, in this case, finds that Shine Varghese and the complainants have faltered at the first hurdle—the alternative remedy, which they had on several counts. That is to say, the challenged decision had a legal flaw and was overturned.

Background

Cases relating to multiple lodging of FIRs or police’s denial of filing a complaint are numerously found in a country like India. These types of instances often make the complainants yearn for restoring their rights which according to them have been violated by the accused. This puts a question on the motion of criminal procedure as to when being the ideal stage or what are the basic requirements that are needed to kick start the motion of the criminal justice system. This raises further questions relating to the delineation of the respective circumstances to start the wheel of the criminal justice system. Analysing through the complainant’s side every complaint lodged before the police officials should be lodged to keep the motion of the criminal justice system lubricated, but if this being the case there will be innumerable frivolous complaints before the police officials rather defeating the purpose of smooth criminal procedure in the country. So what is the requisite action for identifying that the complaint is legible in order to be lodged?

The answers to this question comes through various Judicial Interpretations which have refurbished the Criminal Jurisprudence and coined the pivotal Operandi of Preliminary Inquiry which can be exercised by the police officials if deemed necessary in certain cases. Previous noteworthy Supreme Court decisions, such as Nazir Ahmed, H.N. Rishbud, and Inder Singh v. the State of Delhi, The court ruled that the judiciary could not intervene with the police in matters such as investigation, especially of a cognizable offense, which is the police’s statutory right. The court claimed that the police do not need judicial permission. In view of individual liberties and the country’s law and order condition, the court decided that the roles of the police and judiciary are complementary rather than conflicting. The judiciary’s job begins after a charge has been made, not before. In the case of Abhinandan Jha v. Dinesh Mishra, show how this jurisprudence has evolved. The Supreme Court took great care in describing the powers of the police and the judiciary in the case of Abhinandan Jha v. Dinesh Mishra. They clarified the police’s responsibilities in the prosecution of crimes, as well as their powers, referring to Chapter XIV of the Criminal Procedure Code. Sections starting with Section 154 and concluding with Section 176. Section 154 deals with facts related to the commission of a cognizable offence, as well as the procedures to be followed. There is no involvement of the Judiciary in any of these parts; the sections include instructions to the police about how to continue with the investigation, but the police officer still retains the power to perform a preliminary inquiry if a complaint does not specifically reveal a Cognizable offence or has concerns about the veracity of the complaint. In Sevi v. State of Tamil Nadu, the court specifically stated that before filing an FIR under Section 154 of the CrPC, the station house officer (SHO) can conduct a preliminary investigation to decide if there is a prima facie case of criminal activity. The Supreme Court claimed categorically in Binay Kumar Singh v. State of Bihar that an officer in charge of a police station cannot be expected to file an FIR upon obtaining information that does not reveal the commission of a cognizable offence. The officer-in-charge should be able to verify the veracity of the complaint and further investigate if a cognizable offence has been committed, according to the court.

Eventually, in Kalpana Kutty v. State of Maharashtra, the Bombay High Court established general principles concerning preliminary inquiry that courts should follow. Such guidelines grant police power to keep a lid on baseless allegations while still ensuring that the accused is not subjected to unnecessary abuse. Lastly, in Lalita Kumari v. Govt. of UP and Others, a three-judge panel decided that filing a First Information Report (hereinafter FIR) should be optional. They reasoned that after a preliminary inquiry, an officer should be sure that an offence is made out in the FIR and an FIR has significant implications for the convicted, and hence the need for a preliminary inquiry is inherent in the provisions of Section 154 of the Code of Criminal Procedure. Article 21 of the Indian Constitution should be considered when reading these provisions.

But what if the police officials because of an external influence or departmental pressure explicitly deny conducting such inquiry and filing the FIR. Are there any alternative remedies to be precise, to change the effect of such denial, or do a complainant have no option left but to approach the Judiciary in order to seek justice? The development in the Jurisprudence relating to the non-filing of complaints by the police personnel have widely been seen in the country, but the only intrinsic question which is untouched by the benches in the previous judgements is the exhaustion of ‘alternative remedy’ if the police denies filing the complaint in a case. One reason for such ignorance of the courts in this aspect can be law’s assumption of people having knowledge of the law and its procedures. This Question is been answered or rather highlighted in the judgment of F.R Sebastian v. Shine Varghese referring to the respective sections of the Criminal Procedure code which makes this judgment an “eloquence to criminal procedural jurisprudence”. This case is regarding certain allegations made against 2 of the renowned members of a Diocese which are found conspiring under the desk and were involved in Criminal Breach of trust and Misappropriation of funds. W.P. (C) No.5522 of 2018 reveals these facts, Shine Varghese is a member of the Ernakulam-Angamaly Arch Diocese, which, according to Shine, performs its affairs in accordance with the Code of Canons of the Eastern Churches (“the Code of Canons”) and its bye-laws. The ecclesiastical components — the church’s estate — are indeed governed by such Cannons and bye-laws. Mar George Alancherry is the Arch Bishop of the Diocese; Fr. Joshy Puthuva, a priest, is the finance officer; and Fr. Sebastian Vadakkumpadan is one of the Pro-Vicar Generals. The Diocese decided to create a medical college a few years back. In 2015, it spent Rs.58,78,25,930 on five pieces of land, the majority of which it borrowed from banks. Due to the failure of the plan and mounting debt, the Diocese sought to sell off some of its other assets. Fr. Joshy and Fr. Sebastian were tasked with the mission by the Diocese’s Finance Council in March 2016. After endorsing the Finance Committee’s suggestion, the Consulters’ Forum required those two people to sell the land under the following conditions:

the land must be sold at “an average price of Rs.9,00,000/- percent”;
The five properties must be sold together as a single lot.

In total, the Diocese agreed to sell 301.76 cents for Rs.27,15,84,000/-. After that, there were commercial issues to remember, as well as the associated temporal tribulations and evils. The accusations now coming out in a flood.

In a nutshell, Shine claims that the Arch Bishop and the two priests disobeyed the Consulters Forum’s directive by selling the land for a pittance. They just got half of the estimated selling price. And on September 13, 2017, Fr Joshy admitted before the Financial Council that he had got Rs.26 crores but only transferred Rs.8,00,00,000/- to the Diocese’s account. Fr Joshy was required to designate an in-house investigation committee after accusations of alleged abuse of confidence and misappropriation became public. According to Shine, the committee conducted a thorough investigation and discovered the Arch Bishop’s, two priests’, and Saju’s wrongdoings, which are crimes under Sections 120B, 406, and 415 of the Indian Penal Code. Shine claims that, as damning as the report was, the Diocese had no intention to prosecute the perpetrators. So Shine, a parishioner, took it upon himself to put the offenders to justice: he lodged an Ext.P1 report with the Station House Officer of the Central Police Station in Ernakulum. The SHO, on the other hand, declined to report a crime or issue a receipt, claiming that “he had orders from higher-ups” not to register any crime involving the “Syro-Malabar Church Land-deal issue.” Shine’s appeal has been ignored by the Commissioner of Police, Kochi. As a result, Shine filed WP (C) No.5522 of 2018, asking that the police authorities report and prosecute a crime. Martin Payyappilly, another parishioner, filed a police report regarding the same supposed crime as Shine Varghese. He accused Saju Varghese of intervening and manipulating the police into not acting on his complaint. Meanwhile, Martin learned the Original Petition (Crl.) No. 64 of 2018 was pending before this Court at the request of another parishioner. And it was almost the same thing. As a result, he filed W.P. (C) No.5997 of 2018, alleging that the police’s failure to report an offence, as well as this Court’s pause in coping with the OP (Crl.), would frustrate the ends of justice.

Apart from throwing light on the major issue of ‘Cacophony of Complaints’ and ‘Exhausting other remedies’ provided in CrPC, there were other subsidiary issues that were in front of the High court of Kerala. These issues were revolving around the Jurisdiction of the court and the legitimacy of writ petitions filed before the court. First, one being that the writ petition was heard by this Court under Article 226 of the Constitution, and the impugned decision was certainly made by exercising “criminal jurisdiction” by a learned Single Judge. Is it possible to bring an intra-court appeal against the decision in light of Clause 10 of the Letters Patent? The second one being that, other parishioners have previously lodged additional lawsuits alleging that the same group of individuals had committed criminal offenses. A competent court has ruled that the claims are of a civil nature in one case. Will the principle of issue estoppel, first and foremost, influence the writ petition if this finding is unaffected? The next issue before the court was of a collateral nature, does the Supreme Court’s decision in Lalita Kumari encourage a plaintiff to circumvent the statutory remedies and go directly to judicial review?

Analysis

‘Alternative remedy or relief’ is “where a new remedy is created or is present in addition to an existing one, they are called “alternative” if only one can be enforced; but if both, “cumulative”.”

In India, courts are endowed with a multitude of innate powers. If it’s under Section 151 of the Code of Civil Procedure (available to all civil courts), Section 482 of the Code of Criminal Procedure (available to the High Court), or Article 226 and 142 of the Constitution (available to the High Courts and the Supreme Court, respectively). These powers are unrestricted in the strictest sense. The courts, on the other hand, have defined their own guidelines for restricting the exercise of powers to specific circumstances. For example, we recently noticed the Supreme Court’s power under Article 142 and the unwritten law that it cannot be used where a statutory provision prohibits it. Inasmuch as it is now well known that the High Courts’ inherent powers to grant prerogative writs or order otherwise in terms of Article 226 of the Constitution, the High Courts would carefully test the reliefs pursued against the bar of alternative remedy. The law prevents a claimant from using the High Court’s extraordinary authority in cases where the claimant has a recourse available elsewhere (for example, an appeal to a Tribunal), and therefore, although the High Court has the power to intervene, it would not do so, requiring the claimant to seek all options before seeking the High Court.

The Supreme Court clarified the rule of ‘alternative remedy’ in its decision in State of Himachal Pradesh v. Gujarat Ambuja Cement Ltd., “We shall first deal with the plea about alternative remedy as posed by the appellant-State.” With the exception of a short time when Article 226 was amended by the Constitution (42nd Amendment) Act of 1976, the right of the alternate solution has been treated as a self-imposed restriction. It is simply a policy, ease, and discretionary rule, not a rule of law. Despite the availability of an appropriate solution, the High Court has the power to grant relief under Article 226 of the Constitution. Around the same time, it should not be forgotten that, even if the issue of an alternative solution has nothing to do with the case’s jurisdiction, the High Court should generally refrain from interfering where an appropriate and effective alternative remedy exists. If anyone comes before the High Court after even pursuing the alternate solution, the court should make sure that he has a solid argument or that there are good reasons to claim the exceptional jurisdiction. After referring to this case the High court of Kerala’s judgment in F.r Sebastian v. Shine Varghese seems appropriate, the court had an ingrained approach while tackling all the issues present in the case and have given justifiable reasoning for the same. Coming to the issues discussed by the court and the reasoning applied to them we shall discuss the first and foremost rudimentary issue of the maintainability of the writ.

Issue 1(Is the writ application maintainable)

The court while addressing this issue referred to the respondent Shri Raman Pillai’s arguments where he cited the case of Ram Kishan Fauji v. State of Haryana stating that even under Article 226, an intra-court appeal is not maintainable where the ruling of a learned Single Judge in the first instance comes under criminal jurisdiction. Clause-10 of the Letters Patent is inaccessible in those circumstances.

In Ram Kishan Fauji, a three-judge Supreme Court bench held that the nomenclature of a writ petition is not the deciding factor; “what is important is what is ultimately being tried to be enforced.” The High Court cannot entertain an intra-court appeal until it rules in the first place under Article 226 “in the exercise of criminal authority,” which is forbidden by Clause 10 of the Letters Patent. But the court observed that the objection put forth by the respondent cannot detain them long, by referring to one of the recent judgments of their court itself the bench elaborately considered the same issue in State of Kerala v. Mohammed where the court compared and analysed clause 10 of letters patent with the case of Ramkishan fauji, High court of Kerala Act, Clause 15 of letters patent applicable to Madras High court.

Court referred the Section 5 of the Kerala High court Act which mandates that an appeal shall lie to a bench of two judges from “(i) a judgment or order of a Single Judge in exercise of original jurisdiction), and (ii) a judgment of a Single Judge in exercise of appellate jurisdiction in respect of a decree or order made in exercise of original jurisdiction by a subordinate court.”, reviewing this the court observed that the restrictions laid down in the clause 15 of letters patent are not incorporated with the Section 5 of High courts Act. As a result, “orders issued by a learned Single Judge in the exercise of criminal jurisdiction are not excluded.” The court reckons—indeed, was required to hold—that the intra-court appeal is eminently maintainable, provided the emphatic enunciation of rule by a co-equal Bench of the Court.

Issue 2 (Principle of Issue Estoppel)

The Honourable court does not give proper explicit reasoning for resolving this issue, rather the court opined that this is an academic issue and would not be adjudicated. This issue arose because there were multiple petitions with the same factual parameter and issues, before Shine Varghese there were several parishioners who filed W.Ps with similar issues and facts. The question before the court was whether Principle of Issue Estoppel will affect the W.P filed by Shine or will his petition be considered. The Principle of Issue of Estoppel is an affirmative defence that prevents a group from re-litigating an issue that was decided against them in a previous action, even though the second action is substantially different from the first. The court even quoted the case of Mills v. Cooper, in which Lord Diplock said that “matter estoppel is a special application of the general law of public policy that litigation should be final.” The general rule still extends to judicial cases, but in a somewhat different way due to the difference between criminal and civil prosecutions. It takes the shape of the double jeopardy provision in this case….” The court however stated that this issue even after being of academic nature will be obviated by the court’s rationales in the issue of alternative remedies.

Issue 3 Collateral (In Lalita Kumari, does the Supreme Court enable the petitioner to withdraw statutory remedies and instead recourse directly to the judicial review?)

The High Court observed the complainant’s arguments which were as follows: Despite the fact that the complainants were presented with a clear process under the Code for filing a criminal case, they based their arguments on what they considered to be Lalita Kumari’s authoritative dictum. They argue that this verdict by a Constitution Bench has eliminated all statutory obstacles that a claimant would otherwise face in reaching the High Court directly. But is it really so? This was been answered in this case by the bench. First of all, discussing the holding in Lalita Kumari Lalita, the court observed that, Kumari’s approach is clear and straightforward: if a victim of a cognizable crime approaches the police, they must file an FIR and immediately investigate the crime, with the arrest of the accused not being a necessary step in the process. Lalita Kumari is worried about the police’s legal duty to file an FIR if they receive a formal report claiming a criminal offense. In any case, it does not imply that an aggrieved complainant must rush to the High Court if the police refuse to register a crime. Lalita Kumari is concerned about the police’s legal obligation to file an FIR if they receive a written report alleging a cognizable offense. In any case, it does not enable an aggrieved claimant to run to the High Court if the police refuse to report an offence. It hasn’t even allowed the suitors to disregard the other constitutional provisions and rely on a public-law remedy, let alone one under Art. 226. That question—what remedies are applicable to a claimant if the police fail to file an FIR—is not discussed or answered in Lalita Kumari. Granted, sub silentio is a well-established legal doctrine for evaluating a decision’s precedential significance. This doctrine, though, has no position unless the court left a matter unresolved that should have been resolved. The verdict on a subject that has not been directly dealt with and pronounced on, despite the fact that it is present by inference, remains sub silentio. As a result, any question that has been left unresolved cannot be seen as a precedent. The Supreme Court noted in B. Shama Rao v. UT of Pondicherry that a verdict is binding not because of its conclusions, but because of “its ratio and the principles laid down therein.” Lalita Kumari, on the other hand, has no opportunity to argue before the court over the procedural remedies available to a complainant after the police refuse to file an FIR. As a result, the court determined that Lalita Kumari will not, in effect, decimate the aggrieved complainant’s other legal remedies. The Landmark case of Lalita kumari has passively contradicted various judicial precedents on this doctrine when the SC interferes by ‘obliging the police officials to file a complaint after the preliminary inquiry is been conducted’. This judgment can be criticized on its sheer ignorance of the sub silentio issues and binding the officials by giving a straitjacket modus operandi in mobilizing the criminal procedure, this at various levels interferes and affects the statutory powers given to these investigating bodies and personnel.

Issue 4 (Is it possible for a complainant to ignore the alternative solutions given by, say, the Criminal Procedure Code and concentrate on a writ solution instead?)

The court analyses the Scope of Alternative remedies if a police official denies to file an FIR, while analysing the statutory remedies per se the court enlightened about the criminal nature of the case specifically refers to the Code of Criminal Procedure which demarcates the procedure for administration of substantive criminal laws, In it, the bench reviews the various sections which deal with the powers of the investigating officers and responsibilities of the magistrate to take cognizance if ever the official fails to register the complaint. At Instance, Court takes into consideration the very basic section of CrPC which discusses about “the information provided to the police officers and their power to investigate”, Section 154 of CrPCreads as follows: A signed or oral report regarding a cognizable offence can be presented to the police by any individual. If the information is submitted verbally, the police must write it down, read it, and make the claimant sign it. The complaint’s content must then be reported in a book maintained for that purpose by a police officer. Furthermore, the officer shall provide the applicant with a copy of the reported information. According to the Pleaders of Shine and other petitioners, this course of action was left incomplete when they provided all the information to the police officers and officers refused to write it down and register a record of the complaint. If this was true, then what was the alternate option left before the applicants after this denial is the major question. The court observes that the answer to this question is itself embedded in Sub-section (3) of Section 154 of CrPC. Subsection (3) specifies the redress open to a complainant if the police refuse to register his complaint: he may send information about the cognizable crime to the concerned Superintendent via post. If that officer determines that the complaint discloses a cognizable offense after receiving it, he must either conduct his own investigation or order one of his subordinate officers to do so under the Code. This clears out that a complaint to the respective Superintendent of Police becomes one of the Statutory Remedies available to the complainant which is explicitly been mentioned in CrPC. Looking forward to other remedies provided in the Code the court refers to Section 156,190 and 200 of CrPC. The “police officer’s power to investigate cognizable cases” is addressed in Section 156 of the Code. The police officer does not require the Magistrate’s permission to investigate if the offense is cognizable. The investigation cannot be halted or dealt with based on the officer’s lack of investigative authority. A Magistrate may even order an investigation whether he or she is acting under Section 190. The phrase “may order such an investigation as above-mentioned” appears in Sub-section (3) of Section 156. The words “as above mentioned” clearly refer to Section 156(1), which requires the officer in charge of the Police Station to conduct an investigation. This clears out that the Officer in Charge of the police station can be referred comes out to be another remedial step by the applicant. The High Court before advancing cited here the Judgement given by SC in Sakiri Vasu vs. State of U.P in which the apex court opines that a review by the Magistrate on the police undertaking their duties under Chapter XII CrPC is also provided for in Section 156(3). If the Magistrate determines that the police have not thoroughly investigated the case or have not done so satisfactorily, she will order the police to conduct a thorough investigation and follow the case. This is an Independent power given to the Magistrate by the statute and does not affect the investigation power of the police officers. This can act as a check on the actions of the responsible police officers dealing with the Complainant’s case. This is a ‘passive remedy’ available after the FIR is filed but if we talk about the magistrate’s cognizance before FIR is filed then we shall refer to Section 190 and 200 of CrPC, the HC Observes. If the police fail to respond at any stage, the plaintiff has the option of filing a complaint with the jurisdictional Magistrate under Section 190 read with Section 200 of the Code. According to Chapter XV of the Code, the Magistrate will investigate the complaint. If a Magistrate “finds a prima facie case after recording evidence,” This clears out that Filing a complaint before the respective Magistrate is another statutory remedy that and complainant can opt. Deducing every section referred we get 4 rigid statutory remedies in CrPC for which an applicant can go for before approaching HC with a Writ remedy. The court apart from reviewing the statute further referred to the Previous SC judgment regarding the alternative remedy if the police fail to file the FIR. Referring to Aleque Padamsee v. Union of India and Sudhir Bhaskarrao Tambe v. Hemant Yashwant Dhage the HC said that If a person has a complaint that the police have not reported or have not adequately investigated, the aggrieved person’s recourse “is not to approach the High Court under Article 226 of the Constitution of India, but to go to the Magistrate concerned under Section 156(3) of the Code.” If the claimant approaches the Magistrate and she is confident on the grounds, she will order the police to file an F.I.R. And if the police had already registered the offence, the Magistrate has the authority to order a proper investigation, including, at her discretion, proposing a change of investigating officer. The Court in reference to these Judgements also commented on the tendency of complainants to rush the HC’s without going with the alternative recourses first. Lalita Kumari, as authoritative as it is, has not modified the proposition of law that the High Court, in exercising its jurisdiction under Article 226 in this case, ensures that the suitor has no other effective, alternative remedy. As a result, the precedential importance of Aleque Padamsee, All India Institute of Medical Sciences, Gangadhar, Sudhir Bhaskarrao Tambe, Sakiri Vasu, and Kunga Nima Lepcha, to name a few, is unaffected. The court criticizes the Impugned Judgments made by the previous bench a few days before stating that the questioned judgment seems to have put a strong emphasis on the Diocese’s inquiry report, concluding—at least on the surface—that a cognizable offence has been created. Regrettably, it has overlooked the crucial question of jurisdiction. It has overlooked Shine’s unseemly haste: no sooner had he filed his case than he ran to the Court—in less than 24 hours. To Conclude, The court observed that Shine’s actions and Martyn’s petition have faltered at various ways. Shine Varghese has failed at the first hurdle—the alternate remedy, which he had on several occasions. That is to add, the disputed decision has a legal flaw and can be discarded. And the court does so. Martin Payyappilly’s writ appeal, like Shine’s, suffers from the absence of an alternative remedy. Aside from that, his writ petition still suffers from a fatal flaw: the concealment of material facts. The fact that the police recorded Martin’s response after his complaint, he did not want to reveal this fact until the prosecutor took it to the Court irrefutably. As a result, the ruling in W.P. (C) No.5997 of 2018 is revoked, and the writ petition is rejected.

The court when criticizes this act of haste by the petitioners without looking for any alternate remedy speaks volumes, “if seen closely we can infer that court indicates towards the overburdening of the criminal justice system because of the ratty and impatient approach of the petitioners” This indication is often referred to in future judgments after the case of F.r Sebastian v. Shine Varghese. In 2019, the Supreme Court in the judgment of Maharashtra Chess Association v. Union of India was questioned that whether the presence of an alternative solution would bar the High Court’s writ jurisdiction.

“The availability of an alternative solution, whether sufficient or not, does not change the inherently arbitrary essence of the High Court’s writ authority, and therefore does not establish an absolute procedural bar to a High Court exercising its writ jurisdiction.”

The court went on to say that courts had placed some limitations on the exercise of their writ jurisdiction to ensure that the jurisdiction did not become an appeal forum for all cases within a High Court’s local jurisdiction.

“It’s clear what this self-imposed guideline is about. When High Courts practice their writ power so widely they systematically overrode constitutional appeal processes, they will be inundated with lawsuits, to the detriment of the litigants in such cases.” It will also frustrate the legislature’s aim of enacting statutory appellate mechanisms to ensure that cases are resolved quickly. The bench rejected the contention that if a High Court’s writ jurisdiction is circumscribed by the presence of a reasonable alternate remedy, whether constitutional, legislative, or contractual, then a High Court should not exercise its writ jurisdiction where such an alternate remedy occurs under the self-imposed law. After considering the representations on behalf of the parties, the Hon’ble Supreme Court in Authorized Officer, State Bank of Travancore, and Ors. Vs. Mathew K.C. observed that the discretionary jurisdiction under Article 226 of the Constitution is not absolute, but must be exercised judiciously in the specified facts of a case and in conformity with the statute. The general rule is that if there are other procedural alternatives available, a writ petition under Article 226should not be considered.

After analysing the issues discussed by the court it can be deduced that the court’s decision in F.r Sebastian v. Shine Varghese is appropriate as it crystalline the scope of alternative recourse provided in the CrPC and rightly points out the wrongdoing of the complainant Shine in creating haste while opting for the criminal procedure to seek justice. The reasoning given in the judgment relies upon the previously decided cases on a similar issue, thus, the reasoning provided is consistent and provides more clarity to the reader’s approach in analysing the scope of statutory remedies. This Judgement does not significantly influence the existing laws rather it interprets and clarifies the ambit of the existing laws and the recourses awarded by them to a layman. However, the court omits the issue of Estoppel which the court labels as an academic issue and not adjudicatory. Anyhow, such omission does not affect the ratio of the judgment and its implications.

Conclusion

This judgment tackles every issue with utmost legal acumen and in a symphony refers to all the various precedents that talk about criminal procedural jurisprudence. This judgment can be called an “Evaluative Judgement” which does not influence or add to the existing laws but rather carve them and clarify their implications. The court’s ruling in F.r Sebastian v. Shine Varghese is relevant because it solidifies the extent of alternative recourse available in the CrPC and correctly highlights the wrongdoing of the defendants in rushing to pursue justice by criminal proceedings. The rationale presented in the decision is clear and gives greater guidance to the reader’s method in evaluating the extent of legislative remedies since it is focused on prior resolved decisions on the same question. This opinion would not substantially change existing laws; rather, it interprets and clarifies the nature of existing laws and the solutions applicable to laypeople. When the court criticizes the petitioners’ hurry in not seeking an alternative solution, it says it all: “if looked at closely, we can conclude that this is a case which apart from deciding prima facie indulges deep into the Faux pas done by the petitioners in a hurry to seek justice, It clearly opines that if courts like the impugned judgment start deciding prima facie without using utmost prudence it will finally result in the overburdening of the criminal justice system and its Collapse at a Point.”

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Models of Alternative Dispute Resolution

Oishika Banerji

October 25, 2021

This article has been written by Adv Priscilla Rodrigues pursuing the Certificate Course in Arbitration: Strategy, Procedure and Drafting from LawSikho. This article has been edited by Prashant Baviskar (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).

Table of Contents

Introduction

Dispute resolution is an important mechanism in order to make social life stable. When civilization began and when people started interacting with each other, the basis of their rights gave birth to the dispute between them. To resolve the dispute between them, a mechanism was required. Dispute resolution mechanism aims to settle and manage disputes, facilitating cooperation between individuals and groups. Thus, it can be argued that it is the stability that people require socially, without which it can be difficult for individuals to carry on with life together. Commercial transactions are increasing in today’s world. All trade can involve disputes, and effective trade must have the means to resolve disputes other than force them. In trade, if two traders are in a dispute over the price or quality of the delivered products, they will normally turn to a third party whom they trust. In the modern world this process is known as arbitration, international commercial arbitration takes formal action at international level as a dispute settlement mechanism between the parties during international trade i.e. when two countries trade with each other.

What is Alternative Dispute Resolution?

Alternative Dispute Resolution (ADR) is a term used to describe the various ways in which legal disputes are resolved. The business world as well as common people are discovering that it is impracticable for many individuals to file lawsuits and seek timely justice. The Courts are backlogged with case files resulting in a year or more delay for the parties to hear and resolve their cases. In response to this question of delayed justice, the ADR Mechanism was created.

Alternate dispute resolutions approaches are gradually being recognized at both national and international level in the field of law and commercial sectors. The diverse approaches can help parties settle their conflicts efficiently and expeditiously on their own terms.

In addition to the trials, alternate conflict resolution strategies are in character. Alternative conflict resolution techniques can be used in almost all contested matters, which can be settled by agreement between the parties according to statute. Alternative conflict resolution methods can be used in different dispute types, in particular; legal, economic, industrial and family disputes. Alternative dispute resolution strategies provide the best solution with respect to trade disputes to aid the country’s economic development.

The aim of justice is to provide redress for the aggrieved and helpless. If, after the death of the petitioner or if the subject matter exhausts, the courts delay the trial and give justice, it cannot be termed as punishment. The alternative dispute resolution process is being implemented because a mechanism was required that worked effectively and offered a friendly and speedy solution to people’s disputes. As the name suggests, ADR is an alternative to the conventional court-led dispute resolution procedure. It is the method of dispute settlement as an alternative to the standard judicial process.

Such approaches are appropriate for reform and implemented to improve the judicial system in developing countries. The alternative dispute resolution system has been adopted by many countries like India. The adoption of ADR in India is a major step by lawmakers and the judiciary towards achieving the “Constitutional Target” of complete justice in India.

Given the huge number of cases pending, governance and administrative oversight of the judiciary by manual processes has become extremely difficult. The Supreme Court stated emphatically that somehow this matter must be addressed: ‘An impartial and effective judicial system is among our constitution’s core components… It’s indeed our statutory role to check that a bottleneck of cases are reported and that measures are made to expedite case disposition.” By the very technique used, the alternative dispute resolution system will maintain and strengthen personal and business relationships which the adversarial process might otherwise be harmful. It is also versatile because it requires the contestants to choose procedures that stipulate the essence of the conflict and the market sense in which it takes place.

Methods of Alternative Dispute Resolutions

The word “Alternative Dispute Resolution” includes various negotiation mechanisms including, Lok Adalats, Arbitration, Conciliation, and Mediation in its fold. Several countries have used this Alternative Dispute Resolution strategy for successful dispute resolution. Mediation is the most common sort of alternative dispute resolution. In addition to this, some had defined mediation as the most appropriate method for resolving disputes. Mediation as a tool for resolving disputes is not a new concept. To put it simply, mediation is a friendly dispute settlement involving a neutral third party who serves as a facilitator and is called a’ mediator. ADR is usually less formal, less expensive and less time consuming than traditional trials. ADR can also give people a greater opportunity to decide when and how to settle their conflict. Arbitration, Conciliation, Mediation, Judicial Settlement, and Lok Adalat are the most commonly used ADR processes in civil proceedings. Section 89 of the Code of Civil procedure allows for the out-of-court resolution of disputes. It is founded on the Law Commission of India’s and the Malimath Committee’s suggestions. The Law Commission of India advised that the Court may encourage any party to a suit or action to attend in person in order to find an amicable resolution of the disagreement.

The Malimath Committee recommended that it be made compulsory for the Court to refer the conflict to arbitration through Arbitration, Conciliation, Mediation, Judicial Arbitration via Lok Adalat, after the issues have been framed. The case could only proceed further if the parties refuse to resolve their differences through any of the alternative dispute resolution approaches.

The different methods of ADR can be summarized as under: –

1. Arbitration;

2. Conciliation;

3. Mediation;

4. Judicial Settlement;

5. Lok Adalat.

Arbitration

Arbitration, a type of alternative dispute resolution (ADR), is a strategy for resolving conflicts outside of the court system in which the parties to a disagreement refer it to one or more people, known as arbitrators, to whom they intend to be bound by their judgement. It is a method of dispute settlement in which a third person examines the evidence in the case and renders a legally enforceable decision for both parties. Arbitration awards have limited right of review and appeal. Arbitration is not the same as civil and mediation proceedings. Arbitration can be optional, or mandatory. Clearly, mandatory arbitration can only come from a law or arrangement that is mutually signed where the parties agree to arbitrate all current or future disputes without necessarily knowing what disputes will ever occur. In India, if the matter is referred to Arbitration then the provisions of the Arbitration and Conciliation Act, 1996 will apply.

The main types of ADR are as under:

Voluntary Arbitration;
Compulsory Arbitration.

Other Types of Arbitration

Ad-hoc Arbitration;
Institutional Arbitration;
Statutory Arbitration;
Domestic or International Arbitration.

Conciliation

It is a form of alternative dispute resolution in which the parties to a dispute hire a conciliator to help them resolve their issues individually. They do this by reducing conflicts, strengthening coordination, identifying problems, offering technical assistance, discussing possible solutions and bringing about a negotiated settlement. In this manner, it is a bit different from Arbitration.

It is a consensual process in which the parties involved are free to reach an agreement and try to resolve their disagreement through conciliation. The method is versatile, which helps the parties to determine the time, duration and content of the conciliation procedure. Those proceedings are seldom public. These are interest-based, as the conciliator must take into account not only the legal positions of the parties but also their; economic, financial and/or personal interests when negotiating a settlement. In the Indian sense, the terms conciliation and mediation are synonymous. Conciliation is a cooperative mechanism through which the conciliator, a qualified and professional neutral, facilitates negotiations between the disputing parties and assists them in recognizing their differences and desires in order to reach an arrangement that is mutually acceptable. Once a settlement has been found before a conciliator between the parties to the conflict, the resolution has the effect of an arbitration award and is legally tenable in any court in the country. Many trade disputes, in which it is not necessary that a binding and enforceable decision should take place, are subject to conciliation. Conciliation may be especially appropriate where the parties to the conflict seek to preserve and sustain their commercial relations.

Mediation

Today, mediation is a voluntary and informal method of dispute resolution throughout the world. It is a simple, voluntary, party-centered and structured negotiation process in which a neutral third party helps parties resolve their disputes friendly through the use of specified communication and negotiation techniques. Mediation is a process where the parties are themselves in control of it. The mediator’s role is strictly that of a facilitator, assisting the parties in reaching a negotiated settlement of their disagreement. The mediator takes no decisions and does not enforce his opinion on what should be a fair settlement. Both sides meet with an experienced neutral mediator during the mediation process. The session starts with each side explaining the issue from their point of view, and the remedy they seek. Once the respective views of each party is discussed, the mediator then splits them into private rooms, initiating a “caucus conference” process and then “joint meetings with the parties.” Both sides agree to the limit. The mediator does not have the power to dictate his decision regarding the party. Mediation allows a conflict to be handled swiftly, with minimal stress and expense, while still preserving the parties’ relationship and maintaining anonymity.

Judicial settlement

Section 89 of the Code of Civil Procedure also refers to judicial settlement as one of the alternative modes of resolution of disputes. There are, of course, no specific rules for such settlements framed up to now. The term “Judicial Settlement” is however specified in Section 89 of the Code. It was provided that the provisions of the Legal Services Authority Act, 1987, would apply when there is a judicial settlement. This means that the Judge concerned, seeks to settle the dispute between the parties in a legal settlement amicably. Such settlement shall be deemed to be an agreement within the scope of the Legal Services Authority Act, 1987, if any friendly settlement is resorted to and reached in the case at question. Section 21 of the Legal Services Authorities Act, 1987 specifies that each Lok Adalat award shall be deemed a Civil Court decree. India has no written guidance on judicial settlement

Lok Adalat

The idea that is gaining popularity is that of Lok Adalats or the courts of the people as formed by the government to settle disputes through conciliation and compromise. It is a judicial body and a dispute settlement organization established for social justice by the citizens themselves, based on the settlement or agreement obtained through formal negotiations. The first Lok Adalats was conducted as far back as 1982 in Una village of Junagadh (Gujrat). Adalats also recognize cases within their jurisdiction which are pending in regular courts. Section 89 of the Code of Civil Procedure also provides for the appeal to the Lok Adalat of pending Civil disputes. When the matter is referred to the Lok Adalat then it will follow the provisions of the Legal Services Authorities Act, 1987. The holding of Lok Adalat is governed by Section 19 of the Legal Services Authorities Act, 1987.

Conclusion

People now have a new way to settle their conflicts thanks to the emergence of alternative dispute resolution systems. The rapid resolution of conflicts in Lok Adalat has gained widespread public support, giving ADR a fresh impetus that will undoubtedly lower the number of cases pending in the courts. There is a pressing need for ADR mechanisms to provide access to justice. The ADR movement must be encouraged to evolve at a faster pace. This will significantly lessen the burden on the courts, in addition to offering immediate justice at the doorstep at a low cost. If they are implemented fully, they will truly achieve the purpose of providing social justice to the disputants.

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A deemed decree under CPC, 1908 : an overview

Diganth Raj Sehgal

October 25, 2021

Civil Litigation — Image source - https://bit.ly/3g6otiK

This article is written by Oishika Banerji of Amity Law School, Kolkata. The article discusses the concept of deemed decree under the Code of Civil Procedure, 1908.

Table of Contents

Introduction

Section 2(2) of the Code of Civil Procedure, 1908 defines “decree” as:

“the formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final. It shall be deemed to include the rejection of a plaint and the determination of any question within Section 144, but shall not include—

(a) any adjudication from which an appeal lies as an appeal from an order, or

(b) any order of dismissal for default.”

From this definition, it becomes clear that there are three classes of decrees namely,

Preliminary: A decree is said to be preliminary when the rights of the parties are decided by an adjudication but the suit is not completely disposed of. For example suit for accounts between principal and agent.
Final: A decree is said to be final when either when no appeal has been filed against it as the matter has been decided by the highest court who has issued the decree or the court passing the decree has disposed of the suit completely.
Partly preliminary and partly final: A decree can be partly preliminary or partly final only in cases of mesne profits where the decree passed by the court in regards to possession of the property is the final decree, and the decree which directs an inquiry into the mesne profits will be the preliminary decree.

Nowhere can the concept of the deemed decree be noticed in this provision and therefore it is clear that although deemed decree symbolizes any decree that does not fulfill the essentials under Section 2(2), it can be considered as a decree. This article will provide an overview of the concept of a deemed decree and how it is perceived by the Code of Civil Procedure, 1908.

Deemed decree

While the meaning attached to the term “decree” has been incorporated under Section 2(2) of the Code of Civil Procedure, 1908, importance must be provided to the term “deemed” as well. The literal interpretation of the word “deemed” signifies “to consider”. The latter term has been coined with “decree” to design a statutory fiction for the purpose of providing a divergent meaning to the term “decree” and thereby covers what the term does not cover expressly. This explanation, therefore, differentiates the words “decree” with that of “deemed decree”.

The case of CIT v. Bombay Trust Corporation (1930) requires a special mention as the Privy Council, in this case, held that whenever a person is deemed to be something, the Act of the Parliament requires him to be treated like something which he, in reality, is not. It was the case of East End Dwellings C. Ltd v. Finsbury Borough Council (1952) where the function of the term “deemed” was highlighted as have been discussed previously. Further, in 1979, the Apex Court of India in the case of Lucky Kochuvareed v. P. Mariappa Gounder, understood the intention of the legislature behind the usage of the term “deemed’ and observed that whenever any statute is arranged with the term “deemed” is associated to a thing, or an individual in general, it would mean that the Legislature vests a status on that object or the individual after due consideration on its part.

It is noteworthy to mention that every decree is appealable unless otherwise has been expressly stated in the statute. Similarly, the deemed decree should also be appealable by nature. But, the same gets clarified in the case of B. Nukaraju v. MSN Charities (1994). The Court held that as the concept of a deemed decree is not covered by the ambit of Section 2(2), these types of decrees will therefore not be proceeding according to Section 96 of the Code of 1908 which talks about “appeals from original decree”. Thus in such scenarios, the only miscellaneous appeals will be applied in place of regular appeals.

Deemed decree under the Code of Civil Procedure, 1908

Section 2(2) of the Code of Civil Procedure, 1908 does not expressly talk about deemed decrees but the Code, in general, recognizes this type of decree in several ways which find a discussion hereunder.

Rejection of a plaint

Order 7 Rule 11 of the Code of Civil Procedure, 1908 lays down the provision for rejection of a plaint. A plaint is a pleading by the plaintiff, a presentation of which commences a civil proceeding. The provision provides certain grounds which are to be considered by the Court while rejecting a plaint. Now it is necessary to point out why rejection of a plaint will be perceived as a deemed decree. The wordings of Section 2(2) itself states that the provision is deemed to be inclusive of;

Rejection of a plaint;
Determination of any question under Section 144 of the Code of Civil Procedure, 1908.

For a decree under Section 2(2) to result, there are certain requisites that this provision expressly mentions to be followed, which are;

An adjudication must take place;
Adjudication taking place must be done in a suit;
The adjudication must determine the rights of the parties in the suit;
The determination must acquire a conclusive nature;
Adjudication must be formally expressed.

Taking these grounds into account, a direction by the Court is considered to be a decree. If a plaint is rejected by the Court, then it implies that no adjudication has taken place and, therefore there exists no suit, as a suit means a civil proceeding that is instituted by plaint presentation. Therefore, rejection of a plaint cannot be considered as a decree under Section 2(2) instead of a deemed decree as the legislation intends to state.

Determination of question under Section 144

Section 144 of the Code of Civil Procedure, 1908 talks about the application for restitution. Just like the rejection of plaint, determining a question under Section 144 is also a deemed decree as having been expressly provided by Section 2(2) of the Code. Section 144 is an empowering provision for the courts to order restitution whenever an order or a decree appears to be reversed by means of an appeal, or revision, or other proceedings.

In the case of S.M. Deshmukh v. Ganesh Krishnaji Khare (1973) the Bombay High Court had observed that the responsibility to ensure that no action of the Court affects the parties to the suit vests solely on the Courts. The Courts have inherent jurisdiction to grant restitution whenever circumstances demand. Section 144 of the Code can be considered to be a deemed decree and not a decree in general because a decree under Section 2(2) of the Code needs to be a product of conclusive determination whereas Section 144 rectifies any kind of error that could take place by the Court while passing a decree. Therefore, after the error is erased, the decree retains its traits under Section 2(2), and thus the legislation intends to refer to the determination of question under Section 144 as a deemed decree.

Adjudication under Order 21 Rule 58

The term adjudication means determining the point of law that is in conflict. Order 21 Rule 58 of the Code of Civil Procedure, 1908 lays down the provision for adjudication of claims to, or objections to attachment of property. To simply state, Rule 58 talks about adjudication that results from the claim made on the attachment of a property along with the execution of a decree on the basis that such property is not liable to such an attachment. Clause 4 of Rule 58 which invokes the concept of deemed decree under Order 21 Rule 58 states that “Where any claim or objection has been adjudicated upon under this rule, an order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.” A bare reading of this clause reveals that the adjudication taking place under Rule 58 will not be resulting in a decree under Section 2(2) of the Code, instead will be a deemed decree as Clause 4 expressly mentions.

Order 21 Rule 98

Order 21 Rule 98 of the Code of Civil Procedure, 1908 lays down the provision for orders after adjudication. Before delving into the provision, it is significant to note that the definition of decree under Section 2(2) of the Code of 1908 expressly eliminates order. Instead, the sub-clauses of clause 2 of Section 2 read with Section 2(14) of the Code differentiate decree from that of order. By this very fact, Order 21 Rule 98 falls within the ambit of deemed decree according to the intention of the legislation but not exactly a decree under Section 2(2). The Andhra High Court in the case of Zafu Javeed v. V. Narasimha Reddy And Others (1998) observed that Order 21 Rule 98 of the Code of Civil Procedure, 1908 contemplates adjudication related to the questions that are referred in Rule 101 Code which deals with the questions that are to be determined. The Court further held that unless an order amounts to adjudication, the same cannot be considered as a decree and therefore no appeal can be filed against such an order. Thus although it cannot be considered a decree, it can be perceived as a deemed decree.

Order 21 Rule 100

Order 21 Rule 100 of the Code of Civil Procedure, 1908 deals with order to be passed upon application complaining of dispossession. This Rule also needs to be read along with Rule 101 which deals with questions to be determined. Applying the same interpretation as have been made in Order 21 Rule 98, it can be said that Rule 100 of the same order is a deemed decree as it involves an adjudication which formally does not fit in the scope of Section 2(2) of the Code of 1908 but they are deemed to be decrees due to legal fiction.

Conclusion

As we come to the end of this article, what can be inferred from the discussion regarding the deemed decree above is that this type of decree holds immense importance just like decrees under Section 2(2). Although not mentioned in any provision, deemed decrees being implied from the examples provided in this article has a greater role to play in the working of the Code of Civil Procedure, 1908.

References

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Invoking arbitration agreements in unstamped documents in the light of Garware Wall Ropes Judgment : Analysis

Abanti Bose

October 25, 2021

Arbitration agreement and gavel on a desk. — Image Source- https://bit.ly/2XcCCTM

This article is written by Pramil Kant, pursuing Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution from LawSikho. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Smriti Katiyar (Associate, LawSikho).

Table of Contents

Introduction

“If you want to prolong a dispute, litigate. But if you want to resolve a dispute, arbitrate”- Anonymous. There has always been confusion regarding the admissibility of an unstamped agreement containing an arbitration clause in a court of law. To give a background, certain documents are mandatorily required to be stamped. The list of such documents is provided in Schedule I of the Indian Stamp Act, 1899. In case, such documents are not stamped or proper stamp duty is not paid on such documents, Section 35 of the Indian Stamp Act, 1899 provides that such documents cannot be admitted in evidence by any person having by law or by the consent of parties, authority to receive evidence. Therefore, neither the court of law nor arbitrator can admit such documents in evidence. Further, if a court of law cannot admit such a document, it will not be able to appoint an arbitrator or arbitral tribunal.

On the other hand, Section 16(1)(a) of the Arbitration and Conciliation Act makes it clear that an arbitration clause that forms part of the contract shall be treated as an agreement independent of the other terms of the agreement. In other words, an arbitration clause contained in an agreement and the master agreement are essentially two different agreements. Any defect, irregularity in the substantive agreement shall not affect the arbitration clause contained in it. Therefore, the principle of severability has been introduced in an agreement containing an arbitration clause. The reason behind introducing the principle of severability is that no technical irregularity should be allowed to come between the intention of the parties to settle their disputes through arbitration. Further, this principle of severability follows from United Nations Commission on International Trade Law (UNCITRAL) model law on international commercial arbitration, 1985.

Garware Wall Ropes Limited vs. Coastal Marine Constructions and Engineering Limited

In the landmark case of Garware Wall Ropes Limited vs. Coastal Marine Constructions and Engineering Limited (“Garware Wall Ropes Judgment), a sub-contract was given by the appellant to the respondent which contains the following arbitration clause:

“Any and all claims, disputes, questions or controversies involving the parties and arising in connection with the agreement or execution, interpretation, validity, performance, termination hereof which cannot be finally resolved by such parties [sic through] negotiation shall be resolved by final and binding arbitration held in Pune. The disputes shall be referred to a sole arbitrator to be jointly appointed by GWRL and COMACOE jointly in agreement.”

It is important to discuss here the amendment made in the Arbitration and Conciliation Act, 1996 in 2015. This amendment inserted Section 11(6A) which reads as follows;

Section 11 : appointment of arbitrators

(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under subSection (4) or sub-Section (5) or sub-Section (6), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement.

Before Section 11(6A) of the Arbitration and Conciliation Act, 1996, the apex court in SMS Tea Estates (P) Ltd. v. Chandmari Tea Company (P) Ltd., [“SMS Tea Estates”] has held that where the arbitration clause is contained in an unstamped agreement, the provisions of the Indian Stamp Act, 1899 [“Indian Stamp Act”] requires the judge hearing the Section 11 application to impound the agreement and ensure that the stamp duty and penalty (if any) are paid upon proceeding with the Section 11 application.

Therefore, the question before the apex court was:

Whether the ratio of SMS Tea Estates is still applicable after the insertion of Section 11(6A) of the Arbitration and Conciliation Act, 1996 and;

Will the non-stamping of the master agreement affect the arbitration clause contained in it?

The decision of the Supreme Court

The apex court, after considering the contentions of both the parties in detail, held that the arbitration clause contained in an unstamped agreement, that compulsorily required to be stamped, cannot be invoked. The court held that as soon as the court is faced with an unstamped agreement, it should impound the same and only after the stamp duty and penalty (if any) has been paid in accordance with the stamp duty act, the court can invoke an arbitration clause contained in the agreement.

In simpler words, the court cannot appoint an arbitrator unless the deficit stamp duty and penalty (if any) has been paid.

In order to understand the reasoning of the court, we will have to analyse Section 7 of the Arbitration and Conciliation Act, 1996.

Arbitration agreement

An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

Therefore, an arbitration agreement can be considered an arbitration clause only if it is contained in a contract. As per the Indian Contract Act, an agreement enforceable by law is a contract.

When an arbitration clause is contained in a contract, it is important to note that the agreement only becomes a contract when it is enforceable by the law. And an agreement, which requires proper stamp duty to be paid, shall become enforceable by law only when that particular agreement has been properly stamped and stamp duty duly paid. Therefore, on a conjoint reading Section 7(2) of the Arbitration and Conciliation Act, 1996 and Section 2(h) of the Contract Act, 1872, it becomes quite evident that arbitration clause shall “exist” only when it is contained in an agreement enforceable by law.

The court further held that once the stamp duty along with penalty (if any) has been paid on the agreement, the court can invoke the arbitration clause contained in it and appoint an arbitrator or arbitral tribunal.

Analysis of the judgment

The primary purpose of the Indian Stamp Act is to generate revenue for the state. Many experts have opined that though the apex court has upheld the revenue-generating objective of the Stamp Act, this judgment of the apex court will have an adverse effect on achieving the objectives of the Arbitration and Conciliation Act and promoting arbitration as an alternative dispute resolution mechanism.

Firstly, the experts have felt that the non-stamping of an agreement only affects the evidentiary value of the legal agreement and has no effect on its validity. However, in the Garware Wall Ropes Judgment, the supreme court has held that a legal agreement that is not duly stamped is not enforceable in law and therefore not a “contract”.

Secondly, the court has upheld the SMS Tea Estates Judgment in this case. In that judgment, the issue before the court was whether a lease deed, which requires compulsory registration and stamping, can be used by the court of law as a piece of evidence when it is neither registered nor stamped. In that case, the court applied the principle of severability differently to the Registration Act and the Stamp Act. The court held that even if the document is not registered, the arbitration clause contained in it will be independent of the terms of the lease deed and non-registration will only affect the admissibility of the lease deed and will not have any effect on the arbitration clause. But unless the deficit stamp duty is paid, the courts cannot look into the arbitration agreement contained in the contract unless the deficit stamp duty is duly paid. This is because unlike Section 49 of the Registration Act, Section 35 of the Stamp Act does not contain any provision enabling the instrument to be used to establish the collateral agreement.

Many of the legal experts have opined that non-compliance with the provisions of the registration act and the stamp act has a similar effect on the document; it makes the document inadmissible in evidence. But the supreme court in SMS Tea Estates has applied the principle of severability differently to the stamp act and the registration act.

Conclusion

It is pertinent to note that while after the 2015 amendment, the question regarding the existence of the arbitration agreement could be decided by both the court or the arbitrator but after the 2019 amendment, the arbitrator(s) is to be appointed by arbitral institutions, therefore the question of whether the court or arbitral institution or arbitrator will decide the existence of arbitration agreement remains ambiguous.

Further, a recent judgment of the supreme court in N.N Global Mercantile Pvt Ltd v. Indo Unique Flame Ltd. & others (“Global Mercantile Judgment) has re-examined the Garware wall ropes judgment and held that technical lapses, defects or irregularities in the substantive agreement should not affect the intent of the parties to resolve their disputes through arbitration. The court further held that;

If an arbitration clause is contained in an agreement that is not duly stamped, the court can refer the dispute to arbitration provided that the parties pay appropriate stamp duty to the concerned authorities after the dispute is referred for arbitration.
Also, an insufficiently stamped agreement containing the arbitration clause could not prevent the parties or the court, as the case may be, from appointing arbitrator(s).
Lastly, if a party applied to the court for interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, even if the court was informed that the agreement containing the arbitration clause was not duly stamped, it can still grant interim relief to the party.

But the Supreme court in N.N Global Mercantile Pvt. Ltd. found it prudent to refer to the question, “whether an arbitration agreement in an unstamped document is rendered enforceable in law” to a constitution bench.

In other words, the issue is still not settled and a final outcome from the Supreme Court will remove the ambiguity over this issue.

References

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