Photo of Aditya Mehta

Partner in the Dispute Resolution Practice at the Mumbai office of Cyril Amarchand Mangaldas. Aditya has expertise and extensive experience in commercial litigation and arbitration (both domestic and international), handling disputes both of a general commercial nature as well as public and regulatory disputes across sectors, including financial regulation, administrative, white collar, sports, media and entertainment, food and beverage, local government, planning and environment and public sector projects. He regularly appears and argues matters before Courts (including High Courts and the Supreme Court), Tribunals and Regulatory Authorities. He can be reached at aditya.mehta@cyrilshroff.com.

 

Competition or unlawful contractual interference

In a recent decision, the Delhi High Court dealt with the tort of unlawful interference in contractual relationships and inter alia held that the said tort has no place in India in view of Section 27 of the Indian Contract Act, 1872 (“Contract Act”).[1]

Background

The developer of a certain property at Amritsar agreed to lease the said property to the Plaintiff for fifteen years, by way of a term sheet. The Plaintiff paid a security deposit to the developer as per the term sheet and proceeded to draw up the main transaction document.

Upon learning that the Defendant (a competitor of the Plaintiff) had been pursuing the developer for the purpose of entering into an agreement with respect to the same property, the Plaintiff informed the Defendant about the term sheet executed by the developer with the Plaintiff and requested the Defendant to desist from pursuing the developer. However, the Plaintiff learnt that the developer had entered into an agreement with the Defendant with respect to the said property. Soon thereafter, the Plaintiff was informed by the developer that the term sheet stood terminated on account of the Plaintiff’s failure to execute the main transaction document within the stipulated time. The developer refunded the security deposit, which was accepted by the Plaintiff without protest. The Plaintiff alleged that (a) the Defendant induced the developer to terminate the term sheet with the Plaintiff; and (b) the Defendant had similarly attempted to interfere with transactions between the Plaintiff and developers of other properties in different cities.

The Plaintiff filed a suit against the Defendant inter alia seeking a permanent injunction to restrain the Defendant from inducing a breach of any agreement between the Plaintiff and third parties in respect of non-functional properties of the Plaintiff across India.
Continue Reading Competition or unlawful contractual interference: The line continues to remain blurred

Arbitrator’s power to recall its order of termination of arbitral proceeding- A tale of Dubiety - Part II

In Part I of this post, we inter-alia attempted to highlight the law (and perhaps a relevant counter perspective) in relation to the power of the arbitrator to recall its order of termination of arbitral proceedings passed under Section 25(a) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act”). In this post, we attempt to answer whether such a remedy would extend to termination of arbitral proceedings under Section 32(2)(c) of the Act, and other issues incidental thereto.
Continue Reading Arbitrator’s power to recall its order of termination of arbitral proceeding- A tale of Dubiety? (Part II)

Introduction:

This article analyses the legal basis and the genesis of the power of an arbitrator to recall its order of termination of proceeding on account of default of the Claimant.

India seated arbitral proceedings, whether ad-hoc or institutional, are governed by the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act), which is based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 (UNCITRAL Model Law). Whilst arbitrators are not bound by the Code of Civil Procedure, 1908 (CPC) or the Indian Evidence Act, 1872[1], they is usually guided by the broad principles enshrined in the said enactments, while conducting the arbitral proceedings. In this regard, it is pertinent to note that under Order IX Rule 13 of CPC, the Court has power to recall its order. Under the said rule, if the Court is satisfied that summons was not duly served on the defendant, or that there was sufficient cause for defendant’s failure to appear when the suit was called on for hearing, the Court is empowered inter-alia to pass an order setting aside an ex- parte decree that may have been passed against the defendant.


Continue Reading Arbitrator’s power to recall its order of termination of arbitral proceeding- A tale of Dubiety? (Part I)

In Shakti Bhog Food Industries Ltd. v. The Central Bank of India and Anr.[1], the Hon’ble Supreme Court has clarified as to when the three-year limitation period contemplated under Article 113[2] of the Limitation Act, 1963 (Act), commences. It has also reiterated the importance of considering the averments made in a plaint as a whole while determining an application for rejection of plaints under Order VII Rule 11[3] of the Code of Civil Procedure, 1908 (CPC).


Continue Reading When does the clock of limitation start ticking for suits falling under Article 113 of the Limitation Act?

unfettered right to exclude or limit their liability for breach of contract Part 2

In Part I of this post, we had discussed the concept of exclusion or limitation of liability clauses and the position in India. In this part, we will examine the position of such clauses in England and provide our views on such clauses. 

Position in England 

The application of clauses excluding or limiting liability in England is more consistent. When faced with standard form contracts or contracts where there is inequality of bargaining power, English courts apply the test of fairness or reasonableness of clauses in such contracts and refuse to enforce provisions of contracts that are unconscionable or exploitative.[1]
Continue Reading Do parties have an unfettered right to exclude or limit their liability for breach of contract? – Part II

Do parties have an unfettered right to exclude or limit their liability for breach of contract – Part 1

Introduction

The law of damages in India is codified in Sections 73 and 74 of the Indian Contract Act, 1872 (“Contract Act”). Section 73 of the Contract Act provides that a party that suffers breach of contract is entitled to receive from the party that has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach or which the parties knew, when they made the contract, to be likely to result from a breach. Section 73 of the Contract Act bars the grant of compensation for remote and indirect loss or damage sustained on account of breach of contract.

This bifurcation between damages towards losses, which naturally arise in the usual course of things (first limb) and losses that the parties knew, when they made the contract, to be likely to result from a breach of the contract (second limb), appears to be borrowed from the principle laid down in the celebrated English decision of Hadley v. Baxendale.[1] The first limb is popularly referred to as general damages, whilst the second limb is referred to as special damages i.e. additional loss caused by a breach on account of special circumstances, outside the ordinary course of things, which was in the contemplation of the parties.
Continue Reading Do parties have an unfettered right to exclude or limit their liability for breach of contract? – Part I

To Pay Rent or Not To Pay Rent - The Delhi High Court rejects plea for suspension of rent during lockdown

The COVID-19 outbreak and the resultant nationwide lockdown have severely impacted performance of obligations, whether contractual or otherwise, across the country. Most entities/individuals are exploring the option of pleading frustration of contract[1] or invoking force majeure[2] clauses to suspend or obtain a relaxation on their contractual obligations. In this post, we examine the recent decision in Ramanand & Ors. v. Dr. Girish Soni & Anr.,[3] where the Delhi High Court rejected an application for waiver or suspension of rent on account of the lockdown.
Continue Reading To Pay Rent or Not To Pay Rent? The Delhi High Court rejects plea for suspension of rent during lockdown

Determinable contracts under the Specific Relief Act,1963 – Part II

In  Part I of this post, we discussed the concept of determinable contracts under the Specific Relief Act, 1963 (the “Act”) and analysed two decisions of the Supreme Court in this regard. In this post, we will examine the decisions of various High Courts which caused some confusion as to what would qualify as a determinable contract under the Act.

Delhi

As far back as 1999, the Delhi High Court found a joint venture agreement which provided for termination by either party in the event that certain government approvals were not obtained by a specified date, to be determinable in nature.[1] Conspicuously, the court did not refer to the decision of the Supreme Court in Indian Oil Corporation Ltd. v. Amritsar Gas Service & Ors.[2]

The most notable result of the lack of clarity in Amritsar Gas (supra) came by way of a decision of the Delhi High Court (Division Bench) in Rajasthan Breweries Ltd. v. The Stroh Brewery Company.[3] The agreements in this case specified certain events which would entitle each party to terminate. Observing that the facts of the case before it were identical to those in Amritsar Gas (supra), the court held that the agreements in this case were determinable and, therefore, not capable of specific performance. The court went so far as to hold that even in the absence of a specific clause enabling either party to terminate the agreement on the happening of specified events, the very nature of the agreement (being a private commercial transaction) made it liable to termination without assigning any reason by serving a reasonable notice. In the event such termination is held to be wrongful or bad in law, the only remedy available to the aggrieved party is to seek compensation for wrongful termination and not specific performance. The decision in Rajasthan Breweries (supra) was applied by the Delhi High Court in subsequent decisions.[4]
Continue Reading Determinable Contracts Under the Specific Relief Act, 1963 – Part II

Determinable contracts under the Specific Relief Act, 1963 – Part I

Introduction

The remedies most resorted to for breach of contract are damages, specific performance, and injunctions. The remedy of damages is governed by the Indian Contract Act, 1872, whilst specific performance and injunctions are governed by the Specific Relief Act, 1963 (the “Act”).

Prior to the amendment of the Act in 2018, the grant of specific performance was not available as a matter of course but was based on the discretion of the court. Section 10 of the un-amended Act laid down cases in which the court could exercise this discretion viz. when no standard exists for ascertaining the actual damage caused by non-performance of the act agreed to be done or when the act agreed to be done is such that compensation in money for its non-performance would not afford adequate relief. The Specific Relief (Amendment) Act, 2018 substituted Section 10 of the Act, which now provides that specific performance of a contract shall be enforced by the court, subject to Sections 11(2), 14 and 16 of the Act.[1] Section 20 of the un-amended Act, which set out the contours of the court’s discretion and enumerated cases under which the court may exercise discretion not to grant specific performance, was substituted in its entirety with a provision relating to substituted performance. The grant of specific performance of a contract is, therefore, no longer a matter of discretion and must be granted subject to the exceptions set out in the Act.
Continue Reading Determinable contracts under the Specific Relief Act, 1963 – Part I

Section 34 4 of the Arbitration and Conciliation Act 1996 – A fly in the ointment Part II

In Part I of this post, we examined the contours of Section 34(4) of the Arbitration and Conciliation Act, 1996 (the “Arbitration Act”), pre-conditions for its invocation and the scope of the powers conferred upon the court thereunder. In this post, we analyse some of the questions and ambiguities that may arise in the applicability of Section 34(4) of the Arbitration Act.

Can Section 34(4) of the Arbitration Act be invoked to eliminate any ground under Section 34(2) of the Arbitration Act?

Section 34(2) of the Arbitration Act provides two sets of grounds on which an award may be set aside. Section 34(2)(a) sets out grounds of challenge such as incapacity of a party, invalidity of the arbitration agreement, lack of proper notice of appointment of the arbitrator or of the arbitral proceedings or inability of a party to present his case, an award which deals with disputes not submitted to arbitration, improper composition of the arbitral tribunal or arbitral procedure contrary to the agreement between the parties, etc. These grounds must be established by the party challenging the award, on the basis of the record of the arbitral tribunal.
Continue Reading Section 34(4) of the Arbitration and Conciliation Act, 1996 – A Fly in the Ointment? (Part II)