Dispute Resolution

The Supreme Court reaffirms the scope of patent illegality

Background

The Supreme Court has, in Patel Engineering Limited v. North Eastern Electric Power Corporation Limited,[1] reaffirmed the scope of patent illegality, post the 2015 amendment of the Arbitration and Conciliation Act, 1996 (“Act”), as a ground to challenge a domestic award under Section 34 of the Act.

Disputes between Patel Engineering Limited (“Patel Engineering”) and North Eastern Electric Power Corporation Limited (“NEEPCL”), arising out of works contracts for three separate packages, culminated in three arbitral awards dated March 29, 2016. One of the issues in each of the three arbitral proceedings was which clause of the conditions of contract would apply to decide the rate at which Patel Engineering was entitled to extra payment for additional quantities of lead. The arbitrator’s interpretation was in favour of Patel Engineering in all three awards. NEEPCL challenged the awards before the Additional Deputy Commissioner (Judicial), Shillong, who upheld the awards.
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SUPREME COURT’S CONTINUOUS BATTLE WITH COVID-19

I. Introduction

The last few months have been extremely unpredictable and extraordinary for the world as it continuously battles against the novel Corona virus (“Covid-19”) in all its spheres. In India, the economy has suffered a severe blow and the legal fraternity and judicial system seems to be no different due to a lack of digital infrastructure.

Recently, by an order dated May 6, 2020 (“May 06 Order”)[1], the Hon’ble Supreme Court extended all periods of limitation prescribed under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and under Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”) w.e.f. March 15, 2020 until further orders. This order has a tremendous implication for strict timelines prescribed under these statutes. In this article, we will analyse whether the May 06 Order was necessary in light of the order dated March 23, 2020 (“March 23 Order”) passed by the Hon’ble Supreme Court in the same proceedings[2] and thereafter, explore the implication of the same.
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The Pursuit of Enforcement – Can the Corporate Cloaks be Unravelled

Introduction

It is trite that a company is a separate legal entity, and is distinct from its members.[1] As Lord Sumption observed in Prest v Petrodel Resources Ltd.[2], “The separate personality and property of a company is sometimes described as a fiction, and in a sense it is. But the fiction is the whole foundation of English company and insolvency law.” Equally sacrosanct is the principle that arbitration proceeds on the basis of an agreement between parties. After all, “like consummated romance, arbitration rests on consent”.[3] However, practical considerations have led to the marginal dilution of these otherwise fundamental principles.

There are instances where a company and its members are not treated as separate legal entities (i.e. where the corporate ‘veil’ is pierced). Similarly, there are cases where arbitral proceedings enjoin non-signatories.[4] A unique amalgam of these exceptions is found in cases where an arbitral award is sought to be executed against an entity that was never a party to the arbitral proceedings. For example, in Cheran Properties Limited v. Kasturi and Sons Limited and Ors.[5] (“Cheran Properties”), applying the ‘group of companies’ doctrine expounded in Chloro Controls,[6] and analysing Section 35 of the Arbitration and Conciliation Act, 1996 (“Act”) to ascertain who “persons claiming under them” would be for the purpose of binding such persons to the arbitral award, the Supreme Court permitted enforcement of an arbitral award against a third party/non-signatory. In this post, however, our focus is on whether Indian courts have pierced the corporate veil to execute an arbitral award against a third party to the arbitral proceedings when such third party’s unique relationship with the award debtor has been exploited to fraudulently circumvent or frustrate execution of the arbitral award.
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Summary Judgment under the Commercial Courts Act, 2015 – An Underutilized Tool in Contractual Disputes

The Commercial Courts Act: A game of catch-up 

The Commercial Courts Act, 2015 (“Act”) introduced a slew of measures intended to streamline procedures relating to commercial litigation as part of the Ease of doing Business in India initiative. The changes brought about were made on the recommendation of the Law Commission of India to bring Indian commercial litigation on par with international standards. Among the measures introduced to improve efficiency and reduce delays was a mechanism for summary judgment of claims pertaining to commercial disputes.
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Injunction against encashment or invocation of Bank Guarantees

 Introduction 

The restraining of the invocation of a bank guarantee has traditionally been one of the less ventured into areas of law. In India as well as in common law, Courts have laid down strict standards and thresholds for judicial intervention, and only in the rarest cases would Courts allow an injunction against invocation of a bank guarantee. This trend, however, is changing and evolving constantly.

A bank guarantee is a written tripartite contract given by a bank (say, A), on behalf of its customer (say, B) in relation to a particular commercial contract with a third-party (say, C). By issuing this guarantee, Bank A takes responsibility of paying a fixed sum of money in case of non-performance of contractual obligations by B towards C.
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Extent of applicability of Code of Civil Procedure, 1908 to proceedings under the Consumer Protection Act, 1986

OVERVIEW

The Consumer Protection Act, 1986 (read with the rules and regulations framed thereunder) (hereinafter referred to as the “Act”) was enacted with the objective of providing better protecting the interests of consumers. Towards this end, the Act provides for the establishment of consumer councils and other authorities for settlement of consumer disputes and for matters connected therewith. The Act is a composite and complete code in itself, providing for exhaustive substantive and procedural provisions in relation to the redressal of consumer disputes. For speedy redressal of consumer disputes, the Act provides for setting up of quasi-judicial machinery at the District, State and Central Level (“Dispute Redressal Authorities”). These quasi-judicial authorities are creatures of the statute and have wide powers under the Act, to inter alia grant reliefs of a specific nature and to award, wherever appropriate, compensation to consumers.
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COGNIZABILITY OF COPYRIGHT INFRINGEMENT DEBATE IS BACK

The question of whether the offence of copyright infringement under the Copyright Act, 1957 (the “Copyright Act”) is a cognizable offence or a non-cognizable offence, has long been debated and addressed varyingly by different High Courts over the years. Recently, the Hon’ble Rajasthan High Court (“Rajasthan HC”) in the case of Nathu Ram & Ors. v State of Rajasthan[1] had the occasion to consider this question once again, and in doing so, opted to refer the same to a larger bench for settling the issue, thereby bringing this debate to the fore once again. This article shall analyse relevant statutory provisions and jurisprudential developments in order to understand how courts have dealt with the issue.
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FORCE MAJEURE IN THE TIMES OF COVID -19

The onset of the Covid-19 pandemic in India has proven not only to be a humanitarian crisis, but also an economic crisis of an unprecedented scale. Specifically, restrictions on movement of persons and goods, save for those involved in essential services, have raised serious doubts on the ability of parties to perform their obligations under contracts when these are not ordinarily classified as ‘essential services’. Uncertainty as to the performance of contracts has led to parties envisaging breaches of contract and assessing their rights and remedies in relation to the same.
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FRUSTRATION (OF CONTRACT) IN THE TIME OF SARS-CoV-2

Overview

On March 11, 2020, the World Health Organization (WHO) declared the novel coronavirus disease a pandemic. On the same day, the Government of India imposed visa and other travel restrictions. Soon thereafter, many states in India declared a ‘lockdown’, an emergency measure [under the Epidemic Diseases Act, 1897 and the Disaster Management Act, 2005 (“Disaster Management Act”)] to prevent and contain the spread of SARS-CoV-2, and also issued prohibitory order(s) under Section 144 of the Code of Criminal Procedure, 1973. A stricter lockdown was then imposed by the Central Government, which will presently remain in effect till May 3, 2020. During the lockdown, whilst certain commercial activities have been classified as essential and are permitted to continue operations, subject to following preventive measures (including social distancing), several others remain stalled and suspended.
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Supreme Court denounces speculative litigation seeking to resist enforcement of foreign awards

Introduction

Over the years, Indian Courts have increasingly limited their interference with arbitral awards. This approach of non-interference is more so when it comes to enforcement of foreign awards under Section 48 of the Arbitration and Conciliation Act, 1996 (“Act”) as has been reaffirmed in a recent judgment of the Supreme Court in Vijay Karia (“Appellants”) and Ors. v. Prysmain Cavi E Sistemi SRL & Ors[1] (“Respondents”).

In this case, the Supreme Court had occasion to consider an appeal against the order of a single judge of the Bombay High Court, allowing enforcement of a London seated foreign award (“Foreign Award’). In doing so, the Supreme Court dismissed the appeal and came down heavily on the Appellants for engaging in speculative litigation and attempting to invoke the limited powers of the Supreme Court under Article 136[2] only to resist enforcement of the Foreign Award.
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