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. Continue Reading Supreme Court’s Continuous Battle with Covid-19

Supreme Court to have its say on legality of Fantasy Sports

Introduction

Online gaming, particularly fantasy sports, has witnessed a surge in the Indian market primarily due to easy internet access and increase in digital usage. The number of fantasy sports operators increased seven-fold between 2016 and 2018, whereas the user base grew over 25 times between June 2016 and February 2019[1].  Investments upto USD 166 million (approx.) were made in fantasy sports operations during 2018 -2019.[2] While no valuation of the industry as a whole is readily available, Dream11, the largest fantasy sports operator in India was estimated to be valued at approximately USD 1-1.5 billion in April 2019.[3]

The growth of fantasy sports has raised questions on its legitimacy and legality in India. Fantasy sports are legally recognised in the United Kingdom, Spain, Italy, Canada, France and in most states in USA. In India, the High Courts of Punjab & Haryana, Rajasthan and Bombay have clarified that fantasy sports are games of “skill” rather than “chance” and, therefore, do not amount to gambling. These decisions have encouraged participation in such sports and led to its growth in India. Continue Reading Supreme Court to have its say on legality of Fantasy Sports

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Termination of Leases – Express or Implied 

Landlord-Tenant relationship is a jural relationship and is governed by the provisions of Transfer of Property Act, 1882 (Act). In a landlord/tenant relationship, the parties are often referred to as lessor (landlord) and lessee (tenant). The contract under which the landlord-tenant relationship is bound is a lease agreement. The term ‘lease’ is defined under Section 105 of the Act and states as follows – 

“A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specific occasions to the transferor by the transferee, who accepts the transfer on such terms”. Thus, a lease of an immovable property is a contract between two principal parties the lessor and the lessee, whereby the lessor creates an interest in favour of the lessee with regard to property for a specific duration. Continue Reading Termination of Leases – Express or Implied?

Another One Bites the Dust – domestic award set aside as being perverse

In what one hopes is not a bull run, one more arbitral award has been set aside by the Supreme Court. In SEAMEC v. Oil India Ltd., a domestic award was set aside on the basis that the contractual interpretation by the Arbitral Tribunal was perverse and completely defeated the explicit wordings and purpose of the contract.

In our last blog ‘Enforcement of Foreign Awards in India – Have the brakes been applied?’, we had discussed the Supreme Court judgment in NAFED v. Alimenta S.A.[1] In that case, the Supreme Court refused to enforce a foreign award on the basis that the transaction contemplated (export of HPS groundnuts) would have violated Indian law and was therefore contrary to the public policy of India. We had noted that in the face of a plethora of judicial decisions, the Apex Court had waded into an examination of the merits of the case and the terms of the relevant contract, something which Indian courts have repeatedly held are purely within the purview of the arbitrator’s power. Continue Reading Another One Bites the Dust – Domestic Award Set Aside as Being Perverse

COVID-19: Absence of Legislative Intervention may impact Commercial Insurance Claims

 

The onset of the COVID-19 pandemic and the subsequent nationwide lockdown to control its spread has impacted businesses significantly and also led to various entertainment and sporting events being either postponed or cancelled. While one would expect business interruption and event cancellation insurance to cover such losses, such claims are likely to encounter certain issues, which are discussed in this post.

Being Covered under an Insured Peril

Most insurance policies have a list of causes/ events that are covered by the policy. These events/ causes are called insured perils. Only losses/ damages that are caused by insured perils can form the basis of a claim under the said policy. For instance, the policy wording of a standard-form future events insurance covers certain specified losses if any insured event is cancelled due to either (i) loss or damage to the venue due to fire, allied perils, earthquake, flood or cyclone, resulting in cancellation of the event; or (ii) death of current Prime Minister, President of the Republic of India, Chief Minister of the State in which the event is being held, due to which National/ State mourning is declared or any other prominent personality.[1] Claims under such policies are generally triggered when events like sporting tournaments, award functions, etc., are cancelled due to insured perils. It is possible for insurance companies to include epidemic/ pandemic as an insured peril in such policies and charge a higher premium for doing so. For instance, the All England Lawn Tennis Association has been paying a higher premium for the past 15 years for such insurance.[2] In contrast, the cancellation of Indian sporting events like the Indian Premier League are unlikely to have insurance coverage for epidemic/ pandemic since the same are generally not underwritten by insurers in India.[3] Continue Reading COVID-19: Absence of Legislative Intervention may impact Commercial Insurance Claims

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. Continue Reading The Pursuit of Enforcement – Can the Corporate Cloaks be Unravelled?

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. Continue Reading Summary Judgment under the Commercial Courts Act, 2015 – An Underutilized Tool in Contractual Disputes

Domestic Arbitration receives booster shot from Supreme Court

  

Recently, the Supreme Court in Quippo Construction Equipment Limited V. Janardan Nirman Private Limited[1] held that if a party to an arbitration agreement chooses not to participate in arbitral proceedings, that party is deemed to have waived the right to raise objections regarding jurisdiction of the arbitral tribunal or the scope of its authority at a later stage. While dealing with objections to a domestic arbitral award, the Supreme Court also had occasion to comment on the perennial seat vs venue debate. In doing so, it inter alia observed that objections with respect to ‘place of arbitration’ may have significance in international commercial arbitrations (where the place of arbitration may determine which curial law would apply), but not so much in domestic arbitrations. Continue Reading Domestic Arbitration receives booster shot from Supreme Court

Single Brand Retail Trading A tale to harmonise NDI Rules with the FDI Policy

In an attempt to liberalise retail trading in India, the Government of India (“GoI”) has introduced intermittent reforms in the past decade, with a view to make the sector investor friendly and to ensure that India remains an attractive investment destination from the Foreign Direct Investment (“FDI”) perspective. The measures introduced have enabled foreign players to set up brick and mortar stores and operate in the e-commerce space to facilitate the transformation of the retail landscape in India. Continue Reading Single Brand Retail Trading: A tale to harmonise NDI Rules with the FDI Policy

Overriding the IBC’s over-rider

Insolvency resolution regimes, globally, function as an exception to otherwise accepted norms of commercial law.[1] The Indian Insolvency and Bankruptcy Code, 2016 (“Code”), is no exception: a mere glance at the Code will display how it has a liberal sprinkling of non-obstante clauses.[2] From a specific dispute resolution mechanism, to an overarching carve out for insolvency resolution mechanism, the legislature has inserted non-obstante clauses in the Code as guidance of its intent. One would imagine that this would have ensured sufficient clarity for all stakeholders, avoided disputes and ensured timely insolvency resolution. Yet, as market participants try to understand the scope and intent of non-obstante clauses in the Code, such clauses continue to generate legal debate and litigation[3]. Perhaps, the stakes are too high for the parties to resist litigating. And some would argue not without good legal reason: after all, the Hon’ble Supreme Court has over the years identified exceptions[4] to the Latin maxim ‘leges posteriores priores contraries abrogant’ i.e. in the event two special statutes contain non obstante clauses, the non-obstante clause in the chronologically later special statute shall prevail[5]. Continue Reading Overriding the IBC’s Over-Rider?