Newsletter ARBITRATION AND CONCILIATION ACT, 1996 FEBRUARY, 2022 WHETHER THE ARBITRAL AWARD PASSED BY AN ARBITRATOR IGNORING THE TERMS OF CONTRCAT IS PATENTLY LEGAL OR NOT? Recently, the Supreme Court of India in Indian Oil Corporation Ltd. v. M/s Shree Ganesh Petroleum Rajgurunagar set aside an award on the ground that a subject matter beyond the scope of the competence of the Arbitrator appointed cannot be decided by him. The Bench comprising of Justice Indira Banerjee and Justice Abhay S Oka pronounced that an Arbitral Tribunal is a creature of contract and is bound to act in terms of contract under which it has been constituted. They further held that if an Arbitral Tribunal fails to act in terms of the contract or ignore a specific terms of a contract, then such award is said to be patently illegal. The Bench, however, further observed that there is a difference between failure to act in accordance with the terms of a contract and erroneously interpreting the terms of the contract. An erroneous interpretation upon valid reference of dispute to the Arbitral Tribunal is an error which falls within its jurisdiction.  On the Contrary, an award that ignored the terms of a contract is not said to be passed in public interest. Read More... WHETHER AWARD PASSED BY THE  INTERNATIONAL COMMERCIAL ARBITRATION CAN BE INTEREFERED ON THE GROUND OF PATENT ILLEGALITY? Recently the Bombay High Court held that merely, violation of a statute does not infringe the public policy of Indian law as provided under Section 48(2) of the Arbitration and Conciliation Act, 1996. The Hon’ble Bench reiterated the settled law that the ground of patent illegality is not to be considered in International Commercial Arbitration Awards that are made in India, including the foreign awards whose enforcement is being challenged in India. Thus, the Court noted that poor reasoning while rejecting a claim does not violate the public policy of India as there is no fundamental defect in passing such an award. The Bench placed reliance on the Supreme Court Judgment titled ‘Vijay Karia, and Ors. v. Prysmian Cavi E Sistemi SRL & Ors.’ and ‘Associate Builders v. Delhi Development Authority.’Read More... INSOLVENCY AND BANKRUPTCY CODE, 2016 WHETHER ADVANCE PAYMENTS MADE TO A CORPORATE DEBTOR FOR SUPPLY OF GOODS OR SERVICES FALLS UNDER THE PURVIEW OF OPERATIONAL DEBT Recently, the Supreme Court in the Judgment titled ‘M/s Consolidated Construction Consortium Ltd. v. M/s Hitro Energy Solutions Pvt. Ltd.’ pronounced that the debt arising out of advance payment made to a Corporate Debtor for supply of goods and services falls within the purview of operational debt. The Hon’ble Court further observed that limitation does not commences when the debt becomes due, but only when default occurs. The Bench placed reliance on ‘B.K. Educational Services Pvt. Ltd. v. Parag Gupta & Associates’. Read More... WHETHER INTEREST NOT GIVEN EFFECT FOR A LONG PERIOD OF TIME CANNOT  BE ENFORCED BY WAY OF CLAIM? Recently, the National Company Law Appellate Tribunal, New Delhi in ‘Himalyan Crest Power Pvt. Ltd. v. Pankaj Khaitan, RP’ pronounced that the interest has to be recognised on annual basis and has to be disclosed in the audited accounts. In the present case a financial creditor filed its claim including principal amount and interest component. However, the Resolution Professional (“RP”) only admitted claim towards principal amount, thereby rejecting the interest component. The RP indicated through various documents that the documents provided to project the interest component were fabricated and bogus. Furthermore, there was an inordinate delay of 9 years in recognising interest amount by the Claimant in its balance sheet. Additionally, there was no corresponding booking of interest in Corporate Debtor’s account. The Bench relied on a Supreme Court Judgment titled ‘Urvashi Aggarwal (Since Dead) v. Kushagr Ansal & Ors., to reject the interest component claimed by the Claimant. Read More... WHETHER AN EXPRESS AGREEMENT IS A PRE REQUISITE TO PROVE THE LOAN AND ITS DISBURSEMENT Recently, the National Company Law Appellate Tribunal, New Delhi in BDH Industries Ltd. v. Mars Remedies Pvt. Ltd. pronounced that the Insolvency and Bankruptcy Code nowhere prescribes compulsory existence of an express agreement to prove the loan and its disbursement. Documents evidencing existence of a loan are enough to constitute admission and acknowledgment of the Corporate Debtor regarding the debt. The Bench relied on a judgment passed by NCLT, Mumbai Bench in Anchor Leasing Pvt. Ltd. v. Euro Ceramics Ltd. (C.P. No. 66/IBC/NCLT/MB/MAH/2018) and Asset Reconstruction Co. v. Bishal Jaiswal and Anr passed by the Hon’ble Supreme Court of India. Read More... The Code of Criminal Procedure, 1973 WHETHER DEFAULT BAIL BE GRANTED TO ACCUSED ON THE GROUND THAT COGNIZANCE WAS NOT TAKEN BEFORE EXPIRY OF 90 DAYS FROM DATE OF REMAND, IF CHARGESHEET ALREADY FILED Recently, a division bench comprising of Justice L. Nageswara Rao and B.R. Gavai in Serious Fraud Investigation Office v. Rahul Modi observed that an accused cannot seek default bail merely on the ground that cognizance was not taken before expiry of 60 or 90 days, from the date of remand, if chargesheet has already been filed. The right of default bail to an accused under Section 167(2) of the CrPC can be sought only if charge sheet has not been filed before the expiry of statutory period. Read More... OTHER RELEVANT JUDGMENTS PASSED BY VARIOUS COURTS UNDER VARIOUS LAWS WHETHER JUDICIAL REVIEW CAN BE EXTENDED TO EXAMINATION OF CORRECTNESS OR REASONABLENESS OF A DECISION OF AUTHORITY Recently, the Hon’ble Supreme Court in ‘Regional Manager, UCO Bank and Ors. v. Krishna Kumar Bhardwaj’ emphasized on the scope of the judicial review to pronounce that judicial review cannot be extended to the examination of correctness or reasonableness of a decision of authority. The bench placed reliance on the judgments including B.C. Chaturvedi v. Union of India and Ors., Himachal Pradesh State Electricity Board Ltd. v. Mahesh Dahiya and Deputy General Manager (Appellate Auhtority) and Ors. v. Ajay Kumar Srivastava. Read More... WHETHER MAGISTRATES HAVE THE POWER TO APPOINT AND AUTHORIZE ADVOCATE COMMISSIONERS TO TAKE POSSESSION OF SECURED ASSETS UNDER SECTION 14 OF THE SARFAESI ACT Recently, the division bench of Supreme Court comprising of Justice AM Khanwilkar and Justice C.T. Ravikumar in a Judgment titled ‘NKGSB Cooperative Bank Ltd. v. Subir Chakravarty’ pronounced that the District Magistrate or the Chief Metropolitan Magistrate can appoint an advocate commissioner to assist them in taking possession in accordance with Section 14 of the SARFAESI Act, 2002. The Bench noted that an advocate is an officer of the Court and is subordinate to the District Magistrate for the purposes of Section 14(1A) of the SARFAESI Act, 2002. Read More... 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