Newsletter ARBITRATION AND CONCILIATION ACT, 1996 July, 2021 Whether order passed under section 34 of the Arbitration and Conciliation Act, 1996 can be modified or not? Recently, the Supreme Court comprising of Justice R.F. Nariman and B.R. Gavai recently held that Courts cannot modify an award passed under Section 34 of the Arbitration and Conciliation Act, 1996. The Hon’ble Court observed that the Parliament very clearly intended that no power of modification of an award exists in Section 34 of the Arbitration Act, 1996. The Appeals arose from a judgment where the Madras High Court had modified the compensation granted under the National Highways Act. The Hon’ble Bench observed that Section 34 provides only for setting aside awards on limited grounds as provided under Section 34 (2) and (3). It was also held that Section 15 and 16 of the Arbitration and Conciliation Act, 1940 did give the Courts power to modify, correct and even remit the award. However, a Section 34 proceeding does not contain any challenge on the merits of the award. Read More... Inexplicable Delay of More Than 16 Years in Conducting Arbitration Proceedings Recently, the Ld. Single Bench of the Delhi High Court comprising of Justice Sanjeev Narula allowed a Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of independent sole arbitrator for adjudication of dispute that arose 16 years ago on account of alleged illegal termination of contract. The dispute arose out of Petitioner’s bid in respect of a tender issued for water supply arrangements and other allied works for new washing lines at New Delhi yard by Respondent being the Competent Authority of Northern Railways. This contract incorporated by reference an arbitration agreement issued by Railway Board. The work was rescinded and the contract terminated in 2004. Consequently, the Petitioner raised claims on Respondent for loss and damages. Thereafter a counter-claim was raised by the Respondent by August 2004. However, it appears that the proceedings dragged on account of resignation, retirement or transfer of officers who were appointed as arbitrators. The Petitioner apprised the Hon’ble Bench that sixth Arbitral tribunal was constituted in March, 2017 whereby the tribunal also lost track of the proceedings and as a result the situation reached a complete stalemate. The Hon’ble Bench noted that cases like these reveal a highly worrying and disappointing situation that makes a mockery of arbitration proceedings. The Bench further observed that, it would be unfair to the Petitioner if the Respondent was permitted to form the Arbitral Tribunal once again from its panel of officers. In fact, the Respondent has forfeited its right to constitute the Arbitral tribunal, having not acted as per the procedure despite Petitioner’s requests for constitution of the Tribunal. Resultantly, the Petition was allowed and a sole arbitrator was appointed by the Hon’ble Bench. Read More... INSOLVENCY AND BANKRUPTCY CODE, 2016 When the entire loan transaction is based on the ‘Term Loan Agreement’ which is an inadequately stamped, can an application under section 7 be admitted under such circumstances Recently, the National Company Law Appellate Tribunal, Chennai held that the impugned Order is mainly challenged on the ground that the petition filed under Section 7 of the Code is not maintainable. After all, the entire loan transaction is based on the 'Term Loan Agreement', an inadequately stamped document inadmissible in evidence. The points arise for consideration is that whether petition filed under Section 7 of the code is maintainable or not, as the entire loan transaction is based on the 'Term Loan Agreement', which is an inadequately stamped document, therefore, inadmissible in evidence. NCLAT held that the objections raised by the Appellant/Corporate Debtor are unsustainable. First, the Appellant emphasised the alleged insufficiently stamped Term Loan Agreement. However, in addition to the Term Loan Agreement, the Financial Creditor relies on Demand Promissory Note, Hypothecation letter regarding depositing of title deed, a certified copy of the bank statement, and so many other documents filed along with the Application. Therefore, even if it is considered that the Term Loan Agreement is insufficiently stamped and it cannot be accepted in evidence, then also alleged debt and default are proved beyond doubt. Furthermore, the Application filed under Section 7 is complete. Read More... CIRP can also be Initiated Against Maintenance Company in case Developer Transferred Deposit to Maintenance Company The Principal Bench of the Hon’ble National Company Law Appellate Tribunal at Delhi clarified that CIRP can be initiated against the Maintenance Companies too, in case a developer transfers deposit to such Maintenance Company. In the present case, the amounts were collected by the developer and kept with its subsidiary, the Corporate Debtor, for the purpose of maintenance till the Association/Society or Holding Organization/Respondent gets established to hand over the amount to the body of flat owners. Section 5(8)(f) Explanation makes it clear that any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing. Thus, the claim made by Respondent No. 1 was accepted that it is a ‘Financial Debt. Thus, the Order of Adjudicating Authority vide which CIRP was initiated was affirmed by the Hon’ble Bench. Read More... Subsisting Agreement Tends to Bind the Parties as on Account of Extension by Conduct of Parties The Division Bench of National Company Law Appellate Tribunal, New Delhi comprising of Justice AIS Cheema and Alok Srivastava held that the Appellant and the Respondent continued their relationship of the Corporate Debtor and the Operational Creditor which effectively binds the parties. The impugned Order passed by the Adjudicating Authority (‘AA’) (NCLT Bengaluru) gave rise to the present appeal wherein it Section 9 Application of the Operation Creditor was dismissed on the ground of pre-existing dispute. Conversely, the Hon’ble Appellant Authority observed that the conduct of parties after the lapse of Agreement in December 2017, specifically the fact that the Respondent continued to send emails for printing to the Appellant and the Appellant, duly complying with such requests indicates a subsisting relationship between the parties which tends to bind them with the terms of the Agreement. Therefore, the Appeal was allowed and matter remitted back to the AA to admit the Application. Read More... The Code of Criminal Procedure, 1973 Chhattisgarh High Court Held that Holidays will be Counted in Computing Statutory Period for Default Bail The Petitioners, pursuant to the arrest and remand, have been in a judicial custody. As the charge sheet was filed by the prosecution only after a two-day expiration period, the petitioners moved an application under Sections 167(2) Cr.P.C. seeking bail. The Trial Court vide impugned order rejected the application holding that the two days of delay were Government Holidays and on the first working post-holidays, the challan has been filed. Conversely, the Hon’ble Bench of High Court held that relied on a Supreme Court Judgment titled ‘M. Ravindran v. Intelligence Officer, Directorate of Revenue Intelligence’ to hold that right of the accused is an integral part of personal liberty and there lies an indefeasible link between Section 167(2) of CrPC and Article 21 of the Indian Constitution. The Court further observed that the chargesheet was filed on 61st day in the present case excluding the first day of remand and including the day of filing of challan. Therefore, the bail was granted to the Petitioner, setting aside the decision of the Additional Sessions Judge and Special Judge (NDPS). Read More... Sentence and Compensation Cannot be Awarded without a Full-Fledged Trial A Division Bench of Hon’ble Supreme Court comprising of Justice Sanjay Kishan Kaul and Hemant Gupta held that without a full-fledged trial, there cannot be sentence and compensation. The main issue pertaining to the case was regarding bail with conditions to pay compensation to victim. The Bench observed that Section 357 of the CrPC lays down that such compensation can only arise after conclusion of trial albeit, same being matter of discretion. Thus, bail condition to pay the compensation was set aside. Therefore, instead of awarding a compensation amounting to Rs. 2 lakhs each towards the victims along with bail, the Appellant was directed to not enter the geographical limits of Amreli for 6 months. Read More... OTHER RELEVANT JUDGMENTS PASSED BY VARIOUS COURTS UNDER VARIOUS LAWS The Hon’ble Delhi High Court held that the Right in Trademark Once Relinquished Cannot be Claimed Unless Terms of Such Relinquishment are Revoked Recently, the Hon’ble Delhi High Court held that once the Respondent/Plaintiff has expressly waived his right on the trade mark in favour of the Appellant/Defendant Company, he cannot restrain the Appellant/Defendant Company from exercising the aforesaid rights, even though the said rights have been exercised after passage of substantial time. The Hon’ble Court relied upon on the Judgments passed by the Hon’ble Supreme Court of India including Ramdev Food Products Pvt. Ltd. Vs. ArvindbhaiRambhai Patel &Ors. (2006) 8 SCC 726 and Indu Shekhar Singh v. State of U.P, (2006) 8 SCC 129. It was also observed that the Respondent cannot later raise a plea that it did not use the trademark from 2011 to 2018. Such plea would not hold any merit once the Respondent has relinquished its right. Read More... The Hon’ble Supreme Court Strikes Down parts of 97th Constitutional Amendment with respect to the Co-operative Societies The Hon’ble Supreme Court struck down parts of 97th Constitutional Amendment which shrank the exclusive authority of States over its co-operative societies, a sector considered as a massive contributor to the economy. In a majority judgment authored by Justice Nariman, the court held that co-operative societies come under the “exclusive legislative power” of State legislatures. The judgment may be significant in the background of fears voiced by States whether the new Central Ministry of Cooperation would dis-empower them. Part IX B, which consists of Articles 243ZH to 243ZT, has “significantly and substantially impacted” State legislatures’ “exclusive legislative power” over its co-operative sector under Entry 32 of the State List to over the co-operative sector. In fact, the court pointed out how Article 243ZI makes it clear that a State may only make law on the incorporation, regulation and winding up of a society subject to the provisions of Part IXB of the 97th Constitutional Amendment.The court also took exception to the fact that the Amendment was passed without ratification from the States.However, the court did not strike down the portions of Part IXB of the Amendment concerning ‘Multi State Cooperative Societies’ due to the lack of ratification. In his dissent, Justice K.M. Joseph said the doctrine of severability would not operate to distinguish between single-State cooperatives and MSCS. The judge said the entire Part IXB should be struck down on the ground of absence of ratification. Read More...   NEW DELHI X -3, Green Park Main, New Delhi, 110016, Telephones: +91 11 2652 0041-42 For further / specific information, please contact us at: info@tandonandco.com Disclaimer: The contents of this newsletter are intended for information purposes only, and parts of this newsletter are based on news reports and have not been independently verified. The newsletter is not in the nature of a legal opinion or advice. They may not encompass all possible regulations and circumstances applicable to the subject matter and readers are encouraged to seek legal counsel prior to acting upon any of the information provided therein. 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