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ARBITRATION AND CONCILIATION ACT, 1996

MARCH, 2023

Whether Arbitration Agreement can be assigned and be invoked by the assignee?
Recently, the Hon’ble Bombay High Court in the case titled M/s. Seimens Factoring Pvt. Ltd. Vs. Future Enterprises Pvt. Ltd., held that an arbitration agreement is assignable just as any other contract and where the rights under an agreement containing the arbitration clause are assigned in favour of an assignee the remedy of arbitration also stand assigned in the favour of the assignee. The Respondent has entered into a master rental agreement with one LIQ Residuals Pvt. Ltd for the purpose of renting equipment’s and LIQ has assigned the rental receivables in the favour of M/s. Seimens Factoring Pvt. Ltd.. LIQ Residuals Pvt. Ltd. and M/s. Seimens Factoring Pvt. Ltd. executed a ‘Sale of receivable Agreement’ under which receivables were assigned to M/s. Seimens Factoring Pvt. Ltd. as collateral security.

The Hon’ble Bombay High Court has held that there is no need of a separate execution of arbitration agreement between M/s. Seimens Factoring Pvt. Ltd. Vs. Future Enterprises Pvt. Ltd in view of the fact that all the rights in the favour of .. LIQ Residuals Pvt. Ltd. had been assigned in favour of M/s. Seimens Factoring Pvt. Ltd. including the arbitration remedy and the same is acknowledged by the Respondent..

Whether an arbitration award in violation of the provisions of the Indian Contract Act is Patently Illegal?
Recently, the Hon’ble Delhi high Court in the case titled as Amazing Research Laboratories Vs. Krishna Pharma, held that an arbitration award that is passed in violation of the provisions of the Indian Contract Act, 1872 would liable to be aside due to Patent illegality.

The Hon’ble Delhi High Court relying on the Judgement passed by the Hon’ble Madras High Court in the case titled as Renganathan Vs. Saravana Store (2018 SCC OnLine Mad 5897), held that if the buyer defaults to make balance payment, the seller’s action is not for the price of goods sold and delivered but for the balance due at the foot of an account. The account is running as the amounts received are credited and the amounts still due as debit. In the present case the manner of appropriation is not specified by the parties therefore the amounts towards the earlier debts need to be adjusted first irrespective of the limitation indicated in section 61 of the contract act.

Whether the error on the part of the Tribunal for fixing fees separately for the counter claims and claims is contrary to the agreement between the parties?
Recently, the Hon’ble Delhi High Court in the case titled as National Highway Authority of India vs. M/s AE Tollway Ltd. bearing OMP (T) (COMM). 109/2022, held that schedule IV of Arbitration and Conciliation Act,1996 will not be applicable on the parties for determination of fees, when there is a Concession Agreement for payment of the fee on the basis of the claim and counter claim.

In the present case wherein the National Highway Authority of India and M/s AE Tollway Ltd. entered into Concession Agreement wherein it was agreed between the parties that the fees and expenses payable to the arbitrator shall be according to NHAI Policy Guidelines, 2020. However, the Tribunal rejected the contention that the payment shall be made as per the Concession Agreement and held that schedule IV of Arbitration and Conciliation Act, 1996 will be applicable on the parties for determination of fees.

The Hon’ble High Court held that the Tribunal in its order dated 24.09.2022 is not correct position in law. For the present arbitration, the remuneration of the Tribunal must be computed on the basis of total sum in dispute, inclusive of the claim and counter claim, as provided in 2020 circular.

TELECOM REGULATORY AUTHORITY OF INDIA

Whether the Web Series on the different OTT platforms does not pass the community test of common man and transgresses into area of obscenity?

Recently, the Hon’ble Delhi High Court in the case titled TVF Media Labs Pvt. Ltd. Vs. State ( Govt. of NCT of Delhi) & Anr, Crl. M.C. 2214/2020, observed that there is a need of enacting appropriate laws or guidelines to regulate the content on social media and OTT platform. These platforms need urgent attention, the language used in the TVF series “College Diaries” does not pass the test of moral decency community test and transgresses into the area of obscenity. The Court further observed that the individualistic choice which is not the choice of the majority of people of this country cannot be portrayed as choice of that majority and to be broadcasted on the ground or assumption that youth of this country speak such foul or profane language.

The Court held that the attention of Ministry of Information and Technology to the situation which are fast emerging on a daily basis and to take steps for enforcing stricter application of its rules qua the intermediaries as notified in Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and laws or rules should be made in light of observation made in this judgment.

INSOLVENCY AND BANKRUPTCY CODE, 2016

Whether the insolvency resolution of the company will extinguish the director’s liability under sector 138 NI Act

Recently, the Hon’ble Supreme Court in the case titled Ajay Kumar Radheyshyam Goenka Vs. Tourism Finance Corporation of India Ltd. held that on the approval of resolution plan of a Corporate Debtor under the Insolvency and Bankruptcy Code 2016 doesn’t extinguish the criminal liability of the director under section 138 of NI Act 1881.

The Hon’ble Supreme Court has observed that after passing of the resolution plan under section 31 of IBC and in light of section 32A of IB Code 2016, the criminal proceedings under section 138 of NI Act 1881 will stand terminated in favour of corporate debtor if the same is taken up by the successful Resolution Applicant. However, the proceedings under section 138 of NI Act in relation to directors will continue under law. IBC proceedings does not create any against proceedings initiated under section 138 NI Act 1881 against the director.

Whether an application filed under section 65 of the IBC is maintainable after the filling of the application under section 7,9 or 10 of the code or could be maintainable only after the admission of such an application?

Recently, the National Company Law Appellate Tribunal Principal Bench, New Delhi, in the case titled as Ashmeet Singh Bhatia vs. Sundram Consultants Pvt. Ltd. & Anr., held that an application under section 65 of the IB code can only be preferred before initiation of CIRP process and upon filing of an application either under section7,9 or 10 of IB code, 2016.

The Hon’ble NCLAT referred the decision of Ramesh kymal Vs. Siemens Gamesa Renewable Power Pvt. Ltd. [(2021) 3 SCC 224] in which the Supreme Court has held that the date of initiation of CIRP is the date on which the Financial Creditor, Operational Creditor or Corporate Applicant makes an application with the Adjudicating Authority for the initiation of the process and the insolvency commencement date is the date of the admission of the application. The Court held that the application under section 65 of the code, it would be maintainable after the application is filed under either section 7,9 or 10 of IBC.

SARFAESI ACT, 2002

Whether the bank should give the borrower an opportunity of being heard before classifying their account as fraud?

Recently, the Hon’ble Supreme Court in the case titled as State Bank of India vs. Rajesh Agarwal & Ors. held that the principle of natural justice should be read with the provisions of the master directions on frauds. The classification of an account as fraud entails serious civil consequences for the borrower, the direction must be construed reasonably by reading into them the requirement of observing the principle of natural justice .The court has further observed that the Jah Developers quoted by the borrower where in it was held that a final decision of the Review Committee declaring the borrower as a willful defaulter must be made by a reasoned order and the court agreed with the contention of the borrowers.

The court held that the principle of natural justice and rule of audi alteram parterm must be follow before the bank/JFL declare any account of the borrower as fraud.

TRADEMARK ACT, 1999.

Whether a trademark infringement claim can be made prior to its use by opposite party?

Recently, the Hon’ble Delhi High Court in the case titled Tata SIA Airlines Ltd. vs. Vistara Buildtech LLP & Anr. Wherein the Hon’ble Court observed that VISTARA is a coined word which has no meaning or etymological significance. The Hon’ble High Court further observed that the Plaintiff using the mark “VISTARA” since 2015 and Defendants as a partnership firm came into existence in 2022 and yet to commence its business so the plaintiff can claim priority use for its “VISTARA” marks

The Petitioner has filed present suit against the Respondent seeking restraint from various marks containing the word “VISTARA” as its prominent feature as the plaintiff is the well-known collaboration of the Tata Group and the Singapore Airlines and the plaintiff is the registered proprietor of “Vistara” word and device mark as well as color combination mark under various classes whereas the defendant as stated to use the mark in connection with commercial properties developed by the Respondent. The Plaintiff issued cease and desist notice followed by reminders to defendants to desist itself from continuing to use the impugned marks.

Whether mere phonetic similarity will render the mark identical or similar to the mark of the opposite party?

Recently, the Hon’ble Delhi High Court in the case titled as Twentieth Century Fox Film Corporation vs. The Registrar, held that the Appellant’s Mark bear phonetic similarity will not render the marks identical or similar such identity / similarity has to be such as would result in likelihood of confusion on part of the public. No one can extract from cited mark only the word “AVATHAR” in order to compare it with Appellant’s mark “AVATAR” , the mark has to be compared as whole. The court has further held that the senior examiner has passed the impugned order merely emphazing the phonetic similarity between “AVATHAR” and “AVATAR” ignoring the fact that the defendant mark has no individual parts or elements. Lastly, the court held that the if the competing marks are neither identical nor similar therefore no occasion arises to compare the goods or services in respect of which the marks are registered.

The dispute arose pertaining to the citation no 1012248 in which the word “AVATHAR” is written in English and Tamil along with a sketch of the lady alongside. The Appellant relied upon the “anti – dissection” rules envisaged in section 17 of the Trademark Act which mentions that the rival marks must be compared as a whole therefore the overall impression of the two marks was totally different and has no likelihood of confusion in the mind of the public.

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