Newsletter ARBITRATION AND CONCILIATION ACT, 1996 OCTOBER, 2021 Whether Pendente Lite Interest can be granted during the pendency of an Arbitration proceeding under the Arbitration and Conciliation Act, 1996 Recently, the Hon’ble Supreme Court of India while upholding the decision passed in the case titled ‘Garg Builders v. Bharat Heavy Electricals Ltd.’ the Hon’ble Supreme Court has reaffirmed the position of Section 31(7)(a) of the Arbitration Act, 1996 observed that if the contract expressly bars the award of pendente lite interest, the same cannot be awarded by the arbitrator. And, further stated that when the parties have agreed that pendente lite interest shall not be payable, the Arbitrator cannot award interest on the period between the date on which cause of action arose and the date of passing the award. The Hon’ble Court further noted that a clause of like nature will not be a violation of Section 28 of the Indian Contract Act, 1872. Read More... Whether Pre-Deposit Of 75% Of Awarded Amount under Section 19 MSMED Act is Mandatory? Recently, the Hon’ble Supreme Court of India considered an appeal wherein the issue was whether in an appeal/application filed under Section 34 of the Arbitration & Conciliation Act read with Section 19 of the MSMED Act, the appellate court would have any discretion to deviate from deposit of 75% of the awarded amount as a pre-deposit. A division bench comprising Justice MR Shah and AS Bopanna reaffirmed the decision passed in the judgment titled ‘Goodyear India Ltd. v. Norton Intech Rubbers Pvt. Ltd., (2012) 6 SCC 345 wherein a similar issue was raised and dealt with in affirmative. Thus, the Hon’ble Supreme Court in the present case observed that the Hon’ble High Court and Additional District Judge (Commercial) were justified in directing the Appellant to deposit 75% of the awarded amount as pre-deposit. Hence, the appeal was disposed off. Read More... Whether an Arbitrator can pass Ex-Parte Orders without issuing notice to the parties- Recently, the Hon’ble Bombay High Court while dealing with the issue of notice to the parties observed that, Section 18 of the Act requires the parties to be treated fairly and Section 19 of the Act allows the parties to mutually agree to a procedure to be followed by the Tribunal. Furthermore, Section 24(2) of the Act requires that all parties shall be given sufficient advance notice of ‘any hearing.’ The Hon’ble High Court also noted that the proviso which deals with Court’s power to pass ex-parte orders, cannot be applied to arbitral proceedings, in view of Section 24(2) read with Section 18 of the Act. Accordingly set aside the ex- parte order passed by the Ld. Arbitrator. Read More... INSOLVENCY AND BANKRUPTCY CODE, 2016 Whether Operational Creditor(s) can be classified into Separate Classes for Distribution of Money? Recently, the Hon’ble National Company Law Appellate Tribunal in a case titled ‘GAIL India Ltd. v. Ajay Joshi (Resolution Professional of Alok Industries Ltd. & Ors.), CA (AT)(I) 492 OF 2019’ observed that if the operational creditors have been paid as per Section 30(2)(b) of the Insolvency and Bankruptcy Code, 2016 (“Code”), coupled with Regulation 38 of CIRP Regulations, then the Operational Creditors are entitled to receive only such money that are payable to them as per Section 53 of the Code. And, as such there is no embargo for the classification of Operational Creditor(s) in to separate/different classes for deciding the way in which the money may be distributed to them by the Committee of Creditors, having subjective final discretion of ‘Collective Commercial Wisdom’ in relation to (1) the amount to be paid; (2) the quantum of money to be paid, to a certain category or the incidental category of creditors, by balancing the interests of the ‘Stakeholders’ and the Operational Creditors’, as the case may be. Read More... Computation of time period for filing an appeal before NCLAT within 45 days from the date of order passed by the Ld. NCLT – Recently, the Hon’ble Supreme Court Bench comprising of Justice DY Chandrachud, Vikram Nath and BV Nagarathna held that a sleight of interpretation of procedural rules cannot be used to defeat the substantive objective of legislation that has an impact on economic health of the nation. For that the period of limitation for filing an Appeal under Section 61 (1) of the Insolvency and Bankruptcy Code, 2016 (“Code”) assailing the order of the NCLT is 30 days and an outer limit of 15 days as prescribed under the proviso to Section 61(2) of the Code. The Hon’ble Bench observed that the aggrieved party is expected to exercise due diligence and apply for a certified copy upon pronouncement of the order that it seeks to assail in accordance with Rule 22(2) of the NCLAT Rules. However, it is not open for the aggrieved party to await the receipt of a free certified copy under Section 420(3) of the Companies Act, 2013 read with Rule 50 of the NCLT so as to prevent limitation from running. Thus, the litigant has to file an appeal within 30 days, which can be extended upto a period of 15 days, and not more than that. It is true that annexation of a certified copy of the order is mandatory. While it is true that the tribunals, and even the Hon’ble Supreme Court may choose to exempt parties from compliance with this procedural requirement as per Rule 14 of the NCLAT Rules, the discretionary waiver does not act as an automatic exception where litigants do not make any effort to pursue a timely resolution of their grievance. And as such the clock of limitation starts ticking from the date the order is passed. Read More... Whether acceptance of the Security Deposits by the Corporate Debtor and deposit of interest on that security deposits grants the position of Financial Creditor? A division bench of Hon’ble National Company Law Appellate Tribunal comprising of Justice Anant Bijay Singh and Justice Shreesha Merla held that the ‘Security Deposit’ amount admittedly have an element of interest payable at a fixed rate and hence can be construed as having commercial effect of borrowing. The Corporate Debtor accepted the Security Deposit from the Appellant and credited interest from some time against such amounts. The Hon’ble Tribunal noted that credit of such interest by the Corporate Debtor is nothing but a consideration for the time value of money and the interest is being paid to the Appellant for using the money belonging to the Appellant over a period of time and hence the status of Appellant as a Financial Creditor and his debt as Financial Debt was affirmed by the Hon’ble Appellate Tribunal as per Section 5(7) read with Section 5(8) of the Insolvency and Bankruptcy Code, 2016. Read More... The Code of Criminal Procedure, 1973 Whether a dispute of civil nature  can be given the colours of Criminal Proceedings ? The Hon’ble Supreme Court of India noted that a dispute of civil nature should not be given colour of criminal offence in the case titled ‘Randhir Singh v. State of U.P.’ The appeal was preferred against a judgment passed by the Allahabad High Court dismissing the Application filed by the Appellant under Section 482 CrPC for quashing proceedings under Section 420, 467, 468 and 471 of Indian Penal Code. In the present case, an FIR was lodged against the power of attorney of the complainant and the purchaser of property. Examining the said issue, the Hon’ble Bench observed that the criminal proceedings are seen as a recourse to harass the purchasers. The Hon’ble Bench further noted that while considering a petition seeking quashing of criminal proceedings, the High Court should examine whether a complaint discloses criminal offence or not depends on the nature of the allegation and whether the essential ingredients of a criminal offence are present or not. Read More... Whether a proclaimed offender is entitled to claim anticipatory bail or not? Recently, the Hon’ble Supreme Court of India held that an absconder or a proclaimed offender in terms of Section 82 of CrPC shall not be entitled to the relief of anticipatory bail. The Hon’ble Court further observed that even in the case of business transaction there may be offences under IPC under Sections 406, 420, 467, 468, etc. What is required to be considered is the nature of the allegation and the accusation and not the nature of accusation that is arising out of a business transaction. In this case, an appeal was preferred against the order passed by the High Court challenging the grant of anticipatory bail. The appeal was allowed and the Hon’ble Court further noted that the High Court ignored the factum of initiation of proceedings under Section 82-83 of CrPC. And, accordingly observed that a proclaimed offender is not entitled to claim anticipatory bail. Read More... OTHER RELEVANT JUDGMENTS PASSED BY VARIOUS COURTS UNDER VARIOUS LAWS Supreme Court held that the practice of indiscriminate surveillance of individuals in a democracy leads to a 'chilling effect' on the freedom of speech A division bench of the Hon’ble Supreme Court comprising of Chief Justice of India N.V. Ramana, Justice Surya Kant and Justice Hima Kohli held that in a democratic country governed by the rule of law, indiscriminate spying on individuals cannot be allowed except with sufficient statutory safeguards, by following the procedure established by law under the constitution. The Hon’ble Bench further noted that the protection of journalistic sources is one of the basic condition for the freedom of press. The Hon’ble Bench also stated while technology is a useful tool to improve the lives of the people, it can lead to unreasonable state intrusions and can breach the right to privacy of an individual. The Court further held that it is undeniable that surveillance and the knowledge that one is under the threat of being spied on can affect the way an individual decides to exercise his or her rights. This in many instances can lead to self-censorship. Thus, the Hon’ble Bench expressed their dissatisfaction against the practice of indiscriminate surveillance of individuals in a democracy that leads to a ‘chilling effect’ on the freedom of speech. In view of the same, the Hon’ble Bench ordered constitution of three member technical independent expert committee to investigate the allegations of targeted surveillance of activists, journalists, politicians and constitutional authorities using Pegasus Spyware. The said committee will be headed by former Supreme Court Judge Justice RV Raveendran. Read More... The Hon’ble Delhi High Court stays the registration of trademark ‘Delhi Public International School’ in the name of Respondent- The interim application was filed seeking stay of the operation of registration of trademark ‘Delhi Public International School’ in class 41 in the name of the Respondent. The case of the Applicant was that they have statutory right over their trademark ‘Delhi Public School’, ‘DPS’ and the logo and the same was registered under class 16, 35, 41 and 42. The Petitioner received information that a school is run in Nagpur in the name as ‘Delhi Public International Society’, ‘DPIS’ which is deceptively similar to Respondent’s trademark. The Hon’ble Court was pleased to stay the registration of the trademark ‘Delhi Public International School’ in the name of the respondent. Read More... Can the Revenue Record be taken as a proof of title Document ? Recently, a division bench of Hon’ble Supreme Court of India comprising of Justice Hemant Gupta and Justice V Ramasubramanian observed that revenue record is not a document of title. The Bench further noted that even if the name of lessee finds mention in the revenue record, but such entry without any supporting documents of creation of lease contemplated under the Forest Act is inconsequential and does not create any right, title or interest over 12 bighas of land claimed to be in possession of the lessee as a lessee of the Gaon Sabha. 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. 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