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Appointment of Sole Arbitrator: Two Sides of the Same Coin

Almost every commercial contract contains an arbitration clause in order to circumvent the traditional trajectory of dispute resolution through litigation. It is common to encounter myriad project financing documents between a lender and a borrower bearing arbitration as a means of settling any dispute or difference. The concerning question raised in such a scenario is whether the lender of facilities exercises an upper hand in designating an arbitrator devoid of any recourse to the borrower; thereby bringing us to the crucial question: Have the clauses similar to All disputes and differences of whatsoever nature arising out of this agreement, whether during its term or after expiry thereof or prior termination shall be referred to arbitration in terms of the Arbitration and Conciliation Act, 1996. The arbitration shall take place before a sole arbitrator, to be appointed by the Lender.been obliterated?

The law in case of appointment of the sole arbitrator by a party has been settled by the Hon’ble Supreme Court in the case of Perkins Eastman Architects DPC and Ors. v. HSCC (India) Ltd.[1] (Perkins case). HSCC (India) Ltd. (Respondent), the executing agency of the Ministry of Health and Family Welfare, issued a Letter of Award (LOA) to the consortium of Applicants for the appointment of Design Consultant for All India Institute of Medical Sciences (AIIMS) proposed at Guntur in Andhra Pradesh. The dispute resolution clause in the contract between the parties provided that if Applicants were dissatisfied with the decision of Director (Engg.), HSCC (India) Ltd. (HSCC) they were at the liberty to issue a notice to the Chief Managing Director (CMD), HSCC for the appointment of an arbitrator within 30 (thirty) days of receipt of the decision.

Furthermore, the contract also prohibited any other person except appointed by CMD, HSCC to act as a sole arbitrator thereby entirely vesting the power of appointment of an arbitrator on the Respondent. When disputes arose, the Applicants invoked the dispute resolution clause in the contract and the Chief General Manager, HSCC appointed the sole arbitrator. Thereafter, an application was filed by the Applicants under Section 11(6) read along with Section 11(12)(a) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Act”) which envisages appointment of an arbitrator by the court. The Hon’ble Supreme Court examined if it could exercise the power of appointment of an arbitrator in this case dehors the procedure set out in the arbitration agreement.

The Hon’ble Supreme Court referred to the judgement of TRF Limited v. Energo Engineering Projects Limited[2] (TRF case) in which the Apex Court examined the issue wherein the Managing Director of the Respondent was titled as the sole arbitrator and was also vested with the authority to nominate a replacement. The Apex Court by virtue of Section 12(5) of the Act that deals with the arbitrator’s relationship with the parties or counsel or subject matter of dispute, affirmed the ineligibility of a person falling under the purview of Seventh Schedule of the Act to perform the role of an arbitrator. Therefore, the Managing Director was ineligible to act as an arbitrator due to which his ability to nominate another person as an arbitrator was annihilated. The Apex Court in this case differentiated the dual power of the Managing Director, one to adjudicate as an arbitrator and second, the capacity of the Managing Director to appoint a nominee in his place.  

The principles emanating from the TRF case were reflected in the present case wherein the capacity of CMD, HSCC to appoint an arbitrator was analyzed. The Hon’ble Supreme Court held that in the TRF case the ineligibility of the Managing Director arose due to his interest in the outcome of the dispute. The same ground would be applicable in the scenario irrespective of the binary power of the arbitrator. In other words, if the appointed arbitrator has an interest in the dispute or in the outcome or decision thereof, he shall be incompetent to adjudicate the dispute as an arbitrator and/or disentitled to appoint any other person as an arbitrator.

The Hon’ble Court stated that the facet of exclusivity shall encompass the party that unilaterally appoints the sole arbitrator of its choice and discretion in spelling the course of the proceedings. Thus, the essence of the Act along with the TRF case was retained by upholding that it would be incongruous to confer the power of appointing an arbitrator in the hands of a person who has an interest in the outcome or decision of the dispute. The appointment made by the Respondent who was empowered in accordance to the dispute resolution clause was annulled and the Hon’ble Court exercised its power under Section 11(6) resulting in the appointment of a sole arbitrator to preside over the disputes between the parties.

The Hon’ble High Court of Delhi echoed this principle in the case of Bilva Knowledge Foundation and Ors. v. CL Educate Limited[3] where the court conceded with the view, followed by the case of Proddatur Cable TV DIGI Services v. SITI Cable Network Limited[4] wherein the distribution agreement vested a unilateral right to appoint the sole arbitrator on the Respondent Company which disagreed with the nomination of arbitrator proposed by the Petitioner. The High Court held that test of having an interest in the outcome of the dispute will be exhibited by the Respondent Company acting through its Board of Directors thereby vitiating the unilateral appointment. The High Court clarified that though party autonomy is a touchstone in arbitration, one cannot overlook the underlying principles of fairness, transparency and impartiality that are also fundamental in an arbitration. While the parties may agree to the procedure mentioned in the dispute resolution clause by free will, this agreement should not eclipse the facet of fairness and impartiality in an arbitration proceeding.

Concluding remarks

In cases where both parties can nominate their respective choice of arbitrators the power derived by one party is counter balanced by an equal power with the other party as seen in the Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV)[5].  Though it may seem that the law governing the right of the lender to appoint the sole arbitrator as upheld in the case of D.K. Gupta and Ors. v. Renu Munjal[6] is now settled through the Perkins case, one has to be prudent in drafting and interpreting the clauses for the appointment of sole arbitrator that may be reached by mutual consent or by court appointment or any other alternative thereby balancing party autonomy and the tenets of fairness, transparency and impartiality.

 

References:

[1] AIR2020SC59

[2] (2017)8SCC377

[3] Arb. P. 816/2019

[4] 267(2020)DLT51

[5] 2020(1)ALT70

[6] O.M.P. (T) (COMM.) 106/2017 & IA No. 14824/2017

 

 

Image Credits: Photo by Sora Shimazaki from Pexels

In cases where both parties can nominate their respective choice of arbitrators the power derived by one party is counter balanced by an equal power with the other party as seen in the Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV).

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Food Safety Compliance System (FOSCOS) - A game-changer for Food laws Compliance and Enforcement Mechanism

With increased awareness, globalization and technological advancement, people are becoming more and more conscious of their eating choices. In fact, COVID-19 has changed the food habits of many individuals eager to fight against the pandemic by adopting a more balanced and nutritious diet to improve immunity.

Accordingly, Indian Food laws are changing in line with global food laws/standards through the amendment of various regulations based on the changing scenario. Food Safety Standard Act, 2006 (“the Act”) is also evolving and transforming in consonance with the “One Nation One Food Law” initiative.

 

The Food Safety and Standards Authority of India (FSSAI) established under the Act is now not only responsible for monitoring food safety standards but is also governing the entire food supply chain. With this mandate, the FSSAI has taken various steps towards easing the process of registration and licensing.

 

A new step in that direction is the replacement of the present online application system i.e. Food Licensing and Registration System (FLRS) to provide licensing and registration with an upgraded, advanced, controlled, improved, and developed open-source platform called Food Safety Compliance System (FoSCoS).

 

It was initially launched in the States/UTs of Tamil Nadu, Puducherry, Gujarat, Goa, Odisha, Manipur, Delhi, Chandigarh, and Ladakh in June 2020. FSSAI is now launching the second phase of FoSCoS in the remaining 27 States/UTs on 01st November 2020. Consequently, the FLRS portal has been closed w.e.f. 21st October 2020. FoSCoS is a more user-friendly and effective IT platform that seeks to connect Food Business Operators (FBOs), Designated Officers (DOs), and Food Safety Officer (FSOs).

 

FoSCoS is an upgraded and comprehensive solution that also connects with FSSAI’s other existing IT platforms such as Food Safety Compliance through Regular Inspection and Sampling (FoSCoRIS), Food Safety Connect-Complaints Management System, Online Annual Return Platform, Food Import Clearing System (FICS), Indian Food Laboratory Network (InFoLNet), Audit Management System (AMS), Food Safety Training and Certification (FoSTaC), Food Safety Mitra (FSM), etc.

 

FoSCoS has been rolled out to achieve the following objectives:  

 

  • Transform from the present FLRS which is only a licensing platform to a central food safety compliance regulatory platform.
  • Facilitate a hassle-free and user-friendly IT platform to connect Food Business Operators and Food authorities.
  • Build a technically advanced integrated application to achieve interoperability with other applications, capable of higher user traffic, and has potential for future upgrades and functionalities.
  • Enhance user performance of the application and make the application process simpler and efficient to promote ease of doing business amongst FBOs.
  • Achieve minimal physical documentation and streamline business process flows for FBOs for online applications.
  • Achieve and enable the application to have a standardized product approach rather than a text box approach for manufacturers.
  • Enable the application to seed business-specific details such as CIN No., PAN No. and GST No. to ensure effective profiling and validation of FBOs.

 

The FSSAI expects FoSCoS to be a game-changer for the implementation and enforcement of food laws in India. It is necessary to create awareness among Food Business Operators and the general public to achieve the goal of the Swastha Bharath Mission.

 

 

 

 

Fox Mandal is planning to publish a series of articles/blogs to create awareness on the food laws in India and related compliance under the FoSCoS Platform.

 

 

Image Credits: Photo by Mat Brown from Pexels

The FSSAI expects FoSCoS to be a game-changer for the implementation and enforcement of food laws in India. It is necessary to create awareness among Food Business Operators and the general public to achieve the goal of the Swastha Bharath Mission.

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Revenue Records Do Not Create or Extinguish the Title

With land or property related litigation accounting for two-thirds of all civil cases pending in the Indian courts, evidence to establish legal title has taken a centre stage. Conflicting laws, administrative incompetence, and a lack of awareness among the population is clogging the judicial pipeline. Courts have therefore been conferred with multiple opportunities to analyse the legal implications of the various documents involved in property transaction and an unwavering opinion on the lack of standing of ‘Revenue Records’ in an ownership claim has emerged.

Mutation Entry in the Revenue Records does not Create or Extinguish Title Over Land/ Property

In practice, often, in a dispute over title of a land/property, it is seen that the parties assert their title by placing reliance upon their name being reflected in the revenue records. On this point, recently, the Supreme Court, with characteristic clarity in Prahlad Pradhan & others Vs. Sonu Kumhar & others which was decided on October 16, 2019,[i] reiterated that the mutation entry in the revenue records does not create or extinguish title over the land, nor such entry has any presumptive value on the title of such land.

In reaching the above conclusion, the Supreme Court relied upon the following judgments:

  • In In Smt. Bhimabai Mahadeo Kambekar (D)Th. LR Vs. Arthur Import and Export Company which was decided on January 31, 2019[ii] as well as in Sawarni (Smt.) Vs. Inder Kaur[iii], the Supreme Court had held that the mutation of a property in the revenue record does not create or extinguish title nor does it have any presumptive value on the title. It only enables the person in whose favour mutation is ordered, to pay the land revenue in question.
  • In Balwant Singh & Anr. Vs. Daulat Singh (dead) by L.Rs. & Ors.[iv], similar observations were made by the Supreme Court, where it was held that a party is not divested of his title in the suit property as a result of mutation entry.
  • In Narasamma & Ors. Vs. State of Karnataka & Ors.[v], the Supreme Court reiterated the above position by observing that it is true that the entries in the revenue records cannot create any title in respect of the land in dispute.

Importance of Mutation Entries

In view of the findings of the Supreme Court in the present case, and as per the law already laid down by the Supreme Court, it is an inevitable conclusion that mutation entries in respect of any land on the revenue records do not create or extinguish title. What is then the need for mutation entries?

Mutation entries are maintained for fiscal purposes, to ensure that the land revenue is paid by the person whose name is recorded thereon. Although they are not a direct evidence of legal title, they nevertheless could be used for corroboration. Further, apart from assisting authorities in fixing taxpayer’s liabilities, they are of significance while resale of a property. Also, non-filing would attract penalties. Furthermore, the procedure, cost, and documents required while applying for mutation differ from state to state. States now provide for e-mutation services to ease the process.

Mutation entries are generally challenged on the ground that they were made surreptitiously or fraudulently or a sale deed relating to a particular transaction was fraudulently made and therefore void.

Difference Between ‘Revenue Records’ and ‘Title Documents’

Primarily, lands get transferred/conveyed from one person to another through a registered sale deed (a record of the property transaction between the buyer and seller). Other documents used to establish ownership include the record of rights (document with details of the property), property tax receipts, and survey documents. Hence, there appears two terminologies i.e., (1) revenue records of the land and (2) title documents which describes the owner of the property or land. To understand better “Revenue Record” is a generic expression that includes documents such as the Index of Lands, Record of Rights, Tenancy and Crops, Mutation Register, Disputed Cases Register, etc. It also includes geological information regarding the shape, size, soil type of the land, and economic information related to irrigation and crops. Whereas, a title deed/document talks about the rightful ownership of a person over a land. Apart from the ownership, title deed also speaks of the rights, obligations, and mortgage obligations of the owner.

Land Title is a document that determines the ownership of land or immovable property.  Having a clear land title protects the rights of the titleholder against other claims made by anyone else to the property.  In India, land ownership is determined through various records such as title documents that are registered and survey records issued by the Government. 

Currently, land can be transferred from one party to another through sale, gift, inheritance, mortgage, and tenancy. The Transfer of Property Act, 1882 provides that the right, title, or interest in immovable property (or land) can be transferred only by a registered instrument.  The Registration Act, 1908, is the primary law that regulates the registration of land-related documents.  Therefore, currently, all sale deeds/title documents relating to land or immovable property transfer are registered under the Registration Act, 1908. 

 

 

Reference 

[i]     2019 SCC Online SC 1416

[ii]   (2019) 3 SCC 191

[iii]  (1996) 6 SCC 223

[iv]  (1997) 7 SCC 137

[v]   (2009) 5 SCC 591

 

Sharon McCutcheon on Unsplash

“Revenue Record” is a generic expression that includes documents such as the Index of Lands, Record of Rights, Tenancy and Crops, Mutation Register, Disputed Cases Register, etc. It also includes geological information regarding the shape, size, soil type of the land, and economic information related to irrigation and crops. Whereas, a title deed/document talks about the rightful ownership of a person over a land. Apart from the ownership, the title deed also speaks of the rights, obligations, and mortgage obligations of the owner.

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Impact of Supreme Court ruling pertaining to calculation of Provident Fund contribution on Allowances

The Hon’ble Supreme Court, in a recent judgement, answered the question of whether “special allowances” would fall within the expression “basic wages” for Provident Fund (PF) contribution in the affirmative. Interpreting the provisions of Employees Provident Funds and Miscellaneous Provisions Act, 1952 (“PF Act”) as a beneficial social welfare legislation, the Court affirmed the PF authorities’ factual conclusion that the allowances in question were essentially a part of the basic wage camouflaged as part of an allowance so as to avoid deduction and contribution to the provident fund account of the employees.

In essence, the Court reiterated the principle laid down in prior rulings that where the wage is universally, necessarily and ordinarily paid to all across the board, such emoluments are basic wages and employers had to expressly prove the special treatment in the special allowance for it to be kept out of the purview of calculations for PF purposes.

 

Background

The PF Act is a social security legislation enacted to help ensure that both employees and employers contributed towards a superannuation fund for the purpose of retirement benefits. Per the PF Act, all employees are required to contribute 12% of their basic wages, dearness allowance, cash value of any food concession and retaining allowance, if any with the employer contributing a matching 12%.

 

Basic Wages under Section 2(b)(ii) read with Section 6 of the PF Act is defined as “all emoluments which are earned by an employee while on duty or [on leave or on holidays with wages in either case] in accordance with the terms of employment and which are paid or payable in cash to him, but does not include:

  • the cash value of any food concession;
  • any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other similar allowances payable to the employee in respect of his employment or of work done in such employment;
  • any presents made by the employer.

The phrase “or any other similar allowance” has not specifically been defined in the PF Act or related schemes and has thus been a subject of litigation for several decades. Over the year, companies have been structuring the salary paid to employees to include various allowances, including special allowance. However, in all instances per the understanding of the PF Act, employers have only been paying contribution on Basic Salary, Dearness Allowance and Retaining Allowance or such equivalent components. The PF authorities have usually contended that ‘special allowances’ should be included for the purpose of calculation of contribution. The Hight Courts in India have taken varying views on the subject matter pertaining to contribution on allowances which had resulted in various appeals pending before the Supreme Court of India.

 

Supreme Court Decision on 28th February, 2019[1]

Various appeals[2] were preferred before the Supreme Court questioning whether various types of allowances such as special allowance, travel allowance, HRA, food allowance, etc. were to be construed as ‘basic wages’ for the purpose of calculation of contribution. The petitioners/employers had used the argument that the term ‘basic wages’ had certain specific exceptions and only such payment that had been earned by the employee in accordance with the terms of the employment was to be included for calculation of provident fund. The PF authorities, on the other hand used the principle of ‘universality’, stating that only incentive payments linked to output could be excluded from the calculation of provident fund.

 

The Hon’ble Supreme Court dismissed the appeals by the employers (except the appeal by the RPFC in the Vivekananda Vidyamandir case) and concluded, relying on the principle of universality, that all payments which were made to all employees or categories/classes of employees without discrimination and which are not specifically ‘variable’ in nature and fact or linked to certain incentive for greater output, would be construed as ‘basic wages’ and thus provident fund contribution was to be made on them. For an amount to be construed as variable in nature it would need to be demonstrated that the said amounts were payable on account of employees contributing beyond any normal work that would usually be expected of them; or that it would be payable to employees only if they availed certain opportunities.

 

The Supreme Court relied on some of its previous decisions for its conclusions, namely:

  • Whatever is payable by all concerns or earned by all permanent employees had to be included in basic wage for the purpose of deduction under Section 6 of the Act. It is only such allowances not payable by all concerns or may not be earned by all employees of the concern, that would stand excluded from deduction.[3]
  • Any variable earning which may vary from individual to individual according to their efficiency and diligence will stand excluded from the term ‘basic wages’.[4]
  • Where the wage is universally, necessarily and ordinarily paid to all across the board such emoluments are basic wages. Where the payment is available to be specially paid to those who avail of the opportunity is not basic wages. Conversely, any payment by way of a special incentive or work is not basic wages.[5]
  • That the Act was a piece of beneficial social welfare legislation and must be interpreted as such.”[6]

Impact of Supreme Court Decision

The principles laid out by the Supreme Court, although not new, are a welcome clarification on the position of allowances with respect to the calculation of provident fund contribution. From an employee perspective, employees’ net take home salary is also likely to be impacted by the decision.

 

However, the possibility of the decision having a retrospective effect might exasperate employers. This is on account of the fact that the judgement interprets an existing provision in the law and does not create any new provisions. The retrospective effect may require employer to cover the shortfall in contribution for the past year but additionally pay interest and damages as well.

 

It may also be noted that the Supreme Court decision to include allowances as part of basic wages has primary financial implications in connection to those domestic employees whose salary (on which PF contributions were being paid i.e. basic salary and dearness allowance) is less than INR 15,000 per month, as well as all international workers.

 

Employers are advised to revisit their policies and salary structures and start ensuring that all components of salary which are not discretionary or variable in nature are included for the purpose of PF contributions. Employers are also recommended to conduct audits to ascertain potential past non-compliances / shortfalls in contributions.

 

The matter is also currently sub judice with the management of Surya Roshni Ltd. having filed a review petition before the Supreme Court. It also remains to be seen if the EPFO would take a more lenient stance and allow employers to rectify past non-compliances without incurring the additional cost of interest and damages.

 

References:

[1] In connection with Civil Appeal no. 6221/2011, 3965-66/2013, 3969-70/2013, 3967-68/2013 and Transfer Case no. 19/2019 (arising out of TP(C) no. 1273/2013)

[2] Appeals considered jointly: (i) The Regional Provident Fund Commissioner (“RPFC”), West Bengal v/s Vivekananda Vidyamandir and Others (Kolkata High Court); (ii) Surya Roshni Ltd. vs. Employees Provident Fund and others (Madhya Pradesh High Court); (iii) U-Flex Ltd v/s EPF and another; (iv) Montage Enterprises Pvt. Ltd. v/s EPF and another (Madhya Pradesh High Court); (v) The Management of Saint-Gobain Glass India Limited v/s The RPFC, EPFO (Madras High Court).

[3] (i) Bridge and Roof Co. (India) Ltd. vs. Union of India, (1963) 3 SCR 978

[4] Muir Mills Co. Ltd., Kanpur Vs. Its Workmen, AIR 1960 SC 985

[5] Manipal Academy of Higher Education vs. Provident Fund Commissioner, (2008) 5 SCC 428

[6] The Daily Partap vs. The Regional Provident Fund Commissioner, Punjab, Haryana, Himachal Pradesh and Union Territory, Chandigarh, (1998) 8 SCC 90

Image Credits: Image by Shutterbug75 from Pixabay 

Employers are advised to revisit their policies and salary structures and start ensuring that all components of salary which are not discretionary or variable in nature are included for the purpose of PF contributions. Employers are also recommended to conduct audits to ascertain potential past non-compliances / shortfalls in contributions.

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Property Rights of an Unborn Child in India

While most debates surrounding the existence of a person before birth and after death are theological or philosophical in nature which could go on endlesslythe debate concerning the right of yet-to-be-existent person needs to be settled conclusively. Especially, ascertaining property rights of an unborn is essential as it has a direct implication on the rights of other existent individuals. Although the Indian laws recognize the existence of an unborn as a legal person, rights are not granted until the birth of the child. Further, while a child in a mother’s womb is considered as person for many purposes, the extent of the unborn child’s personal or proprietary rights has not been categorically determined. The unborn is regarded by legal fiction as already born for creation of interest in property.  

Moreover, the right to life has been guaranteed as a fundamental right to everyone under Article 21 of the constitution of India, which may be deemed to include an unborn child. Renowned scholars have also opined that ‘the State should not discriminate between persons who have taken birth and persons who are still in the womb of a mother’. Therefore, the State is under an obligation under Article 21 not only to protect the life of an unborn child from arbitrary and unjust destruction but also not to deny it equal protection under Article 14.i  

Further, judicial pronouncements have tried to shed some light on the status and rights of an unborn child. In the case of Tagore V. Tagoreii, the Supreme Court observed that foetus/infant in a womb is a person in existence for the purpose of making a gift to an unborn child. Subsequently, in the case of Jabbar V. Stateiii, the Court has also held that the term ‘person’ would include an unborn child in the mother’s womb after seven months of pregnancy. This would mean that it is capable of being spoken of as a person if its body is developed sufficiently.  

Property Rights of an Unborn under the Transfer of Property Act, 1884 (“TP Act”): 

Under the Transfer of Property Act, 1882, any property (movable or immovable) can be bequeathed in favour of an unborn child. However, an interest created in favour of an unborn is contingent on the occurrence of birth. Further, interest cannot be transferred directly to an unborn, it must be transferred to another living person or a trust must be created for the purpose.  

Section 13 of the Transfer of Property Act reads as follows: 

‘Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transfer in the property.’ 

As the above provision defines an unborn child is a child or a baby in its mother’s womb. A person yet to be born does not have any existence and is not counted as a living person, still the property can be transferred to the unborn child/baby. 

Section 20 of the Transfer of Property Act reads as under:  

Where, on a transfer of property, an interest therein is created for the benefit of person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.’ 

Therefore, an unborn child i.e. an Infant En Ventre Sa mere can attain definite rights and inherit property only if he/she is born alive and such rights can be vested in the hands of his/her trustees.   

Conditions required for the transfer of property to an unborn child: 

  1. Absolute interest must be made in the favour of unborn child; 
  1. Creation of prior life interest in favour of a person who is in existence on the transfer date. 

As soon as the unborn child takes birth, the property rights immediately get transferred in his/her name. Post which he or she will be the sole owner of the property. 

Property Rights of an Unborn under the Hindu Succession Act, 1956: 

According to the Mitakshara school of law, a son by birth acquires an interest in the ancestral property of the joint family. Whereas, under the Dayabhaga school, the son has no automatic ownership right by birth but acquires it on the demise of his father.iv 

The conflict has been somewhat resolved by the express acknowledgment under Section 20 of the Hindu Succession Act, 1956 which recognises the rights of a child in the womb; 

A child who was in the womb at the time of the death of an intestate and who is subsequently born alive shall have the same right to inherit to the intestate as if he or she had been born, before the death of the intestate, and the inheritance shall be deemed to vest in such a case with effect from the date of the death of the intestate.’ 

In the case of FM Devaru Ganapati Bhat V. Prabhakar Ganapati Bhatv, the Court held that ‘There is no ban on the transfer of an interest in favour of an unborn person. Section 20 permits an interest being created for the benefit of an unborn person who acquires interest upon his birth. Where the donor gifted the property in favour of the appellant, then living, and also stipulated that if other male children are later born to her brother they shall be joint holders with the appellant, the court also held that such stipulation is not hit by Section 13 of the Act. Creation of such a right is permissible under Section 20 of the Act. 

Mulla on Hindu Law, Fifteenth Edition, contains a commentary by the author while dealing with Section 20 of the Hindu Succession Act, 1956  The commentary reads thus: 

It is by fiction or indulgence of the law that the rights of a child born justo matrimonio are regarded by reference to the moment of conception and not of birth and the unborn child in the womb if born alive is treated as actually born for the purpose of conferring on him benefits of inheritance. The child in embryo is treated as in esse for various purposes when it is for his benefit to be so treated. This view is not peculiar to the ancient Hindu law but one which is adopted by all mature systems of jurisprudence. This section recognises that rule of beneficent indulgence and the child in utero although subsequently born is to be deemed to be born before the death of the intestate and inheritance is to be deemed to vest in the child with effect from the date of the death of the intestate.” 

 

Therefore, it is pertinent that the status of a human being in the making and the related rights are expressly clarified through adequate legislation. Judicial pronouncements, though binding, have been varying and evolving. In a country where even a defamed deceased has right to sue, it is essential that the property rights of future citizens are secured adequately.  

 

Image Credits: Photo by Ashton Mullins on Unsplash

It is pertinent that the status of a human being in the making and the related rights are expressly clarified through adequate legislation. Judicial pronouncements, though binding, have been varying and evolving.

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Bulk Data Sharing & Procedure Notification - A Data Breach?

In this digital era, data has become one of the most valuable assets to own. Elections have been won and international alliances have toppled because of support that could be garnered by utilizing data analytics. While heated debate surrounding data breaches by private entities baffles the world, at home, it is accused that the Indian Government has monetized from sale of personal data of Individuals, in the pretext of public purposes” under a notification released by the Ministry of Road Transport and Highways in March 2019 titled “Bulk Data Sharing & Procedure”.

In July 2019, a parliamentary debate pertaining to “sale of data” by the State was raised because the Government had provided access to databases containing driving license and vehicle registration details to private companies and Government entities and generated revenue out of them.  The two databases of Ministry of Road Transport and Highways named Vahan and Sarathi were under discussion.  These databases contained details such as vehicle owner’s names, registration details, chasis number, engine number, and driving license related particulars of individuals.  These details amount to personal information by which an individual could be identified (“Personal Data”).  

The sale of data was pursuant to a notification released by the Ministry of Road Transport and Highways in March 2019 titled Bulk Data Sharing & Procedure wherein a policy framework on sale of bulk data relating to driving license and vehicle registration was introduced.  Among other things, this writeup discusses whether such sale of Personal Data for revenue generation is acceptable in light of privacy as a fundamental right and the Data Protection Bill 2018? and whether such access constitutes data breach? 

 

Bulk Data Sharing & Procedure Notification 

The “Bulk Data Sharing & Procedure” notification by the Ministry of Road Transport and Highways states the purpose for which bulk data access would be  provided: 

it is recognized that sharing this data for other purposes, in a controlled manner, can support the transport and automobile industry.  The sharing of data will also help in service improvements and wider benefits to citizens & Government. In addition, it will also benefit the country’s economy”.  

As per the notification, only such entities that qualify the eligibility criteria would be provided access to bulk data.  The eligibility criteria are that an entity should be registered in India with at least 50% Indian ownership, such bulk data should be processed/stored in Servers/Data Centers in India, and the entity should have obtained security pre-audit report from CERT-In empanelled auditor.  The bulk data access would be provided for a price.  

Commercial organizations could have such data for an amount of INR 3 crores and educational institutions could have them for 5 lakhs.  As per the notification, the bulk data will be provided in encrypted form with restricted access.  Such entities would be restricted from any activity that would identify individuals using such data sets.  The entities would be required to follow certain protocols for data loss prevention, access controls, audit logs, security and vulnerability.  Violation of these protocols is punishable under the Information Technology Act, 2000. 

The Ministry of Road Transport and Highways has in accordance with this policy framework provided database access to 87 private companies and 32 government entities for a price of 65 crores resulting in Personal Data of all individuals being accessible to them.  The Data Principal (the individual whose information is in the database) has no knowledge or control over any use or misuse of his/her information.   

In any data protection framework worldwide, the Data Principal’s consent should be sought stating the purpose for which data ought to be used.  It is only pursuant to Data Principal’s consent that any information can be processed.  On the contrary, providing access to Personal Data to third party private companies without any consent of the Data Principal will keep them out of effective control.  This is against the basic principles of data protection. 

 

Proposed Legislation for Data Protection 

India is on the verge of a new Data Protection Act as the bill is being placed in the Parliament.  The Data Protection Bill, 2018 contains certain provisions to address the above-mentioned issues.  Section 5 of the Data Protection Bill states when personal data can be processed.  Personal Data shall be allowed only for such purposes that are  clear, specific, and lawful.  Section 5 is extracted below: 

  1. Purpose limitation— (1) Personal data shall be processed only for purposes that are clear, specific and lawful. (2) Personal data shall be processed only for purposes specified or for any other incidental purpose that the data principal would reasonably expect the personal data to be used for, having regard to the specified purposes, and the context and circumstances in which the personal data was collected.

Moreover, the relevant enactment regulating driving license and vehicle registration i.e. Motor Vehicle Act does not explicitly permit the State to sell or provide third parties access to Personal Data for generation of revenue.  Therefore, there is no clear, specific, or lawful indication of such access in the enactment.  The question arises whether access to bulk Personal Data can be interpreted as an “incidental purpose” that “data principal would reasonably expect”.  The data principal has provided this information only for the purpose of grant of motor vehicle license and vehicle registration.  The Data Principal ought not have expected his/her data to be sold by the Government. 

Section 13 of the Data Protection Bill is also of relevance here because it authorizes the State to process Personal Data for provision of services, benefit or issuance of certification, licenses or permits.  Section 13 is extracted below: 

Section 13 – Processing of personal data for functions of the State. — Personal data may be processed if such processing is necessary for excise of the functions of the State authorised by law for: (a) the provision of any service or benefit to the data principal from the State. (b) the issuance of any certification, license, or permit for any action or activity of the data principal of the State. 

 

By this section, the State is authorized to use Personal Data for grant of license or permits or to provide any benefit or service.  However, whether the State is authorized to give access to Personal Data to third party private companies is unclear. 

Section 17 of the Data Protection Bill tries to shed some light on this anomaly.  The section states that Personal Data may be processed for “reasonable purposes” after considering if there is any public interest involved in processing the same.  What constitutes reasonable purpose is yet to be specified by the Data Protection Authority to be constituted.  Section 17 is extracted hereunder: 

  1. Processing of data for reasonable purposes. — 

(1) In addition to the grounds for processing contained in section12 to section 16, personal data may be processed if such processing is necessary for such reasonable purposes as may be specified after taking into consideration— 

(a) the interest of the data fiduciary in processing for that purpose; 

(b) whether the data fiduciary can reasonably be expected to obtain the consent of the data principal; 

(c) any public interest in processing for that purpose; 

(d) the effect of the processing activity on the rights of the data principal; and 

(e) the reasonable expectations of the data principal having regard to the context of the processing. 

(2) For the purpose of sub-section (1), the Authority may specify reasonable purposes related to the following activities, including— 

(a) prevention and detection of any unlawful activity including fraud; 

(b) whistle blowing; 

(c) mergers and acquisitions; 

(d) network and information security; 

(e) credit scoring; 

(f) recovery of debt; 

(g) processing of publicly available personal data; 

(3) Where the Authority specifies a reasonable purpose under sub-section (1), it shall: (a) lay down such safeguards as may be appropriate to ensure the protection of the rights of data principals; and (b) determine where the provision of notice under section 8 would not apply having regard to whether such provision would substantially prejudice the relevant reasonable purpose. 

 

Section 17, therefore, clarifies that when there is any public interest involved, the State may provide access to publicly available personal data to third parties.  This read with Section 13 indicates that State is not required to get the consent of Data Principal in order to provide services and benefits.   

 

Whether the State has provided access to personal data for public interest or to provide services and benefits? 

The Bulk Data Processing & Procedure notification states that the purpose of providing access of bulk Personal Data is to “support the transport and automobile industry” & “help in service improvements and wider benefits to citizens & Government”.  Supporting the transport and automobile industry and improving services may qualify as public interest, whereas, mere revenue generation will not.  However, there is no clarification from the Government as to how these private companies to whom database access is being provided assist in public interest.  Further, whether all driving license and registration details related data can be classified as publicly available information is again contentious and questionable as the information provided therein is intended to be provided only to license holders & vehicle owners and is partially masked. 

In the event if this Personal Data is not construed as public data or these public companies have been given access to personal data in the absence of any public interest, it would result  in personal data breach by the Government Departments where the head of Department will be held liable as per section 96 of the Data Protection Bill. 

It is quite preposterous to note that on the one hand Data Protection Bill is being tabled in parliament and on the other, the Government is selling Personal Data of the general public for economic gains.  Whether it results in the exploitation of personal and private data on the pretext of public interest without an individual’s consent needs to be ascertained. 

Image Credits:

Photo by Markus Spiske on Unsplash

 

It is quite preposterous to note that on the one hand Data Protection Bill is being tabled in parliament and on the other, the Government is selling Personal Data of the general public for economic gains.

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SEBI’s Insider Trading Tentacles Reach (Overreach) “fiduciaries”

Recurrent cases of insider trading in eminent corporates has necessitated periodic updation of regulations to meet the needs of the ever-evolving market. The social culture of casually discussing or watsapping Unpublished Price Sensitive Information (UPSI), that is not only difficult to track but also poses evidentiary challenge in the court, needed immediate overhauling. Further, placing all the investors trading in the secondary market on equal footing to ensure symmetrical flow of information among them is exemplar of the non-partisan philosophy that the regulatory authority strives to establish. Towards this objective, the Securities and Exchange Board of India (SEBI), on the recommendations of Shri T. K. Vishwanathan’s Committee on Fair Market Conduct, introduced a myriad of changes through an amendment to the SEBI (Prohibition of Insider Trading) Regulations, 2015 which came into effect in April 2019. Notwithstanding the earnest intention behind the modifications, the amendments are not infallible and could encounter a lot of implementation challenge.  

Major Changes brought about by the amendments to the SEBI Insider Trading Regulations: 

 
Fiduciaries: 

The amendments have brought in various new concepts affecting entities such as law firms, auditors, consultants etc. who, by the very nature of the work carried on for listed company, either get access to UPSI or expressly receive them for specified purposes. UPSI is not generally available to the public and if exposed, would materially affect the price of the securities being traded in the secondary market. Therefore, the role of these entities in stifling leakages was considered crucial and nomenclated as fiduciaries under these amendments through the following concepts: 

Connected Person: 

Individuals associated with the work related to listed company in the last six months, directly or indirectly in any capacity, are considered insiders. The fiduciaries i.e. professional firms such as auditors, accountancy firms, law firms, analysts, insolvency professional entities, consultants, banks etc., assisting or advising listed companies are also covered under the definition of “insider” as connected persons.  

Legitimate purposes: 

Although the regulations allow the use of USPI for legitimate purposes, such as in furtherance of the scope of work assigned by listed company, it cannot be communicated to any other person including other connected persons who are not part of the assignment. The information should be shared only on a need to know basis within the organization.   

Duty to frame code of conduct and recognize Designated Persons: 

The fiduciaries are required to frame code of conduct for regulating, monitoring and reporting trading by Designated Persons (one who is in possession of UPSI or likely to have access to UPSI) and to appoint a compliance officer to implement such code of conduct.  

The amendments also envisage to include immediate relatives of Designated Persons and persons having financial relationship with Designated Persons as insiders requiring compliance with the code of conduct.  Generally, they include partners, retainers at all levels, support staff such as IT Staff and Secretaries and those having access to UPSI.   

Steps envisaged for prevention of insider trading by fiduciaries: 
  • Client information of Listed Companies have to be shared only on a need to know basis within the organization. Adequate and effective system of internal controls must be put in place to ensure compliance with the requirements given under the regulations to prevent insider trading. 
  • A code of conduct has to be framed and a compliance officer has to be appointed who would identify the Designated persons and implement the code of conduct. 
  • Details, including cell numbers of the insiders (Designated person, his relatives and individuals with whom he shares material financial relationship) must be maintained in a database. Further, past employment and educational institutions from where they passed out and their PAN should also be collected. Management must ensure maintenance of structured digital database for the same. 
  • A list of securities as a “restricted list” which shall be used as the basis for approving or rejecting applications for pre-clearance of trades must be maintained confidentially by the compliance officer. 
  • The management, in consultation with compliance officer, is required to determine the threshold value within which Designated persons need not take pre-clearance for executing trades. Any trading over the threshold would require pre-clearance from the compliance officer. 
  • The code of conduct shall stipulate the sanctions and disciplinary actions, including wage freeze, suspension, recovery, clawback etc. that may be imposed for violation of the same. 
  • Violations of insider trading needs to be reported to SEBI. 
  • Individuals must be sensitized regarding the duties and responsibilities attached to the receipt of inside information, and the liability that attaches to misuse or unwarranted use of such information. 
  • On an annual basis, management has to review the implementation of the code of conduct and make changes if necessary.  

 

Unsettled Issues Post-Amendment to the Insider Trading Regulations:

 

  1. Collection of details of past employment, educational institutions from where they passed out and PAN Details relating to fiduciaries and their immediate relatives. 

 

Collection by the compliance officer of a listed company or fiduciary, the details such as phone numbers, past employment, educational institutions from where they passed out and PAN of not only Designated Person but also their immediate relatives is a compromise of the privacy rights of individuals. It is empowering a company official to collect personal details of people who are not even remotely associated or aware of the UPSI or the work carried on by the Designated Persons. Herein “Immediate relative” means a spouse of a person, and includes parent, sibling, and child of such person or of the spouse, any of whom is either dependent financially on such person or consults such person in taking decisions relating to trading in securities. The data that compliance officer is collecting is personal data of many and purpose of such collection will not make much difference in compliance of insider trading law. If a relative denies sharing personal information, what should compliance officer do is also not clear. 

The Listed Companies are expected to sign confidentiality agreement with fiduciary and whereby it can bind fiduciaries with their code of conduct. SEBI also has the power to call for data while investigating a case of insider trading. While all these powers are available additionally empowering compliance officers to collect personal data and private information of relatives, without even having an allegation of commission of an offence is unjustified. Moreover, it seems SEBI has not made any prescriptions to prevent misuse of such personal data at the hands of a listed company.  

 

2. The regulations allow the compliance officer of a listed company to specify those working in a fiduciary as Designated persons under their code of conduct and make their code of conduct applicable. Thus, there is no requirement of a separate code of conduct, and this amendment is an attempt to overreach its powers on people over whom SEBI has no jurisdiction. 

 

The amendments impose overlapping obligations on listed companies and fiduciaries to frame and implement a code of conduct. A listed company would be in a better position to analyze and make the code of conduct applicable to partners, employees or persons who are given access to UPSI. It also creates ambiguity especially if the Designated persons, thresholds, pre-clearance requirements as recognized under the listed company’s code of conduct is different from those prescribed by fiduciaries in their code of conduct. 

Therefore, fiduciaries should not be placed at same footing as that of listed company or intermediary who access UPSI. This is the approach taken by the Vishwanathan committee as well.  Fiduciaries are not regulated under the SEBI Act, 1992. They include persons associated with the securities market within the meaning of Section 11B of the SEBI Act, 1992 and such association is only while handling UPSI received from a listed company or while carrying on statutory functions in connection with securities market. Thus, requiring fiduciaries to frame their own code of conduct and making all requirements of code of conduct as in the same manner that applicable to an intermediary seems to be an attempt to overreach by SEBI and indirectly bring all consulting firms (lawyers, accountants, management consultants) under its jurisdiction.   

Thus, it is inappropriate to have a separate code of conduct for regulating trading of Designated persons of fiduciary. Similarly, requiring private information of immediate relatives of fiduciaries to be procured by listed company or fiduciary is in violation of privacy rights of such persons. These are clear case of overreach of powers by SEBI.  

 

 

Image Credits Photo by nrd on Unsplash

 

It is inappropriate to have a separate code of conduct for regulating trading of Designated persons of fiduciary. Similarly, requiring private information of immediate relatives of fiduciaries to be procured by the listed companies or fiduciary is in violation of the privacy rights of such persons.

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Specific Relief (Amendment) Act, 2018: An Overview

The Specific Relief Act, 1963 (SRA) was amended last year with the objective of changing the approach from ‘damages being the rule and specific performance being the exception, to specific performance being the rule, and damages being the alternate remedy’. The Specific Relief (Amendment) Act, 2018 was passed to encourage foreign investment in India and make laws more business friendly. The expert committee set up for the purpose, in its report dated 26.05.2016[i], recognized the increasing complexity of large projects, and particularly the public interest involved in contracts with the Government and Government agencies for infrastructure development, public-private partnerships and other public projects involving huge investments. Consequently, the Legislature introduced changes to specifically address the infrastructural need of the country. The Amending Act received presidential assent on August 1, 2018 and came into force on October 1, 2018.

Applicability of the Specific Relief (Amendment) Act, 2018: Retrospective or Prospective?

Since the inception of the Act, there have been varied opinions on whether the Act should have retrospective or prospective application?

In the case of Church of North India v Ashoke Biswas[ii], the Calcutta High Court held that any suit that was not ‘decreed’ until the commencement of the Amendment i.e. 01.10.2018 would fall within the purview of the Amendments. The rationale used by the Court in arriving at this conclusion was that the question of enforcement of contract only arises on the date of passing of the decree and not on the date of the institution of the suit, therefore the said Act must necessarily have retrospective effect and apply to all pending suits.

The XIIth Additional City Civil Judge at the Bangalore District Court found that the Act is in-fact prospective in effect[iii]. According to the learned Judge, the Legislature has specifically sought for the amending Act to be prospective by using the following words:

“It shall come into force on such date as the Central Government may, by notification in the official gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision”

The learned judge has construed the above to mean that the date of notification of enforcement of the act, i.e. October 1, 2018 is the date from which the said Act will also apply, thereby having prospective effect.

It is well settled that an amendment which is in the nature of a clarification or carries a declaratory flavor is retrospective in nature, whereas an amendment that alters substantive rights of a party is usually prospective in nature. The current amendment to the Specific Relief Act has changed the approach of the Act, in as much as it has made specific performance the norm and damages its exception. Therefore, the Specific Relief Act should be viewed prospectively. Having said that, the Supreme Court on one occasion[iv] has stated that when amending acts use the term “substitute” to effectuate an amendment to a particular provision, it should be deemed as if the substituted expression were included from the date of introduction of the original law.

The Supreme Court, in the recent case of Surinder Singh Deswal at Col. S.S. Deswal and Ors, v/s. Virendar Gandhi[v] has held that the amendment to section 148 of the Negotiable Instruments Act has retrospective application despite the fact that the amendment alters substantive right of the Parties. The Court, while arriving at the decision, looked at the objects with which the amendment was brought about i.e. to strengthen the credibility of cheques and to facilitate the growth of trade and commerce. The Court was of the view that the objects of the amending act can only be achieved by giving the provisions retrospective effect. 

The Specific Relief Act has been amended with the following objectives[vi]

  • Introduce Provisions for right of third parties
  • Change the approach to specific relief being the rule and damages the alternative
  • Promote injunction
  • Reduce the discretion granted to Courts
  • Right to cover
  • Expert Assistance
  • Unconscionable contracts
  • To encourage foreign investment
  • To make India business friendly and promote ease of doing business.

Drawing a parallel to the Negotiable Instruments judgment[vii], it may be argued that the objectives of the Amendment to the Specific Relief Act and the objectives of the Amendments to the Negotiable Instruments Act are similar in nature, and therefore, the Amendments to the Specific Relief Act must also be given retrospective effect.

It will however be interesting to see how this issue is going to be viewed in the future by different Courts and whether the Apex Court is going to intervene and settle the law. 

Key Changes brought about by the Specific Relief (Amendment) Act, 2018:

 
1. Change of Approach from Damages to Specific Performance

 

Under the erstwhile provision, to claim specific performance, a plaintiff had to satisfy a threshold test, i.e. he had to show that compensation was either unascertainable or was inadequate. This inadequacy test did not permit the remedy of specific performance (or injunction) for every contract. Further, the plaintiff may not be able to prove all losses he has suffered by the breach, nor will such amounts claimed be awarded to him. A decree of specific performance comes closest to protecting this interest: it gives the plaintiff what was promised. To uphold the moral obligation of a promise and deter individuals from breaching the same, the amendment removed this restriction and made specific performance a general remedy available to a promisee who wishes to claim them.

However, it is pertinent to note that the award of specific performance is subject to certain exceptions and also to the terms and conditions of the agreement between the parties. Therefore, the Court has to deny grant of specific performance in the following cases:

  • As found in the principal Act, contracts entered by a trustee on behalf of a trust in excess of his powers or in breach of trust cannot be directed to be specifically performed.
  • As retained from the principal Act, when a contract is completely dependent on the personal details or volition of the Parties, Courts cannot direct specific performance of such contracts.
  • As retained from the principal Act, contracts that are determinable are out of the purview of specific performance.
  • As retained from the principal Act, contracts involving the performance of a continuous duty that cannot be supervised by the Court cannot be specifically enforced
  • As retained from principal Act, where Substituted Performance has been received in lieu of the Contract.
  • Where the person seeking such specific performance has not performed his end of the Contract or is incapable of doing so.

The onus on ‘proving’ that he has been ‘ready and willing’ to perform his end of the contract lies with the Plaintiff even if he does not ‘aver’ it. This is in stark contrast to the earlier provision wherein an ‘averment’ to this effect was considered mandatory.  

It is also interesting to note that the erstwhile law barred granting of specific performance of contracts that contained an arbitration clause, however, the said provision has been done away with vide this amendment.

In addition, promoting the objective of encouraging specific performance of contracts, the amendment, in contrast to the earlier provision of claiming compensation in addition to and in substitution of Specific Performance, now allows for claiming compensation as an additional relief to seeking specific performance of the contract.

2. Right to Cover – Substituted Performance

An aggrieved party may now obtain substituted performance, on account of the breach, from a third party or from one of its own agencies and recover the expenses incurred in such substituted performance from the party in breach. Such substituted performance may be obtained only upon service of notice of a minimum of 30 days to the defaulting party. However, if there is a contract to the contrary between the Parties, the concept of substituted performance will have no applicability.

 3. Rights of Third Parties

The SRA was also amended with a view to enable a third party, on whom parties have conferred a benefit, to specifically enforce contracts, subject to rights of the contracting parties. This is in the nature of an exception to ‘privity of contract’ doctrine.

  • The erstwhile provision entitled a person who had been illegally dispossessed of her property alone to file a suit for specific performance. Now, the person through whom the dispossessed person received title to the property may also approach the court vide a specific performance suit.

Illustration: A leases out a flat admeasuring 30,000 sq. ft. to B. B grants a leave and license to C to the said flat. Any actionable claim that B has against C with respect to the said flat can also be initiated by A under the Specific Relief (Amendment) Act.

  • The amendment also recognizes a newly amalgamated Limited Liability Partnerships to seek specific performance of contracts entered into with one of its component Limited Liability Partnerships.

Illustration: When LLP “a” and LLP “b” amalgamate to form LLP “c”, LLP “c” can then seek specific performance of a contract that LLP “a” was privy to. Similarly, a third party can seek specific performance against LLP “c” for a contract that LLP “a” was a party to.

4. Reducing Discretion of Courts pertaining to Contracts in relation to a trust

As opposed to the earlier provision where Courts were given the discretion to direct specific performance of contracts that were agreed to be done in the performance wholly or partly of a trust, being trusts established under the Indian Trusts Act, 1882, now the words “may”, in the discretion of the Court has been substituted with the word “shall” indicating the mandatory nature of the clause. Therefore, now, the Courts are obligated to direct specific performance of a contract that is to be done in the performance of a trust, either wholly or partially, subject to the terms and conditions of the remainder of the provisions of the act as well as the underlying contract.

5. Expert Assistance

The Amendment empowers the Courts to appoint experts to determine the nature of the Contract, its breach and so on and so forth if it deems fit during the course of the suit. The parties may, with the permission of the Court examine such experts appointed.

6. Public Utility Contracts

The Amendment has placed an embargo on the power of the Court to grant an injunction in infrastructure-based projects that will, in any manner, delay or cause an impediment in the completion of such projects. The Amendment has provided an exhaustive list of the infrastructure projects covered under this statute. Special courts are to be designated by the State Governments to exercise jurisdiction and to try a suit under this Act in respect of contracts relating to infrastructure projects.

7. Expedited Resolution

The Amendment provides for a time limit to dispose off all matters filed under the SRA. All matters are to be expeditiously decided within 12 months from the date of service of summons to the defendant(s), extendable by a maximum period of an additional 6 months.

 

References:

[i] Report of the Expert Committee on Specific Relief Act, 1963 Government of India, May 2016

[ii] MANU/WB/0960/2019

[iii] O.S. No. 5395 of 2011

[iv] National Agricultural Cooperative Marketing Federation of India v/s. Union of India – MANU/SC/1221,2003

[v] Criminal Appeal No. 917 – 944 of 2019 arising out of SLP (Criminal) No.4948 to 4975 of 2019

[vi] Supra Note 1

[vii] Supra note iv

 

Image Credits- Photo by Paul Skorupskas on Unsplash

It is well settled that an amendment which is in the nature of a clarification or carries a declaratory flavor is retrospective in nature, whereas an amendment that alters substantive rights of a party is usually prospective in nature. The current amendment to the Specific Relief Act has changed the approach of the Act, in as much as it has made specific performance the norm and damages its exception.

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