List of Current Affairs

Source: Delhi High Court

Why in News?

The bench of Justice Sachin Datta observed that the court can make time bound directions to collector of stamps to decide upon an arbitration agreement that is unstamped.

• The Delhi High Court gave this observation in the matter of Splendor Landbase Ltd. v. Aparna Ashram Society.

Background

• The Delhi HC was hearing the batch of petitions regarding the issue of unstamped arbitration agreements.
• The court was contemplating upon the question as to how the statutory mandate under Section 11(13) of the Arbitration and Conciliation Act, 1996 (A&C Act) can be harmonized with the judgement of N. Global Mercantile Private Limited v. Indo Unique Flame Ltd and Other (2021).
  • The SC in the aforementioned judgment directed the courts to act in tune with the Indian Stamp Act, 1899 while dealing with a case related to arbitration agreement.

Court’s Observation

• The HC mainly observed that an unstamped/insufficiently stamped arbitration agreement is mandatorily required to be impounded in proceedings under Section 11 of the A&C Act.

Arbitration Agreement

• Arbitration is legally recognized out of court settlement procedure governed by A&C Act, 1996.
• Under the A&C Act, an arbitration agreement is defined under Section 7 as an agreement by parties to submit their existing or future disputes to arbitration.
• This agreement can be in the form of a separate document or can be included as a clause within the original contract between the parties.
• An arbitration agreement must be in writing.
• Section 11 of the Act pertains to the appointment of arbitrators.
• Under Section 11(2) of the A&C Act, the parties are free to agree on a procedure for appointing the arbitrator or arbitrators.
• When parties involved in a dispute are unable to agree on the appointment of an arbitrator, power of appointment of arbitration shifts upon the Chief Justice of India (CJI) or the designated person(s) by the Chief Justice.

Unstamped Arbitration Agreement

• The Act does not specifically state that an unstamped agreement is void or unenforceable.
• Instead, it outlines that an unstamped agreement can be enforced upon payment of the requisite stamp duty and any penalty imposed for the delay in stamping.
• However, the Supreme Court in the N.N. Global Mercantile Case held that an unstamped arbitration agreement would be considered as an unenforceable contract.
  • The court further held in this case that Section 35 of the Stamp Act, which makes any unstamped or insufficiently stamped document inadmissible in evidence applies the same principle to arbitration agreements.

Landmark Cases

• M/S Sms Tea Estates P.Ltd vs M/S Chandmari Tea Co.P.Ltd (2011):
  • The SC in this case held that, unless the stamp duty and penalty due in respect of the instrument is paid, the court cannot act upon the instrument.
  • It means that the court cannot act upon the arbitration agreement also which is a part of that instrument.
• Garware Wall Ropers Ltd. vs Coastal Marine Constructions (2019):
  • The SC in this case held that, when an arbitration clause is contained “in a contract”, it is significant that the agreement only becomes a contract if it is enforceable by law.
  • The court further noted that, under the Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped.
  • Therefore, an arbitration clause in an agreement would not exist when it is not enforceable by law.

Legal Provision

• Section 11(13) of the A&C Act, 1996 states that, an application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the Supreme Court or the High Court or the person or institution designated by such Court, as the case may be, as expeditiously as possible and an endeavor shall be made to dispose of the matter within a period of sixty days from the date of service of notice on the opposite party.

Source – Supreme Court

Why in News?

Recently, the Supreme Court in the matter of M Sivadasan (Dead) through LRs v. A.Soudamini (Dead) through LRs and Ors., has restated that a Hindu female has to be in possession of the property for claiming rights under Section 14(1) of the Hindu Succession Act,1956 (HSA).

Background

• For claiming ancestral rights over the property, the appellants had filed a suit for partition and mesne profit before the Trial Court in Kerala.
• The Trial Court dismissed the suit on the ground that the woman from whom they seek to derive their rights was never in possession of the property and hence Section 14(1) of HSA was not applicable.
• This finding of the Trial Court was upheld by the First Appellate Court and finally by the High Court of Kerala in the second appeal.
• Thereafter, a Special Leave Petition (SLP) was filed before the SC.
• While confirming the decree of the trial court, the SC dismissed the SLP.
• Section 2(12) of Civil Procedure Code, 1908 (CPC) deals with mesne profits.
• It states that mesne profit of property means those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom, together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession.

Court’s Observations

• The bench comprising Justices CT Ravikumar and Sudhanshu Dhulia observed that Section 14 (1) has no application in this case as the essential ingredient of Section 14 (1) is possession over the property for a Hindu female to claim rights under this section.
• The Court further observed that possession was a pre­requisite to sustain a claim under sub­section (1) of Section 14 of this Act. The Hindu female must not only be possessed of the property, but she must have acquired the property. Such acquisition must be either by way of inheritance or devise, or at a partition or in lieu of maintenance or arrears of maintenance or by gift or by her own skill or exertion, or by purchase or by prescription.

Legal Provisions

The Hindu Succession Act, 1956

• It was enacted on 17^th June 1956 for the purpose of amending and codifying the law relating to intestate succession among Hindus.
• The Hindu Succession (Amendment) Act, 2005 amended the provisions on coparcenary property, giving daughters of the deceased equal rights with sons, and subjecting them to the same liabilities.

Section

• Section 14 of HSA deals with the property of a female Hindu considers it as her absolute property. It states that -

(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner.

Explanation.—In this sub-section, “property” includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as Stridhana immediately before the commencement of this Act.

(2) Nothing contained in sub-section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property.

• In Chaudhary v. Ajudhia (2003), the High Court of Himachal Pradesh held that it is immaterial as to how the female acquired the property and if she possesses any property, the property is considered as her absolute property.

Source: Supreme Court

Why in News?

The Supreme Court (SC) has observed the adverse remarks should not be passed against public officials unless necessary in the matter of State of Punjab v. Shika Trading Co. 

Background

• In the present case Shikha Trading Company (STC) filed a Writ Petition in the Punjab & Haryana High Court (HC) against the illegal sealing of its shop by the officers of the Department of Excise and Taxation, Punjab in 2010.
• The petition was disposed of with following directions:
• As during the pendency of the petition, the shop of STC was desealed, it rendered the petition infructuous.
• That the officer of the State posted as Assistant Excise Taxation Commissioner (AETC Ludhiana-I) had filed an affidavit taking a false defence, hence proceedings, criminal in nature, be initiated against him with the registration of First Information Report (FIR).
• The present appeal is directed against the second part of the above order i.e., in pursuance of the criminal registration of FIR.
• The learned senior counsel appearing for the aggrieved party has urged, amongst other grounds, that the impugned directions were passed without affording an opportunity to the concerned officer to explain the relevant facts and circumstances.
• Furthermore, an argument was put forward that issuing an order of this nature against a State Officer who has initiated a campaign against tax evaders could lead to a demoralizing impact on other upright officers.
• The respondent had not mentioned any adverse statement regarding the state or against any functionary of the State of Punjab, hence there is no opposition to the present appeal.

Court’s Observations

• The SC bench comprising of Justices Abhay S. Oka and Sanjay Karol after perusing the records produced in Court, was of the considered view that this matter needs to put a quietus to as there seemed no basis for the HC to arrive at such a conclusion.
• The bench further noted that the officer was neither made party to the dispute, nor was he given an opportunity to show cause therefore while relying on an earlier precedent in case the of State of UP v. Mohammad Naim (1964), the court observed that such remarks “Due to the great power vested in our robes, have the ability to jeopardize and compromise independence of judges”; and may “deter officers and various personnel in carrying out their duty”. It further flows therefrom that “adverse remarks, of serious nature, upon the character and/ or professional competence of a person should not be passed lightly”.

Adverse Remarks

• According to Rule 8 (2) of All India Services (Confidential Roll) Rules, 1970 an adverse remark means a remark which indicates the defects or deficiencies in the quality of work or performance or conduct of an officer but does not include any word or words in the nature of counsel or advice to the officer.

Power to Expunge Remarks

• To expunge remarks refers to the process of removing or deleting certain comments, statements, or observations from a written document or record.
• This is typically done to eliminate content that is considered inappropriate, irrelevant, or objectionable.
• The SC in Dilip Kumar Deka & Anr. v. State of Assam & Anr. (1996) reiterated the three tests laid down in the case State of U.P. v. Mohd. Naim (1964) in regard to expunction of disparaging remarks against a person or authority whose conduct comes in for consideration before a court of law to be decided by it.
• The tests are:
  1. Whether the party whose conduct is in question, is present before the court or has an opportunity of explaining or defending himself?
  2. Whether there is evidence on record bearing on that conduct justifying the remarks?
  3. Whether it is necessary for the decision of the case, as an integral part thereof, to condemn the conduct?