List of Current Affairs

Source: Allahabad High Court

Why in News?

Recently, the Allahabad High Court in the matter of India Oil Corporation Ltd. & Anr v. The Commercial Court & Anr., held that objection cannot be raised under Section 47 of the Civil Procedure Code, 1908 (CPC) in proceedings for the execution of arbitral award.

Background

• A suit was filed in the year 1989 for the appointment Arbitrator under the Arbitration Act, 1940 in which arbitrator was appointed in 1991.
• Arbitration could only commence in the year 2001 due to pending litigation proceedings.
• In 2002, the arbitrator passed an order to continue the proceedings as per the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act).
• In 2005, the award was passed partly in favor of the petitioner and respondents.
• Respondent had moved an application under Section 33 of the A&C Act for the modification of the award.
• After several rounds of litigation, the award attained finality.
• Respondents had filed an Execution Application in which the petitioner had filed objection under Section 47 of CPC and the same was rejected vide order dated 8th August 2022.
• A petition was filed before the Allahabad HC challenging the order dated 8th August 2022.
• The petition was dismissed by the Court.

Court’s Observations

• A bench comprising of Justice Neeraj Tiwari dismissed a petition against the rejection of objection under Section 47 of CPC at the stage of execution of arbitral award.
• The Court reiterated that arbitral award is not a decree under Section 2(2) of CPC, therefore, an objection filed under Section 47 of CPC in execution proceedings is not maintainable.
• Further, the Court reiterated the principle laid down by the Supreme Court in Padmajeet Singh Patheja v. ICDS LTD (2006).
  • In this case, the SC held that an arbitral award can be executed invoking Section 36 of the A&C Act, 1996 along with the provisions of CPC in the same manner as if it is decree of the Court.
  • Section 36 states that where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the CPC in the same manner as if it were a decree of the Court.

Legal Provisions

Section 47, CPC

• This Section deals with the questions which are to be determined by the Court executing decree. It states that -

(1) All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.

Sub-section (2) was omitted by the Amendment Act of 1976.

(3) Where a question arises as to whether any person is or is not the representative of a party, such a question shall, for the purposes of this section, be determined by the Court.

Explanation I— For the purposes of this section, a plaintiff whose suit has been dismissed and a defendant against whom a suit has been dismissed are parties to the suit.

Explanation II—

(a) For the purposes of this section, a purchaser of property at a sale in execution of a decree shall be deemed to be a party to the suit in which the decree is passed.

(b) all questions relating to the delivery of possession of such property to such purchaser or his representative shall be deemed to be questions relating to the execution, discharge or satisfaction of the decree within the meaning of this section.

• In the case of Bharat Pumps and Compressors V. Chopra Fabricators (2022), the SC held that an arbitration award is not included under the definition and meaning of decree in CPC and so no questions can be raised in the execution of such an award.

Arbitration and Conciliation Act, 1996

• This Act improved the previous laws regarding arbitration in India, namely the Arbitration Act, 1940, the Arbitration Act, 1937, and the Foreign Awards Act, 1961.
• This act also derives authority from the UNCITRAL (United Nations Commission on International Trade Law) Model Law on international commercial arbitration and the UNCITRAL rules on conciliation.
• It unites and manages the laws associated with domestic arbitration, international business arbitration, and the enforcement of foreign arbitral awards.
• It also defines the law related to conciliation.
• It controls domestic arbitration in India and was amended in 2015, 2019 and 2021.
• Section 33 of this Act deals with the correction and interpretation of the award. It states that -

(1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties—

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;

(b) if so, agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award.

(3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award.

(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5).

(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section.

Source: Delhi High Court

Why in News?

Recently, the Delhi High Court in the matter of Sanghi Bros (Indore) Pvt. Ltd. v. Kamlendra Singh, held that sale of property to a third party makes it inequitable to grant and enforce the specific performance decree.

Background

• In the year 2004, a suit for specific performance was filed by the plaintiff against the defendant for the transfer/ sale of the suit property as per the Memorandum of Understanding (MOU) executed between the parties.
• Under the MOU, the defendant had agreed to assign all his interest in the Suit Property to which he was entitled as the major beneficiary of a Will.
• During the pendency of this Suit, the said Will, was sub-judice before the HC of Madhya Pradesh.
• Later, the HC of Madhya Pradesh upheld the validity of the Will in favor of the defendant.
• Hence, the defendant, being the owner of the Suit Property had sold the property to a third party for consideration.
• Thereafter, a suit was filed before the Delhi HC on behalf of the plaintiffs for a decree for specific performance against the Defendant.
• The Delhi HC refused to grant a decree of specific performance against the suit property.

Court’s Observations

• The bench of Justice Chandra Dhari Singh refused to grant a decree of specific performance against a suit property after noting that the property had been sold to a third party during the pendency of the suit as the said circumstance made it inequitable to grant and enforce the specific performance decree.
• The Court reiterated that it is a settled law that specific performance is not granted by the Courts due to the various hardships which may be caused to the third party in case the specific performance is granted.
• The Court said that while exercising the discretion of granting specific performance, the court has to balance the interests of justice and equity for the parties involved and has to look into the probable consequences of granting such specific performance.
• The Court held that since the Court had not granted the relief of specific performance, therefore, in terms of Sections 20 and 21 of the Specific Relief Act, 1963, the plaintiffs were entitled for grant of compensation in lieu of specific performance.

Legal Provisions

Specific Performance

• Specific performance constitutes an equitable remedy granted by a court to uphold the contractual commitments among the parties.
• Unlike a claim of damages, which involves compensation for not fulfilling the contractual stipulations, specific performance operates as a remedy that enforces the terms agreed between the parties.
• It is governed by the Specific Relief Act, 1963 (SRA).
• Section 10 of SRA deals with the specific performance in respect of contracts. It states that-
  • The specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of section 11, section 14 and section 16.
• The Supreme Court in the case of Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd. (2023) held that the relief of specific performance of a contract can only be granted when the party claiming such relief shows its readiness and willingness to perform its obligations under the contract.

Section 20, SRA

• This Section deals with the substituted performance of contract. It states that —

(1) Without prejudice to the generality of the provisions contained in the Indian Contract Act, 1872 and, except as otherwise agreed upon by the parties, where the contract is broken due to non-performance of promise by any party, the party who suffers by such breach shall have the option of substituted performance through a third party or by his own agency, and, recover the expenses and other costs actually incurred, spent or suffered by him, from the party committing such breach.

(2) No substituted performance of contract under sub-section (1) shall be undertaken unless the party who suffers such breach has given a notice in writing, of not less than thirty days, to the party in breach calling upon him to perform the contract within such time as specified in the notice, and on his refusal or failure to do so, he may get the same performed by a third party or by his own agency:

Provided that the party who suffers such breach shall not be entitled to recover the expenses and costs under sub-section (1) unless he has got the contract performed through a third party or by his own agency.

(3) Where the party suffering breach of contract has got the contract performed through a third party or by his own agency after giving notice under sub-section (1), he shall not be entitled to claim relief of specific performance against the party in breach.

(4) Nothing in this section shall prevent the party who has suffered breach of contract from claiming compensation from the party in breach.

Section 21, SRA

• This Section deals with the power to award compensation in certain cases. It states that—

(1) In a suit for specific performance of a contract, the plaintiff may also claim compensation for its breach in such performance.

(2) If, in any such suit, the court decides that specific performance ought not to be granted, but that there is a contract between the parties which has been broken by the defendant, and that the plaintiff is entitled to compensation for that breach, it shall award him such compensation accordingly.

(3) If, in any such suit, the court decides that specific performance ought to be granted, but that it is not sufficient to satisfy the justice of the case, and that some compensation for breach of the contract should also be made to the plaintiff, it shall award him such compensation accordingly.

(4) In determining the amount of any compensation awarded under this section, the court shall be guided by the principles specified in Section 73 of the Indian Contract Act.

(5) No compensation shall be awarded under this section unless the plaintiff has claimed such compensation in his plaint.

Provided that where the plaintiff has not claimed any such compensation in the plaint, the court shall, at any stage of the proceeding, allow him to amend the plaint on such terms as may be just, for including a claim for such compensation.

Source: Supreme Court

Why in News?

The constitutional bench of Justices Sanjay Kishan Kaul, Sanjiv Khanna, Abhay S Oka, Vikram Nath, and JK Maheshwari observed that Section 6A of Delhi Special Police Establishment Act, 1946 (DSPE) is void ab intio.

• The Supreme Court gave this observation in the matter of Central Bureau of Investigation v. Dr RR Kishore.

Background

• The matter is related to the arrest made by the Central Bureau of Investigation (CBI) under the DSPE Act without prior sanction from the Central Government.
  • As the law mandates a prior sanction in case of arrest of an officer of the rank of joint secretary and above in corruption cases.
  • It was contended that the arrest has been made under Section 6A (2) of the DPSE Act.
• The Delhi High Court held that the said Section 6A will not be applicable in this case and CBI was directed to seek the central government's approval for reinvestigation.
• CBI filed an appeal before the SC, but during the pendency of appeal, Section 6A was adjudged as unconstitutional in the case of Subramanian Swamy v. Director, CBI and Another (2014).
• The matter was then referred to a constitutional bench to decide the application of the ruling given in Subramanian Swamy case and its retrospective effects.

Court’s Observation

• The SC held that it is crystal clear that once a law is declared to be unconstitutional, being violative of Part III of the Constitution, then it would be held to be void ab initio, stillborn, unenforceable and non est in view of Article 13(2) of the Constitution.
• The court further said that the declaration made by the constitution bench in the case of Subramanian Swamy will have retrospective operation.
• Hence, Section 6A of the DSPE Act is held not to be in force from the date of its insertion i.e., 11th September 2003.

Position of Post Constitutional Laws

• Article 13 of the Constitution of India, 1950 deals with the consistency of pre and post constitutional law with the Part III of the Constitution.
• Article 13 (2) states that the State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void.
• Clause 2 of the Article invalidates the laws which were enacted after the commencement of the Constitution and are derogatory to Part III of the Constitution.
  • These laws are commonly known as Post Constitutional Laws.
• Article 13(2) acts as a robust safeguard for fundamental rights.
  • It ensures that the State, in its legislative capacity, does not infringe upon the core principles of justice, equality, and liberty enshrined in the Constitution.
• Article 13(2) applies only to laws made by the "State" which includes the Central Government, State Governments, and Local or other authorities.
  • It does not extend to the actions of private individuals or entities unless they are acting as agents of the state.
• 44th Amendment of the Constitution clarified that the ‘law’ under Article 13(2) includes constitutional amendments under Article 368.
• The SC, through its verdicts in several cases clarified that the post-constitutional laws which are adjudged void by a Court will be void from its enforcement.

Landmark Cases

• Mahendra Lal Jaini v. The State Of Uttar Pradesh And Anr. (1968):
  • The SC held that no post constitution law can be made contravening the provisions of Part III and therefore the law to that extent, though made, is a nullity from its inception.
  • The court held that “All post constitution laws which contravene the mandatory injunction contained in the first part of Article 13 (2) are as void as are the laws passed without legislative competence”.
• The State of Gujarat and Another v. Shri Ambica Mills Ltd. (1974):
  • The SC held that “When Article 13(2) uses the expression ‘void’, it can only mean void as against persons whose fundamental rights are taken away or abridged by law”.
• The State of Manipur & Ors. v. Surjakumar Okram & Ors. (2022):
  • The SC laid down the following principles:
    • A statute which is made by a competent legislature is valid till it is declared unconstitutional by a court of law.
    • After declaration of a statute as unconstitutional by a court of law, it is non est for all purposes.
    • In declaration of the law, the doctrine of prospective overruling can be applied by this Court to save past transactions under earlier decisions superseded or statutes held unconstitutional.
    • Relief can be moulded by the Court in exercise of its power under Article 142 of the Constitution, notwithstanding the declaration of a statute as unconstitutional.