List of Current Affairs

Source: Supreme Court 

Why in News?

The Supreme Court recently ruled on a case involving the validity of a gift deed and its attempted revocation, involving the Tamil Nadu Khadi and Village Industries Board. 

• SC ruled this in the case of N. Thajudeen v. Tamil Nadu Khadi And Village Industries Board. 

What is the Background of N. Thajudeen v. Tamil Nadu Khadi And Village Industries Board Case?  

• The case revolves around a property measuring 3,750 square feet located in Survey No. 16/1 in Kotlambakkam Panchayat, District Cuddalore.  
• The property was transferred through a registered gift deed executed on 5th March 1983.
• The donor gifted the property to the Tamil Nadu Khadi and Village Industries Board specifically for the purpose of manufacturing Khadi Lungi and Khadi Yarn.  
• The gift deed was absolute in nature and didn't contain any provisions for revocation. 
• The case went through multiple legal forums before reaching the Supreme Court.  
• Initially, the Trial Court dismissed the suit in 1994, primarily on the grounds that the gift deed was invalid as it was never accepted and acted upon.  
• Challenging this decision, the Tamil Nadu Khadi and Village Industries Board filed an appeal before the District Judge, who allowed it in 1997 and reversed the trial court's judgment.  
• The matter then moved to the High Court through a second appeal, which was dismissed on 11th January 2011.  
• Finally, the case reached the Supreme Court with a 207-day delay, which was condoned by the court. 

What were the Court’s Observations?  

• On Gift Deed Validity: 
  • The gift deed was absolute with no right reserved for revocation 
  • The deed explicitly stated the property was accepted by the respondent 
  • Evidence showed the respondent took possession and applied for mutation 
  • The plaintiff-respondent issued a memo and proceeded to raise construction 
• On Revocation Attempt: 
  • The attempted revocation on August 17, 1987, was held void ab initio. 
  • Non-utilization of property for intended purpose doesn't automatically enable revocation. 
  • No stipulation in gift deed allowed revocation for non-utilization. 
• On Limitation Period: 
  • The suit was not barred by limitation as claimed. 
  • For possessions based on title, the limitation period is 12 years. 
  • When declaration of title is combined with other relief, limitation is governed by the additional relief sought. 

What is Gift under Transfer of Property Act, 1882 (TPA)? 

About 

• A Gift is a unique legal concept representing a transfer of property ownership where the transferor (donor) willingly effects such transfer without any compensation or monetary consideration.  
• The transfer may involve moveable or immoveable property between living persons (inter vivos) or take effect after the donor's death (testamentary).  
• Under the TPA, only inter vivos transfers are considered gifts, covered under Sections 122-129.  
• This stands as an exception to Section 25 of the Indian Contract Act, 1872, which generally voids agreements without consideration. 

Parties in a Gift Transfer 

• Donor 
  • Legal age of majority 
  • Sound mental capacity 
  • If a juristic person (registered societies, firms, institutions), proper authority 
  • Complete ownership rights over the property A gift by a minor or insane person is void. 
• Donee 
  • Need not be competent to contract 
  • Must exist at the time of gift 
  • Can be insane, minor, or even unborn (in mother's womb) 
  • Must be ascertainable (gift to general public is void) 
  • Can include juristic persons 
  • May be multiple persons if ascertainable 

Essential Elements of Valid Gift 

• Transfer of Ownership 
  • Complete divestment of donor's rights 
  • Transfer of all rights and liabilities 
  • Donor must have ownership rights 
  • May include conditional transfers 
  • Must transfer absolute interest 
• Existing Property 
  • As per Section 124 of TPA, the gifted property must be in existence at the time of making the gift, although its conveyance may take place either in future or in present. 
  • Can be movable, immovable, tangible, or intangible 
  • Must be transferable under Section 6 
  • Future property gifts are void 
  • Excludes spes successionis and right to sue 
• Transfer Without Consideration 
  • Must be gratuitous 
  • Even minimal consideration makes it sale or exchange 
  • Love and affection not considered pecuniary consideration 
  • Services rendered qualify as gift 
  • Assumption of liabilities disqualifies as gift 
• Voluntary Transfer with Free Consent 
  • Donor must act of own free will 
  • Consent must be uncoerced 
  • Complete freedom in decision-making 
  • No external pressure or influence 
• Acceptance of Gift 
  • Express or implied acceptance required 
  • Implied through conduct or circumstances 
  • Possession or title deed acceptance 
  • For incompetent donees, acceptance by guardian/parent 
  • Right to reject onerous gifts 
  • Juristic persons need competent authority acceptance 

What is Law Related to Suspension or Revocation of Gifts? 

• As per Section 126 of TPA, a gift which under an agreement between the parties is revocable wholly or partially at the mere will of the donor is void wholly or partially as the case may be. It lays down two modes of revocation of gift which are as follows:  
  • Revocation by Mutual Agreement: 
    • If the donor and the donee have agreed that on the happening of a specified event (not depending upon the will of the donor), the gift should be revoked or suspended. 
  • Revocation by Recission as in the Case of Contractors: 
    • A gift will be revoked if it was not made with the free consent of the donor.  
    • A gift may also be revoked in any of the cases in which if it were a contract, it might be rescinded. As per Section 19 of Indian Contract Act, 1872, a contract may be rescinded in case of coercion, undue influence, fraud and misrepresentation.  
  • Provisions of Section 126 do not apply to an incomplete gift, such a gift can be revoked at any time.   

Source: Rajasthan High Court 

Why in News? 

A bench of Justice Munnuri Laxman and Justice Pushpendra Singh Bhati held that per se ineligibility was not in existence under the unamended Section 12 of the Arbitration and Conciliation Act, 1996 (A & C Act).             

• The Rajasthan High Court held this in the case of M/s Anik Industries Ltd v. M/s Shree Rajasthan Sintex Ltd.  

What was the Background of M/s Anik Industries Ltd v. M/s Shree Rajasthan Sintex Ltd. Case? 

• The Claimant here was engaged in the business of Coal Trading amongst other businesses. 
• The Respondent had an Industrial Plant at Durgapur (Rajasthan). 
• The Claimant supplied coal to the Respondent Industrial Plant for generation of power under various purchase orders placed by respondent from time to time. 
• The claimant had raised a claim of certain balance amount before the Tribunal. 
• The Respondent denied the above claim and asserted that the coal supplied was not upto the quality expected which resulted in damage to the industrial plant and machinery of the respondent. Therefore, the Respondent after adjusting the above two amounts claimed a counter claim of certain amount as damages. 
• Proceedings before the Courts: 
  • The Tribunal partly allowed the claim of claimant and dismissed the counter claim of the respondent. 
  • The above order was assailed before the Commercial Court, Udaipur under Section 34 of the Arbitration and Conciliation Act, 1996 (A & C Act). 
  • The Commercial Court set aside the award on the following grounds: 
    • Perversity in the findings of the Tribunal with regard to the counter claim. 
    • Disqualification incurred by the Arbitrator on the ground of non-disclosure of his affiliation with the sister concern of Claimant-Company. 
• The present appeal was filed against the above order passed by the Commercial Court. 
• Thus, in the present case there are two issues for consideration: 
  • Whether the findings of Tribunal in granting the part claim to the claimant and rejecting the counterclaim of the respondent suffers from any perversity. 
  • Whether non-disclosure of one of the Arbitrator about his affiliation with the sister-concern results in any apparent bias so as to vitiate the award. 

What were the Court’s Observations?

• With Respect to Issue (i): 
  • The Court held that the interference of commercial Court will only arise when award suffers from perversity. 
  • The Court held that the findings of the Commercial Court were based on the Chartered Engineer Assessment and such findings were well reasoned and did not suffer from any perversity. 
  • Therefore, the Court held that the Commercial Court was wrong in holding that the Tribunal has not considered the counter claim in right perspective. 
  • Therefore, the finding of the Commercial Court with regard to this issue was set aside. 
• With Respect to Issue (ii): 
  • The Court held in this case that the concept of affiliation with the affiliate company was specifically introduced by way of the Amendment Act of 2015. 
  • No such concept was there prior to the Amendment. 
  • It is to be noted that in the present case the Arbitrator was not an advisor or acted as a counsel to the parties to the arbitration proceedings. He only filed Vakalatnama in the case pending before the concerned court representing the sister-concern of the claimant-Company. 
  • The Court held that prior to the Amendment Act of 2015, there is no ineligibility with regard to existence of specific circumstances as referred in Fifth and Seventh Schedule after Amendment of 2015. 
  • Finally, the following was held by the Court with regard to the facts and circumstances of the case: 
    • The appointment of one of the arbitrator as a legal counsel to one of the case of the sister-concern of the claimant-Company is not worse than allowing an employee to engage to act as an arbitrator. 
    • This principle of apparent bias by virtue of the affiliation of arbitrator with the parties to the proceedings on the basis of employment and/or engagement was not a recognized principle by the Apex Court prior to the 2015 Amendment. 
  • Thus, the Court held that the order of the Commercial Court is liable to be set aside. 

What are the Provisions with Regards the Ineligibility of Arbitrators added by way of Amendment of 2015 to A & C Act?  

• It is to be noted that the grounds for ineligibility have been introduced mainly by way of Amendment Act of 2015. 
• Following is the comparison between the provisions (Section 12 of A & C Act) pre and post amendment of 2015:

• Further, two Schedules, Fifth and Sixth, were also added specifying the existence of relationship of the Arbitrator with the parties to the proceedings and the circumstance which gives rise to justifiable doubt as to his independence and impartiality. 

What is the Approach of Courts Pre and Post Amendment of 2015 with Regards to Ineligibility of Arbitrators?  

• It is to be noted that by way of 2015 Amendment specific circumstances have been introduced which give rise to justifiable doubt as to his independence and impartiality. 
• Post 2015 Amendment there is a specific reference of ineligibility in the circumstances referred under Seventh Schedule. This means that a per se ineligibility has been statutorily recognized which is not in existence under the old Act. 
• The non-disclosure per se is not a ground to incur disqualification or ground of annulment under old provision. In case, non-disclosed facts and circumstance is a material, it may result disqualification or annulment. 
• Difference between ‘Actual bias’ and ‘Apparent bias’

• • It is to be noted that the concept of apparent bias has been introduced by way of 2015 Amendment Act. 
• The concept of affiliation with the affiliate company was introduced by way of 2015 Amendment. 
• In the cases of Aravali Power Co. Pvt. Ltd v. Era Infra Engineering Ltd. (2017) and Indian Oil Corporation Ltd v. Raja Transport Pvt. Ltd. (2009) , the Supreme Court held that an employee of the parties to the proceedings was considered to be not a circumstance, which would give rise to a reasonable apprehension of bias.