Newsletter ARBITRATION AND CONCILIATION ACT, 1996 MAY, 2022 WHETHER A MATTER CAN BE REFERRED TO A SOLE ARBITRATOR BY MUTUAL CONSENT IN ABSENCE OF ANY ARBITRATION AGREEMENT IN WRITING BETWEEN THE PARTIES? Recently, the Hon’ble Supreme Court of India in Swadesh Kumar Agarwal Vs Dinesh Kumar Agarwal & Ors, held that in the absence of a written agreement between the parties, an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for the appointment of an arbitrator is not maintainable. In the instant case, the Hon'ble Court further observed that in absence of a written agreement the aggrieved party may approach the High Court for appointment of an arbitrator under section 11(5) of the Arbitration and Conciliation Act, 1996. However, where there is a written agreement on the appointment procedure agreed upon by the parties and there is a failure to appoint an arbitrator or arbitrators, Section 11(6) of the Act shall be attracted and an aggrieved party may approach the High Court for appointment of an arbitrator under Section 11(6) of the Act, 1996. Thus, an application under section 11(6) of the Act shall be maintainable only in a case where there is a written agreement and/or the contract containing the arbitration agreement and the appointment procedure agreed upon by the parties, application under section 11(6) of the Act, 1996 shall be maintainable. Read More... WHETHER ARBITRAL TRIBUNAL CAN AWARD INTEREST AS AGAINST THE TERMS OF AGREEMENT EXECUTED BETWEEN THE PARTIES? Recently, the Hon’ble Supreme Court in Delhi Airport Metro Express Pvt. Ltd. v. Delhi Metro Rail Corporation, observed that the power of the arbitral tribunal to award interest is subject to an agreement between the parties to the contract. It was held that the tribunal cannot award interest if the parties have agreed otherwise. Following the previous observation of the Hon’ble Supreme Court in the case of Sree Kamatchi Amman Constructions vs. Divisional Railway Manager (Works), Palghat and others, the court observed that the phrase “unless otherwise agreed by the parties” provided in Section 31(7)(a) of the Arbitration and Conciliation Act, 1996 clearly emphasizes that when the parties have agreed with regard to any of the aspects covered under Section 31(7)(a) if the Act, the Arbitral Tribunal would cease to have any discretion with regard to aspects provided in the said provision. The Bench further observed that only in the absence of such an agreement, Arbitral Tribunal would have a discretion to exercise its powers under Section 31(7)(a) of the 1996 Act.  The discretion is wide enough.  It may grant or may not grant interest.  It may grant interest for the entire period or any part thereof.  It may also grant interest on the whole or any part of the money. Read More... WHETHER SECTION 65-B OF INDIAN EVIDENCE ACT HOLDS ANY AUTHORITY IN ARBITRAL PROCEEDING? Recently the High Court of Delhi in Millennium School v. Pawan Dawar held that Section 65-B of the Indian Evidence Act, 1872 is not applicable to arbitral proceedings. The Court concluded that the arbitrator erred in rejecting the petitioner's documents because the Section 65-B criteria was not met. The court held that although, the principles of the Evidence Act are usually applied in arbitral proceedings, sensu stricto, the said Act is not applicable and hence Section 65-B of the Indian Evidence act is not applicable. Placing reliance on previous cases of Om Prakash v Central Bureau of Investigation, the Court further reiterated that if a document is admissible in evidence and no objection to the mode of proof is taken thereof at the stage of tendering the same in trial, the party is estopped to challenge the same before the Appellate Court or thereafter. Read More... WHETHER FILING A WRITTEN STATEMENT IN A DISPUTE NOT COVERED IN THE AGREEMENT TRANSLATES TO RENUNCIATION OF THE RIGHT TO INVOKE ARBITRATION? Recently, the Delhi High Court, in the case of Extramarks Education India Private Limited V. MES Central School, clarified that a party's right to pursue arbitration cannot be presumed forfeited solely because it has filed a written declaration in relation to disputes not covered by the agreement. The Single Bench comprising of Justice Sanjeev Sachdeva, while referring the matter to the Delhi International Arbitration Centre, held that the petitioner cannot be held to be deemed to have waived his right to invoke arbitration under the subject agreements by merely filing a written statement in the Suit which is not connected with the subject agreements and is in respect of disputes that do not arise from the subject agreements. Read More... WHETHER SECTION 5 OF THE LIMITATIONS ACT IS APPLICABLE ON THE PROCEEDINGS OF ARBITRATION & CONCILIATION ACT? The Rajasthan High Court in the case of State Of Rajasthan & Anr. v. M/s. Godhara Construction Company has ruled that Section 5 of the Indian Limitation Act does not apply to arbitration and conciliation procedures under Section 34 of the 1996 Arbitration and Conciliation Act. Relying on various precedents of Hon’ble Apex Court like Simplex Infrastructure Limited Vs. Union of India and Union of India v. Popular Construction Co., the court held that The proviso to Section 34(3) of the Act of 1996 empowers the Court if it is satisfied that the applicant was prevented by sufficient cause from making application within the said period of three   months   to   further   extend   the   period   and   filing   of   the application for setting aside the arbitral award by 30 days but not thereafter. While, Section 5 of the Limitation Act does not place any outer limit in regard to the period of delay that could be condoned, the proviso to sub-section (3) of Section 34 of the Act places a limit on the period of condonable delay by using the words “may entertain the application within a further period of thirty days, but not thereafter.” Read More... INSOLVENCY AND BANKRUPTCY CODE, 2016 WHETHER AN AUTHORITY PROVIDING LAND UNDER LEASE AGREEMENT CAN BE CLASSIFIED AS AN OPERATIONAL CREDITOR? In the case of New Okhla Industrial Development Authority vs. Anand Sonbhadra, the Supreme Court ruled that the NOIDA, which had provided land under lease agreements/deeds, is an operational creditor under the Insolvency and Bankruptcy Code, 2016. The court while defining what a Financial Debt is under section 5(8) of the Insolvency and Bankruptcy Code, 2016 is, held that, a debt is a liability or an obligation in respect of a right to payment. Irrespective of whether there is adjudication of the breach, if there is a breach of contract, it may give rise to a debt. In the context of section 5(8) of the Code, disbursement has been comprehended as money, which has been paid. What is relevant is to attract section 5(8) of the Code, on its plain terms, is disbursement which means payment of money, which flows to the debtor, and in the instant Lease Deed in question, there was no disbursement of any debt (loan) or any sums by Noida to the lessee. Considering the question if the Lease deed was a Financial Lease the Court held that, it is not any lease or a hire- purchase contract, which would entitle the lessor to be treated as the financial creditor. There must be a lease or hire-purchase contract, which is deemed as a finance or capital lease. While taking into consideration provisions like no transfer of ownership of the underlying asset and the powers of Noida to cancel the Lease Deed the Supreme Court held that the Lease Deed is not a ‘finance lease’, and Noida not a FC under Section 5(8)(d) of the Code. Read More... INTELLECTUAL PROPERTY RIGHTS WHETHER COPYRIGHT INFRINGEMENT IS A COGNIZABLE OFFENSE? In the recent case of Knit Pro International vs State of NCT of Delhi, the Hon’ble Supreme Court ruled that copyright infringement as covered under Section 63 of the Copyright Act is a cognizable and a non bailable offense. A division bench comprising of Justice MR Shah and Justice BV Nagarathna noted that an offense punishable with an imprisonment of 3 years and above but below 7 years is a cognizable offense . Taking note of Section 63 of the Copyright Act and Part II of the First Schedule of the Cr.P.C the court ruled that there was no ambiguity that copyright infringement as covered under Section 63 of the Copyright Act is a cognizable offense. Read More... WHETHER REPRESENTING A PREVIOUS ASSOCIATION WITH ANOTHER AMOUNT TO TRADEMARK INFRINGEMENT? In the matter of M/s Copenhagen Hospitality & Retails v. M/s AR Impex & Ors, a Delhi High Court bench comprising of Justice Prathiba M Singh declared that La Milano or its franchisees have no legal authority to convey to customers that their stores are in any way linked with La Pino'z Pizza. In the instant case, the main contention of the Plaintiff was that the sub-franchisee at Rajendra Nagar, Delhi, continues to use the same Facebook profile, Instagram page, email etc, which were in some manner or the other, linked with La Pino’z. The Hon’ble Court observed that the manner in which search engines, and social media platforms function shows that the historical data is always linked to the earlier name. The Court directed La Milano that any such usage either on WhatsApp or on any other social media platform be immediately deactivated or deleted. The Court also restrained La Milano from representing to the public that it had any association or connection with La Pino’z Pizza. Read More... WHETHER INTERIM EX-PARTE INJUNCTION CAN BE GRANTED AGAINST THE USE OF DECEPTIVELY SIMILAR MARK? In the recent case of ‘SINGH & SINGH LAW FIRM L.L.P & ANR. v. SINGH & SINGH LAW, PLLC & ORS’ the Delhi High Court was of the prima facie opinion that the use of the marks “Singh & Singh”, “Singh & Singh Law”, “Singh & Singh Law PLLC”, “Singh & Singh Law, PLLC”, which are identical or deceptively similar to the trademarks of the Plaintiffs is likely to cause confusion to the clients, both in India and abroad, as Plaintiff No.1 is stated to have significant and extensive digital presence. The Court is also of the prima facie opinion that the adoption of the identical name by Defendants No.1 to 3 is not bonafide and is with a view to ride over the formidable goodwill and reputation of the Plaintiffs. The Plaintiff submitted that the manner in which the legal services are rendered across the globe, i.e. by word of mouth, reputation, name, quality of services, etc. coupled with the familiarity of foreign clients/law firms with Plaintiff No.1’s name, Singh & Singh, would clearly lead the public to believe that Defendant No. 1 is another branch or an associate office of Plaintiff No.1. Read More... WHETHER A MARK CAN BE INTRODUCED WHILE ADDING A PREFIX OR SUFFIX TO SOME OTHER MARK? A Delhi High Court single judge bench comprising of Justice Jyoti Singh, in the case Starbucks Corporation v. Teaquila A Fashion Cafe & Anr, held that the trademark “FRAPPUCCINO” held by Starbucks could not be used either alone or with prefix or suffix or any other confusing and deceptively similar trademark in relation to their goods, services and business, doing so would amount to Trademark Infringement. The Hon’ble Court was of the view that the Plaintiff’s FRAPPUCCINO trademarks have acquired formidable reputation and goodwill in India and the Defendants have used identical marks with respect to similar goods and the trade channels and the customer base are also common and therefore, the triple identity test is satisfied. The Delhi High Court, while adjudicating that the defendant was guilty of infringement, placed reliance on Indian Performing Right Society v. Debashis Patnaik and awarded nominal damages to the tune of Rs. 2,00,000 and further a cost Rs. 9,60,100 in favor of Starbucks Read More... Miscellaneous WHETHER A PARTNER CAN BE CONVICTED AND HELD VICARIOUSLY LIABLE UNDER SECTION 138 OF THE NI ACT WHEN THE PARTNERSHIP FIRM IS NOT AN ACCUSED TRIED FOR THE PRIMARY/SUBSTANTIVE OFFENCE? In the case of Dilip Hariramani versus Bank of Baroda, the Hon’ble Supreme Court stated that Section 141(1) of the NI Act states that where a company commits an offence, every person who at the time the offence was committed was in charge of and was responsible to the company for the conduct of the business, as well as the company itself, shall be deemed to be guilty of the offence. The expression ‘every person’ is wide and comprehensive enough to include a director, partner or other officers or persons. At the same time, it follows that a person who does not bear out the requirements of ‘in charge of and responsible to the company for the conduct of its business’ is not vicariously liable under Section 141 of the NI Act. Therefore, the burden is on the prosecution to show that the person prosecuted was in charge of and responsible to the company for conduct of its business. While referring to the summarisation of law on Section 141 in ‘National Small Industries Corporation Limited v. Harmeet Singh Paintal and Another’, the Court upheld that Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the company. Read More... WHETHER AN ALTERNATE REMEDY UNDER SARFAESI ACT RENDER A WRIT PETITION NOT MAINTAINABLE? In the recent case of Om Prakash v. Hero Housing Finance Ltd. the Rajasthan High Court held that the writ petition is dismissed in view of availability of alternative remedy to the petitioners under the provisions of the SARFAESI Act. While dismissing the writ petition, the bench placed reliance on the judgment titled ‘Balaji Enterprises v. Authorised Officer, Bank of Baroda’ wherein a writ petition was dismissed because first, the petitioners have an alternative effective statutory remedy under the SARFAESI Act, 2002. Read More... WHETHER STATE MONEY LENDING LAWS APPLY TO NBFCs? In a landmark judgment, the Hon’ble Supreme Court of India held that the state money lending laws will not apply in the case of Non-­Banking Financial Companies (for short “NBFCs”) regulated by RBI. The Supreme Court has clarified that Non- ­Banking Financial Companies (NBFCs) regulated by the Reserve Bank of India, in terms of the provisions of Chapter III ­B of the Reserve Bank of India Act, 1934 (RBI Act) cannot also be regulated by State enactments. After perusing the scheme of Chapter III ­B of the RBI Act, the Court found that the power of intervention available for the RBI over NBFCs, is from the cradle to the grave. The Court further stated that once it is found that Chapter III ­B of the RBI Act provides a supervisory role for the RBI to oversee the functioning of NBFCs, from the time of their birth (by way of registration) till the time of their commercial death (by way of winding up), all activities of NBFCs automatically come under the scanner of RBI. Therefore, the court held that as a consequence, the single aspect of taking care of the interest of the borrowers which is sought to be achieved by the State enactments gets subsumed in the provisions of Chapter III­B. Read More... NEW DELHI X -3, Green Park Main, New Delhi, 110016, Telephones: +91 11 2652 0041-42 For further / specific information, please contact us at: info@tandonandco.com Disclaimer: The contents of this newsletter are intended for information purposes only, and parts of this newsletter are based on news reports and have not been independently verified. The newsletter is not in the nature of a legal opinion or advice. 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