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ARBITRATION
KR Anand v. New Delhi Municipal Council, ARB.P. 1776/2024
Municipal Corporation of Delhi v. Satya Pal Gupta, FAO
(COMM) 169/2023 & CM No. 43577/2023
BKS Galaxy Realtors LLP v. Sharp Properties, Arbitration
Appeal No. 72 of 2024 with Interim Application No. 9968 of 2024
CRIMINAL LAW
Balwan Singh v. State of Haryana, CRM Misc. 5607/2017
INSOLVENCY LAW
Central Transmission Utility of India Ltd. v. Mr. Summit
Binani and Anr., TA (AT) No. 174/2021 (CA(AT)(Ins.) No.
1011/2020)
WHITE COLLAR CRIMES
Prem Prakash v. Union of India through Directorate of
Enforcement, SLP(Crl) No. 5416 of 2024
ARBITRATION
Date: 13.11.2024
Case Name: Municipal Corporation of Delhi v. Satya Pal Gupta,
FAO (COMM) 169/2023 & CM No. 43577/2023
Forum: Delhi High Court
EITHER FACTS OR CASE TITLE ARE INCORRECT -CHECK JUDGMENT
AND PREPARE UPDATE AGAIN.
The petition was filed under Section 11(6) of the Arbitration and
Conciliation Act, 1996 (“Act”), seeking the appointment of a sole
arbitrator to resolve disputes between the parties. The dispute arose
following the petitioner’s acceptance of the respondent’s bid for the
construction of park, ride, and holding facilities at Safdarjung Airport,
with subsequent disagreements over outstanding monetary claims.
The petitioner invoked the arbitration clause after a delay of over 10
years, prompting the respondent to argue that the claims were time-
barred.
The court clarified that the scope of the current proceedings was limited
to determining the existence of an arbitration agreement. The
respondent’s objections regarding time-barred claims were deemed
matters for consideration by the arbitral tribunal.
Relying on the Supreme Court’s judgments in SBI General Insurance
Co. Ltd. v. Krish Spinning and interplay between Arbitration
Agreements under the Act and the Indian Stamp Act, 1899, the High
Court confirmed the existence of the arbitration agreement in the
parties’ agreement. Consequently, the court appointed Justice (Retd.)
A.K. Pathak as the sole arbitrator and granted the respondent the right to
raise any objections related to limitation or jurisdiction before the
appointed arbitrator.
Date: 20.11.2024
Case Name: Municipal Corporation of Delhi v. Satya Pal Gupta,
FAO (COMM) 169/2023 & CM No. 43577/2023
Forum: Delhi High Court
The Appellant filed the present appeal under Section 37(1)(c) of the
Arbitration & Conciliation Act, 1996 (hereafter the A&C Act) impugning
an order dated 19.04.2023 passed by the learned Commercial Court
under Section 34 of the A&C Act assailing the arbitral award dated
15.05.2019
The present dispute aroseises out of an agreement for the construction of
a polyclinic, which was executed by the respondent. According to the
agreement, the construction work was to be completed within eighteen
(18) months; however, the work was delayed, and the project took more
than 27 months for the completion from the stipulated completion date.
The dispute was referred to arbitration by the Hon’ble High Court per
the Delhi International Arbitration Centre Rules.
The Contractor claimed that the work commenced immediately, but
Municipal Corporation of Delhi (“MCD”) failed to fulfill its reciprocal
obligations, which impeded the timely completion of the project. The
MCD contended that the claims were time barred. The Arbitral Tribunal
rejected MCD’s arguments that the claims were barred by limitation and
that the Tribunal lacked jurisdiction. Additionally, the Tribunal rejected
the MCD’s assertion that time was of the essence of in the contract. It
observed found that the delay in completing the project was primarily
due to MCD’s failure to perform its obligations. However, the Tribunal
determined that the Contractor was not entitled to any damages for the
period of delay because the Contractor had not commenced the work at
that time. The Tribunal ruled partially in favour of the Contractor,
rejecting certain claims.
Aggrieved by the partial rejection of its claims (Claim Nos. 1, 2, 6, and 8),
the Contractor filed an application under Section 34 of the Arbitration
and Conciliation Act (“Act”), challenging the impugned award. The
Contractor, however, accepted the partial rejection of Claim No. 5. The
Commercial Court held that the Contractor was entitled to sums of INR
28,85,934 and INR 4,54,708 for Claim Nos. 1 and 2, respectively. The
Court also awarded INR 1,50,000 to the Contractor for Claim No. 8,
which pertained to the costs of the arbitration proceedings. In response,
MCD filed an appeal under Section 37(1)(c) of the Act, challenging the
Commercial Court's decision.
In Appeal the issues before the High Court were:
a.) Whether delay in execution of the work attributed to MCD was
based on appreciation of evidence and material placed on record?
b.) What is the true consequence of such delay
Tthe High Court observed that the findings of the Arbitral Tribunal,
which attributed the delay in work execution to MCD’s failure to remove
trees and a subsequent thirty-nine (39) months delay, could not be
interfered with in this appeal. It further noted that the Commercial Court
was correct in holding that there were no grounds to set aside these
findings.
Regarding the issue of escalation, the Court noted that there was no
dispute that the escalation was to be calculated based on the work
completed, and the Contractor’s calculation was not contested.
Therefore, the Court agreed that there were no grounds to interfere with
the Arbitral Tribunal’s award regarding escalation. The Commercial
Court had correctly recognised the limited scope of review under Section
34 of the Act. It rejected MCD’s challenge to the award of escalation
under Section 10C of the General Conditions of Contract.
However, the Court found the Arbitral Tribunal’s calculation of the
quantum of damages to be flawed. Specifically, there was no evidence or
material to support the Tribunal’s assumption that the Contractor would
have earned a 10% profit on the value of the work. Additionally, there
was no material to suggest that, had the contract not been delayed, the
Contractor would have been employed in a more profitable contract. The
Court held that the Tribunal’s award for loss of profit due to the
prolonged contract period lacked evidentiary corroboration. As such, the
award for loss of profit under Claim No. 5 was found to be vitiated by
patent illegality.
The Delhi High Court upheld the Commercial Court’s decision, setting
aside the Arbitral Tribunal’s award to the extent that it had granted the
Contractor’s Claim No. 5 for loss of profit.
Date: 11.11.2024
Case Name: BKS Galaxy Realtors LLP v. Sharp Properties,
Arbitration Appeal No. 72 of 2024 with Interim Application No. 9968 of
2024.
Forum: Bombay High Court
The appellant has preferred an the present appeal under Section 37 of
the Arbitration and Conciliation Act, 1996 (“Act”), seeking to set aside
the order passed by the Trial Court. The impugned order was passed
rejecting the Application filed by the Appellants under Section 8 of the
Arbitration and Conciliation Act, 1996 (“Act”) for referring the
respondent’s suit to Arbitration.
The respondent had entered into a Joint Development Agreement (“JDA”)
with the appellant for the joint development of a property. Subsequently,
an Agreement for Sale was executed, wherein Respondent No. 6 agreed
to sell the property to Appellant Nos. 1 and 2. The Agreement to Sell,
incorporating contained an arbitration clause. within the agreement.
Disputes later arose between the parties, prompting the respondent to
file an application before the trial court seeking an ex parte temporary
injunction, which was granted in their favor.
Aggrieved by the trial court’s order, the appellants filed an application
under Section 8 of the Act, contending that the Agreement for Sale,
which included the arbitration clause, was interlinked with the
performance of the Memorandum of Understanding (“MoU”) and the
Allotment Letter. The appellants argued that these documents were
interconnected and could not be treated as separate and distinct.
However, the trial court rejected the Section 8 application, leading to the
present appeal under Section 37.
The issue before the Court was whether the arbitration clause would
survive despite satisfactory performance of Agreement to Sale and
consequent execution of conveyance deed?
The appellate court held that the Agreement for Sale had ceased to exist
upon the execution of the Deed of Conveyance/Sale Deed. It is a well-
established legal principle that once a conveyance is executed, the
purpose, validity, and enforceability of the Agreement for Sale are
extinguished. Consequently, the arbitration clause contained in the
Agreement also became becomes inoperative, as the Agreement itself
stood stands fully discharged upon the execution of the Deed of
Conveyance.
The court further observed that the MoU and the Allotment Letter
constituted separate transactions independent of the Agreement for Sale.
It held that the claims in the present suit did not arise from a single
transaction but were distinct obligations under the MoU and Allotment
Letter, which ought to have must been performed in accordance with
their respective terms. The court clarified that the entitlement of
Respondent Nos. 1 to 5 would be triggered solely by the execution of the
Conveyance Deed, and not by any rights or obligations under the now-
extinguished Agreement for Sale.
Moreover, the court emphasized that references to the Agreement for
Sale in the plaint were historical and not substantive, as the subject
matter of the suit pertained to declarations, injunctions, recovery, and
specific performance under the MoU and Allotment Letter, not the
Agreement for Sale.
The court also addressed the appellants’ reliance on precedents asserting
that a prima facie inquiry under Section 8 of the Act suffices and does not
require a detailed trial. It held such precedents inapplicable to the
present case, as the issue here was a matter of law: the Agreement for
Sale, having merged into the Deed of Conveyance/Sale Deed, was
rendered redundant, thereby nullifying the arbitration clause.
ThereforeAccordingly, the High Court of Bombay dismissed the
Arbitration Appeal, re-affirming the trial court’s finding that the rights,
obligations, and responsibilities arising from the Agreement for Sale had
been extinguished upon its merger into the Sale Deed.
CRIMINAL LAW
Date: 26.11.2024
Case Name: Balwan Singh v. State of Haryana, CRM Misc.
5607/2017
Forum: Punjab and Haryana High Court
The case was about Aa petition was filed under Section 482, Cr.P.C.
seeking to quashing an of FIR registered filed under Section 306 of the
Indian Penal Code (“IPC”) against a senior government employee
accused of abetting the suicide of his junior by harassment and bullying.
The allegations in the FIR were that the petitioner, a senior official in a
government veterinary hospital, allegedly used abusive language and
physically slapped the deceased, leading to the latter’s suicide on the
same day., accompanied by The deceased left behind a suicide note
blaming the petitioner for his actions.
The deceased was a class IV employee at the veterinary hospital in
Rohera, and the suicide note specifically named the petitioner, accusing
him of insulting, calling him dishonest, and physically assaulting him.
Before the High Court it was argued on behalf of the The petitioner’s
counsel argued that the deceased had been allegedly involved in corrupt
practices, including charging extra money for treatment and issuing
unauthorised prescriptions. The petitioner had reportedly reprimanded
the deceased and warned him not to demand bribes from villagers.
The court Referringed to the judgement of the Supreme Court incase of
Nipun Aneja v. The State of Uttar Pradesh, where the Supreme Court
clarified the conditions under which superior officials can be held liable
for the suicide of their subordinates. The court observed It was held that
merely mentioning a name in a suicide note is not sufficient to put an
accused on trial under Section 306 IPC. However, in the facts of the this
case, the court found sufficient material to proceed with the case, noting
that the specific accusations in the suicide note and the absence of any
complaints or actions taken by the petitioner to address the alleged
misconduct of the deceased were issues which mandated trial.
The court rejected dismissed the petition for quashing of FIR petitioner’s
contention and held that the evidence available warranted further
proceedings against him under Section 306 IPC., dismissing the plea to
quash the FIR.
INSOLVENCY LAW
Date: 27.11.2024
Case Name: Central Transmission Utility of India Ltd. v. Mr.
Summit Binani and Anr., TA (AT) No. 174/2021 (CA(AT)(Ins.) No.
1011/2020)
Forum: NCLAT, Chennai
The present appeal was filed by the Central Transmission Utility of India
Limited (erstwhile Power Grid Corporation of India Limited) challenging
an order passed by the NCLT Hyderabad. The case concerns KSK
Mahanadi Power Company Limited (“Corporate Debtor”), which
entered into a Bulk Power Transmission Agreement (“TSA”) with Power
Grid Corporation of India Limited (“PGCIL”). Following the Corporate
Debtor’s admission into Corporate Insolvency Resolution Process
(“CIRP”) on 03.10.2019, PGCIL issued a notice of cessation and
subsequently lifted power regulation upon payment of Rs. 100 crores by
the Corporate Debtor.
However, PGCIL later encashed the Corporate Debtor’s security deposit
of INR 108.44 crores and adjusted it against transmission charges. The
appellant argued that the adjustment was in accordance with the
regulatory framework under the Electricity Act, 2003, and the amount
was to be applied first to the old dues, not limited to post CIRP dues. On
the other hand, the respondents contended that the action violated
Section 14 of the Insolvency Bankruptcy Code, 2016 (“IBC”), which
imposes a moratorium restricting recovery of dues during CIRP.
The issue before the tribunal was whether a third party can adjust a
deposit against pre-CIRP dues during the moratorium period under
Section 14 of the IBC.
The tribunal referred to several judicial precedents, including the
Supreme Court’s rulings in Embassy Property Developments Pvt. Ltd.
v. State of Karnataka and ABG Shipyard Liquidator v. Central
Board of Indirect Taxes & Customs, where it was held that the
moratorium prohibits such adjustments to protect the assets of the
Corporate Debtor.
The tribunal held that the appellant could not adjust the security deposit
towards pre-CIRP dues post-admission of the Corporate Debtor into CIRP,
as such an action is prohibited under Section 14 of the IBC. Accordingly,
the appeal was dismissed.
WHITE COLLAR CRIMES
Date: 28.08.2024
Case Name: Prem Prakash v. Union of India through Directorate of
Enforcement., SLP(Crl.) No. 5416/2024
Forum: Supreme Court of India
OLD JUDGMENT – NOT PASSED IN NOVEMBER
The case was about the Supreme Court ruling that a statement given by
an accused under custody in one case, when recorded by the
Enforcement Directorate (“ED”) in connection with a separate money
laundering case, is inadmissible in evidence under Section 50 of the
Prevention of Money Laundering Act (“PMLA”).
Supreme Court granted bail to the accused, noting that while the
individual was in custody in connection with one Enforcement Case
Information Report (“ECIR”), their statements were recorded by the ED
in relation to a new case.
The key question was whether statements made in such circumstances
would be admissible as evidence in a new case under Section 50 of the
PMLA.
The Apex Court referred to the earlier judgment in Vijay Madanlal
Choudhary v. Union of India, which held that statements under Section
50 of the PMLA could be admissible, but whether the protection of
Section 25 of the Indian Evidence Act, which makes confessions to police
inadmissible, applied to PMLA cases had to be decided case-by-case.
The bench, while addressing this, considered whether an accused in
judicial custody could give a free and voluntary statement, or whether
the conditions of custody and the power imbalance with the investigating
agency made such statements unreliable. They concluded that a person
in custody is not operating with a free mind, and allowing such
statements would be unjust and unsafe.
The Supreme Court also held that the ED cannot summon an accused in
judicial custody without the permission of the court that remanded the
individual.
Additionally, the statement given by the accused was found to be in
violation of Article 20(3) of the Constitution of India, which protects
individuals from self-incrimination.
Therefore, the statement made under Section 50 of the PMLA was
deemed inadmissible in the present case.
