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Bridging Gap Between Myth And Reality: India As A Hub Of Institutional Arbitration

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INTRODUCTION

As enunciated by McKinsey, “Risk allocation and contract enforceability can make India a prospective hub of Institutional Arbitration.”

According to the National Judicial Data Grid and the Supreme Court, “there are now 3.9 crore cases pending in district and subordinate courts, 58.5 lakh cases pending in different high courts, and over 69,000 cases pending at the Supreme Court.” More than 58% of these cases are civil and are pending merely to settle their disputes through judicial intervention. Adoption of Institutional Arbitration, with minimum judicial intervention, would resolve conflicts and further a cooperative approach.

In institutional arbitration, the parties may agree that in the event of a dispute or disagreement, they will be referred to a specific institution such as the Indian Council of Arbitration (“ICA”), International Chamber of Commerce (“ICC”), Federation of Indian Chamber of Commerce & Industry (“FICCI”), etc. These institutions have formulated their own arbitration rules, which will apply to arbitral proceedings conducted by them. India portrays the enormous scope of Institutional Arbitration through its characteristic risk allocation, timely redressal of issues, and a binding arbitral award. European institutions provide evidence for this. 

The Permanent Court of Arbitration (“PCA”) and the Government of India signed a Host Country Agreement on September 19, 2008. This enables the PCA to establish itself in India and help India prosper as an international seat of Institutional Arbitration. Second, the London Courts of International Arbitration (“LCIA”) is developing its presence in New Delhi, offering a second facility outside of London in addition to the Dubai International Financial Centre- London Court of International Arbitration (“DIFC-LCIA”) site in Dubai. The interest of international institutions to invest in India’s Institutional Arbitration platform opens gates of change and acceptance. The insistence of the Department of Justice to reduce litigation and settle disputes through arbitration became an essential step of development.

STEPS TAKEN TO UPLIFT INSTITUTIONAL ARBITRATION IN INDIA

To encourage and perform effectively on prospects, India has been taking several enforcement steps. The Arbitration and Conciliation (Amendment) Act 2019 was enacted on August 9th, 2019. It led to the establishment of an independent body, the Arbitration Council of India (ACI), responsible for fostering institutional arbitration in India by assessing arbitral institutions and promoting the accreditation of arbitrators. 

The government established a High-Level Committee under the chairmanship of Justice B. N. Srikrishna, a retired Supreme Court judge, to examine the implementation of institutional arbitration mechanisms in India. 

The HLC’s which submitted its report in August 2017, outlined the major obstacles to the growth of institutional arbitration in India and advocated a wide range of actions to make India a prominent centre for institutional arbitration. The New Delhi International Arbitration Centre (hereafter the NDIAC) was created and incorporated to develop an independent and autonomous framework for institutionalized Arbitration.

Arbitration proceedings in India are still lengthy and take years to complete. In this regard, amendments were made by the Arbitration and Conciliation (Amendment) Act 2015, establishing time limits for arbitration proceedings. ACA grants the arbitral tribunal significant powers to shorten delays. The Mumbai Center for International Arbitration (MCIA) was established in 2016. It aimed to bring the best international practices to the Indian Market. Consequently, the SC of India and Bombay High court have referred Two Ad-hoc matters to institutional Arbitration. 

MCIA has also seen a rise of 150% growth in the total case. They have also launched Young MCIA to bring bright young students into the world of Arbitration. These are significant instances that will enable India to promote institutional arbitration.

Since the Government is a massive litigant in the country, incorporation of Arbitration as an inherent part of ministry disputes would help boost the seat of Arbitration in India. Maharashtra Government opting for institutional Arbitration to settle disputes of the ministry is a step of inclusion and experience.

ADVANTAGES OF INSTITUTIONAL ARBITRATION

It was closely examined in the case of Vandana Gupta And Anr. vs Kuwait Airways Ltd. And Ors, the critical advantage of institutional arbitration is that the parties can select the framework of appointment and replacement without the court’s intervention, which leads to the fulfillment of the true objective of Alternative dispute resolution to have expeditious and effective disposal through a private forum of the party’s choice. 

It was also examined in the case of Union of India V. Singh Builders Syndicate, that In the case of Ad-hoc Arbitration, When a court appoints an arbitrator without specifying fees, either both parties or at least one of them suffers a significant drawback. The parties feel compelled to agree to whatever fees the arbitrator suggests. Institutional arbitration has also developed a mechanism in case of arbitrators’ fees. It is governed by a consistent rate prescribed by the institution under whose jurisdiction the arbitration is held, rather than by the arbitrators themselves on a case-by-case basis.

The parties in ad-hoc arbitration are supposed to make their personal decisions regarding the arbitration proceedings. This often leads to misinformed choices and subsequently irregularity in the process of arbitration. Institutional Arbitration moves past these difficulties of ad hoc arbitration. The presence and utilization of experienced arbitrators, existing rules, and predefined procedures save time and ensure a proper, justified, and dignified resolution of disputes.

Efficient Governance facilitated by Institutes fostering arbitration is a key advantage of the same. Without the hassle of falling back on discarded rules and unacceptable practices, Institutional Arbitration fosters growth and regular update of rules and regulations according to international standards. Institutional Arbitration adequately addresses the challenge of incompatibility of parties and brings forth cooperative techniques that often lack in ad hoc arbitration.

A WAY FORWARD FOR INDIA:

LESSONS FROM INTERNATIONAL ARBITRAL INSTITUTIONS

The main objective of this comparison is to determine the factors that contribute to the success of leading international arbitral institutions and to identify best practices that can be applied in the Indian context with necessary modifications. According to the QMUL Survey “The ICC Court, the LCIA, the HKIAC, the SIAC, and the Arbitration Institute of the Stockholm Chambers of Commerce” are the five most preferred arbitral institutions worldwide. The SIAC and the HKIAC have benefited enormously from the support they received from their respective governments in the form of financial and/or infrastructural cooperation. The Indian government, just like the governments of Singapore and Hong Kong, may consider aiding arbitral institutions in India by establishing appropriate infrastructure, such as integrated dispute resolution services, in major commercial centres such as Mumbai and Delhi.

The business and legal community has also played an important role in the establishment of the top 5 Arbitral Institutions. In India, the Federation of Indian Chambers of Commerce and Industry (“FICCI”) and the Associated Chambers of Commerce and Industry of India (“ASSOCHAM”) have established the two arbitral institutions, the ICA and the ASSOCHAM International Council of Alternative Dispute Resolution, respectively. There is a need for the development of more such institutions in India. India should also incorporate an hourly set rate as per Article 16 of HKIAC.

The majority of the arbitral institutes examined above had a panel of highly qualified and experienced arbitrators from various jurisdictions. The SIAC, for example, has an incredible panel of arbitrators that includes people from 41 different countries. Arbitral institutions also aim to ensure that arbitrators in arbitrations conducted by them are fair and professional

CHALLENGES AHEAD

The major challenge in the implementation of Institutional Arbitration lies in the fact of bearing the administrative cost of firms and adhering to unrealistic time frames. Unlike ad hoc arbitration, parties cannot function at their own pace, the hierarchical structure of institutions forces parties to bear exorbitant costs, based on the reputation of the institution as well as bureaucratic functions.

Another challenge that lies in the successful propagation of Institutional Arbitration in India, is the impediments in implementation. The Recommendations by the Srikrishna Committee promised revolutionary advancements in arbitration. But their implementation is nowhere near to be seen. Declaration of the International Centre for Alternative Dispute Resolution (ICADR) as an institute of National importance to invite international parties and promote out of court techniques was envisaged. But the action continues to be on paper. Lack of promotion and acceptance leads to the Centre having just 49 cases so far.

To ensure the promotion of Institutional Arbitration, India needs to ensure that Indian parties prefer an institutional approach rather than ad hoc, and India is a preferred seat of arbitration for international firms. While the second provides promising results through Government upliftment, the first seems to fail on account of legal awareness among people. A huge task before authorities is to remove the misconceptions about institutional arbitration and foster trust regarding the same.

CONCLUSION

The advent of the COVID-19 pandemic, and a sudden shift to online platforms, open doors of revolution for Institutional Arbitration in India. With a sudden and unprecedented shift to virtual platforms, the functioning of courts has been severely affected. In such a scenario, parties willing speedy resolution of disputes have started exploring the option of arbitration.

Since ad hoc arbitration becomes tedious and extensive to adhere to. Institution Arbitration comes to the rescue of parties, with predefined rules, easy virtual settlement, reduced costs with virtual compatible modes, experienced arbitrators and speedy recovery facilitate increased participation by Indians.

To ensure the promotion of Institutional Arbitration, India needs to ensure that Indian parties prefer an institutional approach rather than ad hoc, and India is a preferred seat of arbitration for international firms. While the second provides promising results through Government upliftment, the first seems to fail on account of legal awareness among people. A huge task before authorities is to remove the misconceptions about institutional arbitration and foster trust regarding the same.

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AN ASSOCIATION OF CORPORATE BODIES CAN ESTABLISH A CAPTIVE POWER PLANT PRIMARILY FOR THEIR OWN USE UNDER THE ELECTRICITY ACT: SUPREME COURT

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The Supreme Court in the case Chhattisgarh State Power Distribution Company Ltd. vs Chhattisgarh State Electricity Regulatory Commission observed that a captive power plant primarily for their own use can be established by an association of corporate bodies.

The requirement would be that the consumption of SBIPL and SBMPL together should not be less than 51% of the power generated. Admittedly, the joint consumption by SBIPL and SBMPL is more than 51% and under the provisions of the said Act, the use of electricity by it would be for captive use only even an association of corporate bodies can establish a power plant. Since SBMPL holds 27.6% of the ownership, the requirement of not less than 26% of shares is fulfilled by SBMPL as SBMPL holds 27.6% equity shares in SBPIL.

The fourth proviso to sub­section (2) of Section 42 of the said Act would also reveal that surcharge would not be leviable in case open access is provided to a person who has established a captive generating plant for carrying the electricity to the destination of his own use and under Section 9 of the said Act, could be an individual or a body corporate or association or body of individuals, whether incorporated or not, it is clear that the person will get benefit even an association of corporate bodies can establish a captive power plant it has been seen. The definition of “person” is wide enough to include any company or body corporate or association or body of individuals, whether incorporated or not, or artificial juridical person it should be primarily for the use of the members of such co­operative society or association is the requirement, the Bench observed while referring to the provisions of the Electricity Act.

The BPIL, the respondent contended and supported the impugned judgment that no permission is required from the Commission for supply of electricity for its own use. Thereafter the appellant Company contended that unless SBPIL consumes 51% of the aggregate electricity generated by it, it will not be entitled to get the benefit under Section 9 of the said Act, in an appeal filled before the Apex Court.

An appeal was dismissed by the Appellate Tribunal for Electricity filed by the Company further The Commission held that SBPIL was entitled to supply electricity to its sister concern SBMPL and the same would qualify to be treating as own consumption and within the ambit of Section 9 read with Section 2(8) of the Electricity Act, 2003 and Rule 3 of the Electricity Rules, 2005 SBPIL submitted a petition for providing open access and wheeling of power through the transmission system of the Chhattisgarh State Power Distribution Company Ltd (Company) for captive use by SBMPL to the Chhattisgarh State Electricity Regulatory Commission, the commission. A Captive Generation Plant is established by SBPIL, and is a sister concern of SBPIL Shri Bajrang Power and I spat Ltd and Shri Bajrang Metallics and Power Ltd, SBMPL.

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Where the crime was committed the remission or premature release policy of the state has to be considered: Supreme Court

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The Supreme Court in the case Radheshyam Bhagwandas Shah, Lala Vakil vs State of Gujarat observed that where the crime was committed has to be considered in the remission or pre­mature release in terms of the policy which is applicable in the State.

While allowing the writ petition the court observed and contended that Once the crime was committed in the State of Gujarat, after the trial been concluded and judgment of conviction came to be passed, all further proceedings have to be 6 considered including remission or pre­mature release in terms of the policy which is applicable in the State of Gujarat where the crime was committed and not the State where the trial stands transferred and concluded for exceptional reasons under the orders of this Court, as the case may be. The court further stated that under Section 432(7) CrPC the appropriate Government can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments.

the appropriate Government in the ordinary course would be the State of Gujarat. But the case was transferred in exceptional circumstances by this Court for limited purpose for trial and disposal to the neighboring State i.e., the State of Maharashtra by an order dated 06.08.2004. ordinarily, the trial was to be concluded in the same State and in terms of Section 432(7) CrPC as the crime in the instant case was admittedly committed in the State of Gujarat, observed by the Apex Court.

he application for pre­mature release has to be filed in the State of Maharashtra and not in the State of Gujarat, as prayed by the petitioner by judgment impugned dated 17.07.2009 As His petition filed in the High Court of Gujarat was dismissed taking note of Section 432(7) CrPC on the premise that since the trial has been concluded in the State of Maharashtra. Thereafter He had filed his petition for pre­mature release under Sections 433 and 433A of the Code of Criminal Procedure, 1973 stating that he had undergone more than 15 years 4 months of custody.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed and noted that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of the appropriate Government.

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Adopt roster based reservation for preferential candidates as followed by JIPMER: Supreme Court directs all AIIMS institutes

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The Supreme Court in the case Students Association AIIMS Bhopal And Or’s. v. AllMS and Or’s observed and directed all AIIMS Institutes to adopt roster-based reservation followed by Jawaharlal Institute of Postgraduate Medical Education and Research, Pondicherry (JIPMER) as a plea was filled in the Court seeking direction to AIIMS to have a defined criteria for arriving at seat matrix for institutional preference candidates in INI-CET examination.

the order of the Apex Court in the case AIIMS Students’ Union v. AIIMS And Or’s, would not be applicable if It emphasized that if the roster-based system is implemented the actual roster points for AIIMS would be different from JIPMER as the same would depend on the percentage of seats decided to be allocated to the preferential candidates but It stated that the reservation would be similar to the one adopted by JIPMER AIIMS New Delhi was willing to provide a roster-point based reservation for its institutional preference candidates, by way of an affidavit 20th January 2022 the Bench was apprised that pursuant to a meeting held on 28th June 2020 as prescribed the relevancy:

It shall not be too wide with the one for the general category candidate, that the margin of difference between the qualifying marks for the Institute’s candidate.

The one who has secured marks at the common entrance PG test less than the one secured by any other candidate belonging to reserved category enjoying constitutional protection such as SC, ST etc. cannot be the AIMS graduate the last student to qualify for admission.

appearing on behalf of AIIMS, Advocate, Mr. Dushyant Parashar, New Delhi was asked to get instructions from AIIMS, Bhubaneswar and Jodhpur so that the Court can pass appropriate orders on the next date of hearing. As that apart from AIIMS, Bhubaneswar and AIIMS, Jodhpur, all other AIIMS before the Apex Court has agreed to implement the roster-based reservation system followed by JIPMER Puducherry for their institutional preference candidates, the Court was informed at the last date of hearing.

the petition had been filed seeking direction to AIIMS to disclose how the seats for institutional preference candidates are to be allotted in the view of the same the petitioners claim that in the INI-CET examination conducted in July, 2021, only 4 seats (1.87%) in AIIMS, New Delhi were allotted to institutional preference candidates. Rivetingly, the petitioners note that no seats were allocated to any other AIIMS for admission of institutional preference candidates.

the Bench comprising of Justice L. Nageswara Rao and the justice A.S. Bopanna observed and noted that to record in the order that the roaster system would be applicable from this year. Mr. Parashar informed it that since new software is to be put in place for counselling, it might cause some delay. The bench further stated that the court will order it to apply this year but in case of delay AIMS can come later.

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‘The crime committed has to be considered in the remission or premature policy of the state’

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The Supreme Court in the case Radheshyam Bhagwandas Shah, Lala Vakil vs State of Gujarat observed that where the crime was committed has to be considered in the remission which is applicable in the State and the pre­mature release in terms of the policy

The Court noted while hearing the writ petition that in terms of the policy which is applicable in the State of Gujarat where the crime was committed and not the State where the trial stands transferred and concluded for exceptional reasons under the orders of this Court once the crime was committed in the State of Gujarat, after the trial been concluded and judgment of conviction came to be passed, all further proceedings have to be 6 considered including remission or pre­mature release, as the case may be, in the instance case. under Section 432(7) CrPC, there cannot be a concurrent jurisdiction of two State Governments, can be either the Central or the State Government of the appropriate government.

in terms of Section 432(7) CrPC, the trial was to be concluded in the same State and ordinarily in the State of Gujrat the crime in the instant case was admittedly committed. by an order 06.08.2004., the case was transferred in exceptional circumstances by this Court for limited purpose for trial and disposal to the neighbouring State i.e., the State of Maharashtra, observed by the bench of Apex Court.

As mentioned by the petitioner in the plea that by judgment impugned dated 17.07.2019., the application for pre­mature release has to be filed in the State of Maharashtra and not in the State of Gujarat and His petition filed in the High Court of Gujarat was dismissed taking note of Section 432(7) CrPC on the premise that since the trial has been concluded in the State of Maharashtra. under Sections 433 and 433A of the Code of Criminal Procedure, 1973, the petition was filled by the petitioner for premature release further the petitioner stated that that he had undergone under the custody of more than 15 years 4 months.

Section 302, 376(2) (e) (g) and reading it with Section 149 IPC, Shah was found guilty for the offence, the offence committed by him in the State of Gujrat.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

The bench comprising of Justice Ajay Rastogi and the justice Vikram Nath observed that under Section 432(7) CrPC can be either the Central or the State Government but there cannot be a concurrent jurisdiction of two State Governments of that appropriate government.

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Seeking reduction of qualifying the percentile for admission in ayurveda course: A plea in Supreme Court

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The Supreme Court in the Case Amit Kumar v UOI & Or’s observed in Ayurveda course in view of large number of vacancies and for seeking reduction of qualifying percentile for admission, an ayurveda aspirant who appeared in NEET 2021 has approached the Court.

the court had observed that lowering the minimum marks and reducing the percentile for admission to first year BDS Course would not amount to lowing the standards of Education and further the Court directed to lower the percentile mark by 10 percentiles for admission in first year of BDS Course for academic year 2020-2021, with regards to substantive the contentions made by the petitioner by referring the judgement passed in the case in Harshit Agarwal & Or’s v Union of India.

the percentile may also be reduced for Ayurveda programme enabling the Petitioner to take admissions then If percentile is being reduced/considered for reduction for BDS course was further stated by the petitioner in the plea, while referring to an order dated 04.29.2022. Thereafter the top Court had asked Centre to consider lowering the percentile for BDS Courses.

Seeking the Centre’s response in a plea by filing a counter affidavit, noted by the Top Court specifying the above-mentioned information:

after deducting the admission granted for MBBS Courses (BDS Courses), the total number of Candidates.

in All India Quota and State Quota, the totals number of vacant seats.

in government colleges on one hand & private/deemed colleges on the other hand, the number of seats which are remaining.

the petition was filed through AOR Neeraj Shekhar and for the petitioner Advocate Shivam Singh appeared.

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Bank case rejected by Supreme Court against farmer

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The Supreme Court in the case Bank of Maharashtra & Or’s v Mohanlal Patidar observed an order given by the High Courts of directing the bank the OTS proposal given by a farmer who had availed a loan from the bank, the court further pulled up the Bank of Maharashtra for challenging the order.

The Bank shall complete remaining formalities and provide all consequential benefits flowing therefrom to the petitioners, the court further stated that it is needless to emphasize The OTS proposal given by the petitioners in both the cases shall be accepted by the Bank and ‘sanction letters’ be issued forthwith, the court allowed the petitioner plea.

The petitioner not only promptly challenged the said order, it is noteworthy that petitioner never acceded to the unilateral decision dated 25th August 2021 and even otherwise the letter dated 25th August 2021 is held to be illegal by us, clause-7 of policy cannot take away the fruits of OTS benefits, within two months from the date of issuance of order dated 22th September 2021, the petitioner filled the instant petition and further the court directed we are unable to give stamp of approval to the impugned orders and action of the Bank, observed by the bench comprising of Justice Sujoy Paul and the justice Dwarka Dhish Bansal while setting aside the impugned orders of the bank.

In an order dated 03.09.2021 it was stated and it showed that the petitioner was required to pay minimum 10% of the OTS amount within stipulated time and that he had deposited Rs.35,00,000/- out of Rs.36,50,000/- within the stipulated time, it was argued before the court by the counsel.

As full and final settlement of the dues, he will be required to deposit Rs.50.50 lakhs as he was informed by the Asset Recovery Branch of the Bank.

Whole law comes into place when a matter of farmers come as the down payment were also accepted and it was further stated by the bench in an oral remark You don’t file cases against the ones who loot 1000s of crores.

The respondent had obtained a loan and intended to pay it in terms of a One Time Settlement which was quantified as Rs 3650000/-. in furtherance thereof the respondent had deposited Rs 35,00,000 with the bank, in the above-mentioned matter.

The bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme, contended by the counsel further the counsel stated that the bank had miserably failed to accept the same and on the contrary, decided to enhance the compromise amount to Rs.50.50 lakhs unilaterally which was contrary to the OTS scheme.

The bench comprising of Justice DY Chandrachud and the justice Surya Kant observed and remarked while dismissing the plea assailing Madhya Pradesh High Court’s order dated 02.21.2022 Such a litigation in Supreme Court will spoil the families of farmers financially, Go after bigger fish.

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