The initiation of arbitration proceedings is customary on the arbitrability of the dispute. Section 7 of the Arbitration and Conciliation Act, 1996 (“The Arbitration Act”) provides for arbitration agreement. An Arbitration agreement is an agreement to submit present or future disputes (whether they are contractual or not). Russell on Arbitration, 22nd Edition states, an arbitration agreement is therefore a contractual undertaking by two or more parties to resolve disputes by the process of arbitration, even if the disputes themselves are not based on contractual obligations. From the aforementioned definition it can be said that agreement which allows the parties to submit their disputes in front of a third independent party.
Section 2(1) (h) of the Arbitration Act defines Party: ‘Party’ means a party to an arbitration agreement. The bare language would lead to conclude only the parties to an arbitration agreement can refer their disputes to arbitration. However, at times party tries to wiggle out of their contractual obligation and subsequently deny the existence of an arbitration agreement or worse off, they question its validity. Section 8 of the Arbitration Act provides for courts obligation to refer the parties to arbitration in light of an existing arbitration clause. Where an arbitration agreement exists, the court is under an obligation to refer the parties to arbitration in terms thereof. [Agri Gold Exims Ltd. v. Sri Lakshmi Knits & Wovens]
The article here will reflect and illuminate of the essentials of maintainability of suit in light of section 8, the suits which are barred and the suits which are not barred.
The prerequisites to be followed while filing a petition under Section 8 of the Arbitration Act have been duly recognized by the High Court of Madras in the case of Kotak Mahindra Finance Ltd. v. T.N. Balasubramanian. The conditions to be satisfied before approaching the court as are follows:
• An arbitration agreement exists;
• Action has been brought forth by a party to the arbitration agreement against the other; • Subject matter of the action and arbitration are in line;
• Reference of arbitration by the other party prior to filing of the first statement in dispute.
The reference to arbitration is dependent on the requirements of the section being satisfied by the parties [Kohinoor Creations v. Syndicate Bank]. An application visualized under this section has to be a written application, said the Bombay High Court in the case of Garden Finance Ltd.
v. Prakash Industries Ltd. The question of who proves the onus to be not bound by the arbitration agreement arises. Ideally, the agreement exists. The parties are factually bound and contractually bound by it, in such scenario the onus to prove lies on the plaintiff. [Ranwa Const. Co. v. Administrator, Pant Krishi Bhawan]
SUITS BARRED UNDER SECTION 8
The following grounds are debarred from filing by a party to an arbitration agreement. They are as follows:
i .A suit to challenge an award or an agreement: The agreement and award cannot be challenged or enforced by a civil suit. As decided in the case of Ratanji Virpal & Jamnadhar Rungta respectively.
ii. A suit for affirm agreement or award: a declaration for the same is barred. [Jawahar Lal Burman v. Union of India]
iii. Suits arising out of arbitration agreement: The differences or disputes arising out of a contract, which fall under the subject matter of the arbitration agreement, shall be only adjudicated by the arbitral tribunal. [Olympus Superstructures Pvt. Ltd. v. Meena Vijay Khaitan]
iv. Matters already referred to arbitration: where arbitration proceedings have begun, the same subject matter cannot be the cause of action or is maintainable in a civil suit. [Abhishek Mehra v. DLF Commercial Developers Ltd.]
v. False allegations for undue influence: A party cannot be allowed to tale advantage of an agreement for ten years and later seek to avoid it by saying that it was induced by undue influence. [Champa Pictures v. Md. Ibrahim Chamoo]
vi. Claims on account of extra or consequential service on the basis of oral instructions: Such claims fall under the purview of arbitration agreement and hence, to be decided by the arbitrator. [Avtar Singh Gujral v. National Power Construction Corp. Ltd.]
SUITS NOT BARRED UNDER SECTION 8
The following grounds are not barred notwithstanding the quiddity of an arbitration clause:
i. Stranger to a contract
a. A stranger to a contract against whom a relief or an award has been granted, can challenge the validity of the award through an suit. [Nathuni Pandey v. Paras Pandey]
b. Where a partnership has been reconstituted illegally, in such scenario, a stranger cannot be debarred from filing a suit. [Atul Singh v. Sunil Kumar Singh]
ii. Suits alleging fraud
A. The court should not refer the matter where a case is made out to be a prima facie case of fraud. [Jayant Mulchand Shah v. Elsen Und Metall Aktiengfsells] b. In the case of Raja Picture Palace, the Andhra Pradesh laid down some grounds where the court will be held to be rightful in not referring the matter to arbitration.
i . The dispute involves grave allegations of fraud or misrepresentation;
ii. The plaintiff alleges collusion and conspiracy among the defendants;
iii. The dispute involves determination of complicated questions of law which can be properly decided by a court;
iv. The arbitration agreement itself is disputed, and;
v. There is a good ground for apprehending that the arbitrators will not act fairly in the matter.
Howbeit, where an allegation is made on the basis of fraud, can also be tried under an arbitrator, a mere allegation or fabrication of a claim by the petitioner, cannot be said to take away the matter from arbitration. [Ministry of Sound Int’l Ltd. v. Indus Renaissance Partners Entertainment Pvt. Ltd]
iii. Subject matter of suit not arising out of arbitration agreement: Any relief independent of the subject matter of arbitration is maintainable in a suit.[ P. Narayanan Nair v. E. Achuthan Nair] iv. Suit for specific performance and further relief: Dispute pertaining to specific relief has to be decided by the Arbitral Tribunal, whereas, further relief not falling under the subject matter is not barred. [Shanti Mann v. Moral Properties & Mulchand v. Tolaram respectively]
v. Suit by Minor and Criminal Proceedings: A minor can sue to set aside an award ordered against him on the basis that the reference to arbitration was made without leave of the court as required by Order 32, Rule 7, CPC. [Davuluru Vijaya Ramayya v. Venkatasubha Rao]
An arbitration agreement cannot prevent a criminal prosecution against an accused. [S. W Palantikar v. State of Bihar]
vi. Long Pendency of suit and to avoid multiplicity of litigation: If a matter has been pending for more than 20 years, then the available remedy lies in a suit and not arbitration. [State of UP v. Janki Saran Kailash Chandra]
If a matter against a single party and a non party to an agreement cannot be split up it should not be referred to arbitration. Bifurcation of the subject matter of the suit is not permitted. [Barirum Chemical Ltd. v. Bombay Industrial and Chemical Co.] vii. Suits under Special Enactments and statutory arbitration: The Arbitration Act does not have overriding effect over Lex Specialis (Special Enactments) or statutory arbitration as mentioned under Indian Telegraph Act and the Displaced Persons (Debt Adjustment) Act of 1951.
viii. Settlement of disputes between Public Sector Undertaking (PSU’s) : Dispute between two PSU’s are referred to a High Power Commission for resolution as per policy of the Government of India. [Board of Trustees of Chennai Port Trust v. Ircon Int’l Sree Bhavani Builder (JV)]
An application made under section 8 for referring the matter to arbitration is not a suit by nature. It’s a proceeding for the determination of the said question. A court cannot pass an order and direct a person be made a party to the arbitration. [Patanjali v. Rawalpindi Theaters Pvt. Ltd.] The similar recourse for international commercial arbitration lies under Section 45 of the Arbitration Act. This section is different from what is envisaged in Section 89 of CPC. Section 89 empowers to refer those matters to arbitration which per se do not contain an arbitration clause or an agreement, but, fall under the scope of arbitration. Similarity lies in approaching the court, the parties wanting to enforce arbitration approach the court of proper jurisdiction as the case may be.
The application filed under section 8 of the arbitration act is in the nature of a summary proceeding. This was held by the Bombay High Court in the case of Shriram Hanutram v. Mohanlal & Co. The judiciary is qualified and tethered to decide the issue of jurisdiction raised before it. A court can look into plaints [Lal Chand v. Alliance Jute Mills Co. Ltd.], affidavits and counter affidavits. [Mithailal Gupta v. Inland Auto Finance] The determination to be made by the court is apropos the circumstances in which recourse has been sought for by the party. The courts have to analyze if the particular party has prima facie made out a case for seeking recourse to civil suit for appropriate relief or not. [Ramji Dayawala & Sons (P) Ltd. v. Invest Import] The Court has to state sufficient reasons for denying or referring the matter to arbitration. [Raghunandan Sao v. Narain Sao].
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CESTAT: Registration Of Premises Not A Necessary Prerequisite For Claiming A Refund Under Cenvat Credit Rules, 2004
The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case M/s. Selling Simplified India Private Limited Versus Commissioner of CGST, East Delhims observed and has held that the registration of premises is a necessary prerequisite for claiming a refund under Rule 5 of the Cenvat Credit Rules, 2004.
The bench comprising of Judicial Member, Rachna Gupta observed and has stated that the service providers are entitled to a refund under rule 5 of the Cenvat Credit Rules, 2004 when the output service is exported.
In the present case, the appellant is engaged in rendering taxable services of business support to the following group companies, i.e., Selling Simplified Group, Selling Simplified Inc, Selling Simplified Ltd., U.K. and three of the companies are located outside of India. It is availed by the appellant that the Cenvat credit for input services used to render the said output service as they are paying service tax on such input services. Thus, on 22.12.2016, the appellant filed a refund claim for Rs.9,97,364 under Notification No.27/2012-CE(NT) dated 18.06.2012, issued under Rule 5 of the Cenvat Credit Rules, 2004, along with several documents.
It was observed by the department that the appellant had centralised service tax registration for the premises but had claimed some input service credit for the services utilised at the unregistered premises. Some of the export invoices were also raised from the unregistered premises. However, with these observations, the department formed the opinion that the appellants should get registration for their Noida premises also. A ‘Show Cause Notice’ was issued by the department proposing the rejection of the refund claim.
It was contended by the appellant that the export invoices were issued by the appellant from an address that is not part of the centralised registration. Further, the address mentioned in the invoices is Noida; hence, the Commissionerate does not have jurisdiction to decide the refund. The group of companies and the appellant to whom the Appellant had provided business support services are simply the establishments of a single individual.
It was held by the CESTAT that the show cause notice is a foundation on which the department has to build its case and it should be specific and contain all relevant details so that an assessee will be able to give a reply to specific allegations made in the show cause notice. As since the issue of jurisdiction was not specifically taken in the show cause notice, the adjudication on this point against the assessee is not sustainable. Since, the appellant admittedly has centralised registration in terms of subclause (2) and (3) of Rule 4, and the Noida unit was not required to be registered.
Supreme Court: No Bar To Withdraw Admitted CIRP Application Before Constitution Of Committee Of Creditors-IBC
The Supreme Court in the case Ashok G. Rajani vs Beacon Trusteeship Ltd. Observed and stated that there is no bar to withdrawal of an admitted CIRP application before constitution of Committee of Creditors.
The bench comprising of Justice Indira Banerjee and JK Maheshwari observed and has stated that the settlement cannot be stifled before the constitution of the Committee of Creditors in anticipation of claims from third persons, against the Corporate Debtor.
It was observed by the court while dismissing the appeal against NCLAT order which gave the parties the opportunity to settle their disputes before the Adjudicating Authority (NCLT) in terms of Section 12A of the IBC reading with Rule 11 of the National Company Law Tribunal Rules, 2016 (NCLT Rules).
Further, the bench noted that Section 12A of the IBC enables the Adjudicating Authority to allow the withdrawal of an application admitted under Section 7 or Section 9 or Section 10, on an application made by the applicant with the approval of 90% voting shares of the Committee of Creditors in such a manner as it is specified.
The court stated that Section 12A of the IBC clearly permits withdrawal of an application under Section 7 of the IBC that has been admitted on an application made by the applicant. Thus, the question of approval of the Committee of Creditors by the requisite percentage of votes, can only arise after the Committee of Creditors is constituted. In our view, before the Committee of Creditors is constituted, there is no bar to withdrawal by the applicant of an application admitted under Section 7 of the IBC.
Further, the court noted that Rule 11 of the NCLT Rules enables the NCLT to pass orders for the ends of justice including order permitting an applicant for CIRP to withdraw its application and to enable a corporate body to carry on business with ease and should be free of any impediment.
While dismissing the petition, the court stated that considering the investments made by the Corporate Debtor and considering the number of people dependant on the Corporate Debtor for their survival and livelihood, there being no reason why the applicant for the CIRP, should not be allowed to withdraw its application as once its disputes have been settled. However, the settlement cannot be shifted before the constitution of the Committee of Creditors in anticipation of claims against the Corporate Debtor from third persons. Thus, the withdrawal of an application for CIRP by the applicant would not prevent any other financial creditor from taking recourse to a proceeding under IBC and the urgency to abide by the timelines for completion of the resolution process cannot be stated as a reason to stifle the settlement.
Senior Advocate Mukul Rohatgi Declines To Be The Next Attorney General For India
The Senior Advocate Mukul Rohatgi has declined to be the next Attorney General for India. The offer made by the Central Government in that regard is turned out by him.
On September 30, the term of the incumbent Attorney General for India KK Venugopal is ending. However, there were reports that Rohatgi was going to take the AG’s mantle after Venugopal.
In June 2017, Rohatgi had earlier resigned as the Attorney General after serving for three years. Venugopal was appointed as the AG for a term of three years after Rohatgi and he was given one year extension each in 2020 and 2021. This year on June 29, AG Venugopal’s term was extended by three more months by the Union Government. Thus, there were reports that Venugopal had requested the Government to not further extend his tenure citing health problems, and the Government requested him to continue for three more months.
Hijab–Fight for rights or religion..?
Hijab controversy took grounds in Karnataka after the Udupi College issued guidelines for the academic year in July 2021 prescribing a uniform dress code.
In September six students (who later became the lead petitioners in the Karnataka High Court) complained of discrimination by teachers against them on religious grounds. By December, their complaint had taken the form of protest that drew intervention of entire country. The very Primary and important issue under consideration of Supreme Court is whether Hijab is a fundamental right or mere a religious practice.
As of now, a settle law position says that even though right to religion is covered under Art. 25 of the constitution and art 19- Right to Speech and 21- Personal Liberty of the constitution but can it be excluded or included in under ‘Reasonable Restriction’ of the fundamental rights. However, to consider any religious practice under Art 25 of the Constitution must fall within the ambit of ‘Essential Religious Practice”.
Before we get into the issue lets see what the Holy Quran Say on Hijab-
How does the Quran address the issue of Hijab-
Term Hijab is reiterated seven times in the Quran referring each time exactly to the same means Curtain, Separation, mask but the verse that has been most often used to prove the obligation of veiling for women and mentions the term Hijab is as under-
“ O you who have been believed, do not enter the houses of the prophet except when you are permitted to meal…. And when you ask (his wives) for something, ask then from behind a separation (Hijab) Quran 33;53.
As it indicates here, the Hijab concerns only the wives of the prophet and meets a circumstantial requirement in order to respect the private life of Prophet. Besides, it does not represent, in anyway, a particular model of clothing.
It is therefore, quite clear that the term Hijab does not absolutely refer to the meaning given nowadays. Hence it could be ascertain that Hijab is not an essential in Islam.
IS HIJAB ESSENTIAL IN ISLAM?
Before considering the issue, it is pertinent to know whether Hijab fall under essential right in Islam or not?
Many Islam Scholar would say that Head Cover is mandate in Quran however while answering the same Karnataka High Court referring ingredients of Article 25 of the constitution concludes that Hijab is not essential part of Islam. Art 25 of the Constitution guarantees a person the freedom of conscience and the right to freely profess, practice, and propagate her religion. But this fundamental right is subject to public order, morality and health. This is not an absolute right.
UNIFORM VS FUNDAMENTAL RIGHT-
School Uniforms are form of secular democracy, it demonstrate secular and homogeneous in the Schools and colleges therefore achieves constitutional secularism. Therefore Fundamental rights cannot be claimed against School Uniforms. Therefore, The Karnataka High Court ruled, “We are of the considered opinion that the prescription of the school uniform is only a reasonable restriction constitutionally permissible, which the students cannot object to.”
Judicial Review – Essential Religious Practice
The hon’ble Supreme Court and High Courts have ample time interpreted the law regarding religious beliefs and practice of religion, however, every time the courts might have opined in different way but all the opinions are based on same foundation called “ Essential Religious Practice The Hon’ble Supreme Court first discussed the concept of ‘Essential Religious Practice’ in the case of Commissioner, Hindu Religious Endowments, Madras v. Shri Lakshmidar Thirtha Swamiyar of Shri Shirur Mutt AIR 1954 SC 282. In the said case, the Supreme Court distinguished ‘secular practices’ from ‘religious practices’ and held that the latter alone is protected by article 25 of the Constitution. The ‘religious practice’ must be essential to the religion itself.
The Supreme Court further elaborated that the Essential part of a religion means the core beliefs upon which a religion is founded. Essential practice, in a religion, means those practices that are fundamental. It is on these essential practices that the superstructure of the religion is built on without which any religion will be no religion. The test to determine whether a part or practice is essential to a religion is to find out whether the nature of the religion will be changed without that practice. If the taking away of that part or practice could result in a fundamental change in the character of that religion or in its belief, then such part could be treated as an essential or integral part.
In order to understand whether the practice of wearing a Hijab satisfies the test of Essential Religious Practice, it is important to further study the judicial developments in this regard.
In the case of Javed and Ors. v/s State of Haryana and Ors. (2003) 8 SCC 369, a challenge was laid to the Haryana Panchayati Raj Act disqualifying anyone with more than 2 living children from holding specified offices in the Panchayat. The Petitioner, a Muslim by faith, submitted, amongst other grounds, that his personal laws permitted him performance of marriages with up to 4 women for the purpose of procreating children and restriction thereof would violate Art 25 of the Constitution of India. The Hon’ble Supreme Court held that such a protection can be claimed only if the same forms an Essential Religious Practice. The Hon’ble Court further held that what is permitted or prohibited does not become a positive tenet of a religion and that a practice does not acquire sanction simply because it is permitted. The Hon’ble Court concluded by holding that the same can be regulated or prohibited by Legislation in the interest of public order, morality, and health.
In the case of Khursheed Ahmed Khan v/s State of UP and Ors. (2015) 8 SCC 439 the Supreme Court affirmed the principle propounded in the Javed Ali case (supra.). In the instant case, the Petitioner challenged the UP Government Servants’ Service Conduct Rules, 1956 that provided for removal of government servants for proven misconduct of contracting another marriage during the subsistence of an already existing one. The challenge to the rule by the Petitioner was that it was permissible for Muslims to enter into marriage with 4 women and as such the said service rules violated his Fundamental Rights under Article 25 of the Constitution of India. The Hon’ble Supreme Court while referring to a plethora of judgements including the Javed Case (supra.), negatived the plea and held that Art 25 was subject to public order, morality, and health and further went on to hold that polygamy was not an integral part of the religion and monogamy was a reform within the powers of the State under Art 25 of the Constitution of India. Holding so, the Hon’ble Court dismissed the Petition and upheld the service rule
To conclude with the issue of Hijab will have to undergo the test of ‘Essential Practice of Religion’. And in such case I feel the issue has very little chances of recognizing Hijab as ‘Essential religious Practice’ and if the petitioners fail to convince the court, it would then, remain as religious practice but not essential religious practice.
(Author is columnist and practicing advocate at Bombay High Court)
Allahabad High Court Quashes POSCO Case: If Husband/Accused Is Convicted Then Victim/Wife’s Future Would Be Ruined
The Allahabad High Court recently in the case Rajiv Kumar v. State of U.P. And 2 Others observed and has recently quashed an FIR and criminal proceedings in a POCSO case registered against a man as it noted that the accused man and victim-wife (who was a minor at the time of the incident) married the accused/ applicant out of her own sweet will and is living a happy married life with him.
The bench comprising of Justice Manju Rani Chauhan observed that to punish punish the offenders for a crime, involved in the present case, is in the interest of society, but, at the same time, the husband is taking care of his wife and in case, the husband is sentenced and convicted for societal interest, then, the wife will be in great trouble and it would ruin their future. Thus, it is also in the interest of society to settle and resettle the family for their welfare, the bench quashed the rape-POCSO case against the accused.
Facts of the Case:
The Maternal Uncle of the Victim lodged an FIR against the accused under Sections 363, 366, and Section 376 of the Indian Penal Code, 1860and Section 3/4 of the POCSO Act, alleging that the accused had raped the victim (then a 17-year-old minor).
Further, the accused moved the instant Section 482 CrPC petition seeking to quash the instant FIR. Also, the victim appeared before the Court and had submitted that her maternal uncle had lodged the FIR in an attempt to ruin her married life.
It was further stated by her that she has entered into a compromise with the accused and has married him out of her free will, and consent, and without any external pressure, coercion, or threat of any kind. Before the court, it was also submitted that that out of their wedlock, they are blessed with a male child, who is presently four and half years old and as per her date of birth and at the time of marriage she was nearly 17 and half years old.
It was submitted by the Applicant-Accused that on account of the compromise entered into between the parties concerned, all disputes between them have come to an end, and therefore, further proceedings are liable to be quashed in the present case.
Observations Made By Court:
In the present case, the court noted that though the offence under the relevant sections 363, 366 and 376 of IPC and Sections 3/4 of POCSO Act are not compoundable under Section 320 Cr.P.C, however, adding to it, the court stated that the power of the High Court under Section 482 Cr.P.C is not inhibited by the provisions of Section 320 Cr.P.C and the criminal proceedings as well as the FIR can be quashed by exercising inherent powers under provision of Section 482 Cr.P.C, if warranted in given facts and circumstances of the case for ends of justice or to prevent abuse of the process of any Court, even including the cases which are not compoundable where parties have settled the matter between themselves.
The court while considering the facts and circumstances of the case, and also the submissions made by the counsel for the parties, the court came to the considered opinion that the victim herself, has stated before this Court that out of her own sweet will, she has married the applicant and is living a happy married life and out of their wedlock, the couple are blessed with a male child. However, no useful purpose shall be served by prolonging the proceedings of the criminal case as the parties have already settled their disputes.
Accordingly, the court quashed the charge sheet and the cognizance order as well as the entire proceedings of the Criminal Case were hereby quashed. Thus, the application was allowed.
SC likely to hear next month pleas related to Article 370
A Supreme Court constitution bench is expected to hear a slew of petitions related to Article 370 of the Constitution, which granted Jammu and Kashmir (J&K) semi-autonomous status before it was repealed in August 2019. Chief Justice of India (CJI) Uday Umesh Lalit said on Friday that the petitions will be heard after the Dussehra holiday.
When senior advocate Prashanth Sen asked the CJI to list the matter, Justice Lalit responded, “We will certainly list that…it will be listed after Dussehra break.” From October 3 to 10, the court will be closed for Dussehra.
The petitions were last heard in March 2020, when a five-judge panel declined to refer the case to a larger panel. The reference was requested because previous court decisions on the subject were in conflict with one another. This contention was rejected by the bench.
At the time, the bench was aware of an older batch of petitions pending in the Supreme Court challenging the constitutionality of Articles 370 and 35A, which granted J&K special status. It was stated that all issues concerning Article 370 should preferably be heard together.
National Conference legislators, former bureaucrats, and some organisations are among those who have objected to the repeal of Article 370. Some petitioners cited the Supreme Court’s 2018 decision, which stated that Article 370 had gained permanent status.
Many petitions have also been filed against the Jammu and Kashmir State Reorganization Act, which calls for the division of J&K into two Union Territories.
Despite opposition from the central government, which argued that Article 370 had international and cross-border implications, the Supreme Court issued notices on the petitions on August 28, 2019. The Centre also claimed that it is a highly sensitive issue, and that whatever happens in the country will be brought up at the United Nations. While issuing notices in 2019, the court referred the case to the five-judge constitution bench.
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