A learned Single Judge of the Bombay High Court recently considered (in Rakesh Malhotra v. Rajinder Malhotra) the question of whether disputes before the CLB under ss. 397-398 and 402 of the Companies Act, 1956 are capable of being referred to arbitration. Patel J. concluded that having regard to the nature and source of the powers of the CLB, disputes in petition properly brought under ss...
Bombay High Court on “Slump Sales”
The Bombay High Court recently considered as interesting point on ‘slump sales’ in the income tax context. The case, CIT v Bharat Bijlee 365 ITR 258, arose after the assessee company transferred one of its undertakings (as a going concern) to another entity under a scheme of arrangement u/s 391-394 of the Companies Act, 1956. There was no monetary consideration for the transfer:...
The Aliakmon and Title to Sue: a recent Bombay decision
In a recent judgment, Dreymoor Fertilizers v. mvTheoforos-1, the Bombay High Court (Sriram J.) has held that a claimant, suing in tort for economic loss, must establish either legal ownership or possessory title over the relevant property at the time of loss. Without going into the correctness of the decision in the specific facts before the Court, it is respectfully submitted that some of the...
Enercon v. Enercon: Indian Supreme Court on arbitration/conflict of laws
The Supreme Court of India in Enercon (India) v.Enercon GmBH (Civil Appeals 2086 & 2087 of 2014; judgment dated February 14, 2014) has decided several important questions pertaining to the law of arbitration and private international law. To summarize, the Court has held: i. ...
Duties of Directors: a Recent Judgment
The judgment of the English High Court in Madoff Securities v. Stephen Raven [2013] EWHC 3147 (Comm) was delivered last week, and is now available on BAILII. There is plenty of interesting dicta on the duties of directors. In England, the duties are codified in s. 172 of the UK Companies Act. 2006. (The new Indian Act also has a partial codification: see for example, s. 166 of the Companies Act...
Arbitration Agreements in Writing: a recent Bombay High Court decision
In a judgment delivered on September 19, 2013, in the case of Mody v. Kerwala, a learned Single Judge of the Bombay High Court has considered the requirement that an arbitration agreement must be in writing. The learned single Judge has held that s. 7 not only imposes a requirement that the arbitration agreement must be in writing; but also provides for the exclusive modes of proving...
Remedies against Directors’ Undue Gains: Personal or Proprietary?
What is the appropriate remedy against a director who makes secret profits? Should the remedy be merely a personal one, or should it be a proprietary one? This issue is one of great importance and several jurisdictions have been debating the issue for years now. The rules against conflict and profit are at the core of a director’s duties; and it is essential for a legal system to provide a...
Class Actions in the Companies Act, 2013: a Recipe for Confusion?
The Companies Act, 2013 introduces some important changes to the company law regime in India. In this post, we shall discuss one such new feature: the class action. The provisions governing class actions are introduced through s. 245 of the Act. These provisions are included under ‘Chapter XVI – Prevention of Oppression and Mismanagement’: however, class actions are evidently not the same as...
Supreme Court on Novation and Arbitration clauses
A couple of days ago, we had pointed out a judgment of the Bombay High Court on separability. In that case, a MoU between the parties treated an earlier SPA as “null and void”. The SPA contained an arbitration clause, while the MoU did not. The Division Bench held, however, that the dispute between the parties (inter alia pertaining to validity of the MoU) was governed by the arbitration clause...
The Indian Fiona Trust?
In an important judgment, the Bombay High Court has examined in depth the doctrine of separability in the law of arbitration. The judgment and its implications will be analysed in further detail subsequently; for the convenience of readers, however, some important principles laid down are extracted below. —- …[A]n arbitration agreement can and does survive a termination, repudiation...
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