Earlier this year, the UK Court of Appeal was called on to consider an important question dealing with concurrent liability in contract and tort. The facts in Robinson v. Jones involved the defective construction of a house by a builder, which caused economic loss to the purchaser. However, the contractual remedy was barred by limitation. As a result, the purchaser sought to argue that he had a...
Waiver of a Loan – Capital or Revenue?
Recently, the Delhi High Court was called on to decide the interesting question of the tax treatment of loans and interest waived by financial institutions. In Logitronics v. CIT, the Court considered two cases which raised similar issues, and held that the treatment of the waived loan amount would depend on the purpose for which the loan was taken. In the first case, the assessee had taken loans...
Supreme Court on Tainted Securities
In Varghese Joseph v The Custodian, the Supreme Court was called on to clarify the approach to be adopted in relation to tainted securities under the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992. Although there is not much by way of company law principles of even statutory interpretation to be gleaned from the decision, it is of importance due to the investor...
Procedural leniency under the Negotiable Instruments Act
Over the past few years, the Supreme Court has gone a long way towards reducing the use of section 138 of the Negotiable Instruments Act (“Act”) as the basis for the vicarious liability of directors. In February last year, National Small Industries v. Harmeet Singh Pantial, the Supreme Court emphasised the high standards required in order to invoke vicarious liability of creditors under section...
The Problem of Limitation under the Arbitration Act
In Union of India v. Microwave Communication, the Delhi High Court was called on to consider a very important issue relating to the relationship between the Arbitration Act and the Limitation Act. In a remarkably clear decision, involving the interpretation of decisions of the Supreme Court and conflicting dicta from High Courts, the Court concluded that all provisions of Limitation Act, except...
The Court of Appeals on Dishonest Assistance
The United Kingdom Court of Appeals recently considered an interesting case concerning the standard of dishonesty required to hold a person guilty of assisting in the breach of trust. The factual background in Starglade Properties v. Roland Nash is complex, but for the purposes of this discussion, it is sufficient to note that as a result of certain contractual obligations, Larkstore Ltd., the...
Incorporation of Contractual Terms by Reference
Last week, an interesting issue of contractual interpretation fell for the consideration of the United Kingdom Court of Appeals in Malone v. British Airways, [2010] EWCA Civ 1225. The Court was called on to decide circumstances in which terms may be incorporated into a contract from other related agreements or documents, leading it to some interesting conclusions. In the wake of the economic...
Privity in Arbitration Agreements
The issue of privity to an arbitration agreement has been the subject of much controversy, especially in the context of the grant of interim measures under section 17 (by the arbitral tribunal) and section 9 (by the Court). In SN Prasad v. Monnet Finance, the Supreme Court had occasion to revisit this very issue, albeit in a different context. The facts which fell for the Court’s consideration...
The Sale of Liverpool Football Club
Last week, the English High Court of Justice considered a very interesting legal issue, also having great relevance for the football world. This concerned the sale of Liverpool Football Club [“Club”] to NESV, an American company which also owns the baseball team Red Sox. The owners of the Club, Mr. Hicks and Mr. Gillett purchased the club in 2007, funded to the extent of 75% by the Royal Bank of...
Bombay High Court on the Appointment of Arbitrators
Section 11 of the Indian Arbitration Act, 1996, has been subject of much controversy; primarily on the issue of whether the power of Chief Justice to appoint arbitrators provided therein, is judicial or administrative in nature. While that question gave rise to many issues of policy and the scheme of the Act as a whole, a narrower but equally interesting aspect of the provision seems to have gone...
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