In its recent judgment in Mary v State of Kerala, the Supreme Court has considered the scope of section 56 of the Contract Act, 1872, and its relationship with statutory contracts. The appellant responded to an invitation to tender for the right to vend arrack in certain shops in Kalady in Kerala. Her bid of approximately Rs. 25.6 lakhs was successful and she deposited 30 percent (Rs. 7.68 lakhs)...
The Meaning of ‘Inability to Pay Debts’ for the Purpose of Winding-up
The test for statutory winding-up in Indian company law has a long history. Section 434(1)(a) and 434(1)(c) of the Companies Act, 1956 was based on section 223 of the English Companies Act, 1948, and the new Companies Act, 2013, retains this language (see section 271), although the language has been slightly modified in later British legislation (sections 89 and 123 of the Insolvency Act, 1986)...
Guest Post: Named arbitrators – No petition under Section 11 of Arbitration and Conciliation Act, 1996
(The following post is contributed by Ms Renu Gupta, Advocate) Arbitration clauses in most contracts with government corporations specify that in case of a dispute between the parties, an employee occupying a designated post of the corporation or some other person nominated by him, shall be the arbitrator. It is settled law that arbitration agreements in government contracts providing that an...
Double Actionability, Substance and Procedure in Indian Law
The UK Supreme Court (Lord Sumption; Lord Mance concurring) today gave judgment in an important case, Cox v Ergo Versicherung AG (‘Cox’), involving three questions of private international law and some ancillary points relating to the doctrine of mitigation. The Indian courts, faced with similar (even identical) questions, have had to apply old common law rules that have been legislatively...
Section 55 of the Indian Sale of Goods Act: Exhaustive or Illustrative?
There are often practical advantages in being able to sue for an agreed sum instead of damages, because the amount the claimant recovers in an action for the sum is usually not reduced by the application of legal rules such as mitigation and remoteness. For example, suppose an advertiser signs a contract with a television company to advertise its products for a fee of Rs. 1 crore, provides the...
The Bombay High Court on the Agreed Sum and Penalties: A Missed Opportunity?
It has often been said that a court cannot arrive at the right answer unless it asks itself the right question. This resonates particularly in the field of private law, because—as it is perhaps more technical and complex than some other areas of the law—the applicability of certain rules depends upon the characterisation of the issue at hand (for eg, is it a sale or a licence, a penalty or...
Consolidating Secondary Market Disclosures
(This post has been authored by, and is uploaded on behalf of, Professor Umakanth) As we have previously observed on this Blog, there is a considerable divergence between the requirements of disclosure in the primary markets and those in the secondary markets. While SEBI has progressively expanded the requirements of primary market disclosures through the SEBI (Issue of Capital and Disclosure...
Close Connection and The Test of Vicarious Liability in Indian Law
Every first-year law student in Indian and English law schools is taught the famous ‘Salmond’ test of ‘course of employment’ for the purposes of vicarious liability in tort: was the employee’s wrongful act either actually authorised by the master or an unauthorised mode of doing an authorised act? This test survived for many years and works well in the vast majority of cases. But like other...
SEBI Announces Corporate Governance Reforms
(The following post has been written by, and uploaded on behalf of, Professor Umakanth) Over a year ago, SEBI had issued a consultation paper that suggested several reforms to corporate governance norms in India that are contained in clause 49 of the listing agreement. The primary purpose of SEBI’s effort was to integrate the stipulations of clause 49 with the then prevailing clauses of the...
Transposed Wills: The Supreme Court on Interpretation of Contracts
In 1999, Alfred and Maureen Rawlings each decided to execute a will leaving everything to each other and, should the other not survive, to Terry Marley, whom they treated as their son. Their solicitor prepared two simple wills in accordance with these instructions: each will was a mirror image of the other. He presented it to them for signature. Unfortunately, Mr Rawlings signed Maureen’s will...
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