In its recent judgment in Balwant Rai Saluja, a three-judge Bench of the Supreme Court has considered a number of important questions relating to when, if ever, it is appropriate to lift the corporate veil. Readers may recall that we had previously discussed Lord Sumption’s magisterial judgment on this point in Petrodel v Prest: Although the Supreme Court has not endorsed precisely the same...
The Blue Paper and the Pink Paper: The Interpretation of Options
One of the most frequently encountered issues in the practice of commercial law is the construction of contractual notice requirements: a contract that confers on one of the parties the right to do something (eg exercise an option or a break clause) would ordinarily require that party to give notice to the other party. The consequences of failing to understand exactly what the notice requires and...
The Supreme Court on Frustration and Statutory Contracts
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 Criminalization of Commercial Disputes
News reports indicate that the Supreme Court of India has ordered the chairman of Samsung Electronics to appear before a Ghaziabad court in relation to charges filed by a party in a contractual dispute. This is pursuant to an earlier judgment of the Supreme Court rendered on February 1, 2012 that delves into the various substantive issues involved in the dispute, including the jurisdiction of the...
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 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...
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...
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...
Miscellaneous
1. RBI Circular on Options We had carried two guest posts (here and here) on RBI’s notification dated 9 January 2014 relating to options and convertible instruments. This notification has generated a great deal of debate and its precise scope and contours are still being carefully ascertained. For a flavour of the further debate, the following...
Representations & Warranties: Limitation Period
The documentation package containing representations and warranties, covenants and indemnities are quite common in corporate transactions involving Indian companies, particularly those pertaining to acquisitions, investments and corporate finance. However, despite their popularity, they have not been the subject matter of judicial consideration so as to provide some guidance as to how they may be...
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