A striking feature of the credit market over the past decade or more is the growing importance of credit rating: its significance for an applicant in urgent need of credit for his business cannot be overstated. This has given rise to some difficult legal problems: an obvious one is the liability of a credit rating agency (‘CRA’) for negligent entries. Another is whether a CRA is entitled to take...
Codification of Directors’ Duties: Is Common Law Excluded?
Background Hitherto, directors had negligible guidance under company law as regards their duties and liabilities. The preexisting Companies Act, 1956 (the 1956 Act) did not explicitly stipulate directors’ duties, which made it necessary to fall back on common law principles (to be articulated by courts while delivering specific decisions). The statutory uncertainty was compounded by the absence...
The Meaning of ‘Plant and Machinery’ for the Purposes of Capital Gains
The National Gallery describes Sir Joshua Reynolds as the “leading English portraitist of the 18th century” and expert “in the work of Rembrandt, Rubens and van Dyck”. Improbably, the sale of one of his great paintings, the Omai of the Friendly Isles, recently gave rise to an interesting question of income tax law that has also troubled the Indian courts: what precisely does ‘plant and...
Service of Notice on Parties to an Indian Arbitration
In Benarsi Krishna v Karmayogi Shelters, the Supreme Court has decided that the word “party” in section 34 of the Arbitration and Conciliation Act, 1996, does not include a party’s agent. This, it is respectfully submitted, is incorrect or, at best, too widely stated. The important practical consequence of this proposition is that the period of limitation does not begin to run from the date of...
The Supreme Court overrules Bhatia International and Venture Global
The Supreme Court has overruled Bhatia International, and has once and for all held that the supposed omission of the word “only” from section 2(2) has no significance (see below). Importantly, it has also held that a party cannot file a civil suit in relation to the subject matter of the arbitration agreement in order to obtain interim relief. The Court has overruled these decisions...
The Delhi High Court on Foreign Awards and Implied Exclusion of Section 34
We have discussed on several occasions the scope of the proposition in paragraph 32 of Bhatia International that the parties may “expressly or impliedly” exclude the applicability of Part I of the Arbitration Act in cases in which it would be otherwise applicable. The Court has previously held that Part I is not impliedly excluded merely by choosing a foreign substantive law (Indtel Technical...
The Proviso, Public Interest and Section 391
In Re Subhiksha Trading Services Ltd [161 CompCas 454], a single judge of the Madras High Court has considered a number of important questions relating to the role of the Company Court in sanctioning a scheme of arrangement or amalgamation under sections 391-4 of the Companies Act. Subhiksha Trading Services Ltd. [“STS”], the transferor company, was engaged in the business of trading in articles...
The Role of the Seat of Arbitration in Implied Exclusion
It is becoming increasingly difficult to state with confidence the prevailing position of law in India on a question that should, in principle, have a straightforward answer: in what circumstances will the Indian courts decline to exercise jurisdiction under the Arbitration and Conciliation Act, 1996 [“A and C Act”] and what must a contracting party which wishes to achieve this result insert in...
Hybrid Companies and Restrictions on Transferability
We have previously discussed at length the law on the scope of s. 111A(2) of the Companies Act, 1956 [“CA 1956”]. In its recent judgment in Jer Rutton Kavasmanek v Gharda Chemicals, the Bombay High Court has considered this issue, as well as another controversial area in Indian company law – whether “public” and “private” are exhaustive of the types of companies contemplated by the CA 1956. The...
Fuerst Day Lawson: S. 50 Arbitration Act, and “consolidating legislation”
On Friday, a two-judge Bench of the Supreme Court (Alam and Lodha JJ.) gave judgment in Fuerst Day Lawson v Jindal Exports [hereinafter “FDL”]. The judgment contains a careful and comprehensive examination of a long line of authorities, and an authoritative analysis of two very important issues in arbitration law and civil procedure—whether a Letters Patent Appeal [“LPA”] is maintainable in...
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