INDIAN LEGAL IMPETUS · SpiceJet, for cartelisation in determining the fuel surcharge on air cargo. “The basic concern in the present case is the overcharging of cargo freight,

®INDIAN LEGAL IMPETUS

APRIL 2020. Vol. XIII, Issue IV

E-337, East of KailashNew Delhi - 110065, INDIA

GURUGRAM7th Floor, ABW Tower, MG Service RoadSector 25, IFFCO Chowk, GurugramHaryana - 122001, INDIA

BENGALURUUnit No. 101, 10th Floor Sakhar Bhavan, Plot No. 230Ramnath Goenka MargNariman Point, Mumbai - 400021, INDIA

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S i n g h a n d A s s o c i a t e s

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Manoj K. Singh Founding Partner

EDITORIAL

Dear Friends,

“Change is the law of life, And those who look only to the past or present are certain to miss the future” said the famous American President Mr. John .F. Kennedy.

This too shall pass, is an old Persian saying that has originated in the works of the poet Rumi. Abraham Lincoln, something of an aphorist himself, was a fan of this sentiment because it is true and appropriate in all times and situations. We too hope and pray that this too shall pass, and soon. We hope everyone is doing fine. It is an enemy we shall beat, and we will beat. We are pleased to present the May 2020 edition of our monthly newsletter Indian Legal Impetus. In this edition, we have covered the important issues, legal aspects and judicial pronouncements relating to various disciplines of laws in India. We bring to you this edition filled with engaging, enlightening and informative articles dealing with a catena of legal subjects such as Arbitration, Contract Law, Competition Laws, Criminal Law, Right to Information Act, dispute resolution mecha-nism w.r.t the Electricity disputes and most importantly discussions on some issues in the light of the prevailing pandemic. The first article analyses a decade of the working of the Competition Commission of India - a brief overview of its journey and how it gains stability despite several legal challenges. This article explains and anticipates further streamlining of various substantive and procedural aspects of competition law, based on the Competition Law Review Committee recommendations.

The next article of this edition deals with interpretation of Force Majeure Clause in the present Scenario of COVID -19. The author discusses in brief about the contractual obligations of the parties in the situation of pandemic and other consequences. It explains the ways in which a force majeure clause can cover a pandemic situation also including the Indian judgements and some foreign authorities covering the situation. It also analyses about the situation of re-writing the contract clauses in the present pandemic and its interpretation.

Going further, the edition provides an analysis on the Legal Aspects of examining witness during the trial. The author at-tempts to analyse the concept through the various sections as envisaged in Criminal Procedure Code , Indian Evidence Act and Code of Civil Procedure. It explains about the Witness Protection Scheme backed by the judgement tilted as Mahendra Chawla Vs. Union Of India where the very first attempt was made at the national level to grant protection to the witnesses which is a very important facet of a trial and brings the confidentiality and fairness in examining the witness.

The next article analyses the newly added section 8-B of MMDR Act i.e. Mines and Minerals (Development and Regulation) Act, 1957. This also envisaged the EIA notification of 2006 and how these developments have been done to pave way for a more efficient and a transparent regulatory mechanism in the process.

The next article in this this edition is on the Domestic Arbitration Award. It discusses the recent Supreme Court judgement in the case titled Vijay Karia & Ors. vs Prysmian Cavi E Sistemi SRL & Ors. The said judgement discusses the enforcement of a foreign award in India wherein the Supreme Court analyses the scope of Article 136 of Constitution of India. The article discusses the legislative intent of section 50 of the Arbitration Act, challenging an award in two stages under Arbitration Act and how any person can approach the Apex Court under Article 136 against the dismissal of the enforcement of foreign award.

Going forward, our write-up outlines the possible commercial impact on dispute resolution that the power sector may face post the establishment of the proposed Electricity Contract Enforcement Authority (“ECEA”) as per draft of new Amendment Bill of 2020 published by Ministry of Power on 17.04.2020. This article explains the important angles of the new Amendment Bill of 2020.

The next article outlines the change in law if any under EPC Agreements due to the present COVID 19 situation. The article also mentions the judgement passed by Supreme Court titled Energy Watchdog & Ors. vs CERC, MANU/SC/0408/2017

Further on, our write-up explains the difference between Force Majeure and Material Adverse Effect, the invocation of MAE clause and how the COVID -19 pandemic qualifies as an MAE Event.

The penultimate piece gives a brief overview of Suits are not maintainable if determined in the nature of Anti-Arbitration Injunction in the light of the judgement in the case titled as Dr. Bina Modi vs Lalit Modi.

Lastly, we discuss the right of a third party under the Right to Information Act to obtain information from the High Court and the mechanism involved. The article explains the case titled as Chief Information Commission vs. High Court of Gujrat & Anr. and other various precedents. It further analyses the consistency between the RTI Act and the High Court rules in this context.

We hope that our avid readers find these articles useful in understanding and interpreting the recent legal developments. These articles give you a brief view on various important laws, their regimes and the judgements interpreting the law. We welcome all kinds of suggestions, opinion, queries or comments from all our readers.

You can send in your valuable views and thoughts at [email protected]

Be safe.

Thank You.

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SINGH & ASSOCIATES ADVOCATES & SOLICITORS

NEW DELHI E-337, East of KailashNew Delhi - 110065 INDIA GURUGRAM7th Floor, ABW Tower, MG Service RoadSector 25, IFFCO Chowk, Gurugram Haryana -122001 INDIAMUMBAI Unit No. 101, 10th Floor Sakhar Bhavan, Plot No. 230Ramnath Goenka MargNariman Point, Mumbai - 400021, INDIABENGALURU Condor Mirage, 101/1, 3rd Floor, Richmond Road, Richmond Town, Bengaluru - 560025, INDIA

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means without the prior permission in writing of Singh & Associates or as expressely permitted by law. Enquiries concerning the reproduction outside the scope of the above should be sent to the relevant department of Singh & Associates, at the address mentioned herein above.

The readers are advised not to circulate this Newsletter in any other binding or cover and must impose this same condition on any acquirer.

For internal circulation, information purpose only, and for our Clients, Associates and other Law Firms.

Readers shall not act on the basis of the information provided in the Newsletter without seeking legal advice.

INDIAN LEGAL IMPETUSVolume XIII, Issue IV

2020 © Singh & Associates

www.singhassociates.in

All ©Copyrights owned by Singh & Associates R


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Co

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Managing Editor Manoj K. Singh

Published by Singh & Associates

Advocates and Solicitors

Editor Sahil Sood

and Manish Gopal Singh Lakhawat

1. COMPETITION COMMISSION OF INDIA: AN OVERVIEW OF ITS FIRST DECADE OF WORK 04

2. FORCE MAJEURE CLAUSE: IMPLICATIONS IN THE COVID-19 SCENARIO & A LOOK AT SOME LANDMARK JUDGEMENTS 08

3. EXAMINATION OF WITNESS: LEGAL ASPECTS 12

4. NEWLY ADDED SECTION 8-B OF THE MMDR ACT AND ITS CONSEQUENT EFFECTS ON THE EIA NOTIFICATION OF 2006 15

5. THE DOMESTIC ARBITRATION AWARD: WHY SEVERAL BITES AT THIS CHERRY? 16

6. ELECTRICITY CONTRACT ENFORCEMENT AUTHORITY: POTENTIAL IMPACT ON DISPUTE RESOLUTION 19

7. CAN LOCKDOWN DUE TO COVID-19 AMOUNT TO A CHANGE IN LAW UNDER EPC AGREEMENTS? THE ANSWER IS YES! 22

8. EXITING A TRANSACTION: FEASIBILITY OF CITING THE COVID 19 PANDEMIC AS A MATERIAL ADVERSE EFFECT 23

9. SUIT IN THE NATURE OF ANTI-ARBITRATION INJUNCTION IS NOT MAINTAINABLE 25

10. RIGHT OF A THIRD PARTY TO OBTAIN INFORMATION FROM THE HIGH COURT: WHICH MECHANISM TO RESORT TO - RIGHT TO INFORMATION ACT OR THE ZX HIGH COURT RULES? 28

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COMPETITION COMMISSION OF INDIA: AN OVERVIEW OF ITS FIRST DECADE OF WORK

SHRUTI SHIVKUMAR

INTRODUCTIONThe Competition Commission of India (CCI) has completed a decade since the enforcement provisions of the Competition Act, 2002 (Act) were implemented in 2009. In the ten years since its establishment, the commission has undertaken numerous measures to assure ease and freedom of trade and prevention of unfair trade practices in the Indian Market.

Over the years, CCI has finely played both administrative and quasi-judicial roles to eliminate practices having adverse effects on competition, promote and sustain competition, protect the interests of end consumers and ensure freedom of trade in the markets of India. So far, it has been quite a decent check on the anti-competitive agreements and abuse of dominant position of enterprises as envisaged u/s 3 and 4 of the Act.

CHALLENGES FACED BY CCIDuring the course of gaining stability, CCI has faced many challenges starting from the implementation of competition law, transition in antitrust issues of the current era, changing business practices to examination of issues involving the digital economy and e-commerce. It has now become a necessity for CCI to move away from strategies used to examine a conventional business and include parameters of data accessibility, network effects and multi-sided markets for getting better grip on new age areas like digital economy and e-commerce industry.

POPULAR CASE OVERVIEWS

y June 2012-11- Cement companies were accused of meeting regularly to fix prices, control market share and hold back supply, leading to market dominance and gaining illegal profits. CCI had imposed a fine of Rs. 63.07 billion on 11 cement companies for cartelism.

y 2013 - CCI imposed a penalty on the Board of Control for Cricket in India (BCCI) for misusing its dominant position. It was found that the IPL ownership agreements were unfair and discriminatory. The terms of IPL franchise agreements were one-sided and highly in favour of BCCI and the franchises had no say in the agreement.

y 2014 - A fine of Rs. 10 million was imposed on Google due to its failure to comply with the directions of the Director General (DG) seeking information and documents during the investigation.

y 2015 - CCI imposed a fine of Rs. 258 crores on three airlines namely Jet Airways, IndiGo and SpiceJet, for cartelisation in determining the fuel surcharge on air cargo. “The basic concern in the present case is the overcharging of cargo freight, in the garb of fuel surcharge, by the air cargo transport operators which adversely affect consumers beside stifling economic development of the country. Such cartels in the air cargo industry particularly undermine economic development in a developing country…” a CCI order stated.

y CCI had also ordered probe into the functioning of the Cellular Operators Association of India (COAI) in response to the complaint filed by Reliance Jio against the cartelization by its rivals - Bharati Airtel, Vodafone India and Idea Cellular.

y The commission also ordered an antitrust probe against the internet major – Google - for abusing its dominant position with android to block its market. This probe is based on the analysis of a similar case investigated by European Commission where Google was found guilty and penalized. Google is being investigated for its alleged abusive conduct in the market for Android


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operating systems for mobile devices to foreclose its competitors’ operating systems and apps in past 8 years since 2011.

y CCI undertook investigations against the alleged anti-competitive practices of technology and internet-based companies. Online travel agencies such as MakeMyTrip and Oyo are being investigated for allegedly imposing vertical restrictions and abuse of dominance by denying market access, predatory pricing, etc.

y Intel’s conduct for its alleged unfair and discriminatory provisions in its warranty policy for boxed micro-processors is also being scrutinised by the CCI.

y The National Company Law Appellate Tribunal (NCLAT) affirmed the special responsibility of a dominant entity and held that such an entity cannot protect its commercial interests at the cost of the competition.

y The automotive sector has also been subject to investigations across a wide-spectrum of competition law concerns. Maruti Suzuki, for instance, is being investigated for allegedly imposing resale prices on its dealers.

y Similarly, Honda is being investigated for its conduct pertaining to vertical restraints by allegedly imposing discount control mechanisms, exclusive supply agreements, tie-in arrangements, and abuse of dominance.

CONSTITUTIONALITY CHALLENGED BEFORE THE DHC The auto parts case: In 2014, it was alleged that M/s Honda Siel Cars India Ltd., Volkswagen India Pvt. Ltd. and Fiat India Automobiles Limited, had violated sections 3 and 4 of the Competition Act by restricting the supply of genuine spare parts in the open market, where CCI imposed a penalty against 10 biggest car manufacturers including Honda India, Volkswagen India and Fiat India at the rate of 2% of the infringing parties’ average annual turnover. The order of CCI was challenged before COMPAT and CCI’s order was upheld with a reduced penalty to 2% of their average ‘relevant

turnover’ (i.e., the average annual turnover of spare parts in the aftermarket) in the appeal.

On April 10, 2019, the Delhi High Court disposed 12 writ petitions filed by 10 car manufacturers (i.e., BMW, Mercedes Benz, Fiat, Skoda, Volkswagen, Honda, General Motors, Tata Motors, Hindustan Motors and Mahindra & Mahindra) and India’s largest music label and movie studio, T-Series – Super Cassettes Industries Pvt Ltd challenging the constitutional validity of certain provisions of the Act, which directly impacted the validity of the CCI’s final order in Auto Parts case.

ISSUES DETERMINED BY THE DELHI HIGH COURT

(i) Whether the CCI is a tribunal exercising judicial functions;

(ii) whether the composition of the CCI is unconstitutional and violates the principle of separation of powers;

(iii) whether the “revolving door” practice at the CCI vitiates any provisions of the Act and more specifically, if the manner for decision-making provided under section 22(3) of the Act is unconstitutional; and

(iv) whether an expansion in scope of inquiry by the CCI is illegal.Findings

Ruling on the first issue, the Delhi High Court observed that in discharging their investigative functions, the Director General and the CCI are not concerned with a dispute between two parties over a legal relationship, status or private property, but rather whether the Competition Act has been breached. In view of the specific functions performed by the CCI (i.e., advisory, investigative, administrative and adversarial), the court held that it does not perform the exclusive adjudicatory functions of a tribunal. However, the court ruled that this finding does not mean that CCI’s orders are not quasi-judicial. In this regard, the court observed that CCI orders are subject to appeal to a tribunal (i.e., an appellate tribunal). Further, they are open to judicial review as regards any procedural flaw under Article 226 of the Constitution.

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On the second issue, as regards the CCI’s membership, the Delhi High Court relied on the Supreme Court’s decision in Utility Users’ Welfare Association, which concerned section 113 of the Electricity Act 2003 – under which the appointment of a judicial member is not mandated – which states as follows:

“We are, thus of the unequivocal view that for all adjudicatory functions, the bench must necessarily have at least one member, who is or has been holding a judicial office or is a person possessing professional qualification with substantial experience in the practice of law and who has the requisite qualifications to have been appointed as a Judge of the High Court or a District Judge.”

Accordingly, the Delhi High Court held that when the CCI issues adjudicatory orders (especially final orders), the judicial member’s presence and participation is necessary.

As regards the necessary qualifications to be appointed as a member of the chair of an appellate tribunal under section 53D of the Competition Act, the Delhi High Court observed that the tribunal performs judicial functions by hearing and deciding appeals of CCI orders. However, the mandate that the chair must have been a former Supreme Court judge or high court chief justice and obtained the approval of the chief justice and at least one Supreme Court judge is sufficient to guarantee their judicial experience.

As regards section 53E, which was challenged on the ground that the selection committee which appoints the chair and members of an appellate tribunal is overseen by the executive, the Delhi High Court referred to Madras Bar Association v Union of India and held that the personnel chosen for the task assigned to COMPAT must be approved by the chief justice and at least one judge of the Supreme Court. Consequently, section 53E, as it stood prior to the 2007 amendment, was declared unconstitutional.

The third issue was objection to section 22(3) due to the ‘revolving door’ policy, which enables members to participate in only one or some proceedings or cease from participating at their will, which does not guarantee a fair hearing and violates the basic principle of ‘one who hears must decide’. The revolving door allegation was based on the premise that certain persons who had heard the final arguments in the

original case before the CCI had chosen not to sign the final order of August 25, 2014.

The Delhi High Court held that the possibility of a ‘revolving door’ did render section 22(3) invalid. The court supported this view by referring to the Supreme Court’s decision in State of Rajasthan v Union of India and Sushil Kumar Sharma v Union of India, in which it was observed “the mere possibility of [an] abuse of [a] provision of law does not per se invalidate a legislation. It must be presumed, unless contrary is proved, that administration and application of a particular law would be done not with an evil eye and an unequal hand.”

However, bearing in mind the undesirability of a decision by a smaller number of members when a hearing is undertaken by a larger body, the Delhi High Court issued certain directions which will guide the CCI in its hearings and when rendering final decisions. The court stated that when all evidence has been heard, the CCI should set down the case for a final hearing. When the final hearing commences, the membership of the CCI should be constant and the same number of members should write the final order. The court further ordered that no member should take an individual break during the course of the proceedings and re-join the proceedings later as such walk-out/walk-in practice is detrimental to the principles of natural justice.

Further in line with the fourth issue, the Delhi High Court noted that Excel Crop Care Ltd. v. CCI dealt specifically with the question of subject matter of expansion and that the Supreme Court had clarified that the Director General can expand the subject of investigations, which are not limited to the parties against which allegations have been levied, but may be extended to other associated ones (e.g., third parties). Accordingly, the court was not convinced by the petitioners’ plea that the CCI had acted in an illegal manner.

RECENT DEVELOPMENTSAs per the recent amendments in regulations, the parties are required to fill information under the Act to disclose any pending litigation to the CCI. This would enable speedy disposal of cases, prevent forum shopping and overlaps with other sectoral regulators.

The amendments also provide the CCI with the option to reveal the identity of the party filling the information, in the interest of expediency, in cases where confidentiality has been claimed over such identity.

Towards the end of 2019, the CCI also saw the appointment of Justice Sangita Dhingra as a judicial member, in keeping with Delhi High Court’s ruling in


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the Mahindra case that stressed on the requirement of a judicial member while passing the final orders.

CONCLUSIONThe graph of CCI’s enforcement has evolved substantially in many sectors and, in the years to come, we expect that its stance will continue to progress, particularly in emerging areas such as digital markets and e-commerce sector. It is expected that the CCI would take some measures to implement a framework for adequate transparency and define basic conditions for e-commerce industry and digital market platforms. In 2020, we also anticipate further streamlining of various substantive and procedural aspects of competition law, based on the Competition Law Review Committee recommendations.

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FORCE MAJEURE CLAUSE: IMPLICATIONS IN THE COVID-19 SCENARIO & A LOOK AT SOME LANDMARK JUDGEMENTS

SAHIL SOOD

The COVID-19 Scenario - Applicability of the Force Majeure Clause Any party seeking to rely on the Force Majeure clause may need to show that it was not aware, at the time of entering the contract, that circumstances giving rise to the event of force majeure were likely to occur. For example, now that the COVID-19 pandemic is omnipresent, if parties enter into a contract after this point and then have problems performing later, they may not be able to rely on force majeure unless the contract specifically covers COVID-19 and its consequences, and provides for what happens if it affects performance of the contract. Also, parties entering into fresh contracts since the outbreak should be using the COVID-19 force majeure clause and seek advice from the lawyers on appropriate drafting of the contract.

If the clause refers only to performance of obligations being prevented by the relevant event, then a party may not be able to rely on the clause if its performance has been made more difficult or delayed, but not completely prevented (in other words, it can still perform, but it is more difficult to do so and/or it cannot perform as expected).

Contractual obligations in the event of a pandemicAs the global impact of the outbreak worsens, causing disruption to international trade and other commercial activities, the risk of businesses being unable to perform their contractual obligations increases. When a breach of contract arises, the affected party would normally sue the defaulting party for compensation. However, if the failure to perform the contract is caused by a pandemic, the defaulting party might be relieved by invoking the following as a defence:

y the pandemic has triggered the force majeure clause under the contract; or

y the contract has been frustrated by the pandemic.The purpose of a force majeure clause is to relieve the defaulting

party (or all parties) from performing the contract or the remainder of the contract when an exceptional event or circumstance beyond the reasonable control of the parties prevents or hinders the performance of the contract. Sometimes, a force majeure clause does not seek to relieve the parties from the contract entirely, but only suspend its performance until after that event or circumstance.

Ways in which a force majeure clause would cover a pandemicWhen the contractual definition of a force majeure event expressly includes a pandemic – adding a pandemic to the list of force majeure events can ensure clarity as to whether a viral outbreak would trigger a force majeure clause in a contract. In such a case, if the WHO or a state agency declares the outbreak to be a pandemic, there shall usually be no question that a force majeure event has occurred; or

y When the force majeure clause covers extraordinary events or circumstances beyond the reasonable control of the parties – such general, catch-all wording may be sufficient if it is determined that the factual circumstances caused by the pandemic are beyond the reasonable control of the parties. It is also possible that the consequences of or relating to a pandemic (e.g. government policies, travel restrictions, etc.) could themselves amount to a force majeure event if they are beyond the reasonable control of the parties.

Ways in which the force majeure clause is enforcedWhether a force majeure clause would apply depends on the wording regarding the triggering event. If the clause provides that the triggering event must “prevent” the performance of the contract, the party relying on it would usually need to prove that the performance is


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physically or legally impossible. The fact that the event has made the performance difficult or unprofitable is unlikely to be sufficient to trigger a typical force majeure clause. On the other hand, if the clause provides that an event that causes the performance to be “hindered” or “delayed” could trigger the clause, it is likely to be adequate to demonstrate that the performance is substantially more onerous. However, an increase in the cost of the performance alone is still unlikely to be sufficient to trigger the force majeure clause. Furthermore, the party invoking the force majeure clause should demonstrate that it has taken all reasonable steps to mitigate the event as well as its effect on the performance of the contract (e.g. identifying alternative sources or keeping a sufficient reserve of materials that could become limited in supply).

Frustration of contract by a pandemicA contract is frustrated when there is a supervening event that changes the nature of the outstanding contractual rights and/or obligations to the extent that the parties could not have reasonably contemplated such change at the time of the execution of the contract. In such a situation, the party may be excused from performing the contract because the primary purpose of entering into the contract, and its performance have been rendered radically different. The change in circumstances must be attributable to an external event that is not caused by the default of the party relying on it. Also, the force majeure clause may be triggered if the contract does not make enough provision for such supervening event. Therefore, if a COVID-19 pandemic fundamentally changes the principal purpose for the parties to enter into the contract such that its performance is radically different from what was originally contemplated, the defaulting party may be excused from performing the frustrated contract.

Frustration of contract should only be invoked in the event of a pandemic if the contract does not contain a force majeure clause or the clause does not cover a pandemic as discussed above. The scope of the application of frustration is narrow as the courts would not invoke the doctrine of frustration lightly “to relieve contracting parties of the normal consequences of an imprudent commercial bargain”. If the contract already provides for a pandemic event (under a force majeure clause for instance), such express provision would usually prevent the contract from being

frustrated. Frustration of a contract would not occur merely because the event has made the performance difficult, more costly, or onerous. Nor would a contract be frustrated simply due to an unforeseeable event that did not otherwise change significantly the outstanding contractual rights or obligations from what the parties could reasonably have contemplated at the time of the execution of the contract.

OTHER CONSEQUENCES FOR CONTRACTS:

y Price adjustment clauses - parties may seek to adjust all or part of the contract price for a commodity due to increased costs e.g. due to increased supply chain strain as a result of COVID-19.

y Limitation or exclusion clauses - parties may increasingly seek to rely upon limitation or exclusion clauses (especially in the absence/inapplicability of a force majeure clause) to limit or exclude liability for non-performance.

y Change of law clauses - a party could rely on a “change of law” clause in a contract (entitling either party to terminate or renegotiate the contract, where a change in the applicable law makes it impracticable or impossible for a party to perform its contractual obligations).

y Material Adverse Change (MAC) clauses – the outbreak of COVID-19 could trigger a MAC clause in a contract. A MAC clause is a term found in some agreements which allows a party to refuse to proceed if certain events occur after the contract date. Whether events related to the COVID-19 pandemic will amount to a MAC will depend on the terms of the clause and the specific circumstances. It may be possible to invoke a MAC clause if events have taken an unexpected turn, after the contract was entered into, which has had a dramatic impact in the particular circumstances of the transaction. Given the extreme circumstances resulting from the COVID-19 pandemic in many areas, this may be an available line of argument, but it will all depend on the circumstances. Given the fact-specific nature of the enquiry, previous case

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laws may be of limited assistance in determining the outcome of a future case, which will turn on the wording of a different clause agreed against different background facts, and the different circumstances alleged to constitute a MAC.

y Disruption to supply chain logistics – if existing supply chains fail or are significantly impacted, businesses will be forced to find alternative solutions.

y Distress/Insolvency – the spread of COVID-19 has already resulted in an increase in companies experiencing financial distress as they try to mitigate the financial impacts of supply chain issues coupled with lower customer demand. Companies with already high debt levels are finding existing credit lines withdrawn at a time when they need to pay suppliers who are able to deliver on time while not receiving customer payments. Likewise, planned refinancing and distressed M&A activity is being delayed (as a result of travel restrictions and other measures), with the result that companies are finding it more challenging to execute and implement time critical turnaround plans. As a result, companies may be forced to seek formal and informal protection from their creditors.

Principles in other jurisdictionsPrior to the decision in Taylor vs. Caldwell, (1861-73) All ER Rep 24, the law in England was extremely rigid. A contract had to be performed after its execution, notwithstanding the fact that owing to an unforeseen event, the contract becomes impossible of performance, which was not due to the fault of either of the parties to the contract. This rigidity of the common law was loosened somewhat by the decision in Taylor (supra), wherein it was held that if some unforeseen event occurs during the performance of a contract which makes it impossible to perform, in the sense that the fundamental basis of the contract goes, it need not be further performed, as insisting upon such performance would be unjust.

In Gulf Oil Corp. v. FERC 706 F.2d 444 (1983), the U.S. Court of Appeals for the Third Circuit considered litigation stemming from the failure of the oil company

to deliver contracted daily quantities of natural gas. The court held that Gulf- as the non- performing party- needed to demonstrate not only that the force majeure event was unforeseeable but also that the availability and delivery of the gas were affected by the occurrence of a force majeure event. The terms of the agreement and the intent has to be understood to determine the effect of force majeure clause.

In Phillips P.R. Core, Inc. v. Tradax Petroleum Ltd., 782 F.2d 314, 319 (2d Cir. 1985), it was observed that the basic purpose of force majeure clauses in general is to relieve a party from its contractual duties when its performance has been prevented by a force beyond its control or when the purpose of the contract has been frustrated.

In Transatlantic Financing Corp. v. U.S. 363 F.2d 312, the D.C. Circuit Court of Appeals affirmed a finding that there was no commercial impracticability where one party sought to recover damages because its wheat shipment was forced to be re-routed due to the closing of the Suez Canal. The court of appeals held that because the contract was not rendered legally impossible and it could be presumed that the shipping party accepted “some degree of abnormal risk,” there was no basis for relief.

Under Hong Kong law, if a contract is otherwise silent, a contract party will need to demonstrate that the outbreak of SARS in 2003 frustrated the purpose of the contract. This is a question of interpretation that depends upon the circumstances surrounding the performance of the contractual obligations and the impact of the SARS outbreak, as construed by a Hong Kong court. This is inevitably difficult to forecast. However, the express inclusion of the word “epidemic” in a force majeure clause provision certainly helps further the argument that a force majeure event has occurred (but not that a contract party is necessarily relieved from performance).

Some landmark rulings in IndiaDeliberating on what is to be considered as a force majeure, in the seminal decision of Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310, the hon’ble apex court had adverted to Section 56 of the Indian Contract Act. The Supreme Court held that the word “impossible” has not been used in the section in the sense of physical or literal impossibility. To determine whether a force majeure event has occurred, it is not necessary that the performance of an act should literally become


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impossible, a mere impracticality of performance, from the point of view of the parties and considering the object of the agreement, will also be covered. Where an untoward event or unanticipated change of circumstance upsets the very foundation upon which the parties entered their agreement, the same may be considered as “impossibility” to do as agreed. Subsequently, in Naihati Jute Mills Ltd. v. Hyaliram Jagannath, 1968 (1) SCR 821, the Supreme Court also referred to the English law on frustration and concluded that a contract is not frustrated merely because the circumstances in which it was made are altered. In general, the courts have no power to absolve a party from the performance of its part of the contract merely because its performance has become onerous on account of an unforeseen turn of events.

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EXAMINATION OF WITNESS: LEGAL ASPECTSPRIYANKA GODARA

INTRODUCTIONAccording to Black’s Law Dictionary, “Witness is one who sees, knows or vouches for something or one who gives testimony, under oath or affirmation in person or by oral or written deposition, or by affidavit”.

According to Bentham, “Witnesses are the eyes and ears of justice”.

According to J. Wadhwa, “A criminal case is built on the edifice of evidence, evidence that is admissible in Law. For that witnesses are required, whether it is direct evidence or circumstantial evidence”,

KINDS OF WITNESSESAccording to Black’s Law Dictionary the term ‘Witness’ means:

1. Person who sees a document signed

2. Person called to court to testify and provides evidence.

Therefore, there are different types of witness who assist in concluding the trial for delivering the justice. They are Child Witness, Interested Witness, Eye Witness, Hostile Witness, Related Witness, Independent Witness, Solitary Witness, Material Witness, Trap Witness, Expert Witness & Official Witness.

EXAMINATION OF WITNESSExamination of witness plays a key role in the presentation of the evidence in a court of law regardless of the character of the case i.e. civil or criminal. Admissibility of evidence is also a crucial aspect which is decided by the judicial officers only. The testimony of a witness is recorded in the form of question and answer. Witness is not permitted to deliver a speech to the court but is meant only to answer the question. The testimony of the witness is only confined to the facts relevant to the issue. Such process of recording the evidence is termed the examination of a witness.

Section 135 of the Indian Evidence Act deals with the examination of witnesses present. In the Code of Criminal Procedure, Section 311 empowers the court to summon a material witness, or to examine a person present at “any stage” of “any enquiry”, or “trial”, or “any other proceedings” under CrPC, or to summon any person as a witness, or to recall and re-examine any person who has already been examined if his evidence appears to. Examination of witnesses is envisaged in the Code of Criminal Procedure whether in trials either session trial, warrant trial, or summary trial.

In the Code of Civil Procedure, examination of witnesses is enumerated in order XVIII of rule 4 to 16.

The examination of a witness by the party who calls that witness is called the Examination-in-Chief. The examination is only confined to relevant facts and leading questions are not asked. The objective of this examination is to induce all material facts from the witness within the witness’s knowledge referring to the party’s case. It is the duty of the counsel to bring out neatly and in proper chronological order every relevant fact supporting his client’s case to which the witness can depose. The statements made in examination-in-chief lose much credibility and weight unless they are put into the crucible of cross-examination and emerge unscathed from the rest.

The examination of witnesses can be classified into three types as defined under, Section 137 of the Indian Evidence Act, 1872 as follows:

y Examination-in-chief means the examination of witness by the party who calls him Cross-Examination means the examination of witness by the adverse party Re-Examination means the another examination of a witness, after the cross examination, by the party who called himThe order of examination is laid down under section 138 which states that:

Witnesses shall be first examined-in-chief, then (if the adverse party so desires) cross-examined, and finally (if


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the party calling him so desires) re-examined. The examination and cross-examination must relate to relevant facts; however, the cross-examination need not be confined to the facts to which the witness testified on his examination-in-chief.

Direction of re-examination: The re-examination shall be directed to the clarification of matters noted in cross-examination; and, if new matter is, by permission of the Court, introduced in re-examination, the adverse party may further cross-examine upon that matter.

WITNESS PROTECTION SCHEME In the Supreme Court of India’s landmark judgment, Mahendra Chawla V/s Union of India, the Supreme Court bench of Justice A.K. Sikri and Justice Ashok Bhushan, directed the formation of vulnerable witness deposition complexes in all district courts across the country in line with the Witness Protection Scheme (WPS) framed by the Centre. The bench further emphasized that the scheme would hold the field until there was any appropriate legislation to switch it.

The Supreme Court made this extraordinary intervention on a petition filed by four witnesses who were threatened for deposing against the self-proclaimed Asaram Babu and his son Narayana Sai, for the rape of women devotees. Around 10 persons who were witnesses against the father-son duo were attacked, and of them, three succumbed to death.

According to the Witness Protection Scheme (WPS), the witness protection measures shall be proportionate to the threat and shall be for a particular duration not exceeding three months at a time. They may include:

y Ensuring that witness and accused don’t come face to face during investigation or trial;

y Monitoring of mail and telephone calls;

y Arrangement with the phone company to change the witness’s telephone number or assign him or her an unlisted phone number;

y Installation of security devices, like security doors, CCTV, alarms, fencing, etc., at the witness’s home;

y Concealment of identity of the witness by referring to him/her with the changed name or alphabet;

y Emergency contact persons for the witness;

y Close protection and regular patrolling around the witness’s house;

y Temporary change of residence to a relative’s house or to a close-by town;

y Escort to and from the court and provision of government vehicle or a state-funded conveyance on the date of hearing;

y Holding of in-camera trials;

y Allowing a support person to stay during recording of statement and deposition;

y Usage of specially designed vulnerable witness court rooms which have special arrangements like live video links, one way mirrors and screens other than separate passages for witnesses and accused, with a choice to modify the image of face of the witness and to change the audio feed of the witness’s voice so that he/she is not identifiable;

y Ensuring expeditious recording of deposition during trial on a day-to-day basis without adjournments; and

y Awarding periodical financial aids/grants to the witness from time-to-time from the Witness Protection Fund for the aim of relocation, maintenance or starting a replacement of profession, if desired.Once an order for the protection of the identity of a witness is pronounced by the competent authority, it shall be the responsibility of the Witness Protection Cell to secure the identity of such witness, his or her family members, including name, parentage, occupation, address etc. The Supreme Court bench also held that, till the time the identity of any witness is protected under an order of the competent authority, the Witness Protection Cell shall provide details of persons who may be contacted by the witness in case of emergency.

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The major reason for establishing the vulnerable witness deposition complexes is the numerous acquittals in criminal cases due to witnesses turning hostile and giving false testimonies as well as the lack of protection given to them and their families.

RIGHTS OF THE WITNESSESThere should be certain standards of safety that need to be given to the witness by the state who comes forward to testify and it is the responsibility of the state to provide adequate protection to the witness. The various Law Commission Reports and the Witness Protection Scheme have identified certain rights that a witness possesses:

y Right to information of the status of the investigation and prosecution of the crime;

y Right to protection from harm and intimidation;

y Right to secure waiting place while at court proceedings;

y Right to submit evidence without revealing identity;Right to occupy a secure place and transportation; andRight to be treated compassionately and with dignity and respect for privacy.It is mandatory for Investigating Officer/Court to inform each and every witness about the existence of “Witness Protection Scheme” and its features.

CONCLUSIONExamination of witnesses is extremely important for any case irrespective of its civil or criminal nature and both the procedural laws explain the examination of witnesses. Sections 135 to 166 of the Indian Evidence Act explain the examination of witnesses including important aspects like, who can first examine the witnesses during the examination of witnesses, what are the relevant facts that are accepted during the examination of witnesses, what are the questions that may be asked by an advocate during the cross-examination of witnesses, what questions cannot be asked during the cross-examination and explicitly mentions the power of judges during the examination of witnesses.

The Witness Protection Scheme, 2018, is the first attempt at the national level to grant protection to the

witnesses, which will contribute to eliminating victimization of witnesses and prevent them from becoming hostile. Witnesses are the eyes and ears of justice, as they play a key role in bringing justice to the victims of heinous crimes. This scheme attempts to ensure that witnesses receive adequate protection and it aims to strengthen criminal and civil justice system in India.

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NEWLY ADDED SECTION 8-B OF THE MMDR ACT AND ITS CONSEQUENT EFFECTS ON THE EIA NOTIFICATION OF 2006

ANURAG ABHISHEK

On January 10, 2020, a new section – section 8B related to the provision for transfer of statutory clearances was inserted in the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957) (hereinafter referred to as MMDR Act). The said insertion has been done vide the Mineral Laws (Amendment) Act, 2020 (2 of 2020).

The newly added sub-section (2) of section 8B of the MMDR Act provides that a successful bidder of mining leases expiring under the provisions of sub-sections (5) and (6) of section 8A and selected through auction (as per the procedure provided under this Act and the rules made thereunder) shall be deemed to have acquired all valid rights, approvals, clearances, licences and the like vested with the previous lessee for a period of two years. The sub-section (3) of section 8B of the MMDR Act provides that it shall be lawful for the new lessee to continue mining operations on the land, in which mining operations were being carried out by the previous lessee, for a period of two years from the date of commencement of the new lease.

Moreover, in pursuance of the aforesaid amendment to the MMDR Act, the Central Government found it appropriate to amend the erstwhile Ministry of Environment and Forests’ Notification number S.O. 1533 (E) dated the 14th September, 2006 (hereinafter referred to as the EIA Notification, 2006) to align the same with new Section 8B of the MMDR Act, 1957. In this regard, the EIA Notification, 2006 has also been amended. Firstly, it has been provided that the successful bidder of the mining leases expiring under the provisions of sub-sections (5) and (6) of section 8A of the MMDR Act, 1957 (67 of 1957) shall be deemed to have acquired valid prior environmental clearance vested with the previous lessee for a period of two years, from the date of commencement of new lease and it shall be lawful for the new lessee to continue mining operations for a period of two years from the date of commencement of new lease or till the new lessee obtains a fresh environmental clearance, whichever is earlier. However, the successful bidder has to apply and obtain prior environmental clearance within a period of two years from the date of grant of

new lease, for continuing operations beyond the said period of 2 years.

Secondly, the Schedule, against the item 1(a), in the column (5), after clause (2) of the Note has been amended where it has been provided that evacuation or removal and transportation of already mined out material lying within the mining leases expiring under the provisions of the MMDR Act, 1957, by the previous lessee, after the expiry of the said lease, shall not form the part of the mining capacity so permitted to the successful bidder. Thirdly, the Appendix-IX has also been substituted where certain category of works such as extraction of ordinary clay or sand by manual mining by the kumhars (potter) to prepare earthen pots, lamp, toys, etc. as per their customs; extraction of ordinary clay or sand by manual mining by earthen tile makers who prepare earthen tiles and others shall not require prior environmental clearance.

Thus, the above stated amendments in the MMDR Act and consequently in the EIA Notification of 2006 have paved way for a more efficient and a transparent regulatory mechanism for the mining industry and it is expected that the same will go a long away in creating a robust mechanism for fulfilling the objectives with which these amendments have been envisioned by the legislature.

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THE DOMESTIC ARBITRATION AWARD: WHY SEVERAL BITES AT THIS CHERRY?

RAHUL PANDEY

The hon’ble Supreme Court, in a recent judgment passed on February 13, 2020, in the matter titled “Vijay Karia & Ors vs Prysmian Cavi E Sistemi SRL & Ors1 came down strongly on the appellant, imposing a cost of Rs. 50 Lacs and dismissed the civil appeal. It is important to know the factual matrix of the aforesaid case in order to discuss the crux of this article.

BACKGROUNDThe apex court adjudicated the dispute between the shareholders arising out of a Joint Venture agreement (JV) signed and executed between the shareholders of one Ravin Cables Limited (RVL) and Prysmian Cavi E Sistemi SRL (respondent), an Italy based company. The appellants are shareholders of RVL, being represented by Mr. Vijay Karia i.e. appellant No. 1, executed the JV with respondent on 19.01.10, by virtue of which, the respondent acquired 51% shareholding in RVL’s share. The respondent also paid RVL’s shareholders, a substantial consideration towards ‘control premium’ under a separate ‘Control Premium Agreement’ executed between the parties. As per the terms of the JV, RVL was to be jointly managed by the CEO & MD till the expiry of the ‘integration period’ under the JV, i.e. for a further period of 6 months after expiry of the interim period.

However, during that period, the CEO was removed by the appellants and their group of directors opposed the appointment of a CFO who was appointed by the respondent. This intervention in the management and control of RVL cumulated into disputes between the parties. The respondent invoked the arbitration clause under the JV, alleging material breaches of the JV and arbitration was set in motion. The appellants also raised several counter claims alleging material breaches by the respondent. The sole arbitrator allowed all the reliefs sought by respondent and rejected all the counter claims as raised by the appellants. The arbitration was an International Arbitration being the seat at London and was governed by English law and consisted of the sole arbitrator appointed under the

1 Civil Appeal No. 1544 of 2020 [Arising out of SLP (Civil) No. 8304 of 2019

London Court of International Arbitration (LCIA) Rules, 2014. The tribunal passed its award in favour of the respondent. The award was never challenged before the English courts, although there exists a provision of appeal/challenge under English Arbitration Act. When the respondent approached the Indian Court i.e. High Court at Mumbai for enforcement, the appellant herein raised objection against the enforcement of the award under the grounds provisioned in Section 48 of the Arbitration and Conciliation Act, 1996 (Act) and the same was dismissed by the hon’ble High Court vide judgment dated 07.01.2019 and the award was held to be enforceable against the appellants.

Thereafter, the appellant(s) approached the apex court under Article 136 of the Constitution and raised its contentions broadly on three grounds i.e. (1) that the appellant was unable to present its case before the Tribunal; (2) that the hon’ble Tribunal failed to deal with the issues as and when raised by the appellant (under Section 48(1)(b)); and (3) that the foreign award is against the public policy of India (under Section 48(2)(b)) in two respects viz., (a) that it is in contravention to the fundamental policy of Indian law; and (b) that it violates the most basic notions of justice.

RULING OF THE COURTThe apex court, in its judgment examined all facets of the issues relating to enforcement of a foreign award in India. court duly examined the scope of Article 136 of the Constitution and made a remark on the appellant for wasting the court’s time in adjudicating a matter which has been exhaustively dealt by the arbitrator in the award and by the High Court of Bombay under Section 48 of the Act. The court in Paragraph 24 of the judgment has duly explained the scope of Section 48 r/w 50 of the Act and how it is distinct from Section 37 of the Act wherein the provision of appeal against a domestic award is much wider, as the party can approach the appellate court against the outcome of Section 34 of the Act i.e. even if the application for setting aside the award is refused or granted. The hon’ble court has also tried to explain the legislative intent behind Section 50 of the Act as it does not


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provide any provision for appeal against the order refusing to enforce the foreign award under Section 48 of the Act. It is important to reiterate the concerned paragraph within Para 24 of the judgment for a better understanding of the issue.

“Before referring to the wide ranging arguments on both sides, it is important to emphasize that, unlike Section 37 of the Arbitration Act, which is contained in Part I of the said Act, and which provides an appeal against either setting aside or refusing to set aside a ‘domestic’ arbitration award, the legislative policy so far as recognition and enforcement of foreign awards is that an appeal is provided against a judgment refusing to recognize and enforce a foreign award but not the other way around (i.e. an order recognizing and enforcing an award).This is because the policy of the legislature is that there ought to be only one bite at the cherry in a case where objections are made to the foreign award on the extremely narrow grounds contained in Section 48 of the Act and which have been rejected.”

The hon’ble apex court has also discussed the scope of Article 136 and the scope of the adjudication by this court under Article 136 against the judgment rendered by the High Court under Section 48 of the Act.

Para 24: “Bearing this in mind, it is important to remember that the Supreme Court’s jurisdiction under Article 136 should not be used to circumvent the legislative policy so contained. We are saying this because this matter has been argued for several days before us as if it was a first appeal from a judgment recognizing and enforcing a foreign award. Given the restricted parameters of Article 136, it is important to note that in cases like the present - where no appeal is granted against a judgment which recognizes and enforces a foreign award - this Court should be very slow in interfering with such judgments, and should entertain an appeal only with a view to settle the law if some new or unique point is raised which has not been answered by the Supreme Court before, so that the Supreme Court judgment may then be used to guide the course of future litigation in this regard. Also, it would only be in a very exceptional case of a blatant disregard of Section 48 of the Arbitration Act that the Supreme Court would interfere with a judgment which recognizes and enforces a foreign award however inelegantly drafted the judgment may be.

Thereafter the apex court dealt with the contentions raised by the parties and detailed out various precedents pertaining to the subject matter and dismissed the Civil Appeal and imposed a heavy fine of Rs. 50 Lacs against the appellant.

CRUX OF THE ISSUE

The basic tenet which this article seeks to underline is that since the Act provides a party to challenge a domestic award in two stages i.e. under Section 34 and also under Section 37, then why Special Leave Petitions are entertained against the awards in a casual manner. The fundamental intent behind the Act is to provide a swift adjudication of dispute with minimal interference of the court(s). It is to be looked into that the scope pertaining to the challenge of a domestic award under Section 34 and with regard to the challenge against the enforcement of a foreign award under Section 48 are on similar footings. There is a significant difference between Section 37 of the Act and Section 50 in terms of the scope of appeal as under Section 37, a party can appeal against the order of Section 34 irrespective of its outcome but under Section 50, one cannot appeal if the petition under Section 48 is allowed.

The hon’ble apex court in the aforesaid judgment has relied over this issue and has duly tried to explain the scenarios under which a party can approach the apex court under Article 136, when challenge against the enforcement is dismissed. The court has very well phrased the intent of legislature behind Section 50 by stating that only one bite at the cherry is allowed in terms of foreign award and so Special Leave Petitions (SLP) need not be entertained in a routine manner.

The intent behind Section 37 of the Act is still a conundrum which needs to be unfolded by the apex court as it did for Section 50 in the aforesaid judgment. The legislature has already provided two opportunities to a party to approach the court against a domestic award i.e. Section 34 and then Section 37. It is to be noted that the aggrieved party approaches the apex court under Article 136 of the Constitution without any hesitation as it has transformed into an appellate forum. It is stated that as a matter of fact, the public entities approach the apex court under Article 136 against the judgment under Section 37 of the Act in a routine manner and in many cases the petitions gets entertained also on some ground or other. The issue

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which needs to be checked is the approach of the parties in filing SLP under Article 136 against the judgment of Section 37 as when the legislature has already provided two bites at the cherry, then why numerous bites are allowed unless the cherry falls under the ambit of the various grounds as mentioned under Section 34 and the same failed to be noticed by both the forums. The hon’ble apex court, vide catena of judgments, has duly explained the scenarios under which an award can be challenged under Section 34 and the ambit of Section 37 of the Act, but irrespective of the same, parties approach the Supreme Court under Article 136, in a casual manner. It is to be noted that in most of the SLP’s against the judgment under Section 37, the parties try to get the evidence re-appreciated where the same is barred under the eyes of law. The apex court needs to deal with all those SLP’s with an iron fist as it did in the aforesaid judgment by imposing such a heavy fine, which in future would surely act as a deterring factor for approaching the apex court under Article 136 against the judgment of Section 48 of the Act.

The Supreme Court needs to reinstate the actual intent of Article 136 i.e. it does not confer upon a party a right to appeal against the judgment rendered by the court under Section 37 in appeal against the order passed under Section 34 of the Act.

CONCLUSIONThe parties opting for the Arbitration as a mode of adjudication to resolve their disputes need to abide by the provisions of the Act. In the light of the aforesaid judgment, SLP need not be entertained against the judgment of Section 37 or Section 48. SLP holds a key place in our judicial system; it is only to be exercised in cases where any substantial question of law is involved or gross injustice has taken place but not as a right.

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ELECTRICITY CONTRACT ENFORCEMENT AUTHORITY: POTENTIAL IMPACT ON DISPUTE RESOLUTION

ARCHIS CHOUDHARY

INTRODUCTIONThe Ministry of Power (MOP), Government of India, on April 17, 2020, published the draft Electricity (Amendment) Bill, 2020 for comments.1 As the statement of objects and reasons for the amendment highlights, electricity is one of the most critical components of infrastructure which is essential for sustained growth of the economy of the country and its welfare. The draft amendment bill broadly seeks to deal with the following:

y Enforceability of performance of contracts related to purchase, sale or transmission of power between a generating company and a licensee;

y Uniformity of selection process for posts of tribunals and regulatory commissions under the Electricity Act, 2003 (the Act);

y Promotion of renewable energy generation & inclusion of hydro sources under renewable power purchase obligations;

y Payment security mechanisms for load dispatch centers;

y Simplification of tariff structures;

y Provide a framework for cross border trade of electricity;

y Timely adoption of tariff discovered under competitive bidding;

y Strengthening of penalties; and

y Improving the distribution model by introduction of Distribution Sub-licensees.

This article outlines the possible commercial impact on dispute resolution that the sector may face post the establishment of the proposed Electricity Contract Enforcement Authority (ECEA).

1 Vide letter bearing Ref. No. 42/6/2011-R&R (Vol-III) dated 17.04.2020.

1. THE ELECTRICITY CONTRACT ENFORCEMENT AUTHORITYA new chapter, Part XA, is proposed to be inserted in … for the purposes of establishing an ECEA which shall have the sole authority and jurisdiction to adjudicate upon matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity. The draft provision expressly excludes jurisdiction of the ECEA over any other matter related to regulation or determination of tariff or any dispute involving tariff.2

1.1 DISPUTE RESOLUTIONThe draft amendment bill proposes that a person aggrieved with matters regarding performance of obligations under a contract related to sale, purchase or transmission of electricity may prefer an application to the ECEA, within a period of 6 months from the non-performance of the obligation under the relevant contract.3

Currently, as per the Act, the power to adjudicate disputes involving the licensees and generating companies or the power to refer them to arbitration lies with the regulatory commissions at the central and state level.4 The proposed amendment to Section 79(1)(f ) & Section 86(1)(f ) of the Act seeks to exclude matters covered by the novel Section 109A from the ambit of this current provision. This effectively means that the jurisdiction to adjudicate disputes relating to tariff or its determination/regulation will still vest with the commissions set up under the Act while a new forum, i.e., the ECEA will deal with matters regarding performance of obligations under Power Purchase Agreements (PPAs)/contracts.

2 Section 190A, as per section 28 of the draft of The Electricity (Amendment) Bill, 2020.

3 Section 109B, as per section 28 of the draft of The Electricity (Amendment) Bill, 2020.

4 Section 79(1)(f) & Section 86(1)(f) of the Electricity Act, 2003.

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Although, post this amendment, the power to refer disputes to arbitration under Section 79(1)(f ) & Section 86(1)(f ) of the Act appears to be intact but it is unlikely that the commissions will be willing to do the same citing issues of public interest. It is pertinent to mention that the Act is a special and comprehensive legislation which regulates generation, transmission and distribution of electricity5 and has an overriding effect on other laws6 and thus, this amendment also will have precedence over other available dispute resolution mechanisms.

1.2 APPEALS It is proposed that any party aggrieved by the decision of the ECEA may file an appeal to the Appellate Tribunal within 60 days.7

2. IMPACT ON DISPUTE RESOLUTION2.1 TIME FRAMESThe draft amendment bill proposes an optimistic timeline of 120 days to dispose an application filed before it.8 It further provides that in case the ECEA is not able to dispose the application within 120 days, it will record its reasons in writing for not doing so.

It appears that the complex issue of interpretation of PPAs/contracts to determine their validity and subsequently enforcing obligations of parties penned down therein after a breach has been established, is to be conducted in a constricted timeline. This may help in expediting the whole process but would also lead to a lot of stress on the ECEA machinery.

2.2 LOGISTICAL CHALLENGESConsidering scenarios like nationwide lockdowns and social distancing due to the current pandemic situation that the country is dealing with, it is imperative to factor in logistical challenge of hearings before adjudicatory bodies in person. The draft amendment bill proposes that the ECEA benches will ordinarily sit in Delhi9 which might pose as a hindrance to a sector

5 Chhattisgarh State Electricity Board vs. Central Electricity Regulatory Commission & ors, (2010) 5 SCC 23.

6 Section 174 of the Electricity Act, 2003.

7 Section 109N, as per section 28 of the draft of The Electricity (Amendment) Bill, 2020.

8 Section 109B(7), as per section 28 of the draft of The Electricity (Amendment) Bill, 2020.

9 Section 109C(2)(c), as per section 28 of the draft of The Electricity (Amendment) Bill, 2020.

which operates pan-India, unless, provisions for hearings through video conferencing are prescribed later in time.

2.3 RELIEF TO GENERATING COMPANIES The strongly worded provision of the draft amendment bill proposes that the ECEA will have original and sole jurisdiction to adjudicate upon matters regarding performance of obligations under PPAs/contracts relating to electricity. This may bring some relief to generating companies and developers who have been facing the problem of outstanding dues.

2.4 IMPACT ON DISTRIBUTION COMPANIESIn the current framework of the amendment bill, no ostensible support is provided to distribution companies in lowering the outstanding regulatory assets, a problem which has been hemorrhaging the DISCOMs. The jurisdiction to deal with tariff disputes still lies with the commissions under the Act. It appears that the establishment of ECEA will only act as another burden to these entities while recovering from the economic impact of COVID-19.

2.4 COMPOSITION OF BENCHESThe upside here is that the amendment provides that the composition of an ECEA bench shall be such that it shall have at least one Judicial Member and one Technical Member10 (Qualification for a Technical Member has been laid down as “a person who has been an officer with a Ministry or Department of the Central Government dealing with power or any other sector of infrastructure; or a person having adequate knowledge and experience in dealing with matters relating to electricity”.11 This will ensure proceedings involving complex PPAs and contracts are conducted with the required technical sanctity.

2.5 PENDING DISPUTESIt is imperative to discuss what will be the fate of ongoing proceedings if this amendment is enacted. The MOP will have to issue clarifications on this issue to clear ambiguities relating to transfer of proceedings or enforcement of orders pronounced before the enactment of this amendment bill.

10 Section 190C(2)(b), as per section 28 of the draft of The Electricity (Amendment) Bill, 2020.

11 Section 109D(1)(c), as per section 28 of the draft of The Electricity (Amendment) Bill, 2020.


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CONCLUSIONThe sector stands on a structured scaffold based on calculated demand and supply of energy. While the sector battles with issues of outstanding dues of state power utilities and DISCOMS, in times of uncertainty brought in by the ongoing COVID-19 pandemic, the sector will be vulnerable to and overburdened by a flood of disputes and litigation. It appears that the proposed amendment provides no specific respite to this bleeding sector in managing this problem.

While the intention of the amendment is also to bring about a change in the tariff structures and foster inclusion of renewable energy sources, further clarification from the MOP will help address the ambiguities in the existing draft.

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CAN LOCKDOWN DUE TO COVID-19 AMOUNT TO A CHANGE IN LAW UNDER EPC AGREEMENTS? THE ANSWER IS YES!

MANISH GOPAL SINGH LAKHAWAT

To prevent the spread of the Covid-19 pandemic, the Government of India, vide its order dated March 24, 2020, under Section 10(2)(l) of the Disaster Management Act, 2005, ordered a lockdown of the entire country except the essential services for a period of 21 days effective from March 25, 2020 which has now been extended to May 17, 2020 following two extensions.

The GOI has also issued guidelines in furtherance to its order dated 24.03.2020 to contain the spread of Covid-19. Further, any violation of these guidelines would attract action under Section 51 to 60 of the Disaster Management Act, 2005 and Section 188 of the IPC.

This Covid-19 pandemic is a force majeure event and in contracts where there is no clause of force majeure event, Section 56 of the Indian Contract Act, 1872, can be triggered to claim the impossibility of performance. However, the question is whether this lockdown order due to Covid-19 can amount to Change in Law? As for the EPC agreements with NHAI, the answer is Yes! and the same is discussed below.

Definition of Change in Law: Change in law has been defined under an EPC Agreement as follows:

“Change in Law” means the occurrence of any of the following after the base date:the enactment of any new Indian law;the repeal, modification or re-enactment of any existing Indian law;the commencement of any Indian law which has not entered into effect until the base date;

a change in the interpretation or application of any Indian law by a judgement of a court of record which has become final, conclusive and binding, as compared to such interpretation or application by a court of record prior to the base date.What is law? As per Article 1.2.1(b) of the Indian Law, it shall include the laws, acts, ordinances, rules, regulations, bye laws or notifications which have the force of law in the territory of India and as from time to time may be amended, modified, supplemented,

extended or re- enacted. The relevant part of Article 1.2.1(b) is reproduced hereunder:

1.2 Interpretation

1.2.1 In this Agreement, unless the context otherwise requires

(b) references to laws of India or Indian law or regulation having the force of law shall include the laws, acts, ordinances, rules, regulations, bye laws or notifications which have the force of law in the territory of India and as from time to time may be amended, modified, supplemented, extended or re- enacted.

Is an order or guideline a law? As per the definition of Change in Law read with Article 1.2.1(b) of the EPC Agreement, Change in Law would mean change in any law, act, ordinance, rule, regulation, bye law or notification which have the force of law. As per the principle of “ejusdem generis” an order or guideline under a statute and having the force of law can also be read as a change of law.

The above preposition is also supported by the judgment of hon’ble Supreme Court of India in the case of Energy Watchdog and Ors. Vs. CERC & Ors., MANU/SC/0408/2017 wherein the hon’ble court in para 53, held a statutory document issued under an Act and having the force of law to be covered under the expression Change in Law and the consequential benefits of change in law can be claimed thereupon.

view of the above, the order, dated March 24, 2020, by the Government of India under Section 10(2)(l) of the Disaster Management Act, 2005 and the guidelines in furtherance to this order to contain the spread of Covid-19 would amount of Change in Law as the same would fall under “enactment of any new Indian law” under the EPC Agreement and thus, entitling the contractors of its consequential benefits.

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EXITING A TRANSACTION: FEASIBILITY OF CITING THE COVID 19 PANDEMIC AS A MATERIAL ADVERSE EFFECT

AISHWARYA SATPATHY

Given the unprecedented scale of disruption across supply chains and businesses which has severely affected the performance of commercial contracts, it is not surprising that the COVID-19 pandemic has been declared a Force Majeure event in many jurisdictions. While the Force Majeure clause is a staple of all commercial contracts, another oft-forgotten boilerplate of agreements which substantially deal with security transactions is the ‘Material Adverse Effect/Change’ Clause (hereinafter referred to as ‘MAE clause’) which permits exiting a transaction before closure due to considerable change in the commercial environment surrounding the envisioned transaction.

DIFFERENCE BETWEEN FORCE MAJEURE AND MATERIAL ADVERSE EFFECTMAE clauses can be located within the agreements concerned with M&As, securities issuances, investment or financing transactions. While interpretation of Force Majeure and MAE clauses can be subjected to the rule of ejusdem generis, in that, they both activate upon the occurrence of an event ‘beyond the control’ of the parties which makes it difficult to realize the objective of the contract – the invocation of the clauses differs with respect to the nature of events that might qualify as either.

Force Majeure events usually manifest as physical events that affect the performance of a contract – they can occur any time after the parties have entered into a contract and affect either of the parties’ obligations under the contract. On the contrary, MAE events entitle the purchaser of securities or an investor to walk away from a transaction before closing it. MAE clauses might be drafted to be as open-ended (catch-all events) as a generic Force Majeure clause, but they never list an exhaustive set of events. Events that qualify as MAE are those that affect the economy and market conditions at large and can substantially alter the financial status of the target company – something that is not envisioned by the acquirer while agreeing to enter into a deal.

INVOCATION OF MAE CLAUSEThe corollary for MAE clauses in the Indian context, can be found in Regulation 23(1)(c) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The said regulation provides that an open offer can be withdrawn if:

“(c) any condition stipulated in the agreement for acquisition attracting the obligation to make the open offer is not met for reasons outside the reasonable control of the acquirer, and such agreement is rescinded, subject to such conditions having been specifically disclosed in the detailed public statement and the letter of offer.”

It is interesting to note that the said regulation does not merely permit withdrawal of the offer but also mandates the rescission of the agreement which triggered the open offer. Due to the difficulty of categorizing any event as a MAE, the ‘materiality’ threshold of an ‘affecting’ event is kept ambiguous in agreements. It is left to the courts to interpret and determine whether an event is MAE. Given that courts have held strict standards1 while interpreting ‘loosely’ drafted clauses, they may rely on ascribing ‘business efficacy’ to the agreement and prevent the party to terminate a contract by deeming the cited event as MAE. However, if a MAE affects the market health, the risk is allocated to the buyer but if it affects the target’s financial viability, the risk is borne by the seller.

Claiming an event to be ‘material’ should convey that the change is of such a nature that it would have altered a person’s decision to enter into the agreement, had it occurred prior to entering into the agreement. Courts have held that this MAE should affect the buyer’s long term perspective of expecting a reasonable return from the transaction2. While some quarters of poor performance may not qualify as MAE, the inability to exhibit project turnovers/revenues by a large margin

1 Nabha Power Ltd. v Punjab State Power Corporation Ltd. (PSPCL) (2018) 11 SCC 508.

2 Mrs. Fields Brand, Inc. v. Interbake Foods, LLC, Court of Chancery of State of Delaware, 2017

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or drastic cost-cutting measures have the potential to qualify as MAE3. It would not help to solely rely on continuous poor performance by a company as the very nature of business carries with itself the possibility of fluctuation – the affected party has to attribute it to some exceptional and unpredictable extreme event. 4In the case of Nirma Industries Ltd. and anr v. Securities Exchange Board of India5, although an MAE clause was absent from the agreement wherein the seller pledged equity shares to the buyer (the Appellant), the latter moved the SEBI for withdrawal of the open offer on the basis of the emergence of extraordinary facts that merit withdrawal. The hon’ble Supreme Court rejected this proposition on the ground that the circumstances6 stated by the buyer did not render it impossible7 to proceed forth with the transaction. Thus, the Supreme Court also confirmed that only where the impossibility of performance can be, stricto sensu, framed within the criteria specified in the relevant statutory provisions, can the withdrawal of an open offer be permitted by SEBI.

Keeping in mind the above judgment as well as the more lenient stance promoted by Regulation 23(1)(c) of the 2011 Takeover Regulations, MAE clauses might forego the need to establish that an event has to render a transaction ‘impossible’ in order to qualify as an MAE. Yet, the drafters have found it wise to err within the statutory compliances lest arbitrary withdrawals of offers become the norm.

DOES THE COVID-19 PANDEMIC QUALIFY AS A MAE EVENT?Given the unavailability of guidelines on determining ‘materiality’ of events affecting securities transactions and the unique circumstances propagated by the COVID-19 outbreak, the courts will have a novel duty - of examining disputes concerning invocation of MAE clauses citing the pandemic, on a case-to-case basis.

The main factor on which the cases shall be examined will be the degree to which the market and various

3 Akorn, Inc. v. Fresenius Kabi A C.A. No. 2018-0300-JT

4 In Re IBP, Inc. Shareholders Litigation v. Tyson Foods, Inc., No. 18373, 2001 Del. Ch. LEXIS 81 (June 15, 2001).

5 AIR 2013 SC 2360

6 The promoters of Seller had perpetrated fraudulent transactions resulting in embezzlement of funds in excess of Rs. 350 Crores

7 Regulation 27(1)(d) of the 1997 Takeover Regulations

industries have taken a hit, in turn considerably affecting the businesses of the target companies. While the travel and hospitality sector has been suffering the most, stocks of pharmaceutical and healthcare companies have been on the rise. For example, a buyer cannot take coverage under a MAE clause citing COVID-19 as a cause of poor performance by a company, which is a part of the essential services sector, in order to rescind its investment offer in the company.

The buyer shall have no recourse to the MAE clause if the contract excludes events caused due to natural calamities, since the COVID-19 pandemic shall fall squarely within such exclusion. But if the clause provides no exceptions and has an open-ended definition as to what might constitute an MAE, the buyer may prove that the pandemic has altered the target company’s financial condition, operations, assets, liabilities or business, to the detriment of the buyer’s proposed investment. The current spate of business closures, lay-offs, shuttered operations combined with orders to mandatorily disburse wages has compromised the economic status of many target companies, especially the start-ups. The buyers/investors can rely on such an unforeseen upheaval to invoke the MAE clause.

***


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SUIT IN THE NATURE OF ANTI-ARBITRATION INJUNCTION IS NOT MAINTAINABLE

SWATI SEHGAL

INTRODUCTIONThe hon’ble High Court of Delhi, in a recent judgment titled as Dr. Bina Modi v Lalit Modi & Ors., CS (OS) 84/2020) (Delhi High Court), held that the suit in the nature of anti-arbitration injunction are not maintainable. In holding so, the Delhi High Court placed the reliance on case titled as Kvaerner Cementation India Limited v Bajranglal Agarwal (2012) 5 SCC 214 ,which has recently been cited with approval in National Aluminum Company Ltd. Vs. Subhash Infra Engineers Pvt. Ltd. 2019 SCC OnLine SC 1091, wherein the Supreme Court held that if the plaintiff therein wanted to raise an objection with regard to the existence or validity of the Arbitration Agreement, it was open for parties to move an application before the Arbitrator but with such plea the parties cannot maintain a suit for declaration and injunction.

FACTS y K.K. Modi and Bina Modi were husband and

wife having three children namely, Charu Modi, Lalit Modi & Samir Modi. A Trust Deed was executed by K.K. Modi as Managing Trustee and Bina, Lalit, Charu and Samir as Trustees and provided for certain obligations to be carried out by the Trustees in the event of death of K.K. Modi.

y K.K. Modi died on 02.11.2019. Consequently, as per the terms of the Trust Deed, Bina became the Managing Trustee and was further required to conduct a meeting of the Board of Trustees and certain unanimous decision were required to be taken qua the ownership and management of all the assets of the Trust Fund including the Family Controlled Business. In the event no unanimous decisions was arrived at by the Trustees, the entire Trust Fund including all Family Controlled Business was required to

be sold off in the manner provided in the Trust Deed.

y A meeting of the Board of Trustees was called on 30.11.2019 viz. Bina, Lalit, Charu and Samir, however, no unanimous decision was reached regarding the sale of assets of the trust and this triggered the sale of entire assets of the trust and the family controlled business. Various communications for the settlement took place between the aforesaid parties. However, amidst the on-going settlement talks, Lalit Modi, on 18.02.2020, filed an Application for Emergency Measures before the International Court of Arbitration (ICA) of the International Chambers of Commerce (ICC).

y ICC appointed the Emergency Arbitrator and who, besides giving other directions, scheduled a preliminary call/meeting of the Emergency Arbitration proceedings on 22.02.2020 where all parties participated in the hearing before the Emergency Arbitrator. The Emergency Arbitrator issued procedural timelines and set a date for physical hearing of the Application for Emergency Measures on 07.03.2020.

Meanwhile Bina Modi Charu Modi and Samir Modi filed a suit seeking permanent injunction restraining the defendant No.1 Lalit Modi, in both the suits, from prosecuting or continuing with the Application for Emergency Measures and/or from instituting or proceeding with any arbitration proceedings against the plaintiff/plaintiffs in both the suits, under Clause 36 of the Trust Deed along with other reliefs. Clause 36 (d) of the trust deed provided that:

“…..The Trustees may try to amicably resolve the difference, dispute or breach of the provisions of the deed as stated above. In case the dispute or the breach continues for a period of more than 90 days, then all such disputes shall be settled under the Rules of Arbitration of the International Chamber of Commerce,

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Singapore (“ICC”) by one or more arbitrators appointed in accordance with the said rules.

The arbitration will be governed in accordance with the laws of India and ICC will follow Indian law as the substantive law for deciding the dispute arising between the parties under/pursuant to this deed. Each party shall bear its own cost of arbitration.

The award given by the arbitrator shall be final and binding and will not be challenged in any court by any of the parties hereto. The beneficiaries shall agree that by executing the Deed of Adherence they agree to and are bound by the provisions of this arbitration clause.”

Issue Involved in suits: Whether the suit, in the nature of anti-arbitration injunction is maintainable?

The plaintiff contended that there was neither any express bar nor any implied bar to this court in exercising jurisdiction to grant injunction against arbitration or against a party, restraining such party from proceeding with the arbitration placing reliance on Mcdonald’s India Pvt. Ltd. Vs. Vikram Bakshi (2016) 232 DLT 394, wherein this High Court held that anti-arbitration injunction can be granted in extreme circumstances, where the existence of the Arbitration Clause is in peril because of the “properly arguable” case of the agreement to arbitrate which was forged in order to defeat the proceedings properly brought before the courts and the courts have jurisdiction to determine the question as to whether the Arbitration Agreement was void or a nullity. The plaintiff further relied on Union of India Vs. Vodafone Group PLC United Kingdom 2018 SCC OnLine Del 8842, wherein it was held that there is no unqualified or indefeasible right to arbitrate and that the National Courts in India do have and retain the jurisdiction to restrain International Treaty Arbitrations which are oppressive, vexatious, inequitable or constitute an abuse of legal process. Further, the plaintiff contended that Kvaerner Cementation India Limited Vs. Bajranglal Agarwal (2012) 5 SCC 214 does not qualify as precedent, as it contains no discussion and no facts and the same does not notice Section 2(3) of the Arbitration Act.

On merits, it was argued that since the procedural law as well as the substantive law to be applied for adjudication of disputes, is of India and Emergency arbitration is not recognized under the Act, hence, it

was not maintainable. The defendant countered the above said argument while placing its reliance on CS(OS) No.1769/2003 titled Bharti Tele-Ventures Ltd. Vs. DSS Enterprises Pvt. Ltd., wherein the court held that a suit for declaration of invalidity of Arbitration Agreement or of arbitration commenced, and for permanent injunction to restrain arbitration, to be not maintainable and Bhushan Steel Ltd. Vs. Singapore International Arbitration Centre 2010 SCC OnLine Del 2236 relying on Kvaerner Cementation India Limited Vs. Bajranglal Agarwal Supra holding, that once it is held there is a valid Arbitration Agreement between the parties, a suit for declaration that the Arbitral Tribunal has no jurisdiction or for permanent injunction to restrain arbitration would not be maintainable.

The defendant further contended that the present suit is not maintainable as in the matter of Kvaerner Cementation India Limited v Bajranglal Agarwal Supra as recently cited with approval in National Aluminum Company Ltd. Vs. Subhash Infra Engineers Pvt. Ltd. 2019 SCC OnLine SC 1091. The Supreme Court held that if the plaintiff therein wanted to raise an objection with regard to existence or validity of the Arbitration Agreement, it was open to the plaintiff to move an application before the Arbitrator but with such plea he cannot maintain a suit for declaration and injunction.

DecisionThe High Court held that suits such as the present one, to declare the invalidity of an arbitration clause/agreement and to injunct arbitration proceedings, whether falling in Part I or Part II, are not maintainable for following reasons:

i. Kvaerner Cementation India Limited (supra) is binding on this Court and the jurisdiction to decide the validity and existence of Arbitration Agreement will rest with the Arbitration Tribunal i.e. owing to the availability of the same remedy under Section 16 of the Arbitration Act under the principles of autonomy of arbitration and competence-competence (kompetenz-kompetenz),

ii. The reliance on behalf of Plaintiffs, on McDonald’s India Private Limited and Vodafone Group PLC United Kingdom supra is of no help. Both do not notice Kvaerner Cementation India Limited supra which was passed before the said judgments, as it is settled law that dicta of a larger bench of the High Court does not bind when the law even if earlier in point of time pronounced by the Supreme Court is otherwise and


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especially when the larger bench of the High Court has not noticed the law as declared by the Supreme Court.iii. The High Court further observed that the division Bench of this Court in McDonald’s India Pvt. Ltd. supra relied on LMJ International Ltd. Vs. Sleepwell Industries Co. Ltd 2012 SCC OnLine Cal 10733 (DB), dicta of the Division Bench of the Calcutta High Court which was concerned with the power and jurisdiction of a Civil Court to restrain a party from making a reference to an International Commercial Arbitration referring the judgment of the Supreme Court in Modi Entertainment Network Vs. W.S.G. Cricket Pte Ltd. (2003)4 SCC 341 pertaining to anti suit injunction, holding that the principles laid down therein would apply to anti-arbitration injunction suits as well. In doing so the Division Bench of this Court did not consider the alternative remedy under Section 16 of the Arbitration Act and under the ICC Rules also, available in relation to anti- arbitration injunction suits as distinct from anti-suit injunctions and thus, the same cannot be relied upon.

iv. Once the statute (Act) has provided for the mode of obtaining the same relief before the Arbitral Tribunal, the court under Section 41(h) of Specific Relief Act would not grant the same relief i.e. of anti-arbitration injunction.

v. The Arbitration Act is a complete code in itself. The courts cannot interfere with the code pertaining to arbitration laid down in the statute, by exercising jurisdiction to do, for which equally efficacious relief can certainly be obtained before the Arbitral Tribunal.

***

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RIGHT OF A THIRD PARTY TO OBTAIN INFORMATION FROM THE HIGH COURT: WHICH MECHANISM TO RESORT TO - RIGHT TO INFORMATION ACT OR THE HIGH COURT RULES?

PRATEEK DHIR

The hon’ble bench of the Supreme Court comprising of hon’ble Justice R. Banumathi, Justice A.S Bopanna, Justice Hrishikesh Roy, vide judgment dated 4th March, 2020, disposed-off Civil Appeal No.1966 1967 of 2020, in case of Chief information Commissioner Vs. High Court of Gujarat and anr., and held that for information to be accessed/certified copies on the judicial side to be obtained, the mechanism provided under the High Court Rules shall be resorted to and not the provisions of the Right to Information Act, 2005 (hereinafter referred to as RTI Act/the Act).

BRIEF FACTSAn RTI application dated 05.04.2010 was filed by respondent No.2 seeking information pertaining to the cases – Civil Application No.5517 of 2003 and Civil Application No.8072 of 1989- along with all relevant documents and certified copies. In reply, vide letter dated 29.04.2010, Public Information Officer, Gujarat High Court duly informed the respondent No.2 that for obtaining required copies, he should make an application personally or through his advocate on affixing court fees stamp of Rs.3/- with requisite fee to the “Deputy Registrar”. It was further stated that as respondent No.2 is not a party to the said proceedings, as per Rule 151 of the Gujarat High Court Rules, 1993, his application should be accompanied by an affidavit stating the grounds for which the certified copies are required and on making such application, he will be supplied the certified copies of the documents as per Rules 149 to 154 of the Gujarat High Court Rules, 1993. Subsequently, the respondent No.2 preferred an appeal bearing no.84 of 2010 before the Appellate Authority-Registrar Administration under section 19 of the Act, which was dismissed vide an order dated 04.08.2010, on the ground that for obtaining certified copies, the alternative efficacious remedy is already available under the Gujarat High Court Rules, 1993 and that under the provisions of RTI Act, no certified copies can be provided.

Respondent No.2 then filed the second appeal No.1437 of 2010-11 before the Appellant-Chief Information Commissioner and relying upon sections 6(2) and 22 of the RTI Act, the appellant-Chief Information Commissioner vide its order dated 04.04.2013 directed Public Information Officer of the Gujarat High Court to provide the information sought by respondent No.2 within twenty days.

Subsequently, Special Civil Application No.7880 of 2013 was filed before the high court, wherein the learned single judge, passed an interim order dated 11.10.2013 directing the Respondent No.1 to provide the information sought by Respondent No.2 within four weeks.

Being aggrieved by the interim order, respondent No.1-High Court of Gujarat preferred Letters Patent Appeal No.1348 of 2013 before the Division Bench, which set aside the order of the Chief Information Commissioner by observing that when a copy is demanded by any person, the same has to be in accordance with the Rules of the High Court on the subject.

The hon’ble bench understanding that the issue at hand concerned all the high courts, requested Mr. Atmaram N.S Nadkarni, (Additional Solicitor General) to appear as amicus curiae to assist the court, entrusting him with the responsibility of collecting and filing a compilation of the information obtained by him from various high courts, about the rules framed by various high courts in exercise of their power under Article 225 of the Constitution of India and under section 28 of the Act.


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DISCUSSION VIS-A-VIS CONSISTENCY/INCONSISTENCY BETWEEN THE RTI ACT & THE HIGH COURT RULES PERTAINING TO THE MECHANISM TO BE FOLLOWED BY A THIRD PARTY FOR OBTAINING INFORMATION FROM THE HIGH COURT:A) SUBMISSIONS - HIGHLIGHTING THE INCONSISTENCY AND PREFERRING THE RTI ACT OVER THE HIGH COURT RULES

y Section 6(2) of the RTI Act specifically provides that an applicant making a request for information shall not be required to give reasons for requesting the information sought; whereas under the Gujarat High Court Rules, applications made by third parties seeking copies of the documents shall be accompanied by an affidavit stating the grounds on which they are required. Thus, there is direct inconsistency between the provisions of the RTI Act and the Gujarat High Court Rules, 1993.

y A harmonious construction between the two, i.e. the RTI Act & the Gujarat High Court Rules, is not possible and in the event of conflict between the provisions of RTI Act and any other law made by the Parliament or State Legislature or any other authority, the former must prevail. Section 22 of the RTI Act specifically provides that the provisions of the RTI Act will have an overriding effect over any other laws for the time being in force.

y The information sought from the High Court under RTI Act cannot prejudicially affect the privacy/rights of other parties or the administration of justice. In order to establish that the information provided under the RTI Act does not violate the right to privacy, the judgment in the matter of Central Public Information Officer, Supreme Court of India v. Subhash Chandra Agrawal1 was relied upon, wherein the hon’ble Supreme Court upheld the order passed by the Central Information Commissioner directing the Central Public Information Officer, Supreme

1 2019 (16) SCALE 40

Court of India to furnish information as to the assets declared by the hon’ble Judges of the Supreme Court. The Constitution Bench held that such disclosure would not, in any way, impinge upon the personal information and right to privacy of the judges.

B) SUBMISSIONS - HIGHLIGHTING THE CONSISTENCY BETWEEN THE RTI ACT AND THE HIGH COURT RULES:

y It was duly submitted that the Respondent No.2 was informed to make an application as per the procedure stipulated under the Gujarat High Court Rules, 1993, and since he was not a party to the proceedings, he was informed that his application should be accompanied with an affidavit stating the grounds for which the certified copies are required. The High Court Rules and the RTI Act are in consonance with each other.

y Assistance offered by Amicus - The learned amicus submitted that: there is an inconsistency between the RTI Act and the Rules framed by the High Court so as to furnish information. It was also submitted that although section 22 of the RTI Act has an overriding effect over any other laws, in case there are inconsistencies, section 22 of the RTI Act does not contemplate to override those legislations which also aim to ensure access to information.

y various High Courts over a period of time have taken a consistent view that when the information can be accessed through the mechanism provided under the Supreme Court Rules, 2013 and the High Court Rules or any other statute, the provisions of the RTI Act cannot be resorted to.

POINTS FOR CONSIDERATION BEFORE THE HON’BLE BENCH:

(i) Whether Rule 151 of the Gujarat High Court Rules, 1993, stipulating that for providing copy of documents to the third parties, they are required to file an affidavit stating the reasons for seeking certified copies, suffers from any inconsistency with the provisions

3 0


of RTI Act?

(ii) When there are two machineries to provide information/certified copies – one under the High Court Rules and another under the RTI Act, in the absence of any inconsistency in the High Court Rules, whether the provisions of RTI Act can be resorted to for obtaining certified copy/information?

VIEW OF THE HON’BLE BENCH: y The hon’ble bench considered the

contentions and perused the impugned judgment and materials on record and dealt the aforesaid points for consideration in the following manner:

y The hon’ble bench observed that Section 8(1) of the RTI Act provides for exemption from disclosure of information. Right to information is subject to exceptions or exemptions stated in Section 8(1) (a) to 8(1)(j) of the RTI Act.

y The hon’ble bench while analysing the procedure in respect of grant of the certified copies of pleadings, judgments, documents, decrees or orders, deposition of the witnesses, etc. to the parties to the litigation and also to the third parties, discussed the present scenario, before the hon’ble Supreme Court and the High Courts. The hon’ble bench observed:

i) Procedure before the Supreme Court - “So far as the third parties are concerned, as per Order XIII Rule 2 of the Supreme Court Rules, the court on the application of a person who is not a party to the case, appeal or matter, pending or disposed of, may on good cause shown, allow such person to receive such copies as is or are mentioned in the Order XIII Rule 1 of the Supreme Court Rules.” Thus, as per the Supreme Court Rules also, the third party is required to show good cause for obtaining certified copies of the documents or orders.

ii) Procedure before the High Court –

“The procedure followed for furnishing of copies/certified copies of orders/documents etc., being information on the judicial side, are governed by the Rules framed by the High Court under Article 225 of the Constitution of India. Insofar as the RTI Act is concerned, in exercise of the powers under Section 28 of the RTI Act, various High Courts have framed the Rules under RTI Act and the information on the administrative side of the High Court can be accessed as per the Rules framed by the High Courts under RTI Act.”

y The hon’ble bench also considered the information before it, pertaining to the procedure followed by various high courts for furnishing certified copies of orders/judgments/documents and observed that, “Insofar as furnishing of certified copies to third parties, the Rules framed by the High Courts stipulate that the certified copies of documents/orders or judgments or copies of proceedings would be furnished to the third parties only on the orders passed by the court or the Registrar, on being satisfied about the reasonable cause and bona fide of the reasons seeking the information/certified copies of the documents.”

y The hon’ble bench relied upon the following judicial precedents, to emphasize the caution to be exercised at the time of disclosure of information:

Girish Ramchandra Deshpande v. Central Information Commissioner and Others2- wherein the hon’ble Supreme Court observed that, the details disclosed by a person in his Income Tax Return are personal information which stand exempted from disclosure, unless it involves a larger public interest which justifies the disclosure of such information.

i) Institute of Chartered Accountants of India v. Shaunak H. Satya and Others3- the hon’ble Supreme Court observed that, object of the RTI Act is to harmonise the conflicting public interests, that is, ensuring transparency to bring in accountability and containing corruption on one hand, and at the same time ensuring that the revelation of information, in actual practice, does not harm or adversely affect


3 1

other public interests which include efficient functioning of the governments, optimum use of limited fiscal resources and preservation of confidentiality of sensitive information.

ii) The Registrar Supreme Court of India v. R S Misra4, wherein the hon’ble Delhi High Court has held that, once any information can be accessed through the mechanism provided under another statute, then the provisions of the RTI Act cannot be resorted to.

NON-OBSTANTE CLAUSE OF SECTION 22 & REPEALING CLAUSE OF SECTION 31 OF THE RTI ACT: The hon’ble bench dwelled upon sections 22 and 31 of the RTI ACT and clarified that, in the non-obstante clause of Section 22 of the RTI Act, three categories have been mentioned - (i) the Official Secrets Act, 1923; or (ii) any other law for the time being in force; and (iii) any instrument having effect by virtue of any law other than this Act. In case of inconsistency of any law with the provisions of the Right to Information Act, overriding effect has been given to the provisions of the Right to Information Act. Further, Section 31 of the RTI Act which is a repealing clause repeals only the Freedom of Information Act, 2002 and no other laws. The Act has not repealed the Official Secrets Act or any of the laws providing disclosure of

information. Therefore, all those enactments including Official Secrets Act, 1923, continue to stay in force thereby implying that the RTI Act has an overriding effect to the extent that they are inconsistent.

CONCLUSIONThe hon’ble bench, in the light of aforesaid reasoning, considering various statutory provisions of the RTI Act, High Court rules of various high courts, Supreme Court rules and settled judicial precedents has held –

i) Rule 151 of the Gujarat High Court Rules stipulating a third party to have access to the information/obtaining the certified copies of the documents or orders requires to file an application/affidavit stating the reasons for seeking the information, is not inconsistent with the provisions of the RTI Act; but

merely lays down a different procedure as the practice or payment of fees, etc. for obtaining information. In the absence of inherent inconsistency between the provisions of the RTI Act and other law, overriding effect of RTI Act would not apply.

ii) The information to be accessed/certified copies on the judicial side to be obtained through the mechanism provided under the High Court Rules, the provisions of the RTI Act shall not be resorted to.

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NOTES

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