Courts cannot adjudicate arbitration matters if contract is inadequately stamped: SC
The Supreme Court (“SC”) in the case of Garware Wall Ropes Ltd v. Coastal Marine Constructions & Engineering Ltd., passed a judgment, wherein it ruled that courts cannot appoint an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Act”) if the contract containing the arbitration clause is inadequately stamped. The SC held that in such cases, the courts will need to wait till the parties have rectified the under-stamping of the contract by paying the applicable penalties.
Further, theSC reaffirmed its judgment in the case of SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd.(“SMS Tea Case”) which held that a court hearing an application under Section 11(6) of the Act with regards to an arbitration clause contained in an inadequately stamped agreement will need to wait until the parties have paid the proper stamp duty before proceeding with the application.
Also, the Supreme Court took note of the recent judgment from the Bombay High Court in the case of Gautam Landscapes Pvt. Ltd. v. Shailesh Shah and Ors., and held that the Bombay Court was incorrect in ruling that a court may not be required to await adjudication from stamp authorities before deciding upon a Section 11(6) application.
Quick View:
- The SC’s judgment can have broader implications than just the enforceability of the arbitration clause. This principle, if it is extended to enforcing other clauses in contracts, will reiterate the position mentioned in the Indian Stamp Act, 1899, whereby an agreement does not become a contract and is not enforceable under law unless it is adequately stamped.
- Therefore, we are of the opinion that through this judgement, parties entering into any arrangement will ensure that they are in proper compliance with relevant stamp duty laws.
The principle of Res Judicata applies to labour and industrial proceedings: SC
The SC, in the case of Chairman and Managing Director, The Fertilizers and Chemicals Tranvancore Ltd. & Another v. General Secretary FACT Employees Association & Others., passed a judgment, whereby it reiterated that the principle of Res Judicataas defined in the Code of Civil Procedure, 1908 applies to labour and industrial proceedings.
Res Judicata refers to the principle that once a matter has been finally adjudicated upon by a competent court, it may no longer be pursued in a different court by the same parties.
In this case, an appeal had been made to the SC against a judgment of the High Court of Kerala (“Kerala HC”), whereby, the Kerala HC had held that an issue referred to the labour court by the Government of Kerala was not barred by Res Judicata.
However, the SC while allowing the appeal against the Kerala HC judgment, ruled that no judicial forum at the instance of any party had the jurisdiction to try any issues on merits, if such issues had already attained finality by virtue of principles of Res Judicata.
Quick View:
- The SC’s judgment falls in line with a series of prior rulings (see: R.C. Tiwari vs. MP State Cooperative Marketing Federation Ltd.; Executive Engineer, ZP Engg. Divn. & Anr. vs. Digambara Rao & Ors) and upholds the legal principle of respecting the finality of an adjudication from a court of competent jurisdiction.
- The SC in its language has specified that the principle of Res Judicataapplies to all forums, thereby clarifying any doubts with regards to its application in tribunals, special courts etc.
- It can be expected that as a result of the SC’s judgement, the time it takes to resolve labour matters will considerably reduce in the country. This is because, currently, several cases are caught up in appeals. By virtue of this judgements, only cases where there has been a wrong interpretation of law can be heard by another court even after a court with competent jurisdiction has ruled on the matter.
Passports cannot be suspended solely on the grounds of non-appearance in investigation proceedings under FEMA: Delhi HC
The High Court of Delhi (“ Delhi HC”) , in the case of Junaid Iqbal Mohammed Memon (“Junaid”) v. Union of India & Others has held that a passport cannot be suspended or revoked under Section 10(3)(c) of the Passports Act, 1967(“Passports Act”) solely on account of non-appearance before an investigation authority pursuant to proceedings under the Foreign Exchange Management Act, 1999 (“FEMA”).
The present case involved an alleged violation of Section 13 of FEMA which specifies that officers may take action and file a complaint with an adjudicating authority in the event they suspect any violation of FEMA. Under this section, the Enforcement Directorate had filed a complaint against Junaid and had requested him to appear in person. However, when Junaid failed to appear before the Enforcement Directorate, the Indian Consulate in Dubai cancelled Junaid’s passport.
Junaid, accordingly, approached the SC and contended that his passport had been arbitrarily impounded and also that he was not covered by the provisions of FEMA as he was a non-residential Indian (“NRI”). On the other hand, the Government of India, contended that Section 3 of FEMA covered NRIs as well as foreign nationals in addition to the residents of India.
The SC, on a review of the contentions made by parties and a review of the Passport Act, held that a passport can be impounded only where a warrant or summon for appearance or a warrant for arrest of the passport holder has been issued by a court of law.
Therefore, the SC held that the Government could impound a passport only if a criminal prosecution as provided under Section 13(1C) of FEMA is commenced and summons are issued by a competent court and the concerned person fails appear before the competent court.
Quick View:
- The Delhi HC’s judgment highlights that impounding or suspending a passport solely on the discretion of the Enforcement Doctorate without a warrant or order by a competent court was wrong, thereby granting protection against arbitrary revocation.
- However, the Court also struck a balance and provided that where proceedings are initiated in a competent court, a passport holder may be liable to the revocation of passport facilities, thereby, laying down a concrete threshold for the revocation of a person’s passport.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.