Quick Update: MCA to prescribe new format for annual return filings by auditors
The Ministry of Corporate Affairs (“MCA”) has published a notice, stating that the MCA is in the process of prescribing the format of annual return required to be filed by auditors under Rule 5 of the National Financial Reporting Authority Rules, 2018.
The MCA added that all relevant stakeholders are requested to make such filings only after the format has been made available by the MCA for such purpose.
Commercial Courts are not required to allow late filing of documents without good-cause: Delhi HC
The High Court of Delhi has passed an order in the case of Nitin Gupta v. Texmaco Infrastructure & Holding Limited (“Texmaco”), whereby it held that commercial division of the courts are not required to entertain or allow applications for late filing of documents, without any good cause being established for non-disclosure of the same along with pleadings.
In this case, Mr. Nitin Gupta had filed a suit for the recovery of a sum of INR. 1,25,00,000/- (One Crore Twenty Five Lakhs Only) with interest from Texmaco that had purportedly been paid by Mr. Gupta in pursuance of an agreement to sell immovable property, which had later failed to come to fruition.
The delayed document in question was a letter dated September 2, 2013 from Texmaco to Mr. Gupta, intended to be filed by Mr. Gupta as proof of the money transacted between the parties to the suit. Mr. Gupta pleaded that the delay in filing was due to an error of his earlier advocate, and was not deliberate but due to an inadvertent, bona fide mistake.
Texmaco on the other hand highlighted that Mr. Gupta had not filed either the list of witnesses or affidavits by way of examination-in-chief of his witnesses in spite of expiry of the time granted for the same.
It was also noted by the Court, that the letter in question stated that the total sale consideration was INR. 10,25,00,000/- (Rupees Ten Crores Twenty-Five Lakhs Only) which contradicted Mr. Gupta’s submission that the said amount was INR 11,50,00,000/- (Rupees Eleven Crores Fifty Lakhs Only) and the that Mr. Gupta had not sought an amendment to his earlier pleadings.
Consequently, the Court dismissed Mr. Gupta’s application for belated filing, observing that even if Mr. Gupta was unable to locate it, he must have been aware of the said letter at the time of filing, but not only had he failed to disclose it during the his declaration on oath in terms of Order XI Rule 1(3) of the Code of Civil Procedure, 1908 but he went on to make pleadings contrary to its contents.
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The Court emphasised that the form prescribed for filing an affidavit of document requires the disclosure of all relevant documents, including those not in immediate possession of the party at the time of filing of the affidavit.
The Court added that any litigant who fails to make such disclosures will not be allowed to belatedly file any documents without establishing good cause to justify why no proper disclosure of the document was made.
Unilateral alteration of a contract through an arbitral award is against the basic notion of justice: SC
The Supreme Court of India (“SC”), in the case of Ssangyong Engineering & Construction Co. Ltd (“Ssangyong”) v. National Highways Authority of India (“NHAI”), has passed a judgment, whereby it held that a unilateral addition or alteration of a contract can never be imposed upon an unwilling party through an arbitral award as the same conflicts with the most basic notions of justice and the public policy of India as per Section 34(2)(b)(ii)(iii) of the Arbitration and Conciliation Act, 1966 (“Act”).
In the given case, a dispute had arisen between the NHAI and Ssangyong and was referred to arbitration, when the NHAI sought the application of a circular issued by NHAI in 2013 which would have changed the price adjustment formula provided in a contract executed between NHAI and Ssangyong. However, Ssangyong opposed the application of the said circular contending it to be a unilateral modification of the formula.
The arbitral tribunal upheld the application of the 2013 circular stating that certain government guidelines of the Ministry of Commerce and Industry (“MCI”) required the application of the rules provided in the 2013 circular (The said guidelines were noted by the arbitral tribunal to be on the official website of MCI but were not put on record in the proceedings).
The said arbitral award was challenged by Ssangyong under Section 34 of the Act, which provides the provisions pertaining to an application for setting aside an arbitral award.
Among other things, Ssangyong contended that the arbitral award adjudicated upon matters beyond the scope of the matters submitted to arbitration and should be set aside as per Section 34(2)(a)(iv) of the Act. However, the SC held that the issue about the application of the linking factor under the 2013 circular was within the ambit of the disputes relating to the application of price formula raised by the parties.
However, the SC noted that the government guidelines relied upon by the arbitral tribunal were never evidenced or disclosed by the NHAI before the tribunal. Therefore, Ssangyong was never granted an opportunity to comment on the applicability or interpretation of those guidelines and was consequently rendered “unable to present its case”.
Additionally, the SC held that the arbitral award created a new contract for the parties by applying the unilateral 2013 circular and by substituting a workable formula under the agreement by another formula outside the scope of the original agreement
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The SC in this judgment ruled that imposition of unilateral modifications to a contract on an unwilling party was a breach of “fundamental principle of justice” and a party to an agreement cannot be held liable to perform a bargain that they had not entered into with the other party and went on to add that such a course of conduct shocks the conscience of the court.
However, the SC has cautioned that the application of the principles laid by it in this case should be limited to exceptional circumstances, such that no court interferes with an arbitral award on the ground that justice has not been done in the opinion of the court, as doing so would be an inquiry into the merits of the dispute.
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.