Motor Vehicle Accident Claims – Compensation Calculation

Motor Vehicle Accident Claims – Compensation Calculation 

Adopted by the court in the case of Sarla Verma & ors V. DTC & Anr.

• ACTUAL SALARY : (Where the annual income is in the taxable range, the words “actual salary” should be read as “actual salary less tax”). (explained in para 13 /39 in SC Pranay Sethi) (para 10 of Sarala Verma)
• **IF NO PROOF of ACTUAL Salary [wherein   the   victim   was employed, but the claimants are not able to prove her actual income,   before   the   Court.   In   such   a   situation,   the   Court  Reportable “guesses” the income of the victim on the basis of the evidence on record, like the quality of life being led by the victim and her family, the general earning of an individual employed in that field, the qualifications of the victim, and other considerations] Supreme Court Judgement in Kirti Vs. Oriental Insurance Company (SC 2021)- Judgement para :2

• FUTURE PROSPECTS

• 50% of actual salary (below 40yrs of age and having permanent job) (para 11 Sarala Verma) (para 13 / 39 Pranay Sethi)
• 30% of actual salary (age between 40 to 50yrs)
• No addition if the age is above 50 yrs 
• No addition When deceased was self-employed or was on fixed salary (SC stated in Pranay Sethi case as While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax.)
• SC stated in Pranay Sethi case as In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the deceased was below the age of 40 years. An addition of 25% where the deceased was between the age of 40 to 50 years and 10% where the deceased was between the age of 50 to 60 years should be regarded as the necessary method of computation. The established income means the income minus the tax component.

• PERSONAL EXPENDITURE (para 14 Sarla Verma) (para 39 Pranay Sethi)

• If the deceased was Married deduction should be 
• 1/3 of salary will be deducted if the dependents are 2 to 3
• 1/4 if the dependents are 4 to 6
• 1/5 if the dependents exceed 6
• If the deceased was Bachelor and claimants are parents
• 50% will be deducted from salary as personal expenditure (mother will be considered as the only dependent)
• Where family of the Bachelor is large and dependent on the income of the deceased as in a case where he has widowed mother and large number of younger non-earning sisters or brothers his personal and living expenses may be restricted to 1/3 rd 

• MULTIPLIER 

Age of the Deceased	Multiplier scale in Trilok Chandra as clarified in Charlie Act
Upto 15 yrs	- As per Supreme Court of India in the case of National Insurance Co. Ltd vs Pranay Sethi on 31 October, 2017 Colum 6 should be selected if the age of deceased is up to 15yrs which means the multiplier in the case of age up to 15yrs will be 20 -
15 to 20 yrs	18
21 to 25 yrs	18
26 to 30 yrs	17
31 to 35 yrs	16
36 to 40 yrs	15
41 to 45 yrs	14
46 to 50 yrs	13
51 to 55 yrs	11
56 to 60 yrs	09
61 to 65 yrs	07
Above 65 yrs	05

As per Supreme Court of India in the case of National Insurance Co. Ltd vs Pranay Sethi on 31 October, 2017

Colum 6 should be selected if the age of deceased is up to 15yrs which means the multiplier in the case of age up to 15yrs will be 20 (judgement para 42 – (43.2))

• ADDITIONAL CLAIMS 

[SC stated in Pranay Sethi case as Reasonable figures on conventional heads, namely, loss of estate, loss of consortium and funeral expenses should be Rs. 15,000/-, Rs. 40,000/- and Rs. 15,000/- respectively // the amount that we have quantified should be enhanced on percentage basis in every three years and the enhancement should be at the rate of 10% in a span of three years. (from 2017)] (Pranay Sethi  Para 61 / viii)

• Loss of Estate (Rs 15000)
• Loss of consortium (Rs 40000)
• Cost of funeral expenses (Rs 15000)
• Cost of Transportation
• Cost of Medical Expenditure 

as per judgement of Sumedh Kumar Sethi (Dwarka Court 614) Loss of consortium is Rs 40,000 X number of dependents 

**ACTUAL INCOME if the Claimants are not able to produce documentary evidence 

The Supreme Court has held that even if there is no evidence on record of actual income, deceased person's potential to earn can be considered while considering insurance claims in motor accidents matter.

CJI. NV. Ramana in 

CIVIL APPEAL NOS.19­-20 of 2021

KIRTI & ANR. ETC.             …APPELLANT(S) 

VERSUS 

ORIENTAL INSURANCE CO. LTD.                         …RESPONDENT

judgement para2:

There are two distinct categories of situations wherein the Court usually determines notional income of a victim.  The first category   of   cases   relates   to   those   wherein   the   victim   was employed, but the claimants are not able to prove her actual income,   before   the   Court.   In   such   a   situation,   the   Court  Reportable “guesses” the income of the  victim on the basis of the evidence onrecord, like the quality of life being led by the  victim and her family, the general earning of anindividual employed  in that field,the qualifications of the  victim, and other considerations.

• INTEREST

        (Tribunal Verdict) Interest at the rate of 9% per annum from the date of filing of the claim petition till the date of payment. 

(Supreme Court : Kirti V. Oriental Insurance 2021 order para: 16) Interest @ 9% p.a. from the date of filing of the Detailed Accident Report 

JUDGEMENT DOWNLODS

SARALA_VERMA_VS_DTC

NATIONAL_INSURANCE_VS_PRANAY_SETHI

KIRTI_VS_ORIENTAL_INSURANCE

Constitutional & Legal Provisions for Differently Abled people in India

  Constitutional Provisions on Disability in India 

The Constitution of India provides ample scope for development of legal instruments to protect the rights of the disabled people. Some of the major Constitutional Provisions facilitating supportive provisions on Disability in India are delineated in the following para. 

The Constitution of India, through its Preamble, inter-alia seeks to secure to all its citizens; Justice, social, economic and political; Liberty of thought, expression, belief, faith and worship; Equality of status and of opportunity. Dignity of the individual is a fundamental notion behind all the fundamental rights guaranteed under part III of the Constitution of India. Part-III of the Constitution provides for a set of six Fundamental Rights to all the citizens (and in a few cases to non-citizens also). These include – Right to Equality; Right to Freedom; Right against Exploitation; Right to Freedom of Religion; Cultural and Educational Rights and Right to Constitutional Remedies. All these rights are also available to the Persons with Disabilities (PwDs) even though no specific mention of such persons appears in this Part of the Constitution. 

Further, the State has been directed under the various provisions of the constitution to extend similar treatment to all persons (including disabled). 

Article 41 of Constitution of India declares that the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement and in other cases of undeserved want. 

Article 46 lays down an obligation on the State to promote with special care the educational and economic interests of the weaker sections of the people, and protect them from social injustice and all forms of exploitation. 

Indian Constitution while distributing legislative powers between the Centre and States kept the disability issue in the State list. Relief to the disabled is a State subject by virtue of entry No. 09 of list II of the Constitution of India. Besides, the following provisions in the Constitution take care of the issues pertaining to PwDs: 

• (i)  Eleventh Schedule to Article 243-G: “Social welfare, including welfare of the handicapped and mentally retarded.” (Entry No. 26),
  
• (ii)  Twelfth Schedule to Article 243-W: “Safeguarding the interests of weaker sections of society, including the handicapped and mentally retarded.” (entry 09).
  

Article 249 of the Constitution empowers the Parliament to legislate on any subject falling in any list in order to fulfill its international obligations. 

=========================================================================

Legal Provisions on Disability in India 

Some of the important Acts enacted by the Government of India for the welfare of persons with disabilities are listed in the following para of this section. 

(1) The Mental Health Act, 1987 

This was an Act to consolidate and amend the law relating to the treatment and care of mentally ill persons, to make better provision with respect to their property and affairs and for matters connected therewith or incidental thereto. 

Superseding the Mental Health Act, 1987, Government of India passed ‘The Mental Health Care Act, 2017’on 7 April 2017, with an objective to provide for mental healthcare and services for persons with mental illness and to protect, promote and fulfill the rights of such persons during delivery of mental healthcare and services and for matters connected therewith or incidental thereto. 

(2) The Rehabilitation Council of India Act, 1992: 

An Act was created to provide for the constitution of Rehabilitation Council of India for regulating the training of rehabilitation professionals and the maintenance of a Central Rehabilitation Register and for Matters connected therewith or incidental thereto. The Act also prescribes punitive action against unqualified persons delivering services to persons with disability. 

The Rehabilitation Council of India (RCI) was set up as a registered society in 1986. On September, 1992 the RCI Act was enacted by Parliament and it became a Statutory Body on 22 June 1993.The Act was amended by Parliament in 2000 to make it broader based. 

The Council lays down policy parameters regarding various aspects of training and education in the field of Rehabilitation and all institutions have to seek recognition from RCI as per provision of RCI Act, 1992.List of RCI's approved training institutes is available in public domain and can be accessed through http://www.rehabcouncil.nic.in/ 

(3) Person with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 

The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation Act, 1995) came into force on February 7, 1996.This was an important landmark and was a significant step in the direction of ensuring equal opportunities for persons with disabilities and their full participation in the nation building. The Act provides for both preventive and promotional aspects of rehabilitation like education, employment and vocational training, job reservation, research and manpower development, creation of barrier-free environment, rehabilitation of person with disability, unemployment allowance for the disabled, special insurance scheme for the disabled employees and establishment of homes for persons with severe disability etc. 

According to the Person with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, "Disability" means- 

1. Blindness;
   
2. Low vision;
   
3. Leprosy-cured;
   
4. Hearing impairment;
   
5. Locomotor disability;
   
6. Mental Retardation;
   
7. Mental illness
   

(4) The National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 

The Government of India enacted the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 on December, 30 1999 with objective to provide for the constitution of a body at the National level for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities and for matters connected therewith or incidental thereto. The trust aims to provide total care to persons with mental retardation and cerebral palsy and also manage the properties bequeathed to the Trust. 

As certain groups among the disabled are more vulnerable than others, a special enactment for the protection of such persons, their property and well-being was felt necessary. The enactment of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (referred to as the National Trust Act) aims to fulfill a common demand of families seeking reliable arrangement for their severely disabled wards. 

(5) Rights of Persons with Disabilities (RPWD) Act, 2016 

The Act replaces the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. It fulfills the obligations to the United National Convention on the Rights of Persons with Disabilities (UNCRPD), to which India is a signatory. 

According to the Rights of Persons with Disabilities (RPwD) Act, 2016, enacted on 28.12.2016 and came into force from 19.04.2017, Disability has been considered as an evolving and dynamic concept. 

Disabilities covered under the Act: 

➢ The types of disabilities have been increased from existing 7 (as defined in the Person with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995,) to 21 and the Central Government will have the power to add more types of disabilities. 

➢ The Act covers the following specified disabilities: 

1. Blindness
   
2. Low-vision
   
3. Leprosy Cured persons
   
4. Hearing Impairment (deaf and hard of hearing)
   
5. Locomotor Disability
   
6. Dwarfism
   
7. Intellectual Disability
   
8. Mental Illness
   
9. Autism Spectrum Disorder
   
10. Cerebral Palsy
    
11. Muscular Dystrophy
    
12. Chronic Neurological conditions
    
13. Specific Learning Disabilities
    
14. Multiple Sclerosis
    
15. Speech and Language disability
    
16. Thalassemia 
17. Hemophilia
    
18. Sickle Cell disease
    
19. Multiple Disabilities including deaf-blindness
    
20. Acid Attack victims
    
21. Parkinson’s disease
    

According to the Rights of Persons with Disabilities Act, 2016,"Person with disability" means a person with long term physical, mental, intellectual or sensory impairment which, in interaction with barriers, hinders his full and effective participation in society equally with others, and "Person with benchmark disability" means a person with not less than forty per cent. of a specified disability where specified disability has not been defined in measurable terms and includes a person with disability where specified disability has been defined in measurable terms, as certified by the certifying authority. 

The new list of recognized disabilities includes three blood disorders (Thalassemia, Hemophilia and Sickle Cell disease) and acid attack survivors. Intellectual disability, Parkinson’s disease, Cerebral Palsy, Dwarfism and Autistic Spectrum disorders also find place in the list. This inclusion will help more people to have access to the government schemes and facilities intended for the welfare of disabled people in India. 

The RPWD Act 2016 also provides for creating institutional infrastructure to support the needs of persons with disabilities. Setting up of Special Courts in each district has been mandated. These courts will handle the cases related to the violation of rights of disabled people. In addition, State Governments will setup district-level committees and a separate State Fund for the welfare of PwDs. Similarly, a national level fund will also be set up. 

This historic legislation is a corner stone of evolution of jurisprudence on the rights of persons with disabilities in India. As a result, disability concerns have come into sharp focus. However, within a period of ten years of enforcement of this Act its weaknesses have also surfaced in the absence of a powerful implementing instrumentality. Unlike usual indifference the government soon realised these weaknesses and acceded to the demand of the disability movement for overall review of the Act. Towards this end a committee was constituted which harmonised views of the disability sector and relevant bodies in its comprehensive report. 

Constitutional Bench Judgements of 2020 (INDIA)

 1. Protection under anticipatory bail should not be fixed for limited period

Case: Sushila Aggarwal v. State of NCT of Delhi [2020 5 SCC 1]

2. Consumer Forum has no jurisdiction to extend time beyond 45 days for opposite party’s version

Case: New India Assurance v. Hilli Multipurpose Cold Storage Pvt. Ltd. [2020 SCC OnLine SC 287]

3. Land acquisition under Land Acquisition Act of 1894 will not lapse if compensation is tendered in the State treasury

Case: Indore Development Authority v. Manoharlal & Ors. [2020 SCC OnLine SC 316]

4. Accused under NDPS Act not entitled to acquittal merely because informant was investigation officer

Case: Mukesh Singh v. State (Narcotic Branch of Delhi) [2020 SCC OnLine SC 700]

5. States, not MCI, have power to make reservation for in-service PG candidates in NEET courses

Case: Tamil Nadu Medical Officers Association & Ors. v. Union of India & Ors. [2020 SCC OnLine SC 699]

6. SARFAESI Act will apply to co-operative Banks as it does to commercial banks

Case: Pandurang Ganpati v. Vishwasrao Patil Murgud Sahakari Bank Ltd [2020 SCC OnLine SC 431]

7. Government order providing 100% reservation for tribal teachers in Scheduled Areas unconstitutional

Case: Chebrolu Leela Prasad Rao & Ors. v.State of AP & Ors. [2020 SCC OnLine SC 383]

8. Sub-classification of Scheduled Castes: 5-judge Bench refers EV Chinnaiah to larger bench on whether Scheduled Castes form a homogenous class

Case: State of Punjab & Ors. v. Davinder Singh & Ors. [2020 SCC OnLine SC 677]

9. Curative petition and stay on execution of 2012 Delhi gang rape convict dismissed

Case: Pawan Kumar Gupta v. State of NCT of Delhi [2020 SCC OnLine SC 264]

10. Rights conferred on religious and linguistic minorities to administer educational institutions of their choice under Article 30 are not absolute, State can impose reasonable restrictions

Case: Christian Medical College Vellore Association v. Union of India & Ors. [2020 SCC OnLine SC 423]

11. Constitutional validity of Scheduled Castes/Scheduled Tribes (Prevention of Atrocities) Amendment Act, 2018 upheld

Case: Prithvi Raj Chauhan v. Union of India & Ors. [2020 4 SCC 727]

12. Under Article 233, judicial officers can’t be appointed as District Judges through direct quota reserved for advocates

Case: Dheeraj Mor v. Hon’ble High Court of Delhi [2020 SCC OnLine 213]

13. Daughters become equal coparceners at birth even if born prior to 2005 amendment to Hindu Succession Act

Case: Vineeta Sharma v. Rakesh Sharma & Ors. [2020 SCC OnLine SC 641]

14. Prashant Bhushan held guilty for contempt of court for tweets against CJI SA Bobde

Case: In re Prashant Bhushan & Anr [2020 SCC OnLine SC 698]

Important Supreme Court (India) Judgments On Arbitration Passed In 2020

  The Supreme Court of India has pronounced numerous judgments in the matters related to the Arbitration and Conciliation Act, in the year 2020. In this write-up, the important pronouncements are briefly discussed.

• State of Gujarat (through Chief Secretary) and Another v. Amber Builders, Civil Appeal No. 8307 of 2019 (Decided on 08/01/2020). 

THE GUJARAT PUBLIC WORKS CONTRACT DISPUTES ARBITRATION TRIBUNAL HAS THE POWER TO GRANT INTERIM RELIEF IN CASES OF STATUTORY ARBITRATIONS UNDER THE GUJARAT ACT, 1992.

A Bench of Justices Deepak Gupta and Aniruddha Bose held that on a conjoint reading and a careful analysis of the Arbitration Act and the Gujarat Act, the powers vested in the Arbitral Tribunal in terms of Section 17 of the Arbitration and Conciliation Act, can be exercised by the Tribunal constituted under the Gujarat Act because there is no inconsistency in these two Acts as far as the grant of interim relief is concerned. This power is already vested in the Tribunal under the Gujarat Act and Section 17 of the Arbitration and Conciliation Act complements these powers and therefore it cannot be said that the provisions of Section 17 of the Arbitration and Conciliation Act are inconsistent with the Gujarat Act.

• Vijay Karia & Ors. v. Prysmian Cavi E Sistemi SRL & Ors., Civil Appeal No. 1544 of 2020 (Decided on 13/02/2020).

MINIMAL INTERFERENCE BY COURTS IN TERMS OF SECTION 48 OF THE ARBITRATION ACT IN ENFORCEMENT OF FOREIGN AWARDS.

A Bench of Justices R.F. Nariman, Aniruddha Bose and V. Ramasubramanian held that that the Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick. All the pleas taken by the Appellants are, in reality, pleas going to the unfairness of the conclusions reached by the award, which is plainly a foray into the merits of the matter, and which is plainly proscribed by Section 48 of the Arbitration Act read with the New York Convention. The Bench held that a good working test for determining whether a party has been unable to present his case is to see whether factors outside the party's control have combined to deny the party a fair hearing. Where no opportunity was given to deal with an argument which goes to the root of the case or findings based on evidence which go behind the back of the party and which results in a denial of justice to the prejudice of the party or additional or new evidence is taken which forms the basis of the award on which a party has been given no opportunity of rebuttal would on the facts of a given case, render a foreign award liable to be set aside on the ground that a party has been unable to present his case. This must be with the caveat that such breach be clearly made out on the facts of a given case, and that awards must always be read supportively with an inclination to uphold rather than destroy, given the minimal interference possible with foreign awards under Section 48.

• Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram & Other Charities and Others v. Bhaskar Raju & Brothers and Others, Civil Appeal No. 1599 of 2020 (Decided on 14/02/2020).

THE COURT CANNOT ACT UPON A DOCUMENT OR THE ARBITRATION CLAUSE WHICH IS NOT PROPERLY STAMPED.

A Bench comprising the Chief Justice SA Bobde, Justices B.R Gavai and Surya Kant held that when a lease deed or any other instrument is relied upon as containing the arbitration agreement, the Court is required to consider at the outset, whether the document is properly stamped or not. If the instrument is not properly stamped, it should be impounded and dealt with, in the manner specified in Section 38 of the Stamp Act, 1899. It has also been held, that the Court cannot act upon such a document or the arbitration clause therein.

• Mankastu Impex Private Limited v. Airvisual Limited, Arbitration Petition No. 32 of 2018 (Decided on 05/03/2020).

MERE EXPRESSION "PLACE OF ARBITRATION" CANNOT BE THE BASIS TO DETERMINE THE INTENTION OF THE PARTIES THAT THEY HAVE INTENDED THAT PLACE AS THE "SEAT" OF ARBITRATION.

A Bench of Justices R. Banumathi, A.S. Bopanna and Hrishikesh Roy held that the seat of arbitration is a vital aspect of any arbitration proceedings and its location will determine the courts that will have exclusive jurisdiction to oversee the arbitration proceedings. It was further held that the Seat normally carries with it the choice of that country's arbitration/curial law and it is well-settled that "seat of arbitration" and "venue of arbitration" cannot be used inter-changeably. Mere expression "place of arbitration" cannot be the basis to determine the intention of the parties that they have intended that place as the "seat" of arbitration. The intention of the parties as to the "seat" should be determined from other clauses in the agreement and the conduct of the parties.

• National Agricultural Cooperative Marketing Federation of India v. ALIMENTA S.A., Civil Appeal No. 667 of 2012 (Decided on 22/04/2020).

FOREIGN AWARD AGAINST PUBLIC POLICY NOT ENFORCEABLE IN INDIA.

A Bench of Justices Arun Mishra, M.R. Shah and B.R. Gavai held that the award in the present case could not be said to be enforceable, given the provisions contained in Section 7(1)(b)(ii) of the Foreign Awards Act. As per the test laid down in the Renusagar case, its enforcement would be against the fundamental policy of Indian Law and the basic concept of justice. The award is unenforceable, and the High Court erred in law in holding otherwise in a perfunctory manner. The Bench allowed the appeal filed by the NAFED and set aside the impugned judgment and order passed by the High Court.

• Firm Rajasthan Udyog & Ors. v. Hindustan Engineering & Industries Ltd., Civil Appeal No. 2376 of 2020 (Decided on 24/04/2020).

ARBITRATION AWARD FIXING PRICE OF LAND CAN'T BE EXECUTED LIKE A DECREE FOR SPECIFIC PERFORMANCE OF SALE AGREEMENT.

A Bench of Justices Uday Umesh Lalit and Vineet Saran held that the award in the present case did not relate to right, title or interest in an immovable property and was only for determination of the price of land, yet if the execution court was to treat the same for execution of sale deed of land (immovable property), it ought to have considered the impact of non­registration of such Award, which has not been done in the present case. The Bench also held that execution of an award can be only to the extent what has been awarded/decreed and not beyond the same. In the present case, the Arbitrator in its Award had only declared the price of land and nothing more. The question of execution of a sale deed of the land at the price so declared by the Arbitrator in its Award, could not be directed.

• Quippo Construction Equipment Ltd v. Janardan Nirman Pvt Ltd., Civil Appeal No. 2378/2020 (Decided on 29/04/2020).

NON-PARTICIPATION IN ARBITRAL PROCEEDINGS RESULTS IN WAIVER OF RIGHT TO RAISE OBJECTIONS ON JURISDICTION AFTER AWARD.

A Bench of Justices Uday Umesh Lalit and Vineet Saran held that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections. In the circumstances, the respondent is precluded from raising any submission or objection as to the venue of arbitration, the conclusion drawn by the Court at Alipore while dismissing the case was quite correct and did not call for any interference. The Bench held that a party who knows that any provision from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.

• South East Asia Marine Engineering and Constructions Ltd. v. Oil India Limited, Civil Appeal No. 673 of 2012 (Decided on 11/05/2020).

USUALLY, COURT NOT REQUIRED TO EXAMINE MERITS OF INTERPRETATION PROVIDED IN AWARD BY ARBITRATOR IF SUCH INTERPRETATION WAS REASONABLY POSSIBLE.

A Bench of Justices N.V. Ramana, Mohan M. Shantanagoudar and Ajay Rastogi held that usually the Court is not required to examine the merits of the interpretation provided in the award by the arbitrator, if it comes to a conclusion that such an interpretation was reasonably possible. The Bench further held that we do not subscribe to either the reasons provided by the Arbitral Tribunal or the High Court. Although, the Arbitral Tribunal correctly held that a contract needs to be interpreted taking into consideration all the clauses of the contract, it failed to apply the same standard while interpreting a Clause of the Contract. It is a settled position that a Court can set aside the award only on the grounds as provided in the Arbitration Act and where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning.

• Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd., Special Leave Petition (C) Nos. 3584-85 of 2020 (Decided on 22/05/2020).

PATENT ILLEGALITY A GROUND AVAILABLE TO SET ASIDE DOMESTIC ARBITRAL AWARDS MADE AFTER 2015 AMENDMENT.

A Bench of Justices R. Banumathi, Indu Malhotra and Aniruddha Bose held that an arbitral award can be set aside under Section 34 of the Arbitration and Conciliation Act if it is patently illegal or perverse. The ground of patent illegality is a ground available under the statute for setting aside a domestic award made after the 2015 amendment to the Arbitration and Conciliation Act. The Bench held that an award can be termed as patently illegal if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view

• M/s. Centrotrade Minerals and Metals Inc. v. Hindustan Copper Ltd., Civil Appeal No. 2562 of 2006 (Decided on 02/06/2020).

SUPREME COURT PAVED A WAY FOR THE EXECUTION OF A FOREIGN AWARD EMANATING FROM A TWO-TIER ARBITRATION MECHANISM.

A Bench of Justices R.F. Nariman, S. Ravindra Bhat and V. Ramasubramanian paved the way for the execution of a Foreign Arbitral Award in India arising out of a two-tier arbitration mechanism. The Bench gave a go-ahead for the execution of ICC Foreign Award passed in favour of Centrotrade. The matter related to the agreement between Centrotrade Minerals and Metals Inc, an American giant, and Hindustan Copper Limited, a Government of India enterprises, for the supply of Copper Concentrate. The arbitration clause in the agreement provided for a two-tier arbitration mechanism whereby any dispute was to be settled by a Sole Arbitrator under the aegis of the Indian Council of Arbitration (ICA).

• Government of India v. Vedanta Limited and Others, Civil Appeal No. 3185 of 2020 (Decided on 16/09/2020).

ENFORCEMENT OF AN ARBITRAL AWARD MAY BE REFUSED ONLY IF IT VIOLATES THE ENFORCEMENT STATE'S MOST BASIC NOTIONS OF MORALITY AND JUSTICE.

A Bench of Justices S. Abdul Nazeer, Indu Malhotra and Aniruddha Bose, held that enforcement of an arbitral award may be refused only if it violates the enforcement State's most basic notions of morality and justice, which has been interpreted to mean that there should be great hesitation in refusing enforcement, unless it is obtained through corruption or fraud, or undue means. It was observed that the enforcement court would examine the challenge to the award in accordance with the law and merely because the Malaysian Courts have upheld the award, it would not be an impediment for the Indian courts to examine whether the award was opposed to the public policy of India under Section 48 of the Indian Arbitration Act, 1996. The enforcement court would not review the correctness of the judgment of the Seat Courts, while deciding the challenge to the award and the period of limitation for filing a petition for enforcement of a foreign award under Sections 47 and 49 of the Arbitration and Conciliation Act, would be governed by Article 137 of the Limitation Act, 1963 which prescribes a period of three years from when the right to apply accrues. The power to set aside a foreign award vests only with the court at the seat of arbitration, since the supervisory or primary jurisdiction is exercised by the curial courts at the seat of arbitration. The enforcement court may refuse enforcement of a foreign award, if the conditions contained in Section 48 are made out.

• Noy Vallesina Engineering SpA v. Jindal Drugs Limited, Civil Appeal No. 8607 of 2010 (Decided on 26/11/2020).

PROCEEDINGS UNDER SECTION 34 OF THE ARBITRATION & CONCILIATION ACT NOT MAINTAINABLE AGAINST PRE-BALCO FOREIGN AWARDS.

A Bench of Justices Indira Banerjee and S. Ravindra Bhat held that the proceedings under Section 34 of the Arbitration and Conciliation Act are not maintainable to challenge a pre-BALCO foreign award. The Bench held that Part I of the Arbitration Act, 1996 would have no application to international commercial arbitration held outside India. Therefore, such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of the Arbitration Act, 1996. The provisions contained in the Arbitration Act, 1996 make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Arbitration Act, 1996. Having regard to the precedential unanimity, about the manner of applicability of BALCO in respect of agreements entered into and awards rendered earlier, with respect to the law of the seat of arbitration (or the curial law) excluding applicability of Part I of the Act, and the unambiguous intention of the parties, that the seat of arbitration was London, where the ICC arbitration proceedings were in fact held, and the awards rendered, the impugned judgment cannot be sustained.

• Suresh Shah v. Hipad Technology India Private Limited, Arbitration Petition (Civil) No(s). 08/2020 (Decided on 18/12/2020).

THE LEASE/TENANCY MATTERS WHICH ARE NOT GOVERNED UNDER THE SPECIAL STATUTES BUT UNDER THE TRANSFER OF PROPERTY ACT ARE ARBITRABLE.

A Bench comprising the Chief Justice SA Bobde, Justices A.S. Bopanna and V. Ramasubramanian held that if the special statutes do not apply to the premises/property and the lease/tenancy created as on the date when the cause of action arises to seek for eviction or such other relief and in such transaction if the parties are governed by an Arbitration Clause; the dispute between the parties is arbitrable and there shall be no impediment whatsoever to invoke the Arbitration Clause. The Bench also held that eviction or tenancy relating to matters governed by special statutes where the tenant enjoys statutory protection against eviction whereunder the Court/Forum is specified and conferred jurisdiction under the statute alone can adjudicate such matters and in such cases the dispute is non­arbitrable.

:: Courtesy Livelaw.in

Important Supreme Court (India) Judgments On Arbitration Passed In 2020

  The Supreme Court of India has pronounced numerous judgments in the matters related to the Arbitration and Conciliation Act, in the year 2020. In this write-up, the important pronouncements are briefly discussed.

• State of Gujarat (through Chief Secretary) and Another v. Amber Builders, Civil Appeal No. 8307 of 2019 (Decided on 08/01/2020). 

THE GUJARAT PUBLIC WORKS CONTRACT DISPUTES ARBITRATION TRIBUNAL HAS THE POWER TO GRANT INTERIM RELIEF IN CASES OF STATUTORY ARBITRATIONS UNDER THE GUJARAT ACT, 1992.

A Bench of Justices Deepak Gupta and Aniruddha Bose held that on a conjoint reading and a careful analysis of the Arbitration Act and the Gujarat Act, the powers vested in the Arbitral Tribunal in terms of Section 17 of the Arbitration and Conciliation Act, can be exercised by the Tribunal constituted under the Gujarat Act because there is no inconsistency in these two Acts as far as the grant of interim relief is concerned. This power is already vested in the Tribunal under the Gujarat Act and Section 17 of the Arbitration and Conciliation Act complements these powers and therefore it cannot be said that the provisions of Section 17 of the Arbitration and Conciliation Act are inconsistent with the Gujarat Act.

• Vijay Karia & Ors. v. Prysmian Cavi E Sistemi SRL & Ors., Civil Appeal No. 1544 of 2020 (Decided on 13/02/2020).

MINIMAL INTERFERENCE BY COURTS IN TERMS OF SECTION 48 OF THE ARBITRATION ACT IN ENFORCEMENT OF FOREIGN AWARDS.

A Bench of Justices R.F. Nariman, Aniruddha Bose and V. Ramasubramanian held that that the Appellants are indulging in a speculative litigation with the fond hope that by flinging mud on a foreign arbitral award, some of the mud so flung would stick. All the pleas taken by the Appellants are, in reality, pleas going to the unfairness of the conclusions reached by the award, which is plainly a foray into the merits of the matter, and which is plainly proscribed by Section 48 of the Arbitration Act read with the New York Convention. The Bench held that a good working test for determining whether a party has been unable to present his case is to see whether factors outside the party's control have combined to deny the party a fair hearing. Where no opportunity was given to deal with an argument which goes to the root of the case or findings based on evidence which go behind the back of the party and which results in a denial of justice to the prejudice of the party or additional or new evidence is taken which forms the basis of the award on which a party has been given no opportunity of rebuttal would on the facts of a given case, render a foreign award liable to be set aside on the ground that a party has been unable to present his case. This must be with the caveat that such breach be clearly made out on the facts of a given case, and that awards must always be read supportively with an inclination to uphold rather than destroy, given the minimal interference possible with foreign awards under Section 48.

• Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram & Other Charities and Others v. Bhaskar Raju & Brothers and Others, Civil Appeal No. 1599 of 2020 (Decided on 14/02/2020).

THE COURT CANNOT ACT UPON A DOCUMENT OR THE ARBITRATION CLAUSE WHICH IS NOT PROPERLY STAMPED.

A Bench comprising the Chief Justice SA Bobde, Justices B.R Gavai and Surya Kant held that when a lease deed or any other instrument is relied upon as containing the arbitration agreement, the Court is required to consider at the outset, whether the document is properly stamped or not. If the instrument is not properly stamped, it should be impounded and dealt with, in the manner specified in Section 38 of the Stamp Act, 1899. It has also been held, that the Court cannot act upon such a document or the arbitration clause therein.

• Mankastu Impex Private Limited v. Airvisual Limited, Arbitration Petition No. 32 of 2018 (Decided on 05/03/2020).

MERE EXPRESSION "PLACE OF ARBITRATION" CANNOT BE THE BASIS TO DETERMINE THE INTENTION OF THE PARTIES THAT THEY HAVE INTENDED THAT PLACE AS THE "SEAT" OF ARBITRATION.

A Bench of Justices R. Banumathi, A.S. Bopanna and Hrishikesh Roy held that the seat of arbitration is a vital aspect of any arbitration proceedings and its location will determine the courts that will have exclusive jurisdiction to oversee the arbitration proceedings. It was further held that the Seat normally carries with it the choice of that country's arbitration/curial law and it is well-settled that "seat of arbitration" and "venue of arbitration" cannot be used inter-changeably. Mere expression "place of arbitration" cannot be the basis to determine the intention of the parties that they have intended that place as the "seat" of arbitration. The intention of the parties as to the "seat" should be determined from other clauses in the agreement and the conduct of the parties.

• National Agricultural Cooperative Marketing Federation of India v. ALIMENTA S.A., Civil Appeal No. 667 of 2012 (Decided on 22/04/2020).

FOREIGN AWARD AGAINST PUBLIC POLICY NOT ENFORCEABLE IN INDIA.

A Bench of Justices Arun Mishra, M.R. Shah and B.R. Gavai held that the award in the present case could not be said to be enforceable, given the provisions contained in Section 7(1)(b)(ii) of the Foreign Awards Act. As per the test laid down in the Renusagar case, its enforcement would be against the fundamental policy of Indian Law and the basic concept of justice. The award is unenforceable, and the High Court erred in law in holding otherwise in a perfunctory manner. The Bench allowed the appeal filed by the NAFED and set aside the impugned judgment and order passed by the High Court.

• Firm Rajasthan Udyog & Ors. v. Hindustan Engineering & Industries Ltd., Civil Appeal No. 2376 of 2020 (Decided on 24/04/2020).

ARBITRATION AWARD FIXING PRICE OF LAND CAN'T BE EXECUTED LIKE A DECREE FOR SPECIFIC PERFORMANCE OF SALE AGREEMENT.

A Bench of Justices Uday Umesh Lalit and Vineet Saran held that the award in the present case did not relate to right, title or interest in an immovable property and was only for determination of the price of land, yet if the execution court was to treat the same for execution of sale deed of land (immovable property), it ought to have considered the impact of non­registration of such Award, which has not been done in the present case. The Bench also held that execution of an award can be only to the extent what has been awarded/decreed and not beyond the same. In the present case, the Arbitrator in its Award had only declared the price of land and nothing more. The question of execution of a sale deed of the land at the price so declared by the Arbitrator in its Award, could not be directed.

• Quippo Construction Equipment Ltd v. Janardan Nirman Pvt Ltd., Civil Appeal No. 2378/2020 (Decided on 29/04/2020).

NON-PARTICIPATION IN ARBITRAL PROCEEDINGS RESULTS IN WAIVER OF RIGHT TO RAISE OBJECTIONS ON JURISDICTION AFTER AWARD.

A Bench of Justices Uday Umesh Lalit and Vineet Saran held that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections. In the circumstances, the respondent is precluded from raising any submission or objection as to the venue of arbitration, the conclusion drawn by the Court at Alipore while dismissing the case was quite correct and did not call for any interference. The Bench held that a party who knows that any provision from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objection to such non-compliance without undue delay or if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.

• South East Asia Marine Engineering and Constructions Ltd. v. Oil India Limited, Civil Appeal No. 673 of 2012 (Decided on 11/05/2020).

USUALLY, COURT NOT REQUIRED TO EXAMINE MERITS OF INTERPRETATION PROVIDED IN AWARD BY ARBITRATOR IF SUCH INTERPRETATION WAS REASONABLY POSSIBLE.

A Bench of Justices N.V. Ramana, Mohan M. Shantanagoudar and Ajay Rastogi held that usually the Court is not required to examine the merits of the interpretation provided in the award by the arbitrator, if it comes to a conclusion that such an interpretation was reasonably possible. The Bench further held that we do not subscribe to either the reasons provided by the Arbitral Tribunal or the High Court. Although, the Arbitral Tribunal correctly held that a contract needs to be interpreted taking into consideration all the clauses of the contract, it failed to apply the same standard while interpreting a Clause of the Contract. It is a settled position that a Court can set aside the award only on the grounds as provided in the Arbitration Act and where two views are possible, the Court cannot interfere in the plausible view taken by the arbitrator supported by reasoning.

• Patel Engineering Ltd. v. North Eastern Electric Power Corporation Ltd., Special Leave Petition (C) Nos. 3584-85 of 2020 (Decided on 22/05/2020).

PATENT ILLEGALITY A GROUND AVAILABLE TO SET ASIDE DOMESTIC ARBITRAL AWARDS MADE AFTER 2015 AMENDMENT.

A Bench of Justices R. Banumathi, Indu Malhotra and Aniruddha Bose held that an arbitral award can be set aside under Section 34 of the Arbitration and Conciliation Act if it is patently illegal or perverse. The ground of patent illegality is a ground available under the statute for setting aside a domestic award made after the 2015 amendment to the Arbitration and Conciliation Act. The Bench held that an award can be termed as patently illegal if the decision of the arbitrator is found to be perverse, or, so irrational that no reasonable person would have arrived at the same; or, the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view

• M/s. Centrotrade Minerals and Metals Inc. v. Hindustan Copper Ltd., Civil Appeal No. 2562 of 2006 (Decided on 02/06/2020).

SUPREME COURT PAVED A WAY FOR THE EXECUTION OF A FOREIGN AWARD EMANATING FROM A TWO-TIER ARBITRATION MECHANISM.

A Bench of Justices R.F. Nariman, S. Ravindra Bhat and V. Ramasubramanian paved the way for the execution of a Foreign Arbitral Award in India arising out of a two-tier arbitration mechanism. The Bench gave a go-ahead for the execution of ICC Foreign Award passed in favour of Centrotrade. The matter related to the agreement between Centrotrade Minerals and Metals Inc, an American giant, and Hindustan Copper Limited, a Government of India enterprises, for the supply of Copper Concentrate. The arbitration clause in the agreement provided for a two-tier arbitration mechanism whereby any dispute was to be settled by a Sole Arbitrator under the aegis of the Indian Council of Arbitration (ICA).

• Government of India v. Vedanta Limited and Others, Civil Appeal No. 3185 of 2020 (Decided on 16/09/2020).

ENFORCEMENT OF AN ARBITRAL AWARD MAY BE REFUSED ONLY IF IT VIOLATES THE ENFORCEMENT STATE'S MOST BASIC NOTIONS OF MORALITY AND JUSTICE.

A Bench of Justices S. Abdul Nazeer, Indu Malhotra and Aniruddha Bose, held that enforcement of an arbitral award may be refused only if it violates the enforcement State's most basic notions of morality and justice, which has been interpreted to mean that there should be great hesitation in refusing enforcement, unless it is obtained through corruption or fraud, or undue means. It was observed that the enforcement court would examine the challenge to the award in accordance with the law and merely because the Malaysian Courts have upheld the award, it would not be an impediment for the Indian courts to examine whether the award was opposed to the public policy of India under Section 48 of the Indian Arbitration Act, 1996. The enforcement court would not review the correctness of the judgment of the Seat Courts, while deciding the challenge to the award and the period of limitation for filing a petition for enforcement of a foreign award under Sections 47 and 49 of the Arbitration and Conciliation Act, would be governed by Article 137 of the Limitation Act, 1963 which prescribes a period of three years from when the right to apply accrues. The power to set aside a foreign award vests only with the court at the seat of arbitration, since the supervisory or primary jurisdiction is exercised by the curial courts at the seat of arbitration. The enforcement court may refuse enforcement of a foreign award, if the conditions contained in Section 48 are made out.

• Noy Vallesina Engineering SpA v. Jindal Drugs Limited, Civil Appeal No. 8607 of 2010 (Decided on 26/11/2020).

PROCEEDINGS UNDER SECTION 34 OF THE ARBITRATION & CONCILIATION ACT NOT MAINTAINABLE AGAINST PRE-BALCO FOREIGN AWARDS.

A Bench of Justices Indira Banerjee and S. Ravindra Bhat held that the proceedings under Section 34 of the Arbitration and Conciliation Act are not maintainable to challenge a pre-BALCO foreign award. The Bench held that Part I of the Arbitration Act, 1996 would have no application to international commercial arbitration held outside India. Therefore, such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of the Arbitration Act, 1996. The provisions contained in the Arbitration Act, 1996 make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Arbitration Act, 1996. Having regard to the precedential unanimity, about the manner of applicability of BALCO in respect of agreements entered into and awards rendered earlier, with respect to the law of the seat of arbitration (or the curial law) excluding applicability of Part I of the Act, and the unambiguous intention of the parties, that the seat of arbitration was London, where the ICC arbitration proceedings were in fact held, and the awards rendered, the impugned judgment cannot be sustained.

• Suresh Shah v. Hipad Technology India Private Limited, Arbitration Petition (Civil) No(s). 08/2020 (Decided on 18/12/2020).

THE LEASE/TENANCY MATTERS WHICH ARE NOT GOVERNED UNDER THE SPECIAL STATUTES BUT UNDER THE TRANSFER OF PROPERTY ACT ARE ARBITRABLE.

A Bench comprising the Chief Justice SA Bobde, Justices A.S. Bopanna and V. Ramasubramanian held that if the special statutes do not apply to the premises/property and the lease/tenancy created as on the date when the cause of action arises to seek for eviction or such other relief and in such transaction if the parties are governed by an Arbitration Clause; the dispute between the parties is arbitrable and there shall be no impediment whatsoever to invoke the Arbitration Clause. The Bench also held that eviction or tenancy relating to matters governed by special statutes where the tenant enjoys statutory protection against eviction whereunder the Court/Forum is specified and conferred jurisdiction under the statute alone can adjudicate such matters and in such cases the dispute is non­arbitrable.

:: Courtesy Livelaw.in