Showing posts with label contract. Show all posts
Showing posts with label contract. Show all posts

23 July 2020

Arbitrator can pass an award directing specific performance of an agreement of sale

Point 3: This point becomes relevant because if the arbitrators cannot grant specific performance, a point can be raised under Section 34(2)(b)(i) that the subject matter of the dispute is not capable of arbitration. [Para No.35]

   One of the points raised in the grounds in this Court is that the grant of specific performance is discretionary and the discretion to grant or not to grant specific performance has been conferred by the Specific Relief Act, 1963 on the Civil Court and hence the arbitrator cannot be deemed to have been empowered to grant such a relief. [Para No.36]

    We may point out that the Punjab High Court in Laxmi Narayan vs. Raghubir Singh [AIR 1956 Punjab 249] the Bombay High Court in Fertiliser Corporation of India vs. Chemical Construction Corporation [ILR 1974 Bombay 856/858 (DB)] and the Calcutta High Court in Keventer Agro Ltd. vs. Seegram Comp. Ltd. [Apo 498 of 1997 & Apo 449 of (401)] (dated 27.1.98) have taken the view that an arbitrator can grant specific performance of a contract relating to immovable property under an award. No doubt, the Delhi High Court in M/s PNB Finance Limited vs. Shital Prasad Jain & Others [AIR 1991 Del. 13] has however held that the arbitrator cannot grant specific performance. The question arises as to which view is correct. [Para No.37]

Arbitrator can pass an award directing specific performance of an agreement of sale
   In our opinion, the view taken by the Punjab, Bombay and Calcutta High Courts is the correct one and the view taken by the Delhi High Court is not correct. We are of the view that the right to specific performance of an agreement of sale deals with contractual rights and it is certainly open to the parties to agree - with a view to shorten litigation in regular courts - to refer the issues relating to specific performance to arbitration. There is no prohibition in the Specific Relief Act, 1963 that issues relating to specific performance of contract relating to immovable property cannot be referred to arbitration. Nor is there such a prohibition contained in the Arbitration and Conciliation Act, 1996 as contrasted with Section 15 of the English Arbitration Act, 1950 or section 48(5)(b) of the English Arbitration Act, 1996 which contained a prohibition relating to specific performance of contracts concerning immoveable property. [Para No.38]

11 July 2020

Mere breach of contract cannot give rise to criminal prosecution for cheating

Further, on careful reading of the charge, it appears that the Court has framed the charges of offences under Sections 409, 420, 467, 468, 471 and 120-B of IPC. On reading of provisions of IPC, of which charges are framed against the petitioners as well as principle laid down in this regard by the Hon'ble Apex Court in its various pronouncements, before applying the Section 409 of IPC, consideration of Section 405 of IPC is necessary. Bare reading of Section 405 IPC shows that the accused is either entrusted with a property or acquires dominion over the property and misappropriates the same dishonestly or converts the same for its own use or dishonestly uses or disposes of that property. In criminal breach of trust, the person comes into possession of a property honestly but he develops dishonest intention subsequent to his acquiring dominion over the property by way of entrustment or otherwise. To constitute the offence of criminal breach of trust following ingredients must be fulfilled:-
(i) There has to be some property.
(ii) The said property must be entrusted to someone with or without any contract.
(iii) The dominion of the property was shifted from complainant to the accused.
(iv) The accused person refuses to return/restore the said property to the rightful owner when demanded.
(v) The accused having misappropriated/converted to its own use/disposed the property refuses to restore the property to the complainant/lawful owner.

15. When offence of criminal breach of trust committed by any public servant or by banker merchant or agent then they shall be punished under Section 409 of IPC.

16. Further in order to apply section 420 IPC, the essential ingredients are:-
(i) cheating;
(ii) dishonestly inducement to deliver property or to make, alter or destroy any valuable security or anything which is sealed or signed or is capable of being converted into a valuable security, and
(iii) mens-rea of the accused at the time of making the inducement."

Mere breach of contract cannot give rise to criminal prosecution for cheating

17. Further, under the IPC, the cheating is defined in Section 415 and on reading of the said provision in the light of legal verdicts passed in this regard, the following ingredients are necessary to constitute the offence of cheating :-
(1) Deception of any person.
(2) (a) Fraudulently or dishonestly inducing that person;
(i) to deliver any property to any person; or
(ii) to consent that any person shall retain any property; or
(b) intentionally inducing that person to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property.

22 June 2020

Setting aside of the arbitral Award in rejecting the counter-claims of the respondent does not result in the same being decreed in its favour

Arbitration proceeding - Counter claim by respondent - counter claim dismissed - Award challenged u/s. 34 in District Court - District Court set aside that dismissal-award - consequences of such decision:

Held:

The Court which exercises jurisdiction u/s. 34 of The Arbitration and Conciliation Act is not a court of first appeal under the provisions of the C.P.C. hence the setting aside of an arbitral award rejecting a claim/counter claim does not result in the claim/counter claim which was rejected by the Arbitrator being decreed as a result of the judgment of the court in a petition under Section 34 of The Arbitration and Conciliation Act.

Setting aside of arbitration award is not decreed award
So, it follows that the Award of the Arbitral Tribunal ensures to the benefit of the petitioners being a successful party. It is the successful party who can seek its enforcement under Section 36 of the Act and also secure the Award under section 9 of the Act and not the respondent being the losing party. This position of law is well settled by the judgment of the Bombay High Court as upheld by the Supreme Court in case of Dirk (Supra) wherein in paragraphs 13 & 14, the Court has held as under:

12 June 2020

For claiming payment of agreed amount, claimant need not prove any actual loss

Failure to make payment of compensation payable under contract is not equal to breach of contract.

   Paragraph 1103 of Halsbury's distinguishes between kinds of money payments. Damages, as dealt with earlier, are said to be distinguishable from debts and from a sum of money payable under a contractual liability to pay a sum on a given event. In fact, damages are sought to be distinguishable from compensation and from a penalty and from costs. In the present case, once we come to the conclusion that the amount awarded is not damages and for breach of contract, the petitioner-Niko has no case whatsoever to challenge the award. It will be also beneficial to consider Anson's on the Law of Contract, which, in Chapter 18, deals with actions to recover an agreed sum. The claim in that case was for a liquidated amount and the defendant was obliged under the contract to pay money. Although in that sense, it is said to be similar to specific performance, it is distinguishable and does not attract the same bar in law. The Law of Contract draws a clear distinction between a claim for an agreed sum and a claim for damages for breach of contract. The claimant need not prove loss where a claim is for payment of an agreed sum and remoteness of damages and mitigation of loss are irrelevant in such situations. In the instant case, the formula is meant to provide for such payment. The application of the formula is a matter which was before the tribunal and which the tribunal has considered. The formula was admittedly applicable being within the contractual scope and was not extraneously sourced. There is no question of any further proof of loss caused. [Para No.54]

06 June 2020

Muslim mother is not guardian of minor's property

  • Whether consent of mother is necessary to alienate property of minor?

  • Whether father is required permission of District Court for alienating property of minor?
   Grand mother gave property to minor grandson as a gift - Father without consent of mother of minor and without permission of court executed agreement to sale with third-party - before execution of sale deed, minor attained majority - Notice for specific performance of agreement given to the owner who has attained the majority - suit for specific performance filed against owner who was minor at the time of execution of agreement to sale by his father - Trial court hold that father of the minor was the legal guardian, however, he did not have the authority to execute the agreement, as the defacto guardian was the mother - Suit dismissed - First appellate court reversed the judgment of trial court - Second appeal filed in High Court.

Held: Under Mohammedan Law the mother cannot act or be the guardian of the property of the minor. Consent or permission neither of mother nor of District Court is necessary for father, being natural guardian to alienate property of minor.

26 April 2020

Rule of natural justice need not be observed where fraud or misrepresentation is played

Petitioner was appointed as Distributor of LPG - Submission of "Residence Certificate" was essential eligibility criteria for awarding the distributorship - Distributorship awarded to him -  Unfettered power to the Oil Company were given in the Dealership Agreement for termination, in case, any information found to be untrue or incorrect - Upon a complaint made by one of the unsuccessful complainants it was discovered that the furnished "Residential Certificate" to be false and incorrect - Oil Company, without issuing show cause notice terminated his distributorship. Therefore he claimed that absence of show-cause notice tantamount to absence of the opportunity of being heard and hence termination hits the soul of justice violating Article 14 of the Constitution of India and on this ground alone the said termination letter deserves to be quashed.

Held:
fraud-and-natural-justice
   A Contract is like a written form of the law or like a private legislation that legally binds the parties, hence the aforementioned clause derives utmost sanctity from the agreement. The doctrine of 'Pacta sunt servinda' governs the contractual relationship and the clauses of the contract are the law between the parties. This doctrine presupposes strict compliance of the terms enumerated in the termination clauses of the agreement, otherwise it destroys the sanctity of the contract and eludes the future performance. [Para No.17]


   Fraud and justice cannot go together. It is a settled law that "Fraud" vitiates every solemn act. In Lazarus Estate Ltd. v. Beasley, Lord Denning observed "No judgment of a Court, no order of a Minister can be allowed to stand if it has been obtained by fraud. Fraud unravels everything." In the same judgment Lord Parker LJ observed that fraud "vitiates all transactions known to the law of however high a degree of solemnity.


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