- Foreign arbitral awards are enforceable against non-signatories to the arbitration agreement: Supreme Court of India.
Case Name: Gemini Bay Transcription (P) Ltd. v. Integrated Sales Service Limited, decided on August 10, 2021.
Case Citation: Civil Appeal Nos. 8343-8344 OF 2018.
Case Facts: On September 18, 2000, a Representation Agreement (“Agreement”) was entered into between the Respondent No. 1, Integrated Sales Services Limited (“ISS”) and DMC Management Consultants (“DMC”) and a Hong Kong-based company, wherein ISS was to assist DMC in selling their goods and services, in consideration of a
commission. The Agreement captured an arbitration clause according to which any dispute was to be referred to a single arbitrator in Kansas City, USA. It was alleged by ISS that the chairman of DMC, Mr. Arun Dev Upadhyaya, has formed a company in India by the name Gemini Bay Transcription Private Limited (“GBTPL”) and GBTPL was used to reroute the clients onboarded by ISS to GBTPL and terminate their contracts with DMC in order to avoid commission payments to ISS. In this regard, an arbitration notice was served to the said chairman, GBTPL and DMC. GBTPL contested that the Agreement was entered into between ISS and DMC and GBTPL was not a party to the same. The international arbitration passed an award of USD 6,948,100 in favor of ISS. ISS then approached the Single Judge of the Bombay High Court to enforce the foreign award. Considering the fact that the chairman and GBTPL were non-signatories to the Agreement, the Single Judge ordered that the foreign award was enforceable only against DMC. On appeal to the Division Bench of Bombay High court, the order of the Single Judge was reversed and the award was enforced against both DMC and GBTPL. Hence, the appeal to the Supreme Court of India. Case Decision: The Supreme Court of India dismissed the appeal and upheld the enforcement of the award against both DMC and GBTPL. The apex court discussed the relevant provisions of Section 44 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and observed that as per Section 44, a foreign award is an arbitral award on differences between “persons” and not necessarily “parties” to the agreement and therefore foreign awards can be binding on “persons” who may not be signatories to the arbitration agreement, however, such persons cannot challenge the validity of an arbitration agreement by virtue of the wordings in Section 48 (1) (a) which requires the challenge to be made by “parties” to the agreement only and not by any other person. In addition to this, the apex court also opined on ancillary issues of enforcement of foreign arbitral awards.
2. Determine if the document is a mortgage or a conditional sale: Supreme Court of India.
Case Name: Bhimrao
Ramchandra Khalate vs. Nana
Dinkar Yadav decided on August
13, 2021.
Case Citation: Civil Appeal No.
10197 OF 2010.
Case Facts: Bhimrao Ramchandra Khalate (the “Plaintiff”), was the owner of 20 guns of agricultural land situated in the village Khunte. In need of money, the plaintiff borrowed a sum of INR 3,000/- from Defendant No. 1 by executing a document titled “conditional sale deed” as a security for the loan amount. Plaintiff requested Defendant No. 1 to accept the loan amount and reconvey the disputed land. Defendant No. 1 refused the offer and instead transferred the land in favor of his brother, Defendant No. 2 (collectively with Defendant No(“Defendants). Subsequently, the Plaintiff filed a suit against the defendants under the provisions of the Transfer of Property Act, 1882 (“the Act”) for redemption and possession of the disputed property, claiming that the said transaction was in fact in the nature of mortgage even though was titled as a conditional sale. Case Decision: The appeal was allowed. On perusal of the said document, the apex court observed that a sum of INR 3,000/- was taken as a loan from Defendant No. 1 by Plaintiff. The same was to be returned to Defendant No. 1 and the said Defendant was bound to retransfer the land to Plaintiff if the amount is paid within one year. In light of this, the court observed that the intention of the parties has to be seen when the document is executed and the document has to be read as a whole. In the present case, the advance of the loan and return thereof are part of the same document which creates a relationship between debtor and creditor. Thus, it would be covered by the proviso in Section 58 (c) of the Act which states that “provided that no such transaction shall be deemed to be a mortgage unless the condition is embodied in the document which effects or purports to effect the sale”.
- Validity of thumb impression on a document by a literate person: Supreme Court of
India.
Case Name: Lacchmi Narain
Singh (D) v. Sarjug Singh (Dead),
decided on August 17, 2021.
Case Citation: Civil Appeal No.
5823 of 2011
Case Facts: In 1960, Rajendra Singh executed a Will in favour of the applicant Mr. Sarjug Singh (“Applicant”). In the probate proceedings initiated by the Applicant, certain objections were raised by the alleged legal heirs of the executant. The objectors alleged that the Will favouring the Applicant was revoked and canceled by a registered deed (“Cancellation Deed”). The Applicant challenged the genuineness of the testator’s thumb impression on the Cancellation Deed. While examining the genuineness of the Cancellation Deed, the trial court referred to the evidence of the handwriting expert and the said expert analyzed other deeds executed by the testator and confirmed all thumb impressions tally. In this light, the trial court concluded that the Will has been revoked by virtue of the Cancellation Deed. On appeal, the High Court of Patna granted the probate and reversed the finding of the trial court. Hence, the appeal before the apex court. Case Decision: Relying on the findings of the trial court, the court observed that all the four deeds executed by Rajendra Singh in his lifetime, contained his thumb impression and not his signature. Therefore, the adverse presumption of the genuineness of the Cancellation Deed cannot be drawn merely because the testator chose to append his thumb impression. The court further observed that the key characteristic of a thumb impression is that every person has a unique thumb impression. Forgery of thumb impressions is nearly impossible. Therefore, the adverse conclusion should not be drawn from affixing thumb impressions instead of signing documents of the property transactions. Therefore, the genuineness of the Cancellation Deed cannot be doubted only due to the fact that same was not signed and Rajendra as a literate person, affixed his thumb impression. The appeal was allowed by the apex court.
4. The Registering Officer has no right to decide if the person presenting the document for registration has a marketable
title: Bombay High Court.
Case Name: State Bank of India v.
The state of Maharashtra decided on
August 4, 2021.
Case Citation: Writ Petition No.
579/2021
Case Facts: State Bank of India, the petitioner (“SBI”) had initiated proceedings under the provisions of SARFAESI, 2002. Consequently, a sale certificate dated September 28, 2020 (“Document”) was issued in favor of Ms. Maroti Cottons. On October 19, 2020, the Registrar of Assurances, the Respondent No. 5 (“Registrar”) refused to register the Document in accordance with the provisions of the Registrations Act, 1908 (“the Act”) for multiple reasons, one of which was the main issue in this case, i.e., regarding the encumbrance of the Department of Sales Tax over the property in question. Case Decision: The High Court observed that the ground of encumbrance to refuse registration of a document is in relation to the marketable title of the property. Relying upon the judicial pronouncement of the apex court in the case of Satyapal Anand vs. State of Madhya Pradesh [2016 (10) SCC 767], the High Court observed that the registering officer has no power under the Act to adjudicate upon the issue of marketable title to the property. The power of the registering officer is purely administrative and is not a quasi-judicial power. The registering officer has no right to decide whether a person who has presented the document for registration has a marketable title or not. In light of this, the High Court adjudicated this issue in favour of SBI and directed that the registration of the Document shall not be refused on the basis of encumbrance on it.
5. Bank Guarantee can be encashed during its validity period: Delhi High Court.
Case Name: SPML Infra Ltd. v.
Hitachi (P) Limited, decided on
August 27, 2021.
Case Citation: CM APPL.28298/2021
Case Facts: The present appeal was filed challenging the order of the Trial Court, wherein the Trial Court has passed an ex parte adinterim status quo order as regards the encashment of bank guarantees of the respondent, in an ongoing arbitration matter in the supreme court of india. In response, the respondent states that they would like to press for an injunction order before the Trial Court restraining the appellant from encashing the bank guarantees in question during its validity periods. Case Decision: The High Court hearing the appeal observed that bank guarantees are not furnished for being photo framed and kept in a drawing-room. There is no judicial finding that a bank guarantee cannot be encashed during its validity. The court held that a court cannot injunct encashment of a bank guarantee during its validity if a cause of action arises in the future. A Bank guarantee has a meaning and legal sanctity attached to it. The appeal was accordingly disposed of.
