Subject Wise Case Guide for Law Students: Key Indian Court Decisions

Facts

The respondent has issued a Letter of Intent to the petitioner on for the supply, installation, and commissioning of electric works. The parties executed and signed a letter of intent. The petitioner claimed that the respondent wrongfully withheld Rs.12,24,181 in respect of bills raised by the petitioner against the respondent, which resulted in the filing of a recovery suit for Rs.17,26,000 before the ADJ court. In the aforementioned suit, the respondent filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 requesting that the parties be referred to arbitration in accordance with the arbitration clause contained in the Letter of Intent. The petitioner filed an application under Order 12 Rule 6 of the Code of Civil Procedure (CPC), 1908, seeking a decree based on the respondent's admissions. By the impugned order, the court has granted the respondent's application filed under Section 8 of the Act. As the respondent's Section 8 application was granted, the petitioner's application under Order 12 Rule 6 of the CPC was dismissed. The petitioner has filed a writ petition to challenge the same.

Key Takeaways for Students

Legal Issue

Whether a party can file a writ petition against an order referring the parties to arbitration under Section 8 of the Act?

Holding

The Court ruled that a petition under Article 227 of Constitution of India could not be filed in response to an order referring the parties to arbitration under Section 8 of the Act. There is no provision in the Act for appealing an order allowing a Section 8 application. Thus, the legislative intent is clear in terms of the court referring the parties to arbitration and raising all issues related to the existence and validity of the arbitration agreement before the tribunal.

Final Decision Petition Dismissed

Facts

The appellant and the respondent had executed an agreement in relation to supply of equipment, modernisation and up-gradation of the production facilities of the appellant. Certain dispute arose between the parties leading to arbitration proceedings. The arbitration proceedings were held in England and the arbitral tribunal made two awards in favour of the Respondent. The Appellant filed applications under Section 34 of the Arbitration Act before the District Judge, which were dismissed. Aggrieved, the Appellant filed appeals before the High Court of Chhattisgarh which were also dismissed.

Key Takeaways for Students

Legal Issue

Whether the Indian Court can provide interim measures where the seat of arbitration is outside India?

Holding

A close perusal of the terms between the parties would clearly show that the first part of Article 22 of arbitration agreement is on the law governing the contract. In the first part of that Article, it is agreed between the parties that the proper law of the contract will be governed by the prevailing law of India, and in the case of arbitration, English Law would apply.

Hence, it is clear that the law applicable to arbitration agreement in the present case is English Law. Once it is found that the law governing the arbitration agreement is English Law, Part I of the Arbitration and Conciliation Act, 1996 stands impliedly excluded. Accordingly, no error was found in the view taken by the High Court that the applications filed by the Appellant under Section 34 of the Arbitration and Conciliation Act, 1996 are not maintainable against the foreign awards between the Appellant and the Respondent.

Final Decision Petition Dismissed

Facts

The claimant, Deccan Chronicle Holdings Ltd (DCHL), owned and operated a cricketing franchise in the Indian Premier League known as the Deccan Chargers (IPL). An agreement was signed between Deccan Chargers and the BCCI for a period of ten years. However, Board of Control for Cricket in India (BCCI) terminated the franchise in September 2012. The BCCI also alleged that the franchise had breached the BCCI code. The dispute was brought to the Bombay High Court, which selected former Supreme Court Justice C K Thakker as the sole arbitrator. DCHL was granted Rs 4814 crore by the sole arbitrator, plus interest at 10% per annum from the date of the arbitration procedures, to be paid by BCCI. BCCI filed a case with the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, 1996, to have the awards set aside.

Key Takeaways for Students

Legal Issue

1. Whether the private law bound Arbitral Tribunal can apply public law principles or Article 14 of the Constitution against a public body?
2. Whether the commercial arbitrators are entitled to settle a dispute by applying what they conceive is 'fair and reasonable'?

Holding

In the instant case, the court held that a writ court may well hold against a public body on a public law principle or by invoking Article 14 of Constitution; but an arbitrator, constrained as he or she is by the contract, and has no such power. Consequently, it was ruled that there is absolutely no authority for the proposition that a private-law-bound tribunal has recourse to hold a public body accountable on the principles under Article 14 of Constitution.

Further, the Court held that commercial arbitrators are not entitled to settle a dispute by applying what they conceive is 'fair and reasonable', in the absence of a specific authorization in the arbitration agreement. Section 28(3) of the Act mandates the arbitral tribunal to take into account the terms of the contract while making and deciding the award. Further, under Section 28(2) of the Act, the Arbitral Tribunal is required to decide ex aequo et bono or as amiable compositeur only if the parties expressly authorize it to do so. The Arbitrator is bound to implement the contractual clauses and cannot go contrary to them. Thus, commercial arbitrators cannot decide based on their notions of equity and fairness, unless the contract permits it. Lastly, set aside the Rs 4814 crore arbitral award passed by the Arbitral Tribunal, as the Respondent i.e., DCHL. was in "unquestionable breach of its contractual obligations".

Final Decision Disposed Off

Facts

In this case a dispute arose between a registered broker with the National Stock Exchange and its client involving certain transactions. The client had initiated arbitration proceeding against the broker wherein the claim was rejected by an award given by the nominated sole arbitrator. The Respondent then filed an application under Section 34 of the Arbitration and Conciliation Act, 1996, before the District Court, Delhi. By a judgment, the Additional District Judge referred to the exclusive jurisdiction clause contained in the agreement, and stated that he would have no jurisdiction to proceed further in the matter and, therefore, rejected the Section 34 of Act application. However, on appeal, the Delhi High Court held that the issue of jurisdiction in the present case was a question of fact and parties were not allowed to lead evidence on it. Accordingly, the High Court directed District Court, Delhi to decide this question (in relation to existence of territorial jurisdiction of Delhi Courts) after framing a specific issue and permitting parties to lead evidence on it.

Key Takeaways for Students

Legal Issue

Can an arbitration dispute be decided by any Court other the one having exclusive jurisdiction under the bye-laws?

Holding

The court held that courts in Mumbai have exclusive jurisdiction. If the agreement is read with the National Stock Exchange bye-laws, it is clear that it is the Mumbai courts and the Mumbai courts alone, before which a Section 34 of Arbitration and Conciliation Act, 1996 application can be filed. The arbitration that was conducted at Delhi was only at a convenient venue earmarked by the National Stock Exchange.

Final Decision Appeal Allowed

Facts

Petitioners are engaged in the business of designing, developing, manufacturing, marketing and/or sale of telecommunications related products worldwide. Bharat Sanchar Nigam Limited (BSNL) invited bids for planning, supply, installation and commissioning of IMPCS 20/30 Combo Network (Phase V), the petitioner was responsible for delivering these systems as per the tender requirements. To formalize this, they signed Cooperation Agreements with the respondent on 20.03.2009.

Both agreements stated that if BSNL imposed any penalties on the petitioners for delays in fixing faults, the respondent would cover the entire penalty. Additionally, if the respondent had to hire a third party to fix the defects, the respondent would bear all related costs and risks.

Petitioner issued four purchase orders to respondent. According to petitioners, the aforesaid work was commissioned after a delay on 25.06.2012 and was valid till 24.06.2013 and the associated warranted for complete solution/products supplied was valid till 24.06.2015. BSNL raised several issues with regard to solution and products supplied by the respondent, however, respondent in direct breach of its contractual obligation did not rectify/resolve certain issues.

Due to non rectification of open issues BSNL imposed penalty amounting to INR 3,62,46,055 on petitioners for the period 2015-2017. Additionally, BSNL has withheld Huawei's Bank Guarantee (BG) amounting to INR 7,72,23,487, which may be encashed by BSNL due to inaction of respondent.

Petitioners stated that due to the respondent’s failure to address issues with BSNL and after unsuccessful discussions, they sent a legal notice to the respondent on 21.12.2018 asking for a resolution plan within seven days. The respondent replied on January 3, 2019, but only promised a detailed response that never came.

Consequently, the petitioners sent another legal notice on 14.03.2019 requesting arbitration under Clause 18 of the Agreements and suggested Justice (Retd.) R.C. Chopra as the sole arbitrator. Since the respondent did not respond, the petitioners have now asked the Court to appoint an arbitrator.

Key Takeaways for Students

Legal Issue

Whether the arbitration clause in Cooperation Agreement dated 20.03.2009 is valid and not barred by limitation?

Holding

The Court while taking into account the case of BSNL v. Nortel Networks (India) (P) Ltd., (MANU/SC/0171/2021) has observed that petitioners first sent Legal Notice dated 21.12.2018 to respondent calling upon to provide a resolution plan within seven days, which was replied by the respondent vide its communication dated 03.01.2019 stating therein the respondent was under the process of reviewing the allegations and claims raised by the petitioners and a details response shall be shared shortly. Thereafter, petitioners sent a legal notice dated 14.03.2019 to respondent invoking arbitration wherein name of Justice (Retd.) R.C. Chopra was proposed for appointment as Arbitrator, which was not replied to.

The period of limitation of three years will be counted from the expiry of refusal to reply to appointment of Arbitrator within 30 days of invoking arbitration by notice, which in this case shall be 13.04.2019. The present petition was filed before this Court on 24.05.2019 and in this manner, there is no delay in filing the present petition.

As per the Cooperation Agreement dated 20.03.2009 that was entered into by both the parties existence of arbitration Clause-18.2 therein and invocation of arbitration by virtue of notice dated 14.03.2019 is not disputed. Also, terms of Clause-18.2 the disputes have to be referred to a single Arbitrator. Mr. Justice G.S. Sistani (Retd.) was appointed as the sole arbitrator to adjudicate the dispute between the parties.

Final Decision Petition Allowed

Facts

The State of Maharashtra's Irrigation Department contracted with Respondent No. 1 for civil work on Stage IV of the Koyna Hydroelectric Project. Respondent No. 1, in turn, sub-contracted part of the work to the Petitioner. Clause 19 of their agreement stipulated that any disputes would be referred to arbitration in Bombay, with each party appointing one arbitrator. If either party failed to appoint an arbitrator within 30 days, the other party’s arbitrator could proceed as the sole arbitrator.

When disputes arose, the Petitioner appointed Respondent No. 2 as his arbitrator, while Respondent No. 1 initially appointed S.N. Huddar, who declined due to prior involvement with the project. S.L. Jain was then appointed. Respondent No. 1 later proposed appointing a third arbitrator under Section 15(2) of the Arbitration and Conciliation Act, 1996, which Respondent No. 2 contested. Respondent No. 1 approached the Bombay High Court, which appointed a retired judge as the third arbitrator. Aggrieved by this decision, the Petitioner filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996.

Key Takeaways for Students

Legal Issue

What is the Nature of power under Section 11(6) of the Arbitration and Conciliation Act, 1996?

Holding

The Supreme Court has clarified and explained the operation of Section 11(6) of the Arbitration and Conciliation Act, 1996 [Act] dealing with the appointment of arbitrators by the Chief Justice. The Court explained that such an appointment is an exercise of judicial power and not an administrative decision. This has far-reaching consequences for the future conduct of arbitral proceedings in India and more importantly for the signal that this sends out about the scope of judicial interference in alternative methods of dispute resolution. The function performed by the Chief Justice of the High Court or the Chief Justice of India under Sub-section (6) of Section 11 of the Act (i.e. Arbitration and Conciliation Act, 1996) is administrative, - pure and simple -, and neither judicial nor quasi-judicial.

Ratio The power exercised by the Chief Justice or his designate under Section 11(6) of the Arbitration and Conciliation Act, 1996, is a judicial function and not an administrative one.

Case Overruled by Vidya Drolia and Ors. vs. Durga Trading Corporation and Ors. MANU/SC/0939/2020

Facts

The dispute arose between Shri Lal Mahal Ltd (an Indian supplier) and Progetto Grano Spa (an Italian buyer) concerning a contract for the supply of wheat. The buyer challenged the quality of the wheat supplied, questioning the reliability of the quality certificate issued at the port of loading in India. An arbitral tribunal under the Grain and Feed Trade Association (GAFTA) in London ruled in favor of the buyer, awarding damages against the seller. The seller's appeals against the award were rejected both by the GAFTA Board of Appeal and the High Court of Justice in London. The buyer then sought to enforce the award in India, which led to the seller opposing the enforcement on the grounds that it would violate the public policy of India.

Key Takeaways for Students

Legal Issue

Whether the enforcement of a foreign arbitral award can be opposed on the grounds of patent illegality under the public policy exception?

Holding

The Supreme Court held that the concept of public policy for the purposes of enforcement of foreign awards is narrower than for setting aside domestic awards and declined to entertain challenges on grounds of patent illegality.

Final Decision Appeal Dismissed

Ratio In enforcement proceedings, the scope of public policy is limited to fundamental policy of Indian law, interests of India, or justice and morality. Patent illegality is not a ground to resist enforcement.

Facts

The Appellant had entered into a lease agreement with the respondent in respect of certain machineries. A dispute arose between the parties and the respondent sent a notice to the Appellant invoking the arbitration clause. The respondent appointed a sole arbitrator as per the arbitration clause of the Lease Agreement and the Arbitrator in turn issued a notice to the appellant asking them to make their appearance before him. Thereafter, the Appellant filed application before Hon'ble the Chief Justice of Bombay and prayed for appointment of another Arbitrator and the Respondent opposed this application. This petition was rejected by the Chief Justice holding that as the Arbitrator had already been appointed by the first respondent, the Lessor, the petition was not maintainable. The question was whether in a case falling under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Act), the opposite party cannot appoint an arbitrator after expiry of 30 days from the date of demand.

Key Takeaways for Students

Legal Issue

Whether in a case falling under Section 11(6) of the Act, the opposite party cannot appoint an arbitrator after expiry of 30 days from the date of demand?

Holding

Appointment of arbitrator after expiry of 30 days was held to be valid and the court stated that in cases arising under Section 11(6) of the Act, if the opposite party has not made an appointment within 30 days of demand, the right to make appointment is not forfeited but continues, but an appointment has to be made before the former files application under Section 11 of the Act seeking appointment of an arbitrator. Only then the right of the opposite party ceases.

Final Decision Appeal Dismissed

Ratio Right to appoint arbitrator is not forfeited immediately after the expiry of 30 days of receiving the demand. It persists until the other party files an application under Section 11 of the Act for court intervention.

Facts

The Single Judge of the High Court dismissed the application for condonation of delay in an application filed under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act) to set aside an award. Consequently, the application filed under Section 34 of the Act also dismissed.

The Single Judge while dismissing the application of condonation of delay took into consideration the case of Union of India v. Popular Construction Co. (MANU/SC/0613/2001) wherein it was held that Sub-section (3) of Section 34 of the Act, by use of the words but not thereafter, restricts the power otherwise vested in Court to condone the delay beyond thirty days. The same also creates a ground of time bar for refusing to set aside the award and was part of the self-contained code for setting aside of the award. The appeal filed against the order of Single Judge also dismissed by Division Bench as non-maintainable in view of bar created by Section 37 of the Act. Hence, the present appeal has been filed.

Key Takeaways for Students

Legal Issue

Whether the Ld. Single Judge's order refusing to condone the appellant's delay in filing an application under Section 34 of the Arbitration Act would be an appealable order under Section 37(1)(c) of the Arbitration Act.

Holding

The Court observed that undoubtedly, a limited right of appeal is given under Section 37 of the Act. But it is not the province or duty of this Court to further limit such right by excluding appeals which are in fact provided for, given the language of the provision.

The impugned question of law is answered by stating that an appeal under Section 37(1)(c) of the Act, would be maintainable against an order refusing to condone delay in filing an application under Section 34 of the said Act to set aside an award. The impugned judgment of the Division Bench under appeal is set aside.

Final Decision Appeal Allowed

Facts

The Respondent filed a winding-up petition against the petitioner before the High Court. In response, the Petitioner filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (Act), seeking a referral of the matter to arbitration based on the existing arbitration agreement between the parties. The Single Judge dismissed the application, and the Division Bench of the High Court upheld this decision. The High Court referred to previous cases under the Indian Arbitration Act, 1940, where it was consistently held that matters concerning the winding up of a company could not be referred to arbitration.

Key Takeaways for Students

Legal Issue

Whether a petition for the winding up of a company, which is governed by the Companies Act, 1956, can be referred to arbitration under Section 8 of the Act?

Holding

The Supreme Court held that while Section 8 of the Act, mandates that a judicial authority must refer a matter to arbitration when an arbitration agreement exists between the parties, this is limited to disputes or matters that the arbitrator is competent to decide. The Court emphasized that the power to order the winding up of a company is vested in the courts under the Companies Act, 1956, and cannot be delegated to an arbitrator.

Final Decision Petition Dismissed

Ratio The power to wind up a company is conferred exclusively on the courts by the Companies Act, and an arbitrator, irrespective of any agreement between the parties, lacks jurisdiction to order the winding up of a company.

Facts

The Modi family, divided into GROUP A (led by K.N. Modi and his sons) and GROUP B (led by K.K. Modi and other sons of Mai Modi), owned several public limited companies. Disputes arose between the two groups, leading them to seek resolution through various financial institutions, including the Industrial Finance Corporation of India (IFCI). A Memorandum of Agreement was signed by both parties, specifying that all matters would be resolved by the Chairman of IFCI or his nominees, whose decisions would be final and binding.

Both groups were dissatisfied with the final report submitted by the Chairman of IFCI, which outlined the division of assets. The report included a series of directions for implementation, which were not filed in court. Subsequently, on 18th May 1996, Group B filed an arbitration petition in the Delhi High Court under Section 33 of the Arbitration Act, 1940, challenging the legality and validity of the directions issued by the Chairman of IFCI. Additionally, they filed a civil suit in the Delhi High Court, arguing that the directions issued were a decision and not an arbitration award.

Key Takeaways for Students

Legal Issue

1. Whether Clause 9 in the Memorandum of Agreement constituted an arbitration clause.
2. Whether the decision of IFCI constituted an arbitration award.

Holding

The Supreme Court held that the clause in the Memorandum of Agreement did not constitute an arbitration clause as it did not explicitly refer to the disputes being submitted to arbitration or an arbitrator. Additionally, the Court concluded that the decision of IFCI did not constitute an arbitral award based on the guidelines for determining whether parties intended to arbitrate.

Final Decision Disposed Off

Ratio For a clause to constitute an arbitration clause, it must explicitly state that disputes will be referred to arbitration and decided by an arbitrator.

Facts

During the pendency of this appeal, all parties entered into an arbitration agreement, agreeing to refer their disputes, including those in this appeal, to Justice S. Ranganathan, a retired Judge of the Supreme Court, as the sole arbitrator. The arbitration agreement, in the form of an application, was signed by all parties and met the requirements of Section 7 of the Arbitration and Conciliation Act, 1996.

Key Takeaways for Students

Legal Issue

Whether the Supreme Court, while hearing an appeal, can refer the parties to arbitration under the Arbitration and Conciliation Act, 1996?

Holding

The Supreme Court held that under Section 8 of Act, a judicial authority before which an action is brought in a matter that is the subject of an arbitration agreement must refer the parties to arbitration if an application is made before the first statement on the substance of the dispute is submitted.

The court further noted that the phrase "which is the subject of an arbitration agreement" does not necessarily require that the agreement be in existence before the action is brought to court. It can also connotate an arbitration agreement brought into existence while the action is pending.

The language of Section 8 of the Act is peremptory, making it obligatory for the Court to refer the parties to arbitration if the requirements of Section 7 are met. Consequently, nothing remained to be decided in the original action or the appeal, as the rights, obligations, and remedies of the parties would now be governed by the new Act. The Court allowed the application and referred the parties to arbitration. The appeal was disposed of accordingly

Final Decision Appeal Disposed Of

Ratio Application under Section 8 of the of the Act serves only to notify the Court that the subject matter of the action is governed by an arbitration agreement; it does not amount to an application within the meaning of Section 42 of the Act.

Facts

The Appellant, Sanjiv Prakash, is a member of a family which also consists of his sister, Seema Kukreja (Respondent No. 1 herein), his mother, Daya Prakash (Respondent No. 2 herein), and his father, Prem Prakash (Respondent No. 3 herein). A private company was incorporated by Respondent No. 3, who paid for the entire paid-up capital with his own money. The Appellant was approached by a foreign corporation seeking long-term equity investment and collaboration.

A Memorandum of Knowledge (MoU) was signed by four members of the Appellant's family. The Appellant's family and the corporation then signed a Shareholders' Agreement (SHA) on 12.04.1996. Disputes between the parties arose when Respondent No.3 decided to transfer his stock to be held jointly between Appellant and himself, and Respondent No.2 did the same to be held jointly between Respondent No.1 and herself.

The appellant invoking the arbitration Clause contained in the MoU serve a notice upon the three Respondents, alleging that his pre-emptive right to purchase Respondent No. 2 shares, as was set out in Clause 8 of the MoU had been breached and Justice Deepak Verma was nominated to be the sole arbitrator. The respondent contented that the MoU ceased to exist on and from the date of the SHA, i.e. 12.04.1996, which superseded the aforesaid MoU and denied that there was any arbitration Clause exists after 12.04.1996. As a result, the appellant filed a petition before the Delhi High Court under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act).

The Delhi High Court stated that an arbitration agreement being a creation of an agreement may be destroyed by agreement. That is to say, if the contract is superseded by another, the arbitration clause, being a component/part of the earlier contract, falls with it or if the original contract in entirety is put to an end, the arbitration clause, which is a part of it, also perishes along with it. Hence, the arbitration Clause of the MoU, being Clause 12, having perished with the MoU, owing to novation, the invocation of arbitration under the MoU is belied/not justified.

Therefore, the Delhi High Court rejected plea of the appellant under Section 11 of the Act. Aggrieved by this, the Appellant has filed an appeal in the Supreme Court.

Key Takeaways for Students

Legal Issue

Whether Single Judge erred in concluding that arbitration Clause of MoU, having perished with MoU, owing to novation, invocation of arbitration under MoU was belied?

Holding

The Supreme Court held there is nothing vexatious or frivolous in the plea taken by the Appellant. The Court considered the limiting scope of Section 11 of the Act, and concluded that the issue of novation of an agreement cannot be decided by courts in the limited prima facie assessment of whether the parties have entered into an arbitration agreement. Therefore, the Court set aside the judgment of the Delhi High Court and referred the parties to the arbitration of a sole arbitrator.

Final Decision Appeal Disposed Of

Facts

The respondent purchased property and availed finance facility from the Appellant. The Respondent made the entire payment to the appellant and requested for return of original documents. The Appellant, it appears, lost/misplaced the aforesaid original documents and lodged an FIR on 21.06.2018. As a result, the respondent filed the suit seeking recovery of Rs. 3,40,00,000 as damages. As the agreement that was signed by both the parties contained arbitration clause, the appellant filed an application under Section 8 of the Arbitration & Conciliation Act 1996 (the Act). The Respondent contented that the appellant had opted to proceed with the suit and now cannot be heard to claim Arbitration.

The Single Judge held that the dispute raised in the suit cannot be said to be covered by Dispute Resolution clause of the Loan agreement, and was of the view that the arbitration agreement, in the present case, was invalid. Aggrieved by this, the appellant filed his appeal in front of Division Bench.

Key Takeaways for Students

Legal Issue

Whether there exists a valid arbitration agreement between the parties or not?

Holding

The Delhi High Court held that arbitration clause in the agreement cannot amount to a valid arbitration agreement since the clause lacks an essential element of an arbitration agreement-"mutuality." in as much as, the clause only gives one party i.e., the appellant the right to walk out of arbitration, and the same right is not conferred on the respondent.

The Court observed that Section 7 of the Act states that "some or all disputes" can be referred to the arbitration, the parties are not at the liberty to split the claims which arise out of the same defined legal relationship i.e. there cannot be a valid arbitration clause providing for arbitration of claims of one party and providing for the remedy of the Court or any other fora for the claim of the other party. The court upheld the decision of Single Judge by observing that arbitration clause in the said agreement is the antithesis to "the spirit of mutuality".

Final Decision Appeal Dismissed

Facts

Sterlite Industries (India) Ltd. (Respondent) entered into an agreement with MMTC Ltd. (Appellant) on December 14, 1993, which included an arbitration clause allowing each party to appoint one arbitrator, and for these arbitrators to appoint an umpire. Respondents, alleging non-receipt of dues from Appellants, invoked the arbitration clause by appointing an arbitrator in January 1996. Appellant refused to appoint its arbitrator, contending that the arbitration clause was not valid under the Arbitration and Conciliation Act, 1996 ("Act"). Therefore, the Respondents filed an application in the Bombay High Court to enforce the arbitration agreement under the New Act.

Key Takeaways for Students

Legal Issue

1. Whether an arbitration agreement made before the commencement of the Act, specifying the appointment of an even number of arbitrators, is enforceable under the Act?
2. Whether the failure to appoint a third arbitrator (umpire) invalidates the arbitration agreement?

Holding

The Supreme Court held that the arbitration agreement in question was valid and enforceable under the Act, despite providing for an even number of arbitrators. The Court also held that the Act's provisions concerning the number and appointment of arbitrators did not invalidate the arbitration agreement, and that Section 11 of the Act applied to the appointment of the third arbitrator.

The Supreme Court directed the Chief Justice of the High Court to appoint the third arbitrator as required by Section 11(4)(b) of the Act, due to the failure of the two appointed arbitrators to appoint the third arbitrator within the prescribed time.

Final Decision Disposed Off

Ratio Appointment of an even number of arbitrators does not invalidate an arbitration agreement. Under Section 11(3) of the Arbitration and Conciliation Act, 1996, if the parties appoint two arbitrators, those arbitrators must appoint a third arbitrator who will act as the presiding arbitrator.

Facts

The case arose from a contract dispute between the Union of India and G.S. Atwal and Co. regarding the excavation of a Feeder Canal. Disputes arose over the refund of hire charges for equipment loaned by the Farakka Barrage Project. These disputes were referred to arbitration multiple times, with the fifth arbitration being the subject of this case. The Respondent, G.S. Atwal and Co., claimed a refund of excess hire charges, along with other expenses, which was disputed by the Appellant, Union of India. The arbitrator awarded a sum to the Respondent, which was later challenged by the Appellant on grounds of jurisdiction and the scope of the arbitrator's authority.

Key Takeaways for Students

Legal Issue

1. Whether the arbitrator had the jurisdiction to unilaterally enlarge the scope of the arbitration to include additional claims beyond the agreed reference?
2. Whether the respondent was entitled to a refund of hire charges?

Holding

The Supreme Court observed that the jurisdiction of an arbitrator is strictly derived from the arbitration agreement between the parties. An arbitrator cannot unilaterally expand the scope of arbitration beyond what was expressly agreed upon by the parties. Any such expansion without mutual consent is void and the award based on such expansion is liable to be set aside.

The Supreme Court held that the arbitrator exceeded his jurisdiction by unilaterally enlarging the scope of the arbitration without the agreement of the appellant. Therefore, the respondent was not entitled to a refund of hire charges as awarded by the arbitrator.

Final Decision Appeal Allowed

Ratio Arbitrator cannot unilaterally expand the scope of arbitration beyond what was expressly agreed upon by the parties

Facts

The subject matter of case involves division of property between the Appellant and the Respondent. The arbitration award was passed on 07.07.1996 whereby certain properties were given to the Appellant and Respondent each, whereas some other assets were kept undivided with equal rights and interest thereon of both groups. Then by an award dated 03.11.1996, the issues between the Appellants and the Respondents were finally decided taking note of earlier awards. Later, the Appellant filed an arbitration petition under Section 34 of the Act challenging the award and contended that they learnt about the arbitral award only when they were served with the notice of execution petition filed by the Respondent and therefore period of limitation starts only from the date of their receipt of copy of the award. They also emphasized that the signature of Appellant in the arbitral award showing his acknowledgement was forged and therefore, could not be acted upon.

The Appellants later on amended the arbitration petition stating that petition filed initially, did not contain the challenge to award dated 03.11.1996 and hence, by an amendment sought to challenge award dated 03.11.1996 as well. This application was rejected by District Court on the ground of limitation and later by the High Court.

Key Takeaways for Students

Legal Issue

From when does the period of limitation prescribed under Section 34(3) of Arbitration and Conciliation Act, 1996 commence?

Holding

The Court, with respect to the issue of limitation, has held that for filing an application under Section 34 of the Arbitration and Conciliation Act, 1996, the period of limitation would commence only after a valid delivery of an arbitral award takes place under Section 31(5) of the Act. Section 34(3) of the Act provides that an application for setting aside an award shall not be entertained by the court if it is made after three months from the date on which the applicant had received the arbitral award.

In this case, the award dated 03.11.1996 also refers to the award dated 07.07.1996. The award dated 03.11.1996 was also signed by Appellant and he has undertaken that the arbitration award is duly agreed and approved by him and his family members and further undertaken to act in accordance with the award and to give effect to the same which shows that the Appellant was well-aware of the award dated 07.07.1996.

Final Decision Appeal Dismissed

Facts

Petitioner was an advocate enrolled with the Bar Council of Tamil Nadu. To practice law in India, a person has to be Indian citizen and should possess degree in law from a recognized University in India Foreign degree of law from a University outside India requires recognition by the Bar Council of India. The Indian advocates however, are not allowed to practice in U.K., U.S.A., Australia and other foreign nations except on fulfilling onerous restrictions like qualifying tests, experience, work permit. Foreign lawyers cannot be allowed to practice in India without reciprocity.

However under the guise of LPOs (Legal Process Outsourcing) that conduct seminars and arbitrations, foreign lawyers are visiting India on Visitor Visa and practicing illegally. Stand of the foreign law firms, , is that there is no bar to a company carrying on consultancy/support services in the field of protection and management of intellectual, business and industrial proprietary rights, carrying out market service and market research, publication of reports, journals etc.

Prayer in the writ petition is to take action against the Respondents or any other foreign law firms or foreign lawyers illegally practicing the profession of law in India and direct them to refrain from having any illegal practice on the litigation side and in the field of commercial transactions in any manner whatsoever.

Key Takeaways for Students

Legal Issue

Whether there is a bar on a foreign lawyer from conducting arbitration proceedings arising out of contracts relating to international commercial arbitration, in India?

Holding

The court held that there is no absolute right of the foreign lawyer to conduct arbitration proceedings in respect of disputes arising out of a contract relating to international commercial arbitration. If the Rules of Institutional Arbitration apply or the matter is covered by the provisions of the Arbitration and Conciliation Act, 1996, foreign lawyers may not be debarred from conducting arbitration proceedings arising out of international commercial arbitration in view of Sections 32 and 33 of the Advocates Act, 1961. However, they will be governed by code of conduct applicable to the legal profession in India

Final Decision Disposed of

Facts

The Respondent, Saw Pipes Ltd., engaged in supplying equipment for offshore oil exploration, entered into a contract with the Appellant, Oil & Natural Gas Corporation Ltd. (ONGC), to supply casing pipes. Due to a workers' strike across Europe, Saw Pipes could not procure the raw materials necessary to fulfill the order on time. Upon notification, ONGC extended the delivery deadline but imposed a condition that liquidated damages would be deducted for any delay in the supply. The contract stipulated a liquidated damages clause: for each week of delay, the contractor would be charged 1% of the total price of the undelivered portion, with a cap at 10% of the total contract price. The clause also specified that these damages were genuine pre-estimates, not penalties, and could be deducted from payments due to the Respondent.

When Saw Pipes failed to deliver on time, ONGC withheld $304,970.20 and ₹15,75,559, including customs duty, freight charges, and sales tax, as liquidated damages. Saw Pipes disputed these deductions, leading to arbitration. The Arbitral Tribunal ruled in favor of Saw Pipes. Dissatisfied, ONGC challenged the arbitral award before the Bombay High Court, which dismissed the appeal. ONGC then appealed to the Supreme Court of India.

Key Takeaways for Students

Legal Issue

1. Does the Supreme Court have jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, to hear the present appeal?
2. Can an arbitral award be set aside if the tribunal fails to follow the procedure prescribed under the Arbitration and Conciliation Act, 1996?
3. Can an award be set aside on grounds of "public policy" under Section 34 of the Arbitration and Conciliation Act, 1996, if it violates substantive law?

Holding

Firstly the Supreme Court discussed its jurisdiction to set aside arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. The Court emphasized that interference is permissible only on specific grounds, such as if the tribunal has acted beyond its jurisdiction or if the award is in conflict with the public policy of India.

Regarding the damages, the Court held that when the terms of the contract are clear, the court should not require proof of actual loss if the parties have agreed on a genuine pre-estimate of liquidated damages. However, if the liquidated damages are construed as a penalty, the court may grant reasonable compensation only if the claimant can prove the actual damage. The Court highlighted that contracts executed by experts in the field should not easily be construed as penalties.

Citing Maula Bux v. Union of India (MANU/SC/0081/1969) the Court concluded that when it is difficult to assess the compensation, the burden of proof lies with the party challenging the reasonableness of the stipulated damages. In this case, no such challenge was raised.

The Court further noted that the Arbitral Tribunal's decision violated Sections 73 and 74 of the Indian Contract Act, 1872, as it failed to recognize the liquidated damages as a genuine pre-estimate of loss. The Tribunal also ignored the terms of the contract, which clearly distinguished liquidated damages from penalties.

Therefore the Court had set aside the arbitral award on the grounds of patent illegality and violation of public policy under Section 34 of the Arbitration and Conciliation Act, 1996. The Court held that the Tribunal acted beyond its jurisdiction by disregarding the contract's terms and the applicable substantive law, leading to a miscarriage of justice. The Court also ruled that the force majeure clause could not be invoked, as the contract did not anticipate a workers' strike.

Final Decision Appeal Allowed

Ratio Jurisdiction of Supreme Court under Section 34 of the Arbitration and Conciliation Act, 1996, is broad enough to allow for the setting aside of arbitral awards on specific grounds, including violations of public policy.

Facts

The appellant in this case agreed to do certain construction work for the respondent-company registered under the Indian Companies Act and having its principal place of business at Bombay on the terms and conditions of a written tender. Clause 13 provided that despite of the place where the work under the contract was to be executed, the contract shall be deemed to have been entered into by the parties at Bombay and the court in Bombay alone shall have jurisdiction to adjudicate thereon. On disputes arising between the parties, the appellant submitted that a petition to the Court at Varanasi for an order under Section 20 of the Arbitration Act, 1940. The respondent contended that in view of clause 13 of the arbitration agreement, only the courts at Bombay had jurisdiction.

The Trial Judge concluded that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the Courts at Bombay, which they did not otherwise possess.

The High Court of Allahabad in exercise of its revisional jurisdiction set aside the order passed by the Subordinate Judge and declared that the Courts in Bombay had jurisdiction under the general law to entertain the petition. Hence, the appeal.

Key Takeaways for Students

Legal Issue

Which Court shall have jurisdiction to try the case?

Holding

The Code of Civil Procedure, 1908 (CPC) in its entirety applies to proceedings under the Arbitration Act, 1940. The jurisdiction of the Courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the CPC. By Clause 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay. In any event the respondent has their principal office in Bombay and they were liable in respect of a cause of action arising under the terms of the tender to be sued in the Courts at Bombay. It is not open to the parties by agreement to confer by their agreement jurisdiction on a Court which it does not possess under the CPC.

Final Decision Appeal Dismissed

Facts

The appellant, a contractor entered into a construction contract with the Military Engineering Service for making some additional construction in the factory. The contract was entered into at Bareilly in Uttar Pradesh. A dispute arose in regard to the execution of the contract between the contractor and the respondent. An Arbitrator was appointed who in due course rendered an award in favour of the contractor. The contractor instead of instituting an appropriate proceeding in Uttar Pradesh where the contract was executed and the work was carried out, instituted a proceeding on the original side of the Delhi High Court and prayed for making the award a rule of the Court under Sections 14 and 17 of the Indian Arbitration Act, 1940. The respondent raised a plea to the effect that the Delhi High Court had no Jurisdiction inasmuch as the cause of action had arisen at a place in Uttar Pradesh and that the contract was also executed at Bareilly in Uttar Pradesh.

The learned Single Judge negatived this plea. The Respondent preferred a letters patent appeal to the Division Bench of Delhi High Court which allowed the appeal and set aside the order of the learned Single Judge upon reaching the conclusion that the Delhi High Court had no jurisdiction and observed that the Union of India was not carrying on any "business" in Delhi so as to attract Section 20 of the CPC.

Key Takeaways for Students

Legal Issue

Whether a suit is maintainable against the Government anywhere in the State because the State is deemed to carry on business everywhere in the country?

Holding

The Supreme Court held that maintaining the armed forces is part of the sovereign activity of the State. It is an activity which is undertaken by the Central Government for ensuring the security of India which is a sovereign function of the State and if the activity of the state is sovereign in nature the suit against the government can be filed only at the place where the cause of action has arisen in full or in part.

Final Decision Appeal Dismissed

Facts

The petitioners and their ancestors had been the tenants of the land and respondents were proprietors of the said land for past 50 years. Due to communal violence in western district of UP, petitioners had to leave their village and in their absence the respondents took unlawful possession of the said land and on return of the petitioners, denied to deliver the possession back to the true owners. The petitioners filed suit for ejectment under U.P. Tenancy Act, 1939. In the trial court, the petitioners succeeded and a decree was passed in their favor. The said decree was confirmed in appeal which was taken by respondents. Respondents then preferred a second appeal before the Board of Revenue under Section 267 of the U.P. Tenancy Act, 1939. The board allowed the appeal preferred by respondents for a part of land and dismissed the petitioner's suit with respect to the land. Aggrieved by this decision, the petitioners moved the High Court at Allahabad under Article 226 of the Constitution of India for the issuance of a writ of certiorari to quash the said judgment. The said petition was dismissed. It was under these circumstances that the petitioners filed the petition under Article 32 of Constitution of India. The grounds against the decision of the Board which the petitioners seek to raise by their present petition are exactly the same as the grounds which they had raised before the Allahabad High Court; and so it is urged by the respondents that the present petition is barred by Res Judicata.

Key Takeaways for Students

Legal Issue

Whether the petition is barred by Res Judicata?

Holding

If the petition filed in the High Court under Article 226 of Constitution of India is dismissed not on the merits but because of the laches of the party applying for the writ or because it is held that the party had an alternative remedy available to it, then the dismissal of the writ petition would not constitute a bar to a subsequent petition under Article 32 of Constitution of India.

Final Decision Petition Dismissed

Facts

Appellant filed a suit against the Respondent to protect his copyright, trademarks and common law rights as regard his art work/ trade mark ‘Dhodha House’ which the Respondent had allegedly infringed by carrying on a similar business in the name and style of M/s. V.R.K. Todha Sweet House. The Appellant filed a suit before the District Judge, Ghaziabad wherein it also prayed for an order of injunction. The learned 1st Addl. District Judge, Ghaziabad passed an order of injunction against the Respondent.

Respondent preferred an appeal there against before the High Court of Judicature at Allahabad. The High Court inter alia held that the civil Court had no territorial jurisdiction to try the suit. The High Court was further of the opinion that 'Dodha' is a name of a variety of sweet and it is not a special product. It is not in dispute that the Appellant carries on business of sweet meats in the district of Ghaziabad whereas the Respondent carries on the similar business at Kotkapura in the district of Faridkot.

Key Takeaways for Students

Legal Issue

Whether Ghaziabad Court had territorial jurisdiction to try the suit?

Holding

Supreme Court held that where it is uncertain as within whose jurisdiction of two or more courts the immovable property is situated, any of those courts may try the suit relating to that suit property and dispose of the matter and its decree shall have the same effect as if the property is situated within the local limits of its jurisdiction.

Final Decision Appeal Dismissed

Facts

Kutty Amma executed a settlement deed in favour of her husband giving life-estate to him, and vested remainder in favour of the respondent. She died in the year 1971. Her husband alienated the property in 1972 by a registered sale deed in favour of Narayanan Nair and Chennan. The respondent filed a suit to restrain the appellant from alienating the properties. Pending the suit, the appellant purchased the suit property from Narayanan Nair and Chennan. The trial court decreed the suit holding that 'the husband' had no right to alienate the lands and permanent injunction was issued restraining him from committing acts of waste. The appeal by 'the husband' was dismissed. The appellant was not a party to the earlier suit so the respondent filed another suit against 'the husband' and the appellant for perpetual injunction restraining them from committing the acts of waste. The suit was decreed. Therein the validity of the appellant's title was left open. The respondent filed another suit in Court of Subordinate Judge for declaration of his title and possession against the appellant. The trial court decreed the suit and granted mesne profits. On appeal, it was confirmed. The second appeal was dismissed. Hence, the present appeal.

The concurrent findings recorded by all the courts are that the appellant being successor in title and interest of ‘the husband’ is bound by the decrees and did not acquire any title. The transfer in his favour was only the life-estate ‘the husband’ and on his demise the estate of Kutty Amma stands vested in the respondent. Thus the present dispute is concluded by those judgments and decrees by the principle of res judicata.

Key Takeaways for Students

Legal Issue

Whether the decree passed in previous suit would act as Res Judicata for subsequent suit?

Holding

It was held that, when the right and interest of the respondent were questioned in his suit against ‘the husband’, the validity of the settlement deed and the terms thereof were gone into. The civil court found that ‘the husband’ acquired life-estate under the settlement deed executed by his wife conferring vested remainder in the respondent and on its basis the respondent was declared entitled to an injunction against ‘the husband’ who was prohibited not only from committing acts of waste, but also from alienating the properties in favour of third parties. The later suit of injunction to which the appellant was a party also binds the appellant. Therefore, even the decree founded on equitable relief in which the issue was directly and substantially decided, and attained finality, would operate as res judicata in a subsequent suit based on title where the same issue directly and substantially arises between the parties.

Final Decision Appeal Dismissed

Facts

The first appellant and the first respondent were married at Tirupati in 1975 and separated in July 1978. The first appellant filed a petition for dissolution of marriage in the Circuit Court of St. Louis County Missouri, USA. The first respondent sent her reply from here under protest. The Circuit Court passed a decree for dissolution of marriage on February 19, 1980 in the absence of the first respondent.

The first appellant had earlier filed a petition for dissolution of marriage in the sub-court of Tirupati. In that petition, the first appellant filed an application for dismissing the same as not pressed in view of the decree passed by the Missouri Court. On August 14, 1991 the learned sub-Judge of Tirupati dismissed the petition.

The first appellant re-married and the first respondent filed a criminal complaint against the appellants for the offence of bigamy. The appellants filed an application for their discharge in view of the decree for dissolution of marriage passed by the Missouri Court. By his judgment, the learned Magistrate discharged the appellants holding that the complainant, i.e., the first respondent had failed to make out prima facie case against the appellants.

Against the said decision, the first respondent preferred a Criminal Revision Petition to the High Court which set aside the order of the Magistrate holding that a photostate copy of the judgment of the Missouri Court was not admissible in evidence to prove the dissolution of marriage. The Court further held that since the learned Magistrate acted on the photostat copy, he was in error is discharging the accused and directed the Magistrate to dispose of the petition filed by the accused, i.e., appellants herein for their discharge, afresh in accordance with law. Hence, the appeal.

Key Takeaways for Students

Legal Issue

Whether Indian courts enforce a foreign judgment if the judgment is not that of a competent court?

Holding

Under Section 13 of the CPC, a foreign judgment is not conclusive as to any matter thereby directly adjudicated upon between the parties if it has not been pronounced by a Court of competent jurisdiction. The present decree dissolving the marriage passed by the foreign court is without jurisdiction according to the Hindu Marriage Act, 1955 (Act) as neither the marriage was celebrated nor the parties last resided together nor did the respondent reside within the jurisdiction of that Court. The decree is also passed on a ground which is not available under the Act which is applicable to the marriage. The jurisdiction assumed by the foreign court as well as the ground on which the relief is granted must be in accordance with the matrimonial law under which the parties are married.

Final Decision Appeal Dismissed

Facts

Petitioner being aggrieved with the order passed by the learned Additional District Judge in the original suit, Jaipur City has preferred this revision. The suit was instituted for the recovery of the advances made by the Petitioner against the Respondent and the Trial Court dismissed the Petitioner’s claim.

This Court, suo motu asked the parties whether the Trial Court's impugned decision dismissing the suit is appealable and, if so, whether the revision petition can be entertained?

The counsel for the petitioner submitted that the suit has not been dismissed but the Court has held that it is liable to be dismissed. As such this is not a decree but is an interlocutory order and the revision is maintainable. He further submits that the Court has not directed that the suit be dismissed and, for this reason formal decree has not been drawn.

Key Takeaways for Students

Legal Issue

What is the distinction between Decree, Order and Judgement under the Code of Civil Procedure, 1908?

Holding

The Court held that it is not necessary in a decree that there should be a statement given by the Judge. Statement is to be given by the Judge only in the judgment and he records the reason for arriving at a particular conclusion in the judgment and decree is the formal expression of the conclusions arrived at by the Judge in the judgment. So, it is not necessary that there should be a formal expression of the order in the judgment, though it is desirable to be so. From the perusal of the impugned order, it is clear that the learned Judge has held that the suit is barred by limitation and is liable to be dismissed. The expression of the words 'liable to be dismissed' by implication means that the suit is dismissed and it may tantamount the formal expression of the dismissal of the suit, though not said in specific words.

The judgment also leads to conclude in its final adjudication, as the Judge has held that the suit is barred by limitation, and, as the suit which is barred by limitation cannot be entertained so, it is natural disposal of the suit and final adjudication of the rights and liabilities of the parties. However, a mistake is there on the part of the Court also that the Court has not drawn the decree so far. The party cannot be penalised for the mistake of the Court. In the facts and circumstances, it is a fit case where the revision filed by the petitioner should be treated as an appeal.

Final Decision Disposed of

Facts

The plaintiff and defendant entered into an agreement for sale of an agricultural land. The defendant refused to sell the land to the plaintiff. Hence, the plaintiff filed a suit for specific performance of contract for sale of an agricultural land. The defended contended that the land being an agricultural land is covered under Bombay Tenancy and Agricultural Lands Act, 1948 (Tenancy Act, 1948) and since the plaintiff is not an agriculturist therefore, the agreement was contrary to the provisions of the Tenancy Act and the same cannot be specifically enforced.

The plaintiff sought to repel the contention by producing a certificate Ext. 78 certifying that the plaintiff was an agricultural labourer. If the Court does not take note of Ext. 78, an issue on the pleadings that whether the plaintiff is an agriculturist would arise and in view of the provisions contained in Section 70(a) read with Sections 85 and 85A of the Tenancy Act, 1948, the issue would have to be referred to the Memlatdar for decision for which Civil Court would have no jurisdiction.

The Trial Court held that the certificate Ext. 78 had no evidentiary value and was not valid and recorded a finding that the plaintiff was not an agriculturist. On the question of jurisdiction, the Trial Court was of the opinion that it being an incidental issue in a suit for specific performance of contract, the Civil Court has jurisdiction to decide the same.

The High Court agreed with the finding of the Trial Court and observed that the Civil Court undoubtedly has jurisdiction to entertain a suit for specific performance, and while considering the main issue whether specific performance should be granted or not, Civil Court will have to consider whether there are prima facie any facts on account of which granting of specific performance would result into a transaction forbidden by law. Therefore, Civil Court will have jurisdiction to decide the subsidiary issue whether the plaintiff is an agriculturist. Hence, the present appeal.

Key Takeaways for Students

Legal Issue

1. Whether the Civil Court will have jurisdiction to decide the issue of specific performance?
2. Whether the plaintiff is an agriculturist?

Holding

The Court held that, both on principle and on authority, there is no escape from the conclusion that where in a suit properly constituted and cognizable by the Civil Court upon a contest, an issue arises which is required to be settled, decided or dealt with by a competent authority under the Tenancy Act, 1948, the jurisdiction of the Civil Court to settle, decide or deal with the same is not only ousted but the Civil Court is under a statutory obligation to refer the issue to the competent authority under the Tenancy Act, 1948 to decide the same.

Regarding the decision of whether the plaintiff is an agriculturist, it was held that such an issue being within the exclusive jurisdiction of the Mamlatdar, it is incumbent upon the, Civil Court to refer the issue to the competent authority under the Tenancy Act, 1948 and the Civil Court has no jurisdiction to decide or deal with the same. That issue arises in the suit from which the present appeal arises and both the Trial Court and the High Court were in error in clutching at a jurisdiction which did not vest in them and, therefore, on this ground alone this appeal will succeed.

Final Decision Appeal Allowed

Facts

The Plaintiff and the Defendant had filed for a suit for partition. A decree was passed on the basis of compromise arrived at between the parties and there was complete partition of the suit properties which was acceptable to both the parties. A decree was passed in this regard on 13th July, 1978. After 13 years, the Plaintiff applied for final decree as an afterthought as there was a change in values of the properties.

The learned District Judge dismissed the plaintiffs application by order dated 4th February, 1893. The application was held to be not maintainable. The plaintiff filed a revision petition in the High Court against the order of the District Judge. The High Court allowed the Civil Revision Petition setting aside the order of the District Judge. The High Court treated the decree dated 13th July, 1978 as a preliminary decree and therefore, it entertained the application for final decree. Hence, the present appeal.

Key Takeaways for Students

Legal Issue

Whether the decree passed on 13th July, 1978 was a final decree or a preliminary decree?

Holding

The court observed that parties had agreed to compromise the matter of the suit and they had put in court a deed of compromise praying that a decree be passed in accordance with the terms of compromise. This shows that the court also proceeded on the basis that it was finally disposing of the suit be recording a compromise between the parties with respect to subject matter of the suit. All this clearly shows that the suit was finally disposed of and parties were put in possession of respective properties which fell to their share.

Final Decision Appeal Allowed

Facts

United Producers Distributors Forum (UPDF) is an association of film producers and distributors which includes both corporate houses and individuals independent film producers and distributors. The Association of Motion Pictures and TV Programme Producers (AMPTPP) and Film and Television Producers Gild of India Ltd (FTPGI) are the members of UPDF. Further, UPDF, AMPTPP and FTPGI produce and distribute almost 100% of the Hindi Films produced/ supplied/ distributed in India and thereby exercise almost complete control over the Indian Film Industry. UPDF had instructed all producers and distributors including those who are not the members of UPDF, not to release any new film to the members of the informant for the purposes of exhibition at the multiplexes operated by the members of the informant because of the conflict between the producers/distributors and the members of the informant on revenue sharing ratio.

Key Takeaways for Students

Legal Issue

Did the opposite parties enter into any agreement or indulge in any cartel like conduct that was in contravention of Section 3 of the Competition Act?

Holding

The contravention of the provisions of Section 3(3) of the Competition Act has been established in as much as the producers and distributors behaved in a cartel-like manner. They came together on a common platform, by raising the bogey of survival and indulged in concerted action after talking to each other openly under media glare and took joint decision not to supply films to the multiplex owners with a view to garner higher revenue for themselves.

However, after the notification of the relevant provisions of the Act, there cannot be any doubt that it is the bound duty of the persons/enterprises to ensure that knowingly or unknowingly they do not infringe the provisions of the Act and to take necessary and concrete steps in order to maintain a competition compliance programme.

The opposite parties are directed to refrain from indulging in such anti-competitive practices in future and are further directed to file an undertaking to this effect within one month from the date of receipt of the order. A penalty of rupees one lakh is also imposed on each of the 27 opposite parties. This penalty shall be paid by the opposite parties within one month from the date of receipt of the copy of this order.

Facts

Mahanadi Coalfields Limited (MCL) instead of signing/executing coal supply agreements/fuel supply agreements as required under the New Coal Distribution Policy, 2007 (NCDP) executed/signed MoUs which did not cover all aspects of supply and issues. Aspects like quality control, grade failure, short supply, joint sampling etc., had not been detailed/enumerated in clear terms and conditions. Further, the Informant received a model Coal Supply Agreement (CSA) proposed to be executed between it and MCL. The clauses of CSA demonstrated that the conditions of supply as proposed were onerous and, as such, negated the purpose of securing firm supply of coal on the basis of a contractual arrangement in terms of NCDP. The proposed CSA contained clauses which were burdensome and capable of causing implementation issues imposing additional cost on Maharashtra State Power Generation Company Ltd.(MAHAGENCO) leading to higher cost of electricity which would be eventually passed on to consumers. While the draft CSA was under negotiation, MCL sent a draft MoU to MAHAGENCO which had to be executed simultaneously at the time of execution of CSA. The draft MoU attempted to further dilute the obligations of MCL to supply coal under the proposed CSA.

Key Takeaways for Students

Legal Issue

Whether Coal India Ltd. (CIL) and its subsidiaries are dominant in said relevant market?

Holding

In view of statutory and policy scheme, coal companies have acquired a dominant position in relation to production and supply of coal. Dominant position of CIL is acquired as a result of policy of Government of India by creating a public sector undertaking in name of CIL and vesting ownership of private mines in it. Merely being a Public Sector Undertaking and mention of social objectives in memorandum cannot negate the market power exercised by CIL in view of commercial freedom enjoyed by it. Commission is of considered opinion that, CIL through its subsidiaries operates independently of market forces and enjoys dominance in relevant market.

Facts

The present information has been filed alleging anti-competitive practices on part of the Opposite Parties (OPs) whereby the genuine spare parts of automobiles manufactured by Honda Siel Cars India Ltd (OP-1), Volkswagen India Pvt. Ltd. (OP-2) and Fiat India Automobiles Ltd. (OP-3), respectively, are not made freely available in the open market. It has also been alleged that even the technological information, diagnostic tools and software programs required to maintain, service and repair the technologically advanced automobiles manufactured by each of the aforesaid OPs were not freely available to the independent repair workshops. The OPs and their respective dealers, as a matter of policy, refuse to supply genuine spare parts and technological equipment for providing maintenance and repair services in the open market and in the hands of the independent repairers. By restricting the sale and supply of the genuine spare parts, diagnostic tools/equipment, technical information required to maintain, service and repair the automobiles manufactured by the respective OPs, have effectively created a monopoly over the supply of such genuine spare parts and repair/maintenance services and, consequently, have indirectly determined the prices of the spare parts and the repair and maintenance services. Additionally, such restrictive practice carried out by the OPs in conjunction with their respective authorized dealers, amounts to denial of market access to independent repair workshops.

Key Takeaways for Students

Legal Issue

1. Whether there is any abuse of dominant position in relevant market by Opposite Parties?
2. Whether Opposite Parties have violated provisions of Section 3 of the Competition Act as has been alleged?
3. Whether relevant market has been rightly determined in instant case?

Holding

Independent service providers were customers of Original Equipment Manufacturer (OEMs) in aftermarket and further competed with OEMs in repairs and maintenance service aftermarket. Such practices amount to denial of market access by OEMs under Section 4(2)(c) of the Competition Act. Further, such denial of market access was specifically aimed at adopting a course of conduct with a view to exclude a competitor from market by means other than legitimate competition and such exclusionary abusive conduct allowed OEMs to further strengthen their dominant position and abuse it.

Consequently since exception under Section 3(5)(i) of the Competition Act was not applicable to agreements between OEMs and OESs, contravention found by Commission under Sections 3(4)(c) & (d) read with Section 3(1) of the Competition Act stood established. Furthermore as Commission noted that both in mature and developing competition law regimes of world, refusal to access branded or alternate spare parts and technical manuals/repair tools, necessary to repair sophisticated consumer durable products, such as automobiles, was frowned upon, since such practices restricted consumer choice besides foreclosing market for repairs/maintenance contracts by independent repairers. Practices of OEMs were found to restrict consumer choice and foreclose after markets and were held to be anti-competitive in nature.

An owner of any brand of automobile, manufactured by an OEM, can get his car serviced or repaired from repair shops across territory of India. Whether such repair shops are authorized dealer outlets or those run by independent repairers conditions of competition for sale of spare parts and after-sale repair and maintenance services are homogeneous across territory of India and therefore relevant geographic market for present case consists of entire territory of India. Therefore, this Commission was of view that relevant geographic market, as defined under Section 2(s) of the Competition Act, consisted of entire territory of India. Therefore Commission was of opinion that there existed two separate relevant markets; one for manufacture and sale of cars and other for sale of spare parts and repair services in respect of automobile market in entire territory of India.

Facts

The informant is a body corporate and a wholly owned subsidiary of UP Stock Exchange Limited (UPSE), a Regional Stock Exchange (RSE). The opposite party is a national level stock exchange. As per informant since the operationalisation of the opposite party in 1994, the turnover of the RSEs (including UPSE) started eroding which adversely affected their operations. In 1999, the Securities and Exchange Board of India (SEBI) envisaged a route to rescue the RSEs. The suggested route required the RSEs to form a subsidiary company. This subsidiary was permitted to acquire membership of stock exchanges such as NSE (the opposite party), BSE (Bombay Stock Exchange) etc. and the members of the RSEs could obtain sub-brokership of the subsidiary company and could trade there. UPSE accordingly formed a subsidiary (the informant) in the year 2000 and obtained membership of BSE. In response to the constant demand from its members, the informant obtained membership of NSE in 2009 by paying a high deposit (Rs. 2.71 crores) to enable the members of UPSE to trade at the opposite party stock exchange as sub brokers.

Key Takeaways for Students

Legal Issue

Whether the conduct of the opposite party is legal under the Competition Act, 2002?

Holding

The definition of relevant market proposed by the informant viz 'securities market in India' seems to be correct. Unlike the Monopolies and Restrictive Trade Practices Act, 1969, dominance in itself is not prohibited by the Competition Act, 2002. It is only abuse of dominance which the Act intends to proscribe. Undoubtedly, the opposite party treated the RSE members (including informant) differently from other corporate members. However, differential treatment in itself cannot always be discriminatory. The notion of equality enshrined under the Indian Constitution recognizes reasonable classification and conceives different treatment may be accorded to different classes. In view of the foregoing, it appears that the conditions imposed by opposite party on RSE members (including informant) were necessary for investors' protection. Transactions between opposite party and ordinary corporate members on one hand, and between opposite party and RSE Members on the other were therefore not comparable. The opposite party's conduct therefore does not seem to be in contravention of the provisions of the Act.

Final Decision Case closed

Facts

The Thomas Cook India Ltd. (TCIL) is engaged in travel and travel related services. The Thomas Cook Insurance Services India Limited (TCISIL) is also engaged in travel and travel related services and is a subsidiary of the TCIL and is also a registered corporate agent of Bajaj Allianz General Insurance Company Limited, which is engaged in the business of selling insurance to outbound travelers, as well as health insurance, motor insurance, personal accident insurance etc. Sterling Holiday and Resorts India Limited (SHRIL) is engaged in the business of providing premium hotel services, vacation ownership services, normal hotel services like renting of rooms, restaurants, holiday activities etc. It also arranges meetings, incentives, conference and events for its corporate clients. The Board of Directors of the aforesaid three companies approved a Scheme for demerger/amalgamation.

In order to implement the above scheme, the Respondents entered into a Merger Cooperation Agreement on 07.02.2014. On the same day Board of Directors approved following transactions:

1. Share Subscription Agreement (SSA): TCISIL was to subscribe 2,06,50,000 shares of SHRIL
2. Share Purchase Agreement (SPA): TCISIL was to acquire 19.94% of equity share capital of SHRIL on the fully diluted basis from certain existing shareholders and promoters of SHRIL.
3. Open Offer by TCIL and TCISIL to purchase 26% of the equity share capital from public shareholders of SHRIL.

On 14.02.2014, the Respondents notified the Appellant-Commission about a 'Demerger' and 'Amalgamation,' but not about other transactions, which they claimed were exempt from Section 5 of the Competition Act, 2002 (Act). On 20.02.2014, the Appellant requested the Respondents to fix issues in their application and clarify whether the notified and non-notified transactions were connected. On 05.03.2014, the Appellant approved the application under Section 31(1) of the Act but noted that this approval did not affect potential penalties under Section 43(A) of the Act for separate proceedings.

On 10.03.2014, the Appellant issued a show cause notice to the Respondents, questioning why they should not be penalized under Section 43A of the Act for failing to notify the 'market purchase' as required by Section 6(2) of the Act and proceedings initiated. A penalty of Rupees One Crore was imposed on Respondents on ground of non-compliance of provisions contained in Section 6(2) of Act, which was set aside by the Tribunal. Hence, present appeal.

Key Takeaways for Students

Legal Issue

Whether Tribunal was right in setting aside order passed by Competition Commission whereby penalty of Rupees One Crore was imposed on Respondents on ground of non-compliance of provisions contained in Section 6(2) of Act?

Holding

Once a particular transaction or a series of transactions falls within purview of combination, it was obligatory to report same to Commission under Section 6 Competition Act, 2002.

Section 6(1) prohibited combinations which cause or likely to cause an adverse effect on competition and such a combination shall be void. Section 6(2) of Act required that, advance notice had to be given of proposal to enter into a combination and that had to be given within 30 days of approval of proposal relating to merger or amalgamation, execution of any agreement or other document or acquisition referred to in Section 5(a) of Act.

Section 6(2) made it clear that, no combination shall come into effect until 210 days had elapsed from the date on which notice had been given to Commission under Section 6(2) and Commission had passed orders under Section 30(1), whichever was earlier.

In the facts and circumstances of the case, the order passed by the Commission was just and proper and in accordance with law, which the Tribunal set aside on wrong premises. Thus, the order of the Tribunal cannot be said to be legally sustainable. The nominal penalty has been imposed by the Commission of Rupees One crore only considering the facts and circumstances of the case and that there was a violation of the provision. Thus, we find no ground to interfere with the nominal penalty that has been imposed in the instant case.

Final Decision Appeal Allowed

Ratio Entities must notify significant mergers and acquisitions to the Competition Commission of India (CCI) as required by law. Failure to do so can result in penalties, emphasizing the need for compliance with notification requirements to ensure regulatory oversight and competition protection.

Facts

The Constitutional Order was issued by the President, applying all provisions of the Constitution of India to the State of Jammu and Kashmir. In light of the prevailing circumstances, on the same day, the District Magistrates, apprehending breach of peace and tranquility, imposed restrictions on movement and public gatherings by virtue of powers vested under Section 144, Code of Criminal Procedure (CrPC), 1973. Due to the said restrictions, the Petitioner claims that the movement of journalists was severely restricted. Aggrieved by the same, the Petitioners filed petition seeking issuance of an appropriate writ for setting aside or quashing any and all orders, notifications, directions and/or circulars issued by the Respondents under which any/all modes of communication including internet, mobile and fixed line telecommunication services have been shut down or suspended or in any way made inaccessible or unavailable in any locality.

Further, the Petitioners sought the issuance of an appropriate writ or direction directing Respondents to immediately restore all modes of communication including mobile, internet and landline services throughout Jammu and Kashmir in order to provide an enabling environment for the media to practice its profession.

Key Takeaways for Students

Legal Issue

Whether freedom of speech and expression and freedom to practice any profession, or to carry on any occupation, trade or business over Internet was part of fundamental rights and imposition of restrictions under Section 144 of CrPC, 1976 were valid?

Holding

The internet is also a very important tool for trade and commerce. The globalization of the Indian economy and the rapid advances in information and technology have opened up vast business avenues and transformed India as a global IT hub. There was no doubt that there are certain trades which are completely dependent on the internet. Such a right of trade through internet also fosters consumerism and availability of choice. Therefore, the freedom of trade and commerce through the medium of the internet is also constitutionally protected under Article 19(1)(g) of Constitution of India, subject to the restrictions provided under Article 19(6) of Constitution of India.

Final Decision Disposed Off

Ratio The ruling established that any suspension of internet services must be reasonable, proportionate, and accompanied by a written order specifying the reasons, duration, and responsible authorities. The judgment has influenced policy and administrative practices, promoting a balanced approach to internet governance and reinforcing the protection of fundamental rights in the digital era.

Facts

This Writ Petition is filed by the petitioners against the State of Punjab and the Financial Commissioner, Punjab. The petitioners are the son, daughter and grand-daughters of one Henry Golak Nath, who has died. The Financial Commissioner, in revision against the order made by the Additional Commissioner, Jullundur Division, held by an order that an area of 418 standard acres and 9 1/4 units was surplus in the hands of the petitioners under the provisions of the Punjab Security of Land Tenures Act X of 1953. The petitioners, alleging that the relevant provisions of the said Act where by the said area was declared surplus were void on the ground that they infringed their rights under Articles 19 and 14 of the Constitution of India and filed a writ in this Court under Article 32 of the Constitution for a direction that the Constitution (First Amendment) Act, 1951, Constitution (Fourth Amendment) Act, 1955, Constitution (Seventeenth Amendment) Act, 1964, insofar as they affected their fundamental rights were unconstitutional and inoperative and for a direction that Section 10-B of the said Act X of 1953 was void as violative of Articles 14 and 19(1)(f)(g) of the Constitution of India.

Key Takeaways for Students

Legal Issue

Whether Constitution (First Amendment) Act, 1951, Constitution (Fourth Amendment) Act, 1955, Constitution (Seventeenth Amendment) Act, 1964 are unconstitutional and inoperative as they are violating Article 14 and Article 19(1)(f) & (g)?

Holding

The First, Fourth, Sixteenth and Seventeenth Amendments made important changes in the fundamental rights. The First amendment introduced clause (4) in Article 15 enabling the State to make special provisions for the benefit of the socially and educationally backward class of citizens, the scheduled castes and the scheduled tribes the validity of the First Amendment was upheld in Sri Sankari Prasad Singh Deo's case MANU/SC/0013/1951. The Fourth amendment changed Article 31(2) with a view to supersede the decision in State of West Bengal v. Bela Banerjee MANU/SC/0017/1953 and to provide that the adequacy of compensation for property compulsorily acquired would not be justifiable.

The Sixteenth amendment amended clauses (2), (3) and (4) of Article 19 to enable the imposition of reasonable restrictions in the interest of the sovereignty and integrity of India. Since 1951, numerous decisions of this Court have recognised the validity of the First, Fourth and Seventeenth amendments. If the rights conferred by Part III cannot be abridged or taken away by constitutional amendments, all these amendments would be invalid.

Final Decision Petition Dismissed

Facts

A father lodged a complaint stating that his daughter (Petitioner 1) was missing. In pursuance to the complaint, FIR of a missing person was registered and the investigation officer recorded the statement of the missing person's parents and her relatives and took call details. In the course of investigation it was found that the said daughter married Petitioner 2. Petitioner 1 sent her marriage certificate to her parents through whatsapp revealing the factum of marriage to Petitioner 2. It was the case of the Petitioners that the uncle of the said daughter was threatening them. Both the parties were well educated. They developed liking for each other during their employment. However, there was resistance from the parents of Petitioner 1. Both Petitioners are majors and Hindu by religion.

Key Takeaways for Students

Legal Issue

Whether directions need to be issued for the protection of Petitioners?

Holding

It was held that the consent of the family or the community or the clan is not necessary once the two adult individuals agree to enter into wedlock and that their consent has to be piously given primacy. It was in that context it was further observed that the choice of an individual was an inextricable part of dignity, for dignity cannot be thought of where there is erosion of choice. Such a right or choice was not expected to succumb to the concept of class honour or group thinking.

In the present case FIR regarding missing daughter is quashed with the hope that parents of Petitioner No. 1 will have a better sense to accept the marriage and re-establish social interaction not only with Petitioner No. 1 but even with Petitioner No. 2. The Court highlighted the state's obligation to protect and uphold this right, ensuring that individuals can exercise their choice in marriage freely and with dignity, free from coercion and societal prejudice.

Final Decision Disposed Off

Ratio Right to marry is a fundamental right under Article 21 of the Constitution, which guarantees personal liberty and the right to life.

Facts

Contempt petition was filed regarding the increasing criminalization of politics in India and the lack of information about such criminalization amongst the citizenry. Due to the increased involvement of politicians and a spike in the criminal activities in politics, the concern was raised as to why such candidates were allowed to contest in the elections in the first place.

Key Takeaways for Students

Legal Issue

Whether it is mandatory for the candidates contesting in the election to disclose any and all criminal proceedings pending against them?

Holding

Demanding the explanation for allowing such candidates against whom criminal proceedings were pending, the Apex Court issued the following directions as to the code of conduct on the part of the Political Parties:

1. It is mandatory for political parties to upload in their website the detailed information of candidates along with pending criminal cases against them.
2. The political parties must mention the reasons for selecting candidates and also as to why other individuals, who did not have any criminal antecedents, could not be selected.
3. The reasons as to selection shall be with reference to the qualifications and merits of the candidate, and not merely winning-ability.
4. The information shall be published on a local and national newspaper and on the official social media platforms of the political party.
5. The political party shall submit a report of with the Election Commission within 72 hours of the selection of the said candidate.

Final Decision Disposed Off

Facts

After India's independence, the Zamindari Abolition Acts were enacted in Bihar, Uttar Pradesh, and Madhya Pradesh as part of agricultural land reforms. The zamindars, who lost their landholdings due to these laws, challenged them in the High Courts of Bihar, Uttar Pradesh, and Madhya Pradesh, arguing that the statutes violated their fundamental rights. The Patna High Court declared the Bihar Land Reforms Act of 1950 unconstitutional, while the Allahabad and Nagpur High Courts upheld the laws in Uttar Pradesh and Madhya Pradesh, respectively. To address the ongoing legal disputes, the Indian Parliament passed the Constitution (First Amendment) Act, 1951, which introduced Articles 31A and 31B. The zamindars then filed a petition under Article 32, questioning the constitutionality of the First Amendment Act, 1951, and its validity.

Key Takeaways for Students

Legal Issue

1. Is the First Constitutional Amendment Act, 1951, passed by the Parliament valid?
2. Does the term "law" under Article 13(2) include amendments to the Constitution of India?

Holding

The Supreme Court held that Articles 13(4) and 368(3) empower Parliament to amend Part III of the Constitution, which contains fundamental rights. The Court ruled that a constitutional amendment under Article 368 is not ordinary legislation as defined in Article 13(3), and therefore, cannot be invalidated under Article 13(2).

Therefore the Court upheld the validity of the First Constitutional Amendment Act, 1951, and ruled that the term "law" in Article 13(2) does not include constitutional amendments passed by the Parliament.

Final Decision Petition Dismissed

Ratio The power to amend the Constitution under Article 368 includes the ability to amend fundamental rights. The term "law" in Article 13(2) refers only to ordinary laws passed by the legislative branch and does not extend to constitutional amendments enacted by the constituent branch. As such, even if a constitutional amendment limits or abridges fundamental rights, it remains valid and enforceable.

Facts

On December 17, 1947, the Petitioner AK Gopalan, was arrested for delivering violent speech in public. On 22nd April 1948, while the criminal proceedings were going on, a detention order was passed under the Madras Maintenance of Public Order Act, 1949 which was held illegal by the Madras High Court. On the same day, another order for detention was made by the Government. The petitioner filed a writ petition of Habeas Corpus in Madras High Court which was rejected on the ground that the petitioner did not get bail in any of the cases; therefore, the order for detention is not illegal.

On 23 February 1949, the petitioner was sentenced to imprisonment in criminal proceedings which was later set aside. In another case, the petitioner was sentenced to five years of rigorous imprisonment by the Sessions Judge of North Malabar. Another writ petition of Habeas Corpus by Petitioner was dismissed by the Madras High Court in January 1950.

Meanwhile, the detention order under the Madras Maintenance of Public Order Act, 1949 was cancelled, and another order of detention under Section 3(1) of the Preventive Detention Act, 1950 was passed on 1st March 1950.

The petitioner approached the Supreme Court by filing a writ of Habeas Corpus under Article 32(1), challenging the legality of the order made under the Preventive Detention Act, 1950. He claimed that he had been detained in jail since 1947 and that another order for detention had been made by the State Government which violates his fundamental rights under Articles 19 and 21 of Constitution of India. He further claimed that he was not informed of the grounds of his arrest, which violates his fundamental rights enumerated under Article 22 of the Constitution of India.

Key Takeaways for Students

Legal Issue

1. Whether the detention order passed against the petitioner was valid?
2. Whether the Preventive Detention Act, 1950 was Constitutional?

Holding

The words 'personal liberty' used under Article 21 of the Constitution just meant procedural due process' and preventive detention law under which Gopalan was detained was valid even if it violated his right to movement. This doctrine was commonly known as 'procedural due process'.

The impugned Preventive Detention Act, 1950 is a valid law except as to Section 14 in so far as it prevents the grounds being disclosed to the Court. The petitioner does not complain that he has not got proper grounds. Further, the period of his detention under the impugned Act has not gone beyond three months.

Final Decision Petition Dismissed

Facts

In this case, the Appellant concealed a huge amount of his income and evaded payment of taxation on such income, as a result of which his case was referred to Investigating Commission under Section 5(1) of Taxation on Income (Investigation Commission) Act, 1947. In order to avoid heavier penalty he agreed for settlement under Section 8A of Taxation on Income (Investigation Commission) Act, 1947. Meanwhile the Supreme Court in M. CT. Muthiah Vs. The Commissioner of Income Tax, Madras (MANU/SC/0022/1955), held Section 5(1) of the Act as unconstitutional and violative of Article 14 of the Constitution of India.

The Appellant contended that when Section 5(1) of the Act had been held unconstitutional, the settlement under Section 8A of the Act could not be enforced. Later on, the Income Tax Commissioner sent a communication to the Appellant stating that the settlement arrived at under Section 8A of the Taxation on Income (Investigation Commission) Act, 1947, is valid and binding on the Appellant. Hence, the present Appeal.

Key Takeaways for Students

Legal Issue

Whether the decision of the Income Tax Commissioner making the settlement binding, is valid?

Holding

Sudhi Ranjan Das, C.J.: By its own terms section 8A of Taxation on Income (Investigation Commission) Act, 1947 makes it clear that the person concerned in any case referred to the Commission for investigation might apply to the Commission at any time during such investigation to have the case settled. Therefore this provision for settlement was an integral part of the entire investigation procedure. On a consideration of the nature of the fundamental right flowing from Article 14, there is no doubt that it is not for a citizen or any other person who benefits by reason of its provisions to waive any breach of the obligation on the part of the State. Therefore the order of the Income Tax Commissioner should be set aside.

Justice N.H. Bhagwati (Concurring) agreed with the reasoning adopted and the conclusion reached in the above judgment in regard to the ultra vires character of the proceedings adopted under section 8-A of the Taxation on Income (Investigation Commission) Act, 1947, and the void character of the settlement reached thereunder. It was further held that it is not open to a citizen to waive the fundamental rights conferred by Part III of the Constitution of India.

Justice K. Subba Rao (Concurring) agreed with the judgement of the Chief Justice but expressed that he doctrine of waiver had no application in the case of fundamental rights under our Constitution of India.

Final Decision Appeal Allowed

Facts

Champakam Dorairajan (Petitioner) graduated in 1934 from the Madras University. She enquired regarding her admission into the Government Medical College at Madras in the M. B. B. S. course. She contended that admissions of the college were regulated by Communal Government Order that stated that admission into the Medical College is to be regulated not by qualification or suitableness of the candidate, applying for admission, but by directions involving the making of discriminations between applicant on the ground of caste, sex, etc., & that in the face of that order she had little or no chance of being admitted into the said College.

The Petitioner contended that the said Order of Government is void as it is inconsistent with the provisions of the Constitution of India & operates as an infringement of her personal right as a citizen of the State of Madras, & that the maintenance of that order is an infringement of the fundamental rights declared & formulated by the Constitution of India.

Key Takeaways for Students

Legal Issue

Whether the said Government Order is inconsistent with the provisions of the Constitution of India?

Holding

Three Judge Bench of Supreme Court observed:

Chief Justice P.V. Rajamannar has observed that the expressions like "social justice" & "social injustice" are very vague & elastic in their connotation & it is often difficult to determine whether any particular action of the Govt. leads to social injustice or not. By allowing the application Chief Justice P.V. Rajamannar stated applications should be considered without any discrimination being made against them on grounds of religion, race or caste

Justice Vishwanatha Sastri (Concurring) has observed that the communal Government Order which classifies citizens according to their caste & religion for purposes of admission to Govt. Medical & Engineering Colleges, which allots seats in definite & fixed proportions to different castes & religions & communities & which operates effectively to shut out a large number of students with higher qualifications & to let in a large number of students with lower qualifications, solely, on account of their belonging to particular caste & communities, discriminates against citizens on the ground of caste, community or religion, & therefore violates Article 16(1) of the Constitution.

Justice Nagabushnam Pillai Somasundaram (Concurring) agreed with the view presented by the Chief Justice and other member of the bench.

Facts

The present suo motu proceedings were initiated in reference to management of second wave of COVID-19 pandemic on the issues of vaccination policy, supply of essential drugs, supply of medical oxygen, medical infrastructure, augmentation of healthcare workforce and the issues faced by them, and issues of freedom of speech and expression during the COVID-19 pandemic.

Two Judge Bench of Supreme Court constituted a National Task Force to provide a public heath response to the COVID-19 pandemic on the basis of a scientific approach. The terms of reference of this National Task Force included, inter alia, assessing and making recommendations for the need, availability and distribution of medical oxygen; devising a methodology for allocation of medical oxygen and periodical review of the allocation based on the stage of the pandemic; providing recommendations for augmenting the supplies of oxygen; facilitating audits in each State/UT to determine whether oxygen supplies had reached its destination; efficacy, transparency and efficiency of the distribution networks within the State/UT; providing recommendations for ensuring availability of essential drugs, augmentation of medical and paramedical staff, management of the pandemic and treatment of cases.

As COVID-19 pandemic started receding across the nation and the situation appears to have become more manageable. The issue of vaccination became more crucial, since health experts globally agree that vaccination of the nation's entire eligible population is the singular most important task in effectively combating the COVID-19 pandemic in the long run. Therefore, present petition deals vaccination policy.

Key Takeaways for Students

Legal Issue

Whether government has prepared road map on vaccination policy further?

Holding

The Court directed Union of India to file an affidavit. The affidavit should provide the following:

• The data on the percentage of population that has been vaccinated (with one dose and both doses), as against eligible persons in the first three phases of the vaccination drive. This shall include data pertaining to the percentage of rural population as well as the percentage of urban population so vaccinated.
• The complete data on the Central Government's purchase history of all the COVID-19 vaccines till date (Covaxin, Covishield and Sputnik V). The data should clarify: (a) the dates of all procurement orders placed by the Central Government for all 3 vaccines; (b) the quantity of vaccines ordered as on each date; and (c) the projected date of supply; and
• An outline for how and when the Central Government seeks to vaccinate the remaining population in phases 1, 2 and 3.
• The steps being taken by the Central Government to ensure drug availability for mucormycosis.

Facts

The Maharashtra State Reservation (SEBC) Act, 2018 declared Marathas to be a "Socially and Educationally Backward Class", and provided reservations to the extent of 16 percent of the total seats in educational institutions including private educational institutions and 16 percent of the total appointments in direct recruitment for public services and posts under the State.

The constitutional validity of the SEBC Act 2018 was challenged by filing Public Interest Litigations in the High Court of Bombay. The High Court of Bombay upheld the constitutionality of the Act. However, the High Court reduced the quantum of reservations provided therein from 16 per cent to 12 per cent in respect of the educational institutions and from 16 per cent to 13 per cent in respect of public employment.

Key Takeaways for Students

Legal Issue

Whether the SEBC Act 2018 is legally valid under Article 16 of the Constitution of India to provide transgression of the 50 percent ceiling limit fixed by Indra Sawhney v. Union of India (MANU/SC/0104/1993)?

Holding

The Court observed that that Article 16(4) of the Constitution should be balanced against the guarantee of equality enshrined in Article 16(1) of the Constitution, which is a guarantee held out to every citizen, it was categorically held that reservations contemplated in Clause (4) of Article 16 of the Constitution should not exceed 50 per cent. The relaxation of the strict Rule of 50 per cent can be made in certain extraordinary situations.

People living in far flung and remote areas not being in the mainstream of national life should be treated in a different way. In view of the conditions peculiar to them they are entitled to be given relaxation. It was made clear that extreme caution has to be exercised and a special case made out for relaxation of the Rule of 50 per cent.

The Court further observed that applying the law laid down by this Court in Indra Sawhney, we are of the prima facie opinion that the State of Maharashtra has not shown any extraordinary situation for providing reservations to Marathas in excess of 50 per cent. Maratha community which comprises of 30 per cent of the population in the State of Maharashtra cannot be compared to marginalized Sections of the society living in far flung and remote areas. The State has failed to make out a special case for providing reservation in excess of 50 per cent. Neither has any caution been exercised by the State in doing so.

The social, educational and economic backwardness of a community, existence of quantifiable data relating to inadequacy of representation of the community in public services and deprivation of the benefits flowing from reservations to the community are not exceptional circumstances for providing reservations in excess of 50 per cent.

Facts

The present petition under Article 31 of the Constitution of India sought for release of alleged detenu, who was allegedly taken into illegal custody without serving any notice or order. The petition was contested on the ground of maintainability. However release on bail was sought through an interim application owing to his deteriorating health condition.

Key Takeaways for Students

Legal Issue

Whether the accused is entitled to be released owing to his deteriorating health condition?

Holding

The Court observed that alleged detenu has alternative remedies including the right to approach the competent court for the grant of bail and/or the High Court under Article 226 of the Constitution of India and/or under Section 482 Code of Criminal Procedure for redressal of his grievances. Owing to the apparent precarious health condition of the arrestee, it is necessary to provide adequate and effective medical assistance to him. As soon as arrestee recovers, and the Doctors certify him fit to be discharged, he would be shifted back to concerned Jail. Arrestee in the meanwhile at liberty to avail appropriate remedy in accordance with law.

Final Decision Disposed off

Facts

Writ Petition was filed by the petitioner under Article 32 of the Constitution of India for enforcement of his fundamental rights under Articles 25, 26, 14, 19(1)(f) and 31 of the Constitution. He prayed that the provisions of the Kerala Land Reforms Act, 1963 as amended by the Kerala Land Reforms (Amendment) Act 1969 be declared un-constitutional, ultra vires and void.

During the pendency of the writ petition, the Kerala Land Reforms (Amendment) Act, 1971 was passed and the petitioner filed an application for permission to urge additional grounds and to impugn the constitutional validity of the Kerala Land Reforms (Amendment) Act 1971 which was allowed.

The Constitution (Twenty-fourth Amendment) Act came into force in 1971, the Constitution (Twenty-fifth Amendment) Act and the Constitution (Twenty-ninth Amendment) Act came into force in 1972. The effect of the Twenty-ninth Amendment of the Constitution was that it inserted the following Acts in the Ninth Schedule to the Constitution - The Kerala Land Reforms (Amendment) Act, 1969 and The Kerala Land Reforms (Amendment) Act, 1971.

When the case was placed before the Constitutional bench, the same referred this case to a larger bench to determine the validity of the impugned Constitutional amendments.

Key Takeaways for Students

Legal Issue

Whether the Constitution can be amended through Constitutional (Amendment) Acts?

Holding

The decision was narrowly passed by a vote of 7:6, with seven judges supporting the view that the Indian Constitution can be amended like other statutes to meet the socio-economic needs of the State. They observed that while fundamental rights are guaranteed to citizens, these rights cannot be altered by parliamentary amendments. They emphasized that the basic structure of the Constitution must remain intact. Conversely, the six dissenting judges believed that Parliament should not have unrestricted power to amend the Constitution.

Ratio By focusing on the Basic Structure Doctrine, it was held that although amendments in the Constitution are allowed such amendments must not alter its fundamental framework. It was asserted that the core principles of the Constitution should remain intact even when other parts are modified.

Facts

On September 6, 1970, the President of India passed a laconic order in respect of each of the Rulers of former Indian States a sample of which stated that in exercise of the power vested in him under Article 366(22) of the Constitution of India, it is directed that with effect from the date of this Order His Highness Maharajdhiraja Madhav Rao Jiwaji Rao Scindia Bahadur do cease to be recognised as the Ruler of Gwalior. These orders resulted in the forthwith stoppage of the Privy Purses received by the Rulers and the discontinuance of their personal privileges.

Through the Writ Petitions, the petitioners asked for a writ, direction or order, declaring the Presidential Order to be unconstitutional, mala fide, ultra vires and void, and for quashing it and a writ, direction or order declaring that the several petitioners continue to be Rulers and thus, to be entitled to their respective Privy Purses and personal rights and privileges and a further writ, direction or order directing the Union of India to continue to pay the Privy Purses as before and to recognise the personal rights to privileges and to observe the provisions of the Covenants and Merger Agreements.

Key Takeaways for Students

Legal Issue

Whether the Order passed by the President of India ultra vires and void?

Holding

Chief Justice Hidaytullah: The error in the case of the Union of India arises from certain circumstances. The first is to think that the paramountcy of the Crown descended upon the President on Indian Government. The only discretion left is to select a suitable successor to a Ruler and perhaps to withdraw recognition on grounds which are sound and sufficient. The orders of the President are held to be ultra vires.

Justice J.C. Shah (Concurring): Granting that the President may withdraw recognition of a Ruler once granted, the power conferred by Article 366(22) of the Constitution of India is exercisable only for good cause, i.e. because of any personal disqualifications incurred by a Ruler. By the provisions enacted in Articles 366(22), 291 and 362 of the Constitution of India, the privileges of Rulers are made an integral part of the Constitutional scheme. Thereby classes of citizens are, for historical reasons, accorded special privileges. They cannot be deprived of those privileges arbitrarily, for the foundation of our Constitution is firmly laid in the Rule of Law and no instrumentality of the Union, not even the President as the head of the Executive, is invested with arbitrary authority.

Justice G.K. Mitter (Concurring): This series of petitions is not maintainable remarking, that the action of the President appears to be unjustified. The President may, if he chooses, guide himself by the exposition of the law as made above. What a stroke of the pen has done may be undone by another stroke of it. "Because right is right", the President it is hoped, would "follow right" as "wisdom in the scorn of consequence".

Justice K.S.Hegde (Concurring): Ruler as referred to in some of the provisions of the Constitution of India is an entity created by the Constitution to further certain purposes recognised therein. That entity cannot be abolished either by the executive or by the legislature and it is not possible to spell out a power to abolish the Rulership under Article 366(22) of Constitution of India.

Justice A.N. Ray (Dissenting): Recognition of Rulership is not a legal right. It is not a right to property. Privy purse is not a legal right to property. There is no fundamental right to privy purse. There is no fundamental right to Rulership.

Final Decision Petition Allowed

Facts

Petition has been filed for the issue of an appropriate writ, directing the Respondents to provide basic human amenities to the members of the Rohingya Community, who have taken refuge in India. The Petitioners who claim to have registered themselves as refugees with the United Nations High Commission for refugees, had filed present interlocutory application seeking the release of the detained Rohingya refugees and a direction to the Respondents not to deport the Rohingya refugees who have been detained in the sub-jail in Jammu.

Key Takeaways for Students

Legal Issue

Whether Respondent should be directed to release Rohingya refugees and not to deport them?

Holding

The Court observed that there was no denial of the fact that India was not a signatory to the Refugee Convention. There was no doubt that the National Courts can draw inspiration from International Conventions/Treaties, so long as they were not in conflict with the municipal law.

The rights guaranteed under Articles 14 and 21 of the Constitution of India are available to all persons who may or may not be citizens. But the right not to be deported, is ancillary or concomitant to the right to reside or settle in any part of the territory of India guaranteed under Article 19(1)(e) of the Constitution of India. The Rohingyas in Jammu, on whose behalf the present application was filed, shall not be deported unless the procedure prescribed for such deportation was followed.

Final Decision Disposed Off

Facts

The Petitioner Maneka Gandhi’s passport was impounded by the government "in the interest of the general public," without providing her a reason or giving her a chance to be heard. Petitioner challenged this decision, arguing that it violated her fundamental rights, particularly the right to life and personal liberty under Article 21, as well as her rights under Articles 14 and 19.

Key Takeaways for Students

Legal Issue

• Whether the procedure established by law under Article 21 must be just, fair, and reasonable.
• Whether the government's action of impounding the passport without giving reasons or an opportunity to be heard violates Articles 14, 19, and 21 of the Constitution.

Holding

The Supreme Court held that the procedure established by law under Article 21 must be just, fair, and reasonable. It cannot be arbitrary or oppressive, ensuring that the protection of life and personal liberty is substantial and not merely procedural. Regarding the second issue, the Court held that the government's action of impounding the passport without giving reasons or an opportunity to be heard violated Maneka Gandhi's rights under Articles 14, 19, and 21. The impoundment was deemed arbitrary, as it lacked transparency and fairness, failing to meet the requirements of natural justice.

Therefore, the court ruled that the procedure in Article 21 must pass the tests of reasonableness and fairness and must conform to the principles of natural justice. It invalidated the impounding of the passport without providing Maneka Gandhi an opportunity to be heard.

Final Decision Disposed Off

Ratio Any law affecting life and personal liberty must be just, fair, and reasonable. The procedure must be in line with the principles of natural justice.

Facts

In 1983, the Karnataka government passed legislation allowing private educational institutions to charge a capitation fee for admissions to professional courses. This fee, in addition to standard tuition fees, created financial barriers for economically weaker students. Although the Karnataka Educational Institutions (Prohibition of Capitation Fee) Act, 1984, aimed to abolish such fees, a 1989 notification permitted private medical colleges to charge varied fees based on merit and residency, with non-residents facing the highest charges. Miss Mohini Jain, who could not afford the Rs. 60,000 fee and additional charges, was denied admission to a private medical college in Karnataka. She challenged the notification under Article 32(1) of the Constitution, arguing it infringed upon her fundamental right to education.

Key Takeaways for Students

Legal Issue

• Whether the right to education is a fundamental right under the Constitution of India?
• Whether charging a capitation fee complies with the principles outlined under Article 14?
• Whether the government’s notification permits the collection of capitation fees under the guise of regulation?

Holding

The Supreme Court held that the right to education is a fundamental right under Article 21 of the Constitution, crucial for a dignified life. The Court found that charging capitation fees violates Article 14, as it creates financial barriers and discriminates against economically weaker students. It also determined that the Karnataka government’s notification, which allowed such fees, was inconsistent with constitutional mandates, as it undermined the right to education and promoted unequal access under the guise of regulation.

Final Decision Petition Allowed

Ratio Capitation fees are both arbitrary and discriminatory, violating the fundamental rights guaranteed by the Constitution. The principles of equality and non-discrimination, ensuring that access to education remains universal and equitable, irrespective of economic conditions.

Facts

The People’s Union for Civil Liberties (PUCL), a voluntary organization, filed a public interest petition challenging the constitutionality of Section 5(2) of the Indian Telegraph Act, 1885. This section empowered the Central or State Governments to intercept messages during public emergencies or for reasons of public safety if they deemed it necessary on grounds such as safeguarding India’s sovereignty, maintaining friendly relations with other nations, and preserving public order. The PUCL argued that this provision violated the right to privacy, particularly in the context of phone tapping, which had been highlighted by a Central Bureau of Investigation report on the “Tapping of Politicians’ Phones.”

Key Takeaways for Students

Legal Issue

• Whether Section 5(2) of the Indian Telegraph Act, 1885, violated the right to privacy.
• Whether there was a need to modify Section 5(2) of the Act to include specific procedures to prevent abuse and excessive phone tapping.

Holding

The Supreme Court held that while the Indian Constitution does not explicitly mention a right to privacy, this right is inherent in the right to life and personal liberty under Article 21. The Court ruled that the right to privacy could be infringed only through a legally established procedure. Regarding phone tapping, the Court determined that such actions would violate Article 21 unless conducted in accordance with the law. Furthermore, it was held that phone tapping also implicates the freedom of speech and expression under Article 19(1)(a), and any restrictions on this freedom must meet the reasonableness criteria under Article 19(2).

Therefore, the Supreme Court upheld the constitutionality of Section 5(2) of the Indian Telegraph Act, 1885, but emphasized the necessity for strict adherence to the statutory conditions laid out in the provision. The Court declined to accept the argument for prior judicial scrutiny as a mandatory safeguard but issued interim guidelines to regulate the issuance of interception orders. These guidelines included specific procedures and limitations to protect against the arbitrary use of interception powers and ensure the protection of the right to privacy.

Final Decision Disposed Off

Ratio The right to privacy, though not explicitly mentioned in the Constitution, is a fundamental right under Article 21, subject to reasonable restrictions.

Facts

The Petition highlighted the plight of thousands of under-trial prisoners in the state of Bihar who had been languishing in jails for periods longer than the maximum term for which they could have been sentenced if convicted. The writ petition was filed by an advocate, Mrs. Kapila Hingorani, on behalf of these prisoners, who had not been produced before a magistrate periodically, as required by the law. The case brought attention to the severe delay in the judicial process, and the deprivation of the under-trial prisoners' fundamental rights under Article 21 of the Constitution of India.

Key Takeaways for Students

Legal Issue

Whether the prolonged detention of under-trial prisoners without trial violated their fundamental rights under Article 21 of the Constitution of India?

Holding

Yes, the prolonged detention of under-trial prisoners without trial violated their fundamental rights under Article 21 of the Constitution. The Supreme Court ordered the immediate release of all under-trial prisoners who had been detained for longer periods than they would have been sentenced to if convicted.

Further The Court emphasized that Article 39A of the Constitution, which mandates the State to provide free legal aid to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities, is a fundamental constitutional directive. Therefore, the Court directed the State of Bihar to furnish lists of all under-trial prisoners and ensure that the requirements of Section 167(2) of the CrPC were met.

Final Decision The Supreme Court directed the State of Bihar to furnish to us within three weeks from the dateof this judgment the particulars as to the number of cases where first information report have been lodged and the cases are pending investigation by the police in each sub-division of the State as on 31st December, 1978 and where such cases have been pending investigation for more than six months, the State of Bihar will furnish broadly the reasons why there has been such delay in the investigative process.

Ratio Article 21 of the Constitution, which guarantees the right to life and personal liberty, includes the right to a speedy trial. The State is under a constitutional obligation to provide free legal aid to ensure that justice is accessible to all, irrespective of economic or other disabilities.

Facts

After India's independence, the Zamindari Abolition Acts were enacted in Bihar, Uttar Pradesh, and Madhya Pradesh as part of agricultural land reforms. The zamindars, who lost their landholdings due to these laws, challenged them in the High Courts of Bihar, Uttar Pradesh, and Madhya Pradesh, arguing that the statutes violated their fundamental rights. The Patna High Court declared the Bihar Land Reforms Act of 1950 unconstitutional, while the Allahabad and Nagpur High Courts upheld the laws in Uttar Pradesh and Madhya Pradesh, respectively. To address the ongoing legal disputes, the Indian Parliament passed the Constitution (First Amendment) Act, 1951, which introduced Articles 31A and 31B. The zamindars then filed a petition under Article 32, questioning the constitutionality of the First Amendment Act, 1951, and its validity.

Key Takeaways for Students

Legal Issue

• Is the First Constitutional Amendment Act, 1951, passed by the Parliament valid?
• Does the term "law" under Article 13(2) include amendments to the Constitution of India?

Holding

The Supreme Court held that Articles 13(4) and 368(3) empower Parliament to amend Part III of the Constitution, which contains fundamental rights. The Court ruled that a constitutional amendment under Article 368 is not ordinary legislation as defined in Article 13(3), and therefore, cannot be invalidated under Article 13(2).

Therefore the Court upheld the validity of the First Constitutional Amendment Act, 1951, and ruled that the term "law" in Article 13(2) does not include constitutional amendments passed by the Parliament.

Final Decision Petition Dismissed

Ratio The power to amend the Constitution under Article 368 includes the ability to amend fundamental rights. The term "law" in Article 13(2) refers only to ordinary laws passed by the legislative branch and does not extend to constitutional amendments enacted by the constituent branch. As such, even if a constitutional amendment limits or abridges fundamental rights, it remains valid and enforceable.

Facts

The present Special Leave Petition arises from an order dated 30th April, 2021 passed by the Division Bench of the High Court of Judicature at Madras. The Division Bench while entertaining the writ petition ensuring that COVID-related protocols are followed in the polling booths at the 135-Karur Legislative Assembly Constituency in Tamil Nadu allegedly made some remarks on the Election Commission (EC) attributing their responsibilities for the rising number of COVID – 19 cases and their failure to implement appropriate COVID-19 safety measures and protocol during the elections.

The contentions of the EC in the present petitions are that the said remarks by the Division Bench of the High Court of Judicature at Madras are baseless, and tarnished the image of the EC, which is an independent constitutional authority.

The authority of a judge to conduct judicial proceedings and to engage in a dialogue during the course of a hearing and the freedom of the media to report not just judgments but judicial proceedings has come up for discussion.

Key Takeaways for Students

Legal Issue

Whether the judge has the authority to engage in a dialogue during the course of a hearing and does the media has the freedom to report not just judgments but judicial proceedings?

Holding

The Court regarding the freedom of media observed that freedom of speech and expression extends to reporting the proceedings of judicial institutions as well. Courts are entrusted to perform crucial functions under the law. Their work has a direct impact, not only on the rights of citizens, but also the extent to which the citizens can exact accountability from the executive whose duty it is to enforce the law. With the advent of technology, social media forums provide real-time updates to a much wider audience. This is an extension of the freedom of speech & expression that the media possesses. It would be retrograde for this Court to promote the Rule of law and access to justice on one hand, and shield the daily operations of the High Courts and this Court from the media in all its forms, by gagging the reporting of proceedings, on the other.

The Court held that regarding the remarks made by the judges of the Madras High Court, the High Court was faced with a situation of rising cases of COVID-19 and, as a constitutional Court, was entrusted with protecting the life and liberty of citizens. The remarks of the High Court were harsh. The High Court if indeed it did make the oral observations which have been alluded to did not seek to attribute culpability for the COVID-19 pandemic in the country to the EC. What instead it would have intended to do was to urge the EC to ensure stricter compliance of COVID-19 related protocols during elections.

The judges must exercise caution in off-the-cuff remarks in open court, which may be susceptible to misinterpretation. Language, both on the Bench and in judgments, must comport with judicial propriety. The oral observations during the course of the hearing have passed with the moment and do not constitute a part of the record. The EC has a track record of being an independent constitutional body which shoulders a significant burden in ensuring the sanctity of electoral democracy.

Final Decision Disposed off

Facts

On 25 June, 1975, the President in exercise of powers conferred by Clause (1) of Article 352 of the Constitution of India, declared that a grave emergency exists whereby the security of India is threatened by internal disturbances. On 27 June, 1975, in exercise of powers conferred by Clause (1) of Article 359 the President declared that the right of any person including a foreigner to move any Court for the enforcement of the rights conferred by Articles 14, 21 and 22 of the Constitution of India and all proceedings pending in any Court for the enforcement of the above-mentioned rights shall remain suspended for the period during, which the Proclamations of emergency are both in force.

On 8 January, 1976, the President under Article 359(1) of the Constitution of India declared that the right of any person to move any Court for the enforcement of the rights conferred by Article 19 of the Constitution of India and all proceedings pending in any Court for the enforcement of the above-mentioned rights shall remain-suspended for the period during which the Proclamation of emergency is in force.

The questions which fall for consideration are two. First, whether in view of the Presidential Orders, any writ petition under Article 226 of the Constitution of India before a High Court for habeas corpus to enforce the right to personal liberty of a person detained under the Maintenance of Internal Security Act, 1971(the Act) on the ground that the order of detention or the continued detention is for any reason not under or in compliance with the Act, is maintainable. Second, if such a petition is maintainable what is the scope or extent of judicial scrutiny particularly in view of the Presidential Order dated 27 June, 1975 mentioning, inter alia, Article 22 of the Constitution of India and also in view of Sub-section (9) of Section 16A of the Act.

The High Court held that notwithstanding the continuance of emergency and the Presidential Order suspending the enforcement of fundamental rights conferred by Articles 14, 21 and 22 the High Courts can examine whether an order of detention is in accordance with the provisions of the Act which constitute the conditions precedent to the exercise of powers thereunder excepting those provisions of the Act which are merely procedural or whether the order was made malafide or was made on the basis of relevant materials by which the detaining authority could have been satisfied that the order was necessary. Hence, Appeals challenging orders of the High Court was filed in the Supreme Court by State.

Key Takeaways for Students

Legal Issue

Whether the petitions are maintainable even if the right to move to court for the enforcement of fundamental right under Article 21 of the Constitution of India is suspended?

Holding

Chief Justice A.N. Ray: In view of the Presidential Order dated 27 June, 1975 under Clause (1) of Article 359 of the Constitution of India no person has locus standi to move any writ petition under Article 226 of the Constitution of India before a High Court for habeas corpus or any other writ or order or direction to enforce any right to personal liberty of a person detained under the Act on the grounds that the order of detention or the continued detention is for any reason not under or in compliance with the Act or is illegal or malafide.

Justice Hameedullah Begh (Concurring): Presidential Order dated June 27, 1975 bars maintainability of a petition for a writ of habeas corpus where an order of detention is challenged on the ground that it is vitiated by mala fides, legal or factual, or is based on extraneous considerations or is not under the Act or is not in compliance with it.

Justice H.R. Khanna (Dissenting): A Presidential order under Article 359(1) of the Constitution of India, can suspend during the period of emergency only the right to move any court for enforcement of the fundamental rights mentioned in the Order. Rights created by statutes being not fundamental rights can be enforced during the period of emergency despite the Presidential order. Obligations and liabilities flowing from statutory provisions likewise remain unaffected by the Presidential order. Any redress sought from a court of law on the score of breach of statutory provisions would be outside the purview of Article 359(1) of the Constitution of India and the Presidential order made thereunder.

By Majority: In view of the Presidential Order dated 27 June 1975, no person has any locus standi to move any writ petition under Article 226 of the Constitution of India before a High Court for habeas corpus or any other writ or order or direction to challenge the legality of an order of detention on the ground that the order is not under or in compliance with the Act or is illegal or is vitiated by malafides factual or legal or is based on extraneous considerations.

Final Decision Appeal Allowed

Facts

Champakam Dorairajan (Petitioner) graduated in 1934 from the Madras University. She enquired regarding her admission into the Government Medical College at Madras in the M. B. B. S. course. She contended that admissions of the college were regulated by Communal Government Order that stated that admission into the Medical College is to be regulated not by qualification or suitableness of the candidate, applying for admission, but by directions involving the making of discriminations between applicant on the ground of caste, sex, etc., & that in the face of that order she had little or no chance of being admitted into the said College.

The Petitioner contends that the said Order of Government is void as it is inconsistent with the provisions of the Constitution of India & operates as an infringement of her personal right as a citizen of the State of Madras, & that the maintenance of that order is an infringement of the fundamental rights declared & formulated by the Constitution of India.

Key Takeaways for Students

Legal Issue

Whether the said Government Order is inconsistent with the provisions of the Constitution of India?

Holding

Chief Justice P.V. Rajamannar: Expressions like "social justice" & "social injustice" are very vague & elastic in their connotation & it is often difficult to determine whether any particular action of the Govt. leads to social injustice or not. By allowing the application Chief Justice P.V. Rajamannar stated that the applications should be considered without any discrimination being made against them on grounds of religion, race or caste

Justice Vishwanatha Sastri (Concurring): The communal Government Order which classifies citizens according to their caste & religion for purposes of admission to Govt. Medical & Engineering Colleges, which allots seats in definite & fixed proportions to different castes & religions & communities & which operates effectively to shut out a large number of students with higher qualifications & to let in a large number of students with lower qualifications, solely, on account of their belonging to particular caste & communities, discriminates against citizens on the ground of caste, community or religion, & therefore violates Article 16(1) of the Constitution.

Facts

The petitioner was a member of the Indian Administrative Service in the cadre of the State of Tamil Nadu. On 13 November, 1969, the petitioner was posted to act as Chief Secretary to Government in place of C.A. Ramakrishnan who was superannuated. On 7 April, 1971, the petitioner was appointed as the Deputy Chairman of the State Planning Commission. That post was created temporarily for a period of one year in the grade of Chief Secretary to Government. The petitioner did not join the post. The petitioner went on leave and when he returned from leave he was again posted as Deputy Chairman. The petitioner did not join that post and pointed out that the post of Deputy Chairman which was created for one year did not exist after period of 1 year, which has lapsed.

By an order, Government of Tamil Nadu sanctioned creation of a temporary post of Officer on Special Duty in the grade of Chief Secretary to Government for a period of one year from the date of appointment or till the need for it ceased. By the same order, the petitioner was transferred and appointed as Officer on Special Duty in the post sanctioned aforesaid. The petitioner did not join that post and filed this petition. Further, On the transfer of the petitioner from the post of Chief Secretary, one Sabanayagam who was admittedly junior to the petitioner, was promoted as Chief Secretary.

The Petitioner contended that he is appointed to a post or transferred to a post which is not validly created. The post of Officer on Special Duty is said to be not a post carrying duties and responsibilities of a like nature to cadre posts within the meaning of Rule 4 of the Indian Administrative Service (Cadre) Rules, 1954. He further said that under the Rule 9 of the Indian Administrative Service (Pay) Rules, 1954, no member of the Service shall be appointed to a post other than a post specified in Schedule III unless the State Government or the Central Government in respect of posts under its control, make a declaration that the said post is equivalent in status and responsibility to a post specified in the said Schedule.

It is, therefore, said that the petitioner who is a cadre post holder, viz., holding the post of Chief Secretary cannot be posted to a non-scheduled post without a declaration that the non-scheduled post is equal in status and responsibilities to a scheduled post. The petitioner also contended that he is posted to an office which is inferior in status and office to that of the Chief Secretary. Therefore, the order is a hostile discrimination offending Articles 14 and 16 of Constitution of India and the creation of the post as well as the appointment and transfer of the petitioner to the post is malafide.

Key Takeaways for Students

Legal Issue

Whether transfer of the petitioner to a non-scheduled post violative of Articles 14 and 16 of Constitution of India?

Holding

So far as the post of Deputy Chairman is concerned, the petitioner has accepted that post as being of the same status and responsibility as the post of Chief Secretary and did not raise any objection against it. The only question is as to the post of Officer on Special Duty which has not been satisfactorily established by the petitioner to be inferior in status and responsibility to the post of Chief Secretary.

Merely giving the salary of one post to the other does not make for equivalence. The Court cannot accept the thesis that the post of Officer on Special duty was equal in status and responsibility to the post of Chief Secretary as claimed by the respondents. But equally it is not possible to hold it was established on the material on record that this post was inferior in status and responsibility to the post of Chief Secretary. Therefore, it cannot be said that the petitioner was arbitrarily or unfairly treated or that equality was denied to him when he was transferred from the post of Chief Secretary. The challenge based on Articles 14 and 16 must therefore fail.

Final Decision Petition Dismissed

Facts

In Civil Appeal No. 887 of 1975, the Indira Nehru Gandhi was the appellant and Raj Narain was the respondent. Civil Appeal No. 909 of 1975 is the cross objection of the respondent. On 14 July, 1975 it was directed that both the appeals would be heard together.

The Respondent, Raj Narain was a political contender against the Appellant, Indira Gandhi for Rae Bareilly and Mrs. Indira Gandhi won the election. After polling results Raj Narain filed a case against her, contending that she performed election malpractices. The Allahabad High Court found Indira Gandhi guilty and declared her election void. An appeal was filed by Indira Gandhi in the Supreme Court in which a conditional stay was granted by the vacation bench.

Thereafter, emergency was declared in the entire country due to internal disturbances. In the meantime, 39th Constitutional (Amendment) Act, 1971 was passed which introduced Article 329A in the Constitution of India which laid down that election of Prime Minister and Speaker cannot be questioned in any court of law, and it can only be challenged before a committee framed by Parliament itself, thus barring the Supreme Court to decide the pending Indira Gandhi's Case. Therefore, Constitutional Validity of 39th Amendment was challenged.

Key Takeaways for Students

Legal Issue

Whether the 39th Constitutional (Amendment) Act, 1971 was Constitutional?

Holding

The Supreme Court relied on landmark judgement of Kesavananda Bharti's case (MANU/SC/0445/1973) and held clause (4) and (5) of 329-A of the Constitution of India as unconstitutional as Clause (4) destroys not only judicial review but also separation of power. The order of the High Court declaring the election to be void is declared valid. The cancellation of the judgment is denial of political justice which is the basic structure of the Constitution.

The Court further held that Rule of Law, Democracy and Judicial Review are part of the basic structure and no amendment can do away with them.

Final Decision Civil Appeal No. 887 of 1975 Allowed and Civil Appeal No. 909 of 1975 Dismissed.

Facts

This case originated from a petition filed by Justice K.S. Puttaswamy, a retired judge of the Karnataka High Court, challenging the constitutional validity of the Aadhaar project. The Aadhaar project, managed by the Unique Identification Authority of India (UIDAI), issued a 12-digit identification number to residents of India, linking it to various welfare schemes. The petition raised concerns about the potential infringement on privacy through the collection of demographic and biometric data. As similar petitions were also filed, the Supreme Court consolidated them, leading to a larger constitutional question about whether the right to privacy is a fundamental right under the Indian Constitution.

Key Takeaways for Students

Legal Issue

Whether the right to privacy is a fundamental right under Part III of the Constitution of India?

Holding

The Supreme Court held that the right to privacy is an inherent part of the right to life and personal liberty under Article 21 of the Constitution. The Court declared that privacy is a fundamental right that is integral to human dignity and autonomy. This right is not confined to any specific aspect of privacy but extends broadly to protect various dimensions, including personal choices, freedom of thought, control over personal information, and the sanctity of one's body and mind.

The Court also clarified that the right to privacy is not absolute and may be subjected to reasonable restrictions. However, any invasion of privacy by the state must satisfy a three-fold test: legality, which requires the existence of law; necessity, defined in terms of a legitimate state aim; and proportionality, which ensures a rational connection between the means adopted and the objective sought to be achieved.

Final Decision Disposed off

Ratio Right to privacy is a fundamental right under the Constitution of India, deeply embedded in the right to life and personal liberty guaranteed by Article 21.

Precedential Value

Cases Overruled/Partly Overruled:

M.P. Sharma and Ors. vs. Satish Chandra and Ors. MANU/SC/0018/1954

Kharak Singh vs. The State of U.P. and Ors. MANU/SC/0085/1962 (Partially)

Additional District Magistrate, Jabalpur vs. Shivakant Shukla MANU/SC/0062/1976

Union of India (U0I) and Ors. vs. Bhanudas Krishna Gawde and Ors. MANU/SC/0371/1977

Overall Impact

This judgment recognized the need for robust data protection laws to safeguard informational privacy, though it left the task of enacting such legislation to the Parliament.

Facts

In 1981, the State of Maharashtra and the Bombay Municipal Corporation decided to evict slum dwellers and pavement dwellers from Bombay. The then Chief Minister of Maharashtra, Mr. A. R. Antulay, ordered the eviction and deportation of these dwellers to their place of origin. The eviction was to proceed under Section 314 of the Bombay Municipal Corporation Act, 1888. The affected individuals filed a writ petition in the High Court of Bombay seeking an injunction to restrain the State Government and the Bombay Municipal Corporation from implementing the eviction order. The High Court granted an ad interim injunction, but despite this, the petitioners were forcibly evicted on July 23, 1981. The petitioners challenged the eviction on the grounds that it violated their rights under Articles 19 and 21 of the Constitution.

Key Takeaways for Students

Legal Issue

1. Whether there can be an estoppel or waiver of fundamental rights?
2. Whether pavement dwellers are considered “trespassers” under the Indian Penal Code?

Holding

The Supreme Court held that there can be no estoppel against the fundamental rights guaranteed by the Constitution. Fundamental rights are inalienable and cannot be waived, and any act that violates these rights is unconstitutional, regardless of any agreement or acquiescence by the affected party. The Court expanded the scope of Article 21, ruling that the right to life includes the right to livelihood. Depriving a person of their livelihood is tantamount to depriving them of life itself, and such deprivation must be in accordance with a just and fair procedure established by law.

The Court upheld the constitutionality of Sections 312, 313, and 314 of the Bombay Municipal Corporation Act, 1888, stating that these provisions are not unreasonable or unjust. Section 314, in particular, was deemed to be an enabling provision, giving discretion to the Commissioner to remove encroachments with or without notice, depending on the circumstances. Furthermore, while the pavement dwellers and slum dwellers were using public property without authorization, their actions did not constitute criminal trespass under Section 441 of the Indian Penal Code. The Court recognized that their encroachments were acts of necessity, driven by unavoidable circumstances, rather than an intent to commit a crime.

Final Decision Disposed Off

Ratio The right to life under Article 21 is broad and includes the right to livelihood. The Court the principles set out in Articles 39(a) and 41, which guide the State in ensuring citizens' right to livelihood, are fundamental in interpreting the scope of fundamental rights. The State cannot deprive a person of their means of subsistence, except by a just and fair procedure established by law.

Facts

The petitioner is a Driver-Constable in the Delhi Police Force under the Delhi Administration. He demanded that his scale of pay should at least be the same as the scale of pay of other drivers in the service of the Delhi Administration and contended that he discharges the same duties as the rest of the drivers in the other offices, and so, there is no reason whatsoever to discriminate against the petitioner and other driver-Constables. Thus, the petitioner has invoked the jurisdiction of this Court under Article 32 for directions to the respondents to give him his due in equivalent to the others like him.

Key Takeaways for Students

Legal Issue

Whether the pay scale of the petitioner who was a driver in the Delhi Police Force can be same to that of the drivers of Delhi Administration?

Holding

There cannot be the slightest doubt that the drivers in the Delhi Police Force perform the same functions and duties as other drivers in service of the Delhi Administration and the Central Government. If anything, by reason of their investiture with the 'powers, functions and privileges of a police officer', their duties and responsibilities are more arduous. In answer to the allegation in the petition that the driver- constables of the Delhi Police Force perform no less arduous duties than drivers in other departments, it was admitted by the respondents in their counter that the duties of the driver-constables of the Delhi Police Force were onerous.

It was conceded that equation of posts and equation of pay are matters primarily for the Executive Government and expert bodies like the Pay Commission and not for Courts but it must be said that where all things are equal that is, where all relevant considerations are the same, persons holding identical posts may not be treated differentially in the matter of their pay merely because they belong to different departments.

Final Decision Petition Allowed

Facts

This case arose during the 1975 emergency declared by Prime Minister Indira Gandhi. The emergency followed a political crisis after the Allahabad High Court annulled Gandhi’s election to the Lok Sabha for electoral malpractices, leading to a potential six-year ban from office. On June 26, 1975, in response to this, she declared a state of emergency, suspending citizens' fundamental rights to approach the Supreme Court under Article 32, including rights guaranteed under Articles 14 (equality), 21 (personal liberty), and 22 (protection against arbitrary detention).

The government arrested opposition leaders like A.B. Vajpayee, Jayaprakash Narayan, and Morarji Desai under the Maintenance of Internal Security Act (MISA). Although the detainees secured release orders from several High Courts, their petitions for enforcement were stalled due to the suspension of Article 32. The government challenged these orders, consolidating the matters under this case, presenting significant questions regarding personal liberties during emergencies.

Key Takeaways for Students

Legal Issue

1. Whether a writ petition under Article 226 for habeas corpus, challenging the validity of detention during the emergency, was maintainable despite the suspension of Article 32?
2. To what extent could the judiciary scrutinize detention orders during the emergency, especially under Presidential orders issued under Article 359(1)?

Holding

Majority Opinion (4:1):

Chief justice A.N. Ray along with M. Hameedullah Beg, Y.V. Chandrachud and P.N. Bhagwati ruled that during a state of emergency under Article 359(1), individuals could not file writ petitions for habeas corpus under Article 226. The suspension of fundamental rights under Article 359(1) extended to all courts, and personal liberty under Article 21 could not be enforced. The court also held that the validity of detention orders, including those under MISA, could not be scrutinized during the emergency.

Justice H.R. Khanna (Dissented):

Justice Khanna dissented; arguing that even during an emergency, individuals should not be deprived of life and liberty without due process of law. He asserted that Article 21 was not the exclusive source of the right to life and liberty, and that these substantive rights could not be suspended. Justice Khanna maintained that habeas corpus should remain available, and detention orders should be subject to judicial review, even in times of national crisis.

Therefore the Supreme Court, by a 4:1 majority, ruled against the detainees, upholding the suspension of judicial review of detentions during the emergency and denying the maintainability of writ petitions under Article 226 for habeas corpus.

Final Decision Appeal Allowed

Ratio During an emergency, the suspension of fundamental rights under Article 359(1) precludes judicial intervention.

Precedential Value

Case Overruled/Partly Overruled by:

Justice K.S. Puttaswamy and Ors. vs. Union of India (UOI) and Ors. MANU/SC/1044/2017

Facts

The Petitioner was a registered society engaged in taking of the common problems of the people. The present petition was filed to bring to the notice of this Court the serious problem of violation of fundamental right to life, liberty, privacy and the right to die with dignity of the people of this country, guaranteed to them under Article 21 of the Constitution. It was submitted that the people who are suffering from chronic diseases and are at the end of their natural life span are deprived of their rights to refuse cruel and unwanted medical treatment, like feeding through hydration tubes, being kept on ventilator and other life supporting machines in order to artificially prolong their natural life span. It was further pleaded that it was a common law right of the people, of any civilized country, to refuse unwanted medical treatment and no person could force him/her to take any medical treatment which the person did not desire to continue with.

Key Takeaways for Students

Legal Issue

Does the right to die with dignity fall within the scope of the right to live with dignity guaranteed under Article 21 of the Indian Constitution?

Holding

Yes, the right to die with dignity is part of the right to live with dignity under Article 21 of the Constitution. This right includes the option to refuse medical treatment in terminal cases through an Advance Medical Directive or living will.

The Supreme Court Held that the right to die with dignity is constitutionally protected and allowed for the execution of living wills or Advance Medical Directives. The decision provided legal recognition to passive euthanasia, enabling individuals to refuse life-sustaining treatments under specific circumstances.

Final Decision Petition Allowed

Ratio Right to self-determination and bodily integrity are fundamental to personal liberty. Passive euthanasia, involving the withdrawal of life support in terminal cases, aligns with this right, ensuring that individuals can make decisions about their medical treatment and die with dignity when facing irreversible health conditions.

Facts

Several applications for special leave, civil appeals, and writ petitions had arisen, collectively addressing questions about constitutional validity stemming from separate decisions by various High Courts. These cases involved multiple provisions from different enactments. The central issue to be decided by Supreme Court was whether the establishment of Article 323A and Article 323B under Part XIVA of the Constitution of India can replace the High Court's power of judicial Review under Articles 226 and 227 of the Constitution of India.

Parliament enacted the Administrative Tribunal Act, 1985, leading to the establishment of the Central Administrative Tribunal on November 1, 1985, with five benches. Prior to the Tribunal's establishment, multiple petitions had been filed in various High Courts and the Supreme Court challenging the constitutional validity of sub-clause (d) of Clause 2 of Article 323A and sub-clause (d) of Clause 3 of Article 323B of the Constitution of India. These petitions also questioned the constitutional implications of the Administrative Tribunal Act, 1985, arguing that it contradicted the spirit of the Constitution by limiting the jurisdiction of the High Courts under Articles 226 and 227, as well as the Supreme Court’s jurisdiction under Article 32.

Key Takeaways for Students

Legal Issue

Whether the Tribunals constituted under Part XIV-A of the Constitution of India can be effective substitutes for the High Court in discharging the power of Judicial Review?

Holding

Clause 2(d) of Article 323A and Clause 3(d) of Article 323B of the Constitution of India, to the extent they exclude the jurisdiction of the High Courts and the Supreme Court under Articles 226/227 and 32 of the Constitution of India, are unconstitutional. Section 28 of the Administrative Tribunal Act, 1985 and the "exclusion of jurisdiction" clauses in all other legislations enacted under the aegis of Articles 323A and 323B would, to the same extent, be unconstitutional. The jurisdiction conferred upon the High Courts under Articles 226/227 and upon the Supreme Court under Article 32 of the Constitution is part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by Articles 226/227 and 32 of the Constitution.

The Tribunals created under Article 323A and Article 323B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the concerned Tribunal falls.

Facts

Minerva Mills, a textile company situated near Bengaluru, experienced a significant decline in production. In response, the Central Government, under Section 15 of the Industries Development Act, 1951, formed a committee in 1970 to investigate the situation. By October 1971, the committee submitted its findings, leading the government to authorize the National Textile Corporation Limited (NTC), established under the Industries Development Act, to assume control of Minerva Mills. Following this, the 39th Constitutional Amendment placed nationalization laws in the Ninth Schedule, effectively excluding them from judicial review.

In a subsequent effort to solidify legislative supremacy after setbacks like the Indira Gandhi v. Raj Narain case, the Parliament passed the 42nd Constitutional Amendment in 1976. This amendment made significant changes, particularly to Article 31C, through Section 4, and Article 368, through Section 55, both of which limited the scope of judicial review and elevated the Directive Principles of State Policy above the Fundamental Rights, specifically Articles 14 and 19 of the Constitution of India.

Key Takeaways for Students

Legal Issue

1. Whether the amendments to Article 31C, introduced by Section 4 of the 42nd Constitutional Amendment Act, 1976, which give primacy to the Directive Principles of State Policy over Fundamental Rights, violate the basic structure of the Indian Constitution?
2. Whether the amendments to Article 368, introduced by Section 55 of the 42nd Constitutional Amendment Act, 1976, which remove the limitation on Parliament’s power to amend the Constitution and restrict judicial review, violate the basic structure doctrine?

Holding

The Supreme Court ruled that if the Directive Principles (Part IV) override Fundamental Rights (Part III), it would undermine the core of the Constitution, particularly Articles 14 and 19, which are part of the “golden triangle” along with Article 21. Preserving these rights is crucial to protecting individual freedoms, and their subversion by Directive Principles would violate the basic structure.

The Court found the insertion of clauses (4) and (5) in Article 368, which sought to remove judicial review and impose no limits on Parliament's amending powers, to be unconstitutional. Unlimited amending power would lead to an authoritarian state, contrary to the democratic framework envisioned by the Constitution.

Therefore, the Supreme Court struck down Sections 4 and 55 of the 42nd Amendment Act, 1976. The Court held that the amendments violated the basic structure of the Constitution by granting Parliament unlimited amending power and restricting the judiciary's power of review.

Final Decision Disposed off

Ratio Both judicial review and the balance between Fundamental Rights and the Directive Principles are essential elements of the basic structure.

Facts

Shayara Bano, a Muslim woman, was married to Rizwan Ahmed for 15 years. In 2016, Ahmed divorced her using talaq-e-biddat (instant triple talaq), a practice in which a husband can dissolve the marriage by pronouncing "talaq" three times, without any justification or recourse for the wife. Aggrieved by this, Shayara Bano approached the Supreme Court through a writ petition, challenging the constitutional validity of triple talaq, along with other practices such as polygamy and nikah halala. She argued that these practices violated her fundamental rights, particularly Articles 14 (equality before the law), 15 (non-discrimination), 21 (right to life and personal liberty), and 25 (freedom of religion) of the Constitution. Her case garnered the support of women’s rights groups, including the Bhartiya Muslim Mahila Andolan.

In opposition, the All India Muslim Personal Law Board (AIMPLB) contended that Muslim personal law is not codified and is immune from judicial review. They further argued that triple talaq is a religious practice, protected under Article 25, which guarantees the freedom to practice and propagate religion.

The Supreme Court admitted the petition and constituted a five-judge bench to deliberate on the matter. The case was heard in May 2017, and the final judgment was delivered on August 22, 2017.

Key Takeaways for Students

Legal Issue

1. Whether talaq-e-biddat (instant triple talaq) is an essential religious practice under Muslim personal law and is thereby protected under Article 25 of the Constitution?
2. Whether the practice of triple talaq infringes upon the fundamental rights guaranteed under the Constitution, particularly Articles 14 and 15, and should be declared unconstitutional?

Holding

The five-judge constitutional bench ruled by a 3:2 majority that the practice of triple talaq is unconstitutional. The Court held that it violated the right to equality (Article 14) and the right to non-discrimination (Article 15), as it arbitrarily granted the power to dissolve a marriage solely to the husband without providing any recourse for the wife. The Court directed the legislature to enact laws to address this issue and prevent the misuse of triple talaq.

Opinion of Judges

Majority - Concurring Opinions: Justices Rohinton Nariman, Uday Lalit, and Kurian Joseph held that triple talaq was unconstitutional. Justices Nariman and Lalit found the practice to be arbitrary and violative of Article 14, as it allowed husbands to unilaterally dissolve marriages, putting women at a severe disadvantage. Justice Kurian Joseph emphasized that talaq-e-biddat lacked any Quranic basis and was not an essential practice of Islam. He opined that what is “bad in theology cannot be good in law” and that the Court could not uphold practices that were discriminatory and unjust.

Minority - Dissenting Opinions: Chief Justice J.S. Khehar and Justice Abdul Nazeer dissented, holding that talaq-e-biddat is part of uncodified Muslim personal law and, as such, cannot be challenged under the Constitution. They argued that personal laws are not subject to judicial review under fundamental rights, and the judiciary should not interfere in matters of religious freedom, which is protected under Article 25. They suggested that any change in such laws should come from the legislature, not the courts.

Final Decision Petition Allowed

Ratio Talaq-e-biddat is not an essential religious practice under Muslim law and, therefore, cannot be protected under Article 25.

Overall Impact Triple Talaq was struck down.

Facts

Flat buyers instituted a complaint before National Consumer Disputes Redressal Commission (NCDRC) under Section 12 of the Consumer Protection Act, 2019 (the Act) claiming deficiency in services as the developer did not handover the possession on residential flats on time.

The NCDRC observed that there is a delay in handing over the possession of the flats and as per the agreement compensation has to provide at the rate of Rs. 5 per square foot of the super area for every month of delay.

The NCDRC dismissed the consumer complaint filed by 339 flat buyers, accepting the defence of DLF Southern Homes Pvt. Ltd. and Annabel Builders and Developers Pvt. Ltd. that there was no deficiency of service on their part in complying with their contractual obligations and, that despite a delay in handing over the possession of the residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the Apartment Buyers Agreement.

Aggrieved by this flat buyers presented present appeal.

Key Takeaways for Students

Legal Issue

Whether the flat buyers are eligible to claim compensation for delayed delivery of flats?

Holding

The Supreme Court has observed that the conclusion that the dismissal of the complaint by the NCDRC was erroneous. The flat buyers are entitled to compensation for delayed handing over of possession and for the failure of the developer to fulfil the representations made to flat buyers in regard to the provision of amenities. The reasoning of the NCDRC on these facets suffers from a clear perversity and patent errors of law.

Final Decision Appeals Allowed

Facts

In this case, the Bank of India and other Nationalized banks, including Punjab National Bank and State Bank of India, introduced a Voluntary Retirement Scheme (V.R. Scheme) approved by their Boards of Directors. The scheme allowed employees, except those under disciplinary action, to opt for voluntary retirement and receive retirement benefits. Approximately 1,01,000 employees applied, but around 2,000 later withdrew their applications. The banks accepted these applications despite the withdrawals, leading the employees to file writ petitions under Article 226 of the Constitution in various High Courts. The High Courts ruled in favor of the employees, therefore the banks, as the Petitioners, appealed to the Supreme Court. The Respondents were the employees who had applied for the scheme.

Key Takeaways for Students

Legal Issue

1. Whether the V.R. Scheme constituted an offer or an invitation to offer?
2. Whether an employee could withdraw an application before acceptance, and whether the banks could unilaterally alter the employment relationship after an application under the V.R. Scheme has been submitted?

Holding

The Supreme Court held that the V.R. Scheme was an invitation to offer, not an offer itself. The employees' applications were offers under Section 5 of the Indian Contract Act, and these offers could be revoked before acceptance. The acceptance of the offer by the banks was at their discretion, and no vested rights were conferred upon employees by merely submitting an application.

Final Decision Appeal Dismissed

Ratio Offer can be withdrawn anytime, prior to its acceptance under Section 5 of the Indian Contract Act.

Facts

The Plaintiffs in this case commenced an action in the City Civil Court at Ahmadabad against the defendants for a decree for Rs. 31,150/ on the plea that the defendants failed to supply cotton seed cake which they agreed to supply under an oral contract negotiated by conversation via telephone.

The Plaintiff had contended that the cause of action had arisen in Ahmadabad because of the following reasons: 1) The offer of the Defendants was accepted by the Plaintiffs in Ahmadabad; 2) The Defendants were supposed to supply the aforesaid goods in Ahmadabad; 3) The Defendants were supposed to receive payment for the goods to be supplied through a Bank in Ahmadabad.

On the other hand, the Defendants contended that the Plaintiffs had, through telephone, communicated to purchase the cotton seed cake and the Defendants had accepted that offer in Khamgaon. The defendant stated that: 1) The delivery of goods had to be made at Khamgaon; 2) The price for the supply of goods has to be paid at Khamgaon and therefore no part of the cause of action has arisen in Ahmadabad under the territorial jurisdiction of the City Civil Court of Ahmadabad.

The Plaintiffs therefore contended that the making of an offer is part of the cause of action and that the court would have the jurisdiction under whose territorial jurisdiction the offer was made by the offeror, which after its acceptance had become a contract. The plaintiff had also contended that the communication of acceptance of the offer is an essential part of the contract formation, and the contract is said to be made at the place where the communication of acceptance has been received by the offeror.

Key Takeaways for Students

Legal Issue

1. Whether the Ahmadabad Court had jurisdiction over the suit?
2. Was the contract formed at the place of acceptance or where acceptance was received?

Holding

The Supreme Court held that the making of an offer at a place that has been accepted elsewhere does not form a part of the cause of action in a suit for breach of contract or a suit for damages. The court held that ordinarily, it is an acceptance that gives rise to a contract. The communication must be indicated or demonstrated by some external manifestation that the law regards as sufficient.

The Court stated that the Trial Court was right in taking the view that part of the cause of action arose when the acceptance of the offer was communicated to Plaintiff through telephone, i.e. Ahmadabad. The Supreme Court had dismissed the appeal. Therefore, the contract is said to be made where the communication of acceptance is made to the offeror.

Final Decision Appeal Dismissed

Ratio The contract is said to be made where the communication of acceptance is made to the offeror.

Facts

The Plaintiffs were employees of a company dissolved by court order and subsequently inducted into the Defendant Corporation under its terms and conditions. After years of service, the Plaintiffs were dismissed under Rule 9(i) of the employment terms, which allowed termination with three months' notice or salary. The Plaintiffs challenged Rule 9(i), claiming it was unconscionable.

Key Takeaways for Students

Legal Issue

Can an unconscionable term in a contract be declared void or voidable under the Indian Contract Act?

Holding

The Court observed that equity, grounded in distributive justice, limits the freedom of contract to protect weaker parties from harsh or unconscionable terms. Freedom of contract is insignificant when parties do not stand on equal footing, and the weaker party has no realistic opportunity to negotiate. These contracts, often adhesion contracts, are not inherently unconscionable, but when there is gross inequality of bargaining power and terms unreasonably favor the stronger party, the weaker party has no meaningful choice but to consent, rendering the contract unconscionable.

The Court stated it would strike down any unfair or unreasonable clause where there is significant disparity in bargaining power, and the weaker party had no meaningful choice but to accept the terms. Adhesion contracts entered into by parties with significantly superior bargaining power affect many people and, if unconscionable, are injurious to the public interest. Such contracts must be void under Section 23 of the ICA as opposed to public policy. If they were merely voidable under undue influence (Section 16), each affected party would need to seek judicial intervention, leading to excessive litigation.

The Court found that the plaintiffs had significantly less bargaining power compared to the Corporation and had no meaningful choice in accepting the employment terms. Refusing to accept Rule 9(i) would have led to their termination and subsequent anxiety and uncertainty in finding alternative employment. Rule 9(i) was deemed unreasonable and unfair, giving the Corporation arbitrary and absolute power to dismiss employees without guidelines, violating the principle of natural justice, audi alteram partem, as it neither provided for an inquiry nor an opportunity for the accused employee to be heard.

Final Decision Appeal Dismissed

Facts

The Plaintiff entered into a mortgage contract with the Defendant. At that time, the Plaintiff was a minor, albeit with an appointed certified guardian. The Plaintiff fraudulently misrepresented his age to secure the contract. The Plaintiff subsequently filed a suit in the trial court under Section 68 of the Indian Contract Act, 1872 for recovery of money and the Plaintiff also asserted that the Defendant was not a minor. Simply stated, two minors entered into a mortgage agreement without disclosing their true age and without appointing a legally qualified guardian.

Upon reviewing the evidence, the trial court determined that the defendants were between 18 and 21 years of age, thus falling within the category of minors. The court ruled that the Plaintiff could not recover the money under Section 68, as the expenditure in question (marriage) did not constitute "necessaries" as defined by the Act. Despite the fraudulent misrepresentation, the trial court, referencing the Lahore High Court ruling in Khan Gul v. Lakha Singh, decreed the claim for recovery with interest at the contractual rate and future interest in default for the sale of the mortgaged property.

Key Takeaways for Students

Legal Issue

Whether a minor, who had deliberately misrepresented his age, could be ordered to return the principal money under Section 65 of the Indian Contract Act, 1872 (Act), or any other equitable principle?

Holding

The High Court held that the mortgagee, as a defendant, could not secure a decree for the return of the principal money under Section 65 of the Act or any other equitable principle. Additionally, the court determined that neither Section 41 of the Specific Relief Act nor Section 43 of the Transfer of Property Act was applicable. This was because there was no question of instrument cancellation under Section 41 of the Specific Relief Act and no valid transfer under Section 43 of the Transfer of Property Act; the transaction was void from the beginning.

Therefore, the court held that restitution under Section 65 of the Act was inapplicable in this case. Section 65 of the Act pertains to contracts that are discovered to be void or become void, not agreements entered into by individuals who are inherently incompetent to contract. The court asserted that no provision in the Indian Contract Act renders agreements with minors void.

Final Decision Appeal Allowed

Ratio Section 65 of the Contract Act applies to contracts that are discovered to be void or become void, rather than agreements which are void ab initio.

Facts

The Appellant, Delhi Transport Corporation (DTC), issued termination notices to several employees under Regulation 9(b) of the Delhi Road Transport Authority (Conditions of Appointment & Service) Regulations, 1952 (DTC Regulations, 1952), citing inefficiency and incitement of other employees as grounds for termination. The Respondents, comprising the terminated employees and their union, D.T.C. Mazdoor Congress, challenged the constitutional validity of Regulation 9(b) before the Delhi High Court. They argued that the regulation granted the Appellant arbitrary and unchecked power to terminate employees without due process, violating Article 14 of the Constitution of India. The Appellant contended that Regulation 9(b) provided sufficient guidance and that its power of termination was neither arbitrary nor in violation of Article 14 of the Constitution. They further argued that the Contract of Service empowered them to terminate employees under the ordinary law of "master and servant," and that such a contract, though potentially void under Section 23 of the Indian Contract Act or contrary to public policy, was nonetheless legal. The High Court ruled in favor of the Respondents, declaring the regulation unconstitutional. The Appellant then appealed to the Supreme Court.

Key Takeaways for Students

Legal Issue

Whether Regulation 9(b) of the DTC Regulations, 1952was void under Section 23 of the Indian Contract Act, 1872, for being contrary to public policy?

Holding

The Supreme Court observed that Regulation 9(b) of the DTC Regulations, 1952, conferred unbridled and arbitrary power on the Appellant to terminate the services of its employees. The Court emphasized that in light of the developments in constitutional law, particularly following the Maneka Gandhi vs. Union of India (UOI) and Ors. MANU/SC/0133/1978, it was no longer tenable to argue that a competent authority could be vested with wide discretionary power without proper guidelines or procedures. The Court found that the legislative intention behind Regulation 9(b) was clear, unambiguous, and specific in granting such discretionary power, making the regulation arbitrary, unjust, unfair, and unreasonable. Consequently, it was held that Regulation 9(b) of the DTC Regulations, 1952 violated Articles 14, 16(1), 19(1)(g), and 21 of the Constitution. The Court also concluded that the regulation was contrary to public policy and, therefore, void under Section 23 of the Indian Contract Act.

The Supreme Court upheld the decision of the Delhi High Court, affirming that Regulation 9(b) of the DTC Regulations, 1952 was unconstitutional. The Court ruled that the power granted to the Appellant under this regulation to terminate employees' services without due process was inconsistent with constitutional principles.

Final Decision Appeal Dismissed

Ratio Any violation of the principles of natural justice by state action amounts to arbitrariness, which is synonymous with discrimination. Such arbitrariness, when enshrined in a regulation or law, violates Article 14 of the Constitution.

The principles of natural justice apply not only to judicial or quasi-judicial decisions but also to administrative actions that adversely affect individuals.

Facts

The Appellant, Dhurandhar Prasad Singh, was formerly employed as a Routine-cum-Examination Clerk at Ganga Singh College. He challenged the termination of his services by the Secretary of the College’s Governing Body, asserting that his termination was in violation of the Bihar University Statutes. The suit filed by the Appellant resulted in an ex-parte decree against the College’s Governing Body.

During the pendency of the suit, Ganga Singh College became affiliated with Jai Prakash University. The Respondent-University, having assumed control of the college, raised objections during the execution proceedings, arguing that the affiliation of the college with the university was not disclosed in the original suit. The Executing Court initially accepted these objections but later, after a remand by the High Court, rejected them on September 22, 1997. However, upon further revision, the High Court set aside the Executing Court's decision, allowing the University’s objections.

Key Takeaways for Students

Legal Issue

Whether the failure to bring the successor-in-interest on record, under Order 22 Rule 10 of the Code of Civil Procedure (CPC), renders a decree passed against the predecessor-in-interest a nullity, and whether such a decree can be executed against the successor-in-interest who was not a party to the original suit?

Holding

The Supreme Court observed that the omission to apply under Order 22 Rule 10 CPC did not automatically nullify the decree. The Court emphasized that a decree is not void ab initio merely because the successor-in-interest was not brought on record during the suit. The Court further noted that the difference between void and voidable acts is crucial; a void act is a nullity from the outset and has no legal effect, while a voidable act remains valid until it is set aside by a competent authority.

The Supreme Court overturned the High Court's decision, holding that the High Court erred in allowing the objection under Section 47 of CPC. The Court concluded that the decree was voidable, not void ab initio, and that the university, as the successor-in-interest, was bound by the decree despite not being a party to the original suit.

Final Decision Appeal Allowed

Ratio Failure to bring a successor-in-interest on record under Order 22 Rule 10 of CPC does not render a decree passed against the predecessor-in-interest a nullity.

Facts

The trustees of temple/Respondents entered into a contract for necessary temple repairs and funded the initial costs from village common funds. As repairs progressed, additional funds were required, leading to a subscription list being raised. The Petitioner subscribed Rs. 125 to this list. The suit was filed to recover this promised sum, with the lower court decreeing in favor of the trustees. Disagreeing with this decision, the Petitioner filed a civil revision petition in the Madras High Court.

Key Takeaways for Students

Legal Issue

Whether the inclusion of the Petitioner in the subscription list for Rs. 125 regarded as valid consideration for the temple repairs?

Holding

The High Court held that there was no valid consideration to support the promise made by the subscriber. The court emphasized that the definition of consideration in the Indian Contract Act requires that the promisee must have done or abstained from doing something at the promisor's request. In this case, there was neither a request by the subscriber for the trustees to undertake the repairs nor an undertaking by the trustees to do anything in consideration of the promise. The court referenced the cases of Kedarnath Battacharjee v. Gorie Mohamed, MANU/WB/0012/1886 and In re Hudson, reiterating that a mere promise to subscribe does not furnish consideration unless it involves a mutual undertaking or request.

Final Decision Petition Allowed

Ratio Mere promise to subscribe a sum of money to a cause, without any accompanying request or undertaking to perform an act in consideration of the promised subscription, does not constitute valid consideration under the Indian Contract Act. The promisee must show that they acted or refrained from acting at the promisor's request for the promise to be enforceable. In the absence of such consideration, the promise is deemed a bare promise and is not legally binding.

Facts

This case revolves around several appeals by the Ghaziabad Development Authority (Appellant), which had launched various schemes for the allotment of developed plots for the construction of residential flats. These schemes were governed by the principles of contract law, where the brochure issued by the Appellant constituted an invitation to offer. Prospective allottees (Respondents) made applications, which were considered offers, and upon acceptance, contracts were formed between the Authority and the applicants.

However, the Authority failed to deliver the promised plots or caused unreasonable delays, leading to claims for breach of contract. The Respondents approached various legal forums, including the Monopolies and Restrictive Trade Practices Commission (MRTP), Consumer Disputes Redressal Forum, and the High Court, seeking either refunds or compensation. The High Court of Allahabad ruled that a clause in the brochure, which denied interest in the event of withdrawal or surrender, was unconscionable and violated Article 14 of the Constitution. Consequently, it ordered refunds with interest at 12% per annum. Other forums awarded interest at 18% per annum and, in some cases, additional compensation for mental agony caused by the Authority’s breach of contract.

Key Takeaways for Students

Legal Issue

1. Whether compensation can be awarded for mental agony in cases of breach of contract?
2. Whether interest can be imposed on amounts due in the absence of a specific contractual clause?
3. What rate of interest is appropriate when such interest is awarded on equitable grounds?

Holding

The Supreme Court scrutinized the application of contract law principles, particularly in the context of damages and interest for breach of contract. The Court reiterated that under contract law, damages are primarily intended to place the aggrieved party in the position they would have been in had the contract been performed. Compensation for mental distress is typically not awarded unless the contract specifically aimed to provide peace of mind, as outlined in Chitty on Contracts.

The Court observed that while the MRTP Commission awarded Rs. 50,000 for mental agony, such an award was not supported by the contract's terms or the general principles of contract law. The Court distinguished this case from Lucknow Development Authority v. M.K. Gupta (MANU/SC/0178/1994) where compensation for mental harassment was awarded under administrative law principles, not contract law.

Regarding the award of interest, the Court acknowledged that although the contract between the parties did not expressly provide for interest, interest could be awarded based on principles of justice, equity, and good conscience, reflecting the broader scope of relief available under contract law. The Court cited Sovintorg (India) Ltd. v. State Bank of India (MANU/SC/0464/1999) to support the position that interest can be awarded even in the absence of a specific contractual term, provided it is just and reasonable. However, the Court found that the 18% interest rate awarded by the lower forums was excessive and reduced it to 12% per annum, a rate deemed equitable and consistent with the circumstances.

Therefore, the Supreme Court set aside the MRTP Commission’s award of Rs. 50,000 for mental agony, emphasizing that such compensation is not typically available under contract law unless expressly contemplated by the contract. The Court upheld the directions for the refund of amounts paid by the claimants but modified the interest rate from 18% to 12% per annum, aligning with equitable principles within contract law.

Final Decision Disposed Off

Ratio While compensation for mental agony is generally outside the scope of damages in contract law, interest can be awarded on equitable grounds where a breach of contract has occurred, even if, not expressly provided for in the contract.

Facts

Gherulal Parakh (Appellant) and Mahadeodas Maiya (Respondent) entered into a partnership agreement involving the sale and purchase of wheat with other firms. The terms specified that the respondent would conduct transactions on behalf of the partnership, with profits and losses shared equally. The transactions resulted in a loss, which the Respondent fully settled with third parties. Upon seeking to recover half of the loss from Appellant, the Appellant refused the same, prompting him to sue the Appellant for reimbursement.

Key Takeaways for Students

Legal Issue

Whether the partnership agreement involving wagering contracts was illegal under Section 23 of the Indian Contract Act, 1872, which renders certain agreements void if they are "forbidden by law”?

Holding

The Supreme Court examined the nature of wagering agreements under Section 30 of the Indian Contract Act, 1872, which states that such agreements are void but not necessarily illegal or "forbidden by law" under Section 23 of the Act. The court clarified that not all void contracts are forbidden by law, thus distinguishing between the two terms. The mistake of fact must be bilateral for an agreement to be considered void, meaning both parties must suffer from the mistake.

Moreover, the forfeiture of earnest money (byana) or any other deposit is permissible only when a conclusive contract has been formed, not prior to its formation. The court concluded that while wagering agreements are void under Section 30 of the Act, they are not forbidden by law under Section 23 of the Act for the individuals entering into such agreements. Therefore, the court held that the partnership agreement intended for wagering could not be declared void on the basis that it was forbidden by law.

Final Decision Appeal Dismissed

Ratio Not all void agreements are forbidden by law, emphasizing that a bilateral mistake of fact is necessary for voiding contracts and that the forfeiture of deposits like earnest money can only occur when a conclusive contract exists. This distinction between void and forbidden agreements under the Indian Contract Act clarified the conditions under which wagering contracts are considered void but not illegal.

Facts

The plaintiffs sued the defendants for recovery of the value of goods that they had pledged with the defendants' in erstwhile Pakistan. The defendants were claiming that the goods got destroyed in the riots following the partition of India and Pakistan.

Key Takeaways for Students

Legal Issue

Is the bailee liable for damage caused to the goods in their possession even though the cause of damage was outside their control?

Holding

In the extraordinary situation that developed after the partition, the entire staff fled to protect their lives and left the property of the banks and other institutions uncared for. These properties were mercilessly looted or we subjected to the reason, fire and other modes of destruction. Therefore, it cannot be said that the bank failed to take such care of the goods as a person of ordinary prudence would have taken of his own.

Final Decision Appeal Allowed

Ratio Under Section 152 of the Indian Contract Act, 1872, a bailee is not liable for the loss of goods if they have taken the care that an ordinary person would take in similar circumstances. A bailee’s liability is limited to situations where they can exercise reasonable care, and in cases of unavoidable circumstances, they may be absolved of responsibility.

Facts

The Appellant participated in an auction for a bamboo coup known as "Bantha Bamboo Coup" in Chatra North Division, Hazaribagh District. Although the reserve price was Rs. 95,000, the Appellant's highest bid of Rs. 92,001 was provisionally accepted by the Divisional Forest Officer (DFO). The DFO reported the auction to the Conservator of Forests, who forwarded it to the Government for confirmation since the bid was below the reserve price. While the matter was pending, the Appellant offered to accept the coup at the reserve price. The Minister of Forest initially directed the coup to be settled with the Appellant at the reserve price but later reversed this decision and settled it with another respondent for Rs.1, 01,125.

Key Takeaways for Students

Legal Issue

Whether a concluded contract can be existed between the Appellant and the Government upon the provisional acceptance of the bid by the DFO and subsequent confirmation by the Minister?

Holding

The Court held that there was no concluded contract between the appellant and the Government. The DFO's acceptance was conditional upon the Government's confirmation. The Minister did not confirm the DFO's acceptance of the bid but instead accepted the Appellant’s later offer to take the coup at the reserve price. This acceptance was not communicated to the Appellant, who had already revoked the offer by requesting settlement at the highest bid made during the auction. Thus, there was no unconditional acceptance of the appellant's bid.

Ratio A contract cannot be concluded if a bid is conditionally accepted, and the required confirmation is not communicated to the bidder.

Facts

Plaintiff sued Air India and Emirates Airlines for damages due to breach of a contract of carriage. The plaintiff's journey from Kolkata to Dubai via Delhi was disrupted due to a significant delay in the Kolkata to Delhi flight operated by Air India, causing her to miss the connecting flight to Dubai operated by Emirates Airlines. Despite assurances from Air India at Kolkata, no assistance was provided in Delhi to help the Plaintiff board the connecting flight. The plaintiff had to make her own arrangements for travel back to Kolkata from Delhi and claimed damages for mental anguish, strain, and financial loss.

Key Takeaways for Students

Legal Issue

1. Whether the contract of carriage between the plaintiff and Air India/Emirates constituted international carriage under the Carriage by Air Act, 1972?
2. Whether Air India/Emirates fulfilled their obligations under the contract of carriage by failing to provide adequate assistance during the disruption in travel?

Holding

The Court held that the contract of carriage was an undivided international carriage, obligating Air India and Emirates to ensure the plaintiff's seamless travel from Kolkata to Dubai and back. Despite the delay being beyond Air India's control, they failed to provide necessary assistance at Delhi, thereby breaching their duty of care. The defendant's failure to fulfill their obligations under the contract and provide necessary assistance constituted negligence.

Final Decision Plaintiff's claim for damages upheld

Ratio Carriers are liable for damages occasioned by delay and have a duty to provide reasonable care and assistance to passengers, particularly during international carriage, as defined by the Carriage by Air Act, 1972.

Facts

The Respondent/government issued a tender for the supply, delivery, and stacking of 75,000 machine-crushed track ballasts at Naurozabad depot, with a contract period of 24 months. The contract required the rates to be stated in figures and words and specified that offers must remain open for 90 days.

The Appellant received 5 tenders and offered various rebates if the tender was accepted within certain periods (5% for 45 days, 3% for 60 days, 2% for 75 days). Respondent No. 5, another bidder, offered slightly lower rates with shorter rebate periods. The Appellant's tender was accepted, leading Respondent No. 5 to file a writ petition claiming his tender should have been accepted due to lower rates.

Key Takeaways for Students

Legal Issue

1. Whether the railway administration's decision was discriminatory, arbitrary, or mala fide?
2. Whether courts can exercise judicial review in government contracts and state contractual liability cases?

Holding

The Supreme Court held that the courts generally do not interfere with government contracts unless the decision is found to be unreasonable, arbitrary, or mala fide. The court referred to the GJ Fernandez v. State of Karnataka case, stating that if the tender terms are not followed, the tender inviter has the right to cancel the tender. The Court further held that the railway administration did not err in accepting the appellant's tender as his rebate offer was a legitimate part of the tender process. The writ petition by Respondent No. 5 was dismissed, emphasizing that the government is free to enter into contracts but cannot act arbitrarily to exclude others.

Final Decision Petition Dismissed

Ratio If a contract is made with illegal intent or arbitrary manner, the courts can intervene and exercise judicial review.

Facts

The Appellant sued the respondent for the recovery of Rs. 20,700 for damages for breach of contract. He alleged that he entered into a contract with the respondent for the supply of 200 tons of scrap iron in July 1952 through correspondence, that the respondent did not deliver the scrap iron and expressed his inability to comply with the contract by its letter dated January 30, 1953.

Meanwhile, the appellant had entered into a contract with M/s. Export Corporation in Calcutta to supply 200 tons of scrap iron. Due to the respondent's breach of contract, the appellant was unable to fulfill this agreement with M/s. Export Corporation. Consequently, M/s. Export Corporation had to purchase the scrap iron from the open market and sought reimbursement from the appellant for the difference between the amount they paid and what they would have paid had the appellant fulfilled the original contract.

Therefore, the appellant filed the case for breach of contract. The respondents contended that there had been no completed contract between the parties and that the appellant suffered no damages. The controlled price of scrap iron on January 30, 1953, was the same as it was in July 1952, when the contract was made.

The Trial Court noted that a valid contract existed between the parties, that the respondent had breached this contract, and that the appellant was therefore entitled to the damages sought.

Upon appeal, the High Court reversed the ruling passed by the Trial Court by stating that there had been a completed contract between the parties on October 25, 1952, but held that the respondent was not responsible for committing breach of contract as it could not perform the contract on account of the laches of the appellant and that the appellant suffered no damages in view of the controlled price for scrap iron being the same in January, 1953 as it was in July 1952.

Key Takeaways for Students

Legal Issue

Whether the appellant committed breach of contract?

Holding

The Supreme Court upheld the decision of the High Court by holding that the appellant suffered no such damage which he could recover from the respondent. It was observed by the court that Section 73 of the Indian Contract Act is applicable to damages that arise naturally in the usual course of business.

In the present case, the appellant agreed to buy scrap iron at Rs. 100 per ton, with Rs. 70 as the controlled price and Rs. 30 for incidental charges. Due to the non-delivery, he could have bought the iron elsewhere at the same price and charges. Therefore, he did not face any additional costs and could not claim a loss from the breach.

The court emphasized the applicability of illustration (k) of Section 73 of the Contract Act upon the issues of the present case, wherein the respondent being the first party, cannot be held liable for breach of contract when the second party (appellant) had to pay to third parties (M/s. Export Corporation), as he had not been told at the time of the contract that the second party was making the purchase of the article for delivery to such third parties.

Final Decision Appeal Dismissed

Ratio Damages should be based on actual and foreseeable losses directly resulting from the breach. The breaching party is not liable for losses arising from purposes or contracts that were unknown to them at the time of the breach.

Facts

The Plaintiff acquired a 50% share in a property from the first Defendant, who was a minor but concealed his age. The Plaintiff paid Rs. 17,500 for the share, giving Rs. 8,000 upfront in cash before the Sub-Registrar and securing the remaining Rs. 9,500 with a promissory note, payable on demand by the first defendant. The Plaintiff claimed the full amount was paid, stating that the promissory note for Rs. 9,500 was discharged through another promissory note in favor of the first defendant’s brother-in-law, Muhammad Hussain. The Plaintiff paid Rs. 5,500 out of Rs. 9,500 to Hussain and was ready to pay the balance on demand.

Despite receiving payment, the first defendant refused to transfer possession of the property, prompting the Plaintiff to file a suit seeking either delivery of the property or repayment of Rs. 17,500 with 1% annual interest or damages, totaling Rs. 19,000. The trial court found the first defendant had deceitfully concealed his age, invoking estoppel, and ruled in favor of the plaintiff, stating the plaintiff had discharged the due amount. Defendant 2, the wife of Defendant 1, claimed the property was gifted to her before the dispute, but the court declared the gift void as minors cannot transfer property until reaching legal majority.

On appeal, the defense argued that the Plaintiff was not deceived, presenting witnesses who stated the Plaintiff knew the first Defendant’s age. The division bench found no evidence to support this claim and upheld the trial court’s decision, rejecting the defense's arguments.

Key Takeaways for Students

Legal Issue

1. Can a minor who falsely represents themselves as of legal age be estopped from asserting the defense of minority?
2. Can a minor who misrepresents their age refuse to fulfill contractual obligations while retaining benefits from the contract?

Holding

The court stated that according to Section 115 of the Indian Evidence Act, minors are not subject to estoppel. The court harmonized this with the Indian Contract Act, emphasizing that minors cannot enter into contracts, and therefore, estoppel does not apply to them.

Regarding the second issue, the court concluded that while minors can refuse to fulfill contractual obligations, they cannot retain benefits from void agreements. The court referred to Section 65 of the Indian Contract Act and the Specific Relief Act, 1877, to grant compensation to the parties, applying the doctrine of restitution and Section 68 of the Indian Contract Act, which allows for reimbursement of necessaries supplied to minors without holding them personally liable.

The court held that while minors can refuse to fulfill void agreements, they cannot keep the benefits derived from such agreements. The court balanced legal principles to ensure fairness, awarding compensation where appropriate.

Ratio Estoppel does not apply to minors under Section 115 of the Indian Evidence Act and forcing minors to repay benefits from void agreements would conflict with established legal protections for minors.

Facts

The Plaintiff, an elderly man suffering from diabetes, was alleged to have been of weak intellect. He was purportedly taken to Mangalore by the first Respondent, where the deed of settlement was executed, conferring considerable property to the first Respondent while retaining only a life interest for himself and minimal provision for his wife, Lakshmi Amma. The Plaintiff claimed that the first respondent exploited his weakened mental and physical state to obtain benefits under the settlement deed.

The trial court decreed in favor of the Plaintiff, declaring both the will and the settlement deed invalid. Upon appeal, the High Court reversed this decision, leading to the present appeal to the Supreme Court.

Key Takeaways for Students

Legal Issue

Whether the deed of settlement was executed under undue influence and in circumstances that rendered it invalid and void?

Holding

The Supreme Court observed that the deed of settlement was unnatural and unconscionable, making negligible provision for Plaintiff’s wife and excluding his two daughters and other grandchildren. The Court noted the suspicious circumstances under which the deed was executed, including The Plaintiff’s advanced age, weakened physical and mental condition, and the manner in which the document was registered at the Nursing Home.

The evidence presented by the respondent, including the testimony of doctors and witnesses, was found to be unreliable and insufficient to establish that the deed was executed voluntarily and with full understanding.

Therefore, In this case, the Court found that the first Respondent failed to establish that the deed of settlement was executed by the plaintiff of his own free will and without undue influence, given his advanced age, weakened physical and mental condition, and the suspicious circumstances under which the document was executed and registered.

Final Decision: Appeal Allowed

Ratio When a legal document such as a deed of settlement appears unnatural and unconscionable, and the circumstances suggest undue influence, the burden of proof shifts to the beneficiary to demonstrate that the document was executed voluntarily and without coercion.

Facts

The Plaintiffs in this case were the members of the Islam Local Agency Committee, and the Defendants were the heirs of Munshi Abdul Karim. In 1907, a movement was initiated to collect funds for repairing and reconstructing the mosque Masjid Hammam Alawardi Khan. The Local Agency Committee sanctioned a subscription of Rs. 3,000 and received additional pledges and donations, which also included a sum of Rs. 500 promised by Munshi Abdul Karim. Munshi Abdul Karim died on 20 April 1909, and the suit was instituted against his heirs on 14 April 1910 for recovery of money.

Key Takeaways for Students

Legal Issue

Whether the Respondents are liable to pay the promised subscriptions?

Holding

The High Court observed that the subscription by Munshi Abdul Karim was a gratuitous promise, which cannot be enforced, and there was no evidence that he set aside the Rs. 500. Therefore, the suit could not be maintained against Munshi Abdul Karim or his heirs.

Final Decision: Appeal Partly Allowed

Ratio A gratuitous promise is not enforceable by law since it refers to a promise made without any expectation of receiving something in return.

Facts

The plaintiff entered into a contract number C/74 with the Government of India on February 20, 1947, to supply potatoes at the Military Headquarters, U.P. Area, and deposited an amount of Rs. 10,000 as security for due performance of the contract. He entered into another contract with the Government of India on March 4, 1947, No. C/120 to supply poultry, eggs and fish for one year, at the same place and deposited an amount of Rs. 8,500 for the due performance of the contract.

The Government of India rescinded the contracts-the first on November 23, 1947 and the second on December 2, 1947, and forfeited the amounts deposited by the plaintiff.

Aggrieved by this, plaintiff commenced an action against the government for a decree of Rs. 20,000 being the amounts deposited with the Government of India for due performance of the contracts and interest thereon at the rate of 6 percent, per annum.

The Trial Court decreed the suit and observed that the Government of India was justified in rescinding the contracts, but they had no right to forfeit the amounts of deposit as they had not suffered any loss in consequence of the default committed by the plaintiff.

The High Court of Allahabad, in appeal, modified the decree, and awarded Rs. 416.25 only with interest at a rate of 3 percent from the date of the suit. Aggrieved with this, the plaintiff appealed in front of the Supreme Court.

Key Takeaways for Students

Legal Issue

Whether the Government of India had the power to forfeit the amount?

Holding

The Supreme Court observed that forfeiture of earnest money under a contract for sale of property-movable or immovable-if the amount is reasonable, does not fall within Section 74 of the Indian Contract Act, 1872.

If forfeiture acts as a penalty, Section 74 applies. When a contract stipulates that the breaching party must pay or forfeit a sum of money already paid to the party alleging the breach, this obligation is considered a penalty.

The Supreme Court set aside the decree passed by the High Court and substituted the decree with the following decree:

• The Government of India is liable to pay the plaintiff Rs. 18,500 with interest at 2 rate of 3% per annum from the date of the suit till payment.
• The plaintiff was guilty of breach of contracts. Considerable inconvenience was caused to the Military authorities because of the failure on the part of the plaintiff to supply the food that was contracted to be supplied. Even though there is no evidence of the rates at which the goods were purchased, we are of the view, having regard to the circumstances of the case that the fairest order is that each party do bear its own costs throughout.

Final Decision: Appeal Allowed

Ratio Damages for breach of contract should be fair and reasonably foreseeable, taking into account both actual and consequential losses and the requirement for the injured party to mitigate their losses.

Facts

The Appellant was employed by the Respondent Company, Century Spinning & Manufacturing Co. Ltd., which specialized in manufacturing tyre cord yarn. During his employment, the Appellant received specialized training and was exposed to confidential information and trade secrets pertinent to the company's production processes. The employment contract included a non-compete clause that restricted the Appellant from joining a competitor for a specified period after leaving the company. Despite these terms, the Appellant left the respondent's employment and joined a competing company. Consequently, the respondent sought an injunction to enforce the non-compete clause, alleging that the Appellant's actions caused them deprivation and inconvenience.

Key Takeaways for Students

Legal Issue

Whether non-compete covenants are enforceable under Section 27 of the Indian Contract Act, 1872?

Holding

The Supreme Court observed that a distinction must be made between non-compete restrictions applicable during the term of employment and those applicable post-termination. The court noted that while restrictions during the employment period are generally valid to prevent the employee from engaging in competing activities, post-employment restrictions are typically considered void unless the employer can demonstrate significant harm from the disclosure of trade secrets.

The Court upheld the validity of the non-compete covenant during the employment period, stating that such clauses do not violate Section 27 of the Indian Contract Act, 1872. However, the court emphasized that post-termination restraints require substantial proof of potential harm to be enforceable, such as the theft of confidential information.

Final Decision: Appeal Dismissed

Ratio Non-compete covenants effective during the term of employment are not considered restraints of trade under Section 27 of the Indian Contract Act, 1872. The burden of proof lies with the employer to demonstrate actual theft of confidential information to enforce post-termination restraints.

Facts

The Respondent, Saw Pipes Ltd., engaged in supplying equipment for offshore oil exploration, entered into a contract with the Appellant, Oil & Natural Gas Corporation Ltd. (ONGC), to supply casing pipes. Due to a workers' strike across Europe, Saw Pipes could not procure the raw materials necessary to fulfill the order on time. Upon notification, ONGC extended the delivery deadline but imposed a condition that liquidated damages would be deducted for any delay in the supply. The contract stipulated a liquidated damages clause: for each week of delay, the contractor would be charged 1% of the total price of the undelivered portion, with a cap at 10% of the total contract price. The clause also specified that these damages were genuine pre-estimates, not penalties, and could be deducted from payments due to the Respondent.

When Saw Pipes failed to deliver on time, ONGC withheld $304,970.20 and ₹15,75,559, including customs duty, freight charges, and sales tax, as liquidated damages. Saw Pipes disputed these deductions, leading to arbitration. The Arbitral Tribunal ruled in favor of Saw Pipes. Dissatisfied, ONGC challenged the arbitral award before the Bombay High Court, which dismissed the appeal. ONGC then appealed to the Supreme Court of India.

Key Takeaways for Students

Legal Issue

1. Does the Supreme Court have jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, to hear the present appeal?
2. Can an arbitral award be set aside if the tribunal fails to follow the procedure prescribed under the Arbitration and Conciliation Act, 1996?
3. Can an award be set aside on grounds of "public policy" under Section 34 of the Arbitration and Conciliation Act, 1996, if it violates substantive law?

Holding

Firstly the Supreme Court discussed its jurisdiction to set aside arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. The Court emphasized that interference is permissible only on specific grounds, such as if the tribunal has acted beyond its jurisdiction or if the award is in conflict with the public policy of India.

Regarding the damages, the Court held that when the terms of the contract are clear, the court should not require proof of actual loss if the parties have agreed on a genuine pre-estimate of liquidated damages. However, if the liquidated damages are construed as a penalty, the court may grant reasonable compensation only if the claimant can prove the actual damage. The Court highlighted that contracts executed by experts in the field should not easily be construed as penalties.

Citing Maula Bux v. Union of India (MANU/SC/0081/1969) the Court concluded that when it is difficult to assess the compensation, the burden of proof lies with the party challenging the reasonableness of the stipulated damages. In this case, no such challenge was raised.

The Court further noted that the Arbitral Tribunal's decision violated Sections 73 and 74 of the Indian Contract Act, 1872, as it failed to recognize the liquidated damages as a genuine pre-estimate of loss. The Tribunal also ignored the terms of the contract, which clearly distinguished liquidated damages from penalties.

Therefore the Court had set aside the arbitral award on the grounds of patent illegality and violation of public policy under Section 34 of the Arbitration and Conciliation Act, 1996. The Court held that the Tribunal acted beyond its jurisdiction by disregarding the contract's terms and the applicable substantive law, leading to a miscarriage of justice. The Court also ruled that the force majeure clause could not be invoked, as the contract did not anticipate a workers' strike.

Final Decision: Appeal Allowed

Ratio The jurisdiction of the Supreme Court under Section 34 of the Arbitration and Conciliation Act, 1996, is broad enough to allow for the setting aside of arbitral awards on specific grounds, including violations of public policy.

When liquidated damages are clearly stipulated in a contract as genuine pre-estimates, there is no requirement for the claimant to prove actual loss.

Facts

The Respondents held an e-auction for certain coal in different lots. The Petitioner submitted its tender or bid in the said auction and the Petitioner's bid was accepted for 4000 metric tons of coal from Dobari Colliery. The acceptance letter was issued on 19.7.2005 by e-mail at the Petitioner's e-mail address. Acting upon the said acceptance, the Petitioner deposited the full amount through cheque in favour of Respondent on 28.7.2005 which was accepted and encashed by Respondent.

Subsequently, instead of delivering the coal to the Petitioner, Respondent sent an e-mail dated 10.8.2005 to the Petitioner saying that the sale, as well as the e-auction in favour of the Petitioner, stands cancelled "due to some technical and unavoidable reasons".

The only reason that was stated for the cancellation was that there was some other person whose bid for the same coal was slightly higher than the Petitioner, but due to some flaw in the computer or its programme or feeding of data, the said bid could not be considered.

Key Takeaways for Students

Legal Issue

Whether cancellation of auction and contract of sale in favour of Petitioner justified?

Holding

The Respondents are bound by their concluded contract and by the principle of promissory estoppel, since the Petitioner has altered its legal position to its disadvantage, acting upon the communication of acceptance sent to it by these Respondents, by depositing a large amount of money, by cheque which has also been encashed by the Respondents.

There can be no doubt that the Respondents are 'State' within the meaning of Article 12 of the Constitution of India and the cancellation of the auction and the contract of sale in favour of the Petitioner at such a highly belated stage, without giving any opportunity of hearing to the Petitioner, is violative of the principles of natural justice and on that ground also it cannot be sustained.

Final Decision: Writ Petition Allowed

Facts

The case involved a dispute within a joint undivided family between the Plaintiff and the Defendant, his son. Due to a property dispute, the Plaintiff filed a criminal suit against the defendant. To defend himself, the Defendant mortgaged his property for Rs. 10,000 at an interest rate of 24% compound interest with the Plaintiff. Over eleven years, the interest on this mortgage increased eleven-fold. The Defendant contended that Plaintiff exploited his mental distress to impose excessive interest rates and argued that Section 16 of the Indian Contract Act, 1872, should apply.

Key Takeaways for Students

Legal Issue

Whether the Appellant/Defendant, under the circumstances proven in the case, fell within the protective provisions of Section 16(3) of the Indian Contract Act?

Holding

Section 16(3) of the Indian Contract Act states that if a person in a position to dominate the will of another enters into an unconscionable contract, the burden of proving that the contract was not induced by undue influence lies on the person in a position to dominate. This is further illustrated by an example where a father, having advanced money to his son during his minority, misuses parental influence to obtain a bond for a greater amount than the sum due.

The court concluded that the Defendant failed to prove that the Plaintiff was in a position to dominate his will, thereby failing to meet the conditions of Section 16(3) of the Act. As the first step of establishing a dominating relationship was not satisfied, the question of undue influence did not arise. Consequently, the court allowed compound interest on the principal at 2% per month from the date of the bond's execution until September 25, 1917, and thereafter simple interest at 6% per annum until realization.

Final Decision: Appeal Disposed Off

Ratio To determine if a case of undue influence falls under Section 16(3) of the Indian Contract Act, the relationship between the parties must be such that one is in a position to dominate the will of the other. If this position is established, the next step is to determine whether the contract was induced by undue influence.

Facts

The Respondents advertised for receiving tenders for the sale of Tendu-Patta. Under condition no. 10 (b) (1) of the tender advertisement, it was mentioned that a tender may be allowed to be withdrawn before its acceptance on the condition that at least there should be one valid tender available for the consideration for the unit. The petitioner gave a tender in pursuance of tender notice. The tenders were to be opened on a specific date but before they were opened, the petitioner made an application resiling from his tender and requested that since he has withdrawn his tender it may not be opened at all. The tender was, however, opened as this was the only tender submitted for that unit. The contention of the Petitioner is two-fold. In the first place, as he had withdrawn his tender before it was opened and accepted, there was no tender on behalf of the Petitioner. The other contention is that there being no valid contract executed by the Petitioner under Article 299 of the Constitution, there was no enforceable contract between the Petitioner and the Respondent and, therefore, no recovery on the ground of the existence of a contract could be made from the Petitioner.

Key Takeaways for Students

Legal Issue

Whether a revocation/withdrawal of tender is allowed before its acceptance is intimated?

Holding

Yes, a revocation/withdrawal of tender is allowed before its acceptance is intimated.

It was held that the person who makes the contract is entitled to withdraw the offer/tender before its acceptance is intimate to him. It was also held that merely providing a clause in the tender notice could not take away the legal right of the petitioner. Also, it is evident that when the tender was opened, there was no offer by the petitioner because it was already withdrawn; therefore there could be no contract between parties.

Final Decision: Writ Petition Allowed

Ratio An offeror can withdraw his offer/tender before its acceptance is communicated to him, regardless of any contrary clause in the tender notice.

Facts

The plaintiffs' ornaments were stolen and subsequently, seized by the police, who stored them in the Collectorate Malkhana as stolen property. The ornaments were then stolen from the Malkhana and could not be recovered. The plaintiffs filed a suit against the government, seeking indemnification for the loss.

Key Takeaways for Students

Legal Issue

Can bailment exist without a contract?

Holding

The court held that no contract of bailment existed between the plaintiffs and the government. The plaintiffs did not deliver the ornaments to the government; rather, they were seized by the police and stored as part of their duty. Consequently, the government was not liable to indemnify the plaintiffs for the loss.

Final Decision: Application Dismissed

Ratio A contract of bailment requires the delivery of goods by one party to another with the expectation of their return or disposal according to the directions of the party delivering them.

Facts

The Appellants- dealer dealt in the purchase of new and second-hand machinery. They, through an advertisement, came to know that the respondent was offering area-scrap for sale. Expressing desire to purchase the material, the appellants addressed a letter dated November 6th, 1946, to the respondent and purchased an entire lot of scraps for Rs. 10, 00,000 as per the conditions mentioned in the letter. Payment of Rs.2, 50,000 was acknowledged by the respondent. Both parties entered into an arrangement that the appellant will pay in two installments, i.e. Rs. 2, 50,000 on or before November 22, 1946, and the balance of Rs. 5, 00,000 on or before December 14, 1946. They further stated that the appellants shall take delivery after making full payment.

On November 22nd, 1946, the appellant sent a communication stating that he came to know that the quantity agreed is not available with the respondent and therefore he cannot do the business. So, the appellant demanded the sum of Rs 2,50,000 already paid by him to the respondents.

The respondent sent several letters to the appellants asking them to pay the balance amount and take delivery of the goods; but the appellants refused to pay any further amount to the respondent. The respondent ultimately forfeited the entire sum of Rs. 2, 50,000 which, according to it, was earnest money and then cancelled the contract. The appellant instituted the suit in the Calcutta High Court against the respondents for recovery of the sum of Rs. 2, 50,000 together with interest.

The learned Single Judge and, on appeal, the Division Bench of High Court held that the amount of Rs. 2, 50,000 paid by the appellants was so paid as and by way of deposit or earnest money to secure the performance of the contract and, in the absence of any provision to the contrary in the contract, the respondents are entitled to forfeit the deposit amount when the appellants have committed a breach of contract. In this view the respondents’ right to forfeit the sum of Rs. 2, 50,000 was accepted, and the appellant is not entitled to claim a refund of the said amount. The appellant's suit, in the result, was dismissed by the learned Single Judge and, on appeal, the decree of dismissal has been confirmed. Aggrieved by the decision the appellant approached the Supreme Court for recovery of the amount of Rs. 2, 50,000.

Key Takeaways for Students

Legal Issue

Whether the sum of Rs. 2,50,000 paid by the appellant as and by way of part payment or as earnest deposit and were respondents entitled to forfeit the said amount?

Holding

The Supreme Court while interpreting the meaning of earnest held that earnest money can be forfeited, but in dealing with the rest of the amount which was not, admittedly, earnest money, Section 74 of the Indian Contract Act was applied. In the case before us the entire amount, as evidenced by the contract and as held by us earlier, is earnest money and therefore the decisions of Fateh Chand v. Balkishan Das and Maula Bux v. Union of India are not applicable upon the present case.

Final Decision: Appeal Dismissed

Ratio The court’s decision confirms that earnest money serves as a security measure for contract performance, and the non-performing party cannot claim a refund if they breach the agreement.

Facts

The Plaintiff, Ganga Prosad, initiated a suit challenging a deed of gift executed by his father, Prasanna Kumar, in favor of the plaintiff's nephew, Subhas Chandra, who was the first defendant. Prasanna Kumar, who owned lands in two villages, Parbatipur and Lokepur, had an eight annas share in each. The Lokepur properties, the subject matter of the suit, were considered more valuable. Prasanna Kumar passed away in early 1948 at the age of approximately 90, leaving behind his two sons, Ganga Prosad and Balaram (the second Defendant), a daughter, Swarnalata, and his only grandson, Subhas Chandra. Swarnalata, widowed in her childhood, resided with her parents.

Prasanna Kumar had purchased the Lokepur properties benami in Swarnalata’s name after they were auctioned due to arrears of rent. The Plaintiff alleged that Prasanna Kumar, owing to his senile decay, was incapable of executing the deed with a sound mind. The suit was filed in 1952, several years after Prasanna Kumar's death and the execution of the deed. The Plaintiff claimed that he only became aware of the deed of settlement two years before filing the suit and contended that the second Defendant exercised undue influence over Prasanna Kumar to facilitate the execution of the gift deed in favor of Subhas Chandra.

Key Takeaways for Students

Legal Issue

Whether the gift deed executed by the Plaintiff’s father was induced by undue influence exerted by the second Defendant and whether the Plaintiff’s father was of sound mind at the time of the deed's execution?

Holding

The Supreme Court analyzed the essential ingredients of undue influence under Section 16(1) of the Indian Contract Act, 1872, which requires examining if the relations between the parties allowed one party to dominate the will of the other and whether such dominance was used to gain an unfair advantage. The Court found that undue influence in cases of gifts is analyzed similarly to contracts.

The Court emphasized that for undue influence to be established, the relations between the donor and donee must indicate that the donee was in a position to dominate the will of the donor and that the donor's will was dominated to secure an unfair advantage. It further clarified that the burden of proving the absence of undue influence lies with the donee when the transaction appears unconscionable.

The court has held that the allegations of undue influence were not sufficiently pleaded in the plaint. The plaintiff’s assertions were contradictory; while it was claimed that the Prasanna Kumar colluded to execute the deed, it was also alleged that he was of unsound mind due to senile decay.

The Court highlighted that merely having close relations, like that of a father and son, does not automatically imply undue influence. Therefore, the Plaintiff failed to prove that the second defendant dominated Prasanna Kumar’s will at the time of the deed's execution. Consequently, the Supreme Court set aside the High Court’s decision, restoring the trial court's judgment in favor of the defendants.

Final Decision: Appeal Allowed

Ratio In order to establish undue influence in a gift transaction, it must be proven that the donee had a dominant position over the donor, and this dominance was used to secure an unfair advantage. The burden of proving the absence of undue influence falls on the donee when the transaction appears unconscionable.

Facts

The Petitioner/Messrs Punj Sons Private Ltd. entered into a contract with the Respondent/ Union of India for the supply of milk containers. The containers according to the contract were to be coated with "hot dip tin coating”. The petitioner wrote to the Director General of Supplies and Disposals for the issue of a quota certificate for tin which is to be used for hot dip tin coating of the milk containers and addressed a communication to the Director General of Technical Development for the issue of release orders for procurement of tin ingots. Even after several communications, no order for the release of the tin ingots was passed.

The petitioner wrote to the Director General of Supplies and Disposals that they understand that the release orders for tin ingots can only be issued to them after a provision to this effect is made in the A/T by the department. The Respondent replied that there was no stipulation in the A/T for assistance for the procurement of tin ingots and that on an ex gratia basis, the request could be considered provided a price reduction is made.

On 28th November 1970, the Respondents cancelled the contract and informed the petitioners that the cancellation was being done at their risk and expense and that they were liable to pay the extra cost involved in the repurchase. The Respondent claimed damages from the petitioner which was refuted by the petitioner. The dispute was referred to arbitration where the arbitrator awarded a sum to the Union of India.

The petitioner challenged the award on the ground that to complete the contract, tin ingots were necessary for the hot dip tin coating for milk cans and since the tin ingots were not available in the market it was not possible to carry out the contract without the government releasing the required quantity and that despite earnest endeavours made by the petitioner they were not able to obtain an order for the release of the required quota of tin ingots and, therefore, the contract became impossible to perform and stood frustrated.

The Respondents in reply pleaded that there was no condition or stipulation in the tender or the A/T for arranging a release order/ import licence for tin ingots. They admitted that the ingots were not available but pleaded that they were not obliged under the contract to make available the tin ingots.

Key Takeaways for Students

Legal Issue

Whether the gift deed executed by the Plaintiff’s father was induced by undue influence exerted by the second Defendant and whether the Plaintiff’s father was of sound mind at the time of the deed's execution?

Holding

The tin ingots were canalized items and could only be issued on the recommendation of the Union of India. The correspondence between the parties clearly shows that the petitioner had asked the Director General of Supplies and Disposals to obtain the release of the necessary quota of tin ingots for completing the contract. Efforts were made by the Director General of Supplies and Disposals to obtain the release of the required quota of tin ingots but he somehow did not succeed in obtaining the orders of release from the concerned authority. The petitioner had requested the Director General of Supplies and Disposals to amend the A/T but this was also not done. It was in these conditions that the petitioner failed to carry out their obligations under the contract. Thus, the Contract would clearly be hit by Section 56 of the Indian Contract Act, 1872.

Final Decision: Petition Allowed

Facts

Bejoy Krishna Roy and Respondents/Construction Company entered into an agreement under a scheme to develop land for residential purposes. The Company’s plan of work was to sell plots of land in return of earnest money. Bejoy Krishna Roy was one such purchaser who entered into a contract with the company for the purchase of a plot of land covered by the scheme and paid the earnest money. On 30th November 1941 the Appellant was made nominee by Bejoy Krishna Roy.

A portion of land covered under the scheme was requisitioned for military purposes. The company informed Bejoy Krishna Roy about the requisition and the decision to cancel the agreement, which was further communicated to the appellant. The appellant was given two options as conditions and in case the appellant did not accept any of the conditions the agreement would be deemed cancelled and earnest money would stand forfeited.

The Appellant refused to accept the conditions and stated that the construction company was bound by the terms of the agreement. A suit was instituted on the grounds that the contract between the Bejoy Krishna Roy and Construction Company, was still subsisting. Construction Company took the defence that the contract of sale stood discharged by frustration as it became impossible because of the supervening events to perform a material part of it.

The trial judge overruled all the pleas taken by the Construction Company and decreed the Appellant’s suit. An appeal was taken by the Construction Company to the court of the District Judge which was dismissed and the judgment of the trial court was affirmed. The company thereupon preferred a second appeal to the High Court. The question canvassed before the High Court was, whether the contract of sale was frustrated because of the requisition orders issued by the Government. The learned judges answered this question in the affirmative in favour of the Company and dismissed the Appellant’s suit. Hence, the appeal was filed.

Key Takeaways for Students

Legal Issue

What is the true scope and effect of Section 56 of Indian Contract Act, 1872 and to what extent, if any, it incorporates the English rule of frustration of contracts?

Holding

The Supreme Court has held that the doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act, 1872. It would be incorrect to say that Section 56 of the Contract Act applies only to cases of physical impossibility and that where this section is not applicable, recourse can be had to the principles of English law on the subject of frustration. It must be held also, that to the extent that the Indian Contract Act, 1872 deals with a particular subject, it is exhaustive upon the same and it is permissible to import the principles of English law de hors these statutory provisions.

Final Decision: Appeal Allowed

Ratio Doctrine of frustration is an aspect or part of the law of discharge of contract because of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act, 1872.

Facts

The Petitioner, Tarsem Singh, owned 48 Canals 11 marlas of agricultural land. He entered into a contract to sell this land to the respondent, Sukhminder Singh, for Rs. 24,000 per acre. At the time of the agreement, Rs. 77,000 was paid to the Petitioner as earnest money. Despite the respondent’s readiness and willingness to perform his part of the contract, the Petitioner did not execute the sale deed. Consequently, the Respondent filed a suit for specific performance, which was decreed by the trial court. However, the decree was modified on appeal by the Additional District Judge, who found that both parties suffered from a mistake of fact regarding the land's area and the sale consideration, whether it was per "Bigha" or per "Canal." The Lower Appellate Court also determined that the Respondent was not ready and willing to perform his part of the contract, resulting in a decree for the refund of the earnest money, upheld by the High Court.

Key Takeaways for Students

Legal Issue

Whether the agreement for the sale of land was void due to a mutual mistake of fact regarding the land's area and sale consideration, and whether the decree for the return of earnest money was justified despite a specific forfeiture clause in the contract?

Holding

The Supreme Court examined the effect of "mistake of fact" on the agreement. The Court stated that a contract is a bilateral transaction that becomes enforceable by law when the parties have mutual and free consent. Section 20 of the Contract Act states that an agreement is void if both parties have made a mutual mistake regarding a matter of fact essential to the agreement.

In this case, the court found that the parties had a mutual mistake regarding the area of land and the rate of sale consideration. This mistake was essential to the agreement, rendering it void. Consequently, the forfeiture clause could not be enforced, as the agreement itself was void from its inception. The court further referred to Section 65 of the Contract Act, which mandates that any person who has received an advantage under a void agreement is bound to restore it.

Final Decision: Special Leave Petition Dismissed

Ratio A contract rendered void due to a mutual mistake of fact concerning essential elements cannot be enforced.

Facts

The Appellants invited tenders by an advertisement for the supply of 14,000 imperial pounds Cane jaggery to the railway grain shops. The Respondent read the advertisement (which was an invitation to offer) and placed the bid for that invitation to tender by depositing Rs. 7,900 as a security fee. Simply stating, the respondent after reading the invitation to the tender in an advertisement, offered the tender to the appellants.

As per the terms and conditions, jaggery was to be transported in four installments, i.e. 3,500 maunds each. During the contract, the Appellant said that they have the power to cancel the contract at any time. Appellants informed the Respondent that they have canceled an order for the supply of jaggery and the contract was closed according to them. Respondent protested against the appellant and took the defense that the right to cancel the contract was reserved with them only.

Therefore, the Respondents instituted a suit claiming damages for breach of contract since the decision was against the Plaintiffs in the previous suit. The suit was dismissed in the trial court because it held that the Appellants could cancel the contract at any point without making themselves liable to pay damages. This decision was in favor of the Appellant herein.

Key Takeaways for Students

Legal Issue

Whether the Appellant was at liberty to end the contract at any stage of the duration of the contract regarding the outstanding obligations under it or not?

Holding

Yes, the Appellant had the authority to cancel the contract but for only that part where a formal order was not placed.

The Supreme Court stated that the Appellant had the right to cancel that agreement for such supply of jaggery about which no formal order had been placed. The Court further stated that if a formal order had been placed specifying a definite amount of jaggery to be supplied at a definite time, then the appellants had no right to cancel the agreement.

Simply stating, once the order is placed for supply of goods that order amounts to a binding contract making it incumbent on the respondent to supply of goods in accordance with the terms of the order. Therefore, the Appellant had the right to cancel the outstanding contract, not the whole contract. The Court dismissed the appeal and restored the order of the High Court.

Final Decision: Appeal Dismissed

Ratio A standing offer may be revoked at any time provided that it has not been accepted in the legal sense and acceptance in the legal sense is complete as soon as a requisition for a definite quantity of goods is made.

Facts

An advertisement was published by the Defendant stated that £100 reward will be paid by the Carbolic Smoke Ball Company to any person who contacts the influenza after having their ball three times daily for two weeks, as per the printed directions supplied with each ball. The Plaintiff bought the defendant’s product and used it in the manner as prescribed by the product. After some days she got flu. When sued, the Defendant argued that the advertisement was not to be taken as a serious, legally binding offer. It was merely an invitation to treat and there was no person named in the advertisement with whom any contract was made and since there was lack of consideration it was nudum pactum.

Key Takeaways for Students

Legal Issue

Whether the offer was merely an invitation to treat or a contract?

Holding

The Court observed that while making an offer, the offeror expressly or impliedly indicated that there is no need of intimating acceptance to the said offer and only performance of the conditions of offer would be enough to result in valid contract.

It was further held that there was a promise made to the Plaintiff, as one of the public - a promise made to her that if she used the smoke ball three times daily for a fortnight and got the influenza, she should have £100. Thus, her using the smoke ball was sufficient consideration and that a person becomes a persona designata and able to sue, when he performs the conditions mentioned in the advertisement.

Final Decision: Appeal Dismissed

Ratio A person becomes a persona designata and able to sue, when he performs the conditions mentioned in the advertisement

Facts

The Plaintiff filed a suit for accounts against the Principal Defendant (Defendant 1) for the period of his service as a gomasta (agent) under the Plaintiff. The other Defendants were made parties as they were the representatives of Mahendra Nath Roy, who was the surety for Defendant 1. The Subordinate Judge passed a final decree against all defendants, including Defendants 2 to 8, directing that if Defendant 1 did not pay the amount, the Plaintiff could realize the sum by selling the property hypothecated by the surety bond. On appeal, the District Judge reversed the decision, holding that the death of the surety (Mahendra Nath Roy) operated as a revocation of the contract of guarantee for all future transactions under Section 131 of the Indian Contract Act, 1872.

Key Takeaways for Students

Legal Issue

Does the death of a surety revoke a continuing guarantee concerning future transactions, and to what extent are the legal representatives of the surety liable?

Holding

The Court held that the surety bond in question was a continuing guarantee under Section 129 of the Indian Contract Act, 1872 (ICA). Despite the death of the surety, the guarantee continued to bind the legal representatives of the surety as the bond explicitly stated that the surety and his heirs would remain responsible for the obligations. The court observed that the provision of Section 131 of the ICA, regarding the revocation of guarantees upon the surety’s death, does not apply where the contract expressly binds the heirs and representatives of the surety to future liabilities.

Final Decision: Judgment and decree of District Judge set aside

Ratio A surety's liability under a continuing guarantee can extend beyond the surety's death if the terms of the contract expressly provide for such continuation.

Facts

The parties in this case were negotiating for the sale and purchase of a property owned by Respondents. Harvey and Anor had asked Facey if he would sell them the property and the minimum price at which Facey would sell it. In response, Facey stipulated his minimum price for the property, but he was silent as to whether he was ready to sell the property to Harvey and Anor. Harvey and Anor sent Facey a telegram in which they agreed to pay Facey the stipulated price. Harvey and Anor regarded this telegram as obligating Facey to sell them the property at that price. When Facey attempted to sell the property to other buyers, Harvey and Anor accused Facey of breaching their contract and sued Facey for specific performance.

Key Takeaways for Students

Legal Issue

Whether quotation of price is an offer?

Holding

The Judicial Committee of the Privy Council reversed the judgment of the Supreme Court of Jamaica and restored the decision of Mr. Justice Curran, concluding that there was no binding contract between the parties. The mere communication of the lowest price by Facey did not constitute an offer capable of acceptance, and therefore, no contract for the sale of the property, Bumper Hall Pen, was established. The Privy Council directed the Appellant to pay to the Respondents the costs of the appeal to the Supreme Court and of this appeal.

Ratio A mere statement of the lowest price at which a vendor is willing to sell does not imply an offer to sell.

Facts

Defendant's nephew had gone missing. Many servants were sent to look for him. Later a price of Rs. 501 was also announced. However, the servant who found the boy did not know about the reward. Few months later when he was terminated, he filed a suit for the reward money.

Key Takeaways for Students

Legal Issue

Can there be a contract if the other party has no knowledge of the offer?

Holding

There can be no acceptance unless there is knowledge of an offer. Though it was not the duty of the Plaintiff as a servant to search for the missing boy, yet having undertaken the task before the offer, he was bound to perform it. Therefore, his search for the boy could not be regarded as a consideration of the Defendant's promise. Further, a valid contract was not formed because the acceptance of the offer was not communicated to the offeror.

Ratio An offer must be communicated to the offeree to be valid, and acceptance must be communicated back to the offeror for a contract to be legally binding.

Facts

Felthouse wanted to buy a horse from his nephew. He wrote him a letter stating the amount he was willing to pay and that if he does not receive a reply, he would consider the horse sold to him. The nephew couldn't reply to the letter. Later when an employee of the nephew sold the horse to somebody, Felthouse filed a case against him for breaching contract by selling his horse.

Key Takeaways for Students

Legal Issue

Can silence of the offeree be treated as acceptance?

Holding

Felthouse did not have ownership of the horse as there was no acceptance of the contract. Acceptance must be communicated clearly and cannot be imposed due to silence of one of the parties Silence or non-communication of acceptance does not constitute a valid acceptance and thus does not create a binding contract.

Ratio For a contract to be validly formed, acceptance of the offer must be communicated to the offeror.

Facts

The plaintiff sued the defendants for wrongfully repudiating the contract of developing the lands which were sold to the plaintiff, and asked for specific performance of the same. Defendant took the defence of frustration as the lands which needed to be developed were temporarily requisitioned by the Government under the defence rules such that for unspecified period of time, any development work if executed on the land would be illegal. The contract was made at a time when war conditions were prevailing and any such requisition was imputed to be in contemplation of the parties while forming contract. Further, no time was specified in the contract.

Key Takeaways for Students

Legal Issue

Whether the defence of frustration of contract be taken where there is merely delay in performance of contractual duties?

Holding

The court held that the doctrine of frustration under Section 56 of the Indian Contract Act, 1872, applies only when the performance of a contract becomes impossible or unlawful due to an event that was not anticipated by the parties at the time of the contract, and such an event fundamentally alters the contract's nature. However, mere delay in performance, particularly when the contract does not specify a strict timeline, does not constitute frustration. Thus, in this case the doctrine does not apply as there was a mere delay in the performance of contract.

Final Decision Appeal Allowed

Ratio Doctrine of frustration is applicable in contracts where performance of the act becomes unlawful or impossible thereby upsetting the object of the contract.

Facts

Fertilisers and Chemical Travancore Limited (FEDO) has entered into a contract with EASUN for supply and installation of eighteen Power Transformers etc. Only six transformers were supplied by EASUN and the dispute arising between the parties was referred to Umpire.

The Award by Umpire stated that if EASUN failed to conform to fabrication schedule without sufficient cause, FEDO could terminate the contract. FEDO terminated the contract, which was challenged by EASUN. It was the case of EASUN that FEDO had terminated the contract unilaterally and committed breach of contract. On the other hand FEDO stated that EASUN had failed to perform the contract and it had no other alternative except to terminate its contract.

EASUN contended that they were prevented from supplying due to force majeure conditions namely, phenomenal increase in the cost of transformer oil due to war conditions etc. The Umpire agreed with the contention of EASUN that price in transformer oil was unexpected, unforeseen and beyond their control, and, therefore, it must be deemed to be a force majeure condition and so, FEDO was not justified in terminating the contract unilaterally.

Key Takeaways for Students

Legal Issue

Whether the circumstances causing non-performance of contract would come under ‘Force Majeure’?

Holding

Since there was an increase in the price of transformer oil up to 400%, it cannot be described as anything which would be normal in the ordinary trade conditions but it was very much abnormal, due to certain unexpected war condition. So, it can be safely concluded that "fundamentally different situation", "unexpectedly emerged". The Court referred to judgement M/s. Alopi Parshad v. Union of India (MANU/SC/0057/1960) in which reference was made to Section 56 of Indian Contract Act, 1872 and held that “if, a consideration of the terms of the contract in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamentally different situation which has now unexpectedly emerged, the contract ceases to bind at that point not because the Court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation."

Final Decision Disposed of

Facts

The Plaintiff was the owner of a ginning factory constructed on an agricultural land and nominally held in the name of his brother. He sold the factory to the Defendant who paid half the price at once and was put in possession, the balance being payable on a fixed date. The buyer defaulted in paying up on that date and the seller rescinded the contract and brought an action for possession.

Key Takeaways for Students

Legal Issue

Whether reciprocal promised are conditional?

Holding

Supreme Court held that when a certain act for the performance of the contract has been decided by the parties, that has to be considered taking into account if that particular party is ready and willing to perform his part of the contract or not.

Final Decision Appeal Dismissed

Ratio Reciprocal promises are conditional upon the readiness and willingness of the parties to perform their respective obligations. When a specific act is agreed upon for the performance of a contract, the obligation of each party depends on whether the other party is prepared to fulfill their part of the contract. Therefore, if one party fails to demonstrate readiness or willingness to perform, the other party is not bound to fulfill their reciprocal promise.

Facts

The Appellant was a tire manufacturer who agreed with Messrs. Dew to not sell the tires below a recommended retail price. As part of the agreement, Appellant also required Messrs. Dew to gain the same agreement with their retailers, who in this instance was the Respondent, Selfridge. This was agreed between the Messrs. Dew and Selfridges, which effectively made Appellant a third-party to that agreement. Sometime after this, Selfridge sold the tires below the agreed price and Appellant sued the Selfridge for damages and an injunction to prevent them from continuing this activity.

Key Takeaways for Students

Legal Issue

Whether there was any contract between the Appellant and the Respondent?

Holding

Lord Dunedin The agreement in question is not an agreement for sale. It is only collateral to an agreement for sale but that agreement for sale is an agreement entirely between Messrs. Dew and Selfridge.

Lord Atkinson (Concurring) The contract as to Appellants is a nudum pactum, since no consideration moves from them to the respondents, or to any other person or body at the respondents' request. Appeal is dismissed

Lord Parker of Waddington (Concurring) Messrs. A. J. Dew & Co. were entitled to resell the goods supplied to them by the appellants upon any terms they might think fit and in reselling as they did there was no breach of any restrictive contract.

Lord Summer (Concurring) The delivery of the tyres by the appellants was in performance of an obligation unknown to the respondents and prior to their appearance on the scene. In this transaction nothing moved from the appellants to the respondents. The appellants have sued on a nudum pactum.

Lord Parmoor (Concurring) No control was reserved to the appellants and Messrs. A. J. Dew & Co., without any further authority or licence from the appellants, had a full right, as factors or dealers in the appellants' goods, to sell goods to the respondents.

Final Decision Appeal Dismissed

Facts

The Appellant, Durga Prasad, assisted in the establishment of the market, erecting shops at his own expense and causing persons to occupy such shops. Some of the occupiers of such shops set up businesses in the market. The Appellant, on the ground apparently of his services in establishing the market, claimed to be "chaudhri" of the market, and as such to receive from such occupiers one-third of commission earned from traders who visited the market.

The Appellant's claim was recognized by the district authorities and the Municipal Committee made an order declaring him entitled to commission. Such occupiers had, however disputed the claim, and in August 1864, at their instance, the order above mentioned was cancelled by the Local Government as illegal.

With a view to settle the disputes, the Municipal Committee suggested to the Appellant that he should enter into an agreement with such occupiers respecting his claim. Accordingly the Appellant produced an agreement in writing, which purported to be executed by the Respondents in this suit, in which it was agreed by them that he should, receive six annas of the percentage received by the occupiers of shops who acted as commission agents. At the further suggestion of the Municipal Committee the Appellant applied to have the agreement registered, but as many of the Respondents denied that they had executed the agreement, registration of it was refused. In 1877, the Appellant brought the present suit against the Respondents, to establish the validity of the agreement.

Key Takeaways for Students

Legal Issue

Whether a contract is enforceable if consideration for promise had not moved at the desire of the promisor?

Holding

To render the agreement valid as a contract, it must be shown that there was consideration or if not, that the agreement comes within the exceptions provided for in Section 25 of the Indian Contract Act, 1872. The deed is silent as to the character of the consideration for the promise, and the only ground for making the promise is the expense incurred by the Appellant in establishing the Ganj; but it is clear that anything done in that way was not "at the desire" of the Respondents, so as to constitute a consideration. To bring it within the provisions of that clause, it must be shown that what was voluntarily done by the Appellant was done "for the promisors" or "something which the promisor was legally compellable to do," and that has not been shown.

Final Decision Appeal Dismissed

Facts

The Plaintiff has given two old jewels to the defendant for being utilized for making of new jewels. Every evening she used to visit the Defendant-jeweller, take the unfinished jewels, lock them in a box and take the keys with her while leaving the locked box with the defendant. One morning when she came back, the jewellery was missing from the box and issue of liability of Defendant as bailee arises.

Key Takeaways for Students

Legal Issue

Whether the Defendant can be charged as a bailee and made liable for the loss of some gold belonging to the plaintiff?

Holding

The Court observed that under the provisions of Sections 148 and 149 of the Indian Contract Act, 1872 delivery is necessary to constitute the bailment. In the present case, mere leaving of the box in a room in the defendant's house, when the plaintiff herself took away the key of that room, cannot certainly amount to delivery within the meaning of the provision in Section 149 of the Act. Therefore, the defendant cannot be regarded as a bailee.

Final Decision Petition Allowed

Facts

On 20th July, 1895 the Plaintiff, Dharmodas Ghose, while he was a minor, mortgaged his property in favour of Defendant, Brahmo Dutt, who was a moneylender to secure a loan of Rs. 20,000. At that time the Plaintiff was an infant. On the day on which the mortgage was executed, Kedar Nath, the local manager of Defendant got the infant to sign a declaration containing a statement that he had come of age and the Defendant, relying on his assurance that he had attained his majority, had agreed to advance to him Rs. 20,000.

On the 10th of September 1895, the infant by his mother and guardian as next friend commenced this action against Defendant stating that he was under age when he executed the mortgage, and praying for a declaration that it was void and inoperative, and should be delivered up to be cancelled.

The Defendant put in defence that the Plaintiff was of full age when he executed the mortgage and that even if he was a minor, the declaration as to his age was fraudulently made to deceive the Defendant, and disentitled the Plaintiff to any relief.

Mr. Justice Jenkins, who presided in the Court of first instance, found the facts as above stated, and granted the relief asked by Plaintiff. The Appellate Court dismissed the appeal from Defendant. Subsequently to the institution of the present appeal Brahmo Dutt died, and this appeal has been prosecuted by his executors.

Key Takeaways for Students

Legal Issue

Whether contract with minor is valid or not?

Holding

Section 11 of Indian Contract Act, 1872 is most important, as it defines who are meant by "persons competent to contract;" which is :--"Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law to which he is subject. The Act makes it essential that all contracting parties should be "competent to contract," and expressly provides that a person who by reason of infancy is incompetent to contract cannot make a contract within the meaning of the Indian Contract Act, 1872.

An infant falls within the class of persons here referred to as incapable of entering into a contract ; and it is clear from the Indian Contract Act, 1872 that he is not to be liable even for necessaries, and that no demand in respect thereof is enforceable against him by law, though a statutory claim is created against his property. The question whether a contract is void or voidable presupposes the existence of a contract within the meaning of the Indian Contract Act, 1872, and cannot arise in the case of an infant.

Final Decision Appeal Dismissed

Facts

M/s. Alopi Parshad and Sons Ltd. were appointed as Agents by the Government for purchasing ghee required for the use of the Army personnel. The Government agreed to pay the Agents the actual expenses incurred for purchasing ghee and certain other charges incurred by the Agents.

In 1939, World War 2 broke out and there was enormous increase in the demand of ghee by Government. On June 20, 1942, the original agreement was, by mutual consent, revised, and in respect of the establishment and contingencies the uniform rate was substituted by a graded scale. By communication, the Agents demanded that the remuneration and other charges be enhanced.

No immediate reply was given by the Government of India to the letter from the Agents. On May 17, 1945, the Government of India served the Agents with a notice of termination of the agreement. The notice of termination was waived by mutual consent. By a letter the Agents claimed that a dispute had arisen under the contract and appointed an arbitrator. An arbitrator was also appointed by the Government. Arbitrators did not arrive at an agreed decision and the dispute was referred to an umpire, nominated by the parties who were of the view that the agreement was valid.

This Award was filed in the court of the Subordinate Judge wherein the Agents applied to set aside the Award. The Subordinate Judge proceeded to set aside the Award, but he declined to supersede the Reference, and left it to the parties to "appoint other arbitrators in view of clause 20 of the agreement, for settling the dispute."

Against the order of Subordinate Judge, Union of India appealed to the High Court of East Punjab. The learned Judge agreed with the view of the Subordinate Judge. A Letters Patent appeal against the judgement of High Court of East Punjab was dismissed by a Division Bench of the High Court of East Punjab. In the meantime, the Agents called upon the Government of India to appoint their arbitrator for a fresh adjudication of the dispute.

After the Appeal under the Letters Patent was decided by the East Punjab High Court, the arbitrators entered upon reference. On claim made by Agents, the arbitrators made an award rejecting the primary claim. Certain other awards were made in favor of Agents for loss incurred by them. The award was challenged in court of Commercial Subordinate Judge, Delhi on the ground that it was invalid. The Commercial Subordinate Judge held that the arbitrators had committed an error in ordering the Union to pay to the Agents additional charges, but, the award was binding upon the parties and could not be set aside on the ground of an error apparent on the face thereof. The learned Judge, accordingly, rejected the application for setting aside the award.

Against the order made by the Subordinate Judge, an appeal was preferred by the Union of India to the High Court of East Punjab at Chandigarh. The High Court held that there was no specific reference of any questions of law to the arbitrators, and the decision of the arbitrators was not conclusive and was open to challenge, because it was vitiated by errors apparent on the face of the award. The High Court reversed the order passed by the Subordinate Judge, and set aside the award of the arbitrators, holding that there was no "legal basis for awarding any compensation" to the Agents for any loss which they might have sustained. This appeal has been filed with leave of the High Court under clause 133(1)(a) of the Constitution of India.

Key Takeaways for Students

Legal Issue

On what ground did the arbitrators award to the Agents amounts which the Union of India had not agreed to pay to the Agents?

Holding

Referring to Section 56 of Indian Contract Act, 1872 Supreme Court held that performance of the contract had not become impossible or unlawful; the contract was in fact performed by the Agents, and they have received remuneration expressly stipulated to be paid therein. The Indian Contract Act, 1872 does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity.

Final Decision Appeal Dismissed

Facts

The Defendants, Messrs Boots Cash Chemists (Southern) Limited introduced a self-service system. Under this system the customers took the items they required from the shelves, put them into a basket, and then took them to the cash desk. The pharmacist supervised the transaction at the cash desk. The appellants argued that the defendant was violating the Pharmacy and Poisons Act, 1933, which required that certain medications could only be sold by registered pharmacists, and that these sales should only occur when the pharmacist was present.

Key Takeaways for Students

Legal Issue

Whether the contract for the sale of goods (medicines) was completed when the customer selected the items from the shelves or when they paid at the checkout counter?

Holding

It was held that the display of articles is merely an invitation to treat and not an offer. Even though they are priced and put in shops, it does not represent an offer by the shopkeeper which can be accepted merely by the picking up of the article in question. The court reasoned that the process of selecting goods from shelves in a self-service store did not constitute a sale. The actual sale occurred at the checkout, where the customer and the store entered into a binding contract. Since the sale was completed at the checkout, there was no legal requirement for a pharmacist to be present at that stage.

Final Decision Appeal Dismissed

Ratio In a self-service retail environment, the sale of goods, including pharmaceuticals, is considered to occur when the transaction is finalized at the checkout.

Facts

The Plaintiff, Gajanan Moreshwar Parelkar, entered into an agreement in 1934 with the Municipal Corporation for the City of Bombay for the lease of a plot of land. At the request of the Defendant, Moreshwar Madan Mantri, the Plaintiff transferred the benefits of this agreement to the Defendant, who then began constructing a building on the plot. To finance this construction, the Defendant requested the Plaintiff to mortgage the property and secure payments totaling Rs. 10,000. When the Defendant failed to discharge these mortgages, the Plaintiff sought indemnification from the Defendant, who had agreed to assume responsibility for the mortgages.

Key Takeaways for Students

Legal Issue

Whether the Plaintiff is entitled to call upon the Defendant for indemnification even before suffering an actual loss?

Holding

The court held that the plaintiff was entitled to call upon the defendant to indemnify him for the liability incurred under the mortgages, even before any actual loss had been suffered. The court further held that the Indian Contract Act, 1872, is not exhaustive of the law of indemnity. Section 124 deals specifically with indemnity for losses caused by the conduct of the indemnifier or any other person.

However, the Act does not encompass cases where the indemnity arises from liabilities incurred by the indemnified due to acts done at the request of the indemnifier. The court determined that the indemnified party does not need to wait until an actual loss is suffered to claim indemnification if the liability is absolute and has already been incurred. The Defendant has directed to pay the whole amount due to mortgagee.

Ratio The indemnified party is entitled to seek indemnification upon the incurrence of an absolute liability, without the necessity of first suffering an actual loss.