Judgments and Orders passed by Delhi High Court "Banking and Finance"

In Trans Asian Industries Exposition Private Limited v. Jammu and Kashmir Bank Limited [29], the Court held that the expiry of the cumulative period of 30 days plus 30 days as provided for under the second and third provisos to Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (‘SARFESI Act’) would not mean that the Chief Metropolitan Magistrate would be rendered functus officio to pass any further orders in the proceedings. The Court further held that the said provisos were intended to ensure that the matters where taken up with utmost urgency and were not to be read in a manner which would defeat the spirit of the SARFESI Act itself.

In Canara Bank v. Leatheroid Plastics Private Limited [30], the Court reiterated that the parties are bound by the rate of interest agreed to between them along with the periodical rests and the Debt Recovery Tribunal (‘DRT’), would ordinarily not be justified in modifying the same till the date of filling of the application before it. It was noted, however, that for the period that the matter was pending before the DRT as also for the stipulation of interest for the future, the DRT has the requisite discretion and jurisdiction to fix a reasonable rate of interest considering the relevant facts and circumstances.

In Mayank Sharma v. Santhosh Sharma [31], the Court observed that once the suit property had been put to auction in furtherance of appropriate proceedings before the DRT, then an evidently collusive suit filed by a family member of the defendants seeking to demonstrate that the property in question was a Hindu Undivided Family (‘HUF’) property was liable to be rejected.

In Power Max (India) Private Limited v. Jindal Urban Waste Management (Guntur) Limited [32], the Court held that the mere fact that an unconditional bank guarantee incorporated the term ‘indemnified’ at a solitary instance could not convert the document into a letter of indemnification.

https://www.barandbench.com/columns/the-delhi-high-court-in-review-february-2020-part-i

Judgments and Orders passed by Delhi High Court on Arbitration

In a case involving enforcement of a foreign award under Sections 48 and 49 of the Arbitration and Conciliation Act, 1996 (‘Arbitration Act’), the Court in Cairn India Limited v. Union of India [1], held that Article 136 of the Limitation Act, 1963 which provides for a limitation period of 12 years for executing a decree would also apply to a petition seeking to enforce a foreign award.

In Meera Goyal v. Priti Saraf [2], the Court held that when an arbitral tribunal had while deciding an application challenging jurisdiction under Section 16 of the Arbitration Act, deferred a final decision on the concerned application to a subsequent stage in the proceedings, the said determination could not be read as a rejection of the objections articulated in the application and the order could not be said to be an interim award within the meaning of Section 31(6) of the Arbitration Act inasmuch as no issue stood conclusively determined thereby.

In Power Mech Projects Limited v. SEPCO Electric Power Construction Corporation [3], the Court observed that in appropriate circumstances, it could direct the deposit of the entire sum awarded under the arbitral award before considering a challenge petition under Section 34 of the Arbitration Act or before staying the enforcement of the award.

In Parmeet Singh Chatwal v. Ashwani Sahani [4], while hearing a challenge to an arbitral award wherein the arbitration clause in question was printed in tiny font at the bottom of a receipt, the Court set aside the arbitral award while noting that the mere signature on such a receipt would only indicate the acceptance of goods as against consent for referring disputes to arbitration. The Court further observed that a vague arbitration clause purportedly providing for institutional arbitration without any specifics about the constitution of the arbitral tribunal or the status of the entity which would purportedly supervise the arbitration, could not be sought to be unilaterally acted upon by a party.

In Union of India v. M/s B. S. Aggarwal [5], the Court reiterated that the period of limitation for filing an appeal under Section 37 of the Arbitration Act against an order allowing or rejecting a petition under Section 34 of the Arbitration Act was 120 days, and any delay beyond the said period could not be condoned.

In Neha Aviation Management Private Limited v. Air India SATS Airport Services Private Limited [6], the Court reiterated that upon a clarificatory judgment as regards the ineligibility of a particular class of persons to act as arbitrators being pronounced, Section 14 of the Arbitration Act would come into play automatically and result in a de-jure termination of the mandate of similarly placed arbitrators.

In MBL Infrastructures Limited v. Rites Limited [7], the Court held that the amended Section 29A(5) which was introduced by way of the Arbitration & Conciliation (Amendment) Act, 2019 (‘2019 Amendment Act’) could not be said to have retrospective operation, in the background of the fact that the Court on an earlier occasion had already been approached by the parties by means of an application under the un-amended Section 29A. It is relevant to note that a Coordinate Bench of the Court in an unreported decision in Shapoorji Pallonji and Co. Pvt. Ltd. v. Jindal India Thermal Power Limited [8], in a case where there had been no previous application for extension of time under the un-amended Section 29A, held that the amended Section 29A(5), being procedural law, would have retrospective operation and apply to pending arbitrations as well.

In Ames Impex Electricals Private Limited through its Director v. New Delhi Municipal Council [9], the Court held that when the final operative relief awarded by the arbitral tribunal is manifestly contrary to its earlier findings in the arbitral award, then the award could be said to be an unreasoned one and would be liable to be interfered with in exercise of jurisdiction under Section 34 of the Arbitration Act.

In Ircon International Limited v. C. R. Sons Builders and Development Private Limited [10], the Court reiterated that in a case involving attribution of responsibility of delay, an arbitral tribunal is entitled to rely on the fact that extensions of time were granted by the counter-party without imposition of liquidated damages. The Court further reiterated that apportionment of responsibility between the parties is a purely factual exercise which is well within the jurisdiction of an arbitrator.

In Arvind Kumar Jain v. Union of India [11], the Court held that the endeavour of one of the parties to an agreement in seeking to pressurise and compel the other to furnish a waiver from the applicability of Section 12(5) of the Arbitration Act would be a pernicious and unacceptable practice.

In ICCG India Private Limited v. Plant Lipids Private Limited [12], the Court held that a clause which proscribed a particular genre of claims pertaining to non-payment of fees under an agreement to be non-arbitrable could not defeat the right to reference to arbitration of a claim which was for an amount not towards simpliciter fees but towards cost and other miscellaneous charges.

In BVSR-KVR (Joint Ventures) v. Rail Vikas Nigam Limited [13], the Court held that even in a case where the unamended provisions of the Arbitration Act alone where applicable, this would not preclude the Court from taking judicial notice of a judgment rendered under the provisions of the Amended Act, which had invalidated the arbitrator-appointment mechanism in an identical clause which was the subject matter of controversy before the Court.

In Sudha Gupta v. A. K. Gupta [14], the Court proceeded to set aside an arbitral award to the extent that it had awarded a claim to the director of a company in his personal capacity whereas the claim was made by the company itself.

In Godwin Construction Private Limited v. Tulip Contractors [15] the Court reiterated that with the Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’) being a beneficial legislation, a supplier that was already in existence at the time of the commencement of the MSMED Act and which had not obtained registration within the period prescribed but had done so after entering into a contract with the buyer, was entitled to seek recourse to the provision of statutory arbitration as contained in the MSMED Act.

In Sporty Solutionz Private Limited v. Badminton Association of India [16], the Court observed that a person who had accepted the amount payable under an arbitral award without any reservation whatsoever would be estopped from challenging the said award in the future. The Court further observed that once the validity of an alleged forged document had been conclusively pronounced upon by the arbitral tribunal after due consideration of the opposing evidence led before it, such a factual finding could not be sought to be assailed in the limited scope of jurisdiction under Section 34 of the Arbitration Act.

In India Waste Energy Development v. Government of NCT of Delhi [17], the Court observed that once a finding has been arrived at that a challenge to an arbitral award was barred by limitation on account of it having been filed beyond the period stipulated under Section 34(3) of the Arbitration Act then there should not have been a further deliberation on the merits of the case in the usual course.

In Union of India v. M/s Prominent Builders [18], the Court upheld the finding of the arbitral tribunal that the imposition of a minor sum of liquidated damages by a party upon a counter- party as opposed to the full limit permissible under the contract, coupled with acceptance of the work and issuance of completion certificate would defeat any counter-claim for loss of reputation and poor workmanship on the part of the department.

In Leaseplan India Private Limited v. Topsgrup Services [19]. the Court observed that issuance of notice by a Court when presented with a petition challenging an award under Section 34 of the Arbitration Act is not automatic in nature, and the Court is required to consider whether any of the statutory grounds of challenge are made out and as to whether the petition has been filed within limitation or not.

In SSIPL Lifestyle Private Limited v. Vama Apparels (India) Private Limited [20], the Court held that if an application under Section 8 of the Arbitration Act was filed with undue delay i.e. the same was not filed till the date by which the Statement of Defence could have been filed in terms of the applicable law, then such application would be liable to be rejected and the suit would be proceeded with.

In SPML Infra Limited v. Graphite India Limited [21], the Court held that cogent reasons have to be provided for condoning the period of delay under Section 34 (3) of the Arbitration Act and simplistic and stereotypical averments that the authorised representative of the petitioner was pre-occupied with other legal issues or that detailed deliberations had to be entered into before filing the petition would be of no avail.

In Steel Stripes Wheels Limited v. Tata AIG General Insurance Company Limited [22], the Court reiterated the vital parameters which were required to be complied with before a valid filing within the meaning of Section 34 (3) of the Arbitration Act could be said to have been achieved.

In Huawei Telecommunications (India) Company Private Limited v. Bharat Sanchar Nigam Limited (BSNL) [23], the Court refused to refer a non-signatory party to a composite arbitration between two others viz. a contractor and a sub-contractor, inasmuch as it found that even though the agreement between the contractor and the sub-contractor in the said case had an arbitration clause, the employer/ non-signatory party was not a party thereto, and neither did the agreement between the contractor and the sub-contractor make a detailed reference to the terms of the agreement between the employer and the contractor.

In Samsung India Electronics Private Limited v. Vishal Video and Appliance Private Limited [24], the Court held that when there was no express prohibition in an agreement, the reasoned decision of the arbitral tribunal towards awarding commission on a pro-rata basis of the actual sales target actually achieved, though the stipulated benchmark was not achieved, was a pure finding of fact based on evidence and could not be interfered with in exercise of limited jurisdiction under Section 34 of the Arbitration Act.

In Union of India v. Annavaram Concrete Private Limited [25], the Court held that even where the reasoning of the arbitral tribunal is found to be somewhat sketchy, if the said reasoning is sufficient for the Court to discern the basis upon which the arbitral tribunal arrived at its ultimate conclusion, then the same could not be interfered with in exercise of limited jurisdiction under Section 34 of the Arbitration Act.

In Morgan Securities & Credits Private Limited v. Videocon Industries Limited [26], the Court held that when an arbitral award was silent on the specific amount upon which future interest would be payable, then by dint of the statutory fiction under Section 31(7) of the Arbitration Act the future interest would be payable on the entire sum awarded i.e., the principal amount plus the past and pendente-lite interest awarded till the date of the arbitral award.

In National Building Construction Corporation Limited. v. JR Construction [27], the Court held that when no objection had been taken before the arbitral tribunal that any of the claims were ‘excepted matters’, the same could not be taken for the very first time in a petition under Section 34 of the Arbitration Act. The Court further observed that inasmuch as the regime of costs of arbitration proceedings had found statutory recognition under Section 31A of the Arbitration Act, costs could be awarded to the successful party even in the absence of an explicit claim having been raised in this regard in the statement of claims filed before the arbitral tribunal.

In Reliance Industries Limited v. GAIL (India) Limited [28], while reiterating that waiver requires an intentional relinquishment of a known right, the Court held that the finding by an arbitral tribunal rejecting a plea of waiver and estoppel is purely factual in nature and could not be sought to be assailed in exercise of jurisdiction under Section 34 of the Arbitration Act, unless the same was demonstrably perverse.

https://www.barandbench.com/columns/the-delhi-high-court-in-review-february-2020-part-i

Supreme Court: No Hearing of Petitions and No New Petitions Can be Filed Due to Covid-19

 Supreme Court of India has indefinitely extended the period of limitation on filing petitions, applications, suits, appeals, and other proceedings at courts and tribunals across the country in light of the present circumstance caused by the Covid-19 pandemic.

Addressing a writ petition, the court said it had taken suo moto cognizance of the challenges faced by the country on account of the existing limitations. Still, it has decided to extend the restriction period, which was declared on March 15, 2020.

A suo moto cognizance is a Latin term which means an action taken by a government agency, court, or other central authority based on their apprehensions if they receive information about the violation of rights or breach of duty through media or a third party’s notification.

For the renewable energy sector, just like all other sectors, there will be no hearing of any petitions across the board, and neither can new petitions be filed. For the renewable energy sector, it means, if any stakeholder who has appealed to the Appellate Tribunal For Electricity (APTEL) and is not satisfied with their order, they will not be able to file a new petition unless it is urgent.

Also, the Supreme Court has extended the period of limitation on filing petitions. This means if a petitioner decides to appeal to a higher court since they are not satisfied with the order or judgment of a lower court, generally, there is a period within which they can appeal to a higher court. The Limitation Act, 1963, provides the period of filing appeals. It states that the appeals against an order can be filed in a High Court within 90 days and other courts in 30 days from the date of the order. If an appeal is filed after the expiry of the time limit, it is struck by the law of limitation. So, for any appeal, if the limitation period falls when the courts are closed due to the Covid-19 pandemic, then this period is indefinitely extended.

It said that this was to ensure that lawyers and litigants did not have to physically be present to file proceedings in courts and tribunals across the country, thereby putting them and others at risk. It added that the limitation will stand extended until it issues further orders concerning the present proceedings.

The Supreme Court directed that its order must be brought to the notice of all high courts, and through them, it should be communicated to all subordinate courts and tribunals in their respective jurisdictions.

Considering the adverse impact of the Coronavirus pandemic on the global economy, the Ministry of New and Renewable Energy (MNRE) recently issued an official memorandum which states that the time extension in scheduled commissioning of renewable projects due to the disruption of supply chains will be treated as a ‘force majeure’ event.

Earlier, the Ministry of Finance (Department of Expenditure Procurement Policy Division) issued a clarification that coronavirus will be covered in the force majeure clause (FMC) and should be considered as a case of natural calamity. Further, the ministry has stated that this clause can be invoked wherever appropriate.

https://mercomindia.com/supreme-court-no-hearing-petitions-covid-19/

Delhi High Court Reverses Decision: E-Commerce Platforms Now Allowed To Sell And Advertise Products Of Direct Selling Entities Without Consent

In a landmark judgement in Amazon Seller Services Pvt. Ltd. v. Amway India Enterprises Pvt. Ltd. & Others, FAO(OS) 133/2019, a Division Bench of the Delhi High Court has permitted e-commerce platforms to sell and advertise products of Direct Selling Entities ("DSEs") without their consent. In doing so, it has set aside the Single Judge's order in Amway India Enterprises Pvt. Ltd. v. 1Mg Technologies Pvt. Ltd. & Anr., CS(OS) 410/2018 passed in July 2019 by a Single Judge bench of the same Court, which had restrained various e-Commerce platforms including Amazon, 1MG, Flipkart, Healthkart, Snapdeal and independent sellers from selling, offering to sell, advertising, or displaying products in breach of third party agreements. An article summarising the main arguments and issues laid down in the Single judge's order is available on our blog ( See).

Under the concept of direct selling, sellers' market, distribute and sell manufacturers' products and provide services, directly to consumers. Such sale is regulated by agreements between the manufacturers and sellers, and a code of ethics/code of conduct regulated by the manufacturers. The Direct Selling Guidelines, 2016 ("the Guidelines") (See) also safeguard the interests of direct sellers. Clause 7(6) of the Guidelines recommends that any e-Commerce platform or marketplace should obtain prior written consent before selling products of direct sellers.

Direct Selling Entities argued that e-Commerce platforms were offering their products for sale and advertising them on their platforms without their (DSEs) consent, and in contravention of the Guidelines.

In response to appeals filed against the July 2019 order, the Division Bench held that the previous judgment was passed without considering whether the grant of injunction would have an adverse impact on online marketing, and whether it would deprive unwary consumers of exercising their choice to buy such products on online platforms, while ensuring free flow of trade.

The Division Bench also rejected the DSE's argument (specifically, Amway) that e-commerce platforms (specifically, Amazon) had sold tampered, damaged and counterfeit products and held that there was no material or conclusive proof at present, and this could only be determined after trial.

Four major issues were discussed in this judgement, as follows:

Legal validity of Direct Selling Guidelines, 2016

In the original July 2019 order, the Single Judge had held that even though the Guidelines were issued as advisory instructions, once Gazette notifications were issued and implemented by various State Governments, they became binding executive instructions, and thus had force of law. That order had also stated that sellers on e-commerce platforms cannot claim to have a fundamental right under Article 19(1)(g) of the Constitution (the right to practice any profession or to carry on any occupation, trade or business to all citizens) to sell the goods of DSEs without their consent and were bound by these guidelines.

Reversing this decision, the Division Bench clarified that mere notification in the Gazette does not confer the status of "law" on the Guidelines, and that they remained only advisory in nature.

Trademark violation, and abuse of goodwill and reputation

The doctrine of exhaustion of trademark rights came up here again: the principle states that a trademark owner's rights end with the first sale of the product being made, and thus, cannot stop the sale of genuine products on e-Commerce platforms.

The Single Judge had said that the exhaustion of trademark rights could not legitimise the tampering, mutilation, wrongful pricing, or unauthorized sale of products. Accordingly, the Single Judge had held that the use of the marks and the manner of sale on the e-Commerce platforms constituted passing off, misrepresentation and dilution/tarnishment of the marks, products and businesses of the DSEs.

In contrast, the Division Bench pointed out that the e-Commerce platforms had not asserted or even mentioned anything about trademark registration in its plaint. In fact, the suits were not filed for passing off or infringement under the Trade Marks Act and would accordingly not fall under commercial suits. Further the Division Bench relied on Kapil Wadhwa v. Samsung Electronics Company Limited, MIPR 2012 (3) 0191, where it was held that the use of a registered trademark in relation to the goods to be sold in any place, or exported to any market, would not constitute an infringement. It was held that once the goods have been lawfully acquired, if they are put into the market and further sold, there would be no infringement, regardless of whether it was an international market or a domestic market.

The Division Bench also held that once the title to a product passes through sale, no further condition can be imposed on the buyer to restrict "post-sale alienation". Clause 7 (6) of the Guidelines imposes one such condition that the buyer cannot resell the product online. Such a condition was held to be not an enforceable law in the present case, as there was no contractual obligation to that effect between the DSEs and the e-commerce platforms.

Safe harbour protection not contingent on intermediaries' compliance with Guidelines

The third issue was whether e-Commerce platforms could be termed as intermediaries and if they could obtain Safe Harbour protection under the Information Technology Act and the Intermediary Guidelines of 2011.

The Information Technology Act, 2000 ("IT Act") exempts intermediaries from liability for hosting third party content in certain instances (Section 79). "Safe harbour protection" is available where intermediaries merely facilitate and host/list third party information/data or provide a communication link.

The Single Judge had concluded that e-Commerce platforms were not merely passive non-interfering platforms but providers of a large number of value-added services, thus taking them out of the ambit of being termed mere intermediaries.

The Division Bench contrarily held that the Single Judge had misinterpreted Section 79 of the IT Act in concluding that it is restricted to passive intermediaries. The Division Bench concluded that under Section 79, an intermediary would not be liable for any third-party information, data or communication link posted by it, as long as it complies with Sections 79 (2) or (3) of the IT Act.

For this, the court relied on Shreya Singhal v. Union of India, (2015) 5 SCC 1, where it was held that the obligation of an online platform to remove content arises only if there is a court order or a notification from a government agency on the grounds mentioned in Article 19(2) of the Constitution. Thus, allegations from DSEs without a supporting court order or government notification was not sufficient to trigger a takedown obligation.

The Division Bench added that providing value-added services would not dilute safe harbour protections. The definition of an intermediary under the IT Act along with the policy laid down under Press Note No. 2 of 2018 (See) permits entities following the marketplace-based model to provide such value-added services and claim to be a mere intermediary. Infact, Section 2 (1) (w) of the IT envisages that such intermediaries could provide value-added services to third party sellers. This interpretation is reinforced by Press Note No. 2.

Contractual relationships between DSEs and e-commerce platforms

The original order had held that the continuous sale of DSEs' products on e-Commerce platforms, without the consent of the DSEs, results in inducement of breach of contract, and tortious interference with the contractual relationships of the DSEs with their distributors. As e-Commerce platforms were not merely passive non-interfering platforms, upon being notified by the DSEs of unauthorised sales, the Judge had said that they had a duty to ensure that the contractual relationships were not unnecessarily interfered with by their businesses.

The Division Bench, on the contrary, held that the tort of inducement to breach of contract necessitates that there be a contract in the first place between the platforms and the DSEs. The mere fact that online platforms may have knowledge of the Code of Ethics of the DSEs, and the contractual stipulation imposed by such DSEs on their distributors, is insufficient to lay a claim of tortious interference.

In the present case, the Division Bench stated that whether the platforms induced a breach of contract between the DSEs and its sellers/distributors had to be proved and could not be inferred. In fact, the Division Bench held, "by permitting private entities like Amway to restrict downstream distribution of genuine goods, by enforcing contractual stipulations against third parties, the judgment of the learned Single Judge recognizes a monopoly that can be exercised in perpetuity. There is also force in the contention that this runs contrary to the legal position explained in Kapil Wadhwa v. Samsung Electronics."

CONCLUSION

Effectively, the Division Bench has overwritten the Single Judge's ruling in favour of e-Commerce platforms. This has come at a time when courts and the Government have been strictly enforcing due diligence obligations on intermediaries. It remains to be seen as to whether the enactment of the Consumer Protection (Direct Selling) Rules (See) (which have stayed long-pending) will add to the uncertainty on the e-Commerce selling module or fortify the Direct Selling Guidelines by offering more clarity on e-commerce businesses. Arguably, the e-Commerce marketplace wars are not over yet.

http://www.mondaq.com/india/Intellectual-Property/907934/Delhi-High-Court-Reverses-Decision-E-Commerce-Platforms-Now-Allowed-To-Sell-And-Advertise-Products-Of-Direct-Selling-Entities-Without-Consent

Delhi HC restrains DMW e-rickshaw from using mark deceptively similar to that of German automobile manufacturer, BMW

The Delhi High Court has restrained an e-rickshaw manufacturer, bearing the mark ‘DMW’, from using any mark which is identical or deceptively similar to that of the German automobile manufacturer, BMW. [BMW vs Om Balajee Automobile (India)]

The interim order was passed by a single Judge Bench of Justice Jayant Nath in a suit filed by Bayerische Motoren Werke AG (Plaintiff) seeking to permanently restrain e-rickshaw manufacturer, Om Balajee Automobile (India) [Defendant] from manufacturing, exporting or otherwise dealing with goods bearing the mark 'DMW' or any other mark which is identical or deceptively similar to BMW.

The Plaintiff submitted that it had been manufacturing motorcycles under the BMW mark since 1923 and motor cars since 1928.

The Plaintiff stated that the first trademark registration for the famous BMW logo was in 1917 and the earliest Indian registration for the BMW mark was in 1956.

It was further argued that BMW marks were well-known due to extensive and continuous use in India and qualified as a well-known trademarks as envisaged in section 2(1)(zg) and section 11(6) of The Trademarks Act, 1999.

The Plaintiff claimed that in 2016, it had a revenue of 94.163 million Euros and sold a total of 20,03,359 vehicles under the BMW marks around the world. It was added that in the same year, a sum of Rs.6.030 million Euros was spent only on advertising.

The Plaintiff informed the Court that in July 2016, it spotted e-rickshaws with trademark DMW plying on the road and subsequently, moved the High Court.

It argued that the Defendant’s mark DMW was deceptively similar to in appearance, sound and structure to the 'BMW' mark and was thus is in complete violation of the Plaintiff’s trademark rights.

The Plaintiff contended that the Defendant was using DMW mark in relation to goods such as e-rickshaws which were somewhat similar to automobiles covered by the BMW mark.

On the basis of the above, it was asserted that it was a clear case of dilution of the the Plaintiff's trademark in terms of section 29(4) of the Trademarks Act.

The Defendant, on the other hand, argued that the nature of the product, class of buyers and trade channels of the product of the two were entirely different. It was also stated that colour, font and size of the two marks were not deceptively similar.

The Defendant stated that it was not using any logo for its product, unlike the Plaintiff, and while the total value of its product was about Rs 50,000, and the Plaintiff's was a minimum of Rs 35 lacs.

After considering the submissions made by the parties and perusing the two trademarks, the Court opined that the Defendant had adopted the essential features of the trademark of the Plaintiff.

"There is clearly a visual and phonetic resemblance in the marks. The essential features of the plaintiffs marks are copied in the defendants’ mark and the same are likely to deceive and cause confusion.", the Court said.

The Court also rejected the Defendant's argument based on the different nature of the products manufactured by the two companies.

Observing that the strength of the Plaintiff's trademark could not be disputed, the Court said,

..the use of the mark DMW by the defendant prima facie appears to be a dishonest act with an intention of trying to take advantage of the reputation and goodwill of the brand of the plaintiff. It is likely to mislead an average man of ordinary intelligence..Such use by the defendant is detrimental to the reputation of the registered mark BMW of the plaintiff company.

Delhi High Court

In conclusion, the Court stated that 'DMW' was visually and phonetically similar to 'BMW' and the former's usage by the Defendant on its product constituted a prima facie infringement within the meaning of Section 29(4) of the Trademarks Act.

In view of the above, the Court remarked that the balance of convenience was in favour of the Plaintiff and proceeded to pass an ad interim injunction, restraining the Defendants, its officers, agents etc. from manufacturing, exporting, importing or offering for sale, advertising or in any manner dealing with goods not limited to E-Rickshaws bearing the mark DMW or any other mark which are identical or deceptively similar to the plaintiff’s BMW marks.

Source: https://www.barandbench.com/news/litigation/delhi-hc-restrains-dmw-erickshaw-from-using-mark-deceptively-similar-to-that-of-german-automobile-manufacturer-bmw

Benami law and retrospectivity - Analysis of Rajasthan High Court decision in Niharika Jain v. Union of India

Introduction

New-age laws that seek to remedy economic wrongs are interesting. Economic wrongs could be civil or criminal in character. Clearly, any person who cheats and deprives people of their property is an offender and is a threat to the society at large. He needs to be dealt with through a criminal law. However, another person who breaches a contractual obligation would need to cough up damages and a civil law would be apt and sufficient to deal with this private matter. This simple distinction becomes complex in case of certain economic wrongs – the remedy, whether to be civil or criminal or a mix of both, is difficult to decide.

Legislative approaches

International legislative approaches adopt five methods to counter new-age economic wrongs – criminalization, confiscation, forfeiture, civil recovery, and heavy taxation. Criminalization refers to making the wrong as a punishable offence, while confiscation and forfeiture refer to taking away from the wrongdoer, the result of the wrong or the instrumentalities used in committing such wrong, respectively. These three remedies, undoubtedly, would lie within criminal law. Civil recovery and heavy taxation, on the other hand, are more deterrent and retributive in nature, and fall within the domain of civil law1.

The recent Indian legislations are inspired by the first two methods – criminalization and confiscation. The money laundering law criminalizes money laundering2 besides also providing for confiscation3 of the proceeds of crime. The Benami Act as enacted in 19884 (‘unamended Benami Act’) did not provide for confiscation, but only criminalized benami transactions. However, in line with the current legislative approach, the law has been drastically amended by the Benami Transactions (Prohibition) Amendment Act, 2016 (‘the Amendment Act’). Now, the amended Benami Act also provides for confiscation of benami properties besides criminalizing benami transactions.

Decision of the Rajasthan High Court and its analysis

This shift in remedial approach in the legislation was put to judicial scrutiny recently before the Rajasthan High Court in the case of Niharika Jain & Ors. v Union of India5. The central issue that was put to the Court for decision was that whether the consequences of the Amendment Act were retrospective in nature6

The brief facts of the case were that the petitioner had entered into transactions of purchase of lands. These transactions were entered into before 01-11-2016, i.e., the period prior to the coming in force of the Amendment Act. It was alleged by the authorities that these transactions were benami transactions and consequently the said properties were provisionally attached under Section 24 of the amended Benami Act. Against the said attachment order, a writ petition was filed challenging the actions of the authorities.

On the issue of retrospectivity, various arguments were extended by both the sides. It was argued by the petitioner that it was only by way of the Amendment Act that the provisions for confiscation of benami properties were introduced in law. Earlier, a benami property could not be confiscated by the Central Government. Further, since confiscation amounted to a criminal remedy, an amendment bringing such provisions could not be retrospective.

On the other hand, it was argued by the Revenue that the earlier law provided for acquisition without compensation. An analogy could be drawn between the terms ‘confiscation’ of benami assets as used in the Amendment Act and ‘acquisition without compensation’, which was provided for in the unamended Benami Act. The Revenue argued that both the terms were similar and as such, there was no new or enhanced punishment that was brought in by the Amendment Act. It was argued that the main object behind the unamended law was to make the act of entering into benami transactions an offence and consequently acquire such benami properties through acquisition without compensation, so that the offender could be divorced from unjust gains and benefits. Hence, keeping in view the intendment and object in introduction of the earlier law, the necessary amendments introduced through the Amendment Act only clarified the intention of legislature. Such intention was to effectively cure and curb the mischief of ever increasing corruption, which was also intended under the unamended Benami Act. Thus, confiscation of the benami property was a mere replacement for acquisition, and was not a new introduction in toto to the benami law.

The Court did not go into much depth of this argument and held that these provisions are in nature of substantive provisions which affect the rights of the parties and in absence of any express provision providing for retrospective operation, are prospective in nature. In the backdrop of the objectives sought to be achieved by the Amendment Act, the larger question of substitution of the term ‘acquisition’ by the term ‘confiscation’ in the statute and to then determine its penal nature, was not answered by the court and will probably be determined in times to come. Of course, the said analogy must be drawn qua the famous Hayden's rule while addressing the question of retrospective application of the amended provisions vis-à-vis the object sought to be achieved by the unamended Benami Act in order to cure the mischief.

It is also to be noted that though there was a specific provision under the unamended Benami Act7, which provided for acquisition of benami properties without compensation, the same could not have been implemented by the authorities, until the procedure was put in place by the Amendment Act. Thus, in absence of the adequate machinery provisions prescribed under the unamended Benami Act, how far does would the substantive part be considered useful is another big question left unaddressed by the Hon’ble Court.

Furthermore, the argument on retrospectivity was furthered by the petitioner by questioning as to whether the amendment was declaratory or substantive in nature. It was contended that a declaratory enactment declares and clarifies the real intention of the legislature in connection with an earlier existing transaction or enactment. It does not create new rights or obligations. It was also argued that in absence of contrary intention in the statute, a legislation must be presumed to be prospective. The court contemplated on the techniques which are required to draft a legislation- known as legislative drafting, and as regards to those ones required to understand a legislation which are found in the various principles of ‘Interpretation of Statutes’. The Court while considering plethora of judgments8 in accordance with the principle of ‘fairness’ and the maxim lex prospicit non respicit, which means that the law looks forward not backward, held that it is a settled law that a substantive provision unless specifically made retrospective or otherwise intended by the parliament should always be held to be prospective.

Lastly, it was argued by the petitioner that the Benami Rules9 have been notified on 25-10-2016, while the corresponding provision that empowers the Central Government to make such rules has come into force only on 01-11-2016. Thus, it was argued that the rules are bad in law and deserve to be set aside. The Court found substance in such argument. However, the Court did not conclusively opine on this contention and stopped short of setting aside the provisional attachment order on this basis. It is relevant here to refer to the General Clauses Act, 1897. Section 22 of this Act, which inter alia provides for making of rules between passing and commencement of enactment, squarely applies to this argument. The section provides that rule-making power may be exercised any time after the passing of an Act, including even before the Act comes into force. However, rules so framed shall not take effect till the commencement of such Act. The underlying idea behind the section is to enable the formulation of rules which may be needed to bring the Act into operation10. Applying this to the present factual matrix, the Benami Rules were notified after the passing of the Amendment Act, but before such Act came into force. This would be perfectly valid as per the General Clauses Act.

Before concluding, it is also noteworthy that this decision serves as a comprehensive judicial referencer on the benami law, lucidly explaining the law and rulings on the subject matter. For instance, it points out the distinction between the English law of trusts (based on the doctrine of advancement), which is in contradistinction to the Indian law. It also explains the nature of a benami transaction in the Indian context, and its two types – one, wherein there is an operative transfer of title (e.g. where A purchases a property in his own name from the seller B, while the consideration for the same is provided for by C – in this case, there is a real operative transfer happening from B to A), and two, where there is no operative transfer (e.g. where A transfers a property to B without losing on the possession and enjoyment – in such case, there is no operative transfer and A continues to be the real owner)11. This is a fundamental distinction and serves as a crucial point to be kept in mind while reading the new benami law.

The Amendment Act has been enacted as an aspirational measure. An Act comprising of merely nine sections (the unamended Benami Act) was transformed into a seventy-two-section draconian law12, through an amending Act, rather than enacting a new law on the subject matter of Benami transactions.

The reasons for ‘amending’ rather than re-enacting, were explained by the Ministry of Finance to the Parliamentary Standing Committee13. It was submitted that a new Bill was drafted and forwarded to the Ministry of Law – under such proposed Bill, transactions entered into between 1988 and present, would also be covered within the purview of the offence of Benami transactions. However, the Ministry of Law opined that such a measure would be violative of Article 20 of the Constitution14. The Ministry of Law, therefore, suggested that it would be advisable to comprehensively amend the existing law so that the offences committed during from 1988 to present would also be covered. The Amendment Act, therefore, came into being.

It is pertinent to appreciate the separation of powers enshrined in the Constitution in light of the above context. The only organ of the State which is empowered to decipher the sententia legis i.e. the intention of the Legislature behind any law, is the judiciary. The present case evidently establishes this. Despite the intent of the Government behind amending the then existing law on Benami transactions rather than enacting a new law, the Court has held otherwise. The Court has made it abundantly clear that the law, as amended now, would not be applicable to Benami transactions entered into before the Amendment Act came into force. The principle against retrospectivity as laid down in Article 20(1) of the Constitution, has been reiterated, bringing much clarity to current and prospective litigation.

Source: https://www.lexology.com/library/detail.aspx?g=fbe2e823-24d7-45b6-acfd-cd7bdbad3aef

THE ORIENTAL INSURANCE CO. LTD. V. DICITEX FURNISHING LTD.

SC-Dismissing the appeal against the order of the Bombay HC,the Hon’ble SC opined that an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is in the form of a pleading which merely seeks an order of the court, for appointment of an arbitrator. It cannot be conclusive of the pleas or contentions that the claimant or the concerned party can take, in the arbitral proceedings. The court which is required to ensure that an arbitrable dispute exists, has to be prima facie convinced about the genuineness or credibility of the plea of coercion; it cannot be too particular about the nature of the plea, which necessarily has to be made and established in the substantive (arbitration) proceeding.-Hon'ble Justices Arun Mishra and S. Ravindra Bhat[13-11-2019]

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MANOHARAN V. STATE BY INSPECTOR OF POLICE, VARIETY HALL POLICE STATION, COIMBATORE

SC-Dismissing the review petition and upholding the conviction and death penalty, the Hon’ble SC observed that the two accused misused societal trust to hold as captive two innocent school-going children, one of whom was brutally raped and sodomised, and thereupon administered poison and finally, drowned by throwing them into a canal and this was indeed craftily planned and executed. The present offences are so grave as to shock the conscience of this Court and of society and would without doubt amount to rarest of the rare. It is no longer res integra that there can be no hard rule of not awarding death in cases based on circumstantial evidence owing to recent developments in medical science and the possibility of abuse by seasoned criminals.-Hon'ble Justices Rohinton Fali Nariman,Surya Kant and Sanjiv Khanna[07-11-2019]

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EBHA ARJUN JADEJA V. THE STATE OF GUJARAT

EBHA ARJUN JADEJA V. THE STATE OF GUJARAT

SC-Setting aside the order of the TADA Court,the Hon’ble SC held that non-compliance of Section 20-A(1) of  Terrorist and Disruptive Activities (Prevention) Act, 1987 is fatal and so the appellants have been discharged in so far as the offence under TADA Act is concerned. Where the information basically discloses an offence under TADA Act and the other offence is more in the nature of an ancillary offence then the information cannot be recorded without complying with the provisions of Section 20-A(1) of TADA Act. The language of Section 20-A is mandatory in nature and forbids the recording of information about the commission of offence under TADA Act by the police without prior approval of the District Superintendent of Police. -Hon'ble Justices Deepak Gupta and Aniruddha Bose[16-10-2019]

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UNION OF INDIA V. GAUTAM KHAITAN

UNION OF INDIA V. GAUTAM KHAITAN

SC-Directing the Delhi HC to decide the writ petition on its own merits, the Hon’ble SC observed that the penal provisions under Sections 50 and 51 of the Black Money Act would come into play only when an assessee has failed to take benefit of Sec. 59 and neither disclosed assets covered by the Black Money Act nor paid the tax and penalty thereon. The HC was not right in holding that, by the notification/order impugned before it, the penal provisions were made retrospectively applicable. Sub-sec. (3) of Sec. 1 of the Act, itself provides that save as otherwise provided in this Act, it shall come into force on 1st day of July, 2015.The assessment year in consideration was 2019-2020 and the previous year relevant to the assessment year was the year ending on 31.03.2019.-Hon'ble Justices Arun Mishra,M.R. Shah and B.R.Gavai[15-10-2019]
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