Saturday, May 31, 2014

Arbitration Act


Arbitration is the means by which parties to a dispute get the same settled through the intervention of a third person or more, but without recourse to a court of law. The settlement of dispute is arrived by the judgment of the third person or more  who are called Arbitrators. The parties repose confidence in the judgment of the arbitrator and show their willingness to abide by his decision. The essence of arbitration is thus based upon the principle of keeping away the dispute from the ordinary court enabling the parties to substitute by a domestic tribunal. It is therefore reference of the matter of disputes to the decision of one or more persons between the disputing parties.

With a view to consolidate and amend the law relating to domestic arbitration, International commercial arbitration a new law called Arbitration and Conciliation Act 1996 has been passed.

OBJECT: Major changes have been brought in the new law to attract foreign investors by creating such circumstances so that they may have confidence in the system of commercial disputes resolution and enforcement of foreign awards in India. Some of the main objectives of the Act. are as under :

a) To cover domestic and international Commercial arbitration and conciliation.
b) To make provision for an arbitral procedure which is fair, transparent, efficient and capable of meeting needs of the specific arbitration.
c) To ensure that arbitral tribunal gives solid reasons for its arbitral award
d) To ensure that the arbitral tribunal remains within the prescribed limits of its jurisdiction.
e) To minimize the supervisory and intervensionary  role of the court in the arbitral process.
f) To permit an arbitral tribunal to use the means of mediation, conciliation or other procedure during the arbitral proceedings to encourage settlement.
g) To provide that every final arbitral award is enforced in the same manner as if it were a decree of the Court.

Scope and Application of the Act.

The Act contains 86 section and three schedules and is divided into four parts – Part I deals with Arbitration. Part II deals with enforcement of certain foreign award. Part III deals with ‘Conciliation’ which is unique feature in the new Act. Part IV deals with supplementary provision.

Sec 2(2),(3),(4) and (5) specially deal with the scope and applicability of Part I of the Act which is pointed below:-

a) Part I is applicable where the place of arbitration is in India, irrespective of whether the parties are Indian or foreigner.
b)Part I does not affect any law by which certain disputes may not be referred to arbitration.
c) Part I applicable to all arbitration, falling under other enactments, except where inconsistent.
d)Part I does not override any agreement between India and other Country.

The Features of Arbitral Award:

As per sec 2(1)( c ) “arbitral award” includes interim award. The definition does not give much details of the ingredients of an arbitral award. The features of Arbitral Award is pointed below :

1. An arbitral award required to be made in writing on proper value stamp paper as prescribed.
2. The award must be signed by the member of tribunal or majority of signature is enough if the reason for any omitted signature is stated.
3. The award should be dated.
4. Place of arbitration is important for determination of rules applicable to substance of disputes, and recourse against  the award.
5. The arbitral tribunal may include in the sum for which award is made interest up to the date of award and also a direction regarding future interest.
6. The award may also include decision and direction of the arbitrator regarding the cost of the arbitration.
7. After the award is made, a signed copy should be delivered to each party for appropriate action like implementation or recourse against arbitral award.

Arbitration Agreement

There should be an agreement mentioning all terms and condition regarding arbitration procedure. Arbitration Agreement means an agreement referred  under sec 7 that an agreement by parties to submit the arbitration or certain disputes which have arisen between them in respect of legal relation ship whether contractual or not. Agreement shall be in writing with containing the following fact.

a) a document signed by the parties.
b) an exchange of letters, telex, telegram or others means of telecommunication which provide a record of the agreement.
c)An exchange of statement of claims and defence in which the existence of the agreement is alleged by one party and not denied by the other.

Appointment of Arbitrator

Sec 11 of the Act deals with the appointment of the Arbitrator and the following provision should be taken in to consideration.

a) The parties may agree to a procedure of appointment of arbitrator otherwise the following procedure shall apply:-

i. Arbitrator could be any nationality.
ii.In case of three arbitrator each party appoint its own arbitrator and two appointed arbitrator appoint the 3rd arbitrator.
iii.If within 30 days party fail to appoint arbitrator than Chief Justice shall appoint the arbitrator.

b) Decision of  Chief Justice on appointment of arbitrator  is final.
c) Chief Justice or Person designated would have due regard to qualification of arbitrators.
d) Chief Justice can make any scheme, he consider appropriate for appointment.

Number of Arbitrator

Sec 10 provides that parties are free to determine the number of arbitrators provided that such number shall not be an even number. If they fail to determine the arbitral tribunal shall consist of a sole arbitrator.

According to sec 12 of the Act when a person is approached in connection with his possible appointment as an arbitrator he shall disclose in writing any circumstances likely to give rise to justifiable doubts to his independence or impartiality. A party can challenged the appointment of arbitrator if the circumstances giving justifiable doubts as to his independence or he does not posses the qualification agreed by the parties.

Buying a property

Before buying any property or land in India, following legal documents or legalities should be checked.

1.Title deed / certificate of title of the land

When you are planning to buy any property, first and foremost thing is to check down the title deed of that property. The property title deed is the legal document which proves the ownership of property. The title deed presents certain rights and freedom to the person who holds it and such deeds are required where person wants to transfer his ownership.It includes description of property along with the person’s name that holds it and multiple persons can be listed as owner as well. An official seal is used to point out that the deed is recorded officially and normally it is signed by an owner(s) and a witness who may be a regional officer or a clerk.

So as a buyer you have to ask for original deed not a Xerox because sometimes the seller might have taken a loan and given in the original deed.

You should make sure through the title deed that the property is in the name of solely a seller and no one else is and he has all rights to sell it. The best practice is to get reviewed the property deed by an expert lawyer just to make sure that there are no loop holes.

As a good buyer you may also ask for a previous deed and get reviewed by a lawyer.

2. Encumbrance certificate

The encumbrance means any liabilities or charges created on any property in terms of any security of any debit by property owner which is not discharged as on date. It might be held as security against bank loan against property. Encumbrance certificate is necessary to check the title clearance of property when buying any property. This legal document is issued by registering authority. Government authorities and financial institutes like bank is requested encumbrance certificate for the period of 13 years but you can ask for up to 30 years as well to be checked. Then after if you still have any doubts, you can get possession certificate of ownership for a particular land from village office.

3. Torrence Plan

Torence plan is detailed plan of the property which is done by a licensed surveyor. All the measurements details in it are accurate in terms of length, width, borders etc. this plan is necessary for some specific areas only.

4. Pledged land

Many property owners take bank loan by pledging their property. So check they have paid the entire amount due when you are going to buy that property. If they have paid entire amount due then bank has issued them a “Release certificate”. Ask for the same as this release certificate is necessary whenever you want to take any loan in future.

5. Property Tax receipts

Property taxes are first charge on property that is paid to government or municipality. So you have to make enquiry in government and municipal offices to ensure whether all tax has been paid as on date. You can ask for latest tax receipt from owner. In this way you can check whether any notices or requisitions are issued on property or any tax due on the property. While you are checking property tax receipt, there are two columns in it. One is for owner’s name so verify it and other is for tax payer. In some cases, the tax receipt is not with owner. In such cases, you should contact village office with the survey number of land and confirm the original owner.

6. Measurement of Property 

It is prudential to measure the land before registering any property. In this way you can ensure the measurements and borders of land are perfect and accurate. You should get done it with authorized surveyor as you will avoid many problems coming in future. For the sake of your knowledge you should take surveys sketch from survey department and do ensure the accuracy.

7. Owner or Owners

In some cases, it’s possible that there will be more than one owner of property. In that case get No Objection Certificate or Release certificate from other owners.

8. NRI owner

An NRI can also sell his property in India. For this he gives Power of Attorney to third person whom he give rights for selling the property on behalf of him. The most important thing is to ensure the Power of Attorney is witnessed and is duly signed by an officer of the Indian Embassy. The Power of Attorney signed by a notary public has no legal support I such a case.

9. Deed/ Sale Agreement

After sorting out all the things whether financial or any other between buyer and seller, it’s now turn for advance payment and agreement between them. The agreement is done on 5o Rs stamp paper. It includes the final actual amount, advance payment, time limit to pay due amount and how to pay in installments, time indication when the actual sale should take place. It also includes what to do to cover loss if one of buyer or seller makes default. This ensures that the seller does not defer cost in any case after finalization and he doesn’t sell to another party meanwhile. This agreement can be done by an expert lawyer and signed by both the parties with two witnesses. After doing this agreement, if one from both parties makes any default then another one should take legal action against him.

10. Property Registration

All property sales will be held illegal unless the transaction is by means of a sale deed duly stamped and registered. After collecting and checking all the documents, you have to register land/ property at the Sub-Registrar or the SDM (Sub District Magistrates) of your area.

Appointing a Women as a Director in a company

The society in our county is male inclined from the very inception. Women were always seen as lower to men. But now, the time has drastically changed the thinking of society. Several laws are framed for providing security and special status to women. From many years the Central Government was providing even a special tax exemption to the women. Some schemes of Central Government are specially designed only for the betterment, protection and empowerment of the women. Here we can say that Companies Act, 2013 by second proviso to section 149(1) which is providing for the appointment of the women director is an effort for empowerment of the women in India.

Second Proviso to Section 149(1) runs as:

“Provided further that such class or classes of companies as may be prescribed, shall have at least one woman director.”

Earlier the draft rules in regard to the appointment of the Women Director were not very clear as it was providing “The listed company and all other companies which will fall under category of Rs. 100 crore Share capital or 300 crore sales shall appoint the women director within one year and three years respectively from the commencement of second proviso”. If we analyze the draft rules it clearly mentioned that government reserved arbitrary rights in its hands for the appointment of the women director when it was providing such class or classes of companies and on the other side from the commencement of second proviso.

But today as the rules got notified and enforced from 1st day of April, 2014, the position is clear, but only to a limited extent which is providing a choice for company in regard to appointment of the women director.

Section 149(1) clarifies that all the companies must have the Board of Directors, which shall consist of individuals

In case of Private Company: Minimum 2 directors;
In case of Public Company: Minimum 3 directors;
In case of One Person Company:  One director.

The Companies (Appointment & Qualification of Director) Rules, 2014 which come into force on 1st April 2014 provides the class of companies which shall appoint at least one woman director, these are-

(i) every listed company;
(ii) every other public company having -

(a) paid–up share capital of one hundred crore rupees or more; or
(b) turnover of three hundred crore rupees or more:

as on the last date of latest audited financial statements.

Proviso added to the rule is providing that a company, which has been incorporated under the Act and is covered under provisions of second proviso to sub-section (1) of section 149 shall comply with such provisions within a period of six months from the date of its incorporation

So, we can make the difference for the purpose of compliance of the provisions between companies:

Here, first category is of the companies which are incorporated under the current act, for which the proviso is providing that they are to appoint the women director with in the period of six months.

Second category is of those companies which were incorporated under the previous company laws, for those companies the period shall be one year from 1st April 2014 i.e. uptil 31st March 2015.

But the main concern here is to see whether the companies will seriously appoint deserving women director or the women director will also be coming out of the Promoter group. The provision is not clear about the independence of the women director. So, uptil when there is no restriction for the appointment of women director from the promoter group, there will be no difficulty for the promoters to appoint a women director. But, we can interpret only that this provision is a social measure so, the government will not take any step for independence of the women director.

Moreover, if the women director will be independent, it will be more beneficial for the companies because by appointing independent women director they will be complying two provisions of section 149 i.e. by appointing the women director and Independent Director.

The second proviso to the rule 3 is further providing that if there is intermittent vacancy of a woman director, it shall be filled-up by the Board at the earliest but not later than immediate next Board meeting or three months from the date of such vacancy whichever is later. This proviso can be analysed as essential for maintaining the post of women directors as if this provision would not have been made, the companies will be appointing a women director and after appointment will try her removal and would have overcome law. But this provision has ensured the enforcement of the appointment of Women Director in a Company.

Custody of Child - Supreme Court

Supreme Court has directed a mother to return to Singapore with her autistic child and subject herself to jurisdiction of the foreign court in  a recent case where NRIs involved in legal custody battle for children,

A bench of Justices Dipak Misra and V Gopala Gowda, however, directed the husband, who has initiated proceedings against the wife in Singapore, to fund her and the child's air ticket and also withdraw any contempt filed against her in the Singapore court.

The apex court's direction came after a petition filed by the father accusing his estranged wife of illegally spiriting away their child to India despite an order of the Singapore high court, directing she return with the child.

It was informed to the bench that the father of the child is a citizen of Singapore and settled there since 1978. After marriage, the wife also became a permanent resident of Singapore. The couple was blessed with a boy who was autistic by birth and also acquired citizenship of Singapore.

Due to marital discord, the mother took the child to India on the pretext of holidays. She promised she will return and had booked her return ticket as well but never came back.

The father then filed a petition before the Singapore high court which directed the return of the child to the jurisdiction of Singapore. Since the mother failed to comply with the high court's order, the father had to move the court in India.

SC directed the father to arrange a separate house for the mother and the child, and also deposit a sum of Rs 2 lakh for their expenses. SC also directed that all proceedings initiated by the wife in India will be put on hold till the decision by the High Court of Singapore comes while the father was restrained by SC from initiating any proceedings of contempt in Singapore.

Alimony to husband by wife

In recent divorce cases, courts, deviating from the norm, have been denying maintenance to the wife if she is capable of earning or was earning in the past. There are also cases of the wife being asked to pay maintenance to the husband.
The husband paying maintenance to the wife is the textbook model for divorce proceedings. However, in a recently developed trend, the courts have been denying maintenance to the wife if she is capable of earning or was earning in the past. There have also been cases where the court, instead of going the conventional way, has told the wife to pay maintenance to the husband. Even the wives, in a hurry to end the marriage as soon as possible, are opting for out-of-court settlements and paying the husbands a permanent alimony.
Maintenance Plea by the wife rejected
In a recent judgement, a trial court in Delhi denied the plea of a woman seeking maintenance from her husband. It was reported that the trial court dismissed the woman's plea seeking residential maintenance from her estranged husband, and observed that no financial assistance can be provided to a woman if she earns as much as her husband. Anuradha Shukla Bharadwaj, additional sessions judge, observed, "In the era of gender equality, bias cannot be shown to one gender and discretionary relief of financial assistance cannot be granted to wives despite their capability to earn as much as their husbands."
The court, reportedly, said that rental maintenance would have been awarded to the wife had she proved that she was incapable of arranging an accommodation for herself. However, in this case, she was living with her mother.
Although uncommon, it is not the first time that a court has denied maintenance to the wife. There have been several cases where the court has supported the husband and denied the wife's plea for maintenance. In a case, "The husband was an NRI from the UK and the wife was working with a multinational bank here in Delhi, and she was drawing a salary of `60,000-70,000. They had a troubled marriage so the wife filed for divorce. She asked for maintenance under Section 125 of the Code of Criminal Procedure, 1973, from her husband, stating that he was quite rich. However, her plea for maintenance was rejected and the court ruled that since she was earning well, she didn't need her husband's money to survive, despite the fact that he was quite well-off."
"A trend has developed recently wherein the court is denying maintenance to the wife if she has capability, capacity and past employment." Citing a case, he says, "There was a case in which the wife was a dentist by profession and used to be employed. However, at the time of divorce, she wasn't working and asked for maintenance from her husband. But the court denied her maintenance because, in this case, she had the capability and capacity, and was working in the past. So, she could work again to support herself."
Family resource cake
It is not necessary that either of the party has to pay maintenance to the other in divorce cases. "In 2004, Justice Vikramjeet Sen of the Delhi High Court (as he then was) worked out a formula involving a 'family resource cake' in order to provide maintenance to even working wives. Justice Sen, in the said judgment, combined the income of both the spouses, calling it the 'family resource cake.' Half of the 'cake' was allocated to the husband to meet his expenses, and the other half to the wife and children, for their maintenance. This method has been widely followed by other courts in Delhi when awarding maintenance to either spouse."
Maintenance in favour of the husband
Although in most cases, the wife is awarded maintenance to enjoy the same lifestyle as that of the husband, there are also instances where the reverse happens. Not only is the wife refused maintenance, in many cases, she is also asked to pay maintenance to the husband.  In a case where the court granted maintenance to the husband, the Court granted maintenance in favour of the husband, who was suffering from a mental disorder, while the wife had a government job. The wife earned about `20,000, and the husband was granted a maintenance of `2,000." 
There was another case in which a court passed a judgment supporting the plea of a husband who, under Section 24 of the HMA, wanted maintenance from his wife. The trial court directed the wife to pay the husband `20,000 per month as maintenance, `10,000 as litigation expenses and also to provide a car for him. This judgment was later challenged in the High Court by the wife, but the HC also supported the judgment of the trial court. The wife was running a paying guest facility while the husband was unemployed.
The law which allows the husband to seek maintenance from his wife
Husband can only seek maintenance under Section 24 of the Hindu Marriage Act. "Section 24 of the Hindu Marriage Act, 1955, provides that the court, in case of either the wife or the husband having no independent income sufficient for her or his support, may, on the application of either of the spouses, order to pay to the petitioner the expenses of the proceedings and monthly expenses during the proceedings such sum as, having regard to the petitioner's own income and the income of the respondent, it may seem to the court to be reasonable. So, under this section, even the husband can file an application claiming maintenance pendent elite in the pending divorce case. But the only pre-requisite is that he should not have sufficient income to maintain and support self in consonance with the lifestyle and income of the wife. Assuming the wife is earning much more than the husband, the husband only in that eventuality shall have the locus to file for maintenance."