LEGAL PRINCIPLES – FOR SETTING ASIDE ARBITRAL AWARD

Arbitration award can be set aside in terms of section 34 and under process of law; Hon’ble Supreme Court on examining various judgments and situations provided simple principles for setting aside arbitral award.

Section 34 of the Arbitration and Conciliation Act, 1996 provides provision for setting aside arbitral award.

Supreme Court in Delhi Development Authority V S Sharma and Co10 had very exhaustively examined various judgments and situations in which an arbitration award gets vitiated for being set aside in terms of section 34 of the Arbitration and Conciliation Act, 1996, and provided following principles:

(1) An award, which is (i) contrary to substantive provisions of law, or (ii) the provisions of the Arbitration and Conciliation act 1996, or (iii) against the terms of the respective contract, or (iv) patently illegal, or (v) prejudicial to the rights of the parties, is open to interference by the Court under section 34 (2) of the Act.

(2) Award could be set aside if it is contrary to (a) fundamental policy of Indian Law, or (b) the interest of India, or (c) justice or morality

(3) The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court.

(4) It is open to the Court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India. 

Prepared by: S. Hemanth

Advocate at Hemanth & Associates

CAN SUBSEQUENT EVENTS BE CONSIDERED IN A PROCEEDINGS

Rights of the parties are determined on the basis of the date of institution of the suit or proceedings. Can events happening after the institution of the suit be considered?

In the Case of Kedar Nath Agrawal(Dead) V Dhanraji Devi (Dead) by Lrs. and another9, the Supreme Court delineated the circumstances in which the subsequent events could be taken into consideration in the peculiar facts and circumstances of a particular case.

The Hon’ble Supreme Court held, the basic rule is that the rights of the parties should be determined on the basis of the date of institution of the suit or proceeding and the suit/action should be tried at all stages on the cause of action as it existed at the commencement of the suit/action. This, however, does not mean that events happening after institution of a suit/proceedings, cannot be considered at all. It is the power and duty of the Court to consider changed circumstances.  A Court of law may take into account subsequent events inter alia in the following circumstances:

(1) the relief claimed originally has by reason of subsequent change of circumstances become inappropriate; or

(2) it is necessary to take notice of subsequent events in order to shorten litigation; or

(3) it is necessary to do so in order to do complete justice between the parties.

Prepared by: S. Hemanth

Advocate at Hemanth & Associates

TRASFER OF PROPERTY PENDING SUIT – LEGAL PRINCIPLE

Whether a party can transfer property during pendency of the suit? What are the rights and obligations of the transferee? It is important to understand the legal principles underlying the transfer of property pending suit, which this short article provides with the help of the Supreme Court decision, in a simple way.

Section 52 of the Transfer of Property Act, 1882 provides provisions with regard to the transfer of the property pending suit and relating thereto.

Hon’ble Supreme Court in T.G Ashok Kumar V Govindammal & Anr8, had provided following clear principles underlying section 52:

(1) During pendency of the suit in a court of competent jurisdiction which is not collusive, in which any right of an immovable property is directly and specifically in question, such property cannot be transferred by any party to the suit so as to affect the rights of any other party to the suit under any decree that may be made in such suit.

(2) If ultimately the title of the pendent lite transferor is upheld in regard to the transferred property, the transferee’s title will not be affected.

(3) On the hand, if the title of the pendente lite transferor is recognized or accepted only in regard to a part of the transferred property, then the transferee’s title will be saved only in regard to that extend and the transfer in regard to the remaining portion of the transferred property to which the transferor is found not entitled, will be invalid and the transferee will not get any right, title or interest in that portion.

(4) If the property transferred pendente lite, is allotted in entirely to some other party or parties or if the transferor is held to have no right or title in that property, the transferee will not have any title to the property.

(5) Where a co-owner alienates a property or a portion of a property representing to be the absolute owner, equities can no doubt be adjusted while making the division during the final decree proceedings, if feasible and practical (that is without causing loss or hardship or inconvenience to other parties) by allotting the property or portion of the property transferred pendente lite, to the share of the transferor, so that the bona fide transferee’s right and title are saved fully or partially.

Prepared by: S. Hemanth

Advocate at Hemanth & Associates