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Finality of Arbitral Awards

Vashdev Morumal Sawlani v. Yogesh Mehta & Anr, (2002) 2 Arb LR 380

ISSUE:

Whether an arbitral award lacking reasons can be set aside by a court on the ground of it falling under public policy of India and thus a ground under Section 31(3) of the Arbitration and Conciliation Act, 1996?

RULE:

An arbitral award should be backed by reasons as per Section 31(3) of the Arbitration and Conciliation Act, 1996, unless and until the parties to the dispute themselves agree and sign a waiver with respect to the same.

The courts are duty bound to assess if the arbitral tribunal has exercised powers inside the boundaries of the jurisdiction or not.

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Judicial Framework Of Arbitration In India

Venture Global Engineering v. Satyam Computer Services Limited & Anr, 2010 (8) SCC 660

ISSUE:

Whether the court is empowered to allow an amendment to a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, if the said amendment will permit material facts to be introduced on record with respect to the Section 34 petition?

RULE:

An amendment to a petition to set aside an arbitral award can be permitted by the court if the said facts are so material in nature that they have an influence on the applicant’s petition to set aside the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996.

However, the court needs to determine whether the material to be brought on record has a close nexus to the facts forming or influencing the arbitral award. If the material is closely related, then the arbitral award may be set aside due to being manipulated by fraud.

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Winding Up

A.Navinchandra Steels (P) Ltd v. SREI Equipment Finance Ltd & Ors, 2011 Comp LJ 368,SC

ISSUE:

Whether Corporate Insolvency Resolution Proceedings initiated under the Insolvency and Bankruptcy Code of 2016 prevail over winding up proceedings as initiated under the Companies Act of 2013?

RULE:

Corporate Insolvency Resolution Proceedings initiated under either Section 7 or Section 9 of the Insolvency and Bankruptcy Code of 2016 function independently of winding up proceedings initiated under Companies Act of 2013.

When the death of the corporate is unavoidable, efforts must be made to revive the company for the public welfare, which may be inclusive of reviving the workmen, creditors and products produced for the greater benefit of the country.

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Winding Up

Devas Multimedia Pvt Ltd v. Antrix Corporation Ltd & Anr 2 Comp LJ 1 SC.2022

ISSUE:

Whether the NCLT has the power to order for winding up of a company under Section 271 (c ) of the Companies Act, 2013 on the ground that the incorporation & operations was backed by fraud?

RULE:

A company incorporated to commit fraudulent activities or if its operations are fraudulent can be wound by the Tribunal by the powers granted to it under Section 271(c ) & Section 271(e).

The standard norms of justice and morality are constantly against fraud and therefore the intention behind any action initiated by the victim of a fraud can never be an obstruction.

Companies that commit fraudulent activities cannot hide behind arbitral awards or trivial legal provisions, since fraud takes priority over arbitral and contractual rights.

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Winding Up

Lakhani Footcare (P) Ltd v. Official Liquidator & Anr, (2021) 1 Comp LJ 79 (MP)

ISSUE:

Whether the Company Court is empowered to order for a re-auction of the property of the company undergoing winding up process if the price received in the auction is insufficient?

RULE:

The Company (Court) Rules require that the Official Liquidator needs the sanction of the court before proceeding with the sale of the company’s assets by way of an auction under Rule 272 and Rule 273.

In spite of this provision, the Court is obliged to determine whether the price received in the auction is adequate even in the absence of fraud or discrepancies. The Court is empowered to order for a re-auction of the assets if the price received in the auction is not sufficient.

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Application of Environmental laws

J.C.Galstaun v. Dunia Lal Seal [(1905) 9 CWN 612]

ISSUE:

Whether an order passed ordering a suit for perpetual injunction to remove a nuisance and for providing damages on account of the same was sustainable or not?

RULE:

No private person can claim a right to foul an ordinary drain by discharging into it what it was not intended to carry off, and then throw on the Municipality an obligation to alter the drain to remedy the nuisance that he has produced; nor can he say that other persons must meanwhile put up with such nuisance.

The sewer is only a kutcha drain and was intended for the mere drainage of surface water. For these purposes, the slight, obstacle to the flow of the drainage water at the culvert was of little or no importance; for the small quantity of drainage water held back by that obstacle is not offensive and soon evaporates. The discharge of the Defendant's refuse liquid into the drain is of a different situation altogether as it is much more voluminous in nature and the defendant cannot blame the Municipality for its stagnation.

Carrying on an offensive trade to interfere with another's health and comfort or his occupation of property has been constantly held in England to be a legal nuisance against which the Courts will give relief.

An extract from Ogston v. Aberdeen District Tramways Company L. R. provided a precedent to the present case where the following argument was used, “It is an absolutely untenable proposition that any one may create a nuisance and shelter themselves from responsibility by suggesting that somebody else is under a legal responsibility to remove it.”

If no injunction is issued, there will be nothing to prevent the defendant from aggravating the present nuisance by further enlarging his factory and discharging still more refuse into the drain.

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Application of Environmental laws

Radhey Shiam v. Gur Prasad Serma [AIR 1978 ALL 86]

ISSUE:

Whether the operation of an oil expeller and flour mill in a residential building constitutes a private nuisance and can be restrained through an injunction?

RULE:

Using the rule established in Dhanna Lal v Chittar Singh (AIR 1959 Madh Pra 240), it is concluded that even in a noisy locality, if there is a substantial addition to the noise by the introduction of some machine, instrument, or performance at defendant's premises which materially affects the physical comforts of the occupants of the plaintiff's house, then also the noise will amount to actionable nuisance.

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Application of Environmental laws

Ram Baj Singh v. Babulal [AIR 1982 ALL 285]

ISSUE:

Whether the defendant’s brick-grinding machine, situated near the plaintiff’s medical clinic, constituted a private nuisance by generating excessive dust that interfered with the plaintiff’s use of his property, causing discomfort to him and his patients and whether the damage caused to the plaintiff was entitled to a legal remedy ?

RULE:

Nuisance is an act or omission which is an interference with, disturbance or annoyance to a person in the exercise or enjoyments of a right belonging to him as a member of the public, (when it is a public nuisance), or his ownership or occupation of land or of some easement, private, or other right used or enjoyed in connection with land, (when it is a private nuisance)

All that the law requires is that when an act amounts to public nuisance, an individual can sue in his own right only if he is able to prove particular damage to himself i.e., damage which is particular to him as opposed to the damage or inconvenience caused to the public at large or to a section of the public.

Every injury is considered to be substantial which a reasonable person considers to be so.

Causing of actual damage by the act complained of as a nuisance is beside the point. If actual damage or actual injury were to be the criterion a person will have to wait before the injury becomes palpable or demonstrable before instituting a suit or its abatement.

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Application of Environmental laws

Ratlam Municipality v. Vardhichand [AIR 1980 SC 1622]

ISSUE:

Whether by affirmative action a court can compel a statutory body to carry out its duty to the community by constructing sanitation facilities at great cost and on a time-bound basis?

RULE:

The public power of the magistrate under Section 133 CrPC is a public duty to the members of the public who are victims of the nuisance, and so he shall exercise it when the jurisdictional facts are present as here. Thus, the Magistrate can compel municipality to make drains and improve sewerage affecting the health and convenience of the residents.

The criminal procedure code operates against statutory bodies and others regardless of the cash they possess, even as human rights under Part III of the Constitution have to be respected by the State regardless of budgetary provision. Likewise, Section 123 of the Act has no saving clause when the municipal council is penniless.

Judicial discretion when facts for its exercise are present is mandatory.

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General Rules of Transfer

Samarendra Nath Sinha v. Krishna Kumar Nag AIR (1967) SC 1440

ISSUE:

Whether the Trial Court was competent to pass a final decree for foreclosure though the preliminary decree was for sale?

Whether the respondent had the right to contend that he was entitled to redeem the said mortgage in view of the fact that he was the execution purchaser of part of the equity of redemption pendente lite?

RULE:

As per section 151 and section 152 of CPC, a court has the inherent power to correct a clerical mistake or accidental slip in its judgment, decree, or final order. If the preliminary decree contains an unintended error, the trial court can rectify it while passing the final decree to reflect its true intention.

As per section 52 of the transfer of property act, 1882, a purchaser pendente lite (during litigation) is bound by the outcome of the litigation. Such a purchaser cannot assert independent rights in contradiction to the final decree.

Order 34 rule 4 of CPC states that final decree should be in conformity with the preliminary decree but if a clerical final decree should be in conformity with the preliminary decree. However, where a clerical error is present in the preliminary decree, the court can correct it to ensure substantive justice.

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