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Singapore is the most preferred jurisdiction for arbitration and mediation

How pertinent and relevant was it for you to attend this ADR Symposium in Mauritius?

I was invited to speak on the panel on mediation law, and I am the chair of the disputes practice of a very large law firm called JSA (Editor’s note: in India). It was very interesting for me to speak on mediation because I have recently handled quite a number of mediations, and I am very focused and excited about the new ways that mediation could end disputes. I like to attend these conferences and speak about the values and how mediation could be used as a way of resolving disputes.

Why should we favour mediation when there are courts of law?

You go to mediation for two reasons essentially. The first one is that you save time, while the courts will take much longer. Secondly, you will save on costs because the time spent is less in mediation. Now, when you go to court, you are in a situation where you are fighting with your counterparty. Sometimes, business relations end because of the fight. In mediation, you are exploring the possibility of settling your differences. It’s not a dispute. This is very important in mediation. If you are transacting with a party for several years and happen to go to court at some stage, that relationship gets disrupted. In mediation, there is a possibility that you may not disrupt that relationship, and you might also consider settling it by giving in for a little more or a little less. This is the advantage.

Please click here to or refer to the below document to read the full Q&A session of Farid Karachiwal, published in Bizweek.

Tags Arbitration, J Sagar Associates, JSA, JSA Law Firm, Leading Law Firm, Leading Lawyers, Mediation Law, Q&A

A missed opportunity

India recently got its first standalone legislation on mediation as an independent alternative dispute resolution mechanism. However, the Government of India (GoI) promulgated the Mediation Act without incorporating United Nations Convention on International Settlement Agreements Resulting from Mediation, also called the Singapore Convention on Mediation (Singapore Convention) despite criticism of such departure during the consultation stage.

This article discusses the departure and if it was warranted, or whether India missed its host at global recognition and parity in the field of mediation.

Please click here or refer to the below document to read the full article by Dheeraj Nair, Vishrutyi Sahni and Ridhima Sharma, published in Financial Express.

Tags Government of India, JSA, Leading Law Firm, Leading Lawyers, Mediation Act

JSA successfully represents PepsiCo in setting aside the revocation of its registration for its potato variety

JSA successfully represented PepsiCo India Holdings Private Limited before a Division Bench of the Delhi High Court, in setting aside the revocation of PepsiCo’s registration for its potato variety FL 2027 under the Protection of Plant Varieties and Farmers Rights Act, 2001 (“PPVFRA”). The FL 2027 variety is used for the manufacture of Lay’s potato chips.

PepsiCo’s registration was challenged by Ms. Kavitha Kuruganti, a farmers’ rights activist, on various grounds under Section 34 of the PPVFRA before the Protection of Plant Varieties and Farmers Rights Authority (“Authority”). These grounds pertained to alleged deficiencies in PepsiCo’s application for registration and that the grant of registration was against public interest.

The Authority had in December 2021 revoked PepsiCo’s registration. PepsiCo had challenged the matter before a Single Judge of the Delhi High Court and succeeded in getting several findings of the Authority set aside. However, the Ld. Single Judge upheld the revocation of PepsiCo’s registration.

Before the Division Bench, PepsiCo challenged the Ld. Single Judge’s order as also the Authority’s order revoking its registration. Ms. Kavitha Kuruganti also appealed to challenge the findings of the Ld. Single Judge in PepsiCo’s favour.

The Division Bench allowed PepsiCo’s appeal and dismissed Kavitha Kuruganti’s appeal, setting aside the orders passed by the Ld. Single Judge and the Authority.

Our Disputes Team Comprised Lead Partner – Dheeraj Nair and Principal Associate – Anjali Anchayil.

Tags Delhi High Court, Disputes, JSA, Leading Law Firm, Leading Lawyers, Matter

IBC | Annual Compendium 2023

This compendium consolidates all the relevant notifications and circulars pertaining to IBC, which has been circulated during the calendar period from January 2023 till December 2023.

To read further details, click here or refer to the below document.

For more details, please contact [email protected]

*In case the document is not visible on the device you are using, please click the link above.

Tags Banking and Finance, Bankruptcy, Bankruptcy Code, Disputes, Insolvency, JSA, Leading Law Firm, Leading Lawyers, Legal Updates, Newsletters

Arbitration | Annual Compendium 2023

This compendium consolidates all the relevant notifications and circulars pertaining to Arbitration, which has been circulated during the calendar period from January 2023 till December 2023.

To read further details, click here or refer to the below document.

For more details, please contact [email protected]

*In case the document is not visible on the device you are using, please click the link above.

Tags Arbitration, Bombay HC, Delhi HC, Disputes, JSA, Leading Law Firm, Leading Lawyers, Legal Updates, Newsletters, Supreme Court

Successes and Setbacks: Sector progress during the year

India is well on its way to achieving its ambitious “Panchamrit” targets: 500 GW of non-fossil fuel-based installed capacity by 2030, reduction of one billion tonnes of carbon emissions by 2030, generation of 50 per cent of the country’s energy requirements from renewable energy by 2050, reduction in the carbon intensity of the economy by 45 per cent over 2005 levels by 2030, and net zero emissions by 2070. The energy transition vector received an impetus at the recently concluded COP28 in Dubai, where nearly 200 countries agreed to “transition away from fossil fuels”. However, the commitment lacks firmed up timelines and concerns exist with respect to ambiguity in the terminology used.

Please click here to read the full article by Amit Kapur and Akshat Jain, published in Power Line.

Tags Energy, Fuel, JSA, Leading Law Firm, Leading Lawyers, Power Industry

Indian Criminal Law: Changing Paradigm

The Lok Sabha, on 20 December, passed three new bills, namely the Bharatiya Nyaya (Second) Sanhita, the Bharatiya Nagarik Suraksha (Second) Sanhita and the Bharatiya Sakshya (Second) Bill, that is, the BNS-2, the BNSS-2 and the BSB-2, which respectively seek to repeal and replace the Indian Penal Code, 1860, the Code of Criminal Procedure,1973 and the Indian Evidence Act, 1872.

The oft-quoted criticism of criminal justice system is that ‘the process is the punishment’. Various issues plague the Indian criminal justice system. This, in turn, has resulted in delayed investigation, pendency of cases, low conviction rates, and a violation of the rights of victims and accused.

Please click here to read the full article by Kumar Kislay and Vibhor Jain, published in Bar & Bench.

Tags Indian Criminal Law, JSA, Leading Law Firm, Leading Lawyers, The Viewpoint

JSA Prism | Dispute Resolution | December 2023

Please click here to download the Prism as PDF.

7 (seven) judge bench of the Supreme Court holds that unstamped or insufficiently stamped arbitration agreements are not rendered void or void ab initio

A 7 (seven) judge bench of the Hon’ble Supreme Court of India (“Supreme Court”) has observed in the case re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act 1899[1], that non-stamping of the arbitration agreement does not make the agreement void or unenforceable but makes it inadmissible in evidence. However, the same is a curable defect as per the Indian Stamp Act, 1899 (“Stamp Act”). The Supreme Court whilst overruling a constitution bench decision of the Supreme Court in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.[2] (“N.N. Global”) and a 2 (two) judge bench decision of the Supreme Court in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd.[3] (“SMS Tea”) held that the unstamped agreement is inadmissible under the Stamp Act but cannot be rendered void ab initio. The Supreme Court therefore held that arbitration clauses in unstamped or inadequately stamped agreements are enforceable.

Brief Facts

The present judgment arose out of a curative petition filed against the ruling of a 3 (three) judge bench of the Supreme Court in Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram v. Bhaskar Raju and Brothers[4] (“Bhaskar Raju”). The Supreme Court in Bhaskar Raju observed that an arbitration clause in an agreement which is required to be duly stamped, if not sufficiently stamped, cannot be acted upon by the court.

In Bhaskar Raju, one of the parties to the agreement filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) before the High Court of Karnataka (“Karnataka HC”). The other party contended that the lease deed being insufficiently stamped had to be mandatorily impounded under Section 33 of the Karnataka Stamp Act, 1957 and it could not be relied upon unless appropriate stamp duty and penalty was paid. However, the Karnataka HC invoked the power under Section 11(6) of the Arbitration Act and appointed an arbitrator to adjudicate the dispute between the parties. In appeal, the Supreme Court noted that admittedly both the lease deeds are neither registered nor sufficiently stamped as required under the Karnataka Stamp Act, 1957. The constitution bench of the Supreme Court relied upon SMS Tea and by a 3:2 majority decision reversed the decision of the Karnataka HC and held that the arbitration agreement in an unstamped contract is unenforceable.

Earlier decisions of the Hon’ble Supreme Court in SMS Tea and Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited (“Garware”)[5], separate 2 (two) judge benches had held that arbitration agreement in an unstamped contract could not be acted upon since an unstamped commercial contract would not exist.

Subsequently, a 3 (three) judge bench in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.[6], took a different view that an arbitration agreement being separate and distinct from the underlying contract would not be rendered invalid, unenforceable or non-existent; non-payment of stamp duty would not even invalidate the underlying contract, being a curable defect. However, keeping in mind another decision of a 3 (three) judge bench in Vidya Drolia v. Durga Trading Corporation[7] (“Vidya Drolia”), had followed the view taken in Garware that arbitration agreement exists only when it is valid and legal, the 3 (three) judge bench in N.N. Global referred the issue to a 5 (five) judge bench.

This reference was answered in N.N. Global to hold that an arbitration agreement contained in an unstamped agreement is void and cannot be said to exist in law within the meaning of Section 2(h) of the Indian Contract Act, 1872 (“Contract Act”); Court under Section 11 of the Arbitration Act is required to examine and impound an unstamped instrument.

After the passing of the 5 (five) judge bench decision in N.N. Global, while considering the curative petition in Bhaskar Raju, a 5 (five) judge bench of the Supreme Court referred the question of unstamped arbitration agreement to a 7 (seven) judge bench. This was necessitated taking into account the larger ramifications of the 5 (five) judge bench decision in N.N. Global and due to the divergent views taken in various decisions.

Issues

The issue for consideration before the Supreme Court was whether an arbitration agreement would be deemed to be non-existent, unenforceable or invalid if the underlying contract is insufficiently stamped / not stamped.

Key Findings of Supreme Court

After appreciating the submissions advanced by the parties, the Supreme Court harmoniously interpreted the provisions of the Arbitration Act, Stamp Act and Contract Act and held as follows:

Agreements which are not stamped or are inadequately stamped are inadmissible in evidence under Section 35 of the Stamp Act. Such agreements are not rendered void or void ab initio or unenforceable.
Non-stamping or inadequate stamping is a curable defect.
An objection as to stamping does not fall for determination under Sections 8 or 11 of the Arbitration Act. The concerned court must examine whether the arbitration agreement prima facie
The observations in Vidya Drolia pertaining to the existence of an arbitration agreement were not in the context of stamping. Therefore, it cannot be said that Vidya Drolia in any manner determined the effect of an unstamped / insufficiently stamped underlying contract on an arbitration agreement contained therein.
Any objections in relation to the stamping of the agreement fall within the ambit of the arbitral tribunal.
The decision in N.N. Global and SMS Tea and paragraphs 22 and 29 of Garware are overruled.

Conclusion

This judgment is a welcome decision to ensure that steps which are being taken to make India a hub for international and institutional arbitrations, are given further impetus. By way of the present judgment, the Supreme Court has settled the law to hold that arbitration agreements contained in agreements which are not stamped or are inadequately stamped, are not rendered void or void ab initio or unenforceable. This conclusion is premised on the separability of an arbitration agreement from the underlying agreement.

The Supreme Court further empowers arbitral tribunals to adjudicate on issues emanating from insufficiently stamped arbitration agreements by facilitating a liberal interpretation of Sections 33 and 35 of the Stamp Act.

This Prism has been prepared by:

Sidharth Sethi
Partner

Varghese Thomas
Partner

Fatema Kachwalla
Partner

Avinash Das
Senior Associate

Virgil Braganza
Associate

Kunal Saini
Associate

For more details, please contact [email protected]

[1] Curative Petition (C) No.44 of 2023

[2] (2023) 7 SCC 1

[3] (2011) 14 SCC 66

[4] (2020) 4 SCC 612

[5] (2019) 9 SCC 209

[6] (2021) 4 SCC 379

[7] (2021) 2 SCC 1

Tags Arbitration Act, Dispute Resolution, JSA, JSA Prism, Leading Law Firm, Leading Lawyers, Legal Updates, Supreme Court

JSA successfully represented UltraTech Cement Limited and Amplus Dakshin Private Limited JSA before Rajasthan Electricity Commission on Proportionality Test Challenge for CGP

JSA successfully represented UltraTech Cement Limited (UTCL) and Amplus Dakshin Private Limited (ADPL) before RERC in proceedings (Petition no. 2047/2022) challenging the applicability of proportionality test to a single user captive generating plant setup by a Special Purpose Vehicle (SPV) having multiple equity shareholders.

On December 14, 2023, RERC has allowed UTCL and ADPL’s petition, and effectively overruled its earlier decision in Tesco Energy Two Pvt. Ltd. v. RVPNL (Tesco Order). RERC has held that:

Rule 3 of the Electricity Rules, 2005 prescribes the minimum ownership (26% equity shareholding) and consumption (51% of the aggregate electricity) tests for a user of a CGP to qualify as its captive user.
The equity shareholder(s) of a CGP, who do not consume energy generated from the CGP, will not impact the captive status of captive user(s) who fulfil the ownership and consumption test prescribed under Rule 3.
Since UTCL owns 26% of the CGP and is consuming 100% of the power generated from the CGP, it qualifies as a captive user. Non-consumption of electricity by the other shareholder who holds 74% of the equity shareholding does not impact UTCL’s captive status.
Proportionality test (i.e., consumption of electricity in proportion to its shareholding in the CGP) is not applicable since UTCL alone meets the ownership and consumption test under Rule 3, and the other shareholder consumes no energy generated by the CGP.
In terms of the Supreme Court’s Judgment in Dakshin Gujarat Vij Company Ltdv. Gayatri Shakti Paper Ltd (2023 SCC OnLine SC 1276) it is not necessary for every shareholder of a CGP to consume electricity especially if the other shareholders are fulfilling the requirements of Rule 3.

Our Disputes Team Comprised Lead Partner – Abhishek Munot and Principal Associate – Tushar Nagar.

Tags Dispute Resolution, JSA, Leading Law Firm, Leading Lawyers, Special Purpose Vehicle, Supreme Court of India, Supreme Court Verdict

Co-Generation Plants not liable to pay Grid Support Charges- APTEL holds

JSA successfully led Rain CII Carbon (Vizag) Ltd (“Rain Carbon”), a leading Pet Coke manufacturer and a Power Producer, in an Appeal before Appellate Tribunal for Electricity (“APTEL”). The Appeal was filed challenging the levy of Grid Support Charges on Co-Generation Plants by Andhra Pradesh Electricity Regulatory Commission (“APERC”). APTEL, in its Judgment dated 14.12.2023, accepted all submissions of Rain Carbon, and held that a non-captive Co-Generation Plant is not liable to pay Grid Support Charges and the levy shall be limited to only the power consumed by the co-located load, if any.

Four issues were framed and adjudicated by the Supreme Court: –

Whether the State Commission is empowered to levy Grid Support Charges on non-Captive Co-generation plants?
Whether Grid Support Charges should be levied on total installed capacity of the plant?
Whether the reasoning for levy of Grid Support Charges is justified?
Whether imposition of Grid Support Charges leads to double levy on the Appellant?

Key findings of the APTEL Judgment dated 14.12.2023 are summarized below: –

Grid Support Charges cannot be levied on the entire installed capacity as that would mean levying Grid Support Charges even for the capacity which is sold to 3rd parties [Para 10].
Generators which are not self-consuming the power, i.e., not having the captive loads, cannot be said to be drawing support from the grid, and thus cannot be asked to pay Grid Support Charges [Para 66].
There is no decision either APTEL or by Supreme Court regarding imposition of Grid Support Charges on non- Captive Power Plants [Para 26].
Levy of Grid Support Charges on the Appellant’s non-captive power plant shall be limited to only the power consumed by the co-located load [Summary of Judgment].

APTEL in its Judgment, also settled the following position of law: –

Co-Generation Plant, operating parallel to the grid, can be levied with Grid Support Charges only when it is a Captive Power Plant and consuming more than 51% of the energy produced by such plant [Paras 78 and 80].
State Commission has powers to determine and impose Grid Support Charges on Captive Power Plants [Paras 62 and 70].
No reason has been provided by APERC in excluding the generators from the paying Grid Support Charges who have signed PPAs with Discoms [Para 73].

This APTEL Judgment qualifies as a ‘Landmark Judgment’ as it is for the first time, APTEL held Co-Generation Plants not liable to pay Grid Support Charges. This should put to rest several long-standing litigations initiated by Discoms against Co-Generation Plants and will help several other generators in the sector where similar issues are pending.

Our Disputes Team Comprised Lead Partner –Poonam Verma Sengupta, Senior Associate – Saunak Kumar Rajguru and Associate – Sakshi Kapoor