India: Dispute Resolution 2020

I INTRODUCTION TO THE DISPUTE RESOLUTION FRAMEWORK

As with most common law countries, Indian law may broadly be classified as substantive or procedural law. While substantive law determines rights and liabilities of parties or confers legal status or imposes and defines the nature and extent of legal duties, procedural laws prescribe practice, procedure and machinery for the enforcement or recognition of rights and liabilities.[2] To put it another way, substantive laws are those that are enforced while procedure deals with the rules through which the substantive law is enforced.[3]

Dispute resolution in India may be through courts, specialised tribunals (such as those for recovery of debt by banks or company disputes, among others) or alternative dispute resolution mechanisms that include arbitration, mediation and conciliation. The recent amendment to the Commercial Courts Act 2015 (the Commercial Courts Act) provides for the constitution of commercial courts at a district level, except areas where the High Court exercises ordinary civil jurisdiction and provides for commercial divisions (in all High Courts having ordinary civil jurisdiction) and commercial appellate divisions in each High Court for the adjudication and speedy disposal of commercial disputes [4] of a specified value of not less than 10 million rupees or such other notified value within the limits of the relevant territorial jurisdiction. [5]

The primary laws codifying court procedure in India are the Code of Civil Procedure 1908 (CPC) and the Code of Criminal Procedure 1973 (CrPC). Charter High Courts such as the High Courts of Bombay, Calcutta, Delhi and Madras may also apply Letters Patent Rules, which when applicable may override the provisions of the CPC. The procedure to be applied by tribunals is often governed by the statute that establishes the tribunal (and rules framed thereunder). Courts have held that the principles contained in the CPC would continue to apply to the tribunals even if the tribunals are not bound to follow specific provisions of the CPC. [6]

While the legislative and executive branches of the Indian government follow a federal structure, the Indian judicial system comprises a unified three-tier structure with the Supreme Court of India (the Supreme Court) holding the position of the apex court. Below the Supreme Court are the High Courts, functioning (in most cases) in each state. Lower in the hierarchy are the subordinate courts, which include courts at district level and other lower courts.

Law declared by the Supreme Court is binding on all other courts in India. [7] By acceptance of the doctrine of stare decisis, law declared by High Courts binds subordinate courts [8] and may have persuasive value over High Courts of other states. [9] The Supreme Court and the High Courts are charged with original, appellate and writ jurisdiction. Under the writ jurisdiction they have the power to review administrative action including for the purposes of the enforcement of constitutional and fundamental rights granted under Part III of the Constitution of India.

The Arbitration and Conciliation Act 1996 (the Arbitration Act) governs the law related to domestic arbitration, foreign-seated arbitration and enforcement of foreign awards, in India. The Arbitration Act is based on the UNCITRAL Model Law as adopted by the United Nations Commission on International Trade Law on 21 June 1985. Mediation and conciliation have also been given statutory recognition through the Arbitration Act.

As a recent trend, even courts often promote alternative dispute resolution. This was discussed in great detail in the case of Afcons Infrastructure Limited v. Cherian Varkey Construction, [[10] where the Supreme Court laid down guidelines for courts to follow for the effective implementation of Section 89 of the CPC, which encourages parties to settle their disputes by means of alternative dispute resolution. Recently the Supreme Court in Perry Kansagra v. Smriti Madan Kansagra [11] identified various kinds of disputes where alternative dispute resolution may be a better alternative than litigation, such as cases relating to trade, commerce and contracts including money claims arising out of contracts, etc. Disputes relating to specific performance or disputes between insurer and insured, bankers and customers were also considered to be better resolved through an alternative dispute resolution mechanism than litigation.

II THE YEAR IN REVIEW

The year 2019 witnessed a series of amendments aimed at introducing greater ease of doing business in India, and at bringing the current law in tune with the rapid economic growth in the country in order to aid foreign direct investments, public private partnerships, public utilities infrastructure developments, etc.

Two of the primary legislative changes brought about during 2019 were the amendments to: (1) the Arbitration and Conciliation Act, 1996 (the Arbitration Act); and (2) the Insolvency and Bankruptcy Code 2016 (IBC). Both have been discussed in further detail below. The amendments to the IBC introduce significant changes on the substantive as well as procedural aspects of the IBC. The IBC, which came into effect on 1 December 2016, is a comprehensive legislation that seeks to replace extant insolvency and restructuring laws in India and proposes to cover corporate persons (i.e., companies and limited liability partnerships), individuals and partnerships. The National Company Law Tribunals (NCLT) have been vested with the jurisdiction in respect of insolvency and restructuring proceedings against corporate persons in India, while the Debt Recovery Tribunal will oversee proceedings against individuals and partnerships. On 5 August 2019, the President gave assent to the Insolvency and Bankruptcy Code (Amendment) Act, 2019 (the IBC Amendment) through which certain key changes have been introduced in the Code. Some of the important amendments to the IBC include the following:

a. The IBC Amendment seeks to bring clarity on allowing comprehensive corporate restructuring through merger, amalgamation and demerger under a resolution plan.

b. The time period of 14 days for disposal of such applications is now mandatory and the Adjudicating Authority is now obliged to record its reasons in case it fails to comply with the mandatory time period.

c. Under the IBC, various categories of creditors, [12] including foreign creditors, may trigger the insolvency resolution process and provide a single forum to oversee resolution and liquidation proceedings. The IBC Amendment aims to facilitate the decision-making power of the committee of creditors by allowing an authorised representative to vote on behalf of such creditors in accordance with the decision taken by the class of creditors with more than 50 per cent voting share of the financial creditors, who have cast their votes. [13]

d. The IBC provides that the Corporate Insolvency Resolution Process (CIRP) may be initiated on the occurrence of a single payment default of 100,000 rupees and the NCLT will determine whether a payment default has taken place. Accordingly, a CIRP application can be admitted against the corporate debtor. [14] The IBC Amendment provides that the law of limitation will apply to IBC applications, removing earlier confusion in this regard. [15]

e. Before the IBC Amendment, the NCLT was required to declare a moratorium of 180 days (that may be extended for a further period of 90 days) from the date of commencement of the CIRP. The amendment now provides for mandatory completion of the process within 330 days, including any extension of time as well as any exclusion of time on account of legal proceedings. An ongoing CIRP, which has not been closed yet within 330 days, shall be completed within the next 90 days. [16] This extension was provided due to a number of CIRPs taking more than the total 270 days to complete
the proceedings.

f. Once the CIRP has been initiated, the NCLT becomes the sole forum to entertain disputes either initiated by the corporate debtor or against the corporate debtor. [17]

g. Yet another important amendment to the Code is the amendment regarding the distribution of payments made to the different classes of creditors. Post the amendment, the operational creditors shall be paid either: (1) not less than the amount payable to them in the event of liquidation of the corporate debtor under Section 53 of the IBC [18] or (2) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority, whichever is higher. [19] The financial creditors who did not vote in favour of the resolution plan shall be paid not less than the amount payable to them under liquidation priority. [20] Thus, the IBC Amendment clarifies the payment distribution to
be fair and equitable to such creditors. [21]

h. The committee of creditors may approve a resolution plan after considering its feasibility and viability, and the manner of distribution of realisation under the plan, keeping in view priority of the creditors and their security interests. [22]

i. Further, a resolution plan approved by the Adjudicating Authority shall now be binding on the Central Government, any state government and any local authority to whom any statutory dues are owed. [23]

There were also a number of significant judgments of the courts in 2019.

a. The Supreme Court in Swiss Ribbons Pvt. Ltd. v. Union of India [24] upheld the constitutionality of the IBC and held that there were ‘crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid’. The challenge to the constutional validity of the IBC inter alia on the ground that it accords differential treatment of operational creditors and financial creditors as violative of Article 14 of the Constitution of India, 1950 was rejected on the ground that there was intelligible differentia between financial and operational
creditors. This was due to the fact that financial creditors from the beginning would be involved in assessing the viability of the corporate debtor and would engage in the restructuring of the loan in times of financial stress as well as reorganisation of the corporate debtor’s business, which operational creditors cannot do.

b. In Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors [25] the Supreme Court quashed an order that brought parity between financial and operational creditors of Essar Steel in matters of distribution of proceeds and held that the IBC ‘should not be read so as to imbue creditors with greater rights in a bankruptcy proceeding than they would enjoy under the general law, unless it is to serve some bankruptcy purpose.’ In order to pass the muster of law what is required to be seen is that ‘equitable treatment’ is accorded to ‘similarly situated creditors’ depending upon the class to which they belong: secured or unsecured, financial or operational and that all types of creditors cannot be treated equally. ‘The equality principle cannot be stretched to treating unequals equally, as that will destroy the very objective of the IBC – to resolve stressed assets.’ The Supreme Court further upheld the primacy of the Committee of Creditors and held that the CoC in its commercial wisdom may approve a plan (with requisite majority) that provides for ‘differential payment to different class of creditors, together with negotiating with a prospective resolution applicant for better or different terms which may also involve differences in distribution of amounts between different classes of creditors’.

c. In Jet Airways (India) Ltd. (Offshore Regional Hub/ Office), Holland v. State Bank of India & Anr. [26] the question that arose for consideration was whether separate proceedings in CIRPs against a common corporate debtor could proceed in two different countries, one having no territorial jurisdiction over the other. The National Company Law Appellate Tribunal (NCLAT) settled this question with the introduction of elements of cross-border insolvency in the cross-border insolvency protocol agreed between the administrator of Jet Airways (India) Limited (Offshore Regional Hub) and the resolution professional of Jet Airways (India) Limited. [27] The protocol recognises the Indian proceedings as the main insolvency proceeding, which also has the power to deal with the liquidation of the assets of the company located in the Netherlands. The protocol is aimed at promoting international cooperation and communication between the NCLAT and the Dutch court. It also aimed to promote effective, efficient, and fair proceedings, and to avoid duplication of effort and activities by the parties and to identify, preserve, and maximise the value of the company’s worldwide assets for the collective benefit of all creditors and other interested parties. The case laid down several ways to ensure a complete and effective overview of claims and to enable each party to fulfill its obligations.

d. In K. Kishan v. Vijay Nirman Company Pvt. Ltd., the Supreme Court observed that the provisions of the IBC cannot be invoked with respect to operational debts if a proceeding has not yet been finally adjudicated upon under the Arbitration Act. [28] The bench laid down the three-tier test and in the event any one of the conditions is lacking, the application is liable to be rejected: (1) whether there is an ‘operational debt’ exceeding 100,000 rupees; (2) whether the documentary evidence furnished with the insolvency application shows that the aforesaid debt is due and payable and has not yet been paid; and (3) whether there is an existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute.

e. In M/s Mayavti Trading Pvt. Ltd. v. Pradyuat Deb Burman, the three-judge Supreme Court bench adopted a narrow view point with respect to appointment of arbitrators under Section 11 of the Arbitration Act and held that the Court’s power in an application under Section 11 is confined only to the examination of the existence of a valid arbitration agreement and the Court cannot decide on the arbitrability of a dispute. [29] The Court further held that ‘the preliminary disputes are to be examined by the arbitrator and are not for the Court to be examined within the limited scope available for appointment of arbitrator under Section 11(6) of the Act.’

f. In R.V. Solutions Pvt. Ltd. v. Ajay Kumar Dixit & Ors. [30] the High Court of Delhi held that if a third party has a direct relationship to either signatory party of the arbitration agreement, or has some commonality with regard to the subject matter, or composite transactions in the agreement between the parties, then the third party could be subjected to arbitration.

III COURT PROCEDURE
i. Overview of court procedure
It can be seen in connection with the Indian legal system (as a criticism more than a compliment) that ‘there is ample – sometimes excessive – due process; and one has to be patient and persevering’. [31] Broadly, court procedure in India is governed by the CPC for civil matters and the CrPC for criminal matters. As discussed above, even where statutes create specialised tribunals and courts to deal with particular disputes, it is sometimes recognised that the principles contained in the CPC and CrPC would continue to apply. This is often so because provisions in the CPC and the CrPC are recognised as the embodiments of the principles of fair play, natural justice and due process.

ii. Procedures and time frames
The primary statute governing limitation is the Limitation Act 1963. As a general rule, most suits, especially those relating to contracts and accounts have a limitation period of three years for filing. Some suits relating to immovable property may fall within a longer limitation ranging from three to 30 years. [32] The periods prescribed under the Limitation Act may not apply in the event a specific statute prescribes a period of limitation. [33]

Where a plaintiff approaches a court for injunctive relief, especially at an interlocutory stage, the court may require the plaintiff to demonstrate (quite aside from being within limitation) that the plaintiff has acted in a timely manner and has not acquiesced to the infringement of its rights. [34]

The Supreme Court in Wockhardt Limited v. Torrent Pharmaceuticals Ltd. and Ors. clarified the position by stating that acquiescence cannot be equated with delay. There should not be mere silence or inaction on part of the plaintiff but a refusal or failure to act despite knowledge of invasion and opportunity to stop it.

A writ court may require a petitioner (although no limitation is prescribed for writs) to demonstrate that he or she has approached the court without delay, since a delay may disentitle a petitioner to relief. [35]

The CPC was amended by virtue of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act coming into force in 2015. According to the amended provisions of Order V Rule 1(1), Order VIII Rules 1 and 10 of the CPC, [36] a party is granted 30 days to file its written statement and a grace period of 90 days is provided, wherein, a court can, after recording the reasons for delay in filing and after imposing costs, allow a written statement to be taken on record. It was further held by the Supreme Court in the case of M/s SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors [37] that the failure to file written statements within the statutory time period of 120 days for filing written statements in a commercial suit will result in the forfeiture of the right of the defendant to file a written statement and the court would not be able to use its inherent powers to avoid the consequences emanating from the aforesaid provision. The CPC also curtails the number of adjournments that may be sought and attempts to curtail practices that are often perceived as dilatory, such as belated amendments to pleadings [38] and belated production of documents. [39]

It is pertinent to note that the Arbitration Act as amended by the 2019 Amendment Act mandates time-bound arbitrations. It now provides that the pleadings in a case be completed within six months from the appointment of arbitrator. An arbitral award is now required to be made within 12 months from the completion of the pleadings in domestic arbitration. The award in matters other than international commercial arbitration shall be made by the arbitral tribunal within a period of 12 months from the date of completion of pleadings under subsection (4) of Section 23.40 Parties may also agree in writing to have their dispute resolved by fast-track procedures, which would require the award to be made within six months from the date of entry of the arbitral tribunal upon reference.41 If the court passes any interim measure under Section 9 of the Arbitration Act, the arbitral proceedings must commence within 90 days of the court passing such an order. [42]

The Commercial Court Act has also set a time limit of 30 days for the submission of written arguments and 90 days from the date of conclusion of arguments for the pronouncement of a judgment. Appeals have to be disposed of by the appellate body within 60 days from the date of the appeal.

The IBC provides a period 330 days from the insolvency commencement date as the period of the insolvency resolution process that culminates with the submission of a resolution plan to the NCLT. [43]

In spite of these recent developments to reduce time frames, the time taken for the completion of a trial in civil and criminal proceedings may be several years.

iii Class actions
The CPC recognises that where there are numerous persons with the same interest in one suit, one or more of such persons may, with the permission of the court, sue or be sued, or may defend such suit on behalf of or for the benefit of all persons interested. [44]

The Companies Act 1956 and the Companies Act 2013 stipulate that a specified number of members or depositors may, if they are of the opinion that the management or control of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the company law tribunal on behalf of the members or depositors. [45]

The Supreme Court has in the exercise of its writ jurisdiction long recognised the ability of an individual or a group of individuals to bring ‘public interest litigations’ to espouse the cause of larger sections of society. [46]

iv Representation in proceedings
The Constitution of India guarantees the right of a person accused of an offence to be represented by a legal practitioner of his or her choice. [47]

In other proceedings, while litigants are typically represented by advocates enrolled under the Advocates Act 1961, there may be exceptions to the rule. For instance, the Family Courts Act [48] stipulates that a party may be represented by an advocate only if the court thinks that it is necessary for a fair trial. This provision of the Family Courts Act has now been challenged before the Rajasthan High Court. [49] Further, the Industrial Disputes Act [50] restricts the conditions under which a lawyer can appear before the industrial tribunal. The Advocates Act [51] empowers a court to permit any person who has not been enrolled as an advocate to appear before it in any particular case.

v Service out of the jurisdiction
The CPC [52] and the CrPC [53] contain provisions for service out of the territory of India. India has also entered into bilateral treaties and multilateral conventions for these purposes.

Under the CPC, when a defendant resides outside India and no agent in India is
empowered to accept service, summons or notice may be sent by courier or post service as approved by the appropriate High Court. This provision must, however, be read together with the procedure prescribed by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 to which India is a party.

The CrPC recognises bilateral arrangements and makes compliance with such an arrangement mandatory. It is prescribed that summons or warrants issued by a court in India should be served and executed in accordance with the bilateral arrangement, if any. Also, the Ministry of Home Affairs in India has, by a circular dated 11 February 2009, clarified the procedure to be followed for the issuance of summons to a foreign resident (the MHA Circular). Under the MHA Circular, all requests for service of summons, notices or judicial processes on persons residing abroad shall be addressed to the Under Secretary (Legal) of the Ministry of Home Affairs. Thereafter, the Ministry, after scrutinising the request, can forward it to the relevant foreign officer.

vi Enforcement of foreign judgments
A money decree obtained from a court of a jurisdiction notified by the Indian Union government as a reciprocating territory under the CPC can be enforced in India directly by filing an execution petition in a court of competent jurisdiction. [54] As a result, judgments of courts not notified as reciprocating territories or decrees other than money decrees cannot be executed directly in India. A decree holder in such a case may file a fresh lawsuit in the Indian courts on the basis of the foreign judgment. In either execution proceedings or fresh suits filed on the basis of foreign judgments, parties may rely on Sections 1355 and 1456 of the CPC.

Section 44 of the Arbitration Act prescribes that a foreign award that arises out of (1) an agreement to which the New York Convention on the Recognition and Enforcement of Foreign Awards (the New York Convention) applies and (2) is made in one of the territories in respect of which the Central Government declares that the New York Convention applies on satisfaction that reciprocal provisions are being made, may be enforced in India. In this regard, the Arbitration Amendment Act has clarified that a foreign arbitration award may be set aside if it violates the public policy of India on the same grounds as described for domestic awards above. However, unlike domestic awards, foreign awards cannot be set aside on the ground of patent illegality.

vii Assistance to foreign courts
Assistance may be given to foreign courts [57] on the basis of bilateral agreements with the reciprocating territories. In civil matters, the CPC provides for the service of foreign summons issued by certain specified courts only. In such cases, assistance is given when a defendant resides or works for gain or carries on trade or business within India and the summons itself may be a summons for the appearance of the defendant, production of documents or furnishing of information. [58]

Also as discussed above, India is a signatory to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965, whose key objective is to improve the organisation of mutual judicial assistance by simplifying and expediting procedures.

viii Access to court files
Rules relating to access to court files may vary depending on the nature of the proceeding, who is seeking access and whether the proceeding is ongoing or concluded. In most cases a person who is a party to the proceeding is allowed to search, inspect or have copies of all pleadings and other documents or records of the case. A third party seeking the information or record may need to apply to the court and show cause to be allowed to do so.

ix Litigation funding
Disinterested third-party funding is not common. While some courts have found that third-party funding may be permissible, [59] other courts have often declined to uphold such agreements on the grounds of public policy or professional ethics. [60] It has been held in a recent Supreme Court judgment that there appear to be no restrictions on a third party funding the litigation and getting repaid after the outcome of the litigation as long as they are non-lawyers. [61]

IV LEGAL PRACTICE
i. Conflicts of interest and Chinese walls
The Bar Council of India Rules (the BCI Rules), notified by the Bar Council of India (BCI) under the Advocates Act 1961, impose standards on advocates to ensure that conflicts of interest are avoided. These include:

a. a prohibition on appearing for opposite parties in the same matter, and from taking instructions from anyone other than the client and the client’s authorised agent;

b. a prohibition on lending to a client, or converting funds in the advocate’s hands to a loan, or adjusting fees against personal liability owed by an advocate to the client;

c. a prohibition on bidding for, or acquiring an interest in property of actionable claim involved in litigation;

d. a prohibition on appearing in matters where the advocate has a pecuniary interest;

e. a prohibition on becoming a party to stir up or instigate litigation;

f. a prohibition on representing establishments of which the advocate is a member;

g. a prohibition to stand as a surety to the client or certify the soundness of a surety that his or her client requires for the purpose of any legal proceedings;

h. a prohibition on appearing in matters where he or she is a witness;

i. a prohibition to trade or agree to receive any share or interest in any actionable claim;

j. a prohibition to bid in court auction or acquire by way of sale, gift, exchange or any other mode of transfer, any property that is the subject matter of proceedings in which he or she is professionally engaged;

k. a prohibition on appearing in matters in which he or she has reason to believe that he or she will be a witness;

l. a prohibition on appearing before relatives who are judges;

m. the obligation to make a full and frank disclosure to client relating to his or her connection with the parties and any interest in or about the controversy likely to affect his or her client’s judgement in either engaging him or her, or continuing the engagement;

n. the obligation not to disclose information or instructions provided by the client; and

o. the obligation to fearlessly uphold the interests of his or her client by all fair and honourable means.

ii. Money laundering, proceeds of crime and funds related to terrorism
While there are no specific obligations on lawyers with respect to money laundering, India has a strong legislative framework, including the Prevention of Money Laundering Act 2002, the Income Tax Act 1961, the Foreign Exchange Management Act 1999, the Foreign Contribution Regulation Act 2010, the Companies Act 2013, RBI Directions, and SEBI guidelines on Anti-Money laundering (AML) Standards and Combating Financing of Terrorism (CFT), that serves to detect and prevent money laundering and the proliferation of the proceeds of crime. It is pertinent to note that the Finance Act 2019 has amended eight clauses of the Prevention of Money Laundering Act 2002.

iii Data protection
Data protection in India is primarily governed by the Information Technology Act 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules 2011 (the IT Rules). These rules define sensitive personal data and information (SPDI) [62] and prescribe the manner in which SPDI may be collected, processed, transferred, disclosed or stored. The IT Act provides for damages in the event that the SPDI is not protected and wrongful loss is caused as a result.

The introduction of the IT Rules has affected how lawyers may collect and use SPDI.

To the extent that SPDI is collected directly from the data subject, the consent of the data subject is required for the purpose of using the SPDI or transfer of SPDI.

In the context of due diligence and onward sharing of data with other law firms
and LPOs, the levels of compliance appear higher in as much as data sharing agreements usually incorporate the requirements of the IT Rules. Further, if dealing with information of European Union (EU) citizens, law firms are required to comply with the General Data Protection Regulation of the EU.

However, compliance with the procedures specified in the IT Rules by lawyers generally appear to be relatively lax when it comes to collection and use of data in the course or for the purposes of litigation, especially as damages may be claimed only if wrongful loss can be proved.

iv Other areas of interest
As discussed above, most provisions of the Companies Act 2013 have been notified. There are certain significant changes with respect to the liability of actors such as directors [63] and auditors [64] under the Companies Act 2013. For instance, directors of companies facing civil and criminal proceedings are now required to demonstrate that they had ‘acted diligently’ in connection with the subject matter of the dispute in order for them to be excused from personal liability. [65] Under the previous jurisprudence, it was acceptable in some circumstances for non-executive and independent directors to take the defence that they were not involved in the day-to-day operations or management of the company. [66] It is likely that this defence will no longer be available.

V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
i. Privilege
Subject to specified exceptions, [67] Section 126 of the Indian Evidence Act, 1872 (the Evidence Act) prohibits an attorney [68] from disclosing without his or her client’s express consent any communication made to him or her in the course of and for the purpose of his or her employment as an attorney. Recognising the role of interpreters, clerks and other support staff employed by attorneys, the privilege is extended by Section 127 of the Evidence Act to facts coming into their knowledge in the course of their employment. Section 129 protects a client from being compelled to disclose any confidential communication that has taken place with his or her ‘legal professional adviser’.

As discussed above, an advocate is also prohibited by the BCI Rules from disclosing client communications or advice given by him or her to the client.

A contemporary area of interest around this question is whether the protection of attorney–client communication extends to in-house counsel. The area is not free from doubt. While the Bombay High Court in its judgment in Municipal Corporation of Greater Bombay v. Vijay Metal Works [69] took the view that in-house counsel would be covered by privilege, this view was doubted by the same court in Larsen & Toubro Limited v. Prime Displays Private Limited [70] in light of the observations of the Supreme Court in Satish Kumar Sharma v. Bar Council of Himachal Pradesh [71] and Shiv Kumar Pankha and Ors v. Honourable High Court of Judicature at Allahabad and Ors. [72]

ii Production of documents
Under the CPC, the court can, at any time during the pendency of any suit, order the production (under oath) of such documents, relating to any matter in question in such suit. Further, the Evidence Act provides that a witness summoned to produce a document must, if it is in his or her possession, bring it to court regardless of any objection to its production or admissibility. [73] If a party asserts privilege over a document that it is asked to produce and this assertion is disputed by the opposite party or not accepted by court, it is likely that the court would review the claim for privilege and possibly the documents under seal and decide on whether the protection of privilege applies. [74]

VI ALTERNATIVES TO LITIGATION
i. Overview of alternatives to litigation
Since India has permitted foreign investments in various industries and sectors through its new liberal policies, there is a considerable increase in the number of commercial disputes. As a mechanism to deal with its heavy caseload, India has striven to encourage alternative dispute resolution (ADR) mechanisms. In several areas and even at the level of the High Courts and the Supreme Court, the law has allowed for parties to be directed towards ADR. [75]

ii Arbitration
Apart from the Arbitration Act, the Supreme Court of India in Salem Bar Association v. Union of India [76] recommended the adoption of arbitral rules that were formulated by the Jagannadha Rao Committee. The draft rules made by the Committee were circulated to all the High Courts and have been relied on and cited as recently as in 2018. [77] The rules provide for the procedure according to which the referral to ADR mechanisms under Section 89 of the CPC can take place, including the stage at which the referral can take place. Guidelines to be observed by the court before making such referral have also been set out.

The arbitration framework, however, has been outlined in the central Arbitration Act, which provides for various matters such as the interpretation of the arbitration agreement, interim measures that can be taken, appointment and termination of arbitrators, place and procedure for the arbitration and grounds for challenges and recently, the setup of an Arbitration Council in 2019. [78] India is also party to the three main international conventions that govern international arbitrations in different territories and that have been consolidated under the Arbitration Act:

a. the Geneva Protocol on Arbitration Clauses of 1923;
b. the Convention on the Execution of Foreign Awards 1923 (the Geneva Convention);
and
c. the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention).

The Arbitration Act is applicable both to domestic and foreign-seated arbitrations. Part I covers the scope of domestic arbitrations, whereas Part II covers foreign-seated arbitrations and the enforcement of foreign awards. Part I defines the scope of what constitutes arbitration, [79] the essentials of an arbitration agreement [80] and the procedure for determining the validity of such an agreement. [81] It is important to note in this regard that there are limited instances and time-bound procedures for challenging the validity of such an agreement and the arbitral tribunal has the power to determine its jurisdiction. Section 5 of the Arbitration Act specifically provides, with respect to Part I, that no judicial authority may intervene in arbitration except in a case where a stipulation to this effect has been made.

The initial years of the implementation of the Arbitration Act saw regressive interpretation that allowed frequent and wide-sweeping judicial intervention from Indian courts. The judgments of the Supreme Court and High Courts have, however, broken the trend and are serving to restore confidence in India as a potential arbitration destination. The Arbitration and Conciliation (Amendment) Act 2015 has also introduced various provisions that promote arbitration by reducing the timelines and costs involved.

Further, although statistically there are more ad hoc arbitrations conducted in India, the use of institutional arbitration is growing gradually. This has to do in part with the reputed arbitration institutions, such as the Singapore International Arbitration Centre, setting up establishments in India. India’s first international arbitration centre, the Mumbai Centre for International Arbitration, was set up in Mumbai in 2016. The High Courts at Delhi, Karnataka, Punjab and Haryana, and Madras, inter alia, have set up arbitration centres with the objective of providing recourse to credible yet affordable arbitration.

On 9 August 2019, the President of India gave his assent to the amendments to the Arbitration and Conciliation Act, 1996 (the Act). Some of the key highlights of the Arbitration and Conciliation (Amendment) Act, 2019 (the Amendment Act) are set out below:

Arbitral institution
Section 1(ca) has been introduced to define an arbitral institution as an arbitral institution designated by the Supreme Court or a High Court under the Act. The 2019 Amendment proposes to promote institutional arbitrations and defines arbitral institutions as those institutions recognised by the Supreme Court and the High Courts. [82] This means that under Section 8 of the Act, a dispute can be referred to an institution by the Court and the Court need not take the burden of appointing an arbitrator under Section 11 of the previous regime. Further, with the setup of the New Delhi International Arbitration Centre (NDIAC), arbitration in India is likely to see significant growth. [83]

Appointment of arbitrators under Section 11
The Amendment Act empowers the Supreme Court (in the case of international commercial arbitrations) and the High Court (in cases other than international commercial arbitrations) to designate arbitral institutions for the purpose of appointment of arbitrators. Such arbitral institutions shall be graded by the Arbitration Council of India (discussed below). Where a graded arbitral institution is not available, the Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of the arbitral institution.

In the absence of a procedure to appoint an arbitrator or failure of such procedure under the agreement, the appointment shall be made by the arbitral institution designated by the Supreme Court or the High Court, as the case may be. The application for appointment of an arbitrator or arbitrators shall be disposed of by the arbitral institution within a period of 30 days from the date of service of notice on the opposite party. The arbitral institution shall determine the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal subject to the rates specified in the Fourth Schedule.

Arbitration Council
Part 1A has introduced the concept of an Arbitration Council of India (the Council), which shall be established by a notification by the Central Government. The composition of the Council shall include the following seven persons:

a. Chairperson: either a judge of the Supreme Court, Chief Justice of a High Court or judge of a High Court or an eminent person, having special knowledge and experience in the conduct or administration of arbitration, who shall be appointed by the Central Government in consultation with the Chief Justice of India.

b. Members: (1) an eminent arbitration practitioner having substantial knowledge and experience in institutional arbitration (domestic and international); and (2) an eminent academician having research and teaching experience in the field of arbitration and alternative dispute resolution laws.

c. Ex officio members: (1) Secretary to the Government of India in the Department of Legal Affairs, Ministry of Law and Justice or his representative not below the rank of Joint Secretary; and (2) Secretary to the Government of India in the Department of Expenditure, Ministry of Finance or his representative not below the rank of Joint Secretary.

d. Ex officio member secretary: chief executive officer.

e. Part-time member: one representative of a recognised body of commerce and industry.

The Council shall, inter alia, promote and encourage arbitration, mediation, conciliation or other alternative dispute resolution mechanisms and, for that purpose, shall frame policy and guidelines for the establishment, operation and maintenance of uniform professional standards in respect of all matters relating to arbitration. The Council shall also frame policies governing the grading of arbitral institutions and arbitrators and recognise professional institutes providing accreditation of arbitrators.

Grading of arbitral institutions and arbitrators
The Council shall grade arbitral institutions on the basis of criteria relating to infrastructure, quality and calibre of arbitrators, performance and compliance with time limits for disposal of domestic or international commercial arbitrations, in such manner as may be specified by the regulations. The qualifications, experience and norms for accreditation of arbitrators shall
be such as specified in the Eighth Schedule.

Timelines under the Amendment Act
Completion of pleadings
Section 23 has been amended to state that the statement of claim and defence shall be completed within a period of six months from the date the arbitrator or all the arbitrators (as the case may be) received notice, in writing, of their appointment.

Arbitral award
In cases other than international commercial arbitration, the award shall be made by the arbitral tribunal within a period of 12 months from the date of completion of pleadings. In the case of international commercial arbitrations, the award may be made as expeditiously as possible and endeavours may be made to dispose of the matter within a period of 12 months from the date of completion of pleadings.

Amendment to Section 45
Section 45 of the Act, under Part II (power of courts to refer the matter to arbitration unless it finds that the arbitration agreement is null and void, inoperative and incapable of being performed) has been amended to substitute the words ‘unless it finds’, with the words ‘unless it prima facie finds’.

Qualifications and experience of arbitrators
A person shall not be qualified to be an arbitrator unless he or she is or has been:
a. an advocate within the meaning of the Advocates Act, 1961 having 10 years of practice experience as an advocate;
b. a chartered accountant within the meaning of the Chartered Accountants Act, 1949 having 10 years of experience;
c. a cost accountant within the meaning of the Cost and Works Accountants Act, 1959 having 10 years of experience;
d. a company secretary within the meaning of the Company Secretaries Act, 1980 having 10 years of experience;
e. an officer of the Indian Legal Service;
f. an officer with a law degree having 10 years of experience in the legal matters in the government, an autonomous body, a public sector undertaking or at a senior level managerial position in the private sector;
g. an officer with an engineering degree having 10 years of experience as an engineer in the government, an autonomous body, a public sector undertaking, at a senior level managerial position in the private sector or self-employed;
h. an officer having senior-level experience of administration in the Central Government or state government or having experience of senior level management of a public sector undertaking or a government company or a private company of repute; or
i. a person having educational qualification at degree level with 10 years of experience in a scientific or technical stream in the fields of telecoms, information technology, intellectual property rights or other specialised areas in the government, an autonomous body, a public sector undertaking or a senior level managerial position in a private sector, as the case may be.

The Schedule also prescribes general norms applicable to arbitrators, including:

a. the arbitrator must be impartial and neutral and avoid entering into any financial business or other relationship that is likely to affect impartiality or might reasonably create an appearance of partiality or bias among the parties;
b. the arbitrator shall be conversant with the Constitution of India, principles of natural justice, equity, common and customary laws, commercial laws, labour laws, law of torts, making and enforcing of arbitral awards, the domestic and international legal systems on arbitration and international best practices; and
c. the arbitrator should be capable of suggesting, recommending or writing a reasoned and enforceable arbitral award in any dispute that comes before him or her for adjudication.

Confidentiality of the arbitration proceedings
The arbitrator, the arbitral institution and the parties to the arbitration agreement shall maintain confidentiality of all arbitral proceedings except the award where its disclosure is necessary for the purpose of implementation and enforcement of award.

Application of the Arbitration and Conciliation (Amendment) Act, 2015
It has been clarified that unless the parties otherwise agree, the amendments made to the Act by the Arbitration and Conciliation (Amendment) Act, 2015 shall not apply to the arbitral proceedings that began before the commencement of the Arbitration and Conciliation (Amendment) Act, 2015 (i.e., 23 October 2015). As this provision overruled the position laid down by the Supreme Court in BCCI v. Kochi Cricket Pvt. Ltd, [84] the Supreme Court of India recently struck it down on the ground of ‘manifest arbitrariness’ and it was held to be violative of Article 14 of the Constitution. As a result, Section 26 of the 2015 Amendment stands revived, and the decision rendered in the matter of BCCI v. Kochi Cricket Pvt. Ltd will continue to apply as a guiding principle for determining applicability of the 2015 Amendment.

iii Mediation
The most important component of mediation is that it is the parties to the dispute who decide the terms of settlement. In conciliation on the other hand, the conciliator makes proposals, and formulates and reformulates the terms of settlement. Mediation was first given statutory recognition in the Industrial Disputes Act 1947, where officers appointed under Section 4 of the Act are ‘charged with the duty of mediating in and promoting the settlement of industrial disputes’. Mediation, as a form of dispute resolution has not obtained independent force in India but is mostly institutionally annexed to the courts through Section 89 of the Code of Civil Procedure Code 1809. To that extent, this might compromise the independence of mediations from court-related procedures and interference. Nevertheless, it gives mediations greater legitimacy and compatibility with the formal dispute resolution processes in society.

Another point to be noted is the growing importance of mediation clauses in commercial agreements. Both mediation and consultation form a mandatory aspect of pre-arbitration procedure. It has also been held by courts that mediation and consultation are a substantial part of the agreement and are to be followed prior to any arbitration being initiated. [85] In the event that the dispute is referred first to arbitration, the tribunal has the power to render the petition inadmissible on the grounds of the pre-arbitration procedure prescribed by the agreement being violated by the parties.

Akin to the Arbitration Rules 2006, the judges of the Salem bench also recommended the adoption of the Civil Procedure Mediation Rules 2006. These rules govern almost the whole of the mediation process starting from the procedure for appointment of the mediator by both the parties from a panel of mediators who have already been formed for this purpose by the district courts. The qualifications and disqualifications for the panel, the venue of the mediation, the removal of a mediator from the panel, their impartiality and independence, the procedures during the mediation itself, confidentiality, privacy, the settlement agreement and many other aspects are governed by these rules.

It is pertinent to note also the popularity of court-annexed mediation whereby
mediation centres have been set up by various High Courts including in Delhi, Madras and Bangalore.

In July 2019, India signed the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention), by which India has formally recognised ‘enforceable settlement agreements’ arising out of mediation in international commercial disputes. [86]

The recent amendment to the Commercial Courts Act encourages the parties to undergo mediation.

iv Other forms of ADR
Conciliation has been inserted in Part III of the Arbitration Act and is less formal than arbitration, but more formal than mediation. To the extent that it requires only mutually consenting parties and not a formal written document executed to be able to conciliate, [87] it proves an easier form of dispute resolution. The parties can appoint up to three conciliators. [88]

An important requirement of conciliation proceedings is the independence and impartiality of the conciliator and the attempt to ensure the appointment of a conciliator not having the nationality of either of the parties. [89] The conciliators form a medium of communication between the parties inviting them for proceedings and helping them exchange documents and evidence. When the conciliators are of the opinion that elements of a settlement exist,
they can draw up the terms of conciliation and, after being signed by the two parties, it shall be final and binding on both to the same extent as an arbitral award. [90]

An interesting mechanism that is an example of this is found in the Micro, Small and Medium Enterprises Act (the MSME Act), which stipulates that in the event a company falling within the category of micro, small or medium enterprises has not received payment or is a victim of default of contract, the aggrieved company may, by making a reference to the MSME Council established under the MSME Rules, go for mandatory conciliation proceedings, which if they fail, would then go for arbitration. In fact, during this process, the civil courts do not entertain such matters and refer them to the Council for adjudication. An appeal of the award of the Arbitral Tribunal requires a deposit of 75 per cent of the amount value in the civil court of appropriate jurisdiction. [91]

VII OUTLOOK AND CONCLUSIONS
In India, the judge-to-population ratio is not adequate to meet the huge  volume of litigation, effectively adding to the delay in redressal. This phenomenon is often referred to as the ‘docket explosion’. Considering the extensive legal framework and significant backlog of litigation, Indian arbitration has made strong attempts to bring about a dynamic change.

However, the ordinances, especially if enacted by Parliament, are expected to reduce many difficulties with regard to timing, cost, finality of awards and interim reliefs faced by both foreign and Indian parties wishing to arbitrate in India.

i. Arbitration in India:

In a practical scenario, a foreign investor will have the ability to approach a court for protective relief with respect to Indian shares and Indian assets and for other support, such as the recording of evidence in India. On the other hand, the ability to apply to an Indian court for annulment of an award may not be beneficial in all cases. Indian courts in exercise of jurisdiction under Section 34 of the Arbitration Act have previously taken an expansive interpretation of the grounds for challenge of an award. While the Arbitration Amendment. Act has attempted to narrow the scope of interpretation around the term ‘public policy’, this remains untested in Indian courts. Therefore, it is possible that an Indian arbitral award may be re-litigated in an Indian court.

Confidentiality, a cornerstone of arbitration proceedings, has been formally recognised by the 2019 Amendment by which the arbitrator, the arbitral institution and the parties to the arbitration agreement must maintain confidentiality of all arbitral proceedings except the award where its disclosure is necessary for the purpose of implementation and enforcement
of award. [92]

ii Arbitration outside India
Unlike the previous regime, where parties to arbitrations seated outside India did not have recourse to Indian courts under Part I of the Arbitration Act, the Arbitration Amendment Act extends certain provisions of Part I (discussed above) to foreign-seated arbitrations, subject to an agreement to the contrary. This amendment may therefore enable a foreign investor who thinks an Indian party may dissipate its assets or transfer or devalue Indian shares, to approach an Indian court for interim relief. Therefore, even if the Indian party does not have a presence or assets at the foreign location where the arbitration is seated, given the extension of certain provisions of Part I of the Arbitration Act by the Arbitration Amendment Act, foreign investors may be able to obtain protective orders in India. This reduces the risks attached to waiting until an award is finally pronounced by the tribunal.

In this regard, an award of a foreign tribunal, if required to be enforced in India, would need to be presented for enforcement under Section 47 of the Arbitration Act. An Indian court can review the foreign award to the limited extent provided under Section 48 of the Arbitration Act to examine whether it may be enforced. As stated above, since the definition of ‘court’ under the Arbitration Act has been amended to mean the jurisdictional High Court for international commercial arbitrations, the proceedings for enforcement of foreign arbitral awards will now lie before the High Court. Additionally, if the subject matter of the dispute resulting in the foreign award is in excess of the ‘specified value’ as defined under the Commercial Courts Act, all such matters will be heard and disposed of by the commercial appellate division of that High Court. The impact of judicial precedents on the arbitration regime in India remains, however, to be seen. It may be too soon to ascertain the prospects
for a young country such as India.

Authors:
Zia Mody, Managing Partner
Aditya Vikram Bhat, Senior Partner

Footnotes:
1. Zia Mody is the founder and managing partner and Aditya Vikram Bhat is a senior partner at AZB & Partners. The authors would like to acknowledge Priyanka Shetty, who is a senior associate and Bhakti Parekh, who is an associate at AZB & Partners for their assistance.
2. Glanville Williams, Learning the Law (Sweet & Maxwell, 1982) p. 19; Law Commission of India, 54th Report, p. 8.
3. Bharat Barrel and Drum Manufacturing Company Private Limited v. Employees State Insurance Corporation AIR 1972 SC 1935.
4. Section 2(c) of the Commercial Courts Act.
5. Sections 3, 4 and 2(i) of the Commercial Courts Act.
6. See e.g., Groz Beckert Sabool Ltd v. Jupiter General Insurance Co Ltd and Ors AIR 1965 P&H 477 and Sri Ramdas Motor Transport Limited v. Karedla Suryanarayana 110 ComCas 193 (Andhra Pradesh).
7. Article 141 of the Constitution of India.
8. Baradakanta Misra v. Bhimsen Dixit (1973) 1 SCC 446.
9. Pradip J Mehta v. CIT (2008) 14 SCC 283.
10. (2010) 8 SCC 24.
11. Perry Kansagra v. Smriti Madan Kansagra, I (2019) DMC 568 SC.
12. Sections 7 and 9 of the IBC.
13. Inserted by the Insolvency and Bankruptcy (Amendment) Act 2019 as Section 3 of the IBC.
14. Sections 7 and 9 of the IBC.
15. Inserted by the Insolvency and Bankruptcy (Second Amendment) Act 2018 as Section 238A of the IBC.
16. Inserted by the Insolvency and Bankruptcy (Amendment) Act 2019 as Section 4 of the IBC.
17. Section 60(5) of the IBC.
18. Section 53 of the IBC.
19. Inserted by the Insolvency and Bankruptcy (Amendment) Act 2019 as Section 6 of the IBC.
20. Inserted by the Insolvency and Bankruptcy (Amendment) Act 2019 as Section 6 of the IBC.
21. Inserted by the Insolvency and Bankruptcy (Amendment) Act 2019 as Explanation to Section 6 of the IBC.
22. Inserted by the Insolvency and Bankruptcy (Amendment) Act 2019 as Explanation to Section 6 of the IBC.
23. Inserted by the Insolvency and Bankruptcy (Amendment) Act 2019 as Section 7 of the IBC.
24. AIR 2019 SC 739.
25. Civil Appeal No. 8766-67 of 2019.
26. CA (AT) (Ins) No. 707/2019.
27. CA (AT) (Ins) No. 707/2019.
28. Civil Appeal No. 21824 OF 2017.
29. Civil Appeal No. 7023 of 2019.
30. 2019 SCC Online Del 6531.
31. Fali S Nariman, ‘India and International Arbitration’, 41 Geo Wash Intl L Rev 367.
32. Schedule I to the Limitation Act 1963.
33. For instance, the Consumer Protection Act 1986 sets out a period of limitation of two years from the date when the cause of action arose for filing a complaint. Or, for instance, under the Arbitration Act an application for setting aside a final award can be made within three months from the date of the award. A court at its discretion taking on record reasons for delay can grant an extension of 30 days.
34. Power Control Appliances v. Sumeet Machines Limited (1994) 2 SCC 448.
35. AP Steel RE Rolling Mill v. State of Kerala (2007) 2 SCC 725.
36. Order V, second proviso to Rule 1 of the CPC; Order VIII, proviso to Rule 1 of the CPC; Order VIII, second proviso to Rule 10 of the CPC.
37. M/s SCG Contracts India Pvt. Ltd. v. K.S. Chamankar Infrastructure Pvt. Ltd. & Ors, AIR 2019 SC 2691.
38. Order VI, Rule 17 of the CPC.
39. Order VII, Rule 14 of the CPC; Order XII Rule 2 of the CPC.
40. Section 29A of the 2019 Amendment Act.
41. Section 15 of the 2019 Amendment Act.
42. Section 5 of the 2019 Amendment Act.
43. Section 12 of the IBC.
44. Order I, Rule 8 of the CPC.
45. Section 241 read with Section 244 and Section 245 of the Companies Act 2013. Sections 397, 398 and 399 of the Companies Act 1956.
46. People’s Union for Democratic Rights v. Union of India 1983 SCR (1) 456.
47. Article 22 of the Constitution of India.
48. Section 13 of the Family Courts Act 1984.
49. Ashish Davassar v. Union of India & Ors, Civil Writ Petition no. 7216/2019.
50. Section 36 of the Industrial Disputes Act 1947.
51. Section 32 of the Advocates Act 1961.
52. Order V, Rule 25 of the CPC.
53. Section 105 of the CrPC.
54. Section 44A of the CPC.
55. Section 13 of the CPC states: A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except (a) where it has not been pronounced by a Court of competent jurisdiction; (b) where it has not been given on the merits of the case; (c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable; (d) where the proceedings in which the judgment was obtained are opposed to natural justice; (e) where it has been obtained by fraud; (f) where it sustains a claim founded on a breach of any law in force in India.
56. Section 14 of the CPC states: The Court shall presume upon the production of any document purporting to be a certified copy of a foreign judgment that such judgment was pronounced by a Court of competent jurisdiction, unless the contrary appears on the record; but such presumption may be displaced by proving want of jurisdiction.
57. Section 2(5) of the CPC defines a ‘foreign court’ as a court situated outside India and not established or continued by the authority of the central government.
58. Section 29 of the CPC.
59. Intertoll Ics Cecons O & M Co Private Limited v. National Highways Authority of India 129 (2006) DLT 146.
60. Re KL Gauba AIR 1954 Bom 478; In Re: Mr ‘G’, A Senior Advocate of The Supreme Court AIR 1954 SC 557.
61. Bar Council of India v. AK Balaji, AIR 2018 SC 1382.
62. The ‘sensitive personal data or information’ is defined in the IT Rules as personal information that consists of (1) the password; (2) financial information such as bank account, debit or credit card; (3) physical, psychological and mental health condition; (4) sexual orientation; (5) medical records and history; (6) biometric information; (7) any detail relating to the above as provided to the body corporate for providing a service; or (8) any of the information received under each of the heads by the body corporate for processing, or to be stored or processed under a lawful contract.
63. See, for instance, Section 2(60), which includes directors within the definition of ‘officers in default’. Section 166 also lays down duties of directors, which if contravened would result in penal consequences in the form of fines. Section 42(10) stipulates that contravention of the procedure of private placement would impose liability on the directors of the company for a penalty up to 20 million rupees or the amount involved in the offer, whichever is higher. In general, the penal provisions are Sections 447 to 457 of the Companies Act 2013.
64. See, for instance, Section 140, which empowers NCLT to suo moto or on an application, if it is satisfied that an auditor has acted in a fraudulent manner, direct a company to change its auditor. Such auditor will also be liable to penal action under Section 447. Section 147 also penalises auditors for contravention of duties of auditors and auditing standards as set out under the Companies Act 2013. Separately, Section 247 of the Companies Act 2013 imposes penalties on a valuer who has not exercised adequate due diligence.
65. Section 166(3) imposes a specific duty on a director to exercise his or her duties, inter alia, with due and reasonable care. Separately, however, Section 463(1) empowers the court to grant relief if the director has acted honestly and reasonably.
66. Section 149 read with Schedule IV provides for a code of conduct to be followed by independent directors. Specifically, Section 149(12) imposes a liability of independent directors in respect of actions or omissions that had occurred through his or her knowledge or where he or she had not acted diligently.
67. There are two statutory exceptions to the rule of client–attorney privilege. First, any communication made in furtherance of any illegal purpose is not protected and second, facts observed by the attorney in the course of his or her employment, showing that any crime or fraud has been committed since the commencement of his or her employment, are not protected.
68. The Evidence Act predates the Advocates Act 1961. The expressions ‘barrister’, ‘attorney’, ‘pleader’ or ‘vakil’ refer to various categories of legal practitioners recognised when the Evidence Act was enacted. The Advocates Act 1961 now recognises a single category of legal practitioner qualified to practise law, and defines them as ‘advocates’.
69. AIR 1982 Bom 6.
70. (2003) 114 CompCas 141 (Bom).
71. (2001) 2 SCC 365.
72. (2001) 2 SCC 365.
73. Section 162 of the Indian Evidence Act 1872.
74. See, for instance, the judgment of the Bombay High Court in Larsen & Toubro Limited v. Prime Displays Private Limited (2003) 114 CompCas 141 (Bom).
75. Afcons Infrastructure Limited v. Cherian Varkey Construction (2010) 8 SCC 24, most recently relied on in Perry Kansagra v. Madan Kansagra, 2019 SCC OnLine SC 211.
76. AIR 2005 SC 3353.
77. V. Rama Naidu and Anr v. Smt. V. Ramadevi, 2018 SCC Online Hyd 210.
78. Part 1A, the Arbitration and Conciliation (Amendment) Act, 2019.
79. Section 2(1)(f ) of the Arbitration Act.
80. Section 7 of the Arbitration Act.
81. Section 16 of the Arbitration Act.
82. Section 1(ca) of the Arbitration Act.
83. The New Delhi International Arbitration Centre Bill, 2019.
84. (2018) 6 SCC 287.
85. Thermax Limited v. Arasmeta 2008 (1) ALT 788.
86. United Nations Convention on International Settlement Agreements Resulting from Mediation.
87. Section 62 of the Arbitration Act.
88. Section 63 of the Arbitration Act.
89. Section 64(2) of the Arbitration Act.
90. Sections 73 and 74 of the Arbitration Act.
91. Section 18, Section 19 and Section 21 of the MSMED Act, Rules 3 and 4 of MSME Rules, Karnataka.
92. Section 42A of Arbitration Act.

Published In:The Law Reviews
Date: March 17, 2020