Editorial

Dear Friends,
At the outset, let me wish everyone a very joyous and prosperous Dusshera!! We hope and pray that all of you are
showered with positivity, wealth and success.

In the backdrop of this auspicious occasion, it is with extreme pleasure that we bring to you the special edition of our
monthly newsletter “Indian Legal Impetus”.

In this special edition, we have covered the latest developments in the ever-evolving field of law offering insights into
the most important and recent changes and interpretations in the legal landscape encompassing essential subjects like
Intellectual Property Rights, Corporate Law, Arbitration, Litigation, etc. We sincerely hope that you will find this issue
both informative and captivating aligned with contemporary legal perspectives.

Manoj K. Singh The first article examines the changing dynamics of personality rights in India exemplified by the judgment in Anil Kapoor
vs. Simply Life India & Ors. underlining the significance of safeguarding an individual’s image and likeness within the
evolving legal framework.

The second article provides an overview of the ever-evolving landscape of finance and investment, Special Purpose Acquisition Companies or SPACs which
have emerged as a revolutionary and futuristic vehicle for pooled investments.

The third article analyses the far-reaching consequences of the Google LLC v. DRS Logistics (P) Ltd. case and how it has reshaped the landscape for Google in
India, redefining its legal responsibilities and protections.

The fourth article provides an insight on the critical significance of trademark renewal and maintenance in safeguarding brand’s long-term value and the
repercussions of neglecting the same.

The fifth article delves into the complexities of establishing a wholly owned subsidiary and how nominee shareholders serve as a pragmatic solution to ensure
a smooth path to full ownership all while maintaining compliance.

The sixth article elaborately discusses the ongoing GST conundrum surrounding secondment of employees considering the implications of the Supreme Court
Judgment in the case of Nothern Operations Systems.

The seventh article examines the implications of OIDAR services in India, even for overseas companies with no physical establishment in the country and to
develop a strategic action plan to mitigate the risk of GST exposure in India.

The eighth article analyses the complexities in enforcing foreign seated interim reliefs and emergency awards in India. The article sheds light on existing gaps
in the present dispute resolution mechanism while examining the Indian Courts endeavors to address these issues and proposing path forward.

The ninth article highlights the persistent concerns of swift resolution of disputes in light of amendments to the Arbitration & Conciliation Act, 1996 exempting
international commercial arbitrations from the stringent time limits imposed by Section 29A of the Act.

The tenth article examines the Indian jurisprudence on the scope of power of a Referral Court under Section 11(6) of the Arbitration and Conciliation Act,
1996 while referring disputes to arbitration. The article emphasizes the need to redefine the scope of judicial scrutiny at reference stage and for the legal
position to be settled by a larger bench.

The eleventh article analyses the tenets of institutional arbitration in India focusing on the recent developments and measures taken by the Indian
Government to make India an arbitration hub.

The twelfth article delves into the intricate world of money laundering, analyzing the mechanism provided by the Statute and approach of administrative
authorities, while highlighting the paradox of India’s effective legal framework clashing with inadequate implementation, burdening the judiciary.

The thirteenth article analyses the concept of counter-balancing in the appointment of Arbitrators by the Courts in India in cases with asymmetric power of
appointment in the arbitration agreements.

The fourteenth article delves into the realm of traditional knowledge and its scope for patent protection. The article highlights the significance of Traditional
Knowledge digital library as an effective tool to safeguard against unauthorized claims in a digital era.

The fifteenth article dissects the Mediation Act 2023, providing an in-depth analysis of its key provisions. The article explores the potential of this legislation
to revolutionize the Indian Dispute Resolution landscape for more efficient and harmonious dispute resolution.

The sixteenth article provides a comprehensive overview of Cross Border Insolvency in India, shedding light on the complexities and challenges it presents.

The seventeenth article examines the concept of witness conferencing in expert testimony as a mean to improve the arbitration process. The article assesses
the issues linked to witness conferencing offering suggestions and a way forward approach to overcome these challenges.

The eighteenth article provides a guide for foreign investors with a roadmap to navigate India’s diverse investment avenues along with essential insights into
compliance requirements.

The nineteenth article examines the evolution of the law related to payment of stamp duty on arbitration agreements/instruments. The article analyses the
judicial approach, as the courts strive to balance the need for expeditious arbitration with the necessity of fulfilling stamp duty obligations.
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
1. The Evolving Landscape of Personality Rights in India 05
2. Blank Cheque Companies: Futuristic Pooled Investment Vehicle 06
3. Safe Harbor Provisions in India: The Case of Google Trademark Renewal and Maintenance:
Protecting Your Brand Long-Term 10
4. Trademark Renewal and Maintenance: Protecting Your Brand Long-Term 12
5. Unlocking the Potential of Nominee Shareholders: A Gateway to Wholly-Owned Subsidiaries 16
6. GST on Secondment of Employees – The Tussle Continues 19
7. OIDAR Services in India– Scope for Foreign Companies W.E.F., October 2023 22
8. Analysing the Complexities in the Enforcement of Foreign-Seated Interim Reliefs and
Emergency Awards through Interim Protections in India 24
9. International Commercial Arbitration in India and “Missing Timelines” 29
10. Contours of the Scope of Referral Courts Under Section 11(6) of the Arbitration and
Conciliation Act, 1996 - An Analysis 32
11. Institutional Arbitration in India: Promotion of India as a Hub of Arbitration 37
12. Money Laundering – Idea and Execution? Effective Legal Infrastructure in Place, Inadequate
Implementation 41
13. The Logic of ‘Counter-Balancing’ in Arbitration Agreements Providing for Asymmetric Power of
Appointment of Arbitrators 47
14. Traditional Knowledge and Scope of Patent Protection 51
15. Mediation Act, 2023: Revolutionizing the Landscape of Indian Dispute Resolution 54
16. Cross Border Insolvency in India -A Comprehensive Overview 60
17. Enhancing The Arbitration Process: Witness Conferencing in Expert Testimony 65
18. Navigating India's Investment Landscape: A Guide for Foreign Investors 72
19. The Law on Stamp Duty on Arbitration Agreements – A Look From SMS Tea Estates Private
Limited to N. N. Global Mercantile Private Limited 77
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
THE EVOLVING LANDSCAPE OF PERSONALITY RIGHTS IN INDIA
The Delhi High Court vide an Order dated
September 20, 2023 granted a restraining order
against the unauthorized use of well-known Indian
actor Anil Kapoor’s personality rights1. The Order
restrains any unauthorized third party from
misusing Anil Kapoor’s name, image, likeness,
persona, voice, and several other aspects of his
personality.
The Court noted that “There can be no doubt that
free speech in respect of a well-known person is
protected in the form of right to information, news,
satire, parody that is authentic, and also genuine
criticism. However, when the same crosses a line,
and results in tarnishment, blackening or
jeopardises the individual’s personality, or
attributes associated with the said individual, it
would be illegal”.
Personality Rights – An Introduction
Personality rights simply refers to a person’s right
to protect or control the usage of his or her name,
image or likeness. Celebrities in India are becoming
increasingly cautious about protecting these rights
since their names, images, voices or any other
individual attributes may be used without consent
for commercial gains and to leverage sales.
- Akanksha Mathur
Legal Framework to protect Personality Rights
and Judicial Precedents
There is no specific codified law in India dealing
with personality rights. The evolution of
personality rights in India is largely governed by
judicial pronouncements made by the Hon’ble
Courts.
The personality rights can be understood as being
implicit in and derived from the fundamental right
of “Right to Life” guaranteed under Article 21 of
the Constitution of India. However, Courts have
also relied on provisions under the intellectual
property laws to protect personality rights. For
example, under the Copyright Act 1957, the
authors or the performers are provided with the
moral rights to be credited with or to claim
authorship of their work. Such rights also include
the right to restrain others from damaging their
work in a manner that negatively impacts their
reputation. Courts have also protected personality
rights under the provisions of trademark law.
However, while bringing the infringement of
personality rights under the ambit of personality
rights, it is necessary to prove likelihood of
confusion. Apart from the above, personality rights
can also be protected under the law of torts
protecting against the tort of defamation.
1
Anil Kapoor vs. Simply Life India & Ors. [CS(COMM)
652/2023]
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
In Titan Industries Ltd. vs. Ramkumar Jewellers2,
the Delhi High Court laid down that “The right to
control commercial use of human identity is the
right to publicity”. In this case, the Court
recognised the personality rights of renowned
actor Amitabh Bachchan and his wife Ms. Jaya
Bachchan.
The Court, in Titan Industries Ltd. Vs. M/S
Ramkumar Jewellers, identified the following
basic elements to identify liability for infringement
of a person’s publicity rights:
“Validity: The plaintiff owns an
enforceable right in the identity or
persona of a human being.
Identifiability: The Celebrity must be
identifiable from defendant‟s
unauthorized use.”
The Court further held that infringement of
publicity rights does not require proof of falsity,
confusion, or deception, especially when the
celebrity is identifiable. The right of publicity
extends beyond the traditional limits of false
advertising laws.
In Gautam Gambhir v. D.A.P & Co. & Anr.3, while
deciding upon the unauthorized use of the name
of the cricketer ‘Gautam Gambhir’ by the
defendant in its restaurant, the Court decided
against the plaintiff since he failed to prove actual
consumer confusion or any harm to his reputation.
Further, the Court also noted that there was no
commercial misappropriation of the plaintiff’s
name by the defendant.
2
CS(OS) No.2662/2011
3
CS(COMM) 395/2017
In Shivaji Rao Gaikwad v. Varsha Productions1,
the Madras High Court considered the laws of
passing off, defamation and privacy to conclude
that the defendant is not entitled to use the said
name without the permission of the actor
Rajinikanth as the same was causing an incorrect
association with the plaintiff among the
consumers.
In the case of Krishna Kishore Singh vs. Sarla A
Saraogi & Ors.1, the Delhi High Court refused to
grant an injunction against the streaming of the
film, “Nyay: The Justice” which is based on the life
of the late actor Sushant Singh Rajput. The Court
held that the personality and publicity rights are
not available to a person posthumously and are not
inheritable.
Conclusion
As technology evolves, there are likely to be more
instances of unauthorized use of a celebrity’s
personality using means such as artificial
intelligence and therefore, the decision in Anil
Kapoor’s case is a positive step in the safeguarding
of personality rights in India. The decision should
serve as a warning that while the state provides for
freedom of speech and expression, the same
should not be overstepped to exploit a person’s
reputation for illegal commercial advantage.
********
4
Application No.735 of 2014 and Civil Suit No. 598 of 2014
5
CS(COMM) 187/2021
06
INDIAN LEGAL IMPETUS
Volume XVI, Issue X

BLANK CHEQUE COMPANIES: FUTURISTIC POOLED INVESTMENT

VEHICLE
- Shantanu Dubey

A Special Purpose Acquisition Vehicle (SPAC) also These regulatory gaps disabling SPACs to function
known as blank cheque company is a shell in Indian market can be summarized as follows:
company listed on stock exchange having no
• Firstly, SEBI regulations do not provide for
business operation. SPACs are catching the eyes of
listing of SPACs on domestic stock exchanges.
investors and regulators around the globe due to
However, SEBI has constituted primary market
their unique style of pooling investment through
advisory committee which is in the process of
Initial Public Offering (IPO). The management of
finalizing the report on SPACs.
SPACs look out for suitable business combination
• Secondly, SPAC transaction consists of merging
with private company which shows potential to
SPACs with the target entity after a period of
generate return on investment. This provides a
time. Since, SEBI does not provide for
win-win situation for SPACs and the private
framework for SPACs listing in Indian market,
companies as the former gets a definitive business
SPACs transacting with Indian entity would
operation and latter gets to list its share directly on
essentially be a cross border merger between
stock exchanges without getting into hassle of
offshore SPACs and Indian entity. Such
complying with Securities and Exchange Board of
transaction will be subject to foreign exchange
India (SEBI) regulations.
control and necessitate approval of RBI in case
Indian Regulators vis à vis SPACs consideration of merger exceed certain
amount.
In India, though concept of SPACs has caught
attention from stakeholders, however a lack of • Thirdly, SPACs provide for redemption right to
shareholders who vote against proposed
proper regulatory framework has made it difficult
business combination or change in control of
for SPACs to come onto center stage. In general,
the SPACs. Under the Companies Act 2013,
functioning of SPACs are divided into two stages (i)
does not provide for redemption of equity
listing of shares on stock exchange which will
shares, rather only option available for
require SEBI to formulate enabling provisions for
redemption is through buyback of securities.
SPACs to get listed on stock exchange without
having business operation; (ii) merger with private In 2022, Company Law Committee report
unlisted company which will necessitate role of recommended introducing an enabling provision
Ministry of Corporate Affairs (MCA) to bring to recognize SPACs under the Companies Act 2013
amendments to the Companies Act, 2013. and allow entrepreneurs to list a SPACs
incorporated in India on domestic and global
exchanges.

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Further, the committee also recommended that
the Companies Act 2013 should provide for exit
options to equity shareholders disagreeing with
the choice of target company for merger.
Right of Investors in SPACs
• Right to Redemption: SPACs investors usually
have the right to redeem their shares at the
time of the merger or acquisition. This means
that if they do not want to participate in the
acquisition, they can request to have their
initial investment returned to them.
• Right to Vote: Investors in SPACs have right to
vote on proposed acquisition and merger.
• Right to Participate in Liquidation: In event,
SPAC is not able to find business combination
within specified timeframe, then SPACs are
bound to return the proceeds to investors.
• Right to Information: Investors have the right
to receive information about the proposed
acquisition, including details about the target
company, the terms of the deal, and any
potential conflicts of interest involving the
SPAC's management team
India’s First Comprehensive Framework on SPACs
Issued by International Financial Services Centres
Authority
India’s first International Financial Services Centre
(IFSC) at GIFT City in Gujarat has been in limelight
due to its ability to provide flexible investment
options with global standards. Being a unified
regulator, IFSC has been endowed with powers of
domestic regulators namely Reserve Bank of India,
SEBI, the Insurance Regulatory and Development
Authority, and the Pension Fund Regulatory and
Development Authority.
In lieu of these powers, IFSC is able to come up with
framework for flexible pooled investment vehicle
such as SPACs.
International Financial Services Centre Authority
(Issuance and Listing of Securities) Regulations
2022 (IFSC Listing Regulation) provides for
comprehensive framework for the issuance and
listing of SPACs on recognized stock exchanges
established in IFSCs1. SPACs should not identify
business combination prior to IPO, and should
include provisions for redemption in investor
agreement. Further, SPAC Listing Regulation puts
responsibility on sponsors who are in management
of SPACs. Provided that, Sponsor shall mean a
person sponsoring the formation of the SPAC and
shall include persons holding any specified
securities of the SPAC prior to the IPO.
Other conditions provided for SPAC listing are
mentioned below:
1. The minimum size required is USD 50 million,
with a minimum of 50 subscribers, and the
minimum subscription amount must be at least
75% of the total issue size.
2. Sponsors should hold at least 15%
shareholding in SPACs. Provided that,
sponsor’s maximum shareholding post issue
should not exceed 20%. Further prior to or
during IPO, aggregate subscription should be
atleast 2.5% of the issue size or USD 10 million,
whichever is lower.
3. Business combination between SPACs and
target company should be completed within 36
months from the date of listing
4. IFSC Listing Regulation also provides for details,
disclosures, continual disclosure requirements
and SEBI specific obligations etc. in the IPO
process
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

Conclusion

SPACs are futuristic investment vehicle for which

rules/regulations are being framed around the
globe. Though IFSC Listing Regulation provides for
comprehensive framework, entities including
SPACs that are operating in IFSC are considered to
be offshore entity. That is to say, SPACs operating
in IFSC merging with domestic entity would be
considered as cross border merger. For that, fast
track merger approval should be mandated for
business combination between SPACs listed on
IFSC recognized stock exchange and domestic
unlisted company. Secondly, lack of regulation
pertaining to listing of SPACs on domestic market is
delaying benefits that SPACs are capable of
providing to investors. For this, securities market
regulator SEBI should provide for enabling
provision for SPACs to get directly listed on
domestic stock exchanges.

*******

09
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
SAFE HARBOR PROVISIONS IN INDIA: THE CASE OF GOOGLE
In this digital era, the Internet and social media
have become an inevitable part of life. From
shopping to business dealings - everything is now
done online. The ‘Intermediaries’ therefore play a
key role in e-commerce by creating a bridge
between two extremes.
I. What is an ‘Intermediary’?
Section 2(w) of the Information Technology Act,
2000 (hereinafter ‘the IT Act’) defines an
“intermediary” with respect to any particular
electronic record as-
“any person who, on behalf of another person,
receives, stores, or transmits that record or
provides any service with respect to that record,
which includes telecom service providers, network
service providers, internet service providers, web-
hosting service providers, search engines, online
payment sites, online-auction sites, online-
marketplaces, and cyber cafes.”
It is therefore important to ask this question – Are
the Intermediaries liable for third-party’s actions of
posting infringing content on their platform and to
what extent?
II. What is the ‘Safe Harbor’ Clause?
The "safe harbour" clause is listed in the IT Act
which provides for legal immunity to platforms
against content shared by their users.
- Samridh Ahuja
Section 79 of the IT Act
Under Section 79 of the IT Act, the Intermediaries
are shielded from liability for data, material, and
information shared by users on their platform but
over which the intermediary had no direct
knowledge. The intermediary can use the safe
harbor immunity clause provided the intermediary
observed ‘due diligence’.
III. The Case of GOOGLE
In a recent case before the Hon’ble Delhi High
Court, the following issues arose: (a) whether
displaying a trademark as tags or keywords in the
Google ‘Ads Progragramme’ amounts to use of a
trademark? and (b) whether the safe harbor clause
would still be available to Google in such a
scenario?
The Hon’ble Court made the following
Observations1:
• Section 29(6) of the Trade Marks Act, 1999
provides that for the purposes of establishing
infringement, the following constitutes ‘use’
when an unauthorized person:
- affixes it to goods or the packaging of
their product.
- offers goods for sale, puts them on the
market, stocks them or provides any
service under the name of another’s
trademark.
1
Google LLC v. DRS Logistics (P) Ltd., FAO(OS)(COMM) 2 of
2022.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

- imports or exports goods under the mark.
- uses another’s trademark on business
papers or in advertising.
• In the present case, Google’s Ads Programme
was a commercial way of monetizing the use
of their search engine, as these links were
displayed by them at the top of the search
engine specifically as ‘sponsored’. Here, since
the keywords were being used to display the
goods or services offered by a third party, it
amounted to ‘use’ as per Section 29(6) of the
Trade marks Act, 1999 and therefore
constitutes infringement.
• The use of trademark as a keyword, which
does not cause confusion as to its origin or
which does not cause any dilution to the
reputation of the said trademark, would not
amount to infringement.
• It was only after the year 2004, that Google
changed its policy to start usage of trademarks
as keywords in its Ads Programme. It is clear
that the same was done with an intention to
increase its revenue.
• KEY TAKEAWAY: (a) The use of trademarks as
keywords for its ‘Ads Programme’ by Google
amounts to ‘use’ in accordance with Section
29(6) of the Trade Marks Act, 1999 and that
(b) the safe harbour immunity as provided
under Section 79 of the IT Act would not be
available to Google if such keywords infringe
on the subject trademark(s).
IV. Impact of this Case on GOOGLE
The present case is likely to have a two-fold
impact:
- Google would be held liable if its users
include another proprietor’s trademark to
enhance their search ranking which
causes consumer confusion and
infringement.
- Google’s advertising revenue is likely to
be affected.
*******

• Here, the key elements to consider are – ‘USE’

and ‘CONFUSION’. While the ‘use’ of the
trademark by Google was clearly established,
the Respondents could not prove any
confusion among public.

11
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
TRADEMARK RENEWAL AND MAINTENANCE: PROTECTING YOUR
BRAND LONG-TERM
Introduction
In the fast-paced global market place, trademark
serve as the bedrock as it enables organisations to
safeguard their brand reputation. It’s not just a
name or a logo; it’s a symbol of trust and
reputation. Registering a trademark is just an initial
step however protecting your trademark from
getting lapsed is paramount concern. In view of the
same one must understand the importance of the
trademark renewal and maintenance on both the
national as well as on the international scale.
This article will explore why renewing and
maintaining your trademark is vital for brand
protection and how to navigate crucial aspect of
National and International Trademark Renewal.
Importance of Trademark Renewal
Trademark registration is not enduring therefore in
order to keep the brand identity and reputation
alive one needs to get the trademark renew from
time to time. As Trademark renewal ensures
extension of rights on the particular brand to few
more years.
The maintenance of a trademark uniqueness and
protection makes renewal of the trademark
extremely important. A trademark, whether it be a
term, phrase, image, design, or symbol acts as a
key identifier of a good or service and distinguishes
it from rival marks.
- Jyoti Lakhoria
-
Over a time, a trademark may acquire its
“secondary meaning”, and become synonymous
with the commodity or service it is meant to
represent.
Why Trademark Renewal Matters: -
a) Everlasting protection- Renewing your
trademark ensure that your trademark is
legally protected and failure to do so will risk
you losing your exclusive rights over the
trademark and opening your brand
vulnerable to infringement;
b) Preservation of Brand Equity: Your
trademark is not just a name or a logo; but it
is the evidence of trust which your brand has
built overtime. Renewal aid in preserving the
Brand Equity and established trust;
c) Legal Ground for prosecution- A renewed
and valid trademark strengthen the position
of the proprietor of the trademark in any
legal dispute and it works as a solid
foundation against the infringers around the
world;
d) Security to the Brand Name: The brand
name will continue to be protected without
any interruption with a renewed trademark.
A brand name loses its legal protection when
a trademark is failed to get renewed.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Navigating International Trademark Renewal
International Renewal of the trademark involves
several considerations as every country has their
own set of procedure and deadlines. Therefore,
following are the basic point to help you navigate
the process:
a) Tracking of the Renewal dates: A
comprehensive list is required to be prepared
which shall include details of all the
trademarks of various countries and their
deadline of filing renewals in the respective
country. This approach will prevent you from
missing the deadlines.
b) Reminder for the Due Date: One needs to file
the renewal application in the jurisdiction
where the renewal is due. However, there are
few jurisdictions where the Trademark offices
used to give notice to the registered
proprietor before the due date however this
practise is not common in all the jurisdictions.
Therefore, relying on the notification from the
Trademark office is not recommended.
c) Documents requires to be handy: Every
country has its own set of rules with respect to
the filing of the trademark renewal. On one
hand, few countries require proof of
continued use of trademark for the purpose of
filing renewal and on the other hand some
countries do not even require Power of
Attorney for filing renewal application
therefore one must be ready with the
requisite documents with respect to the
designated country for successful filing of the
trademark renewal.
d) Opting Madrid Protocol: Madrid protocol is
one the finest way of the filing the renewal of
the trademark in various country through a
single application. Opting this approach will
definitely help the registered proprietor of the
trademark to be less burdened and also serves
as a cost effective way.
Trademark Renewal in India
In India, initially trademarks are registered for 10
years and same needs to be renewed before the
expiration of the due date. The Trademark Registry
in India follow the practise of giving FORM RG-3
notice at the address of service of the registered
proprietor informing the approaching date of
expiration of the trademark renewal.
Duration to renew a Trademark
• As per rules 57 and 58 of Trade Mark rules
2017: - The renewal can be filed within one
year prior to the date of expiry1.
a) ‘Application with Surcharge’- A grace
period of six months is allowed from the
date of expiration of the last
registration/renewal by payment of
surcharge.
b) ‘Application for Restoration’ (with an
additional surcharge) of the trademark
which is filed after six months and within
one year of the expiration of the last
registration of the trademark.
1
Trade Mark rules 2017
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

Form for Renewal 2

S.No. Form Description Cost (Physical Cost (e-Filing)

Filing)
1. TM-R To renew a trademark's INR 10,000/- INR 9,000/-
registration under Section
25 for each class

Filing renewal with surcharge (Within Six Months) 3

S.No. Form Description Cost (Physical Cost (e-Filing)

Filing)
1. TM-R Request for a surcharge- INR 5000/- + INR 4500/- + Renewal fee
based renewal (a grace Renewal fee
period of 6 months is
allowed from the date of
expiration of the last
registration /renewal by
payment of surcharge )

Restoration of Trademark (Within One Year) 4

S.No. Form Description Cost (Physical Cost (e-Filing)

Filing)
1. TM-R Restoration of a trademark INR 10,000/- + INR 9,000/- + Renewal fee
(after six months and within Renewal fee
one year of the expiration of
the last registration of the
trademark)

Required Document

• A duly executed (signed) Power of Attorney authorizing an agent for filing renewal of the
trademark.

2
https://ipindia.gov.in/form-and-fees-tm.htm
3
https://ipindia.gov.in/form-and-fees-tm.htm
4
https://ipindia.gov.in/form-and-fees-tm.htm
5
Rule 59 of Trade Mark rules 2017
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Volume XVI, Issue X

Failing to file Renewal in India

In India, the consequences behind failure in filing

the Renewal is quiet worrisome. If one has failed to
file or failed to pay the requisite fee even after six
months of due date, then the trademark is liable to
be removed from the register of trademarks by the
Registrar on the basis of non-filing of the renewal
of the trademark and advertise the fact forthwith
in the Journal1. Failure to renew the trademark
shall diminish the hard-earned goodwill of the
trademark and also affects the parties who are
authorised to use the same either by the way of
Assignment or Transmission.6

The key advantage of trademark renewal in India is

that no one else is permitted to use your
trademark, and it preserves the market value and
reputation of the trademark. As a result, the
Trademark Act, 1999 in India provides second
opportunity to renew the Trademark through the
Restoration of Trademark.7

Conclusion

By renewing the trademark, the brand owner not

only protect their own interests but also contribute
significantly to the holistic development of
country’s economic landscape, fostering an
atmosphere of integrity and legal compliance.
Therefore, in the light of the same, it is advisable
to renew the trademark from time to time as
renewal non-only secure your brand’s legacy but
also set foundation for continues success in the
competitive marketplace.

*******

6
https://blog.ipleaders.in/procedure-and-requirements-for-
renewing-and-restoring-an-expired-trademark registration in-
india/
7
Rule 60 of Trade Mark rules 2017

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

UNLOCKING THE POTENTIAL OF NOMINEE SHAREHOLDERS: A

GATEWAY TO WHOLLY-OWNED SUBSIDIARIES
- Yukta Garg

In the corporate landscape, wholly owned
subsidiaries are companies entirely owned by
another entity, often referred to as the parent or
holding company. In this arrangement, the parent
company retains complete membership of all the
shares of the subsidiary. However, a significant
challenge surfaces when regulatory requirements
stipulate that a minimum number of members,
two for private companies and seven for public
companies, must be met, and the entire share
capital should be in the hands of a single entity.
Navigating the Wholly-Owned Subsidiary
Dilemma: Nominee Shareholders as Solution
Under Section 3 of the Companies Act, 2013 (the
“Act”), the minimum number of members required
is two (2) for private limited companies and seven
(7) for public limited companies. For entities who
wish to incorporate a wholly owned subsidiary in
the Indian market, the question arises: How can
one establish a wholly owned subsidiary while
complying with the statutory requirement of
minimum number of members? This quandary acts
as a bridge over regulatory hurdles, facilitating the
establishment of wholly owned subsidiary in India.
This is where the strategic appointment of
nominee shareholders comes into play. Regulated
by the Act, this concept serves as a bridge over the
regulatory hurdles, enabling the establishment of
wholly owned subsidiary in India.
In fact, the first proviso of Section 187 of the Act,
extends a unique exemption, allowing a holding
company to hold shares of its wholly-owned
subsidiary in the names of nominees rather than in
its own name. This provision serves a dual purpose:
i. Meeting the requirement for minimum
number of members required by law, which
is two (2) for private limited companies and
seven (7) for public limited companies.
ii. Facilitating the incorporation of a wholly
owned subsidiary, a prevalent strategy for
foreign companies entering the Indian
market.
Key Aspects of Nominee Shareholders under the
Companies Act, 2013
A nominee shareholder can be an individual or
entity designated by another shareholder or a third
party to hold shares on their behalf. The Act
outlines essential aspects of nominee
shareholders:
1. Legal and Beneficial Interests
Section 89 of the Act, distinguishes between
legal interest and beneficial interest in shares.
Legal interest pertains to the registered
shareholders, while beneficial interest belongs
to the beneficial members.

16
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
The key terms in this aspect have been clarified as
follows:
a. Registered member is a person whose name
has been entered in the register of members,
however, he does not hold any beneficial
interest in such shares.
b. Beneficial member is the person who holds
the beneficial interest in the shares of a
company however, his name is not entered in
the register of members of the company.
c. ‘Beneficial interest’, as introduced by the
Companies (Amendment) Act, 2017 w.e.f
13.06.2018, under Section 89(10) of the Act,
encompasses both direct and indirect
interests in a share through contracts or
arrangements. It grants the right to exercise
all attached share rights, including receiving
dividends, participating in distributions, and
more, regardless of the registered member.
This definition implies a broad scope of
entitlement for beneficial members.
2. Declaration of Beneficial Interest
Section 89 of the Act read with Rule 9 of the
Companies (Management and Administration)
Rules, 2014) provides for the following
declaration of beneficial interest in the shares
held:
a. The registered member or nominee submits
Form MGT-4 within 30 days from the date on
which his name is entered into the register of
members of the company.
b. The beneficial member submits Form MGT-5
within 30 days of acquiring a beneficial
interest in the shares of the company.
c. The company takes note of these declarations
and notifies the Registrar of Companies via
Form MGT-6 within 30 days of receipt of such
declarations.
3. Rights and Obligations of Nominee
Shareholders
Explanation II to Rule 2(1)(h) of the Companies
(Significant Beneficial Owners) Rules, 2018,
clarifies that an individual is considered to
hold a direct right or entitlement in the
reporting company when they acquire a
beneficial interest in the company's shares
under Section 89(2) of the Act and declare it to
the reporting company.
Furthermore, Section 89 of the Act does not
affect the company's obligation to pay
dividends to its members registered in the
Register of Members as per the Act. This
obligation is fulfilled when the company pays
dividends to the registered members.
It's essential to note that once the beneficial
member has made a declaration to the
reporting company, they ultimately receive
the profits, benefits, and advantages, even if
the initial recipient is the registered member.
Additionally, the rights and benefits associated
with the nominee share, such as bonuses,
dividends, and voting rights, are initially
offered to the registered member.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

In the case of bonus shares, they are first
allotted to the registered member and then
transferred to the beneficial member.
As a common practice, share certificates are
issued by the company in the name of the
registered member (nominee), and the
certificate mentions the name of the holding
company alongside the nominee's name.
In summary, the Companies Act, 2013 provides a
well-defined framework for the appointment and
operation of nominee shareholders, furnishing
foreign investors with a solid foundation for their
ventures in India while adhering to the stringent
regulations governing wholly owned subsidiaries.
*******

Nominee Shareholder Agreement

To guard a legal framework between the registered

member and the beneficial member, a Nominee
Shareholder Agreement should be incorporated.
This agreement delineates the terms and
conditions for the transfer of rights and benefits
from the registered member to the beneficial
member including the right to vote and payment of
the consideration for the purchase of the nominee
share, establishing a clear and legally binding
framework for this transition.

Concluding thoughts

In the dynamic landscape of contemporary

business, the concept of nominee shareholders
plays a pivotal role in facilitating foreign
investments and the establishment of wholly
owned subsidiaries in India. It not only allows
companies to meet the minimum membership
requirements but also ensures strict compliance
with Indian corporate laws. Proper documentation
and thorough due diligence in the appointment of
nominee shareholders are essential to avoid
potential legal complications down the road.

18
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
GST ON SECONDMENT OF EMPLOYEES – THE TUSSLE CONTINUES
Goods and Services Tax (GST) Law was rolled out in
India in 2017 and along with the new revolutionary
vision of one nation one tax, some settled
principles of taxability and some unsettled issues
from the erstwhile regime have also been brought
forward. One of the unsettled issues that is in
vogue currently is the taxability of salary
reimbursement for seconded employees.
Secondment of employees is a generic practice
followed by multinational companies, wherein an
employee having a specialised expertise of a group
entity is deputed in its India subsidiary for a
specified period to another group entity to work as
per the expertise he or she carries. Furthermore,
under usual setups, the overseas company second
employees to an Indian entity which reimburses
the cost of the seconded employee, i.e. his salary
and perquisites to the overseas company. The
taxability under the Indian indirect tax laws arises
on reimbursement of the salary and perquisites by
the Indian host company to its overseas entity.
Revenue authorities have argued that such
reimbursement is against the supply of manpower
services by overseas company to Indian company;
hence, would qualify as import of services and
exigible to GST. However, the industry for the
longest time had taken a stand that the seconded
employee is working in the employee capacity and
such services shall be treated as services provided
under the employer-employee relationship, which
is outside the ambit of GST.
- Manpreet Kaur
It is important to note that under the service tax
regime, services provided by an employee to the
employer in the course of his/ her employment
was outside the ambit of definition of the term
‘service’. Similarly, under GST as well, services
provided by an employee to the employer in the
course or relation to his employer shall neither be
treated as supply of goods nor as supply of
services. Accordingly, as a matter of interpretation
and practice, industry did not pay tax on
reimbursement of salary wrt seconded employee
is in the course of his employment with the Indian
company. In support of this stand, there have been
plethora1 of judicial precedents under the service
tax regime confirming that services provided by
seconded employee to Indian company is in the
nature of employer-employee relationship, thus,
not liable to service tax. However, in the landmark
judgment pronounced by the Supreme Court2 in
the case of Norther Operating Systems (NOS), it
has been held that the secondment of employee
by overseas entity to Indian entity qualifies as
‘supply of manpower services’ and exigible to
service tax, taking a dramatic turn in the existing
practice.
1
Volkswagen India Private Limited v. CCE, 2013-VIL-29-
CESTAT-MUM-STCCE v. Computer Sciences Corporation
India Private Limited, 2014-VIL-438-ALH-ST Franco Indian
Pharmaceutical Private Limited v. CST, 2016-VIL-280-
CESTAT-MUM-ST Honeywell Technology Solutions Lab
Private Limited v. CST, 2020-VIL-363-CESTAT-BLR-ST
2
C.C., C.E. & S.T. – Bangalore (Adjudication) vs M/s
Northern Operating Systems Pvt. Ltd., CA No. 2289-2293
of 2021
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
While pronouncing the judgement, the Supreme
Court specifically discussed the relevant clauses of
the agreement to determine whether Indian
company can be treated as the employer of the
seconded employee. To determine the same, the
Supreme Court applied the test of ‘substance over
form’ i.e., going by the facts of the existing
agreement. Few of the pivot clauses of the
agreement highlighted by the Supreme Court to
decide the relationship between Indian company
and seconded employees are:
• The Agreement entered with overseas
company specifically mentions that
secondment of employee was for a specified
duration only, i.e. for a temporary period;
• The seconded employees to be on the payroll
of overseas entity and salary package was in
foreign currency;
• The overseas company pays salary to the
seconded employee, which is reimbursed by
the Indian entity;
• The terms of employment during the
secondment period are in accordance with the
policy of the overseas company i.e. control of
the overseas entity exists;
• The seconded employee would not be treated
as the employee of the Indian entity; and
• Indian entity could request the overseas
company for replacing the seconded
employee.
One of the additional deciding factors used by the
Supreme Court was the existence of quid pro quo
for the secondment agreement i.e., existence of
supply of services by overseas entity and flow of
consideration from Indian entity against the same.
It is important to note that on similar
determinative factor, the Court of Justice of the
European Union (the CJEU) has also pronounced
the judgment that lending or secondment of
employee by a parent company to its subsidiary in
return of mere reimbursement of the related costs
gives rise to a supply of service falling within the
scope of VAT. The determinative factor used in by
the CJEU was again reimbursement made for the
related costs of the seconded employee which
provided a direct link between the secondment
and consideration; hence, exigible to VAT.
Undoubtedly, the CJEU judgement only used one
primary factor towards its decision unlike the
Supreme Court’s NOS judgment in India, which has
indeed opened the doors of litigation around
taxability of secondment of employees by listing
multiple factors to determine the existence of
secondment of employees. However, the Supreme
Court while pronouncing the judgment has
mentioned that the same is fact specific and thus,
be made applicable on cases with similar facts only.
Needless to say, the NOS judgement has paved the
way for revenue authorities to issue multiple
notices to companies without appreciating terms
of the contracts such as whether the employee is
on pay roll or on actually on secondment. In many
cases, Indian companies having foreign employees
on their pay roll for more than a decade are also
getting notices for payment of GST qualifying such
employees as seconded.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

The point for consideration here is that the

fundamental distinction between the seconded
employee and a regular employee is the degree of
their permanence in the Indian entity i.e.,
seconded employees are for limited time however,
regular employees do not have any end date on
their employment contract. However, revenue
authorities are overlooking this basic distinction
and issuing notices by applying the Supreme Court
judgment on all employment agreements entered
with foreign nationals. Nonetheless, the only way
to settle these extremist disputes is that the
government should issue clarification specifically
outlining the cases which should qualify as
‘secondment of employees’. At the same time, it is
crucial for taxpayers, both Indian entity and
overseas company to take caution while drafting
secondment agreements going forward and re-
evaluate their existing agreements in light of the
Supreme Court judgment and mitigating tax
exposure.

*******

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
OIDAR SERVICES IN INDIA– SCOPE FOR FOREIGN COMPANIES
W.E.F., OCTOBER 2023
Digitalization is seeing a new avatar in India.
Further the onset of COVID pushed life towards a
virtual world, from shopping to fitness classes to
online education, everything became just a click of
button away. Accordingly, Indian policy makers
have seen a massive opportunity of increased tax
collection from such proliferation of digital
economy. Although the taxability on Online
Information Data and Access Retrieval service
(OIDAR) services is not new in India, but its scope
has been expanded exponentially, thereby leaving
huge impact on the overseas OIDAR service
providers in India. This Article attempts to inform
the readers with the implication of OIDAR services
in India even for overseas company having no
establishment in India.
Meaning and definition of OIDAR services until
September 30, 2023
The concept of OIDAR services was introduced in
India in the year 2001 during the service tax
regime. With the usage of internet ever increasing,
the scope of OIDAR services also kept broadening.
Finally, with the introduction of GST on July 1,
2017, services facilitated by information
technology over the internet or an electronic
network, which were completely automated and
required minimal human intervention, was taxable
to GST1. The peculiarity of OIDAR services is that it
can be provided online from a remote location
outside India, yet taxable in India.
1
Section 2(17) of Integrated Goods and Services tax Act,
2017 (“IGST Act”) applicable till 30.09.2023
- Megha Tewari
-
These include services like advertising on the
internet, providing cloud services, online supplies
of digital content, online e-book services,
conversion of documents online from .doc file to
.pdf file etc.
Taxability of OIDAR services under GST until
September 30, 2023
In case OIDAR services were provided by a person
from non-taxable territory and received by a non-
taxable online recipient (NTOR), the supplier of
such service in the non-taxable territory is liable to
pay tax. NTOR includes any government body,
individual or an unregistered person, who receives
OIDAR services in relation to any purpose other
than commerce, industry or any business or
profession located in taxable territory2. In a
nutshell, NTOR includes government or an
unregistered person who uses OIDAR service for
personal use. If OIDAR services provided from a
non-taxable territory are received by the NTOR, the
service provider was liable to pay tax. Such person
located in non-taxable territory has an option to
either register himself as a service provider in India
and pay tax; or appoint an intermediary on his
behalf to do the statutory compliances3.
2
Section 2(16) of Integrated Goods and Services tax Act,
2017 (“IGST Act”) applicable till 30.09.2023
3
Section 14 of IGST Act, 2017
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Amended provisions of OIDAR services and NTOR
effective from October 01, 2023
Vide the Union Budget 2022-23, the definition of
OIDAR services has seen a shift and w.e.f. October
1, 2023. In terms of the amendment4, the terms,
“minimal human intervention” and “essentially
automated” were removed from the definition of
OIDAR services. Accordingly, now the services that
were traditionally excluded due to human
interference element have also been brought
within the scope of the GST. Thus, any service with
delivery facilitated by information technology or an
electronic network, is now included in the scope of
OIDAR services. The new definition of OIDAR
service5 reads as “services whose delivery is
mediated by information technology over the
internet or an electronic network and the nature of
which renders their supply impossible to ensure
in the absence of information technology and
includes electronic services”. It is to be noted that
there was a differentiation between normal online
services and OIDAR services, which was marked by
the usage of words “automated delivery”, and
“minimum human intervention”. This change will
result in companies like Facebook, Google and
various edtech platforms getting into the GST
exposure for services rendered by them to
individuals and the government.
Further, the definition of NTOR has also been
amended6 to include any unregistered person
receiving OIDAR services located in the taxable
territory.
4
Amended Section 2(17) of IGST Act applicable w.e.f.,
01.10.2023
5
Supra
6
Amended Section 2(16) of IGST Act applicable w.e.f.,
01.10.2023
Further, unregistered person also includes a person
registered only for the purpose of tax deduction
under the CGST Act7. Thus, any online services
provided to an unregistered person in India would
now be taxable to OIDAR services.
As a result of these changes, OIDAR services
provided by a person outside India to a non-GST
registered person in India would be taxable, and in
such cases, the OIDAR services provide would have
to register for GST purposes and discharge the
applicable GST on the supplies. A practical apt
example would be where a student in India opens
a Netflix account in the US for watching online
content, will now lead to Netflix US being liable to
pay GST in India.
Action plan for overseas service providers
With the amendments for the OIDAR service
providers, it is imperative that overseas online
service providers who are not yet registered in
India, should consider getting a detailed impact
assessment of the tax positions taken by them in
light of the aforesaid changes. The point to be
considered should entail re-visiting the contractual
terms with the Indian customers and the modus in
which their services are rendered. It is need of the
hour that the overseas OIDAR services complete
their due diligence in view of the amendment and
consider either registering themselves under GST
in India and make necessary changes in their IT
systems to help with the Indian GST compliance
requirements or revisit their entire business
intricacies in order to mitigate the risk of GST
exposure in India.
*********
7
Section 24(vi) of the Central Goods and Services Tax Act,
2017
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
ANALYSING THE COMPLEXITIES IN THE ENFORCEMENT OF
FOREIGN-SEATED INTERIM RELIEFS AND EMERGENCY AWARDS
THROUGH INTERIM PROTECTIONS IN INDIA
Indian courts have relentlessly made an endeavor
to ensure that the Indian legal jurisprudence
pertaining to dispute resolution through
Arbitration evolves in a direction to achieve the
goals and objectives set out in the Arbitration and
Conciliation Act 1996 (“the Act”). One such
objective is to ensure speedy disposal of disputes
arising between contracting parties with minimum
interference from courts. In furtherance of these
objectives and in a bid to safeguard the interests of
foreign investors investing in India, the courts have
strived to provide speedy resolution to issues
arising out of International Commercial
Arbitration. For instance, even though the Act is
silent on the enforcement of an emergency awards
in India, the Supreme Court of India in
Amazon.com NV Investment Holdings LLC v.
Future Retail Ltd. & Ors.1 (“Amazon case”) came to
the rescue of the Amazon group and held that the
‘award’ passed by an Emergency Arbitrator in an
Indian seated arbitration is enforceable under
Section 17(2) of the Act as if the same is an interim
order of an arbitral tribunal made under Section
17(1) of the Act.
However, it would not be out of place to state that
lacunae exist in the present dispute resolution
mechanism set out in the Act for parties seeking
interim/emergency reliefs.
1
(2022) 1 SCC 209.
- Nishant Goyal & Aayush Mishra
-
While the position with respect to arbitrations
seated in India was made clear by the Hon’ble
Supreme Court of India in the Amazon case, facile
enforcement of interim reliefs/emergency awards
passed in a foreign seated arbitration remains a far
cry. There is no provision in the Indian Arbitration
Act to (1) directly enforce an emergency award, or
(2) enforce an interim relief provided by an arbitral
tribunal seated outside India. In this piece, an
attempt has been made to break down these two
propositions to highlight the efforts being made by
the Indian courts to address the existing gaps and
suggest a way forward.
Enforcement of ‘foreign-seated’ emergency
awards through Section 9 Relief
The ruling of the Hon’ble Supreme Court in
Amazon case allowing for enforcement of
emergency award in India is seminal in the
evolution of dispute resolution jurisprudence,
especially in the absence of any legal provision
allowing for such enforcement. However, the
judgment is still a small step and not a leap towards
becoming a forum of international dispute
settlement. The Amazon Case is progressive, but
also restricted in the sense that it has only opened
doors for enforcement of emergency awards in
‘India-seated’ arbitrations.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

However, there are no definitive legal provisions
and only a few court pronouncements that shed
light upon the process for enforcement of foreign-
seated emergency awards through the aid of
Section 9 interim protections.
At the outset, despite the absence of any legal
provisions pertaining to the enforcement of
foreign-seated emergency awards in India, the
Courts have recognized and allowed for such
enforcement by adopting the recourse to grant of
interim protections under Section 9 of the Act.
One of the first cases in this line is Raffles Design
International India v. Educomp Professional
Education2, wherein the Hon’ble High Court of
Delhi granted interim protection to the petitioner
(Raffles) under Section 9 of the Act. In this case,
pursuant to certain disputes in relation to the
Share-purchase agreement, the petitioner
instituted a Singapore-seated SIAC tribunal and
secured certain interim protections from an
emergency arbitrator. Even then, the Respondent
continued to remain in contravention of the
Emergency Award and the agreement. Thereafter,
the petitioner preferred a Section 9 application
before the Hon’ble Delhi High Court to direct the
Respondent to act in terms of the Share Purchase
Agreement. The Respondent, relying on the BALCO
judgment3, questioned the maintainability of the
said application on the ground that Section 9
pertains to domestic arbitrations and cannot be
extended to foreign seated arbitrations.4
2
2016 SCC OnLine Del 5521.
3
Bharat Aluminium Company v. Kaiser Aluminium
Technical Services Inc., (2012) 9 SCC 552.
4
supra Note 2, at Para 2.
On careful assessment through the lens of the
proviso to Section 2(2)5 of the Act post the 2015
Amendment, the Court found that the parties have
not excluded the application of Section 9 through
necessary implication. The Court ruled that it
cannot enforce interim measures from an arbitral
tribunal outside its jurisdiction, however, parties in
a foreign seated arbitration can approach national
Courts to seek relief through a ‘separate’ Section 9
application.
Thus, it becomes quite evident that even though
the Orders laid down by emergency arbitrators are
not enforceable in the current legislative
framework of India, but through the above two
judgments, Courts have taken a pro-arbitration
stance by allowing enforcement of foreign-seated
emergency awards. The position regarding
enforcement in India has further evolved with the
judgment of Hon’ble Delhi High Court in Ashwani
Minda v. U-Shin Ltd. and Anr.6, wherein the Court
denied the grant of interim protection to the
applicant. In this case, the applicant approached an
emergency arbitrator under the Japan Commercial
Arbitration Association (JCAA) Rules in a foreign
seated arbitration for grant of interim protection.
However, the same was declined by such
emergency arbitrator. Being aggrieved, the
applicant approached the Hon’ble Delhi High Court
under Section 9 of the Act.
5
The Arbitration and Conciliation Act, 1996, § 2(2), No. 26,
Acts of Parliament, 1996 (India).
This Part shall apply where the place of arbitration is in India:
[Provided that subject to an agreement to the contrary, the
provisions of sections 9, 27 and clause (a) of sub-
section (1) and sub-section (3) of section 37 shall also apply
to international commercial arbitration, even if the place of
arbitration is outside India, and an arbitral award made or
to be made in such place is enforceable and recognised
under the provisions of Part II of this Act.]
6
2020 SCC OnLine Del 1648.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

The Delhi High Court also denied any interim Enforcement of Foreign Interim Reliefs in India:
protection to the applicant on the ground that Does Section 9 Help?
same prayer for interim relief cannot be made
Section 9 of the Act confers wide powers upon the
twice, especially when there are no changes in the
Courts to grant relief to a party before or during the
prevailing circumstances. Thus, as per the
arbitral proceedings or even at any time after the
observation in this case, it can be said that the
making of the award but before the said award is
interim protections granted by foreign arbitral
enforced. Therefore, Section 9 confers power upon
tribunals and emergency arbitrators hold
the Courts to grant relief to a party even if the
persuasive value even when the same cannot be
arbitral proceedings are ongoing. However, this
enforced in India.7 Furthermore, the Hon’ble Delhi
power is fettered by the inclusion of Section 9(3) of
High Court also gave a clarification in this case that
the Act. It lays down that the Court shall not
parties are not barred from approaching the Courts
entertain an application under Section 9 if the
from seeking interim protections and the same can
arbitral tribunal has been constituted unless the
be done even after the constitution of the arbitral
Court deems it fit that the remedy provided by the
tribunal.
arbitral tribunal will be inefficacious.
The latest judicial stance regarding the
Considering that there is no provision of interim
enforcement of foreign emergency awards in India
relief in part II of the Act, an aggrieved party in a
through the Section 9 route was taken in Shanghai
foreign seated arbitration cannot be allowed to be
Electric Group Co. Ltd. v. Reliance Infrastructure
remediless when it comes to the enforcement of a
Ltd.8 In this case, a foreign party to dispute sought
foreign interim protection in India.9 The Indian
an interim relief under Section 9 of the Act against
Arbitration Act operates on the ethos of ‘party
an Indian entity in a Singapore-seated arbitration.
autonomy’, and as such, no party shall be put in the
The Court granted the interim protection and
position of facing the turmoil of lack of efficacious
noted that that there is no provision in the Act to
remedy just because it is in a foreign seated
directly enforce an emergency award/foreign
arbitration. Even the 246th Law Commission Report
interim Order. The Court further noted that any
has suggested extending the application of interim
significant and meaningful reliefs relating to the
protections under Section 9 to foreign-seated
attachment of assets and directions to third parties
arbitrations. Even the 246th Law Commission
could only be granted by Indian Courts.
Report has suggested extending the application of
Thus, with the Shanghai case, it became interim protections under Section 9 to foreign-
conclusive that foreign emergency awards can be seated arbitrations.
enforced in India, despite the absence of relevant
legal provisions, subject to the nature of each case
and the gravity of relief sought by the aggrieved
parties.

7 9
See Plus Holdings Ltd v. Xeitgeist Entertainment Group Chemex Oil Private Ltd. v. Seastarr International Pvt. Ltd.
Ltd, 2019 SCC OnLine Bom 13069. 2022 SCC OnLine Cal 4034.
8
2022 SCC OnLine Del 2112.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Further, the rationale of the 246th Report has also
been relied upon in Aircon Feibars v. Heligo
Charters Pvt. Ltd.10 and Big Charter Pvt. Ltd. v.
Ezen Aviation Pvt. Ltd.11, stating that ‘where the
assets of a party are located in India, and there is a
likelihood that that party will dissipate its assets in
the near future, the other party will lack an
efficacious remedy if the seat of the arbitration is
abroad. […] That being the case, it is a distinct
possibility that a foreign party would obtain an
arbitral award in its favour only to realize that the
entity against which it has to enforce the award has
been stripped of its assets and has been converted
into a shell company.’
The above reasoning of the Hon’ble Delhi High
Court has been relied upon in several other cases
and supplies a legal basis to the argument that
recourse to Section 9 for enforcement of a foreign
interim protection is not barred under Indian Law.
Further, the resort to Section 9 has been allowed
by Indian Courts in several judgments pertaining to
the enforcement of foreign-seated interim
protection. In the Raffles Case too, the Delhi High
Court observed that parties to foreign-seated
arbitrations are free to approach national Courts
for interim protection, provided that a separate
application under Section 9 of the Act shall be filed.
Quite a similar line of reasoning was again followed
in the case of HSBC PI Holdings (Mauritius) Ltd. v.
Avitel Post Studioz Ltd12, wherein the Hon’ble
Bombay High Court granted interim protection to
the petitioner even then when the same had also
been granted beforehand by an emergency
arbitrator.
10
2022 SCC OnLine Bom 329.
11
2020 SCC OnLine Del 1713.
12
2020 SCC OnLine SC 656.
The Hon’ble Supreme Court in appeal upheld the
Order directing the deposit of the full claim
amount of USD 60 million to be kept aside for the
successful enforcement of the Award in India.
Afterword
It is no news that India is making earnest efforts to
become an international arbitration hub. Going by
this aspiration, it is pertinent for the judicial
framework in India to remain liberal in addressing
matters that involve meaningful assets or concerns
of an aggrieved party to a dispute, even when the
same arises outside its jurisdiction. As is evident
from the above analysis, the Courts in India have
maintained the ethos of speedy resolution and
party autonomy by granting interim protections
through Section 9 of the Act to effectuate
enforcement of a foreign-seated emergency
awards and interim reliefs in India.
Plus, going by both legal and logical perspective, it
is good sense to extend the application of interim
protection contained in Part I of the Act, when Part
II is devoid of the same. No party can be expected
to be rendered remediless in the event it requires
interim protection in India by the very statute that
allows it to choose a foreign seat of arbitration. In
addition, it is also suggested that the legislature
should consider incorporating an interim relief
provision in Part II of the Act. Such a step could
clear the existing complexities in the discussion at
hand.
*******
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

INTERNATIONAL COMMERCIAL ARBITRATION IN INDIA

AND
“MISSING TIMELINES”
- Himanshu Dubey

Introduction: The government was actively working on legal

reforms to make India's legal system more
International commercial arbitration in India
arbitration-friendly. This included reducing time
involves arbitration proceedings for disputes that
spent in arbitration proceedings and enforcing
have a commercial nature and where at least one
arbitration awards more efficiently. The Indian
of the parties meets one of the four criteria
government has made several amendments to the
mentioned under section 2 (f) of the Arbitration
Arbitration and Conciliation Act to bring it in line
and Conciliation Act, 1996 (A&C Act/Act),
with international standards and improve the ease
(individual from another country, foreign-
of doing business in India. These amendments
incorporated corporation, foreign-controlled
aimed to streamline arbitration procedures,
association or body, or a foreign government).
reduce delays, and make the arbitration process
India has been making efforts to establish itself as
more efficient. However, the swift resolution of
an international arbitration hub which is aimed at
disputes has remained a persistent concern.
attracting international arbitrations to India and
promoting it as a preferred destination for Developments:
resolving international commercial disputes. The
In 2015 A&C Act went through major amendments
government has already set up International
including the introduction of section 29A. Section
Arbitration centers in India. Efforts were made to
29A aimed to expedite the arbitration process by
promote institutional arbitration over ad hoc
imposing a time limit for rendering an arbitral
arbitration. Institutions like the Mumbai Centre for
award to address concerns about delays in
International Arbitration, the Delhi International
arbitration proceedings for the resolution of their
Arbitration Center, and the International Centre for
disputes through arbitration. It was mandated that
Alternative Dispute Resolution are working to
an arbitral award should be rendered within a
provide institutional support for international
period of 12 months (extendable by a further 6
arbitration cases. Initiatives are undertaken to train
months by consent of the parties) from the date
Indian lawyers, arbitrators, and professionals in
the tribunal enters upon reference. The said time
international arbitration practices. This was aimed
period was extendable upon sufficient cause being
at developing a pool of skilled practitioners who
shown to the Court.
can handle international arbitration cases
effectively.

29
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
The said time period was extendable upon
sufficient cause being shown to the Court.
Apparently, the introduction of section 29A was
part of the broader efforts to align India's
arbitration laws with international best practices,
reduce the time and cost involved in arbitration
proceedings, and make India an attractive
destination for international arbitration.
In 2019, the Arbitration and Conciliation Act again
underwent further amendments, leading to a
significant change in the treatment of international
commercial arbitrations in relation to time
restrictions. These amendments resulted in
international commercial arbitrations being
exempted from the stringent time limits imposed
by Section 29A of the Act.
This change marked a departure from the previous
approach outlined in Section 29A, which mandated
strict time limits for rendering arbitral awards in
both domestic and international commercial
arbitrations. While the intent of Section 29A was to
expedite the arbitration process and enhance
efficiency, it was recognized that international
commercial disputes often involved complex legal
issues, extensive documentation, and multiple
parties from different jurisdictions.
For international commercial arbitrations, the
provision emphasizes that the arbitral tribunal
should endeavor to conclude the proceedings and
make the award expeditiously, ideally within
twelve months from the date of the appointment
of the arbitrators. While the law encourages a
twelve-month timeframe for international
commercial arbitrations, it doesn't impose the
same level of strict adherence and potential
consequences as it does for domestic arbitrations
under Section 29A.
In domestic arbitrations, there is a more rigid time
limit, and failure to adhere to it can result in the
termination of the arbitrator's mandate unless an
extension is granted.
This legislative decision to exempt international
commercial arbitrations from the time limitations
of Section 29A was influenced by
recommendations put forth by the High-Level
Committee, chaired by Hon’ble Justice B. N.
Srikrishna, a retired judge from the Supreme Court
of India, the committee inter alia suggested that
international commercial arbitrations should not
be subjected to the same strict time limits as
domestic arbitrations.
Conclusion:
The original Section 29A of the Act faced criticism
for involving the judiciary in the extension of
timeframes and imposition of an eighteen-month
time limit, irrespective of the size or complexity of
the dispute. Another critical aspect of the
Arbitration is preserving party autonomy.
Arbitration is favored for its flexibility, allowing
parties to structure proceedings according to their
needs and the nature of the dispute. Excessive
time constraints could infringe upon this autonomy
and deter parties from choosing arbitration as their
preferred method of dispute resolution.
However, the complete removal of timelines for
making the award specifically in the context of
International Commercial Arbitration, cannot be
justified. Undoubtedly, one of the primary
motivations for choosing arbitration over litigation
in court is the significant delays experienced in
court proceedings.
30
INDIAN LEGAL IMPETUS
Volume XVI, Issue X

Therefore, exempting international commercial

arbitration from any time constraints is a
regression in the quest for efficient dispute
resolution.

The challenge lies in striking a balance between

ensuring that arbitration proceedings are efficient
and timely while also recognizing the unique
characteristics and complexities of each dispute. It
is crucial to ensure that international commercial
arbitration in India remains a compelling choice for
resolving disputes. While flexibility in timelines can
be beneficial in some cases, it should not come at
the cost of prolonged and unpredictable
proceedings. The challenge now lies in adapting
the legal framework to strike the right balance and,
in doing so, further strengthen India's position as a
preferred destination for international commercial
arbitration.

*********

31
 INDIAN LEGAL IMPETUS
Volume XVI, Issue X
CONTOURS OF THE SCOPE OF REFERRAL COURTS UNDER SECTION
11(6) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - AN
ANALYSIS
▪ Introduction
▪ Prior to the amendment of the Arbitration Act in
The scope of judicial inquiry under Section 11 of
the Arbitration and Conciliation Act, 1996
(hereinafter, ‘Arbitration Act’) has been a
developing jurisprudence in India’s arbitration
landscape. The Courts have endeavoured to
balance the scope of judicial scrutiny at the pre-
arbitral stage and the principle of kompetenz-
kompetenz under Section 16 of the Arbitration Act.
Recently, the hon’ble Supreme Court has held that
it is the duty of the Referral Court to decide the
issue with respect to the existence and validity of
an arbitration agreement ‘conclusively and finally’
and failure to adhere to the same will be contrary
to Section 11(6A) of the Arbitration Act. This
decision is a deviation from the settled position
wherein Courts have encouraged speedy disposal
of cases and limited scope of judicial scrutiny at the
stage of reference. In view of this backdrop, this
article aims to analyse the jurisprudence that has
been developed by the Courts in India and the
settled legal position on the scope of power of a
Referral Court under Section 11(6) of the
Arbitration Act while referring disputes to
arbitration.
1
The authors are Associates at S&A Law Offices,
Gurugram in Dispute Resolution practice.
- Jagatjeet Singh and Jagrati Maru1
-
▪ The position before 2015 Amendment
2015, the position of law with respect to pre-
referral jurisdiction of Courts was based largely on
two decisions of the apex Court as explained
hereunder.
The apex Court in its 2005 decision in SBP & Co. v.
Patel Engineering Ltd. and Anr2 held that when
arbitrability or existence of an arbitration
agreement is challenged the Court has to decide
whether it has jurisdiction, whether there is an
arbitration agreement which is valid in law, and
whether the dispute sought to be raised is covered
by that agreement. It was further held that the
arbitration Act lacks any indication that the power
of the Courts is curtailed on these aspects for the
reason that the arbitral tribunal has the
competence to rule on its own jurisdiction under
Section 163.
Thereafter in 2008, the apex Court in National
Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd.4
held that the Chief Justice/ his designate exercising
jurisdiction under Section 11 of the Act will
consider whether there was really accord and
satisfaction or discharge of contract by
performance. If the answer is in affirmative, he will
refuse to refer the dispute to arbitration5.
2
SBP & Co. v. Patel Engineering Ltd. and Anr., (2005) 8 SCC 618.
3
Id. at Para 19.
4
National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd.,
(2009) 1 SCC 267.
5
Id. at Para 51.
32
 INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Therefore, it was held that the issue of non-
arbitrability of a dispute will be examined by a
Court in cases where accord and discharge of the
contract is alleged.
▪ The 2015 Amendment
The Arbitration and Conciliation (Amendment) Act,
2015 came into effect on 31.12.2015 (hereinafter,
‘2015 Amendment’). The Amendment was much-
awaited as it was an attempt to make Indian legal
diaspora a hub of International Commercial
Arbitration and to make arbitration a preferred ▪
mode of settlement of commercial disputes in
India. The 2015 Amendment aimed to modernize
the Arbitral Practice in India and restrict the undue
interference of the Courts in Arbitral proceedings.
The Amendment restrained the power of the
Courts to only look for the existence of an
arbitration agreement6 or that is what it purported
to do.
▪ The position after 2015 Amendment
In recent years post the 2015 Amendment of the
Arbitration Act, the Courts have generally held that
their power under Section 11(6) is purely limited to
examining whether an arbitration agreement
exists or not, ’nothing more or nothing less’ as
observed by the apex Court in Duro Felgura, S.A.
v. Gangavaram Port Ltd.7
6 8
Arbitration & Conciliation (Amendment) Act, 2015,
Section 6
https://lawmin.gov.in/sites/default/files/ArbitrationandC
onciliation.pdf (last visited Oct. 11, 2023).
7 9
Duro Felguera S.A. v. Gangavaram Port Ltd., (2017) 9
SCC 729, Para 59.
The Court further observed that the cases of SBP &
Co. (supra) and Boghara Polyfab (supra) were in a
different era of the Arbitration Act, an era where
the scope under Section 11(6) of the Arbitration
Act was considerably wide.
The court observed that the legislative intent and
purpose of the 2015 Amendment, is made clear by
the insertion of subsection (6A) under Section 11,
which was essentially to minimise Court’s undue
intervention at the stage of appointing an
arbitrator.
The 2019 Amendment
In a major turn of events and retracing its steps, the
legislature omitted Section 11(6A) of the
Arbitration Act vide Section 3 of the Arbitration
and Conciliation (Amendment) Act, 2019
(hereinafter, ‘2019 Amendment’). Even though the
sub-section (6A) of Section 11 was omitted, the
said Section still remains in force by virtue of
Section 1(2) of the 2019 Amendment, whereby the
Central Government reserved its right to notify the
commencement of the amendments made in the
said Act8. Interestingly, the Central Government,
through a Gazette Notification dated 30.08.2019,
notified various amendments of the 2019
Amendment Act, however, is yet to notify the
omission of subsection (6A) of Section 11 of the
Arbitration Act. As it stands today, the subsection
(6A) in in force, continues to remain in the statute
book and still governs the scope of power of the
Courts under Section 11 of the Arbitration Act.9
Arbitration and Conciliation (Amendment) Act, 2019 at
https://legalaffairs.gov.in/sites/default/files/arbitration-
and-conciliation%28amendment%29-act-2019.pdf (last
visited Oct. 11, 2023).
Bharat Sanchar Nigam Limited & Anr. v. Nortel Networks
Private Ltd., (2021) 5 SCC 738, Para 35.
33
 INDIAN LEGAL IMPETUS
Volume XVI, Issue X
▪ Judicial Precedents
Subsequent to the 2017 decision Duro Felguera
(supra) enunciating that the Court “should and
need only look into one aspect – the existence of an
arbitration agreement10” the hon’ble apex court in
2019 in its decision of United India Insurance Co.
Ltd. v. Antique Art Exports Pvt. Ltd.11, accepted the
objection of ‘accord and satisfaction’ in opposition
to an application for reference to arbitration. It was
further held that the High Court committed a
manifest error in adopting a ‘mechanical process’
in appointing the arbitrator without any evidence
to prima facie substantiate that an arbitral dispute
existed under the agreement which required
reference to arbitration.
Thereafter in Mayavati Trading Pvt. Ltd. v.
Pradyut Deb Burman12 the hon’ble apex Court
clarified that the law prior to the 2015 Amendment
that included going into whether accord and
satisfaction has taken place, has been legislatively
overruled and Section 11(6-A) is confined to the
examination of the existence of an arbitration
agreement and has to be understood in narrow
sense13. The decision in Antique Exports (supra)
was therefore overruled.
10
Duro Felguera S.A. v. Gangavaram Port Ltd., (2017) 9 SCC
729, Para 48.
11
United India Insurance Co. Ltd. v. Antique Art Exports Pvt.
Ltd., (2019) 5 SCC 362.
12
Mayavati Trading Pvt. Ltd. v. Pradyut Deb Burman, 2019
SCC OnLine SC 1164.
13
Id. Para 10.
The settled position on this issue as on today is
defined by the hon’ble apex Court in its 2020
decision in Vidya Drolia and Ors. v. Durga Trading
Corporation14 wherein a three-judge bench held
that the Arbitral Tribunal is the preferred first
authority to determine and decide all questions
pertaining to non-arbitrability and the “court has
been conferred power of “second look” on aspects
of non-arbitrability post the award in terms of sub-
clauses (i), (ii) or (iv) of Section 34(2)(a) or sub-
clause (i) of Section 34(2)(b) of the Arbitration
Act15.”
The bench further observed that Courts can
interfere ‘rarely as a demurrer’ at Section 8 or 11
stage when it is manifestly and ex facie certain that
the arbitration agreement is non-existent, invalid
and the disputes are non-arbitrable. Notably, the
hon’ble apex Court observed that Courts cannot
enter into a mini trial or effectuate an elaborate
review so as to usurp the jurisdiction of an Arbitral
Tribunal. The Court must affirm the integrity and
efficacy of arbitration as an alternative dispute
resolution mechanism16.”
In DLF Home Developers Limited v. Rajapura
Homes Private Limited & Anr.17 the hon’ble apex
Court while allowing two petitions under Section
11(6) of the Arbitration Act held that the Courts are
not expected to ‘act mechanically merely to deliver
a purported dispute to the doors of a chosen
Arbitrator’ but rather are obligated to apply their
mind within the framework of Section 11(6-A).
Such is not intended to take over the jurisdiction of
the Arbitral Tribunal but is directed at streamlining
the process of arbitration.18
14
Vidya Drolia and Ors. v. Durga Trading Corporation,
(2021) 2 SCC 1.
15
Id. Para 154.3.
16
Id. Para 154.4.
17
DLF Homes Developers Limited v. Rajapura Homes Private
Limited & Anr., (2021) SCC OnLine SC 781.
18
Id. Para 20.
34
INDIAN LEGAL IMPETUS
Volume XVI, Issue X

In NTPC Ltd. v. SPML Infra Ltd.19 the hon’ble
Supreme Court of India, while reiterating the stand
held in Vidya Drolia (supra) observed that the
limited scrutiny, through an eye of the needle is
compelling and is intertwined with the duty of the
Referral Courts to protect parties being forced to
arbitrate on a non-arbitrable dispute.20 It was
clarified that the prima facie scrutiny of facts must
lead to a clear conclusion that there is not even an
iota of doubt that the claim is non-arbitrable. On
the other hand, in case of any doubt, the guiding
principle is that such dispute should be referred to
arbitration21.
In the backdrop of above discussion and relevant
case laws, it is imperative that the recent decision
of a division bench of the hon’ble apex Court in
Magic Eye Developers Pvt. Ltd. v. Green Edge
Infrastructure Pvt. Ltd.22 is analysed. Notably, in
Para 13, the apex Court held that in case the issue
with respect to the existence and validity of an
arbitration agreement is not conclusively and
finally decided by the Referral Court while
exercising pre-referral jurisdiction under Section
11(6) and the same is referred to the Arbitral
Tribunal, it will be contrary to Section 11(6-A) of
the Arbitration Act. The bench further observed
that it is the duty of the Referral Court to decide
this issue first ‘conclusively and finally’ so as to
protect the parties from being forced to arbitrate
when there does not exist any arbitration
agreement or in cases where there is no valid
arbitration agreement at all.
An overview of the judgment highlights that the
bench has deviated from the much-settled legal
position of the Referral Court adopting only prima
facie test while referring a dispute to arbitration.
The bench reiterated the primary and secondary
inquiry as held by NTPC Ltd. (supra).
Further, the Court has explained that the
secondary inquiry that can arise at the stage of
reference is with respect to the non-arbitrability of
the dispute. Both inquiries are distinct from each
other. As regards the first issue pertaining to the
existence and validity of an arbitration agreement,
the same goes to the root of the matter and as such
it is to be ‘conclusively decided’ by the Referral
Court at the referral stage itself. As far as non-
arbitrability of the dispute is concerned, in view of
the three-judge bench decision in Vidya Drolia
(supra), the Court at pre-referral stage and while
considering the jurisdiction under Section 11(6) of
the Arbitration Act may even consider prima facie
examination thereby examining the arbitrability of
claims. In summary, the bench held that as far as
the dispute with respect to the existence and
validity of an arbitration agreement is concerned
at the pre-referral stage, the Referral Court has to
decide such issue conclusively and finally and not
refer the same to the Arbitral Tribunal for
consideration23.

19
NTPC Ltd. v. SPML Infra Ltd., (2023) SCC OnLine SC 389.
20
Id. Para 28.
21
Id. Para 27.
22
Magic Eye Developers Pvt. Ltd. v. Green Edge 23
Id. Para 11, 12.
Infrastructure Pvt. Ltd., (2023) 8 SCC 50.
35
INDIAN LEGAL IMPETUS
Volume XVI, Issue X

▪ Conclusion
The extant jurisprudence and legislative efforts
reflect a holistic intention to promote arbitration as
a means to settle disputes in the country by
minimal court interference while also balancing
interests of parties by protecting them from
participating in arbitral proceedings where the
alleged dispute is non-arbitrable. The jurisdiction
and scope of an Arbitral Tribunal to rule upon its
own jurisdiction is diminishing with the influence
of the Referral Courts in conclusively and finally
establishing the jurisdiction of an Arbitral Tribunal.
However, certain judicial intervention is necessary
in the rarest of the rare cases where the alleged
disputes are on the face of it non-arbitrable and an
innocent party is being forced into an expensive
Arbitration.
As on today, the hanging sword of an incomplete
omission of subsection (6A) of Section 11 of the
Arbitration Act along with the evolving stance of
Referral Courts forecasts an unsettled legal
position and potentially paves way for roadblocks
in speedy disposal of disputes. The authors submit
that in view of the discussion in this piece, it is the
need of the hour that the scope of judicial scrutiny
at reference stage is redefined and the legal
position is settled by a larger bench.
********

36
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
INSTITUTIONAL ARBITRATION IN INDIA: PROMOTION OF INDIA
AS A HUB OF ARBITRATION
- Rahul Pandey and Avishikta Chattopadhyay
Introduction
Institutional Arbitration as opposed to Ad-hoc
Arbitration refers to the mode of arbitration in
which established institutions serve as the medium
for resolution of disputes between parties. Arbitral
institutions assist the parties in various ways such
as providing place or venue related services,
logistical and administrative support, creating
roster of arbitrators and delineating procedure for
appointment of Arbitrator(s). Furthermore, the
rules of an Arbitral Institution, delineate a proper
framework for successful dispute resolution
helping the parties reach a decision in a time
bound and efficacious manner.
The exponential growth of arbitration for
adjudicating civil and commercial disputes globally
is directly related to the increase in establishment
of arbitral institutes. According to the 2021
International Arbitration Survey titled “Adapting
arbitration to a changing world” conducted by
Queen Mary University of London and White &
Case LLP, the five most preferred arbitral
institutions were International Chambers of
Commerce(“ICC”), Singapore International
Arbitration Centre (“SIAC”), Hong Kong
International Arbitration Centre (“HKIAC”) and
London Court of International Arbitration
(“LCIA”).1
1
Queen Mary University of London, 2021 International
Arbitration Survey: Adapting Arbitration to a Changing
World ( 2021)
https://arbitration.qmul.ac.uk/research/2021-
international-arbitration-survey/
-
Subsequently, these countries have also become
preferred seats of arbitration because of the
acceptance of the local courts and judiciary,
transparency and unbiases of indigenous legal
system and greater scope of enforceability of
arbitral awards and contracts.
Apparently according to the recent statistics
shared by the arbitral institutes, India has been
amongst the top users of the arbitration services
provided by LCIA2 and HKIAC3 and the top-most
user of services at SIAC4. Therefore, the statistics
prove that India is a good source of arbitration
cases worldwide however, the parties prefer
institutions outside India therefore the pertinent
question that arises is how can India establish itself
as a successful seat of arbitration?
Notably, one of the major ways in which India can
ensure its position as a global seat of arbitration is
through establishment and promotion of
independent institutes for resolution of domestic
and international disputes. This Article discusses
the measures taken by the government to develop
institutional arbitration thereby helping to
promote India as a global seat of arbitration.
2
London Court of International Arbitration, 2022 Annual
Casework Report (2023)
https://www.lcia.org/LCIA/reports.aspx
3
Hong Kong International Arbitration Center, HKIAC
Releases Statistics for 2022, (20 Jan 2023)
https://www.hkiac.org/about-us/statistics
4
SIAC, Annual Report (2022), https://siac.org.sg/wp-
content/uploads/2023/04/SIAC_AR2022_Final-For-
Upload.pdf 37
INDIAN LEGAL IMPETUS
Volume XVI, Issue X

Measures by Government of India towards The Amendment Act added Section 43A, Part IA to
establishing Arbitral Institutions the Act and established ACI with the intent to give
an impetus to institutional arbitration. The ACI was
The Government of India has taken several
defined as a body corporate with head office at
measures to promote institutional arbitration,
Delhi. The Amendment Act also delineated the
including the establishment of the organisations at
composition, term of office, salaries & allowances
different jurisdictions to resolve international
and the powers and functions of the ACI. ACI was
disputes, promoting discourse on institutional
also given the power to establish an electronic
arbitration by establishing committees and
depository of awards. The Amendment Act 2019
organising international conferences related
prepared a road map for establishment of ACI;
international arbitration. The following passages
however, the process has been slow. The delayed
discusses the different measures taken by the
establishment of the ACI undermines the intent of
Government and other organisations to promote
the Amendment Act of 2019 which aimed to
Institutional Arbitration.
streamline and improve the process of alternative
Arbitration Amendment Act, 2019 dispute resolution in India.

Following the 2015 Amendment to the Arbitration Measures taken by India International Arbitration
and Conciliation Act, 1996 (“Act”), the Central Centre
Government set up a high-powered committee
Pursuant to the recommendations of the Sri
chaired by Justice B.N. Sri Krishna to review
Krishna Committee the India International
institutionalisation of arbitration mechanism in
Arbitration Centre, Act was also passed in the year
India. The Report recognised major arbitral
2019 which established the India International
institutions in India and pointed to the relative
Arbitration Centre (“IIAC”) for the purpose of
advantage of institutional arbitration over ad-hoc
transfer of undertakings of the ICADR. IIAC was
arbitration. The Committee while discussing the
declared as an institute of national importance.
necessity of establishing reliable arbitral
The objective of the measure was to increase the
institutions preferred declaring the International
management of arbitration to make India a hub of
Centre for Alternative Dispute Resolution
global arbitration.
(“ICADR”) established in 1995 as an institute of
national importance. The IIAC notified the India International Arbitration
Centre (conduct of Arbitration) Regulations, 2023
On the recommendations of the Sri Krishna
in September 2023. The Regulations provide a
Committee on the 15th July, 2019 the Arbitration
framework for conduction of arbitration from the
and Conciliation (Amendment) Bill, 2019 was
application to making of award. Additionally, the
presented in the Rajya Sabha and received the
Regulations introduced novel ideas such as
President’s ascent on the 9th of August, 2019. One
emergency arbitration and fast track arbitration
of the important tenets of the Amendment of 2019
which was previously judicially discussed but never
was the creation of Arbitration Council of India
adopted in the statutory framework of the country.
(“ACI”).

38
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
It can be inferred that the essence of the
Regulations of 2023 was to give a mandate to the
Centre to ensure smooth conduction of arbitration
and ensure time-bound completion of arbitration.
In September 2023 IIAC organised a conference on
the agenda of institutional arbitration. One of the
important topics of discussion was the substitution
of ad-hocism with institutional arbitration. While
speaking in the conference Hon’ble Justice AK Sikri,
mentioned that the problems of ad-hoc arbitration
are taken care of in institutional arbitration.
According to him, to make India arbitration
friendly, the government and the arbitral
institutions should focus on building a vigorous
legislative framework and increase pro-arbitration
stance of the judiciary.
One of the important recommendations of the
Justice Krishna Committee, that was mentioned by
the Attorney General of India, R Venkataramani
during the IIAC conference was the creation of All-
India Arbitration Bar. According to him a
specialised arbitration bar would attract notable
talent and specialised discourse on the subject of
arbitration and would put India at a relatively
advantageous position compared to her
counterparts.
UNCITRAL RCAP South Asia Conference 2023
The United Nations Commission on International
Trade Law (“UNCITRAL”) in association with the
Ministry of External Affairs, Republic of India and
UNCITRAL National Coordination Committee
organised the South Asia Conference, a flagship
event where the dignitaries discussed about the
importance of international commercial
arbitration.
The Chief Justice of India, Hon’ble Justice D.Y.
Chandrachud mentioned that “India’s future as an
arbitrating country is cemented.” Referring to the
institutions in India and the significant reduction in
costs that arbitration and mediation provides, he
inferred that arbitration is particularly beneficial
for smaller or mid-tier enterprises who will not be
required to shall out large sums by way of legal fees
for court proceedings that may take years to
complete. He also pointed out to the importance
of inclusivity and gender diversity in the
composition of the arbitral panels.
During the UNCITRAL RCAP South Asia Conference
Senior Advocate Fali S. Nariman mentioned the
contemporary problems related to the resolution
of disputes via arbitration. According to him,
contrary to the established position of law, in
practice, arbitration suffers from inordinate delays
and expenses which needs to be rectified through
policy changes. It can be inferred that he was
pointing towards creating a framework where the
process of arbitration would be free from excessive
expenditure and rigid cost structures which is
prevalent both in ad-hoc and institutional
arbitration. Similarly, creating a more transparent
cost structure would ensure party belief in the
process of arbitration.
Conclusion
From the above it is clear that following the
Amendment of 2019, several measures have been
taken for institutionalisation of arbitration. In
2022, the Hon’ble Finance Minister while
presenting the Union Budget 2022 provided for
setting up of an International Arbitration Centre at
the GIFT City, Gujarat.
39
INDIAN LEGAL IMPETUS
Volume XVI, Issue X

In June 2023 the Government has constituted an
Expert Committee under the Chairmanship of Shri
Dr. T.K. Vishwanathan (Former Law Secretary) to
examine the working of the arbitration law in the
country. The committee rolled out notice inviting
comments from stakeholders for making changes
and to evaluate and analyse the operation of the
extant arbitration ecosystem in the country
including the working of the Arbitration Act 1996.
The proactive stance of the Government regarding
institutionalisation of arbitration is clear from the
measures announced by different agencies
regarding institutionalisation.
Subsequent to the various developmental
measures taken by the Government of India,
regional and state sponsored institutions were
established in India with the intent of promoting
Institutional Arbitration. Different public sector
undertakings also established in-house arbitral
institutions. These in-house institutions functioned
independently and made their own arbitration
rules. These rules reflect the essence of the
principles of arbitration enshrined in the UNCITRAL
Model Law on International Commercial
Arbitration and the Arbitration & Conciliation Act,
1996.
At the domestic level, India should strive in the
building a viable framework for enforcing domestic
and international contracts and awards, creating
transparency in the time and cost for resolving
commercial disputes and enhancing judicial
independence. At the international level, India
should focus on the creation of a holistic
environment for stakeholders by furthering
inclusivity, build a robust ex-post resolution
mechanism and engage in the international
conventions relating to dispute resolution.
Concluding thus, the potential of India’s
transformation into a global arbitration hub is
immense. With India’s growth as an arbitration hub
several infirmities that are innate in the dispute
resolution system will also be alleviated thereby
creating a better atmosphere for protection of
rights and remedial measures for the parties.
*******

The transformation of India into an arbitration hub

will not be a cakewalk and will require careful
assessment of the parameters of alternative
dispute resolution that India is seriously lacking in.
For this, efforts will have to be taken in both
domestic and international levels.

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

MONEY LAUNDERING – IDEA AND EXECUTION?

EFFECTIVE LEGAL INFRASTRUCTURE IN PLACE, INADEQUATE
IMPLEMENTATION.
- Piyusha Singh

Introduction Thereafter, a separate procedure of trial is

As the distance in corridors has reduced between
the countries with the advancement and
improvement of technology, the ease of business
relationships within international territories has
increased. However, such connectivity has also
given rise to innovative methods of several illegal
activities as well as transactions. Most of the
countries have enacted legislation, to combat the
economic offences, which is the consequence of
the aforementioned illegal transactions. The
Prevention of Money Laundering Act, 2002
(“PMLA”) is the legislation in India aimed at
tackling the serious threat of money laundering
being a serious economic offence. It is a modern
forfeiture law that envisages proceedings for the
identification, attachment and disgorgement of
illegal profits from criminal to deprive criminal
organizations of their funding.1 The proceedings
under the PMLA initiate with the adjudication
process i.e. the issuance of a Provisional
Attachment order by the Directorate of
Enforcement concerning the property in question
under Section 5 and consequential confirmation of
the aforementioned Provisional Attachment by the
Adjudicating Authority under PMLA as per Section
8 of the PMLA.
-
provided under the PMLA, which is mandated to
begin within a period not exceeding 365 days from
the order of confirmation [Section 8(3)(a)], unless
the investigation is stayed by any Court under the
law for the time being in force [Section 8(3)(b)].
As explained in the Guide to the PMLA & Proceeds
of Crimes, 2022, the offence of money laundering
in India is not a “sui generis autonomous offence”
but is dependent on the commission of a
predicate/schedule offence. It envisages the
proceedings for attachment as being separate and
in the nature of interim measures required to be
taken to avoid a situation where proceedings are
rendered redundant on account of the property
being squandered away.2
It is to be borne in mind that persons involved in
allegations categorized within white-collar crimes
such as the ones under PMLA are generally
commercial corporations and people working for
such organisations. Therefore, it is necessary for
the authorities to mindfully conduct the
adjudication process and take steps further to it, as
the actions under PMLA naturally affect the
reputation of business organizations thereby
affecting the business relationship and economy.

1 2
Guide to the PMLA & Proceeds of Crime, Wadhwa Law Guide to the PMLA & Proceeds of Crime, Wadhwa Law
Chambers, Ed. 1st, Pg. vii. Chambers, Ed. 1st, Pg. xv.

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Understandably, it is necessary to protect the
property in question under the offence of money
laundering, however, at the same time, it is vital
that in an attempt to achieve the object of PMLA
and bring to book the offenders, it must also
safeguard the rights of the persons and ensure
fairness in the procedure.
The present article deals with the lack of proper
implementation of codified law by the
Administrative Authorities affecting the rights and
liberties of individuals along with creating an
added burden upon judicial agency. The article also
deals with the effect of such poor implementation
on international business opportunities and the
international economy.
Mechanism provided by the Statute for the
adjudicatory process of money laundering
The legislature was mindful of the powers
conferred upon the administrative authorities and
therefore, specific conditions/safeguards have
been incorporated within the provisions to
mitigate any arbitrary approach on behalf of such
authorities. A mechanism for adjudication has
been provided under Sections 5 & 8 of PMLA to
confront various aspects to determine the
proceeds of crime and people involved with the
proceeds of crime. Section 3, of PMLA answers the
question of what is an offence of money
laundering.
Section 3 of the PMLA also clarifies who is involved
in the offence of money laundering. Firstly, the said
provision essentially stresses upon the term
“knowingly” thereby giving importance to the
knowledge i.e. “mens rea” or intent of committing
a wrongful act.
Secondly, to fulfil the ingredients of Section 3 the
component of projection has to be established.
Hence, the act of concealment, possession, and
acquisition has to be coupled with projecting or
claiming a tainted property as untainted property.
Once, the offence in accordance with Section 3 is
established, the Competent Authority under
Section 5 has the power to issue a Provisional
Attachment Order for the attachment of the
proceeds of crime to secure it from being
destroyed, concealed or transferred. However,
such action on behalf of the Competent Authority
can only be undertaken if there is some “reason to
believe” based on the material at hand and such
reason is recorded. This very condition is an inbuilt
safeguard against any arbitrary approach by the
Competent Authority. Therefore, the order of
provisional attachment is, thus, the outcome of
satisfaction already recorded by the Competent
Authority.
Thereafter, by virtue of Section 5(5) of the PMLA,
the Competent Authority, within 30 days from the
attachment has to file a complaint stating the facts
before the Adjudicating Authority. The
Adjudicating Authority in furtherance of the
aforementioned complaint and in accordance with
Section 8 of the PMLA, pursuant to providing an
opportunity of being heard to the aggrieved
person and taking into account all relevant
materials, pass an order within a period of 180
days either confirming the provisional attachment
of the proceeds of crime or releasing the proceeds
of crime. The Adjudicating Authority can also pass
necessary orders with regard to the involvement of
parties in money laundering.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
The understanding of legislative intent for the
introduction of this special Statute and devising a
separate machinery for investigation as well as
enforcement is definitely to streamline the process
for money laundering offences. Furthermore,
several safeguards have been provided by the
legislature including the necessity of independent
reasons to be recorded by the Investigating and
Adjudicating Authorities raising genuine concerns
about money laundering and not merely being
dependent upon the outcome of investigation
under predicate offence.
Hence, if the adjudicatory process under PMLA is
undertaken carefully and as mandated by the
Statute, then the authorities will be able to
determine the involvement of people at an initial
stage. In doing so, the corporations will be saved
from unnecessary connection with a criminal case
and as a result, the reputation of the corporation
shall remain unharmed as well as maintain its
opportunities for further commercial endeavours,
thereby ensuring continued improvement in
domestic and international economy.
The mechanical approach of administrative
authorities and its consequences
Surprisingly, even after the parameters are set out
by the legislation and a statutory mandate has
been provided for the authorities to exercise
powers, the approach of the administrative officers
is neither diligent nor careful. As discussed in the
preceding portion of the article, if the
aforementioned parameters are meticulously
adhered to, then persons and business
corporations would be removed from the initial
adjudication process itself. Hence, saving them
from the long trial process.
However, provisional orders or notices are
prepared in a standard format, with no attention to
the documents available at hand.
Unfortunately, as a matter of practice, all the
people involved in the predicate/scheduled
offence, are automatically made a party in the
offence of money laundering too, without looking
into the involvement of each person or their role in
the offence of money laundering. It is important to
keep in mind that a person cannot be subjected to
an investigation by the Enforcement Directorate
Authorities merely because an FIR has been
registered for a predicate/scheduled offence,
which usually has become a practice of these
authorities.
As a statutory mandate, proper reasons have to be
recorded by the Administrative Authorities for any
action taken while exercising the powers conferred
by PMLA. Nevertheless, most of the time, instead
of recording reasons as stipulated by the
provisions, the Administrative Authorities just to
comply with procedural formalities and to fulfil the
mere requirement of rubber stamp, reword the
contentions of the Law Enforcement Agencies in
the predicate/scheduled offence.
The internal consequences of such a mechanical
approach and arbitrary action are twofold; (i) upon
the liberties of the individual subjected to such
investigation and (ii) burden upon the judicial
system.
Firstly, the person subjected to investigation by the
Enforcement Directorate has serious ramifications
upon such a person's rights, liberties and
reputation. Secondly, the purpose behind the
administrative officers independently assessing
each case by the material present with them is also
to reduce unnecessary burden upon the judicial
system i.e. the appellate authorities.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Since the first limb of the investigation is
performed merely to fulfil procedural compliances
and not to fulfil the intent of the Statute,
consequently, the appellate judicial system is
flooded with similar questions primarily the issue
of non-examination of the case and documents at
hand during adjudication process to establish a
case of money laundering. Further, such appeals
take a long time to reach a final decision thereby
affecting the parties/corporations involved in it.
Additionally, the commercial consequences of such
involvement in the adjudicatory process of money
laundering affect (i) the reputation of the
corporations, (ii) the legitimacy of the functioning
of such corporations, (iii) it has dire consequences
on the business and other commercial contracts
and (iv) unlike arbitrations and negotiations such
litigation costs cannot be compensated, (v)
therefore, the corporations face economic
consequences not just from loss of opportunities
but also litigation costs.
It is well established by now with the support of a
plethora of judgments that a direct link/nexus has
to be established between the persons assumed to
be involved in an offence of money laundering and
the proceeds of crime. It has been held in Vijay
Madanlal that the proceeds of crime being the
core of the ingredients constituting the offence of
money laundering have to be construed strictly.
Therefore, all properties recovered or attached by
the investigating agency in connection with the
criminal activity relating to a scheduled/predicate
offence under the general law cannot be regarded
as proceeds of crime. The authorities under PMLA
cannot resort to action against any person for
money laundering on an assumption, but the
existence of projection of tainted property as
untainted, which is the quintessential ingredient
for the offence of money laundering.
It is amply clear that the offence of money
laundering is an independent offence regarding
the process or activity connected with the
proceeds of crime, which had been derived or
obtained as a result of criminal activity relating to
or in relation to a scheduled/predicate offence. The
process or activity can be in any form – be it one of
concealment, possession, acquisition, or use of
proceeds of crime as much as projecting it as
untainted property or claiming it to be so.3
Therefore, the authorities must establish any of
the above-mentioned acts related to the proceeds
of crime to demonstrate a person’s involvement in
the offence of money laundering. This can be done
only if the investigating authorities have conducted
a diligent investigation, independently assessing
the documents and materials through the
parameters set under PMLA.
The basic test to identify Money laundering
offences in developed jurisdictions
In the UK, the Codes of Practice emanate from the
Proceeds of Crime Act, of 2002, which reinforces
the need to follow the statutory requirements that
must be met to obtain an order or warrant before
making the application. The importance is also
given to the objective test which is involved in
considering whether there are reasonable grounds
for suspecting that a person has benefitted from
his criminal conduct or has committed a money
laundering offence. The code suggests that a
reasonable suspicion can never be supported
based on personal factors alone. It is necessary for
reliable supporting information to be available. It
should not be based on information from an
anonymous source without corroboration.4
3
Vijay Madanlal and Others vs. Union of India and Others,
2022 SCC OnLine SC 929.
Note: The SC on 25 August 2022 issued notice on a review
petition, Karti P Chidambaram v. Directorate of
Enforcement R.P. (Crl.) No. 219/2022, seeking review of
the above judgment.
4
Code of Practice under Section 477 of the Proceeds of
Crime Act, 2002 (UK): Investigations, 2018, para. 28-34,
pp.8-9. 44
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
As per the prerequisites under the Proceeds of
Crime Act, 2002, there are explicit requirements
with regard to “reasons to believe” set out, to
make a production order in relation to a money
laundering investigation.
While dealing with the question of conspiracy it
was observed by the Court of Appeal that it could
not have been construed that a person may have
obtained property or derived a pecuniary
advantage when a proper view of the evidence
demonstrates that has not in fact done so. 5
Most of the Commonwealth countries have
enacted generic asset forfeiture laws, such as the
Proceeds of Crime Acts, however, in the United
States; the property, which can be forfeited either
civilly or criminally, varies generally from one
offence to another. Still, under the United States
Code, the offence of money laundering constitutes
concealing the illicit background of the sources of
the money.
The United States Court of Appeals, Eleventh
Circuit, while deciding inter alia a money-
laundering charge after substantial consideration
held that there was no evidence to establish a
conspiracy to commit money laundering. To
sustain the charge of money laundering there must
be proper evidence to substantiate the unlawful
scheme.6
Analysis
Essentially, the PMLA was enacted to regulate and
administer the offences relating to money
laundering. The legislative intent was to ensure
independent and separate investigation, thereby
giving power to the Investigating Authorities to
conduct the investigation.
5
R vs. Olubitan, [2003] EWCA Crim 2940.
6
United States of America vs. Paul Jhonson, 440 F.3d
1286 (6th Cir. 2010).
The statement and object of PMLA is to prevent
money laundering which affects the economic
fabric of the nation. The Vienna Convention and
the United Nations Conventions against
Transnational Organized Crimes, 20007, also state
that money laundering is only committed if the use
and/or concealment is to conceal or disguise the
illicit origin of the property or helping any person
who has been involved in the commission of the
predicate offence to evade the legal consequences
of his/her action.
Hence, the factor that is at the centre of all the
legislation, as well as international treaties, is the
existence of tainted property and the knowledge of
it. Without the existence of both the
aforementioned conditions, the offence of money
laundering will have no legs to stand on. Therefore,
if the procedure given under PMLA is cautiously
undertaken which has the essence of the
previously mentioned treaties, then the aim of
combating money laundering will be achieved
without undue harassment of innocent persons.
The purpose of a codified law for money
laundering is to prevent money laundering,
attachment of proceeds of crime, adjudication and
confiscation thereof, along with prosecuting
persons involved in the process or activity
connected with the proceeds of crime. The
amendments are made to tackle the dynamic and
evolving nature of money laundering. Therefore,
such means and measures must be used to curtail
and eventually diminish the illicit usage of
unaccounted property “proceeds of crime”.
7
Article 6, United Nations Convention Against
Transnational Organized Crime and the Protocols
Thereto.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

However, the officers must refrain from enlarging

the scope of the law and subsequent amendments
by attributing their interpretation; without keeping
the essence/aim of domestic legislation as well as
international treaties against money laundering as
their focal point.
Conclusion
India has an effective mechanism in place to deal
with money laundering, the spirit of which can be
strengthened with proper implementation right
from the adjudication process. This would
fundamentally fulfil the purpose of the PMLA along
with persistent economic growth.
With recent judicial interference, the
circumstances under the adjudication process of
the PMLA have considerably improved. This acts as
an assurance that the Indian judicial system
upholds the sanctity of rights and liberties of each
person along with giving importance to the correct
implementation of its laws. Hence, along with the
object to combat money laundering, India also
promotes healthy economic/commercial relations
both in the domestic as well as international arena,
bringing it to par with the developed nations in
recent times.
*********

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
THE LOGIC OF ‘COUNTER-BALANCING’ IN ARBITRATION
AGREEMENTS PROVIDING FOR ASYMMETRIC POWER OF
APPOINTMENT OF ARBITRATORS
Introduction
In Indian Law, the appointment of Arbitrators is
governed under Section 11(2) read with Section
11(6) of the Arbitration and Conciliation Act, 1996
(“Act”). Under Section 11(2) of the Act, the parties
are free to agree on a procedure for appointing the
Arbitrator or arbitral tribunal. However, if the
proposed Arbitrator's relationship with parties,
counsel, or subject matter falls under the
categories specified in Schedule VII, he/she is
ineligible for appointment as Arbitrator. While
there is no bar on unilateral power to make the
appointment of Arbitrator under Indian law1,
unilateral power to appoint Arbitrators has been
found by Indian courts as prejudicial, biased, and
against the scheme of independence and
impartiality of Arbitrators.2 However, the Courts
have distinguished sole Arbitrator tribunal and
arbitral tribunal comprising multiple Arbitrators
when it comes to the legality of the unilateral
appointment of the Arbitrator. The difference in
treatment is based on the fact that, unlike sole-
Arbitrator tribunal where the choice has an
element of exclusivity, the power to nominate an
Arbitrator is counterbalanced by the power of the
Respondent to appoint its nominee Arbitrator as
well.
1
D.K. Gupta and another v. Renu Munjal, 2017 SCC OnLine Del
12385 & Bhayana Builders v. Oriental Structural Engineers Pvt
Ltd., 2018 SCC OnLine Del 7634.
2
See Perkin Eastman Architects DPC v. HSCC (India) Ltd, (2020)
20 SCC 760.
- Ankur Mishra
Despite the reliance on counter-balancing, the
meaning of counter-balancing under Section 11
read with Section 12 of the Act remains unclear.
Additionally, there is confusion on the application
of counter-balancing in cases involving arbitral
tribunal comprising multiple Arbitrators. Recently,
three judgments of the Delhi High Court namely
Margo Networks Pvt Ltd & Anr v. Railtel
Corporation of India Ltd3 (“Margo Networks”),
Steelman Telecom Limited v. Power Grid
Corporation of India4 (“Steelman Telecom”) and
Taleda Square Private Limited v. Rail Land
Development Authority5 (“Taleda Square”) shed
light on how Courts apply the principle of counter-
balancing in the appointment of Arbitrators under
Section 11(6) of the Act.
This Post attempts to sketch the framework of
counter-balancing that has been adjudged by the
Courts in India in their assessment of the unilateral
power to appoint Arbitrators. Subsequently, this
Post presents a brief critique of how counter-
balancing has come to be characterized under
Indian arbitration law.
3
Margo Networks Pvt Ltd & Anr v. Railtel Corporation of
India Ltd, 2023 SCC OnLine Del 3906.
4
Steelman Telecom Limited v. Power Grid Corporation of
India Limited, 2023 SCC OnLine Del 4849.
5
Taleda Square Private Limited v. Rail Land Development
Authority, ARB. P. 637 of 2023 before Delhi High Court.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Principle of Counter-Balancing in Sole-Arbitrator
Tribunal
In the case of Sole Arbitral Tribunal, the Courts
have in the case of TRF Ltd. v. Energo Engineering
Projects Ltd6 (“TRF”) and Perkins Eastman
Architects DPC v. HSCC (India) Limited7 (“Perkins
Eastman") conclusively ruled that unilateral power
to appoint the Arbitrator in a sole-Arbitrator
tribunal would fall foul of Section 12 of the Act. In
TRF, the Supreme Court of India (“Supreme Court”)
ruled that the person designated as Arbitrator, who
himself is ineligible under the Act to be appointed
as Arbitrator, cannot nominate an Arbitrator. In
TRF, the dispute resolution clause provided that
the dispute would be referred to the sole
arbitration of the Managing Director of the buyer
and/or his nominee. The Supreme Court in TRF
ruled that a “statutorily ineligible” authority
cannot nominate any other person to act as the
Arbitrator in its place. The ruling of TRF was given
its ‘logical deduction’ in Perkins Eastman wherein
the ineligibility to make the appointment of an
Arbitrator was extended even to those cases where
one authority was merely empowered to nominate
and not to act as Arbitrator. The ineligibility, as
understood in TRF and Perkins, arises from the
interest of the nominating authority in the
outcome of the dispute. Thus, it makes no
difference whether the nominating authority is
himself an Arbitrator with the additional power to
appoint or merely has the power to appoint an
Arbitrator for the dispute.
6 Hydrocarbon Engineering Limited v. Indian Oil Corporation
TRF Ltd. v. Energo Engineering Projects Ltd, (2017) 8 SCC
377.
7 10
Perkins Eastman Architects DPC v. HSCC (India) Limited,
(2020) 20 SCC 760.
However, in TRF and Perkins Eastman, the
ineligibility arising out of unilateral power to
appoint Arbitrators was limited only to Sole
Arbitrator Tribunals. The Courts have in TRF and
Perkins Eastman had observed that whatever
advantage a party may derive by nominating an
Arbitrator of its choice would get counterbalanced
by equal power with the other party. Counter-
balance was thus set as an equal and parallel
power to appoint Arbitrators in a given dispute.
Principle of Counter-Balancing in Arbitral Tribunal
comprising of Multiple Arbitrators
In disputes involving public sector undertakings,
usually the dispute resolution mechanism
stipulates one party to select its nominee
Arbitrator from a panel of Arbitrators made by the
other party. In Voestalpine Schienen Gmbh v. Delhi
Metro Rail Corporation,8 (“Voestalpine”) Supreme
Court has ruled that the panel of Arbitrators is
required to be broad-based and the choice should
be given to the concerned party to nominate any
person from the entire panel of Arbitrators.9 There
is, however, no contradiction between the ruling of
Perkins Eastman and Voestalpine.10 The rule of
counter-balancing was again stated by the
Supreme Court in Central Organisation for Railways
Electrification v. M/s ECI-SPIC-SMO-MCML11
(“CORE”). In CORE, the Supreme Court had held
that the power to appoint an Arbitrator by one
party was counter-balanced by an equal power in
favor of the other party.
8
Voestalpine Schienen Gmbh v. Delhi Metro Rail
Corporation, (2017) 4 SCC 665.
9
Overnite Express Limited vs. Delhi Metro Rail Corporation,
ARB. P. 18/2020 before Delhi High Court. Also See L&T
Limited, 2022/DHC/004531
Lite Bite Foods (P) Ltd v. Airports Authority of India, 2019
SCC OnLine Bom 5163.
11
Central Organisation for Railways Electrification v. M/s
ECI-SPIC-SMO-MCML, 2019 SCC OnLine SC 135.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Therein, Respondent was required to choose two
nominees from the list of four nominees provided
whereafter the General Manager would then
choose the 3rd Arbitrator. Based on the same, the
Supreme Court has held that the power of the
General Manager to appoint the 3rd Arbitrator was
offset by the fact that the Respondent could
choose two out of three Arbitrators.
The ruling of CORE is not the last word on Counter-
Balancing, the Supreme Court in CORE had not
specifically ruled on whether the particular panel
was truly broad-based and whether the
circumstance in which a panel-based appointment
procedure can be said to achieve genuine
"counterbalancing" as contemplated in Perkins.
What is also not clear from the ruling of CORE is
whether the counter-balancing posed in CORE was
a general principle of law derived by the Court or a
specific conclusion based on the facts of the case.
After the judgment of CORE, Delhi High Court in
M/s CMM Infraprojects Ltd. v. IRCON International
Ltd and Pankaj Mittal v. Union of India12 observed
that handpicking from the panel of Arbitrators
whereby the 2/3rd strength of the Arbitral Tribunal
is nominated by one party restricts the element of
choice and tips the scale in the favor of one party.
However, the judgment of CORE is distinguishable
on facts given that the arbitration clause in M/s.
CMM Infraprojects was not amended in light of the
Arbitration & Conciliation (Amendment) Act, 2015
which was not the case in CORE.
12
Pankaj Mittal v. Union of India, Order dated 16.12.2021
in ARB. P. 607/2021 before Delhi High Court.
Recently, in Margo Networks, the Delhi High Court
has ruled that “counter-balancing” as
contemplated in Perkins cannot be said to have
been achieved in a situation where one of the
parties has a right to choose an Arbitrator from a
panel and where the remaining (2 out of 3)
Arbitrators are appointed by the other party. In
Steelman Telecom13, the Delhi High Court ruled
that despite the panel being broad-based, the
equilibrium was disturbed where the party
drawing up the panel was given a further right to
accord its "confirmation" as to the choice exercised
by the other contracting party.
Resultantly, the counter-balancing as understood
in TRF and Perkin Eastman is distinct from the
counter-balancing as understood and applied in
CORE. At the outset, it must be noted that a
reference against the judgment in CORE is pending
before the Supreme Court.14 In TRF and Perkins
Eastman, counter-balancing was a case of one
party appointing its nominee and the two
nominees together decide the presiding nominee
Arbitrator. Whereas CORE contemplates counter-
balancing in the form of the right of one party to
select an Arbitrator from a curated panel of
Arbitrators by the other parties' power to choose
any two from out of the four names. The ruling in
CORE does not address the question of whether
the appointment of an Arbitrator from a panel by a
party having an interest in the outcome would fall
foul of Schedule VII of the Act.
13
Steelman Telecom Limited v. Power Grid Corporation of
India Limited, 2023 SCC OnLine Del 4849.
14
Union of India v. Tantia Constructions Ltd., 2021 SCC
OnLine SC 271.
49
INDIAN LEGAL IMPETUS
Volume XVI, Issue X

The ruling of CORE undercuts the parallel to

ineligibility drawn by TRF and Perkins Eastman
when it comes to the question of counter-
balancing. The ruling in recent Delhi High Court
Judgments of Margo Networks, Steelman Telecom
and Taleda Square clarifies that there can be no
counter-balancing if the balance of scale insofar as
the arbitral appointment is concerned is tipped in
favor of one party by either skewing the unilateral
appointment or providing a mechanism for
confirmation.

Conclusion

The emphasis on counter-balancing is laudable as

it attempts to translate and give effect to the
intentions of the parties; however, the same
cannot be turned into a basis for reversing the
ineligibility specifically stipulated under the Act.
The recent judgments of the Delhi High Court in
Margo Networks, Steelman Telecom and Taleda
Square are progressive since they have ruled
against the asymmetrical power of appointment of
Arbitrators. As a result, the legal position vis-à-vis
appointment of arbitral tribunal requires that not
only the panel for selection be broad-based but
that the power of appointment of Arbitrator is
truly counter-balanced without giving one-party
control over the appointment of Arbitrator by
another party.

********

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
TRADITIONAL KNOWLEDGE AND SCOPE OF PATENT PROTECTION
What is Traditional Knowledge? Traditional
knowledge refers to the knowledge, experience,
skills, abilities and applications that have been
developed, maintained, practiced and transmitted
from one generation to the next within a particular
region or community. Traditional knowledge is
often a part of a community’s cultural, social and
spiritual identity. Traditional knowledge can be
used in a wide range of contexts, including
agricultural knowledge, scientific knowledge,
technical knowledge, ecological knowledge,
medicinal knowledge and biodiversity knowledge.
Traditional Knowledge (TK) is not documented and
is usually transmitted through oral tradition.
Examples are as follows:
• Use of turmeric (Curcuma longa) for
medicinal purposes.
• Use of ashwagandha (Withania somnifera)
to treat heart related ailments.
• Traditional healing practices such as Yoga.
Defensive protection of Traditional Knowledge
A group of tactics known as defensive protection
are used to prevent third parties from acquiring
unauthorized or unjustified intellectual property
rights over TK. These actions include modifying the
International Patent Classification System and the
Patent Cooperation Treaty (PCT) Minimum
Documentation, both of which are maintained by
the World Intellectual Property Organization
(WIPO).
- Suchi Rai
The WIPO defines the PCT minimum
documentation as the minimal standard for patent
collections used to search for prior art records in
order to judge novelty and ingenuity. Some
nations and groups are also creating databases of
traditional knowledge, which might be used as
proof of "prior art" to disprove a claim to a patent
on such TK. In order to help holders of traditional
knowledge properly document their knowledge,
WIPO has created a toolbox.
Positive protection of Traditional Knowledge
The prevention of unlawful use of TK and the active
utilization of TK by the community that created it
are the two components of effective TK protection
by IP rights that are currently being investigated.
Within the WIPO Intergovernmental Committee
on Intellectual Property and Genetic Resources,
Traditional Knowledge, and Folklore, negotiations
are taking place on a global legal instrument. Sui
generis laws have been created in various nations
expressly to address the positive protection of TK.
Additionally, both providers and users are free to
sign legal contracts and/or exploit the protection
offered by current IP systems.
Patentability of Traditional Knowledge:
Section 3(p) of the Indian Patents Act, 1970
prohibits the protection of TK. An invention which
in effect, is traditional knowledge or which is an
aggregation or duplication of known properties of
traditionally known component or components is
not an invention and cannot be patented.
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However, IP protection might be requested if the
current TK has undergone a significant advance
that enables the invention to meet the
requirements under Indian IP legislation.
Since a large portion of TK has been passed down
orally or through written record for years, prior
knowledge of the innovation is the main concern
when it comes to safeguarding TK. Due to the fact
that the majority of TK is previously considered
"prior art" and so lacks sufficient novelty to qualify
for patent protection, most TK is ineligible for IP
protection.
TK is an integral part of the knowledge strength of
local communities. Attempts to utilize community-
owned TK for industrial or commercial purposes
are a major problem, as intellectual property
protection creates a monopoly for patent holders,
resulting in unfair exploitation of community-
owned knowledge. It has become. Governments
around the world, including India, have enacted
laws to prevent this unfair exploitation of TK.
The protection of TK is adequately provided for by
Indian law. TK is public domain, so any patent
application relating to TK does not meet the
requirements of section 2(1)(j) of the Patents Act,
1970, which states that "invention means a new
thing... involving an inventive step and capable of
industrial application." Additionally, a substance
created by a simple admixture that only aggregates
the properties of its constituent parts is not an
invention and is not, therefore, patentable,
according to section 3(e) of the Patents Act.
Applications for patents based on TK that violate
legal requirements may be rejected under section
15 of the Patents Act of 1970, as well as in pre-
grant opposition under clauses (d), (f), and (k), and
granted patents may be revoked in post-grant
opposition under clauses (d), (f), and (k) of section
25 (2).
All patent applications relating to TK must be
accurately categorized as "Traditional Knowledge"
by the RECS Section of the Patent Office. The RECS
in-charge must take reasonable precautions to
ensure that no case involving TK is improperly
screened and classified. In order for these TK
applications to be properly routed for examination
to the appropriate groups, such as Chemistry,
Pharmaceuticals, Agrochemicals, Biotechnology,
Microbiology, Biochemistry, Food, Mechanical,
etc., the person in charge of screening must also
assign appropriate International Patent
Classification for such applications. An
administrative procedure for facilitating the
examination and indicating that the subject matter
of the application is significant and relevant in the
context of traditionally known knowledge is the
screening of an application as "Traditional
Knowledge."
The Examiner is required to conduct a thorough
search for anticipation in Traditional Knowledge
Digital Library (TKDL) and/or other databases in
every case involving TK.
If a citation from the TKDL database is used, a copy
of the citation in English must be sent with the
examination report.
If the use of such plants or plant materials is
already well-known as a component of teaching
TK, then the subject-matter of claims relating to
extracts of plant materials with undescribed active
ingredients cannot be said to be novel. However,
since the use of said plant materials and their
therapeutic effects are known from TK teaching,
such claims cannot be said to involve an inventive
step if they relate to alkaloids and/or active
principles obtained from the plant materials and
the structures of the said alkaloids and/or active
principles are characterized. As a result, the prior
art encourages a skilled practitioner to separate
out the various components, such as alkaloids,
flavonoids, phytosteroids, etc.
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Traditional Knowledge Digital Library:
The Council of Scientific and Industrial Research
(CSIR) and the Ministry of AYUSH are working
together on the TKDL project, which aims to
compile data on Indian traditional knowledge in
various languages and formats into a single
repository. The International Patent Offices (IPOs)
use TKDL as a source of prior art references when
examining patent applications.
Features of Traditional Knowledge Digital Library:
The two key components of TKDL are availability
and accessibility. In terms of Language, Format,
and Classification, TKDL offers accessibility.
Sanskrit, Urdu, Arabic, Persian, Tamil, and other
regional languages are among those that have
preserved traditional Indian knowledge. Such
traditional knowledge is translated by TKDL into
the native tongues of the patent examiners as well
as into five international languages: English,
French, Spanish, German, and Japanese. Because
of its distinctive format and similarity to the format
of a patent application, TKDL is simple to
understand for patent examiners. A bibliography
of traditional Indian documents is included in the
complete listing for each TK entity, along with links
to scanned copies of these documents in their
original languages. The traditional knowledge has
a new classification system thanks to TKDL, based
on the International Patent Classification (IPC)
structure, is referred to as the Traditional
Knowledge Resource Classification (TKRC). Both
TKRC codes and IPC codes are included in every
listing in the TKDL. The accessibility of TKDL is an
additional key feature. Only a few national patent
offices have the full version of TKDL available for
use by patent examiners. However, the TKDL
website offers a representative version of the
database. There are 1,200 representative listings
in this database.
Traditional Knowledge Resource Classification:
A cutting-edge classification scheme used by TKDL
is called Traditional Knowledge Resource
Classification (TKRC). For Ayurveda, Unani, Siddha,
and Yoga, the TKRC has organized and categorized
the Indian Traditional Medicine System into
roughly 25,000 subgroups. In place of the few sub-
groups previously available on medicinal plants
under A61K 35/00, TKRC has made it possible to
incorporate about 200 sub-groups under A61K
36/00 as defined in the International Patent
Classification, improving the quality of prior-art
search and examination with regard to patent
applications in the field of traditional knowledge.
The WIPO and the CSIR collaborated to organize an
international conference in New Delhi in 2011 on
the topic of "Utilization of Traditional Knowledge
Digital Library as a Model for Protection of
Traditional Knowledge." In response to this, WIPO
organized an "International Study Visit to TKDL" for
19 countries interested in replicating TKDL in
conjunction with CSIR and DIPP (Ministry of
Commerce and Industry).
The TKDL has proven to be an effective tool for
defending unauthorized claims to already-known
TK and for holding exclusive intellectual property
rights over such TK. Additionally, it exemplifies the
years-long proactive effort to preserve such
knowledge for the present and future generations.
The goal is to prevent incorrect Patent Rights from
being granted as a result of patent examiners not
having access to prior art, not to limit the use of
traditional knowledge.
********
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Volume XVI, Issue X

MEDIATION ACT, 2023: REVOLUTIONIZING THE LANDSCAPE OF

INDIAN DISPUTE RESOLUTION
- Vijaya Singh, Jatin Kapoor and Rahul K. Kanoujia

Introduction This article aims to comprehensively explore the

pivotal provisions of this newly enacted law,
In the realm of dispute resolution, mediation has
shedding light on the transformative changes and
emerged as a potent tool, especially in the context
enhancements it introduces to the mediation
of commercial disputes, due to its expeditiousness,
landscape.
efficiency, and cost-effectiveness. However, a
significant challenge faced by parties has been the Applicability and Limitation of the Act
absence of a governing legislative framework,
The Act exclusively applies to mediations
despite its recognition by Indian Courts through
conducted within India’s territorial boundaries and
judicial pronouncements and legislation. In
takes effect when either all or both parties in the
response to this pressing need, during the recent
dispute reside, or incorporated, or have their place
monsoon session of the Indian Parliament, both
of business in India. It also covers cases where the
Houses unanimously approved the Mediation Bill
mediation agreement explicitly designates it as the
of 2023, subsequently attaining the presidential
governing framework for dispute resolution,
assent and being conferred the title of the
including those involving international mediators.
Mediation Act, 2023 (“the Act”).1 This landmark
Notably, this Act applies to commercial disputes
legislation is designed to advance the cause of
involving either the central or state government as
mediation, with a particular emphasis on
a party, and it also encompasses other dispute
institutional mediation, and to establish a robust
categories subsequently notified by the
mechanism for the enforcement of mediated
government.
settlement agreements. The Act not only strives to
encourage institutional mediation for dispute However, it’s equally important to recognize the
resolution but also addresses the registration of limitations of the Act. The First Schedule of the Act
mediators, promotes community mediation, and enumerates disputes that are deemed unsuitable
champions the adoption of online mediation as a for mediation. These include matters related to
widely accepted and cost-effective process. criminal prosecutions, and land acquisitions, as
well as those involving minors, deities, and
individuals with intellectual disabilities.

1
The Act was first introduced in the Rajya Sabha on December
20, 2021, referred to the Parliamentary Standing Committee
on Personnel, Public Grievances, Law and Justice, and received
presidential assent on September 14, 2023, coming into force
via Gazette Notification No.35 on September 15, 2023.

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Notably, the Act does not cover disputes involving
parties who are not directly participating in the
mediation process. Also, it doesn’t handle disputes
related to certain regulated areas such as
competition, telecom, electricity, securities,
environment, and taxation. Moreover, disputes
involving the government or its agencies that are
not commercial in nature are not covered by the
Act. Additionally, it is essential to know that the Act
doesn’t apply to Lok Adalat and Permanent Lok
Adalat proceedings governed by the Legal Services
Authorities Act, 1987.
An Analysis of the Key Provisions of the Act
(a) Mediation Agreement: In accordance with
Section 4 of the Act, a mediation agreement
may take the form of a clause within an existing
agreement or as a separate agreement signed
by parties agreeing for mediation, provided
that it is documented in writing. The definition
of ‘in writing’ has been provided in the act and
is of somewhat wide connotation. The
definition encompasses (a) any document
bearing the signatures of the involved parties,
(b) an exchange of communications or letters,
including electronic means, as specified by the
Information Technology Act, 2000, or (c) any
pleadings or proceedings in which one party
alleges the existence of a mediation
agreement, and the other party does not deny
it. The Act is also flexible in as much as parties
can submit a dispute to mediation even after
the dispute has arisen between them and a
pre-existing mediation agreement is not a
necessity.
(b) Pre-Litigation Mediation and the Power of
Courts to Refer the Parties to Mediation:
Section 5 of the Act allows disputing parties,
regardless of whether they have previously
entered into a mediation agreement, to
voluntarily and mutually opt for mediation as
an alternative before initiating legal
proceedings in court. This provision marks a
significant departure from the 2021 Bill, which
previously mandated parties to attend a
minimum of two mediation sessions. The
change can be attributed to the influence of
the Standing Committee’s report, which
recommended making pre-litigation mediation
an optional choice.2 Moreover, Section 7
empowers any court or tribunal to refer parties
to mediation at any stage of the proceedings,
regardless of the presence of a mediation
agreement.
(c) Appointment of Mediator: In accordance with
Section 8 of the Act, unless a different
arrangement is mutually agreed upon by the
parties involved, the Act permits the
appointment of a mediator from any
nationality, provided they meet the specified
qualifications, possess the requisite
experience, and hold the necessary
accreditation. Furthermore, the parties retain
the freedom to jointly choose the mediator
and establish the appointment process. In
cases where the parties are unable to reach a
consensus on the mediator or the appointment
procedure, the party initiating the claim may
submit an application to a designated
mediation service provider for mediator
selection.
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Upon receipt of the application, the mediation
service provider is required to appoint either a
mediator as per the parties’ agreement or
select a mediator from its own maintained
panel within a period of 7 days.
(d) Timeline for the Completion of Mediation: As
per Section 18 of the Act the mediation process
must be completed within 120 days from the
date fixed for the first appearance before the
mediator. This may be extendable up to 60
days if all parties mutually consent.
(e) Jurisdiction: In accordance with Section 13 of
the Act, each mediation initiated under its
provisions must take place within the
territorial jurisdiction of the relevant court or
tribunal responsible for resolving the dispute.
However, parties have the flexibility to
mutually consent to conduct mediation
elsewhere, including online. Nevertheless,
when it comes to enforcing, challenging, or
registering the mediated settlement
agreement, the mediation process will be
considered as having occurred within the
territorial jurisdiction of the respective court or
tribunal.
(f) Confidentiality: Like in the case of arbitration
in India, confidentiality is a hallmark of
mediation proceedings also, under Section 22
of the Act. There is a strict obligation on parties
and participants, including the mediator and
mediation service provider, engaged in the
mediation process to maintain the
confidentiality of various elements, including
statements, proposals, documents, and all
forms of communication exchanged during the
mediation sessions.
It is crucial to note that recording mediation
proceedings, whether through audio or video,
is strictly prohibited to safeguard the integrity
of this confidentiality. Moreover, any
information discussed during mediation
cannot be utilized as evidence in any court
proceedings, arbitration, or other legal actions.
Thus, the provision effectively extends the
protection commonly referred to as 'without
prejudice privilege' to encourage open and
candid discussions among parties, fostering an
environment conducive to reaching an
amicable settlement.
It is worth clarifying that the strict
confidentiality requirements do not extend to
mediated settlement agreements required for
registration, enforcement, or legal challenges.
While a high threshold to maintain
confidentiality has been imposed on the
stakeholders, it is essential to highlight that
this privilege does not shield information
pertaining to criminal threats, domestic
violence, child abuse, statements posing
substantial threats to public health or safety, or
claims of professional misconduct or
malpractice that may arise during the
mediation process.
(g) Interim Relief: In accordance with Section 7 (2)
of the Act, the court or tribunal, when referring
parties to mediation, has the authority to issue
interim orders aimed at safeguarding the
interests of any party, as deemed necessary.
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(h) Termination of the Mediation: In accordance
with Section 24 of the Act, the termination of
proceedings is triggered by several key events:
firstly, upon the signing and authentication of
the mediated settlement agreement; secondly,
upon the issuance of a written declaration by
the mediator, after consultation with the
involved parties or as otherwise determined,
indicating that further mediation efforts are no
longer warranted; and finally, on the date
when a party or parties communicate in writing
their decision to opt out of mediation. In the
absence of any of these events, proceedings
will automatically terminate upon the
expiration of a 120 days time limit [Subject to
an extension under Section 18(2) of the Act].
Mediated Settlement Agreements: Form,
Registration Process, Enforcement Mechanisms
and Challenge
Form: As per Section 19 of the Act, the agreement
must meet several requirements: (a) it should be
documented in writing, (b) it can involve some or
all of the parties engaged in mediation, (c) it must
resolve some or all of the disputes between these
parties, (d) it needs to be verified by the mediator
and signed willingly by all the parties; otherwise, it
will be considered void. Additionally, the terms of
this mediated settlement agreement may extend
beyond the specific issues referred to mediation, in
contrast to Section 16 of the Arbitration and
Conciliation Act3 (“the A&C”), which mandates
that arbitration awards stay within the scope of the
disputes referred to in the arbitration agreement.4
3
As per Section 16 (3) of the Arbitration and Conciliation
Act, 1996, a plea that the arbitral tribunal is exceeding
the scope of its authority shall be raised as soon as the
matter alleged to be beyond the scope of its authority is
raised during the arbitral proceedings.
Therefore, unlike the A&C Act, the mediation
process is not rigid in this aspect and truly offers
the parties the option to negotiate all the issues
that have arisen between them, including
interconnected complex disputes and allows for a
holistic approach thereby facilitating a complete
resolution of the issues between the parties.
Registration: Section 20 of the Act provides Parties
with the choice to register a mediated settlement
agreement, distinct from those reached through
court or tribunal-referred mediation or governed
by the Legal Services Authorities Act, 1987. This
registration must occur within 180 days (with the
possibility of an extension) from the date of
receiving the authenticated copy of the
Agreement. It is important to note that registration
is optional, and the Act does not outline the
consequences of choosing not to register the
agreement.
Non-settlement Report: In accordance with
Section 21, in the event that an agreement is not
reached between the parties within the specified
time frame or if the mediator determines that a
settlement is not feasible, the mediator is
obligated to furnish a signed non-settlement
report. This report must be provided to the parties
in the case of ad hoc mediation and to the
mediation service provider in the case of
institutional mediation. It is essential to emphasize
that the non-settlement report shall remain
confidential, and the mediator is prohibited from
disclosing the reasons for non-settlement or any
details pertaining to the parties’ conduct during
the mediation, all in pursuit of safeguarding the
parties’ interests.
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Finality and Enforcement: In accordance with
Section 27, a mediated settlement agreement shall
be deemed final and binding upon the involved
parties and may also be enforced as a court decree
or judgment in accordance with the provisions of
the Code of Civil Procedure, 1908.
Challenge of Mediated Settlement Agreement:
Section 28 outlines the four grounds for
challenging a mediated settlement agreement,
namely fraud, corruption, impersonation, and
instances where the subject matter of the dispute
was not eligible for mediation under Section 6 of
the Act. An application to challenge the settlement
agreement can be submitted within 90 days of
receiving a copy of the mediated settlement
agreement, with the possibility of an extension
granted at the court’s discretion in cases of
sufficient cause. While the Act aims to limit the
grounds for challenge, there is concern that
obstinate parties may exploit these provisions,
undermining the Act’s intended purpose.
Therefore, guidance on interpretation through
judicial precedents may be sought to address this
issue.
Establishment of Mediation Council of India: The
Regulator
The Central Government, in accordance with the
constitution outlined in the Act, will institute the
Mediation Council of India (“the Council”). The
primary objectives of the Council are to oversee
the registration, recognition, and regulation of
mediation institutions and mediators within India.
Additionally, the Council is entrusted with the
responsibility of advancing both international and
domestic mediation in India, as well as facilitating
and overseeing ongoing training, educational
programs, and certification processes in the field of
mediation. Furthermore, the Council is mandated
to maintain a repository of mediation settlement
agreements forged in India.
S&A Comment
Revolutionizing the Landscape of Indian Dispute
Resolution: The Act marks a significant milestone
in India’s legal landscape. While mediation has
been a part of India’s dispute resolution process for
some time, this Act takes a giant leap towards
formalizing and institutionalizing the practice. It
not only reflects the growing recognition of
mediation as a potent ADR mechanism but also
underscores its effectiveness in resolving conflicts
efficiently.
By institutionalizing mediation, this Act promotes
the idea that disputes can be resolved amicably
and efficiently, reducing the burden on the already
overburdened court system. It encourages parties
to explore mediation as a first step in dispute
resolution, thereby potentially reducing the time,
cost, and emotional toll associated with prolonged
litigation.
In a world marked by complexity and ever-evolving
disputes, the Act emerges as a beacon of hope and
a testament to India’s unwavering commitment to
peaceful conflict resolution. India has always been
at the forefront of pioneering initiatives aimed at
channelizing mediation as a means to foster
amicable resolutions, and the introduction of this
Act reflects a profound dedication to this noble
cause.
One cannot overlook India’s early adoption of the
United Nations Convention on International
Settlement Agreements resulting from Mediation,
commonly known as the Singapore Convention on
Mediation.5
5
Cabinet approves signing of the UN Convention on
International Settlement Agreements resulting from
mediation by India,
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=15
80824.
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Volume XVI, Issue X

This forward-thinking approach signifies India’s

visionary role in promoting mediation as an
internationally recognized tool for dispute
resolution. By aligning itself with the principles
outlined in the Singapore Convention, India has
underscored its determination to create an
environment conducive to resolving conflicts
through mediation, not only on a domestic but also
on a global scale.
Conclusion
The Act revolutionized the field of dispute
resolution by establishing precise guidelines,
bolstering confidentiality, offering incentives, and
ensuring enforceability. This legislation has
profoundly reshaped the mediation landscape,
advocating mediation as the primary channel for
resolving disputes. Its purpose is to simplify legal
procedures while nurturing a spirit of collaboration
and cooperation among conflicting parties.
The content of this article is intended to provide a
general guide to the subject matter. Specialist
advice should be sought about your specific
circumstances.

*******

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Volume XVI, Issue X
CROSS BORDER INSOLVENCY IN INDIA -A COMPREHENSIVE
OVERVIEW
The swift progression of technology, worldwide
commerce, and the business environment have
initiated an era marked by the rise of multinational
corporations, which has cultivated a seamless
partnership between nations and companies. In
the contemporary globalized environment,
virtually every nation participates in trade
partnerships that reach beyond its domestic
boundaries. In today's interconnected world,
nearly every country engages in trade relations
that extend beyond its own jurisdiction.
Expanding business operations across multiple
jurisdictions leads to the emergence of creditors
and debtors scattered in different geographic
areas. In the ever-evolving global business
landscape, creditors find themselves susceptible
to payment defaults from companies operating in
various jurisdictions. This leads to the requirement
to have specific laws to protect the interests of
stakeholders located across borders. Thus, it is
imperative to ensure that domestic insolvency
laws align seamlessly with international
regulations, facilitating the simplification of the
intricate network of diverse legal processes. This
underscores the necessity for a comprehensive
framework addressing cross-border insolvency
issues.
- Jatin Kapoor
Understanding Cross-Border Insolvency -
Cross-border insolvency, also known as
international insolvency, arises when a financially
distressed or insolvent debtor has creditors in
multiple jurisdictions across different countries.
In 1997, the United Nations Commission on
International Trade Law (UNCITRAL) introduced
the Model Law with the purpose of assisting
countries in modernizing their insolvency
legislation. This modernization was aimed at
improving their ability to manage cross-border
insolvency cases involving debtors facing severe
financial challenges. It's important to note that the
Model Law does not aim to standardize the actual
insolvency laws of participating countries. Instead,
it empowers and encourages coordination and
cooperation among these countries,
acknowledging that variations may exist in their
respective insolvency regulations.
With the expansion of international trade, the
need for collaboration and coordination across
borders, particularly in the realm of insolvency
law, has grown significantly. UNCITRAL identifies
this need and has crafted the Model Law to
address it effectively.
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The adoption of the Model Law has encountered
reluctance from many countries. The Model Law to
date has been adopted by 50 States in 54
jurisdictions. Numerous major global economies,
including most European Union nations and
several key Asian countries such as China, India,
and Hong Kong, have yet to embrace it.
Recognition Of Cross-Border Insolvency Under
The Indian Regime
The Insolvency and Bankruptcy Code, 2016 (IBC) is
a fundamental statute overseeing insolvency and
bankruptcy matters in India. While the IBC has
made strides in aligning the domestic insolvency
framework, it is still required to evaluate and
implement comprehensive protocols for the
management of cross-border insolvency cases.
This need had been recognized by the Bankruptcy
Law Reform Committee (BLRC) in its Interim
Report where it was stated that:
…the BLRC realizes the importance of developing
an efficient system for addressing cross-border
insolvencies in India. In this regard, some of the
previous law reform committees have
recommended that the UNCITRAL Model Law on
Cross-Border Insolvency should be adopted in
India. The UNCITRAL Model Law provides a legal
framework to coordinate cross-border insolvency
proceedings so as to protect the interests of all
stakeholders. The Model Law achieves this object
by first, mandating judicial cooperation,
secondly, by conferring on a foreign insolvency
administrator (or a similar representative)
standing in local proceedings and finally, by
ensuring equal treatment to foreign and local
claims…
The Eradi Committee and the N.L. Mitra
Committee in 2001, recommended the adoption
of the Model Law by India to improve mutual
assistance and coordination for cross-border
dispute resolution, thereby increasing the flow of
foreign direct investments (FDI).
Following the recommendations of the Joint
Committee on Insolvency and Bankruptcy Code,
2015, and in adherence with the said Joint
Parliamentary Report, two provisions were added,
namely, Section 234 and Section 235 of the Code.
Section 234 of the Code provides for the
conclusion of bilateral agreements with other
nations for the purpose of cross-border insolvency
resolutions and Section 235 of the Code provides
for the issuance of a letter of request by the
National Company Law Tribunal
(NCLT/Adjudicating Authority) to other courts of
the country with which an agreement has been
made.
In November 2017, the Ministry of Corporate
Affairs (MCA) of the Government of India
constituted the Insolvency Law Committee (ILC)
and in its October 2018 Report, ILC recommended
the adoption of UNCITRAL Model Law on Cross-
Border Insolvency (MLCBI) with some
modifications to be inserted as Part Z as part of the
IBC. Following this, the Cross-Border Insolvency
Rules/Regulations Committee (CBIRC) was
formed on January 23, 2020, and submitted its first
Report on June 15, 2020, containing a framework
for cross-border insolvency.
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Regulating Cross-Border Insolvency In The Indian
Context
The emphasis in the context of cross-border
insolvency largely revolves around the control of
insolvency proceedings that extend beyond the
boundaries of domestic jurisdiction and the
associated limitations.
Sections 234 and 235 of Code
IBC provides two provisions that assist in cross-
border insolvency disputes i.e. Section
234 and Section 235.
Section 234 empowers the Central Government to
enter into bilateral agreements with foreign
jurisdictions to resolve cross-border insolvency
issues. Though bilateral agreements are the need
of the hour, however, they can be expensive, time-
consuming, and inadequate due to the
complexities involved.
Section 235 grants the Adjudicating Authority the
authority to issue letters of request to Courts in
countries with which bilateral agreements have
been established under Section 234. These letters
of request aim to determine the fate of assets of
corporate debtors located outside India.
Addressing the intricate challenge of reconciling
conflicting provisions across various treaties
established with distinct jurisdictions, particularly
considering the corporate debtor's assets spread
across multiple locations, may pose one of the
most complex dilemmas for the Adjudicating
Authority.
The Insolvency Law Committee (ILC) in its report
of 2018, acknowledged that the existing
provisions, namely Sections 234 and 235 of the
IBC, fall short of providing a comprehensive
framework to address cross-border issues.
Consequently, adopting the principles from the
Model Law appears to be a viable solution, given
that the intricacies inherent in the cross-border
regime demand a thorough examination of the
Model Law's integration in India as well.
The Model Law is governed by 4 main principles
which are (i) Access (i.e. to grant foreign creditors
and professionals direct access to domestic courts,
allowing them to participate in or initiate
insolvency proceedings against the relevant
debtor), (ii) Recognition (i.e. recognition of foreign
proceedings in the domestic courts of any country,
empowering these domestic courts to decide on
the relief to be granted in line with the foreign
proceedings), (iii) Cooperation (i.e. to foster
effective cooperation between insolvency
professionals and courts in various jurisdictions.),
and (iv) Coordination (i.e. to help countries shape
their insolvency laws into a contemporary,
harmonized, and equitable framework, better
equipped to address instances of cross-border
insolvency.)
Draft Part Z
The ILC introduced a draft provision known as 'Part
Z' within the Code, drawing insights from an
analysis of the UNCITRAL Model Law on Cross-
Border Insolvency from 1997. The Model Law
offers a legal framework that nations can
incorporate into their domestic laws to manage
cross-border insolvency issues.
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Notable recommendations by the Committee
encompass:
- Applicability: The Committee suggested that,
for the time being, the draft 'Part Z' should be
specifically extended to corporate debtors.
- Duplicity of Procedures: The Committee
observed that the Companies Act of 2013
already contains provisions for addressing
insolvency concerns of foreign companies.
Therefore, it recommended a thorough
evaluation of these provisions in the 2013 Act
to determine whether they should be retained
upon the enactment of 'Part Z,' which would
introduce a dual regime for handling
insolvency of foreign companies.
- Reciprocity: The Committee recommended
that the adoption of the Model Law should
initially be based on a reciprocity principle,
which would entail that a domestic court only
recognizes and enforces a foreign court's
judgment if the foreign country has similar
legislation to the domestic one. This principle
may be reconsidered in the future.
- Access: The Model Law allows foreign
insolvency professionals and foreign creditors
to directly access domestic courts to seek
remedies. While direct access for foreign
creditors is already envisioned under the
Code, the Committee proposed empowering
the Central Government to establish a
practical mechanism for foreign insolvency
professionals to access Indian courts within
the existing legal framework.
- Centre of Main Interests (COMI): The Model
Law permits the recognition of foreign
proceedings, granting relief based on this
recognition. Relief is contingent on whether
the foreign proceeding is classified as a main
or non-main proceeding. 1
- Cooperation: The Model Law outlines a
fundamental framework for cooperation
between domestic and foreign courts, as well
as domestic and foreign insolvency
professionals.
- Concurrent Proceedings: The Model Law
presents a framework for the commencement
of domestic insolvency proceedings in
scenarios where foreign insolvency
proceedings are already underway, and vice
versa.
India’s Target To Strengthen Cross Border
Insolvency Regime
In the Budget Speech of 2022, Finance Minister
Smt. Nirmala Sitharaman highlighted the
imperative need for amending the Code to
facilitate cross-border insolvency resolution. These
amendments are not merely geared toward
facilitating cross-border transactions; they also
play a pivotal role in improving the overall
effectiveness of the resolution process. The
absence of a robust and efficient cross-border
insolvency resolution mechanism can be
attributed to a lack of institutional capacity and the
absence of a well-developed bankruptcy
ecosystem.
1
“Foreign main proceeding refers to a foreign proceeding
taking place in the State where the corporate debtor has
the centre of its main interests. Whereas, a foreign non-
main proceeding means a foreign proceeding, other than a
foreign main proceeding, which takes place in a State
where the corporate debtor has an establishment.”
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

However, the potential incidental benefits

stemming from these amendments could
outweigh any initial apprehensions and doubts.
These benefits include increased FDI, enhanced
cross-border trade, and an improved ranking in the
Ease of Doing Business Index.

Conclusion

The pressing need for a comprehensive framework

addressing the intricacies of cross-border
insolvency has been evident for some time. While
several committees have issued reports on this
matter, the existing framework, embodied in
Sections 234 and 235 of the IBC, falls short in
encompassing all aspects of insolvency.

The Model Law represents a commendable stride

towards establishing such a mechanism, yet it is
not without its own limitations. From an Indian
perspective, the principle of reciprocity looms as a
prominent concern, alongside infrastructural
inefficiencies within India, which pose challenges
to the Model Law's effective implementation and
adoption.

Nevertheless, once these obstacles and

deficiencies are surmounted, the Model Law holds
the potential to facilitate cooperation and
communication among diverse jurisdictions,
ultimately leading to the successful resolution of
cross-border conflicts involving India.

*******

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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

ENHANCING THE ARBITRATION PROCESS: WITNESS

CONFERENCING IN EXPERT TESTIMONY
- Swekcha and Aanchal Gupta
-
Introduction After one side finishes presenting their evidence,
the evidence of the other side is recorded.3 This
In arbitration proceedings, parties involved in a
arrangement can sometimes pose a problem when
dispute go through the process of evidence
contradictory testimony is presented on the same
recording to substantiate their respective claims
issue by expert witness. Expert witnesses often
and defenses. They present witnesses, whose oral
tend to side with the parties who have hired them.
testimonies are recorded during the proceedings,
Most times, these views are in contrast to each
to prove their respective cases. These witnesses
other leaving upon the judge/arbitrator to decide
range from fact witnesses to expert witness in
whose methodology and conclusion should be
cases where the subject matter of the dispute
relied upon.1 This method of recording witness
tends to get very technical.1 For instance, when a
testimony also poses procedural difficulties, such
construction company sues the manufacturer of
as long delays due to the unavailability of the
the heavy machinery used by the said
expert witness. There is also a general trend where
construction company for malfunctioning of the
there are often long gaps between the testimonies
machinery – the issues and contentions raised by
of expert witnesses from either sides.1 Such gaps
the parties will get technical in nature. In such
make it difficult to comprehend what the expert
instances, both parties may opt to enlist the
testifies and defeats the purpose of the entire
expertise of individuals who are specialists in the
procedure.
field to present evidence in their favor.2
Hot tub of witnesses or rather witness
Under regular practice of court, testimony of
conferencing, is a method of recording testimony
witnesses is presented one after the other. One
that is gaining popularity lately. This essentially
can call it the traditional method of recording
allows to address the challenges of the traditional
evidence, where a witness from one side is
method of witness evidence by calling the
presented and questioned by the counsel and
witnesses of both sides to the witness box at once
then the counsel of the adverse side is allowed to
and presenting their evidence concurrently.
question the witness.

1 3
Yee, Kenton K., Dueling Experts and Imperfect Verification Elizabeth Reifert, Getting into the Hot Tub: How the United
(December 6, 2008). International Review of Law and States Could Benefit from Australia's Concept of Hot Tubbing
Economics, Vol. 28, No. 4, pp. 246-255, 2008. Expert Witnesses, 89 University of Detriot Mercy Law Review
2
Simon A. Cole, Where the Rubber Meets the Road: Thinking
about Expert Evidence as Expert Testimony, 52 Vill. L. Rev.
803 (2007).
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
Australian courts have been acknowledged as having
the most experience with the "hot tub" method in
which experts give their evidence concurrently.
Australian Federal Court Justice Peter Carden
Heerey6 has been at the forefront of the
development of this procedure and he explained that
“The Australian hot-tub approach typically involves
the parties' experts literally giving evidence at the
same time.”
Witness conferencing is a general process of
evidence recording. This method can be used for all
kinds of witnesses like fact witnesses, expert
witnesses, etc. However, for the purpose of this
paper, the authors have particularly discussed the
use of this method in recording evidence of expert
witnesses.
Expert evidence is not a new phenomenon. In 1554,
Saunders J said in Buckley v Rice Thomas,
"… if matters arise in our laws which concern other
sciences and faculties, we commonly call for the aid
of that science or faculty which it concerns, which is
an honorable and commendable thing for thereby it
appears that we do not despise all other sciences
but our own, but we approve of them and
encourage them." However, some experienced
scholars have observed that in contemporary times,
the use of expert evidence “has increased
dramatically … both in its frequency and its
complexity.”
What is witness conferencing?
One of the leading examples for use of expert
testimony is the case of Strong Wise Ltd v. Esso
Australia Resources Ltd.,7 where eight expert
witness from five different areas of specialization
were examined.
6 8
G. Davies, “Recent Australian Developments: A Response
to Peter Heerey”, 23 Civil Justice Quarterly 396 (2004)-397
7
[2010] FCA 240.
Each expert not only prepared their own
individual report but also took part in a
collaboration with the witness from the other side
to prepare a joint report. Such joint report was
prepared without any inputs from the lawyers or
the judge, with the main aim to set out the points
of disagreement. This enables to narrow down
the critical areas which require discussion which
is, more often than not, lost in the long individual
reports.
The witnesses were then called to the witness box
at the same to record their evidence. Witness
conferencing began with each expert
summarizing their views and what they consider
the principal issues. In this introductory part, the
witness would also question or present their
views on the reports of the other experts.
Thereafter, the counsel identifies the issues on
which they wish to cross examine. The process of
discussion and debate began, where, one expert
would make a comment, the other can agree or
disagree, further confrontation would take place
leading the conversation to go to a conclusive
end. The judge would also partake in the process
by asking questions or confronting the experts
with each other’s views.
The process of witness conferencing
Australia is considered to be the pioneer in this
procedure of taking evidence by way of witness
conferencing. It originated in the Australian
Competition Tribunal (formerly known as the
Australian Trade Practices Tribunal) in the 1970s
and has since made its way across the globe.8
Id at 3.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X
This procedure makes its way as an alternative to the
adversarial method of dispute resolution and
presents room for a more cordial and open space for
discussion and conclusion. This procedure came up
due to the necessity of reliable and objective expert
testimony and to resolve the issues faced by judges
when such expert testimony is presented.1 The result
of this procedure was also seen in increased judicial
efficiency.
The steps of the process can be briefly divided into
the following:
a) Each expert will prepare their own report(s) and
exchange them with the other expert(s), to
ascertain and understand the opposing view. An
added step here can be that the experts are
made to prepare a joint report to determine the
points they agree and disagree on.
b) After the written testimony is on record, all the
experts on one issue are called to the witness
stand at the same time in a scheme alike to a
panel of experts. As soon as they are in the
witness box, the judge gives a brief about the
views of the expert according to their written
testimony.
From here on, the steps of the process can
differ. In each jurisdiction, the adjudicator would
carry discretion to decide how to use this
process and what might be appropriate
considering the legal landscape.
c) Experts are given a chance to present their
opening statement which covers their views on
the issue/dispute, which is followed by a session
where questions are put by the judge to the
panel of experts collectively.
9 10
David E. Bernstein, Expert Witnesses, Adversarial Bias,
and the (Partial) Failure of the Daubert Revolution, 93
Iowa Law Review - 451, 453 (2008).
d) Post the opening statements, a panel
discussion or often a debate style discussion
takes place. The judge and even the expert
witnesses ask follow up questions to one
another. This enables them to question and
challenge each other’s conclusions and
methodologies.
e) Not commonplace, yet in witness conferencing,
lawyers can be accorded a role in terms of
putting forward last questions to the panel of
expert witness. This role, however, differs in
each jurisdiction.
The judiciary in Australia have had success with this
method and they have appreciated the value that it
creates. It has been observed that when witnesses
are confronted by each other, this process helps to
remove partisan advocacy from expert evidence.
This system of confrontation demonstrates a
collaborative approach rather than a witness merely
answering questions as in the traditional method of
evidence recording.10
The use of witness conferencing in different
jurisdictions
Australia pioneered the witness conferencing
method of taking expert evidence by using them in
civil cases but soon, other jurisdictions followed
suit.
In Canada – the story of how witness conferencing
started is similar to that of Australia. The concept
was first introduced through its Competition
Tribunal Rules.11
Steven Rares, Justice, “Using the "Hot Tub - How
Concurrent Expert Evidence Aids Understanding Issues”,
Intellectual Property Forum, Dec 2013.
11
Competition Tribunal Rules available at
https://lois.justice.gc.ca/PDF/SOR-2008-141.pdf 67
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
These rules, specifically Rule 77, give broad power
to the Tribunal and enable them to conduct a hot
tub procedure for witness evidence where the
experts testify “as a panel after oral evidence by
non-expert witnesses,” and that the expert
witnesses may “comment on the views of other
experts on the panel and pose questions to other
expert witnesses.” This establishes that there is a
prevalent practice in Canada where expert evidence
is presented simultaneously.12
In the United States – witness conferencing in this
jurisdiction has primarily faced hurdles in terms of
two aspects; (a) academicians believe that the
players of the legal system are wedded to the
adversarial approach and there is resistance to the
adoption of a more collaborative approach that can
clearly be seen in witness conferencing; and (b) the
major concern is that the witness conference
process might not be conducive to a jury trial given
the nature of the jury as an institution and the ways
in which judges and advocates engage with jurors
and each other in its presence.13
Despite this general observation, it has been seen
that there is no rule that specifically bars the use of
the witness conference procedure. By taking
advantage of this, several judges have attempted to
undertake this process.14 For example, Judge
Woodlock (D. Mass) started using it after learning
about the method from Australia’s Justice Heerey.15
The most common use of the witness conferencing
method has been seen in non-jury contexts such as
a claims construction hearing, a class certification
hearing and other civil matters.
12
Ibid.
13
Greene, Edie and Gordon, Natalie (2016) "Can the “Hot
Tub” Enhance Jurors’ Understanding and Use of Expert
Testimony?" Wyoming Law Review: Vol. 16: No. 2.
14
It is permissible under Rule 611 of the Federal Rules of
Evidence.
15
Id at 6.
In India – The rules of the High court in India
incorporate the concept of witness conferencing for
commercial suits. Highlighting the benefits of the
evidence procedure over the traditional sequential
examination of witnesses, Justice Ravindra Bhat
while deciding Micromax Informatics Ltd. v.
Ericsson,16 stated that disputes involving
"examination of expert evidence should adopt the
hot-tubbing procedure." After the 2015
Amendment to the Arbitration Act, 199617 requiring
time-bound disposal of arbitration disputes,
witness conferencing is of critical importance in
resolving divergent expert opinion on quantification
of damages in an efficient manner.
Arbitration – International Bar Association (IBA)
Rules on Taking of Evidence18 and the CIArb
Protocol for the Use of Party-Appointed Expert
Witnesses in International Arbitration19 too
envisage witness-conferencing. The IBA rules are
broad in nature and give power to the tribunal to
implement various procedures in terms of the
conduct of the proceedings. For example, Article
5(3) of the IBA Rules provides that “the Arbitral
Tribunal in its discretion may order that any Party-
Appointed Experts who have submitted Expert
Reports on the same or related issues meet and
confer on such issues.” Article 4(f) of the IBA Rules
provide that: “the Arbitral Tribunal, upon request of
a Party or on its own motion, may vary this order of
proceeding, including the arrangement of testimony
by particular issues or in such a manner that
witnesses presented by different Parties be
questioned at the same time and in confrontation
with each other.”
16
FAO(OS) (COMM) 169/2017 & CM No.40001/2017.
17
Arbitration and Conciliation (Amendment) Act, 2015.
18
IBA Rules on the Taking of Evidence in International
Arbitration, adopted by a resolution of the IBA Council
https://www.ibanet.org/MediaHandler?id=def0807b-9fec-
43ef-b624-f2cb2af7cf7b
19
CIArb Protocol for the Use of Party-Appointed Expert
Witnesses in International Arbitration
https://www.ciarb.org/media/6824/partyappointedexpertsi
nternationalarbitration.pdf 68
INDIAN LEGAL IMPETUS
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The case for witness conferencing in arbitration
Over the years, Arbitration has become a preferred
mode of dispute resolution for parties involved in
high stake commercial disputes due to the
advantages of party autonomy, efficiency of the
process, use of experienced professionals as
arbitrators and confidentiality that the process
offers. These cases usually involve technical and
field/subject matter expertise, resulting in parties
choosing to engage expert witnesses. As discussed
above, the shortcoming of the traditional method of
evidence recording are also prevalent in arbitration.
The witness conferencing method could be
especially fruitful in an arbitration because of the
following -
Time and money – efficiency is the foremost
concern in the realm of arbitration. Witness
conferencing might play a role to address this
concern to a certain extent. The process can help
identify the topics of disagreement early on, and
then experts can focus their presentations and
discussions on the issues that are most contentious
or that lack consensus.20 This way of organization
results in reduced time spent on evidence recording
and also by extension reduces the cost that parties
incur in conducting the arbitration proceedings.
Easy to understand – Most arbitration disputes are
complex in nature. The primary reason parties opt
for arbitration is so that they can have specialized
adjudicators who have experience in dealing with
similar disputes. In witness conferencing,
complicated information is presented together and
adjudicator is not required to remember it.
20
Vance Hughston SC, Tina Jowett “In the native title
'hot tub': expert conferences and concurrent expert
evident
in native title” August 2014.
This will enable these experienced adjudicators to
make direct comparisons and arrive at a decision.
Because the experts answer questions put forth by
the judge/arbitrator, it becomes easy for the
adjudicator to comprehend the complicated issues
and the evidence presented forward. As stated by
former Justice Heerey, the hot tub method allows
experts to testify "when the critical issues have been
refined and the area of real dispute narrowed to the
bare minimum."21
Bias – When a witness is appointed by one of the
parties to present its views, there is an inherent
assumption that such witness will be biased
towards the parties who is paying the bills. The
adversarial method restricts the scope of the expert
to be impartial. However, since the process is
decided by the parties and the tribunal, they have
the power to opt for witness conferencing and have
informal, open discussions that are less
argumentative and confrontational than traditional
cross-examination. As the Australian Federal Court
noted: “There is ... symbolic and practical
importance in removing the experts from their
position in the camp of the party who called them.”22
The potential issues with witness conferencing
With the perceived advantages, the method of
witness conferencing also has certain
disadvantages. The concern of expert testimony is
always that the more experienced and refined
expert who has been a witness in multiple cases, will
be more confident, or assertive expert and will
dominate the procedure.23 Similarly, the opposing
experts might not be compatible in terms of their
experience and credentials.
21
Id at 6.
22
Id at 20.
23
Marvin J. Garbis, American Law Institute-American
Bar Association Continuing Legal Education ALI-ABA
Course of Study, September 18-19, 2003.
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INDIAN LEGAL IMPETUS
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Further, scholars have also pointed out that experts,
in an attempt to be more likable, try to simplify the
testimony and break it down into lay terms. On the
other hand, there is a concern that the expert might
turn the hot tub into a box-ring where they duel
with their views.24 They might make attempts to
undermine the others authority and mock them
indirectly. With the match of expert minds in the hot
tub, there is always a chance of unproductive
squabbles.
There have been several other criticisms levelled
against the process where a major concern that
comes up is that the lawyers would coach their
experts, however, one must note that this is a likely
occurrence in any kind of procedure of witness
evidence recording.25
A small known concern might be that when experts
meet in a discussion, it gets too technical for others
outside the field to understand since there are no
questions directed as in the adversarial forms.26
With these practical concerns of the results of the
process, another leading area of concern would be
the actual conduct of the procedure. Judges are
concerned that witness conferencing would place
additional managerial burdens on them.27
There is always the concern of the legal team that
the process might hurt their strategy since they do
not have control over the testimony of the expert. A
focused examination in the adversarial method
could limit the exposure and the lawyer would be
better equipped to preempt the pain points.
24
McClellan CJ at CL, Recent Changes and Reforms at the
Land and Environment Court, Speech delivered to the
Local Government Association of N.S.W. (July 27, 2004)
25
Sena Gbedemah & Toshi Dezaki, How Hot-Tubbing Is
Shifting the Paradigm, 26 Disp. Resol. Mag. 18 (2020).
26
Bruce Abramson, Blue Smoke or Science? The
Challenge of Assessing Expertise Offered as Advocacy, 22
Whittier L. Rev. 723, 731 (Spring 2001).
27
Id at 24.
Suggestions and way forward
An effective way to cure the aforementioned
concerns, would be preparation. As simple as the
solution sounds, the execution is even simpler. If the
adjudicator is familiar to the process and takes
active steps to design the layout before undertaking
the process, then witness conferencing can yield
fruitful results. This preparation before the witness
conference is called, especially helps, when the
discussion between the expert witnesses goes off
topic or becomes too technical to understand. The
adjudicator can bring back the discussion to the
issues. Witness conferencing benefits the resolution
process due to the invaluable discussion that takes
place due to simultaneous exchange of views of
opposing experts.28
Since there are no strict laws and/or rules that
regulate the process of witness conferencing,29 and
keeping in mind the foundation of party autonomy
in an arbitration; the parties have the golden chance
of designing a custom witness conferencing process
suited for their dispute. Due to the value of party
autonomy, the lawyers must consider how witness
conferencing can be most fruitful. This can lead to
efficiency in the process in terms of reduced time
leading to reduced costs.30
28
Id at 26.
29
Id at 25.
30
Prescott, D. E., & Fadgen, T. (2019). Adversarial
systems and forensic experts in child custody: How about
adding a hot tub? Journal of the American Academy of
Matrimonial Lawyers, 32(1), 117-144.
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INDIAN LEGAL IMPETUS
Volume XVI, Issue X

In a process where the conclusion comes from
discussion, the experts putting their views forward
and getting opposing feedback, the expert needs to
be good with dialogue. It is an added benefit if the
expert can explain their methodology and their
conclusive view like a teacher, and in a polite
manner without being adversarial. The expert
should also have the ability to engage in an
intellectual match with their peer to make the
discussion fruitful and not give up at the face of first
negative answer. It also makes it important for the
expert to maintain its demeanor in the process.
Lastly, considering the set up in which the expert
witnesses are required to give their testimony, they
need to be a good listener which can enable a
fruitful discussion.
The successful implementation of the witness
conferencing methodology requires appropriate
directions and participation from a Court and/or
Tribunal. The Chartered Institute of Arbitrators
issued Guidelines for Witness Conferencing in
International Arbitration, with Explanatory Notes, in
April 20191 which acts as a very useful guidance
mechanism on the issues and use of Witness
conferencing. These guidelines, though non-
prescriptive, provides a framework for the parties to
develop a methodology for witness conferencing
which is suitable to the circumstances of their
particular dispute.
********

To make the process of witness conferencing

successful, the key role is of the arbitrator. The
arbitrator’s familiarity and knowledge to guide and
control the process will ultimately decide whether
the process was fruitful or not. Ideally, the arbitrator
should be well versed with the issues of the experts
and should streamline the process. In this manner,
the arbitral tribunal can guide the process by asking
questions, by confronting the expert with the other
expert’s views and undertake a sort of inquiry into
the points of disagreement between the expert
witnesses. This will eventually lead to a
comprehensive understanding of the underlying
disputes and adjudication of the same.

31
Chartered Institute of Arbitrators (April 2019).
Guidelines for Witness Conferencing in International
Arbitration
https://www.ciarb.org/media/4595/guideline-13-
witness-conferencing-april-2019pdf.pdf

71
INDIAN LEGAL IMPETUS
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NAVIGATING INDIA'S INVESTMENT LANDSCAPE: A GUIDE
FOR FOREIGN INVESTORS
India's thriving economy, expansive consumer
market, and abundant resources make it an
enticing destination for foreign investors. With
numerous sectors offering growth opportunities,
the entry strategies for foreign investors in India
are diverse and dynamic. The Indian government
has adopted a more permissive approach,
simplifying entry requirements and reducing
scrutiny, thereby promoting foreign investment
across various sectors.
Foreign investors often grapple with selecting the
optimal investment mode and entry strategy that
can yield the best results while minimizing
regulatory obligations and scrutiny when entering
the country. Since foreign investors have diverse
intentions and goals, it is vital to identify the most
suitable entry approach that aligns with their
preferences.
The entity type to be established in India can be
either in the form of incorporated entities or
unincorporated entities. Incorporated entities
typically include companies and limited liability
partnerships (LLPs). These entities offer a separate
legal identity from their owners, providing limited
liability protection and distinct advantages in
terms of access to capital, credibility, and ease of
doing business. Unincorporated entities such as
branch offices, project offices, and liaison offices,
are extensions of foreign companies operating in
India.
- Neha Mittal
These entities do not have separate legal identities
from their parent companies but serve specific
functions in compliance with Indian regulations.
They are suitable for businesses looking to establish
a presence in India without going through the full
incorporation process.
The foreign investors can explore the following
prominent entry avenues:
Incorporated Entities
Investment by way of purchase of shares in an
existing company or incorporation of new
company:
Foreign investors looking to establish a presence in
India often consider acquiring shares of existing
Indian companies or by incorporating a new
company under the provisions of the Companies
Act, 2013. This approach enables investors to
leverage established operations and tap into the
local market knowledge of the target company.
Foreign Direct Investment (FDI) in companies is
governed by the Foreign Exchange Management
Act, 1999 (FEMA) and the Reserve Bank of India
(RBI). The FDI Policy in India is characterized by its
liberal approach, allowing for 100% investment
under the Automatic Route (without the
government approval) for the majority of sectors.
There are a few sectors that permit partial
automatic approval requiring government approval
once a specific threshold of investment is surpassed
and some sector require government approval
regardless of the investment.
72
INDIAN LEGAL IMPETUS
Volume XVI, Issue X
It's important to highlight the specific restrictions
imposed by the Indian government thus modifying
the FDI Policy. Under these revisions, entities from
countries sharing land borders with India, or those
with the beneficial owner of an investment in India
situated in or being a citizen of such countries, can
only invest via the Government route. This
measure was implemented to prevent
opportunistic takeovers or acquisitions of Indian
companies during the COVID-19 pandemic, and
this applies across all the sectors, regardless of the
industry where the investment is intended.
Additionally, it's worth noting that an individual
from Pakistan or a company registered in Pakistan
may invest exclusively through the Government
route in sectors and activities excluding defence,
space, atomic energy, and those prohibited for
foreign investment.
Pursuant to the amendment even if in case of
transfer of ownership, whether for current or
prospective FDI in an Indian entity, that leads to the
beneficial ownership falling under the
abovementioned restrictions, then the subsequent
alteration in beneficial ownership will also
necessitate approval from the Government.
Joint Ventures:
Another popular entry option for foreign investors
in India is forming joint ventures with Indian
partners. This approach helps foreign investors
navigate the complexities of the Indian market
while benefiting from the local partner's
knowledge and resources.
Joint ventures can be particularly advantageous in
sectors with regulatory restrictions and can help
gain access to networks of the Indian partner such
as distribution channels, etc.
Pertinently, JVs can be set up as an incorporated
entity as a company or a limited liability
partnership under the Companies Act, 2013 and
Limited Liability Partnership Act, 2008 or as an
unincorporated entity in the form of a partnership
or strategic alliance. In case of unincorporated JVs,
the JV Partners usually enter into a JV Agreement
that governs the rights and obligations and the
methodology for running the JV.
Wholly Owned Subsidiaries:
Foreign investors can establish wholly owned
subsidiaries in India holding 100% shareholding in
the Indian entity subject to legal compliances. This
approach is favoured by multinational
corporations seeking complete autonomy in their
operations. Setting up of a wholly owned
subsidiary allows the benefit of complete control
that can grant the investors right to make decisions
and implement strategies independently, without
requiring local partners.
As mentioned above, a minimum of 2 shareholders
are required to constitute a private company and 7
in case of public companies. Hence, in order to
ensure compliance with this requirement, the
provisions of the Companies Act, 2013 allow
holding companies to appoint nominees for itself
to hold shares in the subsidiary/wholly-owned
subsidiary companies in order to meet the
statutory minimum limit of members in a company.
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Broad compliances for investing in India in an
incorporated company
Broad compliances to be adhered to in case of
investment to be received from foreign investors
either in an existing company or for setting up of a
new company:
(i) Government approval, if applicable based
upon the sectoral cap
(ii) Know Your Customer (KYC) check by the AD
Category-I bank at the time of receipt of
funds.
(iii) Filing of Foreign Inward Remittance
Certificate (FIRC) - a document that serves as
proof of inward remittances to India issued by
the AD Category-1 Bank
(iv) Filing of FC-TRS, within 60 days of date of
remittance or date of transfer, whichever is
earlier/Filing of FC-GPR in case of issuance of
shares by the investee Indian Company to the
on-resident investor within 30 days of
allotment.
(v) In case of transfer of shares, duly executed SH-
4 (share transfer form) is required to be
submitted to the Company by the
transferor/transferee
(vi) In case of issuance of shares, PAS-3 (Return of
Allotment) is required to be filed by the
Company with the Registrar of Companies
(ROC)
(vii) Filing of BEN-2 - significant beneficial
ownership (SBO) declaration in accordance
with the provisions of the Companies Act,
2013
(viii) Filing of Foreign Liabilities and Assets Return
(FLA) - Annual return to be filed based on
audited/ unaudited accounts of the entity by
July 15 every year.
Limited Liability Partnerships (LLP):
For investors seeking a versatile and collaborative
business structure, establishing a Limited Liability
Partnership (LLP) in India can be an excellent choice.
An LLP seamlessly blends elements of a traditional
partnership and a corporation, granting partners
limited liability protection. This structural
framework is particularly favoured among
professional service providers and small to medium-
sized enterprises (SMEs) and is subject to the
regulatory framework of the Limited Liability
Partnership Act, 2008.
One of the key advantages of LLPs is their flexibility
in profit-sharing arrangements, allowing partners to
define profit distribution ratios. Furthermore, LLPs
offer the additional benefit of not having a
mandatory minimum capital requirement, enabling
investors to commence operations with a nominal
capital contribution.
The process of establishing an LLP is relatively
straightforward, with minimal compliance
requirements. This can be accomplished by
submitting the FiLLiP form, which serves as an
integrated application covering multiple services,
including Director Identification Number (DIN)
allocation, name reservation, and LLP incorporation.
Additionally, it is crucial to highlight the significance
of the LLP Agreement, a pivotal document that
outlines the rights and responsibilities of partners.
This agreement must be filed within 30 days of the
LLP's incorporation to ensure proper governance
and transparency within the partnership.
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Volume XVI, Issue X
Otherwise as well, there are fewer regular
compliances in case of an LLP as compared to the
companies under the Companies Act, 2013, which
makes it a preferred mode of investment in India.
Unincorporated Entities
Foreign companies (a body corporate incorporated
outside India, including a firm or other association
of individuals) must submit their applications for
setting up Branch Offices (BO), Liaison Offices (LO),
or Project Offices (PO) in India. These applications
will be evaluated by AD Category-I banks in
accordance with the directives provided by the RBI.
Branch Offices:
Foreign corporations have the option to establish
branch offices in India, serving as a conduit for
specific activities related to their parent company's
operations. These branch offices function as direct
extensions of the parent company, and their
activities are subject to stringent regulatory
oversight. They are particularly well-suited for
endeavors such as research, import/export
operations, and maintaining connections with
Indian clientele. The establishment and functioning
of these branch offices fall under the purview of
regulations outlined in FEMA and the RBI.
Importantly, branch offices afford the parent
company a high degree of oversight, as they are
regarded as direct extensions of the parent
company.
Branch offices are allowed to repatriate profits,
post-tax, to foreign territories, provided they adhere
to the relevant regulatory requirements.
However, it is vital to recognize that the liabilities of
the branch office can extend to the parent company,
potentially involving the parent company's assets to
meet the branch office's financial obligations.
The non-resident entity applying for a Branch Office
in India should have a financially sound track record
that is a profit making track record during the
immediately preceding 5 financial years in the home
country and net worth of not less than USD 100,000
or its equivalent.
Liaison Offices:
Liaison offices, often referred to as representative
offices, function as communication intermediaries
between the parent company and Indian
counterparts. They have a specific scope, which
includes facilitating liaison activities, fostering trade
relations, and collecting market intelligence.
Importantly, liaison offices are not authorized to
engage in direct commercial operations, and their
activities are subject to oversight by FEMA and the
RBI. Notably, since these offices do not conduct
commercial activities within India, they are exempt
from tax obligations.
The standard duration of validity for a liaison office
is typically three years. However, this rule differs for
Non-Banking Finance Companies (NBFCs) and
entities operating in the construction and
development sectors, as their authorization is
limited to a two-year timeframe.
The non-resident entity applying for a Liaison Office
in India should have a financially sound track record
that is a profit making track record during the
immediately preceding three financial years in the
home country and net worth of not less than USD
50,000 or its equivalent.
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Volume XVI, Issue X
Project Offices:
Foreign investors engaged in specific projects within
India are permitted to establish project offices for a
specified duration. These project offices are
temporary entities established exclusively for the
execution of the project and must be closed upon its
completion. The establishment and operation of
these project offices are governed by regulations
outlined in FEMA and RBI.
Non-resident companies have a general
authorization to set up Project Offices (POs) in India
under the condition that they have secured a project
contract from an Indian company for work within
India. Furthermore, the project in question must
have obtained the requisite regulatory approvals
and must be financially backed by either direct
foreign remittances, funding from a bilateral or
multilateral International Financing Agency, or
financing from an Indian entity that has received a
Term Loan from a Public Financial Institution or a
bank in India for the project.
Broad compliances for investing in India through
unincorporated entities
Broad compliances to be adhered to for setting up
of a Branch office or Liaison office or Project office
are laid down by the RBI and are as follows:
(i) The application for establishing Branch office or
Liaison office or Project office in India may be
submitted by the non-resident entity in Form
FNC to a designated AD Category - I bank (i.e.
an AD Category - I bank identified by the
applicant with whom they intend to pursue
banking relations).
(ii) The Branch office or Liaison office or Project
office for which approval has been granted
should be opened within six months from the
date of the approval letter, or else the approval
shall lapse.
(iii) A foreign company, within a period of 30 days
of the establishment of its place of business in
India, file with the registrar Form FC-1 in
accordance with Section 380 of the Companies
Act, 2013 read with relevant rules.
(iv) Every foreign company shall prepare financial
statement of its Indian business operations in
accordance with Schedule III of the Companies
Act, 2013 and file with the Registrar, along with
the financial statements, in Form FC-3, a list of
all the places of business established by the
foreign company in India as on the date of
balance sheet.
(v) Foreign Company shall prepare and file to the
Registrar of Companies an annual return in e-
Form FC 4, within a period of 60 days from the
last day of its financial year.
(vi) The Annual Activity Certificate (AAC) as at the
end of March 31 each year along with the
required documents needs to be submitted.
Conclusion:
India offers an abundance of entry options for
foreign investors, each with unique advantages and
considerations, closely monitored and regulated by
ROC, FEMA, the RBI, and other relevant Indian laws.
Whether choosing to invest in an existing company,
establish a wholly-owned subsidiary, form an LLP,
open a branch office, or set up liaison or project
offices, investors must carefully assess their needs,
investment duration, and purpose before
proceeding. A thorough analysis of compliance with
Indian regulations is essential before venturing into
India's dynamic marketplace and harnessing its
substantial potential for foreign investment.
******
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Volume XVI, Issue X
THE LAW OF STAMP DUTY ON ARBITRATION AGREEMENTS –
A LOOK FROM SMS TEA ESTATES PRIVATE LIMITED TO N. N.
GLOBAL MERCANTILE PRIVATE LIMITED
In recent months, the question of adequate stamp
duty being paid on arbitration
agreements/agreements that contain arbitration
clause, has come to forefront, after
pronouncement of the judgment in the case of N.
N. Global Mercantile Private Limited v. M/s Indo
Unique Flame Ltd. & Ors (2023) 7 SCC 1 on
25.04.2023 by a 5-judge bench Judgment of the
Hon’ble Supreme Court. In the present article, the
authors will examine the law leading up N. N.
Global Mercantile Private Limited (supra) and how
various High Courts have applied the judgment
since it was pronounced.
EVENTS LEADING UP TO THE PRONOUNCEMENT
OF N. N. GLOBAL MERCANTILE PRIVATE LIMITED
V. M/S INDO UNIQUE FLAME LTD. & ORS (2023) 7
SCC 1
In 2011, in the Hon’ble Supreme Court judgment
of SMS Tea Estates Private Limited v. Chandmari
Tea Company Private Limited (2011) 14 SCC 66, a
bench of Justice Raveendran and Justice A.K.
Patnaik had held that if a document is found to be
not duly stamped under Section 35 of the Stamp
Act 1899, the Arbitration Clause contained therein
cannot be acted upon and the document must be
impounded. However, once the requisite stamp
duty and penalty is paid and the defect is cured,
the Court can give effect to the arbitration clause.
- Vidhi Agarwal & Adhip Ray
-
On 10.04.2019, a two-judge bench of Justice R.F.
Nariman and Justice Vineet Saran of the Hon’ble
Supreme Court, in Garware Wall Ropes Ltd. v.
Coastal Marine Constructions & Engg. Ltd., (2019)
9 SCC 209 affirmed the aforementioned judgment
of SMS Tea Estates. An important ruling in Garware
(Supra) was the even after the insertion of Section
11(6A) through the Arbitration and Conciliation
Amendment Act, 1996 the position of law as
propounded in SMS Tea (Supra) would sustain.
Thereafter, the view taken in Garware (supra)
came to be specifically approved by a Supreme
Court Bench of three Hon’ble Judges in the
Judgment reported in Vidya Drolia v. Durga
Trading Corpn., (2021) 2 SCC 1 dated 14.12.2020.
However, vide the judgment of N.N. Global
Mercantile Private Limited v. Indo Unique Flame
Limited and Others (2021) 4 SCC 379 dated
11.01.2021, another three-judge bench of the
Hon’ble Supreme Court held that an arbitration
agreement contained in another agreement (in
this case a work order) would be an independent
and distinct agreement from the underlying
commercial contract, and there would not be any
impediment in enforcement of the same, pending
payment of stamp duty.
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Volume XVI, Issue X
The judgment doubted the correctness of the
views expressed in SMS Tea Estate (supra),
Garware Wall Ropes Ltd. (supra) and Vidya Drolia
(Supra) and accordingly, referred the question to
the Constitution Bench, which ultimately led to
formation of the Constitution Bench.
Thereafter, in N. N. Global Mercantile Private
Limited v. M/s Indo Unique Flame Ltd. & Ors (2023)
7 SCC 1 the Constitution Bench of 5 Hon’ble
Judges, by a 3:2 majority inter alia held that an
arbitration agreement which attracts stamp duty
and has not been adequately stamped, or an
arbitration clause contained in an instrument
chargeable with stamp duty, but on which stamp
duty has not been paid is non-existent in law and
cannot be acted upon, unless the requisite stamp
duty is paid and the instrument has been validated
as per the provisions of the Stamp Act.
SUBSEQUENT APPLICATION OF N. N. GLOBAL
MERCANTILE PRIVATE LIMITED V. M/S INDO
UNIQUE FLAME LTD. & ORS (2023) 7 SCC 1
At the outset, it is pertinent to mention that on
26.09.2023, the Hon’ble Supreme Court in M/S.
Bhaskar Raju and Brothers & Anr. v. M/S.
Dharmaratnakara Rai Bahadur Arcot
Narainswamy Mudaliar Chattram Other Charities
& Ors. [Curative Petition (C) No.44/2023 In R.P.(C)
No.704/2021 In C.A. No.1599/2020], has stated –
“Having regard to the larger ramifications and
consequences of the view of the majority in N N
Global Mercantile Private Limited vs Indo Unique
Flame Limited and Others, we are of the
considered view that the proceedings should be
placed before a seven-Judge Bench to reconsider
the correctness of the view of the five-Judge
Bench.”
Accordingly, the 7-Judge Bench has heard
arguments on 11.10.2023 and 12.10.2023 and
judgment has been reserved, and a final and
conclusive ruling on the issue is keenly awaited.
However, in the interim period, several judgments
have relied on, applied and in some cases further
clarified the law as crystalized in N. N. Global
Mercantile Private Limited.
SPLENDOR LANDBASE LTD. V. APARNA ASHRAM
SOCIETY AND ANOTHER. 2023 SCC ONLINE DEL
5148
The Hon’ble Delhi High Court in Splendor
Landbase Ltd. v. Aparna Ashram Society and
Another. 2023 SCC OnLine Del 5148 (along with a
number of other petitions) was confronted with a
situation wherein various petitions were filed on
the basis on unstamped arbitration
agreements/unstamped instruments, containing
arbitration agreements. The Hon’ble Court has
tried to balance the objective of speedy resolution
of disputes under Arbitration along with the
requirement of Stamp Duty to be paid on the
agreement/instrument as is evident from its
observation – “In the above conspectus, it is to be
examined as to how the statutory mandate under
Section 11(13) of the Arbitration and Conciliation
Act, 1996 (the ‘Act’), which aims at expeditious
disposal of petitions under Section 11 of the Act, is
harmonized with the obligation imposed vide the
judgment of N. N. Global i.e. to act in tune with the
statutory dictate of the Indian Stamp Act, 1899
(the ‘Stamp Act’).” Accordingly, the Hon’ble Court
framed and answered several issues, which are
discussed subsequently.
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Volume XVI, Issue X
• On the issue of whether
unstamped/insufficiently stamped arbitration
agreements are mandatorily required to be
impounded in proceedings under section 11 of
the Arbitration and Conciliation Act, 1996 the
Hon’ble Court held that NN Global, was
unequivocal that under the statutory mandate
of Section 33 of the Stamp Act, the agreement
which are unstamped or insufficiently stamped
would have to be impounded. However, under
Section 33(2) it was open to the Court to
delegate the task of examining and
impounding the agreement/instrument to an
officer appointed by the Court, who would take
the decision after examining the same in the
backdrop of Section 17 of the Stamp Act.
• On the issue of whether it was mandatory to
file the original agreement with the Petition
under Section 11, the Hon’ble Court held that
it was incumbent for a Petitioner who had filed
the Section 11 Petition on the basis of an
unstamped/insufficiently stamped agreement
to file the original instrument as executed.
However, in case the arbitration agreement
was properly stamped then a true/certified
copy showing clearly the adequate stamp duty
paid, could be filed accompanied by a “clear
and cogent” statement to that effect. Further it
was also clarified that at any stage, should a
requirement arise, the Court could always
require the original to be produced.
• On the issue of procedure to be followed after
impounding, the Hon’ble Court observed that
as per NN Global, Courts could either send the
impounded agreement/instrument to the
concerned Collector of Stamps for the
procedure under Section 40 to be adopted, or,
the Court itself, under Section 35, enable
deposit of the requisite stamp duty along with
penalty, “eventually culminating in the
concerned instrument being admitted in
evidence/acted upon for the purpose of the
proceedings under Section 11 of the Act.”
Further, the Hon’ble Court stated that in
“appropriate cases” when the quantum of
stamp duty payable was not in dispute, it
would be apposite for the Court to act as per
the Section 35 route under its own “watchful
gaze”. Under this route, the duty to determine
the nature of the instrument and the stamp
duty payable was on the Court itself. However,
the Hon’ble Court clarified that various duties,
may be delegated to an officer of the Court/the
Registrar, inter alia including – examining and
impounding the instrument and preparation of
a “report” on the nature and character of the
document and amount of duty and penalty
payable on the same; endorsing that proper
stamp duty has been paid in terms of Section
42 of the stamp act; preparing an
“authenticated copy” of the original document;
preparing a certificate under Section 38(1)
stating that the Stamp Duty and Penalty has
been paid; Transmission of the authenticated
copy, the certificate and total amount to the
concerned Collector at the place where the
instrument was executed.
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Volume XVI, Issue X

• On the issue of whether time bound It is likely that till the time the 7-Judge Bench
directions can be given to the Concerned passes a final and conclusive ruling on the issue,
Collector of Stamps, the Hon’ble Court held this approach will continue to be followed.
that it would be open to the Court to issue
necessary time bound directions to the *******
Collector, to ensure the statutory mandate of
Section 11(13) of the Arbitration and
Conciliation Act, 1996.

• On the issue of instrument executed in one

state but sought to be relied on another
state, the Hon’ble Court held that the law laid
down by the Hon’ble Supreme Court in New
Central Jute Mills Co. Ltd. v. State of W.B.
(1964) 1 SCR 535 was required to be followed,
wherein in case Stamp Duty is payable in
more than one state, in that case, it must first
be stamped in accordance with the law of the
first State, and thereafter the excess amount
(if any) as per the law of the Second State
would have to be paid in accordance with the
law and the rules in force in the second State.

It is pertinent to highlight that the approach

followed in Splendor Landbase Ltd. (supra) has
also been followed by the Delhi High Court and the
Bombay High Court in a number of cases, some of
which are ARB.P. 93/2023, ARB.P. 686/2023,
ARB.P. 539/2023, ARB.P. 312/2023, ARB.P.
1334/2022, ARB.P. 745/2023, ARB.P. 547/2023
and 2023 SCC OnLine Bom 2066. A perusal of
these orders reveal that the Hon’ble Courts have
given short timelines and are aiming to complete
the entire process of payment of stamp duty and
penalty on unstamped/insufficiently as
expeditiously as possible. It is likely that till the
time the 7-Judge Bench passes a final and
conclusive ruling on the issue, this approach will
continue to be followed.

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