Amounts written in different inks render negotiable instrument void: MHC

The Madras High Court recently held that amounts written in different inks in a promissory note without any justification amounts to material alteration and would render the promissory note void.

Any material alteration without the consent of the parties would render the negotiable instrument void as per section 87 of the Negotiable Instrument Act. Thus, the duty of proving consent of parties is also cast upon the plaintiff as the duty to prove the promissory note lies with the plaintiff.

The Court further held that since the First Appellate Court is the final court to settle facts it is the solemn duty of the First Appellate Court to examine facts in all cases and such examination is within the confines of law.

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Posted in Banking Law, Company Law, Consumer Law, General Law, Negotiable Instruments Act | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Homebuyers are Financial Creditors under Insolvency Code: SC

The Supreme Court of India recently upheld the amendments made to the Insolvency and Bankruptcy Code in 2018 (“Code”) to treat homebuyers as financial creditors. The Court said that the original provisions concerning Financial Creditors under the Code always subsumed homebuyers and that the amendment under challenge had only added an explanation to the section making this inclusion further clear.

The Court said, “The expression “borrow” is wide enough to include an advance given by the home buyers to a real estate developer for “temporary use” i.e. for use in the construction project so long as it is intended by the agreement to give “something equivalent” to money back to the home buyers. The “something equivalent” in these matters is obviously the flat/apartment.”

“Also of importance is the expression “commercial effect”. “Commercial” would generally involve transactions having profit as their main aim. Piecing the threads together, therefore, so long as an amount is “raised” under a real estate agreement, which is done with profit as the main aim, such amount would be subsumed within Section 5(8)(f) as the sale agreement between developer and home buyer would have the “commercial effect” of a borrowing, in that, money is paid in advance for temporary use so that a flat/apartment is given back to the lender”, the Court added.

The Court, referring to Section 88 of the Real Estate (Regulation and Development) Act (“RERA”), held that it was an additional remedy, which will not bar other remedies available to a homebuyer. The Code and RERA operate in completely different spheres and said, “Remedies that are given to allottees of flats/apartments are therefore concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the Code.”

Posted in Arbitration Conciliation Law, Banking Law, Consumer Law, Contract Law, General Law, Insolvency & Bankruptcy Law, Real Estate | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Prohibiting registration of marks as ‘immoral’ or ‘scandalous’ against free speech: USSC

The United States Supreme Court recently struck down provisions in federal law prohibiting registration of trademarks on the grounds of being ‘immoral’ or ‘scandalous’ as violation of free speech rights.

“The statute, on its face, dis­tinguishes between two opposed sets of ideas: those aligned with con­ventional moral standards and those hostile to them; those inducing societal nods of approval and those provoking offense and condemna­tion. This facial viewpoint bias in the law results in viewpoint-discriminatory application”, the Court said.

Government sought to narrow the meaning of immoral and scandalous to cover just marks that are sexually explicit or profane.

The Court, however, said “The ‘immoral or scan­dalous’ bar does not draw the line at lewd, sexually explicit, or pro­fane marks. Nor does it refer only to marks whose “mode of expres­sion,” independent of viewpoint, is particularly offensive. To cut the statute off where the Government urges is not to interpret the stat­ute Congress enacted, but to fashion a new one. And once the ‘im­moral or scandalous’ bar is interpreted fairly, it must be invalidated.”

Respondent sought federal registration of the trademark FUCT. The Patent and Trademark Office denied his applica­tion under a provision of the Lanham Act that prohibits registration of trademarks that consists of or comprises immoral or scan­dalous matter.

Posted in Constitution Law, General Law, Intellectual Property Law, International Law, trademark | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Occupational Safety and Health Hazards in Workplace: Govt.

The Government of India has declared the National Policy on Safety, Health and Environment at Workplace (NPSHEW) which aims to establish a preventive safety and health culture in the country through elimination of the incidence of work related injuries, diseases, fatalities, disasters and to enhance the well-being of employees in all the sectors of economic activity in the country.

A comprehensive legislation, Mines Act, 1952 has been enacted by Central Government to regulate the objectives of safety and health of workers in mines. The Mines Act, 1952 and the Rules and Regulations framed thereunder are administered by the Directorate General of Mines Safety (DGMS) under the Ministry of Labour and Employment.

In respect of factories, a comprehensive legislation in the form of the Factories Act, 1948, for taking care of the occupational safety and health aspects of the workers employed in factories registered under the Factories Act, 1948 has been enacted. The Act and the State Factories Rules framed thereunder are being enforced by the respective State/UT Governments through the Chief Inspector of Factories/Directorate of Industrial Safety and Health.

The Ministry has taken steps for drafting four labour codes on Wages, Industrial Relations, Social Security & Welfare, and Occupation Safety, Health and Working conditions respectively, by simplifying, amalgamating and rationalizing the relevant provisions of the existing Central Labour Laws. The Code on Occupational Safety, Health & Working Conditions has been drafted & contains provisions for setting up of a National Occupational Safety, Health Advisory Board.

Posted in Constitution Law, Consumer Law, Employment Law, General Law, International Law, Labor Law, Notifications/Publications/Circulars | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Online subscription income can be treated as business income: ITAT

The Income Tax Appellate Tribunal (ITAT) recently held that income from online subscription services can be treated as business income and not be taxed as royalty or fee for technical services in all cases.

ITAT Mumbai Bench said that for any service to fall in the category of technical/ managerial service, human intervention is a pre-requisite. The Tribunal further added that even fees for technical services or royalty could not be made applicable to all situations where a database was being made available on subscription fees basis.

ITAT observed, “the assessee has collated data from various journals and articles and put them in a structured manner in the database to make it more user friendly and beneficial to the users/customers who want to access the database. The assessee has neither employed any technical/skilled person to provide any managerial or technical service nor there is any direct interaction between the customer/user of the database and the employees of the assessee. The customer/user is allowed access to the online database through various search engines provided through internet connection. There is no material on record to demonstrate that while providing access to the database there is any human intervention. The assessee even does not alter or modify in any manner the articles collated and stored in the database. In the aforesaid view of the matter, the subscription fee received cannot be considered as a fee for technical services as well.”

ITAT further held that providing access to the database did not involve the transfer of any right to use any copyright to its customers/ subscribers.

Posted in Company Law, Consumer Law, Contract Law, General Law, Income Tax Law, International Law, Securities Law | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Winding up of companies fall within the exclusive jurisdiction of NCLT: NCLAT

The National Company Law Appellate Tribunal (NCLAT) reiterated that dispute relating to oppressional mismanagement and cases where winding up of companies may be required fall within the exclusive jurisdiction of National Company Law Tribunal and cannot be referred to arbitration.

Upholding the order of the National Company Law Board (Mumbai), the appellate body said, “…..On a plain reading of Section 242, it is manifestly clear that the facts should justify the making of a winding up order on just and equitable grounds. Admittedly, Arbitrator would have no jurisdiction to pass a winding up order on the ground that it is just and equitable which falls within the exclusive domain of the Tribunal under Section 271(e). That apart acts of non-service of notice of meetings, financial discrepancies and non-appointment of Directors being matters specifically dealt with under Companies Act and falling within the domain of the Tribunal to consider grant of relief under Section 242 of Companies Act render the dispute non-arbitrable…”

NCLAT further clarified that relief claimed needs to be looked into in every case to determine whether the same can be granted by an arbitrator before deciding whether a case could be referred to arbitration as generally a dispute arising out of breach of contractual obligations would be arbitrable.

Posted in Arbitration Conciliation Law, Company Law, Consumer Law, Contract Law, General Law, International Law, mediation | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Arbitration clause has no existence in an unstamped agreement: SC

The Supreme Court of India recently held that an arbitration clause has no existence until the contract containing the arbitration clause is duly stamped.

“When an arbitration clause is contained “in a contract”, it is significant that the agreement only becomes a contract if it is enforceable by law. Under the Indian Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped”, the Court said.

The Court further laid down the following procedure, for cases where the contract is not sufficiently stamped:

1. While proceeding with the Section 11 application, the Court must impound the instrument, which is not adequately stamped.

2. The instrument must be handed over to the Authority under the Stamp Act. The Authority will then adjudicate the stamp duty and penalty (if any). The Authority need to expedite the adjudication as possible, preferably within a period of 45 days from the date on which the Authority receives the instrument.

3. After stamp duty and penalty (if any) are paid on the instrument, any of the parties can bring the instrument to the notice of the Court.

4. The Court will then proceed to expeditiously hear and dispose of the Section 11 application. This will also ensure that once a Section 11 application is allowed and an arbitrator is appointed, then the arbitrator can then proceed to decide the dispute within the time frame provided under section 29A of the Arbitration Act.

The Court clarified that an arbitration clause contained in an agreement does not have an independent existence. Therefore, it is not possible to bifurcate the arbitration clause contained in such an agreement or the underlying transaction so as to give it an independent existence. Hence, the Stamp Act applies to the agreement or transaction as a whole.

Posted in Administrative Law, Arbitration Conciliation Law, Consumer Law, Contract Law, General Law, International Law | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment