Litigation 2019 Second Edition

Last Updated December 05, 2019

India

Law and Practice

Authors



Aarna Law is a counsel-led independent boutique law practice providing a range of legal services and solutions for domestic and international clients. Though established in August 2013, the wide range of experience of its founder Shreyas Jayasimha, its senior advisor Mysore Prasanna and other team members makes it a force to be reckoned with, particularly in the fields of domestic and international dispute resolution, corporate and commercial advice, regulatory and forensic investigations and technology law. The firm's objective is to provide high quality legal and commercial advice that will meet the clients’ needs, while maintaining the strictest standards of probity and confidentiality.

India largely follows the common law legal system due to the history of British colonial rule in the country. Common law is principally law which is derived from judicial precedent. Per Article 141 of the Indian Constitution, all decisions of the Supreme Court of India are binding on all courts within the territory of India.

Presently, however, India employs a mix of common law and civil law systems in the form of a well established statutory, administrative and judicial framework created by the enactment of various statutes.

The independence of the judiciary is sacrosanct in the Indian legal system. The judiciary is tasked with the role of interpreting the Constitution and deciding constitutional disputes.

An adversarial system of legal procedure is followed in India. The courts impartially decide disputes based on the arguments and evidence presented before them by the concerned parties.

The Indian judiciary has a single integrated hierarchy of courts. The Supreme Court is the apex court of the country and each state has its own High Court. Certain High Courts, however, exercise jurisdiction over two or more states. Underneath the High Courts are the District Courts.

The Supreme Court exercises limited original jurisdiction, appellate and writ jurisdiction. Each High Court has powers of superintendence over the District Courts within its jurisdiction. High Courts have appellate and writ jurisdiction – except for the High Courts of Bombay, Chennai, Calcutta, Delhi, and Himachal Pradesh which also exercise original jurisdiction. The District Courts enjoy both original and appellate jurisdiction within their territorial and pecuniary jurisdiction. 

The government of India, as per the powers available to it under the Constitution, has also set up specialised tribunals to deal with specific areas of law. Some examples of these are the Debt Recovery Tribunal, which deals with cases under the Recovery of Debts Due To Banks & Financial Institutions Act, 1993; the National Company Law Tribunal (NCLT), which is the adjudicating authority for matters under the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016 (IBC); and the Income Tax Tribunals, which adjudicate over income tax matters.

All the courts in India follow detailed rules, as set out for litigants by the respective courts. The Supreme Court Rules, 2013 govern the filings and proceedings in the Supreme Court. Every High Court has its own set of rules to be followed by the litigants and/or their advocates. The rules, as set out by the courts, include procedures to be followed in each type of case that is filed in the court. For instance, there are separate rules for suits, arbitration-related proceedings, admiralty proceedings, testamentary matters, etc.

The principle statutes for the rules of procedure to be followed by the courts are the Code of Civil Procedure, 1908 (CPC) for civil cases and the Code of Criminal Procedure, 1973 (CrPC) for criminal matters. The rules laid down by the courts are in addition to, and in fact complement those, stated in these statutes and cannot deviate from them.

A litigant is required to file pleadings in the format and manner prescribed by the rules of the court in which the suit or complaint is filed. These formats are derived from the requirements set out in the CPC and the CrPC.

Parties are also required to file documents in support of their case. However, certain types of proceedings are protected from disclosure, provided that this is either mandated by a concerned statute or under the directions of the court adjudicating upon the matter, taking into consideration factors like sensitivity (such as family matters), public interest, security and defence of the country In such sensitive matters, the courts may permit parties to submit reports and documents in sealed envelopes.

Section 327 of the CrPC states that the place in which any criminal court is held for the purpose of inquiring into or trying any offence shall be deemed to be an open court, to which the public generally may have access with the exception of in camera proceedings as provided under the Code itself. Under Section 11 of the Family Courts Act, 1984, the Family Court may direct in camera proceedings based on the sensitivity of the matter involved, at either the discretion of the Court or the request of a party.

No person is entitled to practise in any court or before any authority in India unless they are enrolled as an advocate as per the Advocates Act, 1961.

A person shall be qualified to be admitted as an advocate on a state roll if he or she fulfils the following conditions:

  • is a citizen of India;
  • is 21 or over;
  • has obtained a degree in law;
  • fulfils such other conditions as may be specified in the rules made by the state Bar Council; and
  • has paid the requisite enrolment fees to the applicable authorities.

According to Section 30 of the Advocates Act, 1961, every advocate whose name is entered in the state Bar Council shall be entitled to practise:

  • in all courts including the Supreme Court;
  • before any tribunal or person legally authorised to take evidence; and
  • before any other authority or person before whom such an advocate is, by or under any law, entitled to practise.

A person who wishes to be enrolled as an advocate is currently required to pass the Bar Council of India examination. No person can, however, be enrolled on the roll of more than one state Bar Council.

Certain High Courts, however, such as those situated in the States of Madhya Pradesh, Uttar Pradesh, Punjab and Haryana have made it mandatory for an advocate to be enrolled with their respective state Bar Councils to appear and plead before their High Courts.

According to Section 23 of the Act, the Attorney General of India and then the Solicitor General of India shall have preaudience over all other advocates. At the state level, the Advocate General of any state shall have preaudience over all other advocates. However, the senior advocates shall have preaudience over other advocates.

The Supreme Court, in the case of Bar Council of India v A.K. Balaji and Ors Civil Appeal Nos 7875-7879, 7170 and 8028 of 2015, held that foreign lawyers or law firms are not entitled to practise law in India, in relation to litigation or non-litigation matters, unless they fulfil the requirements set out in the Advocates Act, 1961, and the Bar Council of India Rules.

The Bar Council of India Rules do not permit an advocate to stipulate a fee contingent on the results of litigation or to agree to share the proceeds thereof. The Supreme Court, in the case of Bar Council of India (mentioned in 1.4 Legal Representation in Court), held that funding of litigation by advocates is not explicitly prohibited, but a conjoined reading of Rule 18 (fomenting litigation), Rule 20 (contingency fees), Rule 21 (share or interest in an actionable claim) and Rule 22 (participating in bids in execution, etc) would strongly suggest that advocates in India cannot fund litigation on behalf of their clients. However, there appears to be no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation.

Certain High Court Amendments, such as in Bombay and Madhya Pradesh, to Order XXV of the CPC, empower these courts to add third party financiers to the litigation which they are financing and also demand security from such financiers for the costs incurred by other parties to such litigation. In Orissa, if the courts are satisfied that there is an element of champerty and maintenance in a case, they can direct a plaintiff to furnish security for a defendant’s estimated costs in that litigation.

Based on the above, as well as case law on the subject dating as far back as the Privy Council, it can be stated that third-party funding agreements may not be per se null and void in India. However, these agreements shall be unenforceable under the Indian Contract Act, 1872 if they contain an extortionate or unconscionable object or consideration. Furthermore, transactions that are not made with an intention of assisting a just and reasonable claim, or are made for improper objects or with a view to being inequitable against a party or against the public policy of India, could be held to be champertous by the courts. 

There are no regulations over third-party funding of litigation in India implying that all types of civil proceedings can be funded by third parties.

Since there are currently no regulations regarding third-party funding of litigation in India, it could be available to both the parties until specific regulations are made in this regard.

Presently, it is understood that there are no minimum or maximum thresholds on third-party funding of litigation in India as there are no specific regulations in this regard. However, third-party funding agreements are strictly scrutinised by the courts to ensure that such agreements are not unenforceable for any of the factors set out in 2.1 Third-Party Litigation Funding.

There are no regulations on the types of costs that will be borne by third-party funders. Hence, the decision on the type of costs to be funded lies with the third-party funder.

Rule 20 and 21 of the Standards of Professional Conduct and Etiquette of Chapter II under Part VI of the Bar Council of India Rules, 1975 prohibit an advocate from stipulating a fee contingent on the results of litigation. The Supreme Court, in the case of G, A Senior Advocate of Supreme Court (1955) 1 SCR 490, held that the practice of charging contingency fees is illegal and amounts to professional misconduct. However, the Bombay High Court, in the case of Jayaswal Ashoka Infrastructures Pvt. Ltd. v Pansare Lawad Sallagar First Appeal No. 106 of 2015, held that a partner of a law firm who was not enrolled as an advocate under the Advocates Act, 1961 and appeared in arbitration proceedings as a "counsel" was not bound by the rule prohibiting an advocate from charging contingency fees. The court also held that representation before an arbitral tribunal is not the same as representation before a court. Furthermore, the Bombay High Court, while relying on the decision in the case of G, A Senior Advocate noted that there was nothing morally wrong, nothing to shock the conscience, nothing against public policy and public morals in a champertous transaction not involving a legal practitioner and hence, the agreement to charge contingency fees would be enforceable. An agreement of this nature, if entered into by an advocate, would be against the public policy of India however this principle would not apply to third parties. The court also observed that merely being a law graduate and a partner in a law firm, would not be sufficient to render void, an agreement entered into by him or her for remuneration based on the outcome of arbitration proceedings.

There are no regulations on the time limit for obtaining third-party funding in India.

The rules of pre-action conduct are not common and apply as may be specified in a particular statute.

Section 80 of the CPC makes it mandatory for a two-month prior notice to be given to the government or a public officer for an act done by that officer in his or her official capacity, prior to the institution of any suit against the government or the public officer. Issuance of that notice can be dispensed with if the party seeking to initiate proceedings requires urgent interim relief. No relief can, however, be granted unless the government or public officer is heard.

A 2018 amendment to the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Commercial Courts Act) requires parties to mediate their disputes before the initiation of any proceedings. The plaintiff can file a suit only if the parties have failed to arrive at a settlement.

Under the IBC, an operational creditor is required to issue notice before the initiation of insolvency proceedings against a corporate debtor, calling upon the debtor to pay the amounts due to the creditor. The petitioner can file only after the expiry of ten days of the notice, in which time period the debtor has the opportunity to either make payment of the debt due or dispute the debt. The NCLT is empowered to reject a petition if it is filed without the issuance of the notice. The requirement of notice does not apply to proceedings by a financial creditor. To elucidate, an operational creditor is a supplier of goods and/or services whose debt has remained unpaid and a financial creditor is a bank or financial institution or any other financial services provider.

In the case of dishonour of a cheque, the party receiving that cheque is entitled to initiate proceedings under Section 138 of the Negotiable Instruments Act, 1881. A complaint under this provision can be initiated only upon issuance of a mandatory notice to the drawer of the cheque. The notice would call upon the drawer to make payment of the amount of the cheque within a stipulated period, failing which proceedings would be filed against the drawer.

Arbitration is said to commence, under the Arbitration & Conciliation Act, 1996 (Arbitration Act), on the date on which a request for the dispute to be referred to arbitration is received by the respondent. Hence, a notice of arbitration is a prerequisite and is also mandatory before referring a dispute to arbitration.

The Limitation Act, 1963 provides for the period of limitation with respect to different causes of action and proceedings. Any suit filed, or proceeding initiated, after the expiry of the prescribed period of limitation, is said to be time-barred and hence unenforceable in a court of law. The law of limitation does not affect the right of an aggrieved person, but makes that right remediless.

The time from which the limitation period begins to run is the date on which the cause of action, by which the aggrieved party is vested with the right to seek an appropriate remedy, arises.

Generally, the limitation period for property-related disputes, including enforcement of the mortgage, is 12 years. For cases of recovery of money it is three.

An admission of liability by a debtor in a money recovery case extends the limitation period, and the period of three years shall then apply from the date of the admission by the debtor.

Certain special laws may provide for limitation periods that are different from those provided by the Limitation Act, with provisions for condonation of delay as well. 

The jurisdiction to which a defendant is subjected to in a suit is provided under Section 20 of the CPC. It states that a suit shall be instituted in a court within whose jurisdiction the defendant, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain. Similarly, a suit for compensation for wrongs to persons or movable property may be instituted, as the plaintiff chooses, either where that wrong is committed, or where the defendant resides, carries on business or personally works for gain.

With respect to suits relating to immovable property, the court within whose jurisdiction that property is situated, has the jurisdiction to try the matter with the exception of the Chartered High Courts (viz, the High Courts of Calcutta, Bombay, and Madras) which shall have jurisdiction to try such a suit, if the cause of action arises, either in whole or in part, within the jurisdiction of those High Courts. In intellectual property related matters, a plaintiff can file a suit within the jurisdiction in which he or she resides or carries on business.

As per Order IV, Rule 1 of the CPC, a plaint has to be presented for the purpose of instituting a civil suit. This plaint has to be filled in duplicate and in compliance with the rules contained in Orders VI and VII of the CPC as well as the rules prescribed by the court in which the suit is proposed to be filed.

A plaint shall contain the following particulars:

  • the Court in which the suit is brought;
  • the name, description, and place of residence of the plaintiff;
  • the name, description, and place of residence of the defendant;
  • the cause of action and when it arose;
  • the reliefs claimed;
  • set off or relinquished amount, if any;
  • the value of the subject matter of the suit; and
  • whether the suit is within the prescribed limitation period.

In many jurisdictions, the plaintiff is required to file the original documents along with the plaint.

According to Order VI, Rule 17 of the CPC, the court may, at any stage of the proceedings, permit a party to alter or amend his or her pleadings in such manner and on such terms as may be just, and all such amendments are to be made as may be necessary for the purpose of determining the real questions in controversy between the parties. No application for amendment is allowed once the trial has commenced unless the court is of the opinion that the matter in question could not have been raised by the party before, despite due diligence.

Summons is issued through the concerned court to the defendant upon the institution of the suit directing him or her to appear and answer the claim by way of a written statement. The summons, generally, directs the defendant to adduce all the documents relied upon by him or her and fixes a day for his or her appearance.

If the defendant or his or her agent resides within the jurisdiction of the court in which the suit is instituted, the summons is served by an officer of that court by way of registered post, or a fax message, or through electronic mail. In certain circumstances when a plaintiff requires urgent relief, the court may permit the plaintiff to serve the summons upon the defendant.

India is a signatory to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, commonly known as the Hague Service Convention. Service of summons to defendants residing outside India can be effected by following the procedure laid down under the Convention if the country in which the defendant resides is also a signatory to this Convention. In other cases, summons may be served to such defendants by registered post with acknowledgment due.

If the defendant does not appear despite due service of a summons, and in spite of sufficient opportunity having been given to the defendant to present its case, the court may order the suit to be heard ex parte –ie, without hearing the defendant. Based on the documents produced as well as the arguments advanced by the plaintiff, the court may either allow or dismiss the suit. Under Order 9, Rule XIII of the CPC, the defendant may apply for setting aside an ex parte decree if he or she is able to satisfy the court that the summons was not duly served or that, due to sufficient reasons, he or she was prevented from appearing before the court. It is mandatory to provide notice of such an application filed by the defendant, to the plaintiff/decree-holder. 

India has provisions under various enactments for representative or class action proceedings. The rules for representative or class action suits depend on the subject matter of the suit.

When there are numerous persons having the same grievances or similar interests in a suit against a common party, then one or more of those persons may, with the permission of the court, sue or be sued, or may defend that suit, on behalf of, or for the benefit of, all such interested persons.

The judiciary has also evolved the concept of public interest litigation wherein a group of people can directly approach the Supreme Court or a High Court under its writ jurisdiction, seeking relief in matters of public importance and interest.

Sections 245 and 246 of the Companies Act, 2013 specifically deal with class action suits. These provisions permit members and depositors to approach the NCLT if they believe that the affairs of a company are being conducted in a manner detrimental to the interest of the company and its shareholders.

Per NCLT Rules, there should be at least 5% of the total number of members of the company or one hundred members of the company, whichever is less; or a member or members who hold a minimum of 5% of the issued share capital of a company, if it is unlisted; or a member or members holding a minimum of 2% in the issued share capital, if the company is listed.

In the case of depositors, the requisite number is at least 5% of the total number of depositors of the company or one hundred depositors of company, whichever is less; or the depositor or depositors to whom the company owes 5% of total deposits of the company.

As far as class action suits in company law are concerned, the NCLT rules permit a member of a class action suit to opt out of the proceedings any time after their initiation, with its prior permission, and also to pursue an independent remedy against the company or other shareholders, as the case may be.

There are no statutory rules or regulations requiring advocates to provide cost estimates to a client.

Parties may approach the court for urgent interim relief to post the filing of a suit. In cases of extreme urgency, the court may be inclined to grant an ex parte order –ie, without notice and without hearing the other party.

The courts in India are empowered to grant a temporary injunction or interlocutory orders if the plaintiff is able to prove that:

  • property, in dispute in a suit, is in danger of being wasted or alienated by the other party;
  • the defendant threatens to dispose of the property to the detriment of the creditors; and
  • the defendant threatens to dispossess the plaintiff.

In so far as arbitration proceedings are concerned, Section 9 of the Arbitration Act permits a party to apply for urgent interim relief before the constitution of an arbitral tribunal. Such an interim order is, however, valid only if arbitral proceedings are commenced by the party which sought the interim relief, within 90 days from the date of grant of that interim relief by the court. Courts are empowered to grant an ex parte injunction in cases of dire urgency.

Summary Suit

Summary suits provide for a summary procedure for enforcement of rights where the defendant has no substantive defence. Summary suits can be filed under Order XXXVII for claims based upon bills of exchange, hundis, and promissory notes; under a written contract for the recovery of a debt; on a guarantee; for recovery of receivables; or on the basis of an enactment where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty. The court may in such cases pass a decree in favour of the plaintiff; or grant conditional leave to the defendant to defend the suit, or grant unconditional leave to defend if the defendant has raised triable issues.

Decree on Admission of Liability

The court may also, under Order XII, Rule 6, pass judgment or a decree on an application made by a party or on its own, if a party has admitted its liability in its pleading or otherwise.

Rejection of Plaint

A defendant may make an application for rejection of a plaint on the following grounds:

  • it does not disclose a cause of action;
  • reliefs claimed in the suit are undervalued and the plaintiff fails to rectify despite being called upon to do so;
  • reliefs claimed in the suit are undervalued and the suit is undervalued and the plaintiff fails to make payment of the requisite court fees despite being called upon to do so;
  • failure to pay requisite court fees;
  • the suit is barred by any law; or
  • the plaint is not filed in duplicate, sufficient copies of the plaint are not provided for service on the defendant and failure to pay requisite fees for service of summons.

The Court may give summary judgment against a plaintiff or defendant on a claim if it considers that:

  • the plaintiff has no real prospect of succeeding on the claim or the defendant has no real prospect of successfully defending the claim, as the case may be; and 
  • there is no other compelling reason why the claim should not be disposed of before recording of oral evidence, such an application can be filed by the plaintiff at any time after the summons has been served on the defendant.

Furthermore, as stated above, parties can make dispositive motions in the form of a summary suit, judgment on the admission of liability, dismissal of the suit, interim orders of an injunction and even sale of property in exceptional cases.

The general rule is that it is up to the plaintiff to decide the parties against whom he or she intends to bring the suit and to implead them as defendants in the suit. However, the court trying the suit has been vested with wide discretionary powers to strike out the name of any person who is a plaintiff or a defendant in a suit. Also, the court is empowered to implead any party, if it is of the opinion that, the presence of that party may be necessary in order to enable the court to effectually and completely adjudicate upon and settle all the questions involved in the suit. The court can implead or strike out any party at any stage of the proceedings in the exercise of its discretionary power.

Any third party who is likely to suffer any injustice, on account of the outcome of the suit, is also entitled to get himself or herself impleaded in such a suit.

The court may, either of its own motion or on the application of the defendant, direct the plaintiff in writing to provide security for payment of costs incurred and likely to be incurred by any defendant. Such an order shall be mandatorily made if the plaintiff is residing out of India and does not possess sufficient immovable property within India, other than the suit scheduled property. If the plaintiff fails to furnish such security as directed by the court, the court is empowered to make an order dismissing the suit. However, the plaintiff is allowed to apply to the court to set aside this dismissal upon such terms as imposed by the court – regarding security, costs or otherwise – as it thinks fit.

Courts are inclined to impose costs on fake, vexatious, frivolous or malicious interim applications or motions.

The Supreme Court, in the case of Ramrameshwari Devi & Ors. v Nirmala Devi & Ors (2011) 8 SCR 992, issued guidelines to all courts regarding ex parte interim applications and directed that courts should impose realistic costs on parties who engage in frivolous litigation. If an injunction has been granted on the basis of false pleadings or forged documents, courts must impose costs on the litigants. In an exceptional case, where the court has to grant an ex parte injunction, it must record in the order that if the suit is dismissed the plaintiff will have to pay full restitution, actual or realistic costs and mesne profits to the defendant.

There is no set timeframe provided for a court to deal with interim applications. A party seeking an urgent relief is required to satisfy the court that:

  • the party has made out a prima facie case for the grant of interim relief;
  • the balance of convenience is in favour of the party making the application; and
  • irretrievable harm, loss, and damage will be caused to the party if the urgent reliefs are not granted.

If a party is successful in convincing the court on the above parameters, it may grant the interim relief and in exceptional cases also grant an ex parte order.

Discovery of documents is provided under Order XI of the CPC. A party may apply to the court to direct another party to the suit to make discovery of documents that are in that party’s possession or power, relating to any matter in question in the suit. A court can also suo moto pass an order directing the other party to produce documents relating to any matter in question in the suit within his or her possession or power. Non-compliance with such an order for discovery may lead to the dismissal of the suit for want of prosecution and, in the case of a defendant, to having his or her defence struck out, and being placed in the same position as if he or she had not offered a defence.

The Jharkhand High Court, in the case of Samir Sen v Rita Ghosh 2018 SCC Online Jhar 1198, held that an application for the discovery of documents is not maintainable after the stage of framing of issues.

As far as witness testimonies in a civil suit are concerned, the examination-in-chief is led through an affidavit of the witness. The opposite party conducts cross-examination of that witnesses based on the affidavit filed by the party.

Interrogatories are a set of questions that are provided to the opposite party with the leave of the court. The reply to the interrogatories is filed by the party to which they are delivered through an affidavit administered under oath. The court is vested with the discretionary power to award costs if it is of the opinion that interrogatories have been unreasonable, vexatious or of improper length.

It has been established through various judicial pronouncements that if the court is of the opinion that a third party to a suit is in possession of certain vital documentary evidence or can adduce crucial testimony in relation to the suit, it may suo moto direct that third party to appear and adduce evidence. Therefore, there is nothing that prohibits courts from ordering the discovery and inspection of third parties. Such an order can also be made on the application of a party to the suit. Even in arbitrations, the parties are free to approach the courts for assistance in taking evidence under Section 27 of the Arbitration Act.

As mentioned in 5.1 Discovery and Civil Cases, Order XI of the CPC deals with the rules relating to discovery and inspection. Furthermore, Order XIII of the CPC discusses the production, impounding, and return of documents.

There are no alternatives to discovery mechanisms.

Sections 126 and 129 of the Indian Evidence Act, 1872 (Evidence Act) deal with privileged communications between a client and attorney. A barrister, attorney, pleader or vakil is not allowed to disclose any communication made to him or her in the course and for the purpose of his or her employment. He or she is not allowed to state the contents or condition of any document with which he or she has become acquainted in the course and for the purpose of his or her professional employment, or to disclose any advice given by him or her to his or her client in the course and for the purpose of that employment. This obligation imposed on the attorney continues even after the employment has ceased. The only exception to this obligation is if the client chooses to disclose such communications or the contents or condition of such documents. However, communications made in furtherance of any illegal purpose, or any fact observed by an attorney showing that any crime or fraud has been committed since the commencement of his or her employment, are not protected from disclosure.

According to the Bar Council of India Rules, an in-house counsel is not entitled to register as an advocate under the Advocates Act, 1961. Therefore, there exists a difference in relation to privilege between an external counsel and in-house counsel. External counsel, being advocates, are bound to comply with the Bar Council Rules and are obliged by the rules laid down under the Indian Evidence Act, 1872. However, since in-house counsel are not advocates, they are not bound by the rules regarding legal privilege. The Bombay High Court, in the case of Larsen & Toubro Limited v Prime Displays (P) Ltd., 2002 (5) BomCR 158, held that legal privilege attaches to a document prepared in anticipation of litigation, either for seeking legal advice or for being used for the purpose of defence or prosecution of the legal proceedings. Hence, a document to which privilege is attached cannot be adduced in evidence. The court observed that since these documents are considered to be privileged documents, whether they also contain advice given by the internal legal department or whether, for that reason they are also privileged, loses its significance.

Documents that are considered to be protected by legal privilege are exempt from production before a court. This includes communication exchanged between a client and his or her advocate. Documents relating to state matters or covered within the ambit of the Official Secrets Act, 1923 are also protected from disclosure. Documents exchanged between parties in mediation proceedings or produced before the mediator in confidence are also protected from disclosure.

When an application for disclosure is filed, the other party may oppose that application on the ground that the information sought to be disclosed is not related to the issues of the suit. In cases where the party contemplates some irreparable loss to reputation or some other substantial injury by such disclosure, these documents can be submitted to the court in confidence.

Grant of injunctive relief in India is governed by the Specific Relief Act, 1963 (SR Act) and the CPC. Courts are empowered to grant temporary as well as permanent injunctions on being satisfied that the plaintiff has made out the grounds for such a relief. Temporary injunctions are injunctions that continue until a specified time, or until the further order of the court, they may be granted at any stage of a suit, and are regulated by the CPC. A perpetual injunction can only be granted by a final order/decree after hearing the parties to the suit whereby the defendant is perpetually injuncted from the assertion of a right, or from the commission of an act, which would be contrary to the rights of the plaintiff.

The court also has the power to grant a mandatory injunction to prevent the breach of an obligation and also to compel the performance of requisite acts.

Apart from the reasons set out in 4.7 Application/Motion Timeframe, when there is a threat to the plaintiff’s right of enjoyment of the property, the court may grant a perpetual injunction in the following cases:

  • where the defendant is the trustee of the property for the plaintiff;
  • where there exists no standard for ascertaining the actual damage caused, or likely to be caused, by the invasion;
  • where the invasion is such that compensation in money would not afford adequate relief; and
  • where the injunction is necessary to prevent a multiplicity of judicial proceedings.

The court may refuse to grant an injunction in circumstances where it is required to:

  • restrain any person from prosecuting a judicial proceeding pending at the institution of the suit in which the injunction is sought, unless that restraint is necessary to prevent a multiplicity of proceedings;
  • restrain any person from instituting or prosecuting any proceeding in a court not subordinate to that from which the injunction is sought;
  • restrain any person from applying to any legislative body;
  • restrain any person from instituting or prosecuting any proceeding in a criminal matter;
  • prevent the breach of a contract, the performance of which would not be specifically enforced;
  • prevent, on the ground of nuisance, an act of which it is not reasonably clear that it will be a nuisance;
  • prevent a continuing breach in which the plaintiff has acquiesced;
  • equally, efficacious relief can certainly be obtained by any other usual mode of proceeding except in case of breach of trust;
  • the conduct of the plaintiff or his or her agents has been such as to disentitle him or her to the assistance of the court; or
  • the plaintiff has no personal interest in the matter.

Injunctions are also passed to freeze assets that prevent the adverse party from disposing of or selling their assets during the pendency of a suit or other proceeding.

Injunctions in the form of anti-suit injunctions can also be passed by the courts in India to prevent parallel proceedings in another jurisdiction within India provided that power is within the jurisdiction of the court granting such injunctions. The Supreme Court of India, in the case of Modi Entertainment Network and Anr v W.S.G Cricket Pte Ltd. AIR 2003 SC 1177, has also laid down the following principles for the grant of anti-suit injunctions:

  • the defendant, against whom the injunction is sought, is amenable to the personal jurisdiction of the court;
  • if the injunction is declined, the ends of justice will be defeated and injustice will be perpetuated;
  • the principle of comity – respect for the court in which the commencement or continuance of the action/proceeding is sought to be restrained – must be borne in mind;
  • in a case where more than one forum is available, the court may examine which would be the appropriate forum having regard to convenience and may grant an anti-suit injunction if it finds the proceedings to be oppressive or vexatious;
  • jurisdiction of the court is to be decided based on a true interpretation of the contract on the facts and in the circumstances of each case;
  • no injunction by a court is possible, when parties have agreed to submit to the exclusive jurisdiction of another court or agreed under a non-exclusive jurisdiction clause, to approach a foreign forum and be governed by the law applicable to it;
  • a party to the contract containing a jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; and
  • the burden of establishing that the forum of choice is a forum not suitable, or the proceedings therein are oppressive or vexatious, would be on the party so contending to aver and prove the same.

The rules prescribed by the court set out the procedure to be followed to make an application for urgent injunctive relief from the court. Parties are permitted to request the court for an urgent listing of the matter or to take up the matter out of turn in cases of extreme exigency. The court, upon hearing the party making such an application, may either immediately grant the urgent relief or require notice to be served to the other party against whom the relief is claimed. Generally, such applications are heard an on the day they are made, based on the urgency demonstrated by the applicant. Furthermore, with due regard to the urgency in the matter, such applications may be taken up on a holiday or beyond the sitting hours of the court. Vacation benches are also set up by courts to hear urgent matters when the courts may be on vacation.

Injunctive relief, on an exparte basis, is available in India, however, courts have held that it should be granted only in exceptional circumstances. The courts have the discretion to grant injunctions on an ex parte basis based on the facts and circumstances of the particular case as the relief claimed is granted without hearing the other party. The considerations for a grant of an ex parte injunction are as stated in 4.7 Application/Motion Timeframe (viz, the applicant has made out a prima facie case; irreparable injury may be caused if such relief is not granted, and the balance of convenience lies with the person seeking the ex parte relief). Also, the applicant needs to immediately notify the grant of an ex parte order to the respondent and submit proof of such intimation by filing an affidavit in court in this regard.

In the event that an injunction, ex parte or after hearing the other party, is set aside, the respondent against whom the order was passed can claim damages against the applicant for injury that may have been caused to the respondent on account of the injunction order.

There has been no particular instance in India wherein the courts have ordered for injunctive relief against the worldwide assets of the respondent.

Third parties can also be brought under the ambit of injunctive relief, provided that the person claiming such relief is able to sufficiently prove that the third party is claiming through a party to the suit.

Where the respondent has failed to comply with an injunction order, the court may direct the attachment and sale of its property to compensate for the damages that may be suffered by the applicant due to non-compliance with the order. Additionally, the respondent may also be detained in prison, for a period of up to three months.

The CPC lays down the procedural law for conducting civil trials in India.

A trial in a civil suit is summarised below:

  • upon completion of pleadings, the court frames the issues (ie, questions of fact and law that need to be decided in the suit);
  • the plaintiff and the defendant are then required to file the evidence of their witnesses through affidavits (examination in chief), each party is given equal opportunity to cross-examine the other party’s witness (in certain cases, parties may choose to orally examine their witness instead of filing an affidavit and re-examination of a witness may also be permitted);
  • parties then present their final arguments orally, which are generally also followed by written arguments; and
  • judgment is then rendered by the court, which may or may not be appealable as per the provisions of the CPC.

With the enactment of the Commercial Courts Act, 2015, the CPC was amended with certain provisions that apply to suits of commercial disputes of a specified value. Order XV-A introduces the concept of case management hearings in the CPC. As per this provision, in deciding commercial matters, the court shall hold the first case management hearing, no later than four weeks from the date of filing of the affidavit of admission or denial of documents by all parties to the suit. The court is empowered to pass orders regarding framing of issues, listing of witnesses for the purpose of examination, fixing dates for adducing of evidence by witnesses, fixing dates for hearing of oral arguments, setting time limits for parties to make their oral arguments and file written arguments, if so directed. The court shall ensure that arguments are concluded within a period of six months from the date of the first case management hearing in a suit. The court is also bound to deliver judgment in the suit within a period of 90 days from the date on which the parties conclude their arguments.

Court are vested with the power to impose costs and to foreclose a party’s right in the trial proceedings in the event of non-compliance with any order of the court.

Jury trials were abolished in India in 1959. However, parties in a matrimonial dispute within the Parsi community may opt for jury trial as per The Parsi Marriage and Divorce Act, 1936.

The Evidence Act governs the rules of evidence. Evidence produced before a court can be oral or in the form of documents. A person can give evidence through his or her personal knowledge or through information gathered from documents available with the witness. Documentary evidence can be produced through original documents (primary evidence) or through copies of the original (secondary evidence). Secondary evidence includes copies made through mechanical processes, counterparts of documents to be used against parties who did not execute them, etc and is admissible when the original:

  • is in possession of a person out of the reach of the process of the court or, despite notice, is not produced by the person who has possession of the document;
  • has been destroyed or lost;
  • is not easily movable;
  • is a public document;
  • is a document of which a certified copy is permitted under any law; or
  • has been admitted in writing by the person against whom it is sought to be proved

Electronic records are also admissible as evidence in Indian courts. The computer containing the original evidence need not be produced before the court provided such evidence is produced along with a certificate under section 65B of the Evidence Act certifying that:

  • the source computer was regularly used and was in lawful control of the person producing the electronic record;
  • the information in the electronic record was regularly fed into the computer in the ordinary course;
  • the computer was operating properly without affecting the contents of the electronic record or accuracy or its contents; and
  • the information contained in the electronic record is derived from information fed into the computer in the ordinary course.

When the court is required to form an opinion on a point of science, art or foreign law; or to identify handwriting, etc it may require an expert on the subject matter to produce evidence in a suit. This evidence is relevant and admissible. An expert may be appointed suo moto by the court or on an application made by a party who desires to present an expert’s evidence. The opinion of an expert, however, is not binding on the court. There are no specific rules of conduct for experts under the Evidence Act.

India follows a practice of an open court system for all court proceeding unless such proceedings are conducted as an in camera proceeding in exceptional cases such as those related to sexual harassment or matrimonial disputes. The Supreme Court, in Swapnil Tripathi & Ors. v Supreme court of India and Ors. (WPC No. 1232 of 2017), permitted live streaming of proceedings in matters of constitutional and national importance to enable citizens to have the right to information and awareness in such cases.

The trial court can, as provided under the Indian Evidence Act, put any question in any form to any witness, or to the parties, about any fact that may or may not be relevant to discover relevant facts. A judge is expected to actively participate in the trial and elicit necessary materials from witnesses in order to reach a correct conclusion. There is nothing that inhibits his or her power to put questions to the witnesses, either during chief examination or cross-examination, or even during re-examination.

A defendant is required to file his or her written statement within 30 days of service of summons. This period could be extended to 90 days if sufficient cause is shown for the delay by the defendant and upon payment of costs that may be imposed by the court for the delay.

Parties are then required to complete inspection of documents within 30 days and thereafter, within 15 days, shall file affidavit of admission or denial of documents. Within four weeks thereafter, the court shall then hold a case management hearing. Parties are required to conclude arguments within six months of that hearing.

As stated in 7.2 Case Management Hearings, courts are expected to deliver judgment in the suit within 90 days from the date on which the parties conclude their arguments. On account of the courts being over-burdened, disposal of cases takes as long as five to ten years.

Parties are permitted to settle matters out of court. Upon settlement, parties may wish to file the terms of settlement with the court or simply withdraw the proceedings. Section 89 of the CPC encourages parties to seek out-of-court settlement through alternative dispute mechanisms such as mediation, conciliation and settlement through Lok Adalats.

A party may seek and be granted liberty to file fresh proceedings at the time of withdrawal of the suit.

Out of court settlement can be brought at any stage of the suit.

Parties may keep the terms of a settlement confidential unless they are required to explain to the court the reason for such confidentiality. The parties may be required to submit the settlement agreement in a sealed cover if so directed by the court. 

Often, the party who is to recover monies or receive consideration under a settlement agreement prefers to file the settlement terms in court so that the terms are included as a part of the court’s order. This is helpful if that party wishes to reopen or initiate further proceedings in the event of default of the terms by the other party.

In court-ordered mediation, the discussions and negotiations between the parties before a mediator are to be treated with the utmost confidentiality when the parties arrive at a settlement, and even otherwise.

Settlement arrived at in a court-directed mediation shall be presented to the court, which will pass an order or decree on the terms thereof. Even otherwise, at the request of parties, a decree may be issued in accordance with the settlement terms. Upon default, the affected party may apply for enforcement through execution of that decree and also pray for contempt of the court’s order.

Settlements made out of court that involve elements of fraud, coercion, misrepresentation or that are made with malafide intent can be set aside.

Parties can be granted reliefs that may be contractual, equitable or statutory, or given under the inherent powers of the court. Specific performance of a contract may also be granted if such a relief has been prayed for in the suit. The court also has discretionary power to award damages and costs. In constitutional matters, writs of mandamus, certiorari, prohibition, habeas corpus and quo warranto can be granted by courts in exercise of their writ jurisdiction.

Section 73 and Section 74 of the Contract Act, 1872 are the primary sources of the law on damages in India. As per Section 73, the party which commits a breach of contract is liable to compensate the innocent party by way of damages. The payment of damages is subject to two conditions as laid down in the section itself: (i) the loss or damage should have arisen as a natural consequence of the breach (the objective criteria), or (ii) it should have been something the parties could have reasonably expected to arise from a breach of the contract(the subjective criteria). Damages under Section 73 are merely compensatory and not penal in nature. The burden of proof to prove entitlement to damages always lies on the injured party.

When payment of money can compensate the loss or injury suffered by the innocent party by putting that party back in the same situation, as if the breach had never happened, courts grant damages. However, if such restitution is not possible, courts can grant specific performance subject to the fulfilment of the criteria laid down under the Specific Relief Act, 1963.

Section 74 deals with liquidated damages wherein the parties to the contract have stipulated a penalty in the event of breach. When there is no evidence adduced to prove loss or damage, such liquidated damages are not granted by the court. Parties need not prove the actual loss or damage suffered. The court, in its discretionary power, can award reasonable compensation where the actual loss or damaged incurred is difficult to be ascertained with precision.

Consumer forums under the Consumer Protection Law are vested with the power to grant punitive damages. Punitive damages are also granted by courts while trying a tort in appropriate cases. However, there is no prescribed upper limit for the grant of such punitive damages.

The granting of interest by the courts largely depends on whether the agreement or the statute governing the case provides for payment of interest. A claim for interest can be made with respect to three different periods: from the date of default till the filing of the suit, from the date of filing of suit till the disposal of the same by a decree, and from the date of decree up to the date of realisation or payment. The CPC mandates a specific prayer to be made in the plaint by the plaintiff claiming interest and the duration for which that interest is claimed, the rate at which it is claimed and whether such a claim is based on a statutory provision or under an agreement.

Section 34 of the CPC gives the court a discretionary power over the granting of interest. However, the court is not empowered to grant interest at rate exceeding 6% per annum for the post-decree period.

A party in whose favour a decree has been passed can enforce the same by filing an execution application. Order XXI of the CPC deals with execution of judgment/decrees. A decree may be executed by either the court which passed that decree or by the court to whom it is sent for execution. A decree holder may choose to execute a decree and seek the assistance of the court for any of the following modes of execution:

  • attachment of property and sale of property of the judgment debtor;
  • arrest or detention of the judgment debtor in civil prison;
  • appointment of receiver; or
  • as per the nature of the decree, any other manner in which it could be executed. 

A decree holder can also seek a garnishee order –ie, direct a person who may be indebted to the judgment debtor to pay the decree holder directly in satisfaction of the decretal amount instead of paying the judgment debtor.

Section 13 of the CPC provides for six different situations when a foreign judgment is deemed to be inconclusive. These grounds are:

  • judgment of an incompetent court;
  • judgment not rendered on merits;
  • judgment opposed to principles of natural justice;
  • judgment obtained by fraud;
  • judgment sustaining a claim founded on a breach of any law in force in India; or
  • judgment being against fundamental rules of international law or in refusal to recognise the law of India where it is applicable.

For a foreign judgment to be enforced in India, it should not fall within the ambit of the above grounds. Section 44A provides for enforcement of foreign judgments by courts that are based in a reciprocating territory. A reciprocating territory is any country or territory outside India which is notified by the government of India. When the certified copy of the decree rendered by the court of a reciprocating territory is filed in a court of competent jurisdiction in India, it shall execute the decree in the same manner as it would a decree passed in India.

A judgment passed by a court in a non-reciprocating territory cannot per se be executed without the filing of a suit in an Indian court of competent jurisdiction on the basis of that foreign decree. The limitation period for filing such a suit shall be three years from the date of the foreign judgment.

Appeals in civil cases lie from the District Courts to the High Courts and from the High Courts to the Supreme Court. Section 96, read with Order XLI of the CPC, provides for appeal from an original decree (first appeal). An appeal from the original decree shall lie to the court authorised to hear appeals from the decisions of that court on no ground except on a question of law. Section 100, read with Order XLII of the CPC, provides for appeal from the appellate decree (second appeal). An appeal against an appellate decree shall lie to the High Court from every decree passed in an appeal by any court subordinate to the High Court if the High Court is satisfied that the second appeal raises a substantial question of law. A party also has the remedy of filing a special leave to appeal to the Supreme Court.

Original jurisdiction in relation to the High Court refers to the authority of the High Court to hear and decide cases for the first time. Appellate jurisdiction in relation to the High Court refers to the power of the High Court to review the decisions of lower courts. The High Court is the highest court of appeal at the state level. It has appellate jurisdiction in civil and criminal cases. Parties also have the right to have applications for review and revision of a judgment. However, the scope of review is limited to situations where the party proves that there is an error apparent on the face of the record. Similarly, in a revision application, the High Court shall only consider whether the court passing the impugned order has acted in material irregularity, or failed to exercise jurisdiction, or exercised jurisdiction which was not available to it under the law.

The right of appeal is a substantive right and such a right abates on the death of a party if the legal representative is not impleaded in the prescribed period. However, the right to appeal should be available to a party under the statute applicable to the case of that party. In certain cases, the court may impose conditions such as deposit of a disputed amount before the appeal of the party is heard by the court. Parties can appeal against the order of a High Court before the Supreme Court. Special Leave Petitions may be filed before the Supreme Court if the High Court refuses to grant the certificate of appeal. Special leave is, however, granted by the Supreme Court only in exceptional cases where, in the view of the Supreme Court, the order of the lower court necessitates interference by them.

The memorandum of appeal shall be filed in the form prescribed under the rules of the court in which the appeal is sought to be filed. The period of limitation to file an appeal before the High Court is 90 days, and to any other court is 30 days. However, parties may apply for condonation of delay if they can show sufficient cause for their failure to file the appeal within the prescribed period.

If there is more than one plaintiff or defendant, then any one of them can file an appeal on behalf of or against all of them respectively. Stay of a decree during the pendency of an appeal shall not be automatic and shall be granted only if an application is made and if the court is satisfied with the grounds on which the stay is sought.

As stated above, the court may require the appellant to deposit a certain sum of money for the appeal to be heard. The Appellate Court may, on the day fixed for hearing of the appeal either issue notice to the opposite party or may dismiss the appeal if it does not find any merit in interfering with the order of the lower court. In the event an order for issuance of notice to the opposite party is passed:

  • it shall fix a date for hearing of the appeal;
  • notice shall also be sent to the lower court, whose decree or order has been challenged; and
  • the appellant shall be required to pay a "process fee" and, upon payment, notice shall be sent to the opposite party.

The first appellate court has the power to decide the correctness of findings of facts as well as of law recorded by the lower/trial court. However, second appeal to the High Court shall lie only if the case involves a substantial question of law.

The grounds on which a party can assail the decision before the appellate court are as follows:

  • if the judgment is contrary to facts;
  • if the judgment is not coherent with the settled legal position;
  • if the judgment is not in conformity with the true and correct interpretation of a contractual or legal provision;
  • if the judgment is not based on any evidence; and
  • if the judgment is passed in violation of principles of natural justice, without granting an opportunity of being heard to the opposite party.

The CPC deals with the production of additional evidence in the appellate court, wherein the parties to an appeal may be permitted to produce additional evidence before the appellate court, only if:

  • there has been a refusal by the trial court to admit evidence which ought to have been admitted;
  • the evidence was not within the knowledge of the party, or he or she could not produce the same in trial court even after due diligence;
  • the appellate court requires any document to be produced or any witness to be examined to enable it to pronounce judgment, or for any other substantial cause;

Whenever additional evidence is allowed to be produced, the court shall record the reason for its admission.

The court can impose conditions such as directing an appellant to deposit a sum of money as a precondition to the filing of an appeal. For an appeal under the Goods & Services Tax Act, 2017 to be eligible, the aggrieved party must deposit a predetermined amount with the appellate authority before which the appeal is presented, and a maximum cap has been set on the pre-fixed deposit. The Consumer Protection Act also requires a party challenging an order in appeal to deposit the prescribed amount at the time of lodging an appeal.

It has been held, in the case of Santosh Hazari v Purushottam Tiwari (Deceased) by L.Rs [(2001) 3 SCC 179], that the appellate court has jurisdiction to reverse or affirm the findings of the trial court. The whole case is open for rehearing, both on questions of fact and law. The judgement of the appellate court must reflect its conscious application of mind and record findings supported by reasons, on all the issues arising along with the contentions put forth by the parties for decision of the appellate court.

A court of the first appeal can reappreciate the entire body of evidence and come to a different conclusion.

The Supreme Court is vested with discretionary powers to transfer a case or an appeal from one High Court to another to meet the ends of justice.

The CPC and the Commercial Courts Act provide that courts, at their own discretion, may award costs to be paid by a party to the other party who has succeeded in a case. Courts have complete discretion to determine who shall pay the costs, the extent to which it shall be paid, and all other directions as may be necessary. Compensatory costs may also be awarded in case of false or vexatious claims or defences. Costs can also be awarded for causing delay in the hearing/proceedings of a suit. "Costs" shall mean reasonable costs relating to

  • fees and expenses of witnesses incurred;
  • legal fees and expenses incurred;
  • any other expenses incurred in connection with the proceedings.

Sections 35, 35A and 35B, read with Order XXA and Order XXV of the CPC, govern the subject of "costs" in suits and other proceedings. Through various judicial pronouncements, the Supreme Court has laid down the following principles with regard to costs:

  • costs should ordinarily follow the event;
  • realistic costs ought to be awarded keeping in view the ever increasing cost of litigation; and
  • the costs should serve the purpose of curbing frivolous and vexatious litigation.

In Ramrameshwari Devi v Nirmala Devi (2012) 8 SCC 249, it was held that:

  • when imposing costs, the estimates should be realistic as to what the defendants or the respondents had to actually incur in contesting the litigation before different courts; and
  • the other factor which should not be forgotten when imposing costs is for how long the defendants or respondents were compelled to contest and defend the litigation in various courts.

Section 35 provides that costs should be realistic and, since it is at the discretion of the court, reasons for awarding costs should be provided by the court.

The CPC provides that the court may order a party to pay interest on costs from a certain date which is generally to be paid until payment or realisation. The method for calculating the quantum of interest is left to the discretion of the court.

Alternative Dispute Resolution (ADR) has been recognised by Courts in India as an integral method for resolving disputes. ADR mechanisms have gained prominence in recent years and there have been dedicated arbitral institutions that have been set up across the country. The courts are also taking proactive steps in encouraging parties to resolve their disputes by mediation or conciliation.

There have been amendments to the CPC and the Commercial Courts Act which go a step further in encouraging the growth of ADR in the country. The Commercial Courts Act requires parties to mediate their disputes prior to the filing of any proceedings. Proceedings may be filed after a period of three months from the commencement of mediation if the parties are unable to arrive at a settlement.

The ADR system in India is governed by the Arbitration and Conciliation Act, 1996 and the Legal Services Authority Act, 1987. The CPC also contains provisions whereby disputes may be referred to ADR by the courts. Arbitral awards and settlement agreements are enforceable by courts in India.

There is other legislation that seeks to promote the settlement of disputes by mediation or conciliation, such as in the sphere of family disputes, labour disputes, and others.

Courts are inclined to encourage parties to attempt settlement of disputes if it appears that the matter is such that it could be resolved through mediation or any other form of ADR. However, the consent of parties is paramount and they cannot be compelled to adopt alternative methods for the resolution of their disputes.

There are certain types of matter that are outside the scope of ADR, such as criminal offences and tax related cases.

Various Institutions have been set up across India to facilitate access to ADR such as, among others, the Indian Council of Arbitration, the Mumbai International Arbitration Centre, the Delhi Arbitration Centre, the Arbitration Centre-Karnataka and the Nani Palkhivala Arbitration Centre. The institutions have their own set of rules that parties need to abide by in the ADR process. Recognising the need to increase awareness as well as to amplify the role of ADR institutions, the government has introduced the recent 2019 amendments to the Arbitration Act that empower arbitral institutions to appoint arbitrators.

The Arbitration Act provides the legal framework for the conduct of arbitration in India. The Arbitration Act deals with the conduct of arbitrators and the recognition and enforcement of awards, both domestic and foreign. The Arbitration Act is based on the UNCITRAL Model Law on International Commercial Arbitration 1985, Recognition and Enforcement of Foreign Arbitral Awards 1958 (the New York Convention) and the Arbitration (Protocol & Convention) Act, 1937 (the Geneva Convention). Part I of the Arbitration Act deals with domestic arbitrations and Part II provides guidelines for enforcement of foreign awards.

Generally, all disputes which can be decided by a civil court, involving private rights (rights in personam), can be referred to arbitration. Thus, disputes relating to recovery of monies, breach of contract, etc can be referred to arbitration. However, matters which involve rights in rem such as tenancy, enforcement of mortgage as well as matters relating to insolvency, matrimonial disputes, testamentary issues, guardianship of minors, winding up of companies and criminal matters are not arbitrable. The Supreme Court has held that matters arising out of a trust deed are also not arbitrable. The Bombay High Court has recently held that copyright disputes are arbitrable. The Supreme Court has recently held that, though matters involving serious fraud are not arbitrable, mere allegations of fraud could be decided by an arbitrator.

Under Section 34 of the Arbitration Act, a party can challenge an arbitral award on the following grounds:

  • the parties to the agreement are under some incapacity;
  • the agreement is void;
  • the award contains decisions on matters beyond the scope of the arbitration agreement;
  • the composition of the arbitral authority or the arbitral procedure was not in accordance with the arbitration agreement;
  • the award has been set aside or suspended by a competent authority of the country in which it was made;
  • the subject matter of dispute cannot be settled by arbitration under Indian law; or
  • the enforcement of the award would be contrary to Indian public policy.

An award shall be construed to be in conflict with the public policy of India if:

  • the making of the award was induced or affected by fraud or in violation of confidentiality provisions of the Act or provisions relating to admissibility of evidence of conciliation proceedings;
  • the award is in contravention with the fundamental policy of Indian law;
  • the award is in conflict with the basic notions of morality and justice; or
  • the award is vitiated by patent illegality appearing on the face of the award.

An application for setting aside an award shall be made within three months of the receipt of the arbitral award unless sufficient cause is shown by the applicant for an extension of this period by a further period of 30 days.

Applications for setting aside an award shall be disposed of within one year of service of that application on the opposite party.

The 2015 amendments to the Arbitration Act, read with the recent 2019 amendments, have clarified that there shall be no automatic stay on the enforcement of an award unless the court, upon an application by the aggrieved party, grants that embargo after hearing all parties. 

The Supreme Court has held that enforcement of an arbitral award under the Arbitration Act may be filed in any jurisdiction in the country, for execution, where that decree is capable of being executed and there is no requirement of obtaining a transfer of the decree from the court which has jurisdiction over the arbitration proceedings.

As regards domestic awards, once the period for filing an application for setting aside of an award has elapsed, or such an application has been finally disposed of or even if such an application is pending, there is no stay on enforcement proceedings and proceedings for enforcement of the award can be initiated. The procedure set out for execution of a decree under the CPC shall apply.

The enforcement procedure for international awards is set out in Part II of the Arbitration Act. An application for the enforcement of a foreign award can be filed under Section 44. The opposite party can resist the enforcement on the grounds set out in Section 48 of the Arbitration Act. Once the enforcement of a foreign award is permitted by an Indian court, the award can be enforced as a decree by following the requisite procedure.

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Trends and Developments


Evolving Legal Regime for Internet Intermediaries in India

The Internet was launched in India on 15 August 1995 and today India has 451 million active internet users, second only to China, as per a recent study by the Internet and Mobile Association of India. Considering that this number covers only 36% of the Indian population there is tremendous headroom for growth. With rock bottom data prices, access to the Internet, primarily via mobile phones, is increasing at a rapid pace. Global internet giants like Facebook, Google and Amazon see India as the next big market following the saturation of growth in the USA and the problems in China. It is estimated that India will have 448 million social media users by 2023. India is the largest market for Facebook and its messaging application, WhatsApp. At present, WhatsApp has more than 400 million users in India. In e-commerce space Amazon and Walmart owned Flipkart sold merchandise of more than USD3 Billion in over five days of festival sales in October 2019. 

The spread of the internet-based economy has given rise to a number of legal issues, primarily related to dissemination due to so-called "fake news", defamation and intellectual property infringement through online platforms and mobile applications. The liability of these platforms, which allow third party users to upload and disseminate content, is becoming a contentious legal issue in India. These platforms are typically called “intermediaries”. 

An intermediary, as per the OECD is defined as a system that “brings together or facilitates transactions between third parties on the internet. They give access to, host, transmit and index content, products and services originated by third parties on the internet to provide internet-based services to third parties”. Intermediaries are essentially entities that facilitate a user’s access to content on the internet, either by acting as a platform to host content or as a conduit to facilitate transmission. They facilitate the exchange of information and materials between third parties over the internet.

The issue as to whether the intermediaries should be held liable for the activities carried out by third parties on their platforms is as old as the existence of internet as we know it today. Different approaches to intermediary liability have been adopted by different countries all over the world. While countries like China make intermediaries liable for content on their networks with strict disclosure requirements. Europe and United States largely give immunity to the intermediaries, subject to their following of certain due diligence.

In India, the internet is regulated primarily under the Information Technology Act 2000 (the “Act”). The Act deals with issues such as cybercrime, e-commerce and collection and recording of electronic evidence. The Act is based on the Model Law on Electronic Commerce, issued by the United Nations Commission on International Trade Law (UNCITRAL) and to which India was a signatory.

An Intermediary is defined under Section 2(1) (w) of the Act as “with respect to any particular electronic records, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, Internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cybercafes”. Therefore, an intermediary is any person who, on behalf of another person, receives, stores or transmits a record or provides any service with respect to that record; this includes telecom service providers, network service providers, internet service providers, web hosting service providers, search engines, online payment sites, online-auction sites, online market places and cybercafes.

Section 79 of the Act is the provision that guarantees "safe harbour" protection to intermediaries for third-party content. The original Section 79 protected only network service providers from liability arising from third-party content if they proved absence of knowledge or they exercised full due diligence to prevent commission of an offence or contravention. Subsequently, as internet penetration and use of internet-based products and services expanded, an amendment to the Act was made in 2008.

This amendment made substantial changes to Section 2(w) (intermediaries) and to Section 79 (the safe harbour provision). The new provisions led to the specific inclusion of telecom service providers, network service providers, internet service providers, web-hosting service providers, search engines, online payment sites, online-auction sites, online-market places and cybercafes on the list of intermediaries. It also widened the safe harbour protection given under Section 79 to all intermediaries. It also protected intermediaries from all unlawful acts in addition to the offences and contraventions covered under the Act itself.

The section now states that an intermediary shall not be liable under any law for any third-party content hosted by them if the function of the intermediary is limited to:

  • providing access to the communication system over which information made available by third parties is transmitted, temporarily stored or hosted;
  • the intermediary does not initiate the transmission, select the receiver of the transmission or selects or modifies any information in the transmission; and
  • the intermediary was mandated to observe due diligence and follow the guidelines under the Act.

The Act provided that the safe harbour shall not be applicable:

  • if the intermediary was aware or was an active participant of the unlawful act; and
  • if it does not expeditiously disable the access to the link on being made aware of the unlawful nature of the material transmitted through the link.

Subsequent to the amendment to the Act, the Government of India, in 2011, notified The Intermediary Guidelines 2011 (“Guidelines”), which were to be actively followed by all intermediaries. The Guidelines were notified in the year 2011 as rules exercising of powers conferred under Section 87 of the Act. The objective of these guidelines was to regulate the intermediaries who on their platforms host third party user generated content.

The Guidelines prescribe the conduct to be followed by an intermediary. An intermediary is required to publish privacy policy and terms of use; the terms of use should clearly inform users that no illegal content shall be uploaded on the website. Illegal content includes content which is harmful, harassing, blasphemous defamatory, obscene, pornographic, paedophilic, libellous, invasive of another's privacy, hateful, or racially, ethnically objectionable, disparaging, infringing intellectual property, relating or encouraging money laundering or gambling, or otherwise unlawful in any manner whatever. If any content on the platform is against the terms of use, it should be disabled by the intermediary; if any third party informs intermediary of any illegal content, the intermediary has to disable the content within 36 hours. Furthermore, all intermediaries are required to appoint a grievance officer who can receive and resolve any complaints and the contact details of such grievance officer are to be prominently displayed.   

Sections 52(b) and (c) of the Copyright Act, 1957, provide protection to intermediaries in case of copyright infringement. The Act protects intermediaries in the case of the transient or incidental nature of the process of electronic transmission or communication to the public of content, and the provision of electronic links, access or integration of content, when not expressly prohibited by the copyright owner. Further, Section 52(c) provides for a notice and takedown mechanism, wherein copyright owners could request intermediaries to remove protected content from their platforms for a minimum period of 21 days, within which the copyright owner has to secure a court order.

In view of various litigations and proliferation of so-called "fake news", the government of India is proposing an overhaul the Guidelines to bring them in line with present requirements. Some of the salient features of the draft Guidelines are:

  • Intermediaries are required to prohibit the publication of content that threatens public health or safety in addition to requirements of the Guidelines.
  • Intermediaries are required to deploy automated tools for removing access to unlawful content.
  • Intermediaries must provide assistance to government agencies (based on a lawful order) within 72 hours. Further, they must enable the tracing of the originator of the information on its platform.
  • Intermediaries with more than five million subscribers will have to incorporate entities in India and will need to have a grievance officer located in India.

The following provides information on significant cases worth mentioning.

Baazee.com

One of the triggers for amending the Act in 2008, specifically for widening the protection given to intermediaries, was the MMS scandal affecting Baazee.com, the Indian arm of eBay. In this case, a pornographic MMS clip was listed for sale on Baazee.com. For selling the illegal content on its website, Avnish Bajaj, the then Managing Director of Baazee.com, was arrested and criminally charged with provisions dealing with pornography and obscenity under the Indian Penal Code, 1860 (the “IPC”), and the Act. In a petition challenging the criminal charges against him, the Delhi High Court in Avnish Bajaj v State held that a prima facie case for obscenity could be made against Baazee.com, and although a case could not be made against Avnish Bajaj for provisions under the IPC, he could be charged for the publishing of obscene content in electronic form as per Section 67 of the IT Act. On an appeal made by Avnish Bajaj against the charge under Section 67 of the IT Act, in 2012 the Supreme Court of India quashed the proceedings against him on the ground that the prosecution of the Managing Director could not go ahead without arraigning the company as an accused party. Subsequent to this case, the Act was amended to avoid the possibility of a repeat of this event. 

Shreya Singhal v Union of India

This is perhaps the most significant case concerning the Act in India. In Shreya Singhal v Union of India, the interpretation of the safe harbour provisions under Section 79 of the Act was dealt with extensively by the Supreme Court of India. Two girls, namely Shaheen Dhada and Rinu Srinivasan, were arrested by the Mumbai police in 2012 for expressing their displeasure at a strike called in the wake of the death of a local political leader in Mumbai. The women posted their comments on Facebook and, by virtue of the comments being posted there, the police invoked Section 66A of the Act and arrested the girls. It was felt that the police have misused its power by invoking Section 66A of the Act, which gave police the power to arrest any person who sends an offensive and inflammatory message via a computer resource. The Supreme Court tested the validity of Section 66A, 69A and the scope and responsibility of an intermediary to monitor user generated content under Section 79. The petitioners contended that powers under these sections violate the freedom of speech and expression guaranteed under Article 19 (1) (A) of the constitution of India. The Supreme Court struck down Section 66A of the IT Act as unconstitutional for having a chilling effect on free speech.

This was a landmark judgment in the Supreme Court’s jurisprudence as, for the first time, the court recognised the free speech rights held by users of the Internet. On the issue of intermediary liability, the Supreme Court held that the "actual knowledge" requirement for an intermediary to take down content under Section 79 (3) (b) has to be read to mean either an intimation in the form of a court order or, on being notified by the government and/or requests by courts or governments, must be restricted to the limitations listed by Article 19(2) of the Constitution. The court similarly interpreted the "actual knowledge" requirement from the Guidelines to mean knowledge through court order. 

MySpace Inc. v Super Cassettes Industries Ltd        

In this case, the division bench of the Delhi High Court reversed the judgement of a single judge which had held MySpace liable for copyright infringement in the case of the upload of infringing content by users. This case is significant as the court adjudicated on the liability of intermediaries who let third parties upload user generated content protected by copyright laws. In this case, the court distinguished Intellectual property infringement cases from the issue of free speech cases and read the meaning of the words "actual knowledge" under Section 79 to mean “…In the case of copyright laws it is sufficient that MySpace receives specific knowledge of the infringing works in the format provided for in its website from the content owner without the necessity of a court order…”.

The court further held that, should a copyright owner provide a list of specific links infringing copyright to an intermediary and the intermediary does not remove the infringing content, safe harbour may be denied. However, the onus is on the plaintiff to show that, despite giving specific information, the defendant did not comply with the copyright owner’s request. The court also dwelled on the advent of private censorship and the chilling effect on free speech if private entities are tasked with identifying infringing content. 

Kent RO Systems v Amit Kotak

In this case, defendants included eBay, on whose platform the products infringing the design registration of the plaintiff were listed for sale. The plaintiff wanted the intermediary (eBay) not only to remove existing infringing products, but to screen similar listings in future and remove any infringing products without the need for the plaintiff to raise the issue every time. The court rejected the claim and held that intermediaries cannot be expected to exercise such vigilance over their platforms, nor adjudicate on the issue of infringement, thought they are liable, and obliged, to remove infringing content on being notified by the rights owner.

Christian Louboutin v Nakul Bajaj & Ors.

This is a significant judgement from the Delhi High Court in context of IP infringement on e-commerce platforms. The court was answering a pivotal question: can an entity which actively promotes sales on its platforms and provides value added services to facilitate these sales be categorised as an intermediary under Section 79. The Court, in this case, listed 26 points to determine if an entity can claim safe harbour protection for intermediaries. The list was based on the role played by the intermediary in the transaction between the seller listing the product on the website and the buyer buying the product through the website.

In this case Christian Louboutin’s products were listed on the defendant’s e-commerce website, www.darveys.com. The defendant’s website listed a complete catalogue of the plaintiff along with an assurance that the products were genuine. The plaintiff had not authorised the defendant's use of its registered trademarks and logos. The defendant argued that it is an intermediary, hence will not be liable for trade mark infringement. With respect to the arguments of "safe harbour protection" taken by the defendant, the plaintiff argued that, since the defendant assured authenticity and genuineness of the products, it could not make use of the protection, and its activities amounted to active participation rather than passive participation.

The High Court, after careful scrutiny, listed factors to be considered while deciding if a platform is an active or passive intermediary. Safe harbour protection can only be accorded to the passive intermediary who can claim lack of knowledge. The Court further held that, besides the list of factors to consider if the platform is an intermediary, the court may consider the following additional factors to determine if the intermediary carries the due diligence of its sellers: 

  • the existence of agreements between sellers and the platform;
  • the manner in which terms are enforced;
  • the consequences of any violation of terms of use by the sellers;
  • whether adequate measures are in place to ensure that rights of trade marks owners are protected; and
  • whether the platform has any knowledge of the unlawful acts of the seller. 

Subodh Gupta vs Herdsceneand & Ors.

This case has been filed by the plaintiff, a reputed artist, against allegations of sexual harassment by the anonymous Instagram handle @Herdsceneand. The allegations were afterwards reported by other media. The Delhi High Court, after hearing arguments, directed Defendant No.1, Google and Facebook to take down the defamatory posts which had made the anonymous allegations. On 30 September 2019, Facebook entered an appearance and undertook the removal of the weblinks of the defamatory posts. On 14 October 2019, Google argued that, being a search engine, it cannot remove or take down links unless the links are available online through other media outlets and such an order of court will stifle free speech. Facebook has also been ordered to disclose the identity of the anonymous handle in a sealed cover on next date of hearing. Google Inc. reiterated that it is merely a search engine and is, therefore, unable to control the content uploaded but, if the content is available on any website, Google Inc. would disclose the same.

The Ld. Single Judge enquired of Google Inc. counsels whether it is technically feasible for them to devise technology with respect to taking down particular content as and when the court passes an order, and further directed Google Inc. to file an appropriate reply in this respect by 18 November 2019, the next date of hearing.

Patanjali Ayurved Ltd. v Google LLC

In this case, the plaintiffs were a reputed Indian Fast-Moving Consumer Goods (FMCG) company, Patanjali Ayurved Limited, and a renowned Yoga guru, Swami Ramdev, who is closely associated with the FMCG Company. The case was filed in relation to certain videos containing defamatory, disparaging and threatening statements against the plaintiffs, and had been filed against Google, Facebook and YouTube. In the course of the hearing, it was even conceded by the intermediary (YouTube) that the video in question was against their community guidelines and policies and that they had suo-motu blocked the relevant URL’s from their platform, across the globe. The Delhi High Court held that the video must be taken down by the intermediaries in the Indian, as well as the global, domain since the plaintiffs conduct business internationally and have a global reputation that stood to be hurt by the video. Since the content violated the community guidelines and policies of the social media companies, they complied with the order.

Swami Ramdev & Anr. v Facebook Inc & Ors

This is recent judgement of Delhi High Court where defamatory content was posted against Swami Ramdev, represented by Athena Legal. The Single Judge of Delhi High Court issued a global injunction a global injunction and directed removal of defamatory content against Swami Ramdev. The court relied on Section 79 of the IT Act which gives extra territorial jurisdiction to Indian courts in relation of issues covered under the IT Act. The court directed:

  • Removal of defamatory content globally in cases where such content was uploaded from IP addresses based in India to ensure that such content is not accessible anywhere in the world.
  • In case any content is uploaded from outside India such links will be removed from Indian domain to ensure that users in India are unable to view the same.

Facebook has filed an appeal before two judge bench of the High Court against the said order contending among other things that since defamation laws vary in each country hence global injunction interferes with laws of other countries and the plaintiff has alternate remedies under the Indian laws against the persons uploading the content hence global injunction is not required. The two judge bench has admitted the petition while not staying the order of the single judge but also directed the respondent not to file any contempt applications till the appeal is decided. 

Social media accounts and proof of identity (Aadhaar) linking cases

Anonymous social media handles starting rumours and spreading so-called "fake news" is a rampant, and growing, problem in India. Two petitions were filed before the Madras High Court in July 2018, by animal welfare activists Antony Rubin and Janani Krishnamurthy, calling for Aadhaar, or any government-authorised proof of identity, to be mandatory for any email or social media accounts. Similar pleas were filed before the High Court of the State of Madhya Pradesh and the Bombay High Court. Facebook decided to approach the Supreme Court, requesting the transfer of all petitions seeking similar relief to the Supreme Court, negating the possibility that all three high courts may give a different opinion.

The Supreme Court vide order, dated 24 September 2019, has observed that some mechanism needs to be evolved whereby the originators of so-called "fake news", rumours and individuals indulging in criminal activities could be traced. The court has not yet taken a view on the linking of social media accounts with a government issued identity card. The court has sought a reply from the government regarding a proposed amendment to the Guidelines and the associated timeline. However, at the same time court has made it clear that under no circumstances may the privacy, dignity and reputation of any person be compromised. The matter is still being heard by the apex court of India. Subsequently, the government, in its affidavit to the court, has said that the revised Guidelines would be implemented in the next three months and consultations with respect to the same are ongoing. The court has also accepted the transfer petitions and will now hear the matter.

Conclusion

Over last few years, initiating from the Shreya Singhal judgement in 2012 (see below), the courts in India have been proactive in adjudicating on internet intermediary related issues. The analysis shows:

  • Aspects of Intellectual Property (IP) infringement and hate speech are fundamentally different and the same set of intermediary guidelines may not work for both.
  • In the context of combating so-called "fake news" and online rumours, courts need to be careful about the individual’s rights of privacy and reputation.
  • Going forward, safe harbour will have limits and intermediaries will need to show their passive role in online transactions to avail safe harbour.

Indian courts are increasingly seeking the removal of defamatory content globally, rather than only within India.

Athena Legal

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Law and Practice

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Aarna Law is a counsel-led independent boutique law practice providing a range of legal services and solutions for domestic and international clients. Though established in August 2013, the wide range of experience of its founder Shreyas Jayasimha, its senior advisor Mysore Prasanna and other team members makes it a force to be reckoned with, particularly in the fields of domestic and international dispute resolution, corporate and commercial advice, regulatory and forensic investigations and technology law. The firm's objective is to provide high quality legal and commercial advice that will meet the clients’ needs, while maintaining the strictest standards of probity and confidentiality.

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Athena Legal started its journey in August 2012 as a boutique dispute resolution firm in New Delhi with limited resources and a single client. Over the last seven years, the firm has evolved into a full service firm. Based out of New Delhi, India, the firm now has a team of 20 lawyers specialising in commercial law, dispute resolution and intellectual property/TMT laws. The firm has clients in all sectors including FMCG, technology/internet, real estate, beverages, manufacturing and banking and finance. Currently, the Firm has tie ups with approximately 200 lawyers across India giving it a pan India reach and approximately 30 law firms globally. Recent undertakings have included: advising a leading FMCG company in relation to its IP enforcement and matters related to online defamation against intermediaries and take down of content; advising an intermediary in multiple cases in relation to its liability as an intermediary and safe harbour protection; advising on a USD600 million acquisition by an FMCG company under the Insolvency and Bankruptcy Code (IBC); and advising clients on trademark prosecution and enforcement in India and South Asia.

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