Litigation 2021

Last Updated December 04, 2020

India

Law and Practice

Authors



Aarna Law is a counsel-led, independent and boutique legal practice providing a range of services and solutions for domestic and international clients. Though only established in August 2013, the wide range of experience of its founder Shreyas Jayasimha, its senior adviser 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 is a common law jurisdiction. 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 legal system is in fact a hybrid framework comprised of elements of customary, religious, and equitable laws.

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.

India's is mainly an adversarial legal system, the trial and judicial proceedings are conducted by judges who are key to the course and manner of a trail.

The legal process is a combination of written and oral submissions, with precedence given to written submissions. Ordinarily, the courts in India base the trial on a party’s pleadings (written submissions), which are followed and aided by oral arguments.

The Courts are organised on the basis of

  • subject matter jurisdiction; and
  • pecuniary jurisdiction.

There are Small Causes Courts, Magistrate Courts, Civil Courts (Junior Division and Senior Division), Sessions Courts, Commercial Courts, Family Courts, Labour Courts and other commissions, forums and tribunals at the state level. These courts deal with suits, claims, or complaints at the first instance.

The courts of original jurisdiction are trial courts. In certain cases, the High Courts also exercise original jurisdiction. Furthermore, the erstwhile provinces of Bombay, Madras and Calcutta exercise original jurisdiction at the level of their High Courts.

There are also appellate courts set up to hear appeals against the orders of the trial courts. Each state, and some union territories, have their respective High Courts. In certain cases, High Courts have original jurisdiction too.

At the apex of the court system is the Supreme Court of India.

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 and Financial Institutions Act, 1993; and
  • 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).

The court filing and proceedings are open to public. If any member of the public provides sufficient reason for wanting the court filing and proceedings, these will be provided to the seeker in the usual course. Certain information can be kept confidential with the express approval of the court.

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.

Protection from Disclosure

Parties are also required to file documents in support of the case. However, certain types of proceedings are protected from disclosure, provided that this is either mandated by the concerned statute or under the directions of the court adjudicating upon the matter, taking into consideration factors such as:

  • sensitivity (eg, family matters);
  • public interest; and
  • the security and defence of the country.

In such sensitive matters, the courts may permit parties to submit reports and document 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 for under the CrPC 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 at 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.

If a person wishes to be enrolled as an advocate they are currently required to pass the Bar Council of lndia 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.

The Supreme Court, in the case of Bar Council of India v K. Balaji and Ors Civil Appeal Nos 7875-7879, 7170, held that foreign lawyers or law firms are not allowed 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.

Foreign lawyers cannot conduct cases in Indian Courts. In India, the "fly-in and fly-out" mode of casual visits of foreign lawyers for consultation and advisory is permitted but foreign lawyers cannot practise in India without fulfilling the requirements under the applicable Act and 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 v K. Balaji and Ors (mentioned in 1.4 Legal Representation in Court) held that funding by advocates is not explicitly prohibited, but a conjoined reading of Rule 8 (fomenting litigation), Rule 20 (contingency fees), Rules 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 (who are not lawyers) funding the litigation and getting repaid after the outcome.

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 that they are financing and also to demand security from such financiers for the costs incurred by other parties to such 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 that are made for improper objects or with a view to being inequitable against a party or against the public policy of lndia, could be held to be champertous by the courts.

All lawsuits with commercial implication are available for third-party funding.

There are no regulations over third-party funding of litigation in India – although there are limitations, as discussed in 2.1 Third-Party Litigation Funding – implying that all types of civil proceedings can be funded by third parties.

Third-party funding is available to both plaintiffs and defendants.

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) l 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 who 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.

There are no specific guidelines prescribing time limits.

Commercial Suits

In cases of commercial suit, pre-litigation mediation is mandated. The penalty for non-compliance is that the commercial suit is liable to be dismissed.

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. A Plaintiff can file a suit only if the parties have failed to arrive at a settlement.

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.

Insolvency and Bankruptcy

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.

Certain other statues, such as the Negotiable Instruments Act (dealing with dishonour of cheques), require a demand notice to be issued before instituting legal proceedings.

There are no requirements for the defendant(s) to respond to a pre-action letter.

Arbitration

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 of 1963 prescribes the statute of limitation.

For civil claims that pertain to immovable property, the general limitation is 12 years. In certain cases it is three years. For other claims, the limitation period is generally three years.

The date on which the right to sue accrues triggers the limitation period.

The CPC provides for requirements of domicile of the defendant and the existence of part of the cause of action in the jurisdiction being invoked.

As per Order IV Rule 1 of the CPC a plaint has to be presented for the purpose of instituting a civil suit. A 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.

In civil proceedings, a party is permitted to amend the document after it has been filed, subject to certain restriction. In criminal proceedings, the general rule is that amendment of the documents is not permitted after they have been filed.

Service occurs through the court’s processes and can also be done by the plaintiff after seeking the permission of the court.

Service is the responsibility of the court initially. If the court service fails, then it is the responsibility of the plaintiff to serve.

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 it. 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 relevant rules 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.

Class actions are not permitted in India.

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.

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.

However, if the issue concerns the public at large, public interest litigation (PIL) can be filed.

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

Parties may approach the court for urgent interim relief. 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.

A party can apply for early judgment and/or for striking off the other party’s case.

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 (an Indian financial instrument), 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;
  • grant conditional leave to the defendant to defend the suit; or
  • grant unconditional leave to defend if the defendant has raised triable issues.

The timing, procedure and legal standard vary with different types of cases and the relevant statues provide for the same.

Summary judgment and judgment on admission are commonly made before trial for a dispositive motion.

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

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 is vested with wide discretionary powers to strike out the name of any person who is a plaintiff or a defendant in a suit.

The court also 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, or 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.

Though the statues do not provide a timeframe for a court to deal with an application (except an injunction application under Order 39 Rules 1 and 2 of the CPC), a party can always request that the application be dealt with on an urgent basis.

Urgency is determined on the basis of three factors:

  • existence of a prima facie case;
  • balance of convenience in favour of the party seeking relief; and
  • irretrievable harm, loss, and damage caused to the party if the urgent reliefs are not granted.

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.

Discovery is administered by the court.

It is permissible to obtain discovery from a third party. The process is to make an application for discovery, subject to the guidelines provided under Order XIII of the CPC and the Commercial Courts Act or other applicable statutes.

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.

Considering that a discovery mechanism is provided, the procedural law does not contemplate other or alternative mechanisms.

Sections 126 to 129 of the Indian Evidence Act 1872 provide for privileged communications between legal advisor and client.

The Sections 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;
  • 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.

These obligations continue even after the employment has ceased. The only exception is if the client chooses to disclose such communications or the contents or condition of such documents.

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.

In-House Counsel

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.

Documents relating to state matters or covered within the ambit of the Official Secrets Act, 1923 are also protected from disclosure.

Injunctive relief may be awarded in cases of breach/contravention of the terms of a contract or of the parameters provided under the Specific Reliefs Act, 1963 and under the CPC.

Types of injunction granted by the Court are:

  • perpetual injunctions – where the court restrains a party from acting or omitting in a certain manner; and
  • mandatory injunctions – where the court directs a party to do, or stop doing, a certain thing.

Injunctions freezing assets and injunctions to prevent parallel proceedings in another jurisdiction are a part of the injunctive relief granted by the Courts.

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.

Anti-suit Injunctions

Anti-suit injunctions can also be passed by the courts in India to prevent parallel proceedings in another jurisdiction within India, provided that the power to do so 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 principals for the grant of anti-suit injunctions. An interim order in International Technology Corp v. XIAOMI Corp dated 9 October 2020 is a notable (interim) decision where an anti-suit injunction has been granted.

The court, upon hearing the party making an application for urgent relief, 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.

Injunctive relief, on an ex parte basis, is available in India; however, courts have held that it should be granted only in exceptional circumstances.

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.

Trial procedure 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 wit-ness may also be permitted).
  • Parties then present their final arguments orally, which are generally also followed by written arguments.
  • 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 to 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, or admission or denial of documents by all parties to the suit. At this hearing the court will:

  • fix dates for adducing of evidence by witnesses;
  • fix dates for hearing of oral arguments; and
  • set time limits for parties to make their oral arguments and their written arguments, if so directed.

The court shall ensure arguments are concluded within a period of six months from the date of the first case management hearing in a suit.

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.

Sections 17 to 23 of the Indian Evidence Act, 1872 (Evidence Act) deal with admission of evidence. The meaning ascribed to an "admission" under Section 17 of the Evidence Act is "a statement, oral or documentary or contained in electronic form, which suggests inference to any fact in issue or relevant fact in a proceeding".

Admissions can be made by:

  • a party to proceedings;
  • an authorised agent of the party;
  • persons who have proprietary or pecuniary interest in the subject matter of the proceedings;
  • persons from whom the parties to the suit have derived interest in the subject matter of a suit;
  • persons whose liability or position is in question;
  • persons to whom a party to the suit has expressly referred to for information; and/or
  • an expert called upon, either by a party or the court, to shed light on certain aspects of the subject-matter in dispute.

Section 58 of the Evidence Act holds that what is admitted need not be proved. The court can try the questions on which the parties are at issue, not those which have not been disputed. Such admissions are considered as formal or judicial admissions.

Primary and Secondary Evidence

The Evidence Act describes two main types of evidence: primary evidence under Section 62 and secondary evidence under Section 63. Primary evidence is mainly documentary evidence, which is usually available in the original and is ordinarily deemed to be admissible in the first instance; while the following are considered secondary evidence.

  • Certified copies of originals or equivalent to originals.
  • Copies made from the original by mechanical processes which in themselves ensure the accuracy of the copy, and copies compared with such copies.
  • Copies made from or compared with the original.
  • Counterparts of documents as against the parties who did not execute them.
  • Oral accounts of the contents of a document by a person who has seen it.

Secondary evidence is admissible subject to the criteria set out in Section 63 subject to the primary evidence being unavailable/ inaccessible. In case of a conflict in respect of admissibility, primary evidence prevails.

Electronic Evidence

The Evidence Act also recognises electronic records as evidence. Sections 65A and 65B of the Evidence Act form a complete code in a sense, where all criteria and prerequisites for admission of electronic evidence are contained. An electronic record is not admissible unless the conditions under Section 65B are satisfied, including that:

  • the electronic record was produced from a computer that was regularly used to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;
  • during the period, the kind of information contained in the electronic record was regularly fed into the computer in the ordinary course of the activities;
  • throughout the material part of the period, the computer was operating properly, and if not, it was not such as to affect the accuracy of the contents; and
  • the electronic record bears the information that is a reproduction of the original electronic record.

Section 65B further mandates that a certificate of authenticity of the electronic record (popularly referred to as the 65B Certificate), signed by the person responsible for the computer from which the record was generated, be produced for the electronic record to be admissible as evidence. The Supreme Court has reaffirmed the mandatory nature of such a certificate in cases where secondary evidence is sought to be produced.

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 practises an open court system for all proceeding unless they are conducted, in exceptional circumstances, in camera. Examples of such exceptional proceedings are 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.

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.

The procedural law provides for the option to pass judgment at the hearing/conclusion of trial and to reserve judgment for a later date. There is, however, a requirement to pronounce judgments/orders in open court under Order XX of the CPC.

Proceedings before the High Courts, usually result in the dictation of the judgment/order in open court at the end of the hearing; however, as in trials before District Courts, judgments are occasionally reserved to be pronounced on a subsequent date. 

There is no specific timeframe for the conclusion of a civil trial in India. The Supreme Court of India has held, in a number of cases, that justice ought to be speedy and has also prescribed deterrents to curb delays (eg, stay orders passed by the lower courts to be valid only for a period of six months).

It may be important to note that the procedural laws prescribe timelines in case of certain specific stages in a trial. The CPC, for example, prescribes a maximum statutory period of 120 days for the filing of a written statement by the defendant. However, in view of the inherent powers of the court under Section 151 of the CPC, the timelines are extended by courts for justifiable reasons stated in an affidavit by the concerned parties.

Court approval is not required for the settlement of suits. In the event that the parties want a judgment and decree drawn up in terms of the settlement, they will have to file a compromise petition under Order XXIII of the CPC.

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 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 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 or misrepresentation – or that are made with malafide intent – can be set aside.

Parties can be granted contractual, equitable or statutory relief, or be given another form 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 may also exercise its discretion in awarding damages and costs.

In constitutional matters, writs of mandamus, certiorari, prohibition, habeas corpus and quo warranto can be granted by courts in the exercise of their writ jurisdiction.

Sections 73 and 74 of the Contract Act, 1872 are the primary sources of law on damages in India. As per Section 73, a party that 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, which are contained in the section itself:

  • loss or damage should have arisen as a natural consequence of the breach (the objective criteria); or
  • 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 for damages always lies on the injured party.

In cases where payment of money can compensate the loss or injury suffered by the innocent party (by putting that party in the same position as if the breach had never occurred), courts grant damages. If such restitution is not possible, courts can direct specific performance subject to the fulfilment of the criteria laid down under the Specific Relief Act, 1963.

Section 74 deal 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 actual loss or damage suffered. The court can exercise its discretion to award reasonable compensation where the actual loss or damage suffered is difficult to ascertain with precision.

Punitive Damages

The Consumer Protection Act extends powers to a Tribunal established thereunder, to grant punitive damages. Punitive damages are also granted, in appropriate circumstances, by courts while trying tort cases. There is no prescribed upper limit for the grant of such punitive damages.

The CPC mandates a specific prayer to be made in the plaint by a plaintiff claiming interest and the duration and rate at which that interest is claimed, and whether such a claim is based on a statutory provision or under a contract. 

The granting of interest by the courts largely depends on whether the agreement or the statute governing the dispute 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 date of filing of the suit;
  • from the date of filing till disposal of the suit via a decree; or
  • from the date of decree till the date of realisation of actual payment.

Section 34 of the CPC gives the courts discretionary power to grant interest, this discretion is capped at 6% interest per annum for the post-decree period.

A party in whose favour a decree has been passed can enforce it by filing an execution petition under Order XXI of the CPC.

A decree may either be executed by the court which passed the decree or by a court to whom it is sent for execution. A decree holder may choose to execute a decree and seek the court’s assistance for any of the following modes of execution.

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

It is also open to a decree holder to seek a garnishee order (ie, a direction to a person indebted to the judgment debtor to pay the decree holder directly to the extent necessary to satisfy the decretal amount instead of paying the judgment debtor).

Section 13 of the CPC provides for six scenarios in which a foreign judgment is deemed to be inconclusive:

  • judgment of an incompetent court;
  • judgment not rendered on merits;
  • judgment opposed to the 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 the fundamental rules of international law or in refusal to recognise the laws of India .

Section 44A of the CPC provides for enforcement of foreign judgments by courts that are based in a reciprocating territory (one which is situated outside India, and notified by the Government of India as recognised under Section 44A).

A jurisdictional Indian court, on being presented with a certified copy of a decree rendered by a court of competent jurisdiction in a reciprocating territory, is capable of enforcing that 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 before a competent Indian court on the basis of the foreign decree. The limitation period for filing such a suit is 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. A High Court is the highest court of appeal at the state level. It has appellate jurisdiction over all civil and criminal cases. Parties also have the right to prefer 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 impugned order by a court has any material irregularity, or failed to exercise jurisdiction, or exercised jurisdiction which was not available to it under the law.

A party’s right of appeal is a substantive right and such a right abets on the death of a party if the legal representative is not impleaded into the proceedings within 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 their interference.

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.

Should there be 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 position;
  • 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 an 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
  • there is some 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 Purush-ottam 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 judgment 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 first appeal can re-appreciate 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 the winning party. Courts have complete discretion to determine who shall pay the costs, the extent to which they shall be paid, and all other directions as may be necessary. Compensatory costs may also be awarded in the 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; and
  • 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 sec 249, it was held that 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 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 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 2019 amendments to the Arbitration Act were brought about, which empower arbitral institutions to appoint arbitrators.

The Arbitration and Conciliation 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 Lawand 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.

The law governing the conduct of arbitrations is also evolving at a notable pace. In BGS SGS Soma JV v NHPC Ltd. 2019 SCC Online SC 1585 it was held that the "venue" of arbitration designated in the arbitration agreement between the parties would be considered as the "seat" of the arbitral proceedings. The Supreme Court held that where there is an express designation of a “venue”, and no designation of any alternative place as the “seat”, and no other significant contrary indication, the conclusion is that the stated venue is the actual juridical seat of the arbitral proceeding.

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 and the enforcement of mortgages – 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. This is a constantly evolving jurisprudence.

In Avitel Post Studioz Ltd. v HSBC PI Holdings (Mauritius) Ltd. 2020 SCC OnLine SC 656, the Supreme Court held that "serious allegations of fraud" could render a dispute non-arbitrable, provided certain tests are satisfied, and not otherwise. The first test is satisfied when it can be said that the arbitration agreement does not exist, and the party against whom breach is alleged cannot be said to have entered into the arbitration agreement. The second test is satisfied when allegations are made against the State or its instrumentalities of arbitrary, fraudulent, or malafide conduct, thus necessitating the hearing of the case by a writ court. In such cases, the questions raised are not predominantly questions arising from the contract or breach thereof, but questions arising in the public law domain.

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 lndia 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 Supreme Court has held that enforcement of an arbitral award under the Arbitration Act may be filed in any jurisdiction in the country 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 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.

Significantly, in Vijay Caria v Prysmian Carvi Civil Appeal No. 1544/2020, Supreme Court of India, the Supreme Court held that Indian courts had to refrain from reviewing awards on their merits under Section 48 in order to comply with India’s obligations under the UNCITRAL Model Law.

Online dispute resolution (ODR) is being proposed as one of the ADR techniques for small and medium value disputes. 

It has been suggested in recent years that there is a need for ODR to effectively manage ADR mechanisms and promote faster and easier dispute resolution. There has been a rise in online hearings with several arbitral institutions adapting to the growing demand for distance/virtual resolution. However, while there are many positive developments in this area, the legal framework is yet to fully recognise the ODR process at significant stages of ADR, such as evidence.

The operation of the courts was suspended during the "lockdown" period. However, provisions were made for filing cases online and virtual hearings were adopted in a speedy manner, through videoconferencing.

The government has not passed any orders suspending the operation of limitation periods. The Supreme Court, in Suo Motu Writ Petition (Civil) 03/2020, took cognisance of the COVID-19 pandemic and has passed multiple orders extending the period of limitation, these being applicable to the duration of continuance of the pandemic.

Aarna Law

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+91 80 2336 8494

info@aarnalaw.com www.aarnalaw.com
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Aarna Law is a counsel-led, independent and boutique legal practice providing a range of services and solutions for domestic and international clients. Though only established in August 2013, the wide range of experience of its founder Shreyas Jayasimha, its senior adviser 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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