RULES OF LAW

Unstamped arbitration agreements are not enforceable in law, and failure to pay the requisite stamp duty can have serious implications on the enforceability of the agreement. The recent decision by the Supreme Court in Civil Appeal No(s). 3802-3803 of 2020 N.N. Global Mercantile Private Limited Versus Indo Unique Flame Ltd. & Ors. has clarified the legal position on the enforceability of unstamped arbitration agreements. The Court held that an instrument, which is exigible to stamp duty, such as an arbitration agreement, cannot be said to be enforceable if it is not stamped or is insufficiently stamped. This decision has far-reaching implications on the enforceability of unstamped agreements containing arbitration clauses, and has redefined the legal position on this issue. Section 2(h) of the Contract Act defines a contract as an agreement enforceable by law, while Section 2(g) defines an agreement as a promise or set of promises enforceable by law. An unstamped agreement, the...

The Doctrine of Frustration: When Contractual Obligations Become Impossible Contracts are the backbone of commercial transactions, but what happens when circumstances change beyond the control of the parties, making it impossible to perform the obligations under the contract? Contracts form the basis of business transactions, with parties relying on each other to fulfill their obligations. However, there are times when unforeseen events or circumstances arise, rendering it impossible to perform the contract. This is where the doctrine of frustration comes into play. Under section 56 of the Indian Contract Act, 1872, a contract can be discharged on the grounds of subsequent impossibility if an unexpected event or change of circumstances occurs, which was beyond the control of the parties and fundamentally alters the purpose or basis of the contract. The use of the word "impossible" in this context does not refer to literal or physical impossibility but rather the impract...

The principle of prospective operation of statutes is a fundamental aspect of legal interpretation that is crucial to upholding the rights of individuals, and it is essential for legal practitioners, business leaders, and the individuals to understand its implications. The settled rule of interpretation is that any amendment to a statute that affects the legal rights of an individual must be presumed to be prospective, unless it is expressly or impliedly retrospective. This principle is fundamental to the interpretation of all legislation and ensures that the rights of individuals are protected under the law. When a repeal of an enactment is followed by a fresh legislation, such legislation does not affect the substantive rights of the parties on the date of the suit or adjudication of the suit, unless it is retrospective. This means that a court of appeal cannot take into consideration a new law brought into existence after the judgment appealed from has been rendered, as the righ...

  Court while hearing objections under the scope of section 34 of the arbitration act cannot interfere unless the findings and conclusions of the arbitrator are totally perverse and illegal. Perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a court of law often in writ jurisdiction of the superior courts but no less in statutory processes wherever the same are available. Intervention of the courts is envisaged in few circumstances only like in case of fraud or bias by the arbitrators; violation of principal of natural justice etc. courts can correct the error of arbitrator. An award contrary to substantive provisions of law or the provisions of Arbitration and conciliation Act, ...