23rd January, 2025

1). Supreme Courts Reaffirms: Arbitral Awards Cannot Be Modified by Courts: SC Reiterates Limits Under Sections 34 and 37 of Arbitration Act 

Case Background

The Supreme Court bench comprising Justices PS Narasimha and Manoj Misra recently dealt with a case concerning land acquisition compensation under the National Highways Act, 1956. The Arbitral Tribunal had determined compensation at ₹495 per square meter for the acquired land. Dissatisfied with this award, the appellant approached the District Court under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act). The District Court modified the arbitral award, increasing the compensation to ₹4,500 per square meter with 9% interest.

The Special District Revenue Officer, representing the competent authority, challenged this order before the Madras High Court under Section 37 of the Arbitration Act. The High Court relied on the Supreme Court's ruling in National Highways Authority of India v. M. Hakeem & Another (2021), which stated that courts do not have the power to modify arbitral awards under Sections 34 and 37. Consequently, the High Court set aside the District Court's decision and reinstated the original arbitral award.

The appellant then approached the Supreme Court, seeking compensation parity with similarly placed claimants in the M. Hakeem case, where the Supreme Court upheld a higher compensation under Article 136 of the Constitution.

Issue of the Case

1. Jurisdiction Issue: Can courts modify arbitral awards under Sections 34 and 37 of the Arbitration Act?
2. Parity Issue: Should the appellant receive the same compensation as similarly placed claimants in the M. Hakeem case?

Court Observations

1. Jurisdiction of Courts Under Sections 34 and 37:
   • The Supreme Court reaffirmed the principle in M. Hakeem that courts cannot modify an arbitral award. The Arbitration Act, 1996, provides for limited grounds for judicial intervention, primarily focusing on setting aside awards rather than altering them.
   • The High Court correctly relied on M. Hakeem to hold that the District Court lacked jurisdiction to enhance the compensation.
2. Parity and Fairness:
   • The Supreme Court acknowledged the appellant's argument for fairness and parity with claimants in the M. Hakeem case, where higher compensation was upheld.
   • It noted that the High Court could not grant parity because it was bound by the jurisdictional limitations under the Arbitration Act. However, the Supreme Court, exercising its powers under Article 142 of the Constitution, ensured that the appellant received the same compensation as the claimants in the M. Hakeem case.

Court Ruling/Decisions

1. On Jurisdiction:
   • The Court upheld the High Court's decision that courts lack the power to modify arbitral awards under Sections 34 and 37 of the Arbitration Act.
2. Relief Granted Under Article 142:
   • The Supreme Court directed that the appellant be awarded compensation of ₹4,500 per square meter with 9% interest, as previously awarded by the District Court. This relief was granted to ensure fairness and parity with claimants in the M. Hakeem case.

Significance of the Decision

1. Reaffirmation of Limited Judicial Intervention:
   • The decision reinforces that the jurisdiction of courts under Sections 34 and 37 of the Arbitration Act is limited to setting aside awards on specific grounds and does not extend to modifying or enhancing them.
2. Fairness Through Article 142:
   • By invoking Article 142, the Supreme Court ensured justice and parity for the appellant, addressing the limitations of lower courts. This demonstrates the Court's ability to balance procedural rules with substantive justice.
3. Need for Authoritative Pronouncement:
   • The Court highlighted the conflicting judgments on this issue. While cases like M. Hakeem and Larsen Air Conditioning emphasize that courts cannot modify awards, other decisions such as J.C. Budhraja v. Chairman, Orissa Mining Corporation and Shakti Nath v. Alpha Tiger Cyprus Investment allowed modifications.
   • A larger bench will now address these inconsistencies to provide clarity.

Legal Provisions Discussed

1. Sections 34 and 37, Arbitration and Conciliation Act, 1996:
   • Section 34: Allows courts to set aside arbitral awards on limited grounds such as fraud, public policy, or procedural irregularities.
   • Section 37: Provides for appeals against orders under Section 34 but does not allow for modification of awards.
2. Article 136, Constitution of India:
   • Empowers the Supreme Court to grant special leave to appeal against any judgment or order, providing a mechanism for substantive justice in exceptional cases.
3. Article 142, Constitution of India:
   • Grants the Supreme Court the power to pass any decree or order necessary for doing complete justice in a case.

Conclusion

This case underscores the judiciary's limited role in arbitration and the autonomy of arbitral tribunals. It also highlights the Supreme Court's ability to ensure justice in exceptional situations through its constitutional powers. Law students and practitioners should closely follow the larger bench's forthcoming decision to resolve the divergent views on modifying arbitral awards.

Case Name: S. JAYALAKSHMI VERSUS THE SPECIAL DISTRICT REVENUE OFFICER & ORS.

2). Supreme Court: Partner of Unregistered Firm Barred from Filing Recovery Suit Against Co-Partners Under Section 69 of Partnership Act 

Case Background

This case arose from a suit filed by the petitioners, who were partners in an unregistered partnership firm, against another partner of the same firm to recover money. The trial court dismissed the suit, citing the bar under Section 69(1) of the Partnership Act, 1932. On appeal, the Andhra Pradesh High Court upheld the trial court's decision. The petitioners then appealed to the Supreme Court.

The bench of Justices JB Pardiwala and R. Mahadevan considered the issue, ultimately affirming the High Court’s decision to dismiss the suit due to the lack of registration of the partnership firm.

Issue of the Case

1. Can partners of an unregistered partnership firm file a suit against another partner to enforce a contractual right, such as recovery of money?
2. Does the bar under Section 69(1) of the Partnership Act apply even if the partnership business has not commenced?

Court Observations

1. Scope of Section 69:
   • The Court highlighted that Section 69(1) of the Partnership Act imposes a mandatory bar on suits between partners of an unregistered firm for enforcing contractual rights. This includes rights arising under the Act or from the partnership agreement.
   • Section 69(2) extends this bar to suits filed by unregistered firms against third parties.
2. Exceptions Under Section 69(3):
   • The Court clarified that certain suits are explicitly exempted from this bar under Section 69(3), including suits for:
     • Dissolution of the firm,
     • Rendition of accounts, and
     • Realization of the property of a dissolved firm.
3. Effect of Non-Commencement of Business:
   • The Court rejected the petitioners' argument that the partnership business had not yet commenced, stating that the bar under Section 69 applies regardless of whether the business operations have begun.
4. Failure to File a Proper Suit:
   • The Court observed that the petitioners should have filed a suit for dissolution of the partnership firm and rendition of accounts, which is not barred under Section 69(3). Filing a recovery suit, in contrast, is prohibited for unregistered firms under Section 69(1).

Court Rulings/Decisions

1. Dismissal of Suit:
   • The Court upheld the High Court's decision that the petitioners' recovery suit was barred by Section 69(1) of the Partnership Act.
   • It affirmed that the partnership firm’s unregistered status precluded the filing of such a suit.
2. Guidance on Proper Relief:
   • The Court suggested that the petitioners could have sought relief by filing a suit for dissolution of the firm and rendition of accounts, which would have been maintainable under the exception in Section 69(3).

Significance of the Decision

1. Clarifies Scope of Section 69:
   • This judgment reinforces the mandatory nature of the bar under Section 69 on suits by or between partners of an unregistered firm. It emphasizes the importance of registering partnership firms to ensure legal enforceability of rights.
2. Emphasis on Appropriate Legal Remedies:
   • The ruling highlights the need to seek relief through appropriate legal remedies, such as dissolution of the firm, rather than attempting to enforce contractual rights directly.
3. Uniform Application of Law:
   • The decision underscores that the bar applies universally, irrespective of whether the firm’s business has commenced.

Legal Provisions Discussed

1. Section 69, Partnership Act, 1932:
   • Sub-section (1): Bars suits between partners of an unregistered firm for enforcing rights arising from contracts or the Act, except for suits related to dissolution or accounts.
   • Sub-section (2): Prohibits suits by an unregistered firm against third parties to enforce contractual rights.
   • Sub-section (3): Provides exceptions to the bar, allowing suits for dissolution, rendition of accounts, and realization of property of a dissolved firm.

Conclusion

This judgment emphasizes the significance of registering partnership firms under the Partnership Act, 1932, to avoid procedural bars to legal enforcement of rights. It also underscores the necessity of pursuing appropriate legal remedies when dealing with disputes among partners. Law students should understand the practical implications of Section 69, especially in litigation involving partnership firms.

Case Name : SUNKARI TIRUMALA RAO & ORS. VERSUS PENKI ARUNA KUMARI

3). Article 21 Takes Precedence Over Section 37 of NDPS Act: Delhi High Court

Case Background:

The Delhi High Court, in a judgment delivered by Justice Jasmeet Singh, addressed the conflict between the constitutional rights of an accused under Article 21 of the Constitution of India and the restrictions on bail imposed under Section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).

The case involved a man accused in an NDPS case registered in 2022. The prosecution alleged that 2.615 kg of opiumwas recovered from his bag, while 0.510 grams of opium was recovered from a co-accused. The accused had been in custody since July 18, 2022, amounting to more than 2 years and 6 months of imprisonment without the trial making significant progress.

Issue of the Case:

The primary issue was whether the accused's constitutional rights under Article 21, guaranteeing the right to life and personal liberty, would prevail over the twin conditions for bail under Section 37 of the NDPS Act, which requires:

1. Reasonable grounds to believe the accused is not guilty.
2. Assurance that the accused will not commit any offense if granted bail.

Court Observations:

1. Article 21 Over Section 37 Restrictions:
   Justice Jasmeet Singh observed that the accused's prolonged custody and delay in the trial violated his fundamental rights under Article 21. The Court held that Article 21 takes precedence over the restrictions under Section 37 of the NDPS Act when the accused has been in custody for a long time without the trial concluding.
2. Delay in Trial:
   The chargesheet cited 22 witnesses, but no witness had been examined in over two years. The Court noted that the trial would not conclude in the near future.
3. Flaws in Investigation Process:
   • The accused argued that no independent witnesses joined the search and seizure process, even though the officers had prior secret information.
   • The chargesheet only stated that 4-5 passersby were asked to join the investigation but declined due to "justified compulsion."
   • No notices under Section 100(8) of the CrPC were served to the passersby who refused to join. (Section 103(8) of BNSS)
   The Court held that while the non-joining of independent witnesses is not fatal to the prosecution case, this flaw could be considered in favor of the accused during the bail hearing.

Court Rulings/Decision:

The Delhi High Court granted bail to the accused on the following grounds:

• Prolonged Custody: The accused had been in custody for over 2 years and 6 months without significant progress in the trial.
• Violation of Article 21: The Court held that the accused’s fundamental right to life and personal liberty prevailed over the restrictions under Section 37 of the NDPS Act.
• Investigation Flaws: Lack of independent witnesses and unexplained reasons for not securing such witnesses were considered in favor of the accused.

Significance of the Decision:

1. Balancing Fundamental Rights and Statutory Restrictions:
   This judgment underscores that Article 21 of the Constitution is paramount and cannot be overridden by statutory provisions like Section 37 of the NDPS Act in cases of prolonged custody without trial.
2. Encouraging Fair Investigation:
   The decision highlights the importance of adhering to procedural safeguards, such as involving independent witnesses during seizures, especially in NDPS cases.
3. Speedy Trial as a Fundamental Right:
   The judgment reinforces that prolonged incarceration without trial violates the accused’s right to a speedy trial, a key aspect of Article 21.

Legal Provisions Discussed:

1. Article 21 of the Constitution of India: Protects the right to life and personal liberty.
2. Section 37 of the NDPS Act: Imposes stringent conditions for granting bail in NDPS cases.
3. Section 100(8) of the Criminal Procedure Code (CrPC): Mandates notices to persons refusing to join search or seizure processes. (Section 103(8) of BNSS)

This decision provides clarity on balancing constitutional rights with statutory restrictions, particularly in cases of prolonged pre-trial detention.

Case Name : ZAKIR HUSSAIN v. STATE GOVT. OF NCT OF DELHI

4). "Kerala High Court Rules Legal Heirs Can Claim Compensation for Pain and Suffering in Motor Accident Claims"

Case: Kerala High Court

Judge: Justice C. Pratheep Kumar

Case Background

The legal heirs (wife, children, and mother) of a deceased motor accident victim appealed against the compensation awarded by the Motor Accidents Claims Tribunal. The deceased, a cleaner in a mini-lorry, succumbed to injuries after being bedridden for seven months following the accident.

The Tribunal had awarded ₹10,78,929, which included only ₹25,000 for pain and suffering. The appellants argued that this amount was insufficient considering the prolonged pain endured by the deceased before his death.

Issue of the Case

Can the legal heirs of a deceased motor accident victim claim compensation for the pain and suffering experienced by the deceased?

Court Observations

1. Negligence Proven: The Court noted that the negligence of the driver of the vehicle was proven, and the insurer was liable to indemnify the compensation.
2. Applicability of Kerala Torts Act: Referring to Section 2 of the Kerala Torts (Miscellaneous Provisions) Act, 1977, the Court emphasized that all personal claims survive to the legal heirs, enabling them to seek compensation under this head.
3. Judicial Precedents:
   • The Court cited Jaya v. Shaji (2014), which recognized the entitlement of legal representatives to claim compensation for pain and suffering.
   • In Mable and Ors. v. Lenoy Sebastian and Others (2024), the Court had awarded ₹1 lakh for pain and suffering to the legal heirs of a victim who endured eight months of suffering before passing away.
4. Contrary Argument: The respondents relied on Oriental Insurance Co. Ltd. v. Kahlon @ Jasmil Singh Kahion (2021), where it was argued that pain and suffering is a personal injury claim and does not extend to legal heirs. However, the Kerala High Court disagreed, emphasizing the state-specific provision under the Kerala Torts Act.

Court Rulings/Decisions

1. Enhanced Compensation for Pain and Suffering: The Court awarded ₹1,00,000 for pain and suffering, considering the deceased’s prolonged period of pain before death.
2. Revised Compensation Breakdown: The deceased’s notional income was fixed at ₹7,000, with ₹11,81,250 awarded for loss of dependency. Additional compensation was granted under various heads, including:
   • Funeral expenses
   • Loss of consortium
   • Loss of estate
   • Bystander expenses
   • Extra nourishment
3. Final Compensation Amount: The total compensation awarded was enhanced to ₹19,08,404.

Significance of the Decision

1. Recognition of Legal Heirs' Rights: This decision reaffirms the rights of legal heirs to claim compensation for the deceased’s pain and suffering under the Kerala Torts Act.
2. Emphasis on Justice for Victims' Families: By enhancing compensation, the Court ensured a fair outcome for the deceased’s dependents, taking into account the physical and emotional hardship endured.
3. Clarity on Applicability of Kerala Torts Act: The judgment highlights the survival of personal claims to legal heirs under state-specific provisions, even in cases where general legal principles suggest otherwise.

Key Legal Provisions:

• Section 2, Kerala Torts (Miscellaneous Provisions) Act, 1977
• Apex Court's decision in Oriental Insurance Co. Ltd. v. Kahlon @ Jasmil Singh Kahion (2021)
• Decisions in Jaya v. Shaji (2014) and Mable and Ors. v. Lenoy Sebastian and Others (2024)

This ruling is a significant precedent for future motor accident cases involving claims for pain and suffering endured by deceased victims.

Case Name: James (Unsound Mind) v Sajeevan

5). Allahabad HC Clarifies: Magistrate/Sessions Court Lacks Jurisdiction to Grant Bail in Appeals Involving NBW against Acquittal or Conviction Issued by High Court  

Case Background:

The case involved a reference made by the Division Bench of the Allahabad High Court to a larger bench in March 2024. The reference arose after the Allahabad/Prayagraj bench passed orders in January 2024, directing that acquitted or convicted persons, against whom the High Court had issued non-bailable warrants, should be released on bail by the Chief Judicial Magistrate (CJM) or the Magistrate. This directive was issued despite the fact that non-bailable warrants had been consciously issued by the High Court to secure the accused’s presence.

Issues Raised in the Case:

The Division Bench at Lucknow framed the following key questions for the larger bench to consider:

1. Jurisdiction of Magistrates: Whether a Chief Judicial Magistrate or any other Magistrate has the authority to grant bail to an accused against whom a non-bailable warrant has been issued by the High Court in an appeal.
2. Generalized Directions: Whether the High Court can issue general directions requiring the Magistrate to release the accused on bail when a non-bailable warrant has been issued.
3. Legality of Directions: Whether the directions passed by the Allahabad/Prayagraj bench (January 2024 orders) were in accordance with the law.
4. Securing Presence in Appeals: What are the proper procedures to secure the presence of the accused in an appeal before the High Court.
5. Amicus Curiae: Whether an appeal can be heard in the absence of the accused, by appointing an amicus curiae (a lawyer for the defendant, when the defendant does not have a lawyer) in cases where the accused is absent without a valid reason.

Court Observations:

A Full Bench of the Allahabad High Court, consisting of Justices Sangeeta Chandra, Pankaj Bhatia, and Mohd. Faiz Alam Khan, addressed these issues. They clarified the following:

• Non-Bailable Warrants and Magistrates' Authority: The Court observed that if the High Court has issued a non-bailable warrant for the arrest of an appellant (whether in an appeal against acquittal or conviction), the intention is to have the accused or appellant committed to prison. In such cases, neither the CJM nor the Sessions Judge has the jurisdiction to release the person on bail. The subordinate court is divested of jurisdiction to grant bail unless specifically directed by the High Court.
• Direction on Bail by Magistrates: The Full Bench disagreed with the previous directions that allowed the Magistrate to release the accused on bail after a non-bailable warrant had been issued by the High Court. The Court emphasized that the High Court's conscious decision to issue a non-bailable warrant reflects the intention to secure the presence of the accused in custody, and this decision should be respected.
• Bailable Warrants: However, the Court clarified that if a bailable warrant is issued, the subordinate court has the discretion to release the accused on bail, with an undertaking to appear before the High Court on the specified date.
• Coercive Measures for Securing Presence: The Court stated that in an appeal against acquittal, coercive measures such as non-bailable warrants can be issued, depending on the circumstances of each case. However, the use of such warrants should not be assumed in every case, and the Court may issue a summons if appropriate.
• Warrant for Appeal against Conviction: In an appeal against conviction where the appellant has already been granted bail, the Court ruled that no immediate non-bailable warrant should be issued unless the appellant's counsel has failed to appear. If the appellant's counsel fails to appear, a bailable warrant may be issued.
• Amicus Curiae in Absence of Accused: The Court further clarified that if an appellant avoids appearing before the Court or is uncooperative, the appeal can be proceeded with by appointing an amicus curiae. The appeal can be decided based on the merits of the case, even if the appellant is not present, as long as the appellate court is satisfied that delaying tactics are being used by the accused.

Court's Ruling:

• The Full Bench ruled that when the High Court issues a non-bailable warrant, it is meant to have the accused committed to custody, and subordinate courts (Magistrates/Sessions Judges) cannot release the accused on bail unless directed otherwise by the High Court.
• The directions of the Division Bench (Allahabad/Prayagraj) to release persons on bail, even after a non-bailable warrant was issued, were set aside.
• It clarified the procedure for securing the presence of the accused in appeals and stated that in the absence of the accused, the appeal could proceed with the appointment of an amicus curiae.

Significance of the Decision

1. Clarity on Jurisdiction: The decision provides clear guidelines on the jurisdictional limits of subordinate courts in cases involving NBWs issued by the High Court.
2. Balance Between Discretion and Authority: It emphasizes that general directions should not override case-specific discretion.
3. Streamlining Procedure: By outlining when and how warrants should be issued, the judgment ensures fairness and avoids unnecessary hardship for appellants who are on bail.
4. Fair Trial Principles: The court reaffirmed the importance of ensuring that appellants, especially those in custody, have proper representation, even if they fail to cooperate.

Legal Provisions Involved

• Code of Criminal Procedure (CrPC), particularly provisions related to non-bailable warrants and bail (Sections 70, 71(73 of BNSS), 437( 480 of BNSS), 438(482 of BNSS), 439(Section 483 of BNSS)
• Criminal Procedure Code (CrPC):
• Section 70: Issuance of warrants. (Section 72 of BNSS)
• Section 88: Power to take bond for appearance. (Section 91 of BNSS)
• Section 389: Suspension of sentence pending appeal; release of appellant on bail. (Section 430 of BNSS)
• Indian Penal Code (IPC) may have been indirectly referenced as part of the legal framework for handling appeals and warrants.

Case References:

• Anokhilal vs. State of Madhya Pradesh (Supreme Court case regarding appointing an amicus curiae).

This judgment ensures that the judicial process remains orderly and that the High Court’s authority in criminal appeals is not undermined by subordinate courts.

Case Name - In Re- Procedure To Be Followed In Hearing Of Criminal Appeals vs. State of U.P 2025