Book Review: Neither Roses Nor Thorns

If we look at the post-independence history of India one can easily see the tumultuous times that this young nation has gone through to reach the stage where it can call itself a robust democracy. Littered with doubts, the journey was always on the verge of derailment. A few gentlemen of extraordinary grit and calibre saved it, however. With most of those men, as is usual with the history, the importance of their actions and the men themselves have gone unnoticed during their times, except a gifted few. Justice H.R.Khanna is one such man who was celebrated in his times and continues to be a venerated personality of this order. His was the lonely voice that sung the triumph of democracy in testing times. To arrive at a decision with wide ramification to both him personally and to the moral fabric that made the country like India takes the kind of courage that is rarely encountered in the history. What makes the man that he is? The answer comes straight from the horse's mouth in 'Neither Roses Nor Thorns'. The narration starts with his childhood and traces it to his ascension as the judge of the highest court of India. The best part of this journey is that, more than the man himself, it is the importance that he gives for those people who partook the burden of the journey with him. Littered with hear warming anecdotes of such men this book just shows the immense importance that this man gives to others that surrounded him in his life, how much ever small they may be. In spite of being a well-written prose there are significant shortcomings that I felt made the book somewhat of a disappointment. The book does not carry the much-required depth that one would expect from it. The lack of depth makes one to think that this is a half-hearted attempt by the author to write an autobiography. For a towering personality that he is, this book has all the possibilities to set the golden standard in writing, since his life offered immense scope for the grandeur in such a scale. In fact, I was not able to help myself but to draw comparisons with the “Roses in December by M.C.Chagla” (The greatest autobiography ever written in my opinion) against which this book fails in every possible aspect of writing. If my guess is right, this is the mistake of editor who was not able to bring the best out of the author. Another major problem that I encountered in reading this book is that it does not make any chronological sense. At places, it jumbles within the overall timeline without much making sense or purpose confusing the reader. Granted! A non-linear narrative is a style of writing. But it must go organically with the story that the writer intends to convey to the reader, which is missing here.
I was utterly disappointed with the book. However, few stray snippets of information about people and incidents qualifies this book to be a read worth one time. There went the unsung song of one of the greatest composers of the democracy called India.

Enforcement of Foreign Awards and Regulatory Intervention: The Case of Tata-Docomo

It created flutters would be an understatement. The high-profile international arbitration between Tata Sons and Docomo was a head turner from the day that the disputes arose between the parties to the failed venture. After the severely contested proceedings before the international arbitral tribunal, where Tata Sons lost the case, the matter came for enforcement before the Delhi High Court. An unlikely intervention against the enforcement was made by the Reserve Bank of India (RBI) before the High Court. Initially, the enforcement of the award was opposed by Tata Sons on the grounds of inability to perform without special permission from RBI under the Foreign Exchange Management Act, RBI opposed the enforcement on the grounds of illegality that would result if the award is enforced since they would contravene the several prohibitions prescribed under the FEMA. This is the first known instance where a regulator intervened in the enforcement of an arbitration award on the grounds of illegality, raising fundamental questions about the propriety of an intervention by a third party in enforcement proceedings. In the meanwhile, a joint application under Order XXIII Rule 3 was filed by Tata and Docomo seeking to place on record the settlement agreement arrived at amongst them. The settlement agreement too subsequently came to be opposed by the RBI on the grounds of illegality under Section 23 of Contract Act and the express bar against any settlement agreement in a execution proceedings under Order XXIII Rule 4 of CPC.The RBI's opposition hinged upon the following grounds:

1. The transaction is in contravention to the FEMA: Clause 5.7.2, the put option clause that created the right in favour of Docomo to have an assured amount of returns on its investment if it wishes to exercise the right vested with it under the clause was seen by RBI in violation of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000.
2. The award does not consider the special permission of RBI to carry out such transactions: It was the case of RBI that for carrying out certain category of transactions are defined under the Foreign Exchange and Management Act, 1999 and the same is plenary in all respects unless anything to the contrary stands stated in the Act. The transaction that was sought to be carried out was seen as a Capital Account transaction that is disguised as a current account transaction. As per Section 2 (e) of FEMA, mere alteration in the assets/liabilities of either a resident or a non-resident entity constitutes a capital account transaction.
3. The transaction, in the form in which it is sought to be enforced, is a colourable transaction: According to RBI, the manner in which the SHA is structured would necessarily result in contravention of FEMA provisions. The portrayal of the transaction as a current account transaction cannot be accepted simply because the essential result would remain the same. The ultimate result of the transaction is the transfer of shares by Docomo to Tata for an agreed consideration under the share holders agreement. This is sufficient for the transaction to fall under the definition of a capital account transaction.

The arguments on the merits aside, RBI all through has never been make out sufficient case or itself on the question of maintainability of such an intervention at all by an entity who is neither a party to the shareholders agreement under dispute nor a party to the process of arbitration. This attains more significance since the important cause of intervention by RBI, as it stated, is that the present case involves interpretation of the provisions of FEMA and other regulations governing foreign exchange. As a regulator it sought to justify its intervention to protect its interests by aiding the court in arriving at the right interpretation of the statutory provisions. This is a dangerous precedence to be set, if such an intervention is allowed. If regulatory bodies across the board intervened on the grounds of the case involving interpretation of statutory provisions, over which they have vested interests, or that the arbitral tribunal has arrived at a wrong conclusion over its interpretation, it would be nigh well impossible for any arbitral award to attain the sanctity of the decree without the express authorisation of such bodies. It would deal a death blow to the whole ecosystem of arbitration. The very concept of arbitration is to resolve dispute amongst two private parties without any intervention from an alien third party entity would stand compromised. The High Court has rightly rejected the intervention made by RBI. 

The objections of RBI, under Order XXIII Rule 4, were also ruled against it holding that nothing can prevent the parties from entering into a compromise regardless of nature of proceedings. Even otherwise, the court found that the objections of RBI, over the illegality of the consent terms arrived at between Tata and Docomo, were not justified.

Another interesting question that this decision has answered is whether RBI would be bound by an arbitral award that interprets the scope of its powers or not. Answering in positive, the judgement states that the conclusion arrived at in the award would be binding on RBI just as it would any other entity, since, under Section 36 of the Arbitration Act an award automatically becomes the decree of the court and is enforced as such under the Civil Procedure Code. However, it must be noted that it would be binding on RBI only for those two parties. It can neither be a precedent nor can it be binding on RBI for any other transaction of similar nature. The judgement is also careful enough to note that this would yet not permit any intervention by RBI, since there is no statutory provision which expressly provides for it.

The judgment is a watershed moment in the field of international arbitration in India, since it has effectively put to rest the ambiguity that prevailed over the control of regulatory bodies in enforcement of foreign arbitral awards. Any contrary decision would have resulted in a situation where the enforcement proceedings of foreign awards would be subject to the whimsical objections of regulatory bodies such as RBI.

Disclosure: I assisted the court on behalf of Reserve Bank of India in this matter.