Scope and Interpretation of Chapter XII-G of Income Tax

Income tax cases sometimes give rise to peculiar instances in which any decision on seemingly simple-minded issues results in intricate and wide ranging repercussions upon an industry as a whole. This case is one such instance wherein the scope of special concessions granted for shipping industry by introduction of Chapter XII-G in the Income Tax Act was called into question. The question of law that was up for consideration of the Supreme Court was whether the High Court is right in holding that the assesse is eligible for tonnage tax on income received under slot charter arrangement from a ship which does not satisfy the conditions specified under Section 115 VD of the IT Act. It is important to note here that many shipping companies, apart from owning ships for carrying out shipping operations, hires slots for carrying out the operations, which sometimes contributes to the majority of their income. Any narrow interpretation of the chapter shall have adverse repercussions for these companies. The High Court in this case interpreted the case in favour of the assesse. However, the decision raises lot many question as far as interpretation is concerned. It has ignored certain vital aspects of Chapter XII-G while deciding the case. Here I shall try to expound few of those glaring errors in its reasoning. The revenue has challenged the judgement before the Supreme Court wherein arguments have already been heard and the judgement is awaited.

The brief facts of the case that led to this case before Supreme Court is given here for better understanding of the case. The petitioner is a ‘qualifying company’, as per Section 115 VC of the IT Act, whose income is assessable under XII-G of the Act, containing special provision relating to income of shipping companies in sections 115V to 115 VZC.  The assesse is also a ‘tonnage tax company’, whose income is calculated under the tonnage tax scheme under Chapter XII-G of the Act. Apart from owning and operating ships they also chartered ships under the ‘slot charter’ arrangements, wherein only a portion of the ship is chartered for the purposes. While filing his returns, for the income that were received vide the slot charter arrangement, did not submit the valid certificate, referred to in Section 115VX of the Act, to show that the chartered ships are ‘qualifying ships’. The assesse submitted the valid certificate only for those ships that it owned. Further the assesse contended that there is no requirement to submit the certificate for those ships which are chartered under the slot charter arrangement, since the income for the same is computed based on the ‘deemed tonnage’ as defined under Rule 11 Q of IT Rules, unlike the income from a fully chartered ship, which is calculated on ‘net tonnage’ basis. Also it was contended by the assesse that ship is not owned by it and hence the certificate required cannot be procured by them. The Assessing Officer (AO) for want of the ‘valid certificate’ denied the contention of the assesse, consequently denying the benefit, that is accorded under Chapter XII-G for a slot charter, and proceeded to estimate the income from slot charter for the relevant assessment years based on the net tonnage basis derived vide the profit and loss account submitted by the assesse.

Both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal dismissed the consequent appeals filed by the assesse. Aggrieved the assesse filed an appeal before the High Court of Kerala. The Hon’ble High Court in its judgement/order allowed the appeal. The Court determined that the basis for determination of income for the purposes of tonnage tax scheme under Chapter XII-G of the Act, meant for the slot charter arrangement, shall be on the deemed tonnage basis. The reasoning for the same is provided as follows

             i.      Section 115 VG of the Act make available the computation of tonnage income, wherein subsection 4 states that tonnage means that the tonnage of a ship indicated in certificate referred to u/s 115VX of the Act and includes the deemed tonnage computed in prescribed manner. The explanation offered in the same section states that for the purposes of the sub-section deemed tonnage shall be the tonnage in respect of an arrangement of purchase of slots, slot charter, whose computation shall be on the basis of Rule 11Q of the IT Rules. Sub-rule 1 of the same make specific reference to Form No.66 of the Rules and the illustrative formula given in the relevant note appearing under that form as regards the sub-rule. For the purposes of Rule 11T the report of audit of accounts has to be mentioned in Form.66, wherein at Sl. No.10 the format of providing computation of tonnage, as per Sec.115VG, income is provided. Column No.1 of the same is the ‘Name of the Ship’, which stands with an asterisk, whose explanation is as under

“There is no need to mention the name of the ship, income from which is computed on deemed tonnage basis”

Therefore it clear that there is no need for providing the valid certificate in case the charter is a slot charter. Consequently, the income shall be calculated on deemed tonnage basis.

        ii.     The reading of Sections 115VB, 115VC, 115VD, makes it clear that, while it is necessary to own at least one ship to become a qualifying company, operating ships may either be owned or chartered by the company. It is also clearly seen that the income derived from slot charter operations by a company shall be included to determine the income of a company, even if such operations are carried on in ships which are not qualifying ships in terms of the provisions of the Act.

              iii.            There is nothing in the act or the rules to indicate that the income which falls within the definition of ‘deemed tonnage’ will be operative only if it is carried out through ‘qualifying ships’.

       iv.      Form No.66, under Rule 11T, provides for the conversion of TEUs into NT for the Slot Charter under Note 3. The same says that the formula for the conversion is provided for converting slots hired into net tonnage, since the slots can be hired all-round the year for short or long terms in varying numbers, therefore it is not possible to convert them to net tonnage just by identifying the particular vessel on which the slot is hired.

The High Court has faltered in not considering the following grounds in its judgement:

The basic requirement for a qualifying company to come within the ambit of tonnage tax scheme is that apart from satisfying other requirements of Chapter-XII G of the Act, is to provide for the proof that the business is carried out in a ‘qualifying ship’. The statute does not in any manner envisage a situation wherein an exemption can be carved out, for the hiring of slot for a charter, from satisfying the requirement of a qualifying ship. Moreover, the primary reliance placed by the High Court upon the provision in a form to interpret the chapter, especially when there are express provisions within the chapter, is a logical fallacy in its least.

The inference can be drawn from Section 115 VI wherein relevant shipping income is defined. Sub-section 6 of the same provides that when a qualifying company operates a ship which is not a ‘qualifying ship’ the income attributable to such operation shall be computed in accordance with the other provisions of this Act. As per this provision, though it merely provides for the income derived from ‘operation’ of a qualifying ship, it cannot be said by any stretch of logic that it only includes such an activity, for such an interpretation will fall foul of the sub-section 2 of Sec 115 V-I, which defines the core activities of a tonnage tax company for the purposes of calculation of relevant shipping income. Apart from this a combined reading of the provisions of the chapter shall make it clear that, though the specific requirement of a ‘qualifying ship’ is not provided anywhere, by necessary implication it shall be applicable for the slot charter arrangement as well. 

As per Section 115VD of the Act, that defines the qualifying ship which can be operated by a qualifying company, for which a valid certificate is necessary. Under Section 115VG it is clear that only a qualifying ship can be operated for the purposes of a slot charter. A combined reading of Section 115VB, 115VD, 115VG will clearly demonstrate that the ship chartered in under slot charter shall be a qualifying ship and the certificate of tonnage is necessary for ships. Therefore, the basic condition necessity that ship should be a qualifying ship cannot be parted with.

Interpretational fallacies of the High Court's judgement apart any parochial interpretation of this Chapter by the court shall result in a situation which will defeat the very purpose introducing this chapter altogether. Any interpretation by the Supreme Court under this chapter which should provide enough leeway for the assessee to accrue the benefits of this chapter even while going for slot charter arrangement. This could be an one off case to rule in favour of the revenue. However, while doing so the court has to be conscious of the fact the repercussions of any blanket restrictions by way of interpretation for slot charter. 

Book Review: Before the Memory Fades

It is not often that you find people who achieve the pinnacle of one’s profession and live to see it. Mr.Nariman, the godfather of Indian bar is one such exception. The very name evokes awe in the minds of many who are a part of the bar and it without any surprises also includes judges who are on the other side of the bar. My first experience of him happened when I was present in the court during his arguments against the proposed NJAC in Supreme Court. I must say there is a quality to his voice and tenor that made me think of Richard Attenborough for a moment. In comparison to the commanding opposition of the Attoney General Mr.Mukul Rohatgi, it was a mellifluous performance that one does not get to witness very often. It is sad that this incandescent voice of the bar is fading due to old age. Naturally as an aspiring member of the bar I picked up this autobiography of his at my first opportunity. With some unexpected eagerness, with which I generally am not associated with for biographies, I started reading the genius of a lawyer’s life. The first few chapters of the book fulfilling my expectations was about his personal life, written in an interesting way laced with sufficient humour to interest the reader. From these pages it is clear that he is from a somewhat well to do background. His professional pedigree too is from the best of stables in the country, chambers of Sir Jamsedji Kanga, of which other stalwarts of the profession like Palkhiwala, Seervai too are a part of. It is actually surprising that even at this age he remembers many interesting incidents at the bar that he fondly reminisces in this book. This part of the book moves without many surprises but with much more gentle humours making it a fast paced interesting albeit not so exciting read altogether.
The real turn in the whole book comes at the stage of his life when he accepts the post of Additional Solicitor General of India and shifts his residence to New Delhi. It happened during the time period when the whole country was at the cusp of radical change of times that will take it into one of most turbulent times that independent India is yet to go through. It was when he was holding this position that the ‘phony’ emergency, as he calls it, was declared in the country, leading to him resigning the post as a form of protest. Considering the then prevailing circumstances when there existed no security even for one’s own life, it was one of the bravest moves that this country has witnessed. As a matter of fact his resignation invited the much needed public attention to the negative effects of the emergency. This particular chapter gives some interesting insight into the mind of the man who mustered the courage to take such a step.
One of the opportunities that Nariman seems to have missed is to appear in the famous Fundamental Rights case (Keshavananda Barati Vs Union of India). His participation in that matter, apart from being a valuable contribution in the case, would have spiced up the reading a little more. The life of a towering personality like him will inevitably touch upon certain watershed moments of Indian judiciary for it is him who played an active role in crafting the outcome of certain number of those pages of history. The subsequent chapters of the book take a definite turn in its tenor and content when he starts to delve into few of those instances. Fraught with controversies even to this day, his decision to defend the Union Carbide in the massive litigation initiated after the Bhopal Gas Tragedy is one such instance. Interestingly he seeks he seeks to justify his stance through this book. Prior to the litigation his reputation for the cause of human rights was internationally celebrated, no less due to his decision not to continue in the post of law officer when the emergency was declared. His reputation in this regard also caused to raise many an eyebrows when he appeared as the lead counsel to defend Union Carbide. In this chapter he explains at length the reality, for much information available to the public are emotionally prejudiced. This chapter in particular helped me no less in understanding several questions that many lawyers are posed in their professional life. Much of the detractors of this decision of Nariman were emotionally opinionated judging him unfairly. But through this chapter he puts up a formidable defence explaining his stance rationally. He has even reproduced two letters (one by renowned Professor Upendra Baxi) that were addressed to him questioning this decision of his. Even prior to reading this book I had several doubts that existed over the role that a lawyer plays in any judicial proceedings. Two extreme forms of reasoning can be had for this question. In one form he is seen as someone who can appear on behalf of anyone that he pleases and in the other he has to judge the cause before entering his appearance. Gandhi, as a lawyer chose the second path. He rejected any cause which he believed is not just. This reasoning of Gandhi is somewhat irrational, for he judges upon the cause of a person even before he is afforded an opportunity before the court. The detractors of this decision of Nariman too sound the like. This reasoning may somewhat put the lawyering as anything for money profession, but the role of a lawyer in judiciary itself calls for it. I personally am not able to see any incongruity in this reasoning and I find it to be rationally robust. As this subject needs separate detailed critical examination I shall refrain from digging further on this. Apart from justification or rather explanation that he offers for his stance in this controversial case, he also offers many judicial solutions to work out of such intricate situations which create difficulties both judicially and emotionally. It does seem to look a little out of place since he himself was and always has been in a veritable position to make such changes. In one page he even offers somewhat of an explanation to this as well, albeit not so convincingly.
The next important chapter is where he narrates his experience as a nominated member of Rajya Sabha (Upper House) of the Parliament. How much ever he seems to have loved it and portrayed it to be a very useful stint as the member, one cannot escape the feeling that his membership was not of much consequence. This is definitely not a surprising when considering the fact that he is nominated member without any party affiliations. Within the political landscape that is fraught with ulterior political motives in every move made, there is little that a sole member can do without the support of major parties on the floor. At its very best his membership did indeed offer the infusion of intellect in the debates held on the floor, sufficing the purpose of his nomination for the membership.
Throughout the passages one can witness the passion that this man holds for this profession. It is hard to miss that in those seemingly autobiographical passages is hidden the man’s eagerness to deliver the message about the ideals for which the profession of advocacy stands for. Hidden is his lament over the disgraceful fall of standards. Nevertheless, more than his reminiscences about the yesteryear members of the bar, who upheld the ideals of the profession, the man himself stands as an exemplar for the wannabes. One thing that I sorely missed in the book is the absence of any interesting information about his maverick of a son Rohinton Nariman. It would have been interesting, personally, to know a little more about the life of Rohinton, whose trailblazing performance as a judge in Supreme Court is raising the standards in the Indian judiciary. All in all this is an extremely interesting read and well serves as an inspiration for aspiring lawyers and lawyers alike.

Recovery of Workmen's Dues Against Sick Company- An Overview

It is always interesting when two important statutory rights are tested for their prominence over each other. In a recent case that I dealt with I had an opportunity to witness one such instance. In this case the dispute was between the petitioner and respondent who claimed their rights under The Sick Industrial Companies (Special Provisions) Act, 1985 and Employees Provident Funds and Miscellaneous Provisions Act, 1952. It is an irrefutable fact that both the parties are conferred with substantial rights which cannot be brushed aside lightly.

In this case the dispute was over the recovery of statutory dues that are to be paid by a company, which is declared to be sick, to its workmen along with consequential damages and interest for delay in its payment. The primary question of law that was up for the consideration of the Court in the case was upon the overriding effect of Sick Industrial Companies Act (SICA) over other statutes. This especially has to be seen in the context of the case wherein the dispute involves the Employees Provident Funds Act (EPC Act). The relevant provision, Section 22 of SICA, which acts as a non-obstante clause is reproduced below.

22. Suspension of legal proceedings, contracts, etc.—

(1) Where in respect of an industrial company, an inquiry under section 16 is pending or any scheme referred to under section 17 is under preparation or consideration or a sanctioned scheme is under implementation or where an appeal under section 25 relating to an industrial company is pending, then, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceedings for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof 32 [and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company] shall lie or be proceeded with further, except with the consent of the Board or, as the case may be, the Appellate Authority.

From the above provision it clear that the intention of the legislature is to provide precedence to the revival of a sick industrial undertaking, for which necessary steps already stands initiated under the relevant provision of the SICA. The underlying reasoning for this protection that is offered for sick companies is to provide a veritable opportunity for their commercial revival. This fact, as contemplated by the legislature while enacting SICA, was duly countenanced by the Supreme Court in the case of Maharashtra Tubes Ltd. Vs. State Industrial and Investment Corporation of Maharashtra Ltd. (1993) 2 SCC 144. There it was held as follows:

The purpose and object of this provision is clearly to await the outcome of the reference made to BIFR for the revival and rehabilitation of the sick industrial company. The words or the like' which follow the words 'execution' and 'distress are clearly intended to convey that the properties of the sick industrial company shall not be made the subject-matter of coercive action of similar quality and characteristic till the BIFR finally disposes of the reference made under 15 of the said lent. The legislature has advisedly used an omnibus expression' the like' as it could not have conceived of all possible coercive measures that may be taken against a sick undertaking.

This proposition abovementioned has been followed in many subsequent decisions. However, it is of importance to note that all the decisions, albeit upholding the primacy of SICA, were declared to be so in specific context of certain legislations which were subject matter of challenge in those cases. Few important decisions to this effect are as follows:

a.   Jay Engg. Works Ltd. Vs. Industry Facilitation Council (2006) 8 SCC 677: In this case the Supreme Court upheld the primacy of SICA against the proceedings initiated for delayed payments under Small Scale and Ancillary Industrial Undertakings act, 1993,  upon a sick company. It was specifically held that any coercive measures against a sick company cannot be initiated, except with the prior consent of the board.

The said provision, thus, mandates that no proceeding inter alia for execution, distress or the like against any of the properties of the industrial company and no suit for recovery of money or for the enforcement of any security, shall lie or be proceeded with further, except with the consent of the Board or as the case may be, the Appellate Authority. The said statutory injunction will operate when an inquiry had been initiated under Section 16 or a scheme referred to under Section 17 is under preparation and/ or inter alia a sanctioned scheme is under implementation. It is not disputed before us that the amount awarded in favour of the Respondent by the Council finds specific mention in the sanctioned scheme which is under implementation.

b.   Raheja Universal Limited Vs. NRC Limited & Ors (2012) 4 SCC 148: As mentioned above in this note, the Apex Court while observing specifically that cases discussed therein (Shree Vallabh Glass Works Ltd. (1990)2 SCC 440; Jay Engg. Works Ltd. Supra) the facts of the cases are distinct the conclusions thereof are to read in reference to those facts. However, it went on to clarify that there is no conflict as far as the protection that is to be granted under Section 22 of the SICA. It is worthy mention here that the proposition was upheld in the context of Transfer of Property Act.

55. Despite these judgments and with an intention to clarify the law, we would state that the matters which are connected with the sanctioning and implementation of the scheme right from the date on which it is presented or the date from which the scheme is made effective, whichever is earlier, would be the matters which squarely fall within the ambit and scope of Section 22 of the Act of 1989 subject to their satisfying the ingredients stated under that provision. This would include the proceedings before the civil court, revenue authorities and/or any other competent forum in the form of execution or distress in relation to recovery of amount by sale or otherwise of the assets of the sick industrial company. It is difficult for us to hold that merely because a demand by a creditor had not been made a part of the scheme, pre or post-sanctioning of the same for that reason alone, it would fall outside the ambit of protection of Section 22 of the Act of 1985.

56. The BIFR, being a specialised body which is required to act as per the legislative intent indicated above, has jurisdiction to examine the matter and grant or refuse its consent for institution, continuation and recovery of dues payable to a particular creditor, whatever the nature of such dues may be. If such an interpretation is not given, the very purpose of the Act of 1985 may stand defeated. For instance, a scheme is sanctioned by the BIFR and is at the stage of successful completion, where demand from the Revenue with regard to the sick industrial company is allowed, this can render the scheme ineffective and impossible to be executed, if permitted to be enforced against such company without approval/consent of the specialised body like the BIFR.

c.  Ghanshyam Sarda Vs. Shiv Shankar Trading Company & Ors. (2015) 1 SCC 298: A more recent decision on this subject matter. In this case while discussing the cases cited hereinabove extensively the Supreme Court declared that the provisions of SICA has to necessarily be given effect to, for the purposes of revival of a sick company. Moreover, the non-obstante clause provided under Section 22 of SICA necessarily extinguishes the jurisdiction to any other forum provided thereunder. It was also observed that during the entirety of implementation of scheme SICA grants protection to the company and leaves it to the discretion of BIFR whether to permit filing and maintaining of suit or other proceedings.

In the context of recovery of provident fund and other allied dues from a company, which is admittedly a sick undertaking was decided in the case of S.L.M. Maneklal Industries Ltd. Vs. Regional Provident Fund Commissioner 1997 (2) LLJ 283. The High Court while relying upon the case of Chamundi Mopeds v. Church of South India Trust 1991 (75) Comp. Case 440, to interpret the term "or the like" with reference to the words preceding namely, "for execution, distress" in Section 22 of SICA, held as follows

In the light of the steps taken by the Board under Sections 16 and 17 of the Act, no proceedings for execution, distress or the like proceedings against any of the properties of the petitioner-Company shall lie or to be proceeded further including the proceedings under the Act of 1952 except with the consent of the Board. The provisions are also in consonance with the principles of equity, inasmuch as that the Board has been given discretion to accord its approval for proceeding against the company by creditors, for the recovery of their dues, outstanding over-dues or arrears. Since the enquiry under Section 16 is ordered by the Board, the various proceedings set out under sub-section (1) of Section 22 are deemed to have been suspended under the provision does not extinguish the recovery but it only postpones, sub-section (5) of Section 22 provides for exclusion of the period during which the remedy is suspended while computing the period of limitation for recovering the dues.

In view of the aforesaid, the impugned notice dated July 28, 1995 for recovery of the arrears of Provident Fund and allied dues is ex facie illegal and is accordingly quashed and set aside. It is, however, open to the Respondent to approach the Board for appropriate directions under the provisions of the Act of 1985. @Para 5 & 6

As mentioned in the previous paragraphs, in specific context of recovery of Provident Fund (PF) dues, the interpretation offered for the overriding effect of SICA from the likes of Shree Chamundi Moped (Supra) case has not been followed in many subsequent cases. In all such cases it was held that holding the protection of SICA cannot be granted for provident fund dues, however upon different reasoning. Since mentioning all such decisions here will unnecessarily make this post lengthy only a few of those decisions are mentioned in the foot note hereunder.[1]

At this juncture an important question, as to the protection of SICA in the context of PF dues, arises. One of factor that is of fundamental importance, which has been ignored in the above mentioned case laws, is that the coercive action contemplated under the EPF Act such as executions, distress or similar process, for the recovery of dues remains the same. Such actions have specifically been deprecated by the Supreme Court in the above mentioned case laws. Technically, while the law as held by the Supreme Court in this background is holding the ground all the above mentioned case law does not hold good, for its reasoning goes against the ratio laid down by the Apex Court.

In the same subject matter a decision rendered by a division bench of Karnataka High Court[2], specific to the context of recovery of PF dues and accumulated interest therein, attains some significance. It was held that the punitive measure as initiated is liable to be quashed, as it was done without the express permission of the board. Extract of the relevant paragraph has been provided below.

It is not possible to accept the contention of the learned counsel for the appellants that the orders at Annexures-"E and F" are not punitive in nature as the said coders clearly commands that the writ petitioner should pay interest and penal damages as per the demand at Annexures "E and F" failing which steps would be taken for recovery of the amounts without further nonce under Sections 8B to 8G of EPF Act Section 8B to 80 of the EPF Act deals with recovery of dues towards PF Contribution including power to sell the property belonging to the company and the impugned orders at Annexures-"E and F" are issued stating that without further notice, such coercive steps would be taken. The orders do not spell out that the orders are only for determination of interest and penal damages and that it will not be executed without the consent of the BIFR. Therefore, the contention of the learned counsel appearing for the appellants that the orders at Annexures-"E and F" are not punitive in nature cannot be accepted. As rightly held by the learned Single Judge when once it is held that Annexures-"E and F" are hold to be punitive in nature, the provisions of Section 22(1) of the SICA Act gets attracted and as admittedly no consent is obtained the orders cannot be sustained and are liable to be quashed.

Case laws abound the legislations pitted against each other, prima facie, though may seem to be placed upon an equal pedestal, one cannot deny the obvious bias that exists towards the workmen and their cause. At any rate the abuse of Sick Industrial Companies Act that is prevalent leaves much to be desired. Unfortunately companies without sufficient bona fides take the protective umbrella of the legislation with sole intention to avoid temporarily their statutory duties. Therefore it is imperative that the workmen are allowed the protection against such an abuse. To that extent large number of case laws affirms this point of view and rightly so.

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[1] 2002 (1) LLJ 775

  2001 (2) LLJ 1423

  2001 (2) LLJ 1193

  2002 (1) LLJ 30 (AP)

[2] Doddaballapur Spinning Mills Pvt. Ltd. (rep. by its M.D.) Vs. Regional Provident Fund Commissioner and Ors. W.P. Nos. 46277 and 52330/2003

Reference and Scope of Hearing in Supreme Court- A Judicial Overview

In the previous post I wrote upon an interesting question that arose in law of trusts that resulted in reference by two dissenting judges of Supreme Court to a larger bench. There I left the possible questions over procedure and scope of hearing in a reference made to a larger bench.  without any discussion. I shall try to cover that up in this short write up.

The composition of a bench hearing the matters in Supreme Court is primarily dictated by Article 145(3) of the Constitution of India.

(3) The minimum number of Judges who are to sit for the purpose of deciding any case involving a substantial question of law as to the interpretation of this Constitution or for the purpose of hearing any reference under Article 143 shall be five: Provided that, where the Court hearing an appeal under any of the provisions of this chapter other than Article 132 consists of less than five Judges and in the course of the hearing of the appeal the Court is satisfied that the appeal involves a substantial question of law as to the interpretation of this Constitution the determination of which is necessary for the disposal of the appeal, such Court shall refer the question for opinion to a Court constituted as required by this clause for the purpose of deciding any case involving such a question and shall on receipt of the opinion dispose of the appeal in conformity with such opinion

With this article the Constitution creates a space for differential treatment for cases which merely involves a disputed question of law and cases which involves substantial question of law as to the interpretation of Constitution itself, with the later cases to directly be referred to five judge bench for hearing, considering their seriousness. This preferential treatment has clearly been held as not repugnant to any provisions of the constitution.[1] Here I am confining myself to the questions involving the cases that only involves substantial question of law. There have been multiple instances where the procedure of reference has been called into question. Primarily the procedural aspects of such situations are provided under Rule 2 of Order VII of the Supreme Court Rules, which provides for the matter to be tabled before the Chief justice of India for constituting an appropriate bench to decide upon the question so referred, making it an administrative power vested upon him.

Reference by a smaller bench to a larger bench can be made for several reasons, like a difference in opinion between two judges or because of any need to reconsider a decision already rendered, albeit by a larger bench. In such situation two questions could possibly arise

• Whether a two judge bench, if the question involves a decision that is decided by a larger bench, refer the matter to an even larger bench to consider any possibility of overruling the earlier decision?
• What is the scope of hearing by the court to which the question has been referred to? Can they consider the matter afresh or they have to confine themselves only to question which has been referred to?

As far as the first question is concerned, the Supreme Court has categorically held in the case of Pratap Chandra Parija Vs. Pramod Chandra Patnaik,[2] that for judicial discipline and propriety, if a two judge bench finds a judgement of three judge bench to be so incorrect that it cannot be followed in any circumstance, the proper course would be to refer the matter before it to another bench of three judges and only if the three judge bench also concludes that the judgement is incorrect, then the matter can be referred to a five judge bench. With this a direct reference to a larger bench is explicitly prohibited. In practical terms it comes out to be a little absurd, for any challenge to the decision of, say a 9 judge bench, has to practically go through three rounds of arguments before progressively larger benches, with the practise established through this decision. However, in any case, the larger bench is still vested with powers to return the matter to the bench which referred the matter to it on any grounds that it finds justified, without deciding upon the question referred to it.

With respect to the scope of such a reference there has not any categorical decision that deals with this issue specifically, except for the case of Hyderabad Industries Ltd. Vs. Union of India.[3] In the case involving five judges listening to the reference made by a bench comprising three judges, one of the parties wanted the bench to decide again upon a question which stood settled by the three judge bench. Three different judgements were authored by the members of the bench. Pertaining to the present issue, the judgement by the majority in clear terms held that the conclusion arrived at stands concluded by the decision of three judge bench and hence no one can be allowed to re-agitate the question which already stands decided, effectively confining the scope to only the issues which are referred to. M.B.Shah J. interestingly enough, though was personally holding a contrary view, over the issue that was sought to be re-agitated, held that the question cannot be gone into as it stands decided at the time of reference.

In the judgement dissenting from the majority on this question of reconsideration Rajendra Babu J. comes out with a rather interesting argument. He holds that such a power to reconsider will arise depending upon the nature of question. In the case however, the issue to be decided could not thus be separated into two different aspects to hold that one aspect of the matter has reached finality. Therefore, he effectively held that in matters where the issue sought to be decided by the larger bench, is of such a nature that segregation of the issues into different aspects cannot be done, the larger bench cannot decide the matter in piecemeal. Further, referring the Supreme Court Rules, he held that, it is the matter as whole, rather than a mere question, which stands referred to the Chief Justice under the rules for constitution of an appropriate bench. However, he clearly holds that it is open for the larger bench to which it is so referred to decide upon the scope and to the questions which are to be decided.

This apart, there may also arise a situation wherein no such particular question is referred to for the consideration of a larger bench by a smaller bench. This may arise in a possible situation wherein two judges differ in their opinion and merely refer the matter without formulating any particular question to be decided. What can be the scope of reference in such a situation? Going on the lines of Hyderabad Industries case we can safely hold a view that the larger bench is vested with powers to decide the scope of hearing on its own.

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[1] AIR 1961 SC 1629

[2] (2002)1 SCC 1

[3] (1999) 5 SCC 15

Extinguishment of Purpose & Dissolution of Trust: A Piquant Dissent

Sometimes, it is the differences that make law interesting to deal with, especially when it is between two Supreme Court judges trying to settle the law. I recently got the chance to work in one such case[1], wherein, two Supreme Court judges differed in their opinions over several questions that arose on extinguishment of a trust under Indian Trusts Act, 1882 (Act). With the judges differing in their views, the matter at present stands referred to a larger bench for its final settlement.

Facts of the Case

The petitioner in the case represents the trust created by Dunlop India Ltd., for the purposes of providing pension, annuities and other benefits to the executive management staff of the company. In the meanwhile the company became sick and is declared as such by the BIFR. The trustees of the trust so created made an application under Section 34 of the Trusts act seeking appropriate directions and/or advice and/or opinion with regard to the money that is lying with the trust. It was stated in the application that the purpose of the trust stands fulfilled without completely exhausting the property held by the trust. Out of some 25 Crores and odd money that was held by the trust for its beneficiaries, an amount totalling Rs.3,99,55,682/- was deposited with LIC to purchase annuities to pay the beneficiaries their dues in the future. With that the purpose of the trust is stated to be exhausted and directions were sought for the rest of the money to be returned to the author of the trust, which is the Company itself. The application was dismissed by single judge of the High Court stating that payment of pension was to be made not only to the existing members but also to the widows and dependants and just by making an advertisement in two newspapers consent of all the members of the trust could not be held to have been obtained impliedly. This is in effect a refusal on the part of the judge to exercise the jurisdiction under Section 34. The intra court appeal made against the dismissal also came to be dismissed subsequently. The appellate court opined that the purpose of trust shall exist until the last surviving employee of the company receive his benefit from the trust fund and therefore the remaining funds lying with the trust cannot be taken by the company.

Before the Supreme Court

The primary question that was up for the consideration of the apex court is the scope of powers under Section 34 of the Act.

34. Right to apply to Court for opinion in management of trust property—Any trustee may, without instituting a suit, apply by petition to a principal Civil Court of original jurisdiction for its opinion, advice or direction on any present questions respecting the management or administration of the trust property other than questions of detail, difficulty or importance, not proper in the opinion of the Court for summary disposal.

A copy of such petition shall be served upon, and the hearing thereof may be attended by, such of the persons interested in the application as the Court thinks fit.

The trustee stating in good faith the facts in such petition and acting upon the opinion, advice or direction given by the Court shall be deemed so far as regards his own responsibility, to have discharged his duty as such trustee in the subject-matter of the application.

The costs of every application under this section shall be in the discretion of the Court to which it is made.

The lower courts refused to entertain the application on the premise that the powers vested in a civil court of original jurisdiction under the section is only to tender opinion, advice or direction for the management of the trust property and it shall not mean that a direction can be issued under the section for the extinguishment of the trust as a whole, confining the powers by literal interpretation of the statute. Upholding the reasoning of the lower court, Sinha J. held that an application under Section 34 may be maintainable only when the question involved are not questions of detail, difficulty or importance, not proper in the opinion of the Court for summary disposal. In the present case there involved the right of a member of the trust to receive pension, for, admittedly on facts, there were cases with several employees pending adjudication over the issue. In order to adjudicate such an issue would require the interpretation of trust deed which cannot be done under the summary jurisdiction so conferred under the section. Segregating Chapter IV (of rights and powers of trustees), under which Section 34 is listed, from other sections involving the extinguishment of a trust (Section 77 and Section 83 under Chapter VIII and IX respectively), he stated that the court cannot exercise a jurisdiction which is not vested with it.

The contention of the petitioner over the application of Section 83, since in this case the trust became incapable of being executed without exhausting the trust property, was not accepted by him since, according to him, firstly, involves seriously disputed question of fact; secondly, the court under the summary jurisdiction cannot finally determine the rights and obligations of the trustees and the beneficiaries thereon and thirdly, even if a few persons opposed the extinction of the trust it should be treated to be sufficient for the court to refuse to exercise its summary jurisdiction under Section 34 of the Act.

The Disagreement

In his judgement, differing from the conclusions arrived at by Sinha J., Markandey Katju J. held that, since all the beneficiaries being paid off, through the payment made to LIC, without exhaustion of the funds of the trust, the trust no longer is under any liability or obligation towards its beneficiaries. Therefore, the balance amount lying with the trust is to be returned to the company, being the author of the trust, in view of Section 83 of the Act. Interestingly enough, he agrees with Sinha J. over the maintainability of an application under Section 34, for a different reason, stating that the words “management and administration of trust property” would not apply when the purpose of the trust itself is exhausted and the question is over the remaining funds. however, in an interesting turn, he invokes the power under Article 142 of Constitution to refund the balance amount to the company.

Syllogism of Powers under Section 34

To the extent that there seems to be no other provision under the Act to govern such piquant situations, it is untenable to hold that an application under Section 34 is not maintainable, upon the premise that it is a summary jurisdiction. This is especially the case when the application so made is governed by principles such as Res Judicata is made applicable. This leaves the author of the irrevocable trust in a piquant situation that even after the exhaustion of all the mandates of the trust, it is still not open to manage the properties of the trust as it deems fit. Sinha J. argument that the application is not maintainable is solely based upon the reasoning that it involves important issues to be adjudicated, which cannot be done under summary procedure, may not be altogether tenable, since the only issue that could possibly arise for adjudication is whether the purpose of the trust is exhausted or not. Since in the present case a sum for those purposes has been set aside in clear terms, the petition can be held to be maintainable for all purposes. Though Katju J. disagrees over the management of trust money, he concurs to the extent that the application under Section 34 is not maintainable. The alternative remedy as proposed is of a suit to be instituted. However, they have failed to take note of the option that has been conferred upon the trustee to go for a remedy under Section 34. A pari materia provision is provided under Section 7 of Charitable and Religious Trusts Act, 1920, which does not have the option “without instituting a suit”, making clear that there exists a option in the hands of the trustee to choose this remedy.

Moreover, the reference of the issue to a larger bench, hearing for which is yet to happen, raises several interesting questions on its own, other than the above stated issues. The inevitable question over the exercise of powers under Article 142 apart, the scope of hearing by the larger bench so referred to will be an interesting aspect to be dealt with. Whether the larger bench can hear the matter afresh or whether they should limit themselves only to the question upon which there has been a disagreement? It will be much more interesting to go into this aspect. I comment on this conclusively at this stage. I shall post on this soon with adequate information.

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[1] Ashok Kumar Kapur Vs. Ashok Khanna (2007) 5 SCC 189

Clash of Orders and Santara

The judgement delivered by the Rajastan High Court making Santara/Sallekhana illegal has raised multiple questions, for the manner in which the whole question has been decided. The sole question that the Rajastan High Court sought, or at least attempted, to answer over was whether the practice of Santhara is an essential religious practice or not. A simple reading of the judgement reveals some glaring confusion over the question that is sought to be decided by the High Court. Though the much part of the judgement proceeds with discussions over the arguments and counters upon whether the act of Santhara will fall under the term suicide or not the active reasoning that is espoused to declare it illegal is over whether it qualifies as an essential religious practice or not, though this reasoning and reliance placed upon essential practice test is in itself a doubtful one. Logics and rationale apart the decision also attains another important and oft ignored dimension in cases where an alternative legal order comes into direct conflict with the majoritarian dictated standards. Seized of this question, the Supreme Court is looking at a much larger question, that this case has given rise to, than that of the one which is decided by the High Court. In a longer run, the manner in which the apex court resolves it is going to redefine landscape of interactions between different legal orders and the conditions of such conflicts. The significance of any decision over this question and its overwhelming impact in a pluralistic society like India needs no emphasis.

The present situation that the judiciary is trying to resolve, given the implications that it bears, must be seen from a radically different perspective than that of pulling it down to mere questions over whether it qualifies the predetermined conditions and rules of order of a society. Looking at the bigger picture, there arises a need for the judiciary to decide that whether alternative norms such as santara, which is in direct conflict with the existing one, can be accommodated and if yes what the necessary qualifiers for such accommodated are. Here I am using the word accommodation with certain positive implications, for the process of accommodation shall involve a legitimate initiation of a dialogic process upon such conditions of conflict rather than emphatic rejection. Here a question might arise over the need for such engagement with such alternative norms for which the answer lies in the arguments that is put forward by the supporters of santhara. If the judgement of the high court is gone through carefully one can very easily see that they are not questioning the legitimacy of the existing norms, rather their main proposition is that they are bound by a different legal order altogether. This is nothing less than a legitimate aspiration of a group of people for recognition of their rights within the existing norms of the society. The rejection aside, real problem lies in the manner in which it has been arrived at. The portrayal of the act of Santhara merely as an act of suicide, couched within its language, has resulted in the misconstruction of the arguments of its supporters. This has essentially resulted in an inverse approach towards the civil liberties where rights are enjoyed by citizens in accordance with law is altered to limited freedom as dictated by the law, providing little latitude for any dissent to survive, much less be recognized. Without any discussions over the implications of arguments that it cannot simpliciter be seen as a suicide, the judgement proceeds to validate its point by the standards of morality which is incompatible with the legal order that it seeks to adjudicate the problem with. The problem in such situation is that, though it is a political disagreement, it is deliberately depicted as a moral disagreement to achieve the ends, which is the non-accommodation within the existing legal order. Though such accommodations can happen at certain level it only happens when the disagreement is conditioned and falls within the perceptional value sets that are created within it. In a pluralistic society’s legal order such instances of deliberate disregard arises when the existing legal order comes in collision course with a set a beliefs, like religion, sexual orientation, race etc. that is different from existing norms of the society. My intention here is not to say that the decision of the High Court is wrong in any sense. It is valid in its own field of reasoning. However, the arbitrary rejection of a dissent from the moral standards defined by the perceptional grids of the majority, in a society that proclaims itself to be a pluralistic or at the least attempts to be one this only ends up raising the potentiality of such conflicts in the future. Besides, this will also have an adverse impact over the very plural character that the Constitution seeks to preserve, for this is an attempt at the homogenization of the legal orders. As indicated earlier the result of this conflict is the misconstruction of the dissent, with little chance for it to be engaged in any meaningful engagement. A similar misconstruction happened in the recent decision of Supreme Court of India over the constitutionality of law that criminalized homosexual acts as well. Given such a situation the Supreme Court is vested with a golden opportunity to explore the possibility any engagement with such alternative legal orders and their accommodation within the existing system.

The Irony of Twisted Fate- Supreme Court of India and the Independence of Judiciary

The question over the process that is to be adopted for the appointment of members of judiciary is nothing new in India. Right from the First Judges case[1], when the matter was for the first time seized upon by the Supreme Court, the debate on this subject remains quite unsettled, with deleterious effects on the executive-judiciary relationship. The recent move by the executive to alter the situation in a grand manner vide the 99^th Constitutional Amendment[2] and the consequent National Judicial Appointments Commission Act[3], to institutionalize the process of appointment has bought in the executive and judiciary into direct confrontation, resulting in the amendment being struck down by the Supreme Court of India as unconstitutional for its violation of ‘basic structure’ of the constitution.

The judgement[4] though seems to be doing its job in protecting the independence of judiciary, the fundamental proposition that it puts forward raises more questions than it proposes to answer. Deciding over the question of constitutionality of the said amendment it has traversed much more than what was required of it, defeating the very principles that it professes itself to be a guardian of. In the name of protecting the ‘independence of the judiciary’ it has promoted itself to hegemony, browbeating the other two legs of the federal structure that the constitution establishes. Though one cannot in any manner assure that the members of the legislature and executive are the vanguards of ethics and morality; however that does not consequently make the judiciary a messiah who is beyond reproach. Though the Supreme Court has placed itself in a lofty summit of unreachable proportions, through this ruling, it is still based on very shaky grounds. The fact that the Second[5] and Third[6] judges case that the present verdict has relied upon itself is based on a stretched interpretation of the Articles of the Constitution has been lost in the rhetorical bashing of the polity.

The mind set with which the conclusion was arrived at had made them defy certain constitutional logics in the process. For example in the First and Second Judges case, the manner in which the term “consultation” used in Articles 124, 217 and 222 of the Constitution, which concerns with the appointment and transfer of members of Higher Judiciary, has been interpreted by the Supreme Court, expanded its scope much beyond what was actually intended by the drafters and included the consultation of Chief Justice and subsequently the collegium of judges as must, thereby assigning the ‘primacy’ to the opinion of Chief Justice. This has to be seen in the light of the fact that the answers arrived at were merely a result of all the extended interpretation that were crammed into the relevant articles of the Constitution. The present verdict, going a step further, has conferred the all compassing power to itself to decide over the matters relating the appointment of members of higher judiciary, making itself a sole authority have a say over the process.

The principle upon which the verdict has been arrived at merely makes it all too obvious, the desperation to protect its exclusive say in this domain. This has made them to go to unheard of lengths to substantiate it. Take this for example. With the purpose of showing that any degree of involvement of other legs of the democracy in the process will cause a prejudice against its independence, the notion ‘theory of reciprocity’ has been exploited. As per this theory in a situation wherein a judge is nominated to the position by the executive, once he attains the post, he feels himself indebted to them. The gratitude that the judge finds prejudices his decision making process. To quote a passage “In the existing Indian cultural scenario, an act of not reciprocating towards a benefactor, would more often than not, be treated as an act of grave moral deprivation. When the favour extended is as important as the position of judgeship in the higher judiciary, one would best leave it to individual imagination, to determine the enormity of the reciprocal gratitude and loyalty.”[7] The very concept is at the best a conjecture but it is stupendous to draw a conclusion that this causes a violation of the basic structure of the constitution. How much ever the possibility of the executive and legislature being morally corrupt lingers over us it is still a constitutional morality to involve them at some level. The Constitutional Assembly has never intended the independence of judiciary to mean the primacy of judiciary. The ostensible suspicion that the judiciary through this verdict is casting upon the executive is no different from the executive misdemeanour of the past when out of turn elevations in the Supreme Court were made, for which vigorous references were made in this verdict. It is ironic to know if the Constitutional principles warrant the degree of independence to be of a magnitude that the present verdict interprets it to be then the judiciary itself has become the potentate that it is there to take control of.

The ideals that is sought to be preserved under the Constitution cannot be done single handedly by the judiciary and it never was the intention of the drafters too. It seeks for an eclectic mix of the three arms of the federal structure in its functioning. The executive judiciary antagonism that is perpetrated through this verdict does not bode well for the nation. Doubtless it can be agreed that the amendment that was sought to be introduced is not the best way to take forward the much needed reforms in the process of judicial appointments, the judiciary has committed a grave error in placing itself in a rather too high a moral ground in the process of declaring it unconstitutional. I believe the present verdict draws its inspiration from the moral compass that guided the judiciary at the darkest hour in our democracy during the periods of emergency. Without a shadow of doubt it is the same that saved us all from the impending tyranny of the then executive. But to continue having the same attitude will defeat the very constitutional principles that it is product of- an irony of twisted fate. If not anything else at the least this verdict has given rise to a fresh debate over the need for reforms in the present process of judicial appointments. The judiciary must take a note of this to fix the functioning of its self, for the opportunity is ripe to introduce much wanted changes towards the accountability and transparency.

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[1] S.P.Gupta v. Union of India, 1981 (Supp) SCC 87

[2] Constitution (Ninety-ninth Amendment) Act, 2014, online: India Code, Legislative Department <http://indiacode.nic.in/coiweb/amend/99th.pdf>

[3] National Judicial Appointments Commission Act, 2014, online: India Code, Legislative Department <http://www.indiacode.nic.in/acts2014/40_of_2014.pdf >

[4] Supreme Court Advocates-on-Record Association and another v. Union of India- Writ Petition (Civil) No. 13 Of 2015

[5] Supreme Court Advocates-on-Record Association v. Union of India, (1993) 4 SCC 441

[6] Re: Special Reference No.1 of 1998, (1998) 7 SCC 739

[7]  Supreme Court Advocates-on-Record Association and another v. Union of India- Writ Petition (Civil) No. 13 Of 2015 at ¶ 164

Dispute Review Boards: The Gun Without Bullets

In a post that I wrote early this year, I discussed the new, for India, concept of Dispute Review Boards. There I merely gave an overview of what the concept is all about, without resorting to any sort deep analysis, and the role of lawyers in such kind of proceedings. Though I wrote that post without actually attending in person any DRB proceedings, my opinions were based on the way in which everyone who is involved in it treated it, as an adjudicating process. My fears, in fact proved to be true beyond reproach as I got to attend one of the most hostile conciliation in my very limited experience. 

The problems in this particular DRB proceeding that I happened to involve myself are numerous. I can with a degree of certainty state that the same is the case with most other DRB proceedings in India. The fundamental problem is the mind-set that every person involved in the proceedings has towards the proceedings itself. As stated in my earlier post, lawyers contribute the most to this problem. Everyone involved in the proceedings thinks this merely as another box ticking exercise that has to be done before reaching the process of litigation, how much ever long drawn and adversarial it could be. This is no less because of the fact that none of the people who were involved in the process were either trained in the process or at least gone through the pain of reading the literature on this process. They essentially treated this like arbitration with a change in the nomenclature of certain things here, like an award in arbitration into recommendation. One of the important contributing reasons for this waywardness is the poor drafting of contractual clauses concerning the DRB. The contract that I was involved in, merely had two lines to the effect that the disputes should be first referred to a DRB and the process shall be governed by the ICC (International Chamber of Commerce) Dispute Board Rules. 

When to form?

The primary aim that is sought to be achieved through this conciliatory process is to solve any dispute in a commercial transaction as and when it arises and as amicably as possible. This has to be seen in the light of the fact that the whole concept Dispute Boards evolved as a solution for the problem of delay that happens frequently in the construction industry. To the contrary, in my case, the DRB process was initiated only after the whole project is over defeating the whole purport. In case the process is initiated post the completion of project, apart from the failure to resolve the disputes on time, it also results in a futile reconstruction of whole process again, wherein inevitably some muddling happens resulting in time and cost to the parties. A real time settlement more than settling the disputes helps preserving the relationship between the parties. An important reason for this mistake is because it has not been expressly mentioned in the contract, that the DRB has to be constituted at the beginning of the project, in order to continuously monitor the project and settle the disputes in real time.

Is It a Necessary Condition Precedent?

An interesting implication can be drawn if we suppose that a party bypasses the process completely and goes to litigate its claims. Though I was not able to find any Indian case law on this subject (Albeit it is a limited and indolent search of a lazy bone) I was able to find several American case laws, for the process has matured to a greater extent there. Two possibilities arise in such situations. One is where the claimant simply bypasses it and initiates litigation and another is where the other party simply insists upon the DRB proceedings to buy more time from litigation. The court (in BAE Automated Systems V. Morse Diesel International), as expected, ruled that, in the absence any legally justifiable reasons the process cannot be bypasses. The reasons can be waiver by one of the parties, fraud, estoppel etc. 

Appointment and Removal of Members

As in all conciliatory proceedings the integrity and impartiality of the person who is appointed as a member of the board is of utmost importance. It will be rhetoric to write about the code of conduct that a member of DRB must follow. In the proceedings that I happened to witness one of the members of DRB was visibly advocating the cause of the party who appointed him when the other party’s counsel made his oral presentation of his case. The reason could either be because he did not realise that it is a conciliatory proceedings and that he has to be impartial or because he is just a plain old jackass. The implications of such instances are very important, for any loss of confidence that a party has over the member will undermine the sanctity of overall process.

Applicability of Part III

I was curious after the incident, over whether the provisions of Arbitration and Conciliation Act, 1996, pertaining conciliation will be applicable in this case or not. It is given that it is a conciliation process; however it is still a creature of a contract. One possible reason can be that we cannot thrust in something which is not there already in the contract, with this essentially being a creation of the contract we cannot set it aside. However, Section 61 of the Act clears the air by defining its application and scope.

61. Application and scope - (1) Save as otherwise provided by any law for the time being in force and unless the parties have otherwise agreed, this Part shall apply to conciliation of disputes arising out of legal relationship, whether contractual or not and to all proceedings relating thereto. (2) This Part shall not apply where by virtue of any law for the time being in force certain disputes may not be submitted to conciliation.

I found an Indian case law that indirectly deals with the applicability of Part III of the act to the proceedings before DRB (Alcove Industries Ltd. Vs. Oriental Structural Engineers Ltd. [1]). The main issue in this case is the responsibility of an arbitrator to disclose in writing at the outset, such facts, which may give rise to justifiable doubts to his independence and impartiality. The arbitrator in this case, before being appointed as an arbitrator by the defendant company, worked as a member of Dispute Board, in respect of some works executed by respondent company. This fact was not disclosed when the appointment to the present arbitration proceedings were made. The court in order to explicate the bar of a conciliator (member of DRB in this case) referred to the provisions contained in Part III of the act. The judgement goes on to hold that section 80 of the act prohibits a conciliator from acting as an arbitrator or as a representative or counsel of a party in any arbitral or judicial proceeding in respect of a dispute that is the subject matter of the conciliation proceedings. Though these aspects are irrelevant for the present post, the important aspect that I can infer from this decision is the applicability of Part III of the act to the DRB proceedings. The decision, albeit indirectly, makes it clear that DRB proceedings are indeed governed by the provisions of the act.

Conclusion
Whatever is the form that the efforts for an amicable dispute resolution might take, it all ends up depending upon the intention and ability of the lawyers to best utilize the opportunity, more than the parties themselves, to settle the disputes in the most prudent way possible. The very intent of the process is defeated in most cases with things as basic as the tenor language that is used in the written communications. Without a fundamental understanding of such intricacies it is impossible for such efforts to succeed at any level. Moreover, in most cases with the resolution process being administered ad hoc without any institutional assistance, just like the case of arbitration, in India, the process loses its focus and the required streamlined approach without required expert assistance. The solution cannot be a something that can be done at the stroke of a pen. It requires some ideological acceptance of the process as a genuine alternative to settle the disputes. 

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[1] 2008 (1) ARBLR 393 (Delhi)