From arbitration to trademark dispute suit, here are the key court orders

A weekly selection of key court orders

Looking for elusive arbitration clause

The question whether an agreement contains an arbitration clause still spawns long litigation, though contracts are supposed to be drafted by sharp-minded lawyers. In the latest such case, the Supreme Court ruled that despite the use of words like ‘mediators/arbitrators’ and ‘binding decision’, there was no clear indication that the parties had agreed to refer disputes to arbitration. The case, Shyam Sunder vs Narotham Rao, arose from disputes over sale and purchase of shares of a cement company among the directors. The court stated that the words mediators/arbitrators were used in a “loose” sense. The two persons named to conduct the affairs were, in fact, escrow agents who had no adjudicatory functions. The idea emerging from the contract is only that the two persons do all the things necessary during the implementation of the transactions between the parties to see that the transactions get successfully completed. There was no clear arbitration clause.

Notice not mandatory in arbitration matters

The Supreme Court has ruled that it is not mandatory to serve prior notice to the opposite party before filing an application to set aside an arbitral award. This was clarified in the judgment, State of Bihar vs Bihar Rajya Bhumi Vikas Bank Samiti. The court was interpreting Section 34 (5) of the Arbitration and Conciliation Act which was amended in 2015. In this case, there was a difference of opinion among judges. A single-judge bench of the Patna High Court ruled that such notice was not mandatory but only directory. However, the division bench of the same high court took the view that it was mandatory, following the decisions of the high courts of Kerala, Himachal Pradesh, Delhi, and Guahati. Ending the uncertainty, the Supreme Court has now stated that prior notice was not mandatory, though the provision was couched in mandatory language. There was no penal consequence if the requirement was not complied with. The judgment reiterated that “proce­du­res are the handmaids of justice” and they should be inter­pre­ted to advance justice, not to scuttle it. The object of the ame­nd­­ment was to speed up the disposal of applications within a year. How­ever, violation of this provision does not lead to any consequence.

Revenue record not final in Sarfaesi

Though agricultural land is exempt from the rigours of the Securitisation (Sarfaesi) Act, it must be proved that the land is used for agriculture by evidence. Mere classification of a piece of land in the revenue records is not conclusive proof that it is agricultural land, the Supreme Court has stated in the judgment, Indian Bank vs K Pappireddiyar. The claim for exemption must be tested on the nature of the land, the use to which it is put on the date of creation of the security interest and the purpose for which it was set apart. Stating so, the Supreme Court set aside the decision of the Madras High Court which granted relief to a person who failed to return the loan to the bank. Earlier, the debt recovery tribunal and its appellate forum had differed on the law. The Supreme Court stated that the high court judgment did not contain any discussion on the claim of the borrower that his was agricultural land and the bank’s denial.

Foreign expert in trademark dispute upheld 

The Supreme Court last week upheld the appointment of a foreign expert to provide evidence in a trademark dispute over a software for cutting and polishing raw precious stones to produce the best quality diamonds. In this case, Diyora and Bhanderi Corporation vs Sarine Technologies Ltd, the latter moved a Surat commercial court claiming that it had copyright over a certain software which was accepted in Israel and the USA which, according to the Inter­natio­nal Copyright Order 1999, extended to this country. It accused the opposite party of violation of that copyright. Since the key question involved high technology, a foreign expert was appointed at its suggestion. However, the opposite party suggested three professors from top Indian institutions. Now the objection was that a lawyer who argued its case had studied in those institutions and would be partial. On the other hand, the rival argued that a foreign expert might breach secrecy while decoding software. The dispute continued over the appoint­ment during which time the foreign expert had already arrived and started investigative procedures. Therefore, the court did not find it feasible to remove him, though it did not doubt the expertise of any electronic scientist named by the parties. 

Claim over Nandini name rejected

If the products are different, similar sounding trade names would not confuse consumers, the Supreme Court reiterated in its judgment, Nandhin Deluxe vs Karnataka Cooperative Milk Federation. In this case, the cooperative, which sells milk and milk products under the name Nandini, objec­ted to the use of the name Nandhini by a restaurant chain for its food items. The objection was rejected by the Registrar of Trade Marks, but the Intellectual Property Appellate Board accepted the complaint of the cooperative. The high court also upheld that view. On appeal, the Supreme Court stated that there ­would be no confusion in the market because the products sold by the restaurant chain like meat and fish were not the same as milk and the logo and other trade dress were distinct. While allowing the appeal, the court further ruled that Nandini is a generic word coming from mythology and there could no monopoly on it.

Music group gets tax exemption

All kinds of musical programmes including musical nights and opera are exempted from entertainment tax in Gujarat accor­di­ng to the law there, the Supreme Court has ruled in the case, Gypsy Pegasus Ltd vs State of Gujarat. The state had demanded enter­tainment tax from the musical group and the high court had upheld the demand, stating that their programmes were not for educational, cultural or charitable purpose. On appeal, the Supreme Court stated that all progra­mm­es were exempted according to the law and there was no exemption.

Judgments without giving reasons

The Supreme Court has once again chastised high courts and subordinate courts for writing judgments without narrating facts, discussing the arguments and providing categorical findings on issues raised by the parties. In this case, Board of Trustees vs Indore Composite Ltd, the division bench of the Madhya Pradesh High Court merely dismissed the petition of the company regarding a lapse in contribution to the provident fund of the employees and the penalty imposed on it. The Supreme Court observed it was “really unfortunate” that the high court did not follow the well-known principles in writing judgments. The Supreme Court remanded the case to the high court for reconsideration.