Overview: In a recent judgment by the Hon’ble Supreme Court of India concerning the Central Organisation for Railway Electrification (CORE) versus M/s ECI SPIC SMO MCML (JV), the Court addressed critical issues surrounding the independence and impartiality of arbitral tribunals under the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). This decision is significant as it reaffirms the principles of party autonomy while ensuring that such autonomy does not compromise the essential standards of impartiality in arbitration proceedings. Brief background of the case: The instant case had arisen out of several appeals which highlighted concerns pertaining to appointment of arbitrators, particularly in public-private contracts. The Law Commission of India had previously emphasized that while parties have the autonomy to choose their arbitrators, this should not override the principles of impartiality and independence, especially during the formation of an arbitral tribunal. Following these recommendations, amendments were made to the Arbitration Act, specifically Section 12(5), which disqualifies individuals with certain relationships to either party from serving as arbitrators. Issues: Whether an appointment process which allows a party who has an interest in the dispute to unilaterally appoint a sole arbitrator, or curate a panel of arbitrators and mandate that the other party select their arbitrator from the panel is valid in law? Whether the principle of equal treatment of parties applies at the stage of the appointment of arbitrators? Whether an appointment process in a public-private contract which allows a government entity to unilaterally appoint a sole arbitrator or majority of the arbitrators of the arbitral tribunal is violative of Article 14 of the Constitution? Held: In view of the issues mentioned hereinabove, the Hon’ble Supreme Court was tasked with determining whether existing arbitration clauses that allowed one party to unilaterally appoint arbitrators violated these principles. The court underscored that an arbitrator must be independent of the parties involved to prevent any bias or perceived bias. This ruling was rooted in previous judgments, including Voestalpine Schienen GmbH v. Delhi Metro Rail Corporation Ltd[1]., which established that a limited choice in appointing arbitrators could lead to a lack of confidence in the arbitral process. Highlights of the judgment: Independence and Impartiality: The court reiterated that both independence and impartiality are foundational to arbitration. It stressed that any appointment process must reflect these values to maintain trust in arbitration as a dispute resolution mechanism.   Automatic Disqualification: The instant judgment clarifies that individuals whose relationships fall under specified categories in the Seventh Schedule of the Arbitration Act are automatically disqualified from being appointed as arbitrators, regardless of prior agreements between parties.   Broad-based panels: The Court mandated that in cases involving government entities, there must be a broad-based panel of potential arbitrators to ensure fairness and impartiality. This requirement aims to prevent any perception of favouritism or bias towards one party.   Public-private contracts: The ruling highlighted the unique nature of public-private contracts, emphasizing that when a government entity is involved, there is an increased obligation to uphold impartiality standards due to the inherent power dynamics at play.   Prospective Overruling: The Court also introduced the concept of prospective overruling concerning its decision, indicating that while this ruling would apply moving forward, it would not invalidate past appointments made under previous interpretations of the law.   MHCO Comment: The Hon’ble Supreme Court's judgment serves as a pivotal reinforcement of arbitration principles in India, balancing party autonomy with necessary safeguards against bias. By insisting on independent and impartial appointment processes for arbitrators, particularly in public contracts, the Court aims to foster a more equitable arbitration environment. This decision not only clarifies existing ambiguities in arbitration law but also sets a precedent for future cases involving similar issues, thereby enhancing the integrity and reliability of arbitration as a preferred dispute resolution mechanism in India.   [1] Voestalpine Schienen Gmbh v. Delhi Metro Rail Corporation Limited, (2017) 4 SCC 665

The Bombay High Court recently clarified the scope of the stamp authority’s power in cases involving properties sold through court supervised auctions. In the instant case, a Writ Petition No.3651 of 2024 was filed before the Hon’ble Bombay High Court seeking to quash and set aside the impugned demand notice dated 7 February 2024 issued by Office of Joint District Registrar, Collector of Stamps inter alia levying stamp duty of Rs 83,60,550/- and penalty of Rs 23,41,000/- on a property acquired under a Sale-cum-Monitoring Committee constituted by Supreme Court. Brief Facts A Sale-cum-Monitoring Committee was constituted by the Supreme Court by an order dated 10 May 2018 passed in Civil Appeal No. 20971 of 2017 to sell the assets of Citrus Check Inn Ltd. (“CCIL”) and Royal Twinkle Star Club Limited (“RTSCL”) and all their associate/sister concerns. Sale-cum-Monitoring Committee followed e-auction process for sale of the premises land together with the building thereon comprising of plots collectively admeasuring about 2160 sq.mtrs. bearing Gat No.107, 108 and 109 having plinth/Plot No.229 in Amby Valley City, Pune, Maharashtra wherein Trident Estate Private Limited (“Petitioner No 1”) was the successful bidder for Rs. 2,51,00,000/- and certificate was issued in favour of the Petitioner No 1. Petitioner No 1 presented a certificate for registration before Sub-registrar of Lonavala and expressed its willingness to pay 5% stamp duty on the amount reflecting in the certificate. However, the sub-registrar of Lonavala verbally rejected Petitioner No 1’s request for registration of the certificate. Being aggrieved by the same, Petitioner No 1 made an application to the office of the Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra seeking direction for registration of the certificate. Petitioner No 1 had also initiated appropriate proceedings before Bombay High Court seeking necessary interim reliefs since the certificate was valid up to 17 August 2024 and thereafter, there was no provision in Registration Act, 1908 for registering it. In response to the application filed by the Petitioner No 1 before Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra the impugned notice was issued to Petitioner No 1 calling upon them to pay stamp duty on the market value derived by Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra and not as per certificate issued by Sale-cum-Monitoring Committee appointed by Supreme Court. It was argued on behalf of the Petitioner No 1 that once a sale is conducted by a Court or under the aegis of Court, the Stamp Authorities could not embark upon a journey to determine the true market value themselves, come to conclusion on the value of the property and levy stamp duty on that basis. Main Issue for Consideration Whether in a case where a sale is conducted by a Court or under the aegis of Court, the stamp authorities can embark upon a journey to determine the true market value of the property sold in an e-auction conducted by the Court and levy stamp duty thereon? High Court Judgement The High Court relied upon the Judgement passed by the Division Bench of this Court in the matter of Spectrum Constrictions and Developers LLP [2022 SCC Online Bom 3693] and Judgement passed by the Supreme Court in the matter of Registrar of Assurances & Another v. ASL Vyapar Pvt Ltd & Anr [2022 SCC Online SC 1554] and held that the price offered by the Petitioner No 1 is above the reserve price and highest bid received for the property. The High Court further appreciated that the price received in any auction could be slightly less as any bidder has to take care of the scenario of the auction process being challenged resulting in passage of time or failure of entire auction process. The High Court further held that auction of a property by a court is possibly one of the most transparent methods by which the property can be sold. Even in a Court monitored auction, the Registering Authority determining what the market price would amount to the Registering Authority sitting in appeal over the decision of the Court permitting sale at a particular price. The Court quashed the impugned order issued by Joint District Registrar and Collector of Stamps (Rural), Pune, Maharashtra demanding stamp duty and penalty on the market value. MHCO Comment The High Court has rightly held and cleared the ambiguity that, the role of the Collector of Stamps is to charge stamp duty on the document presented before him and he is not empowered to determine the market value of the property and charge stamp duty based on their calculation instead of the document presented before him.

The Supreme Court in the recent case of Venkataraman Krishnamurthy & Or. v. Lodha Crown Buildmart Pvt. Ltd. has held that a Part Occupancy certificate cannot constitute a proper delivery of possession and is not equivalent to an Occupancy certificate. BRIEF FACTS: The appellants intended to purchase an apartment in a building to be constructed by the respondent-company at New Cuffe Parade, Wadala, Mumbai. The parties executed Agreement to Sell dated 29 November 2013 (“Agreement”). The sale consideration was fixed at Rs 7,55,50,956/-. As per the payment schedule, this sale consideration was to be paid in four sets of ‘application money’, and the balance amount, being Rs 5,83,53,615/-, was to be paid on initiation of fit outs. As per the Agreement, possession of the apartment was to be delivered to the appellants for fit outs by 30 June 2016 or, with a grace period of one year, by 30 June 2017. CONTENTION OF THE PARTIES: The Appellants alleged that the respondent-company had not delivered possession of the apartment for fit outs by the said date and that they had terminated the Agreement, the appellants approached the National Consumer Disputes Redressal Commission (“NCDRC”). Their prayer was for refund of the amount paid by them with compound interest thereon @ 18% p.a. along with compensation for the harassment, mental agony and torture suffered by them, apart from litigation costs. The respondent-company, however, asserted that it had received the Occupation Certificate for the appellants’ apartment on 8 June 2017, which was well before the expiry of the grace period, and it had called upon the appellants by e-mail on the very same day to make the balance payment in order to initiate the possession process. However, the same was a part occupancy certificate. The respondent company also claimed that the Appellants were trying to get out of bearing the additional burden of the newly introduced Goods and Service Tax payable by them in relation to the subject transaction. ISSUES FOR CONSIDERATION: Whether the Appellants have a right to terminate the agreement when there is a clear delay on part of the Respondent in this factual matrix? Whether a Part Occupancy Certificate obtained by the developer constitutes a valid offer of possession? HELD: The Part Occupancy Certificate was not equivalent to a full Occupancy Certificate and did not constitute proper delivery of possession. Therefore, the Respondents were in the wrong for claiming that the Appellants had failed to take possession.  It was also held that the NCDRC had overstepped its jurisdiction by not strictly interpreting the Agreement’s terms and introducing its own logic instead of following the Agreement’s provisions. The order was also reprimanded for suggesting that the appellants might continue with the Agreement despite clear delay on part of the Respondent company. The Supreme Court further held that the appellants were fully within their rights to terminate the Agreement as per Clause 11.3, which allowed termination within 90 days after the grace period expired.  The court rejected the company's claim that the appellants were trying to avoid tax liability. Therefore, the court set aside the NCDRC's order while directing the respondent company to refund Rs 2,25,31,148. The refund was directed to be made in 12 equal monthly instalments along with interest to be paid at 12% per annum from the date of receipt. MHCO COMMENT: The Supreme Court has been mindful in admonishing the NCDRC for overstepping their authority. This is a progressive step in ensuring that authorities ensure that they pass orders which uphold equity and justice. The court has also upheld the basic tenet of interpretation by reminding the Courts that they cannot rewrite or substitute their own interpretation of commercial terms when there exists an explicit contract in place.

Background: The Securities and Exchange Board of India (SEBI) recently issued an advisory directed at registered intermediaries and regulated entities (Advisory). This Advisory aims to clarify the protocols for communication with SEBI officials, particularly concerning the interpretation of operational measures and policy issues related to the securities markets. Nature of Communications: SEBI frequently receives various forms of communication from registered intermediaries and regulated entities. These communications often seek clarifications on specific operational measures or policy interpretations. However, SEBI has emphasized that any such communication with SEBI officials, whether it be summaries of discussions, meeting minutes, or personal interpretations should not be construed as official approvals or clarifications unless explicitly stated by SEBI itself. This distinction is crucial to prevent misunderstandings regarding the regulatory framework. Explicit Written Communication Required: In light of the above, SEBI, through its Advisory, recommends that all registered intermediaries and regulated entities ensure that any actions requiring approval or clarification are undertaken only after receiving explicit written communication from SEBI. This requirement underscores the importance of documented guidance in maintaining regulatory compliance and avoiding potential pitfalls in operational practices. Utilizing the SEBI Informal Guidance Scheme For those seeking interpretive guidance or no-action letters, SEBI recommends utilizing the Securities and Exchange Board of India (Informal Guidance) Scheme, 2003 (Informal Guidance Scheme). The Informal Guidance Scheme provides a mechanism for registered intermediaries, listed companies, and mutual funds to seek informal guidance on regulatory matters. Eligible entities can request two types of letters under the Informal Guidance Scheme: no-action letters, which indicate whether SEBI would recommend any action for a proposed transaction, and interpretive letters, which clarify specific legal provisions in the context of a proposed transaction. To initiate a request, entities must submit a detailed letter and a fee of ₹25,000, outlining all relevant facts and applicable legal provisions. SEBI aims to respond within 60 days but may conduct hearings if necessary. MHCO Comment: The Advisory issued by SEBI reinforces the necessity for clear and documented communication between market participants and regulatory authorities. By adhering to this advisory and utilizing the Informal Guidance Scheme, when necessary, registered intermediaries and regulated entities can navigate the regulatory landscape more effectively while ensuring compliance with SEBI's requirements. However, it is important to note that the letters issued through SEBI’s Informal Guidance Scheme are not legally binding and SEBI can also take a contrary view in future. Therefore, entities following the guidance provided by SEBI may still find themselves in hot waters with SEBI, which in our view defeats the purpose of providing paid guidance.