Third Party Funding in Arbitration

(By Saurabh Bhagotra, Solicitor, Zaiwalla & Co.)

Originally arbitration was designed as a more cost effective method of dispute resolution to litigation. Unfortunately high-value arbitration proceedings have ended up being quite expensive as they are often managed like a court case. A Claimant is at a disadvantage if he or she does not have the financial resources to instruct a team of lawyers to deal properly with the matter under arbitration. This goes against the principle of a right to justice for all.

To overcome the issue of risking its own finances or to obtain additional financing to pursue a legal action, an individual can approach a third party (with no prior connection to the case or party) to agree to finance all or part of its legal costs, in expectation of receiving a substantial percentage of a monetary order should the party be successful.

Third party funding for litigation has been in existence for a while, mainly for court litigation matters, in many jurisdictions including the United States, England and Wales, Australia, Netherlands, France. In January 2017, the UK Justice Minister, Lord Keen of Elie confirmed that the UK government has no plans to introduce laws to regulate the third party funders in the same way as law firms. However, in England and Wales, the Association of Litigation Funders has published its own self-regulated code of conduct to be abided by its subscribing members.

Singapore

In contrast to the UK, on 1 March 2017 Singapore took an important step in codifying the law on third party funding in arbitration claims (third party funding for litigation is still not permitted in Singapore.) The new regulation allows a party to approach a third party funder to finance an arbitration claim seated in Singapore, including related applications to the Singaporean court seeking interim relief, and for the enforcement of an arbitration award.

The significant amendment, and difference to the law in England, is to the professional conduct rules regulating the lawyers. Singapore lawyers are now obliged to disclose to the arbitral tribunal, and to every other party, the existence of a third party funding arrangement and the identity of their client’s funder. 

There is however some concerns with regards to the disclosure obligation imposed on the Singaporean lawyers which will need further clarification. They are:

What happens to the disclosure obligation when a party is not being represented by a Singaporean registered lawyer/firm and is acting as a litigant in person, and is therefore not required to comply with the professional code of conduct?

If a party is represented by a foreign lawyer who is not registered or practising in Singapore, does that foreign lawyer have to comply with the disclosure obligations contained in the professional conduct rules regulating only Singaporean registered lawyers?  

Any additional disclosure obligation to disclose funding arrangements will likely increase the legal costs incurred by a funded party to comply with such requirement. It is also not yet clear whether these costs including additional costs to retain a funder are recoverable as the ‘costs of the Arbitration’ under these new regulations. (In Essar Oilfields v Norscot, the English High Court did allow a party to recover the costs of obtaining a third party funder).

There may be drawbacks to third party funding but it will no doubt protect smaller businesses by putting them in a position to hire a reputable law firm (domestic or foreign) without risking its limited funds.

There may be drawbacks to third party funding but it will no doubt protect smaller businesses by putting them in a position to hire a reputable law firm (domestic or foreign) without risking its limited funds.There is no doubt that the Singapore government has introduced these rules to increase Singapore’s attractiveness as the seat of arbitration, and to topple England from its preeminent position as an international arbitration hub. These recent reforms will allow parties to access diverse range of funding options to pursue arbitrations claims seated in Singapore and will also ensure that transparency is maintained between the litigating parties.

Foot Note:

If you would like further information on this topic, or require advice in relation to third party funding arrangement for your legal matter, please contact our team at info@zaiwalla.co.uk

Goods and Services Tax (GST) -- A Boon or Bane for India?

(By Shruthi Manohar, Asst. Professor,

Bhavan’s N.A.Palkhivala Academy for Advanced Legal Studies and Research, Kozhikode)

India’s landmark tax reform, GST has finally become a reality. The Historic Central Hall of Parliament has witnessed the launch of the Goods and Services Tax. While addressing the Parliament, in the function held in the Central Hall of Parliament on the mid-night of June 30th The President, Mr.Pranab Mukharjee said that GST is a path-breaking legislation which would benefit the economy.¹

In India we have a situation of indirect taxes forming a substantial part of government revenue, which by itself shows its importance. As pointed out by the ICAI Indirect Tax Committee in its draft representation paper on GST, the indirect tax system in India is one of the most complex systems in the world. Multiplicity of taxes, varying rates, costly compliance and lower revenue to the public exchequer are some of the important reasons which have compelled the Indian administrators think of bringing in an effective tax system across the country which could address such issues.

Looking back it could be seen that, after globalisation many multinational companies were looking at India as a place to launch their businesses, as a place where they can manufacture goods for local markets as well as for exports. But the tax regimes and the complexity of the system stopped many in their tracks. Gradually Indian authorities realised that the system of taxation in existence had many inadequacies and it is imperative to be reformed and improved to enhance India’s global acceptability. Over the years, several improvements have been made in the tax laws. However, introduction of VAT could be termed as the first major coordinated tax reform initiative in India since Independence and it achieved a few milestones. Despite the success of VAT, there are still certain shortcomings in the structure of VAT, both at the Central and at the State levels.

It was at this point that the idea of introducing Goods and Services Tax (GST) came up in policy circles. This can be traced back to the report of the Kelkar Task Force on indirect taxes. It came up with the slogan, “GST is one tax for one Nation”. While looking to the tax structure of developed countries, it could be argued that GST is the need of the hour.

GST is a comprehensive tax levy on manufacture, sale and consumption of goods and services, i.e., a single tax on the supply of goods and services, right from the manufacturer to the consumer. It will be levied on all transactions involving supply of goods and services except those which are kept out of its purview. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.²

The Constitution (One Hundred and First Amendment) Act, 2016 brought Art. 246A which provides that Centre and State can levy taxes on goods and services. Keeping with the constitutional requirements of federal character a dual GST with Centre and State simultaneously levying it on a common tax basis is made. The Centre would levy and collect Central Goods and Services Tax (CGST), and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within a State. The input tax credit of CGST would be available for discharging the CGST liability on the output at each stage. Similarly, the credit of SGST paid on inputs would be allowed for paying the SGST on output. No cross utilization of credit would be permitted³.

In the case of inter-State transactions, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supplies of goods and services under Article 269A (1) of the Constitution. Thus we will be having CGST levied and collected by the Centre, SGST levied and collected by the State, and IGST levied and collected by the Centre⁴.

The system of taxation of goods which we had here prior to the introduction of GST is an origin-based tax system where the manufacturing (origin or exporting) State collects Central Sales Tax (CST) on goods being sold inter-State. Since it is a tax collected by the State of Origin, the destination (importing) State does not allow input tax credit against CST. Therefore, CST remains a stranded cost for inter-State dealers and manufacturers using goods procured from other States. Since GST is a destination-based tax, (i.e., taxed at the place where supply has been made) all SGST on the final product will ordinarily accrue to the consuming State. The States where imported goods are consumed will now gain their share from this IGST paid on imported goods. Since the manufacturing base in India is not evenly distributed across States, a few States gain from this tax system. Kerala can be expected to be one such State.

The Central Government has notified the Goods and Services Tax Compensation Cess Rules 2017⁵, in order to compensate the loss of the manufacturing States by the imposing cess over and above the tax laid on Luxury goods. This is made for the first five years on some specified items like high-end cars and demerit goods including tobacco, pan masala and aerated drinks for a period of 5 years⁶.

Under GST, there would be only one tax from the manufacturer to the consumer, leading to transparency of taxes paid by the final customer. So far as the manufacturers and exporters are concerned, they are also expected to be benefited from GST. The subsuming of major Central and Sales taxes in GST, complete and comprehensive set-off of input goods and services and phasing out of Central Sales Tax would reduce the cost of locally manufactured goods and services, which ultimately can lead to better competitiveness for Indian goods and services in the international market giving boost to Indian exports⁷.

Hence it is expected that, the GST at the Central and at the State level will give more relief to industry, trade, and consumers through a more comprehensive and wider coverage of input tax set-off and service tax setoff, inclusion of several taxes in the GST and phasing out of CST⁸.

GST has introduced a four slab tax rates which levies 5%, 12%, 18% and 28% on various goods and services. Though it ensures competitive pricing, restaurant-accommodation services, on-line shopping, cinema tickets, admission to entertainment events or access to amusement facilities, etc., would be costlier under the new tax regime⁹.

Article 279 A of the Indian Constitution provides for the constitution of Goods and Services Tax Council to examine issues relating to goods and services tax and make recommendations to the Union and the States on parameters like rates, exemption list and threshold limits. Every decision of the Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting¹⁰. Though an elaborate voting structure has been built into the decision making process of the Council in the Constitution, it is remarkable that in the 18 meetings held so far, all decisions have been taken by consensus in the Council¹¹.

Implementation of GST poses many challenges and concerns in spite of its merits. Economic principle of GST is that, it avoided cascading effect of tax. GST with exclusion of goods like electricity, petroleum products, cascading of taxes on these items would still remain. So we can only say that the effect of cascading would be limited, giving an impression that our new GST system is only a partly modified tax system.

GST is of course a major change. Theoretically it is a good concept. What it would be on the practical side is still to be seen. However positive the changes may be, challenges will have to be faced while implementing the new system, especially in the initial stages. The procedural complexities involved in the GST pattern might be disastrous for small enterprises. Use of electronic systems are important for GST migration which can also pose chances of difficulty for many small enterprises.

GST has become a reality. Nation has witnessed the launch of GST on 1st July 2017. In spite of the criticisms, its implementation is necessary and advantageous for the country. The problem is not really with the GST as it is, but more with its mode of implementation. The benefits of the proposed GST system could be reaped, once the challenges posed are addressed properly. It is not expected that a faultless GST could be rolled out in India as a single event, but faults will have to be addressed and rectified without hampering the basic spirit of the reform. In the days to come GST councils will have to review the design and make improvements in order to make GST a success.

Foot Note:-

1.   http://www.taxscan.in/good-simple-tax-india-switches-gst/8849

2.   http://www.cbec.gov.in/resources//htdocs-cbec/gst/new-faq-on-gst-second-edition.pdf

3.   http://www.gstindiaonline.com/pages/gstlegislation/GST%20FAQ/cbec%20faq-2017/001.htm

4.   Ibid.

5.   http://www.cbec.gov.in/htdocs-cbec/gst/compensation-cess-2017

6.   http://www.taxscan.in/govt-notifies-gst-compensation-cess-rules-2017/8927

7.   http://www.thehindu.com/business/Economy/gst-impact-how-key-sectors-of-the-economy reacted/article 19198357.ece

8.   http://www.cbec.gov.in/htdocs-cbec/gst/trade.pdf

9.   http://www.cbec.gov.in/htdocs-cbec/gst/index

10. http://www.cbec.gov.in/resources//htdocs-cbec/gst/new-faq-on-gst-second-edition.pdf

11. http://www.thehindu.com/business/Economy/live-goods-and-services-tax-launch/article 19185917.ece

Relevancy of Accomplice Evidence in Criminal Trial

(By M.E. Aliyar, C.J.M. Court, Ernakulam)

The word “accomplice”is not defined in the Indian Evidence Act, or in the Indian Penal Code. An accomplice is a conscious participant of a crime, which is the subject matter of a criminal trial. An accomplice involves himself to be criminal who had been concerned in the commission of a crime. The dictionary meaning¹, the word “accomplice” means a partner in crime, an associate in guilt. An accomplice hence is a person who along with another or others has taken some part, large or small, in the commission of the crime. It signifies a guilty associate in Crime.²The best test for finding whether a person is an accomplice is to see whether the person concerned is directly or indirectly concerned in or privy to the offence for which the main accused is charged. He must be proved to have done some act to assist the felon personally. The mere fact that one had knowledge that a crime had been committed and that he concealed or failed to disclose such knowledge does not render him an accomplice.“To render a person an accomplice, his participation in the crime must be criminally corrupt” (Beaumont. C.J.)

The term accomplice has a definite meaning in the English Criminal Jurisprudence. The word accomplice includes four categories of persons: -

1. Principal of First Degree.

2. Principal of Second Degree.

3. Accessory before the fact and

4. Accessoryafter the fact.

According to Prof.Marcus³, accomplice is a bastard who betrayed his comrade in order to save his neck from the clutches of law. So, an accomplice is a “Participies Criminies” and who had betrayed his associates and has apparently sought pardon for saving his own neck. He is therefore, presumed not to be a man of high character or a fair witness.

There is no formal legal definition of the term “accomplice” in England’s Law of Evidence too. But the House of Lords has recognized the following being as accomplices:

■   a person who takes part in the offence or who aids, abets, counsel or procures its commission.

■   a handler at the trial of the actual thief

■   parties to crimes, identical in type to the offence charge, evidence of which has been admitted as proving system and intent and negativing accident.

In England, as a general rule, subject to the sufficiency of Evidence and the public interest stages of the Code Test, accomplices should be prosecuted. It is contemplated in Sections 71 to 74 of the Serious Organized Crime and Police (SOCPA)⁴; an accomplice can be used as a prosecution witness rather than prosecuting him, if there may be circumstances where public interest warrants. In England the evidence of the accomplice may be used in the following situations:

•    to corroborate other witnesses on minor or peripheral issues.

•    to provide direct evidence on a point in respect of which the other available evidence is circumstantial.

•    to corroborate other evidence which in law requires corroboration or where a corroboration warning would be given?

•    where the absence of a witness may cause comment.

History of Criminal Law knows this type of men who in order to save their neck may give evidence against his associates. The fate of an accomplice in a criminal trial of ancient time in England was lucidly narrated by Sri. S.H. Ursekarin his book “Principles and Digest of Law of Evidence”.If the accomplice had given true version regarding the occurrence in which his comrade is to be convicted, he had to leave the country with his life. On the other hand, if it is proved that he gave false version regarding the occurrence and suppressed material facts he would be hanged. This condition rather prevented people concerned in crime to give evidence as accomplice evidence.

But now this approach has been changed and practice of pardoning the accomplice started. The pardon tendered to an accomplice is provisional and on condition that the accomplice gives or rather makes a full disclosure of actual facts in the case, in question. In the event of his giving a false version he would be prosecuted along with the other accused for the same offences. In other words, he will be transferred from the “Witness Box” to the ‘Criminal’s Dock’. The accomplice evidence is based on the principle that “a rogue only knows the way of a rogue”.⁵

In India also this practice is understood and followed. S.306 of the Code of Criminal Procedure empowers the Chief Judicial Magistrate or a Chief Metropolitan Magistrate at any stage of the investigation or inquiry into, or the trail of the offence may tender pardon to an accused and to allow him to become a witness against his co-accused on condition of his making a full and true disclosure of the whole of the circumstances within his knowledge relating to the offence and to every other persons concerned, whether as principal or abettor, in the commission thereof. He can then be called an approver.

Competency of an Accomplice to be a Witness

According to S.118 of the Indian Evidence Act, every person is competent to be a witness, if he can give rational answers to the questions put to him. The general rule laid down in S.133 of the Indian Evidence Act, is that an accomplice shall be a competent witness against an accused person. The section reads :-

“An accomplice shall be a competent witness against an accused person; and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice.”

The practice in England would be that only Jury can give credit to the testimony of an accomplice. According to Mr.Taylor, “the degree of credit which ought to be given to the testimony of an accomplice is a matter exclusively within the province of Jury”. An accomplice is a competent witness and there is no absolute rule of law, which enacts that the conviction on the evidence of an accomplice is bad in law. It has been held in the case of “Mathu Murugan Swami Pillai v. Emperor⁶, that the statement of an accomplice is admissible in evidence.

Under Illustration(b) to Section 114 of the Indian Evidence Act, the court may presume that an accomplice is unworthy of credit unless he is corroborated in material particulars. It means that the credibility and trust worthiness of an accomplice to be a witness is under suspicion. It has been said by the Bombay High Court⁷,in Queen Empress v. Mangalal & Mangalal,that the testimony of an accomplice as a witness against his comrade is unworthy of credit unless it is corroborated in material particulars and it has become a rule of practice of almost universal application.

The combined effect of the S.133 and S.114 illustration(b) is to be taken into consideration. It may be noted that⁸ (Digest of the Law of Evidence in Criminal Cases) Section 133 of the Indian Evidence Act, is a legal declaration regarding the status of an accomplice and the legal validity of his evidence. It is a Rule of Law whereas the suspicion or doubt casts upon an accomplice in illustration(b) of S.144, is not a Rule of Law, but a Rule of Practice.

Even then we may reach the conclusion that it is not safe to rely on the uncorroborated testimony of an accomplice. The nature and extent of corroboration varies with the circumstances of each case and no hard or fast rule can be laid down. The court has to first to see whether the evidence of an accomplice is reliable and secondly even if it is so, whether it is corroborated in material particulars by other independent evidences, direct or circumstantial. The Apex Court of India, in Sitaram Saho v. State of Jharkhand ⁹, had observed that “the statute permits the conviction of an accused on the basis of uncorroborated testimony of an accomplice’. Thus the law is that the evidence of an accomplice deserves outright rejection, if there is no corroboration in material particulars.

Justice Fazal Ali¹⁰ in Chanapara Chellappan v. State of Kerala observed that “the law is well settled that the court looks with some amount of suspicion on the evidence of an accomplice witness which is a tainted evidence “. The courts faced with apparently two inconsistent provisions in the Indian Evidence Act and have purported to harmonize the same by following the rule that “an accomplice will be a competent witness no doubt in the eye of law, but his evidence must receive sufficient corroborations. Corroboration may be by way of some circumstances that supplies sufficient confirmation of the truth of evidence of the accomplice in weighing accomplice evidence, the Judge should not overlook the position in which the accomplice may stand, and the motive, which he may have for stating what, is false. S.133 of the Indian Evidence Act can be availed of when no clouds of doubt upon the testifying accomplice are found.

In short accomplice’s evidence is an abject necessity where no other evidence is available. So the law tendered pardon to one of them so that the facts of the case may be made known. The prospect of freedom from punishment and liberty held out by the pardon naturally tempts the accomplice to testify against his associates. So it has been said that an accomplice is a man of doubtful veracity. We have to consider the circumstances under which an accused allowed to be a witness against his co-accused: it is allowed when the prosecution and police miserably failed to locate the evidence against the criminals. It may be dangerous rather than helpful because the policemen with the help of the accomplice may fabricate artificial or false evidence against the other accused. This kind of trap really amounts to the creation of an artificial crime either by the police authorities or their tools, where such a method is employed practically, which might make conviction illegal. Prudence requires that the courts should demand the prosecution to adduce some corroborative evidence. But this scenario will not justify always, particularly cases where crimes are committed by use of sophisticated weapons and tools by terrorist groups and people holding power and influence where police cannot safely dig into.

“To set a thief to catch a thief was presumed to be the idea that influenced the makers of the Indian Evidence Act to construct S.133, which is more or less significant in cases relating to terrorism and white-collar crimes of politicians and big industrialists where the prosecution tools and gadgets are considered to be inferior, not up to dated. Since the law breakers may have most modern weapons and tools in commission of offences, it is abject necessary to ignore the principles of rule of prudence of corroboration and Judges may be convinced to punish the wrongdoers of these kinds by invoking the provision cast upon S.133 of the Indian Evidence. So in my opinion, even though, S.114 illustration(b) of the Indian Evidence Act is there, S.133 of the Indian Evidence Act should be strictly construed.

Foot Note:-

1.   In the Oxford Dictionary-2013 Edition.

2.   Gopal S.Chaturvedi, Field’s Commentary on Law of Evidence, (Delhi Law House, New Delhi, Vol.5.)

3.   Prof. M. Marcus -He was formerly Reader in Law at Lal Bahadur Sastri National Academy of Administration, Missouri and formerly Member of Law Commission. He was formerly the Professor of Law, Govt. Law College, Ernakulam.

4.   W.M.Best, A Treatise on the Principles of Evidence, (H Sweet, London, 4^th Edn.1866).

5.   Prof. M.Marcus,Major Facets of Law in Indian Evidence Act, 2011 Edition.

6.   ILR 35, Mad.379.

7.   (Queen Empress v. Mangalal and Mangalal - ILR 14, Bom-115)

8.   Sarkar & Ejaz, Law of Evidence, (Eastern Book Company, Lucknow, 6th Edn, 2006) & Digest of Law of Evidence in Criminal Cases.

9.   AIR 2008 SC 391.

10. In Chanapara Chellappan v. State of Kerala(1979 - Crl.L.J.-1335).

Arbitration and Conciliation Act
Whether the Amendment under Section 12 Fulfils the Need of the Time

(By Jasla Kabeer, Advocate, Kollam)

 Arbitration and Conciliation Act has been enacted intending to be the feasible short cut to obtain relief which otherwise is tiresome and expensive. In the changed scenario of commerce and industry it mainly applied and started to operate in the field of hire purchase, and all the financiers started to invoke the remedy under the Arbitration and Conciliation Act. At the time of the purchase of the vehicle or of any such item of movable property of value, the buyer is always a person in need, and the financier stands in a higher position. The purchaser has in his pocket only an amount coming around 15% to 20% and the financier extends the loan facility for the whole remaining. Since the financial burden of the buyer at the time of purchase is meager, and the dealings of the financier is such that the buyer is able to get the delivery of the vehicle or the other property instantaneously or in speedy, the buyer has no reluctance or unreliability in the following of the direction being given by the financier. After the share of amount being parted with by the purchaser, the next phase is the signing of agreement with the financier. Since his amount is already paid, and the delivery of the article depends on the release of money by the financier the buyer becomes constrained to act as per the directions of the financier. In most of the cases the buyers are hailing from ordinary class, not well versed or even familiar with the technicalities of such transactions, they know only that they should sign the papers as shown by the financier. Even the raising of any doubts or putting any question regarding the contents of the papers where he is directed to sign, the financier becomes harsh, and may cause to deny the loan facility to the purchaser, hence the buyer silently signs in the printed agreement at the spots wherever pointed out by the financier. The transaction between the financier and the purchaser completes hardly within half an hour, and the knot to tighten goes to the exclusive custody of the financier. The agreement pointed to be signed runs to several pages and numerous clauses which in the ordinary course is impossible and discernible for an ordinary man who comes with a smaller amount intending the purchase without undergoing any burdensome proceedings. The agreement which contains numerous clauses in printed form and in a font not easily legible in English language is strange to such a purchaser, and moreover columns are there left blank capable of being filled at any time according to the convenience of the financier. The most important clause in the agreement is as to the resolving of dispute arising if any related to the transaction when the repayment is defaulted by the purchaser. It is always provided by the appointment of the arbitrator. The agreement always provide for the appointment of only a sole arbitrator column remaining unfilled thereby with liberty to the financier to fill in the name of his own choice. At the time of issue of notice for the reference, name of the arbitrator is being filled in by the financier in the column left, and the purchaser may not have any option or say in the matter. Thus the purchaser is forced and constrained to go to a person to decide his matter appointed by the opposite side. The present amendment u/S.12 of the Act to some extent interferes with the earlier position, and makes available certain grounds for the purchaser to raise questions as to the impartiality of the arbitrator. But these grounds provided are limited and not capable of being stretched or extended to the relationship between the arbitrators which might be clandastaneous and behind the curtain. The sole arbitrator can at any time be subject of partiality and influence, as the person appointed has no accountability or not committed to impartiality, and cannot be made liable in any manner of his delinquency, to the sufferer or cannot be subjected to any disciplinary action. Similarly, the venue of arbitration is also decided by the financier which might have already put in illegible font as one of the clause as if looking no much importance, but it goes to the crux. The venue of arbitration in most of the cases is a far away place beyond the reach of the purchaser, and resultantly the matter becomes ex parte, a remediless imposition on the purchaser. When the award is proceeded in execution, and the purchaser is put in the clutches of coercive steps of enforcement, the purchaser understands that he has no remedy against it except to surrender and to wait at the door steps of the financier for his mercy; but it is seldom shown. 

 When an Act is being promulgated, State is bound to protect the interest of its subjects, and cannot leave him at the mercy of the powerful. When the State wants to protect the financial interest of the businessmen who conducts the business of lending money on interest, at the same time the State should ensure that the borrower should not be exploited by the creditor. An arbitrator is only a temporary arrangement for a particular case and the arbitrator being in such position is naturally more interested inclined to protect his own interest by favouring the powerful and the rich. This cannot be put to an end unless the amendment extends to cover this field to curb any chances of being partial. First of all, the dealings between the financier and the purchaser should have all its transparency from the initial stage of entering in the agreement. The printed form of agreement being used by the financier should be made available in advance to the purchasers by affixing it in the office of the financier or by publishing it in the website of the financier. It should be printed in a font of legible size both in English and in the regional language. No column should be left capable of being filled subsequent to the signing; and to ensure this the copy of the agreement signed by both should be supplied to the purchaser instantaneously of its signing. The venue of arbitration should be confined to the place of suing as provided under the Code of Civil Procedure, and not a place being opted by the financier at his convenience. If the financier can take the shelter of law to execute the decree at a place where the purchaser resides, it is only justifiable that for the arbitration proceedings also the same can be fixed. Further there should be an option to file petition to set aside the ex parteaward with a provision for appeal from such an order if the same is dismissed by the arbitrator. Lastly and more importantly, at any cost and under no occasion the agreement should not provide column for the filling the name of the arbitrator, but it should be a computer print out with names included with options of preference. The sole arbitrator system should be done away with at least in the cases when the amount is above Rs. one lakh. The provisions should be made for the appointment of one arbitrator by the financiers, the other by the purchaser, and the third unanimaously by both parties or if not possible by both the arbitrators. A provision should be made for the setting aside of the award on the ground of perversity of fact or apparent unreasonableness in the matters involving substantial amounts. Over and above, the newly added proviso as S.34(2A) exempting erroneous application of law in passing the award as the ground for setting aside the award is against the need of the time. This incorporation instead of being a proviso should have been a ground for setting aside the award which only will fulfill the need of the time especially in the cases where award is passed by the sole arbitrator, or the award is ex parte. It is not at all prudent or desirable for a welfare State to make a law providing that an executable award should not be set aside on the ground of erroneous application of law. This makes a general impression that erroneous application of law should prevail and such an award should sustain. This might give possibilities of the arbitrator tend to be partial and subject to influence and favouritim. The nature of relationship described in the newly added schedules tending to have the scope of favouritism cannot become exhaustive. Any sort of relationship can deteriorate the character of total impartiality, and even a mere acquaintance can create inclinations in the human conduct, and such cases may affect the merit of output of the arbitration, and will stand incurable. A better supervision and scrutiny by judiciary alone will solve this problem. 

It is shocking and disgraceful to our legal system that the powerful is pointing to a person before whom the person standing in lower position should attend, and all matters will be decided in his chamber where the influential and the powerful has all access including to dictate, and the result of such proceeding becomes a decree and being made enforceable strictly by the mighty arms of a court of law. This is an outdated law in the matter of loan transaction between the powerful financier and starving borrower. The printed form stereotypes agreements unless published in advance are only to be treated as the one signed by the debtor without proper understanding, and such contentions by the debtor are to be appreciated and benefits to be extended in favour of the debtor while passing decisions. The arms of court should not be stretched to the poor by all its vigour at the instance of the powerful on an award passed by his own person, but the law should be changed to free the poor from all such chance of exploitations and oppressions.

A Socialist Lawyer with Social Commitment -- A Tribute to MKD

(By Adv. Parvathi Sanjay, High Court of Kerala)

A banyan tree has got uprooted......a tree with its vast expanse, grand presence, evergreen and drought resistant feature that provided security for years for the entire society especially the legal fraternity of this State has succumbed to the law of nature. Senior counsel Mr.M.K.Damodaran is no more. Not until the vaccum of disbelief was filled with the horror of comprehension did any of us realise how much we identified ourselves with this loss, even apart from personal friendship/relationship. He was a pillar of strength and a source of reassurance for all who approached him for help, advise, guidance, donations and solutions irrespective of their caste, religion, creed, race, economic background or political affiliation.

Damodaran Sir fondly known as ‘Damuettan’ alias ‘MKD’ hailed from an aristocratic family in Malabar and plunged into politics during his student days. He soon became a well reckoned leader and even underwent imprisonment during the period of Emergency in the country. His public relations were amazing and he was successful in maintaining it the right way. His commonsense approach and grasp of the basic facts of a case coupled with his intelligent, prudent interpretation of statute and law helped him rise to be one of the most successful lawyers of this State. His charming countenance and unperturbed disposition were text book features of advocacy. Shrewd examination skills and refusal to get provoked in the court room were his hall marks. Its a much talked incident that a Division Bench of the Honourable High Court of Kerala hearing criminal cases in the early eighties had provoked Damodaran Sir while he was arguing a murder appeal before them. They countered each and every point raised by Sir and expressed irritation and disagreement at every argument by Sir.Damodaran Sir is heard to have withstood the ‘attitude’ pleasantly and handled the court pleasingly. Later after pronouncement of the judgment, one of the Judges of the said Division Bench apparently told Sir that he had a bet with his brother Judge whether Sir would remain calm and cool inspite of severe provocation from the Court.

The methodical manner in which his office functioned helped his junior lawyers to be self sufficient, efficient and confident when they became independent. He was an administrator par excellence which he proved during his 5 year stint as the Advocate General of this State. His criteria while choosing/deciding his team of lawyers to work with him (when he was Advocate General) were purely their academic bent, integrity and commitment. Even when he remained a tough taskmaster, he would always own up his juniors or his team and would never let them down before the clients and beaurocrats for their omissions or faults. He maintained the dignity and decorum of the office of the Advocate General and was very particular that his team of Government Pleaders functioned meticulously with their heads high. He refused to be a puppet in the hands of politicians and beaurocrats while he was the Advocate General and always kept them at their place. The Government received all privileges of a client. All the same he made it clear through his conduct and deeds that the Advocate General and the Government Pleaders were not their subordinates. He was always ready to respect and accept the individuality in a person even if it was in conflict with his concepts and principles. There were never false hopes or promises from him and anyone who approached him for any kind of help would be told at the outset the possible outcome of it. His refusal to accept one’s suggestions would be plain and on his face. He was frank but never hurtingly blunt. He was stern but never rude. He used to face controversies and issues with matured grace. His client dealing was a treat to watch and learn. His mediation skills bore fruit in many tough issues-political, legal and social. He has had to face setbacks from many whom he had helped. He would then smile away his hurt by stating that it merely reflected their culture. He had seasoned his mind to think and act above prejudices and pettiness. He had tremendous respect for women and the old and is never heard to have used abusive or uncivic language.

MKD’s office was once like the land where the sun never set. His juniors (three of them have adorned the Bench of this Honourable Court) are heard to say that they have had to work overnight many days and while leaving office during the early hours would be reminded by Sir to report early in the morning which was just 2-3 hours away. MKD effectively blended his legal and political background and has been the cause for many mile stone events in the social history of this State. It was at his instance that a Human Rights forum with a national banner comprising of retired Judges of various High Courts outside this State visited Koothuparambu following the mob firing incident in 1994 and conducted an informal inquiry into it. The inquiry sittings by this Forum proved to be a platform for the family and associates of the victims of the firing to vent out their emotions freely and receive first aid reliefs by way of words and deeds. The report of this informal inquiry was placed before the then concerned authorities which received the right acknowledgement it deserved. He had a unique strategy to solve problems. He hardly preoccupied himself on the symptoms but used to probe into the root cause of the issue and he saw to it that the issue was eradicated once and for all without a chance for relapse. Inspite of his sterling quality of being approachable, he was discrete in his attitude and meted out respect and affection only to those who deserved it. He never let others take him for granted. He was witty and had remarkable sense of humour.

MKD’s contributions to the overall welfare of the lawyer community include his effective tenure as Bar Council (Kerala State) Chairman (ex-officio), his efforts to build the Chamber complex for the lawyers, his timely and strong intervention in issues relating to the lawyers’ welfare fund and the High Court building construction.

MKD era has ended. I am sure the loss on his death is just not for his family, his relatives, clients, friends and the bar. His office at Kacheripady was a one stop destination for a common man as well as a politician or a beaurocrat where he was assured solace to his anxiety and a solution to his issues. That is lost for ever.

It is hard to eulogize any man that is, to capture in words not just the facts and the dates that make his life, but the essential truth of a person and his unique qualities that illuminate his soul. Albert Einstein is heard to have said, “The value of a man should be seen in what he gives and not in what he is able to receive”. MKD always gave...gave much to his work, to his comrades, to his colleagues, to his friends, family and relatives and to the society in whole. He was every lawyer’s pride and a common man’s guide.

Sir, we knew that we would have to lose you at some point of time in the journey of life but we confess, our loss is unimaginable, irreparable and irreplaceable. You will always be remembered by this God’s own country as a great socialist lawyer with immense social values and commitment, a father figure, a guardian and a Guru in toto..... Our Pranams to you.