How the Resolution of any Conflict between the (English) Arbitration Act 1996

and the Companies Act 2006 can Assist in the Application of Section 8 of the (Indian) Arbitration

and Conciliation Act 1996 as Amended

(By Lawrence Jacobson, In-House Barrister, Zaiwalla & Co LLP, London)

In broad terms, S.8 of the (Indian) Arbitration and Conciliation Act 1996, as amended, appears to have a similar mandatory effect to that of Section 9 (read together with S.4¹) of the Arbitration Act 1996 (the “Act”)² Act. Accordingly, it is hoped that the methods and analysis briefly mentioned below, may be of some assistance to our Indian colleagues.

In a relatively recent decision of a County Court in England³ it was held, among other things, rejecting the Defendant’s application for a stay under S.9 of the Respondent’s claim for audited accounts under S.476 of the Companies Act 2006, that a shareholder who might have been entitled to audited accounts under an arbitration agreement was also entitled to audited accounts outside the parameters of the arbitration agreement under S.476.

The decision of that court, while not binding because it is not a court of record, nevertheless may be of persuasive authority in any future proceedings on an application for a stay concerning matters provided for in an arbitration agreement. Furthermore, the decision may influence the determination of any court as to whether S.9 of the Act has primacy over the statutory rights of any counterparty to an arbitration agreement.

So far as material for the purposes of examining the cogency and efficacy of the County Court decision, the facts of the case are that the Claimant and the Defendant compromised legal proceedings, in which the Claimant had claimed damages based on the alleged market value of his shares in the Defendant Company. Previously, the Claimant had also made various requests for audited accounts to the Defendant Company under S.476 of the Companies Act 2006. No reasons are prescribed by statute for which any qualifying shareholder might make a request to a company.

The Settlement Agreement provided, among other things, that the mechanism for the valuation of the Claimant’s shares would be referred to an arbitrator for determination. It was further provided that once the shares had been valued in accordance with the terms of the agreement the Claimant, forthwith would transfer his shares to a named third party on payment of the valuation price. The parties failed to agree or to refer the matter to arbitration and the Claimant issued proceedings to enforce his request for audited accounts. In response the Defendant issued an application under S.9 to stay those proceedings in order to give effect to the arbitration clause in the Settlement Agreement. The Defendant reasoned that it was highly likely that in determining the mechanism of valuation, the arbitrator might well direct the preparation of audited accounts. In the circumstances, the Defendant formed the view that the Claimant’s claim related in whole or in part to a referred matter in the arbitration.

The Judgment comprised, among other things, the following primary finding:

The arbitration clause in the Settlement Agreement was not sufficiently widely drafted so as to exclude the Claimant’s right to bring the proceedings under S.476.

To what extent is the Judgment consonant with authority?

The Court of Appeal inFulham Football Club (1987) Ltd v. Richards⁴found that there were no express provisions in either the Act or the Companies Act 2006 which excluded arbitration as a possible means of determining disputes involving unfair prejudice to members of a company (S.994 of the Companies Act 2006). Precisely the same can be said of matters under S.476. Furthermore, it held that the Act clearly gave primacy to rights under an arbitration agreement by making a stay of court proceedings relating to the same dispute mandatory. ⁵The Court of Appeal went on to state that:”…the combined effect of an arbitration agreement which covers the dispute and Section 9(4) of the [Act] is that the agreement to refer the dispute to arbitration will exclude the parties’ right to bring or continue legal proceedings covering the same subject matter unless one of the exceptions contained in Section 9(4) is established..”⁶ Fulham Football Club is therefore authority for the proposition that where the arbitration agreement covers the dispute, S.9 has primacy over Sections 994 and 476 of the Companies Act 2006.

Moreover, an arbitration agreement remains binding and effective even if the parties agree to refer to arbitration only certain disputes that might arise from their relationship⁷.

The legal proceedings, as a whole, may be “in respect of “a referred matter although those proceedings concern both that and other matters. In those circumstances, the whole proceedings may need to be stayed if it cannot be determined without consideration of the referred parts.⁸

While it was accepted in the Judgment, that, objectively, one of the primary functions of the audited accounts was that it could be used in connection with the mechanism for valuation, it failed to take into account that such a purpose could not be severed from those functions unrelated to the arbitration agreement. In failing to do so, the Court may well have erred in fact and in law in not giving primacy to S.9 of the Act over S.476 of the Companies Act 2006 as in Fulham Football Club. It is therefore unlikely that this Judgment will be followed.

As none of the exceptions in S.9(4) was relevant, the Court, as expressly required by Parliament, firstly ought to have granted an immediate stay of the legal proceedings while the issue was referred to an arbitral tribunal and then secondly to have resumed the proceedings when the issue had been resolved in accordance with the parties’ agreement ⁹.

Foot Note:

1.     Section 9 has mandatory effect notwithstanding any agreement to the contrary.

2.     “9(1) A party to an arbitration agreement against whom legal proceedings are brought …in respect of a matter which under the agreement is to be referred to arbitration may ….apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter….(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed….”.

3.     Rene Herzfeld (Claimant) v. Morton Medical Ltd.(Defendant) (13 May 2016).

4.     [2012] Ch 333 CA @341 [para.28].

5.     Ibid @341 [para.31].

6.          6.        Ibid@345 [para.42].

7.     Lombard North Central Plc v GATX Group[2012] EWHC 1067 @6 [para.16].

8.     Ibid [paras.13(i) and 16].

9.         9.    Ibid[para.16].

The Admiralty Act, 2017-- An Overview

(By V.B. Hari Narayan, Advocate, High Court of Kerala, Ernakulam)

Finally the much awaited Act on maritime jurisdiction has seen the day of light when it obtained the Presidential accent on 9^th August, 2017. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017 was passed by the Parliament paving way for welcoming changes in the Indian maritime regime. The new Act has replaced the Colonial legislations which was followed hitherto by Courts in exercising admiralty jurisdiction. The Act has repealed the archaic laws of the British period including The Admiralty Court Act, 1861; The Colonial Courts of Admiralty Act, 1890; The Colonial Courts of Admiralty (India) Act, 1891 and provisions of Letters Patent, 1865 in so far as it relates to admiralty jurisdiction of three Chartered High Courts and also seeks to consolidate the existing laws on civil matters of admiralty jurisdiction of Courts, admiralty proceedings on maritime claims and arrest of vessels.

Under the Colonial Courts of Admiralty Act, only the Chartered High Courts were vested with admiralty jurisdiction. It is by virtue of the decision rendered by the Hon’ble Supreme Court in M.V.Elizabethcase (AIR 1992 SC 1018) that the other Coastal High Courts in the Country could exercise admiralty jurisdiction for arrest of ships based on maritime claims. Under the new Act,  8 High Courts namely, Calcutta; Bombay; Madras; Karnataka; Gujarat; Orissa; Kerala; Hyderabad for the State of Telangana and the State of Andhra Pradesh could now invoke admiralty jurisdiction.

Section 3 of the Act specifies that the jurisdiction in respect of all maritime claims shall vest in the respective High Courts and be exercisable upto the territorial waters of their respective jurisdictions. However, the right to extend the admiralty jurisdiction up to Exclusive Economic Zone (EEZ) or any other maritime zone is reserved by the Union Government. The Act has catagorised the claims which come within the ambit of maritime claims, which alone will be subject to exercise of admiralty jurisdiction.

Further, the power of exercise of ship arrest is confined to the territorial limits of the respective High Courts thus preventing the arrest of vessels which are outside the territorial limits. The Act has provided safeguard against wrongful arrest in Section 11 by bringing in a provision for counter security from the claimant if the arrest is found to be wrongful or unjustified or excessive security having been demanded.

The Act has given a wider definition of a vessel under sub-section (i) of Section 2 to include ‘off-shore industry mobile unit’ which could include Oil rigs. It is also made applicable to all vessels irrespective of their flag, registration etc., except naval vessels or those owned and operated by Central or State Government for any non commercial purpose. Thus any vessel whether foreign or Indian to the exclusion of state owned ones could be arrested.

As far as in personamproceedings are concerned, it is interesting to note that proceedings may be instituted only if the cause of action arise either wholly or in part in India, or the defendant ‘actually and voluntarily resides or carries on business or personally works for gain in India’. Further the Act specifically restricts in personamproceedings if the same issues between the same parties are pending before any Court outside India. The Act also provides for the order of priority of maritime claims.

The conferring of admiralty jurisdiction to the 8 High Courts is a welcome change, in as much as the claimants could move the respective High Court where the cause of action has arisen or based on the domicile of party.  The Act seeks to build an admiralty law in line with the modern trends in the maritime sector and in uniformity with prevalent international practices. The jurisdiction of High Courts are thus increased providing for speedy disposal of admiralty related proceedings. Hope the objectives will be achieved.

A Case of Judicial Contradiction

(By Kaleeswaram Raj, Advocate, Supreme Court of India and High Court of Kerala)

Article 142 of the Constitution contains a peculiar provision. It empowers the Supreme Court to pass orders “for doing complete justice in any cause”.  In a recent episode, the apex court has not only erased its own judgments issued under Article 142 but rather contradicted itself, that too in a matter of great public concern.  And quite strangely, this escaped the attention of the legal fraternity and the media at large.The diametrically opposite directives in the highway liquor ban case are astounding. The court has not only erred in its conclusion, but in its processual approach as well.

The Apex Court, on 15th December 2016 in State of Tamil Nadu v. Balu (2017 (1) KLT 132 (SC)) banned liquor vends along the stretches of national and state highways across the country.  The judgment found its rationale in the repeated policy decisions in this regard by the Centre since 2007, which were however honoured only in their breach by the States.  Relying on certain statistics relating to deaths caused due to drunken driving, the court issued the unconventional directives prescribing a 500 metres minimum distance from national and state highways, for the sale of liquor.  The court justified itself by saying that by way of the ban it “does not fashion its own policy but enforces the right to life under Article 21 of the Constitution, based on the considered view of expert bodies”. Thus, in Balu,the court inter aliaheld that the prohibition “shall extend to and include stretches of such highways which fall within the limits of a Municipal Corporation, city, town or local authority”.The court rejected the contentions to the contrary and held that there is “no rational basis to exclude stretches of national highways and state highways which fall within the limits of a Municipal or local authority from the ambit of the suggested prohibition”.  According to the judgment, “such exclusion would defeat the policy since the presence of liquor shops along such stretches of a national or state highway would allow drivers to replenish their stock of alcohol, resulting in a situation which the policy seeks to avoid in the first place”. Any exception to such liquor vends in the cities, according to the court, would be “wholly arbitrary and violative of Article 14 of the Constitution”.  The verdict was hailed by the prohibitionists and the women folk in general, who howe0ver, remain unorganized.

This year, the court again rejected the plea by the liquor vendors to exempt the parts of the highways in the Municipal Corporations, cities and towns, in categorical terms, as seen from the judgment of 31^st March 2017 in Balu II ( 2017 (2) KLT 179). The court while rejecting the request even said:  “It may be attractive to the vendor to sell liquor along the highway but that is not the touchstone of a norm which protects public health and seeks to curb fatalities on the highways of the nation”. The court added that “where a balance has to be drawn between protection of public health and safety and the need to protect road users from the menace of drunken driving on the one hand and the trade of liquor on the other hand, the interest of the latter must be subordinate to the former”.

One may have different perceptions about these judgments of the court.Studies by the World Health Organisation show that the surest way to curtail liquor consumption is to reduce its availability (Global strategy to reduce the harmful use of alcohol,2010).  So viewed, the judgments were people friendly, though not populist. Those were well intended,though slightly illiberal. Unless modified by a larger bench in future, or recalled in review jurisdiction, these judgments in their entirety, had to remain as the law of the land, as mandated by Article 141 of the Constitution.

 Strangely, in a subsequent case,Arrive Safe Society of Chandigarh v. Union Territory of Chandigarh (2017 (3) KLT 923 (SC), (SLP No.10243 of 2017 Order dated 11 July  2017) which came from the Punjab and Haryana High Courts, the Supreme Court  has substantially overruled both the judgments in Balu, by saying that the order of 15^th December 2016 “does not prohibit licensed establishments within Municipal areas” from selling liquor and “this clarification shall govern other municipal areas (in the country) as well”. (See paragraph 7 of the judgment). Arrive Safe Society also was a party in the earlier lis. Thus the prayer that was pointedly considered and repeatedly repelled by the court earlier, stands allowed in a subsequent case where the question of exemption of Municipal or city areas in the whole country was not even a matter in issue. This indulgence shown in paragraph 7 of the Arrive Safe verdict is also antithetical to the preceding paragraph in the very same judgment that reiterated the earlier ratio.

In the case from Chandigarh, all that the Supreme Court could have done was to dismiss that appeal.  Since the appeal was against the verdict of the Punjab and Haryana High Court that validated a notification of the Chandigrarh Administration de-notifying certain stretches of state highways in the Union Territory, a general direction for the whole country was not even called for.  The court in the Chandigarh case also said that the earlier judgments “do not prevent the administration from reclassifying intersectoral roads within the city from State highways to major district roads”.

 The Apex Court has abruptly withdrawn the substantial part of the earlier decisions, that too without offering any valid reason and without hearing all the stake holders including the other petitioners in the earlier case. The process lacked deliberations and procedural discipline.It does not set a healthy judicial precedent. A Court contradicting itself gives unpleasant signals for our democracy.

Weird Words in Judgments

(By R.P. Remesan, Advocate, Kannur)

Legal English, legal language, legal writing and legal literacy are the words which come across while dealing with the art of legal drafting. Legal English refers to the type of English as used in legal writing. It differs from ordinary language in vocabulary, morphology, syntax, and semantics, as well as other linguistic features. A specialized use of certain terms and linguistic patterns governs the teaching of legal language. Legal writing includes the ability to identify accurately the varieties of statements that a court makes in the course of judicial opinion. The term legalese is a pejorative term associated with traditional style of legal writing.

Legal drafting mainly refers preparation of plaint, petitions etc. It includes writing of judgments also. The notable difference between the two is that the former ends in the four walls of the courts and the later comes out of it. So the judgements are often referred to the analysis of the art of legal writing. We have to analyse the verdicts threadbare as part of our profession, though it is not criticism for its own sake. Indeed, we have noticed the exquisiteness of judgements. The art of drafting and linguistic expertise of the Judges in writing the judgments should not be derided, scoffed, or disdained.

While reading the judgments of High Courts and Supreme Court we could see the art of drafting and linguistic expertise. Our Judges are very affluent with their vocabularies. They have used phrases, aphorisms, connotations, maxims etc., to justify and substantiate their way of thinking. The use of weird and wonderful words is not a strange phenomenon in our legal parlance. It is interesting to note such constructions in the judgments. I may quote a few:

The word‘adscititious’means ‘forming an addition or supplement; not integral’.This word was once used by our High Court. None of other High Courts had an opportunity to use it. This is the excerpt.

He refers to Ext.P4 in W.P.(C).2791/2014 wherein the Executive Engineer has recorded that by making any change in the approved alignment as ordered in Ext.P6, an additional protection wall will have to be constructed and that theadscititious cost of W.P.(C).No.30524 of 2016, W.P.(C).No.570 of 2014, W.P.(C).No.6404 of 2014 & W.P.(C).No.15406 of 2014 such wall would escalate the total cost to be much higher than what would be required for the originally approved alignment¹.

The meaning of ‘cacoethes’ is ‘an urge to do something inadvisable’.Interestingly
I could see that Madras High Court used the said word in the following context.

I am also proceeding on the assumption that Rule 8-C is valid. I am referring to this aspect because in a number of writ petitions, the validity of Rule C is raised and it has not been settled by this Court whether that rule is valid or not. Learned counsel for the petitioner wanted to proceed in this cacoethes assumption that Rule 8-C is valid and still -wants to assert his right to quarry in his own land² .

‘To tear something up by the roots’is the dictionary meaning of ‘deracinate’. The words like root out, displace, move, stub, uproot, extirpate are the synonyms of the said words. The word deracinate is seldom used in the judgments. High Court of Madras, Delhi, Rajasthan and Supreme Court used the same a few times. The Supreme Court used the word in similar manner:

No award was passed in 1986 (i.e., within two years), or in fact even till 2006, causing grave prejudice to, nay deracinating, the Constitutional rights of the Appellant landowner³. 

In the Kerala High Court decision the said word has been used thus:

It is also an attempt to deracinate a basic feature of our Constitution to have grievances redressed by Courts established in accordance with the Constitution and the laws⁴. 

William Shakespeare used the word in Henry V

Her vine, the merry cheerer of the heart,

Unpruned dies; her hedges even-pleach’d,

Like prisoners wildly overgrown with hair,

Put forth disorder’d twigs; her fallow leas

The darnel, hemlock and rank fumitory

Doth root upon, while that the coulter rusts

That should deracinate such savagery;

The word ‘douceur’ means ‘a financial inducement or bribe’.One may think that the said word abounds in judgments. But it is rarely found in texts. The Calcutta High Court used the same in (1907) ILR 34 Cal.150. In AIR 1955 Ori. 288 Orissa High Court used the word and the same was quoted by the Supreme Court in the judgment reported in
AIR 1957 SC 729. The latest judgment is reported in 1997 Cri.L.J. 2014 Guj, Extract from the judgment is given below:

‘Hasmukhbai (Ex.22) the brother of the deceased has tried to find fault with the respondent recollecting his irksome conducts on different occasions in past as well as subsequent to the incident, but he has not stated all those facts about ill-treatment, harassments, hostility douceur; and doleful life of the deceased⁵.

The meaning of word ‘incrassate’ is ‘thickened in form or consistency’.The said word in the noun form was used only by M.P.High Court so far. The flourishing and unbridled language may attract the readers.

In this Writ Petition it is imperative to bestow our anxious consideration on the long debate and deliberation that took place consuming quite a speck of time relating to contentious issues which took us in the time machine as the subject related to the past, creating defiant walls and artificial palisade and sometimes brought us to the present in captivative fascination having an ineffaceable sense and purpose of modernity and progressiveness which, at times generated a feeling of puzzlement but definitely the incrassation and intenseness of proponements [?] cannot be surveyed with disposition of a disregardant⁶. [?]

The word ‘denouement’ means ‘a resolution of a mystery; the end result’. A few High Courts used the word. Some of them are given hereunder:

Pursuant to this declaration, the Chiefs were stripped of all their governmental functions and the final denouement took place in 1852 when the British took over the collection of revenue for the jagir lands. Supreme Court ⁷.

A decision regarding punishment under disciplinary action is a denouement to an enquiry process and indeed a culmination of the same. High Court of Punjab and Haryana⁸.

A pretty damsel was snared into a trap by her employer and two other men and killed her by filling her mouth with lethal poison. Her corpse was disposed of in a faraway jungle as denouement of the plot. Kerala High court⁹.

‘Ebullience’means ‘bubbling enthusiasm’. This word has been used in a few judgments of the High Courts and Supreme Court. If the details gathered by me are right the Supreme Court used the said word only in one judgment. See the mesmerizing style.

Seven dangerously ideological teenagers, politically impatient with the deepening injustice of the economic order and ebulliently infantile in their terrorist tactics, were sentenced to seven years in prison for the offence of having robbed the State Bank of a few thousand rupees with non-violent use of crude pistols, and country bombs which, ill the language of the Penal Code, amounts to dacoity-a grave property crime¹⁰.

‘Labyrinthine’means ‘any complex or confusing situation or passage’.The word has its origin in the Greek myth of Minotaur. Many of the High Courts and Supreme Court had occasion to use the weird word very often. I may again quote.

A vivid close-up of the sequence and consequence of the dramatic and traumatic events culminating in the reference to arbitration and the impugned award is essential as factual foundation for the decision of the issues. Even so, we must condense, since labyrinthine details are not needed in a third tier judgment. Broad lines with the brush bring out the effect, not minute etches which encumber the picture¹¹.

The specific grounds of invalidation relied on by the Writ Petitioner are many and the long Judgment of the High Court has lavished discussion on these aspects. Counsels have sought to repeat the rival contentions before us. But we do not think that it is necessary to embark upon the labyrinthine details or prolix analyses which have engaged the learned Judges of the High Court¹².

The following is a quote from Shakespeare’s Henry VI where the word is used:

Oh wert thou for my selfe: but Suffolke stay,

Thou mayest not wander in that Labyrinth,

There Minotaurs and vgly Treasons lurke,

Solicite Henry with her wonderous praise.

Bethinke thee on her Vertues that surmount,

Mad naturall Graces that extinguish Art,

Repeate their semblance often on the Seas,

That when thou com’st to kneele at Henries feete,

Thou mayest bereaue him of his wits with wonder.

The word ‘palimpsest’ means ‘a manuscript on which more than one text has been written with the earlier writing incompletely erased and still visible’.The meaning of the word may give an impression that it is a word frequently used in the judgements. If my appraisal is correct the said word was once used in the year 1928 by Madras High Court¹³.

The allegation was that a valid sale-deed for A and A-1 schedule properties had been incorporated with the mortgage of B schedule properties, the signature and attestations preserved and part of the rest treated as a palimpsest, i.e., the original writing obliterated and a fresh writing superimposed thereon.

‘Serendipity’means ‘The faculty of making fortunate discoveries by accident’.
I have noted only limited instances. In W.P.(C).No.13596 of 2017 our High Court used the word as follows.

Grant of bounty is likely to allow such institutions to develop an attitude of serendipity. Such a culture is inconceivable¹⁴.

The same sentences are found in the judgment of Supreme Court also.¹⁵ Chronologically the Kerala Judgment comes first.

The word ‘vulpine’ is derived from Latin word ‘vulpes’ which means fox. Its meaning is ‘crafty and cunning’. I could notice only one instance where the said word has been used.

It is a statute for the protection of the flat purchaser and to ensure that he is not, for want of financial muscle in a given case, or because his is the one raised voice in an otherwise deafening silence, the victim of a developer’s incessant vulpine machinations that materially damage the quality of his and his family’s life and the sanctity of his home. A man’s home is his castle¹⁶.

These are only a few instances among even more freakish and odd words and phrases, lurking in the deep sea. Further investigation is necessary to bring forth gems in order to satisfy our academic interest

Foot Note:

1.     SNDP Yogam v. State dated, 3.10.16.

2.     Hind Stone v. Union Of India (AIR 1981 Mad.82).

3.     M/S.Soorajmull Nagarmull v. State of Bihar(2015 (3) KLT Suppl.103 (SC) = AIR 2015 SC 3400.

4.     George Koshy v. State of Kerala(2002 (3) KLT 503).

5.     1997 Cri.L.J. 2014 Guj.

6.     Maharshi Mahesh Yogi v. State(AIR 2002 M.P. 196).

7.     Amarjit Singh v. State(AIR 1962 SC 1305).

8.     Kanwal Singh v. State(2010 Lab IC 2245).

9.     Sathyaseelan v. State(1991 CrlLJ 2941).

10.  Lingala Vijayakumar v. Public Prosecutor(AIR 1978 SC 1485).

11.  Gujarat Steel Tubes Ltd v. Union(AIR 1980 SC 1896).

12.  State of M.P. v. Ram Ragubir Prasad(AIR 1979 SC 888).

13.  Cherukuri Venkataratnam v. Bolla Guravayya AIR 1930 Mad.84.

14.  W.P.(C).No.13596 of 2017 (Y) dt. 22/6/2017.

15.  Dental Council of India v. Dr.Hedgewar Smruti Raga Seva Mandal(2017 (2) KLT SN 45 (C.No.62) SC = 2017 (3) CTC 214.

16.  Eterna Co-operative Society Ltd v. Lakeview Developers AIR 2015(2) Bom.314.

17.  Note: Data used in this article are collected from the data base of The Laws, and Legal Eagle software.

Kerala Advocates Welfare Fund-Anomalies Should Be Cured

(By R. Rajendran, Advocate, National Secretary, Bharatheeya Abhibhashaka Parishad)

The legal profession in India is the only profession which is mentioned in the Constitution of India (See Article 22 of The Indian Constitution). The known Indian leaders like Mahatma Gandhi, Dr. B.R. Ambedkar, Dr. Rajendra Prasad and Sardar Vallabai Patel were lawyers and the present lawyer community can alone enjoy such a legacy compared to any other profession. There are more than 25 lakhs lawyers in India. The lawyers are governed by The Advocates Act, 1961. Bar Council of India and respective Bar Councils of States are the statutory bodies which formulate rules and regulations for the smooth functioning of the profession.

Earlier days, legal profession was a ‘status symbol’ but now a days it became a source of livelihood like any other profession. Today this profession is not at all attractive and the dropouts are very high. Less than 15% of new entrants continue in the profession. Though there are brilliant law degree holders, most of them are not interested in the traditional practice and are more interested in joining multinational Companies or other institutions like Banks or Government departments. The struggle for existence in the field is discouraging the youths from entering the profession. Though the term ‘Officer of the Court’ is existing, the majority of lawyers are struggling for their daily bread.

The importance of a very good welfare fund scheme is warranted in the above circumstances. The Kerala Advocates Welfare Fund Act was implemented with such a motto. The Act was introduced in the year 1980, but even now we can’t sincerely call it a ‘welfare Act’; because there is no actual welfare which each and every member wish. The Act was amended by Kerala Government on 8-11-2016, and after receiving the assent of the Honourable Governor, now the amended Act is in force. The Advocates Welfare Fund Bill 2016 is not unique as claimed by the supporters of Kerala Government. There are so many anomalies in the present Act and in that sense it does not contain any welfare.

Before the present amendment, the maximum benefit available to the member in the fund was ` 5,00,000/-. As per Section 16(1) of the old Act, a member who continuously completes 15 years membership in the fund shall be eligible for an amount of `14,285/- for each completed year and was eligible for a maximum amount of ` 5,00,000/- (14,285x35=4,98,925) which means he has to complete 35 years of membership in the Welfare Fund without any break. If a member retires before completion of 35 years he will not be eligible for five lakhs and he will be eligible for the said ` 14,285/- multiplied by his total years of membership. And as per S.16(2) if a member dies his nominee will be eligible for a minimum of `3,00,000/- and maximum of ` 5,00,000/-. Now this provision has been amended and as per Section 16, the maximum benefit is enhanced as `10,00,000/- but the eligibility period is extended from 35 years to 40 years. A member is eligible for `25,000/- for each completed year and is eligible for a maximum amount of `10,00,000/-(25,000 x 40=10,00,000/-). As per Section 16(2) the minimum amount is enhanced to `5,00,000/-

The present amendment is not beneficial to the members. There were strong demands from various lawyers organizations for enhancing the welfare fund amount to the tune of ` 25,00,000/-. The main objection raised by the authority against enhancing the amount was lack of funds. Prior to this amendment the source to the fund was yearly contribution from the part of welfare fund members, welfare fund stamp fee and a small income from legal benefit fund. Unlike other welfare fund schemes there is no employer contribution or Government contribution to Advocates Welfare Fund. So there was strong demand from Bar Council of Kerala and lawyers organisations for allotting certain percentage from the court fee levied by Government to the fund. Now the Government has amended The Kerala Court Fees and Suits Valuation Act and as per Section 76(1) of the Act, 1% additional court fee will be levied in the cases of suits or petitions which can be valued, and ` 100/- in other cases, towards legal benefit fund fee and from the said fund 50% amount will be given to Advocates Welfare Fund. So the question of source to the fund is somehow settled and it is learned that at least 50 crores of rupees will come under this head. More over yearly contribution is enhanced and Welfare Fund stamp fees is also enhanced. But since the amendment has no retrospective effect, nobody will get the full benefit. The annual amount of ` 25,000/- is calculated only from 8-11-2016 onwards. If a present member who had completed 35 years of membership in the fund thinks that after the completion of next five years of membership, he will be eligible for ` 10,00,000/- is only a dream and this is the major drawback in the amendment. Since there is enough fund in the “WELFARE FUND”, nothing should prevent the authorities from disbursing the said `10,00,000/- with retrospective effect to the members.

Another defect is that, after the completion of 40 years also a member should pay yearly subscription as prescribed by the Act as long as he continues in the profession, but his benefit is limited to `10,00,000/-

By this new amendment a fatal provision is incorporated in the Act by this Government. As per Section 9(gh) a new provision in the name of “Provide assistance to the Advocates Academy” is incorporated. This is a provision for diverting fund from Advocate’s Welfare Fund against the interest of the members of the Fund. Earlier there was no provision for diverting any amount from the “fund” other than disbursement of welfare amount to the members. By this amendment there are every chance for diversion of huge amount from the Fund in the name of Advocates Academy and there is no provision to check or ascertain the day to day affairs of Advocates Academy since both are separately administered by different committees. The members are afraid of miss-utilization or possibility of corruption under the cover of this provision.

Another objectionable amendment is carried out in Section 15(1A). (Section 15 is regarding grant of membership in the fund). Earlier as per Section 15(1A) “An advocate who is eligible for or availed of any kind of retirement benefits for the service under the Central or State Government or any public or private sector undertaking, shall not be admitted as member of the Fund or permitted to resume membership in the fund”. But the new provision incorporated is ‘provided that this sub-section shall not be applicable to a person who was in employment for a period not exceeding five years or if the pension does not exceed five thousand rupees per month’. By this new provision double benefit will be availed by such members. This provision will defeat the real intention of welfare fund. Persons who are availing pension to the tune of ` 50,000/- were also admitted in the Fund through the misinterpretation of this section. By incorporating Section 15(1E), an Advocate who has not joined the fund can join now. But this section is not beneficial to the Lawyers as claimed by the supporters of Government. Those persons can join the fund on payment of annual subscription payable corresponding to the period of practice at the time of such admission multiplied by his actual years of practice together with a fine of Rs.2000/- for every completed year of actual practice. But he will be eligible to claim only up to ten years of his previous actual practice. This provision is no-way beneficial or attractive to the present members or those who intend to make use of this provision.

Regarding treatment expenses, a member will get only an amount `1,00,000/- once in three years for major diseases like cancer or for major surgeries.

The apparent anomaly in the parent Act which is pointed out by lawyers and Abibhashaka Parishad from the very institution of the Act is that if a member of the fund is forced to receive the eligible Welfare Fund amount due to unforeseen reasons before he completes the stipulated period, thereafter he cannot continue as a lawyer. He has to surrender his ‘Sannathu’ for getting the amount and after that he cannot practice as a lawyer. This provision is against the provisions of The Advocates Act 1961, which is a Central Act. As per Advocates Act 1961 a lawyer can continue as a lawyer unless he is disqualified by the reasons stated in the Act. We should allow a member of the FUND who is forced to receive the amount from the fund due to unforeseen reasons to continue as a lawyer without giving any further benefit from the Fund.

The Lawyer community should unite for a comprehensive, unique and beneficial welfare fund scheme.