SUPREME COURT JUDGMENT | A WOMAN`S RIGHT TO INHERITANCE IN HUF PROPERTY

The Supreme Court of India in its recent landmark judgment in Vineeta Sharma v. Rakesh Sharma & Ors, lays down the law qua a woman’s right to the ancestral property of a Hindu Undivided Family (HUF).The customary laws created rights only in favour of male descendants, which was codified by the Hindu Succession Act, 1956 (Act). However, pursuant to the 2005 Amendment of the Act, female descendant’s equal rights to ancestral property were also recognized. This landmark judgment further lays down that these rights can be claimed by the daughter even if her father had died before 9 September 2005, which is the date on which the amendment granting equal rights to the daughter under Act came into effect.

This update analyses the Hon`ble Supreme Court Judgment.

BACKGROUND OF CASE

• Earlier, the Mitakshara School of Hindu law codified as the Act governed the succession and inheritance of the ancestral property. The Act only recognized male descendants as legal heirs and female descendants were not considered as coparceners or an heir to the ancestral property.
  
  
• The Section 6 of the Act provided for the devolution of interest in a coparcenary property of a person who died intestate. The law provided that when a person dies intestate, the coparcenary property will devolve only to his male heirs including his sons, grandsons and great-grandsons.
  
  
• To correct this historical gender discrimination, the Act was amended in September2005 (2005 Amendment) and the female descendants were duly recognized as coparceners for the purpose of the partition of property post the amendment. Further, Section 6 of the Act was amended in 2005 to recognize a female descendant of a coparcener as a coparcener herself by birth, in her own right, in the same manner as the male descendant.
  
  
• It also gave the female descendant the same rights and liabilities in the coparcener`s property as she would have had if she had been a male descendant.
  
  
• Vineeta Sharma, the Appellant, had filed a suit demanding her share as a coparcener before the Delhi High Court. Although the 2005 Amendment granted equal rights to female descendants, the issue raised in several cases was whether, this law is to be applied retrospectively, and if the rights of the female descendants depended on whether their father through whom they would inherit, was alive on the date of the amendment or not. Different benches of the Supreme Court and the High Courts had taken conflicting views on the issue.
  
  
• This raised a very important issue before the court whether the 2005 Amendment, which gave equals rights to the female descendants in the ancestral property, was applicable retrospectively or only prospectively.
  

SUPREME COURT HELD:

• The Supreme Court expounded on the 2005 Amendment which removed the gender discrimination as contained in Section 6 of the Hindu Succession Act, 1956, by giving equal rights to female descendants.
  
  
• Under Section 6 a right to an “unobstructed heritage” is created by virtue of the birth of the daughter of the coparcener, the right cannot be limited by whether the coparcener is alive or deceased when the right is operational. An obstructed heritage depends upon the owner`s death, but an unobstructed heritage does not depend upon the death of the owner. Thus, the coparcener father need not be alive on 9 September 2005, the date of amendment of provisions of Section 6 of the Act.
  
  
• It also stated that the conferral of a right is by birth, and the rights are given in the same manner with incidents of coparcenary as that of a son and she is treated as a coparcener in the same manner with the same rights as if she had been a son at the time of birth. Though the rights can be claimed, with effect from 9 September 2005, the provisions are of retroactive application, they confer benefits based on the antecedent event and the Mitakshara coparcenary shall be deemed to include a reference to a daughter as a coparcener.
  
  
• The Supreme Court, further clarified that the above rule may not be applicable to the partition that may have taken place earlier, either by way of a registered deed or by court decree. It observed that the intention of the legislature behind creating the above exception was to not re-open matters which were already closed or to take away rights which had already vested by way of actual partition.
  
  
• The Supreme Court explained that if a partition deed has been executed and registered but no effect has been given to the same nor has it been acted upon, the joint family property in question cannot be said to have been partitioned. Therefore if the statutory provision of partition created by proviso to Section 6 of the Act, as originally enacted, did not bring about the actual partition or disruption of legal right. Then daughters are also to be given equal share as that of a son.
  
  
• Oral partition cannot be accepted as a statutorily recognised mode of partition.
  
  
• It also provided for the distinction between the terms prospective, retrospective and retroactive application of various laws.
  
  
• It also directed the High Courts to dispose of cases involving this issue within six months since they would have been pending for years.

MHCO Comment:

This landmark judgment is an excellent specimen of the progressive and gender sensitive outlook of the Indian Judiciary. This landmark judgment recognizes that women who have been deprived of an equal share of their deceased father`s ancestral property will now have the right to claim their due. Further, it also upheld the fundamental right to equality under the Indian Constitution in its truest sense.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.comfor any assistance

INDIAN ARBITRATION UPDATE | WHAT MAKES A VALID ARBITRATION    AGREEMENT?

Bombay High Court (BHC) in the recent case of Quick Heal Technologies Ltd. v. NCS Computech Pvt. Ltd. construed the use of the word ``may`` in an arbitration agreement as an option for dispute resolution and not a mandatory provision, thereby dismissing the application for appointment of an arbitrator. In this update, we will analyses this interesting judgment.

FACTS:

• Quick Heal Technologies Limited (Petitioner) entered into a software distribution agreement with one NCS Computech Private Llimited (Respondent No 1) and one Innovative Edge, a partnership firm (Respondent No 2) on 2 April 2011 (Agreement).
  
  
• The Agreement contained an arbitration clause which reads as follows:
  
  ``17. Dispute Resolution:
  
  a. All disputes under this Agreement shall be amicably discussed for resolution by the designated personnel of each party, and if such dispute/s cannot be resolved within 30 days, the same may be referred to arbitration as stated below.
  
  b. Disputes under this Agreement be referred to arbitration as per the Arbitration and Conciliation Act, 1996 as amended from time to time. The place of arbitration shall be at Pune and language shall be English. The arbitral tribunal shall comprise one arbitrator mutually appointed, failing which, three (3) arbitrators, one appointed by each of the Parties and the third appointed by the 2 so appointed arbitrators and designated as the presiding arbitrator and shall have a decisive vote.
  
  c. Subject to the provisions of this Clause, the Courts in Pune, India, shall have exclusive jurisdiction and the parties may pursue any remedy available to them at law or equity.``
  
  
• Later in 2017, disputes arose between the parties, and as a result of failure to settle the disputes amicably, the Petitioner sent the notice of invocation of arbitration to the Respondents. As the Respondents disputed the said notice, the Petitioner was constrained to file a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 (Arbitration Act).
  
  
• The Petitioner argued that there was a valid and mandatory arbitration agreement, which was binding on the parties, while the Respondents disputed the existence of a valid arbitration agreement, on the account of use of the word ‘may’ in the relevant clause.
  

ISSUE:

• Whether the use of the word `may` in the arbitration clause can amount to a valid arbitration agreement?
  

HELD:

The BHC answered the above question in the negative and dismissed the petition for the following reasons:

• The Court observed that the use of both the words `shall` and `may` clearly indicates that the parties intended to resolve the dispute through amicable settlement. In case of failure of such settlement, the disputes `may` be settled by way of an arbitration. Use of both the words in the same clause indicates that the parties were well aware of the implications of both these words, and thus the construction of the provision of reference to arbitration cannot be made as mandatory, but has to be made as optional. Thus, the agreement is not a mandatory arbitration agreement and thus the petition was dismissed.
  
  
• The Court further relied upon the cases of Wellington Associates Ltd. v. Kirit Mehta and Powertech Worldwide Ltd. v. Delvin International General Trading LLC and held that there was no consensus ad idem between the parties with regard to arbitration and they only agreed to provide fresh consent (by use of the word `may`) in order to proceed with the arbitration. Since there was no fresh consent in the present case, the petition was dismissed.
  
  
• As regards the interpretation of the mandatory or optional nature of the words contained in the clause, the Court relied upon the Supreme Court judgments in the cases of The Labour Commissioner, Madhya Pradesh v. Burhanpur Tapti Mills Ltd. and others and Jamatraj Kewalji Govani v State of Maharashtra, and held that in the clauses where the words `may` and `shall` both appear, they must be construed to have a distinct meaning.
  
  
• The court however, distinguished the facts of the present case from the landmark judgments of the Supreme Court, in cases of Zhejiang Bonly Elevator v. Jade Elevator Components and Indtel Technical Services v. Atkins Rail Ltd. where the words `should` and `will` were used respectively, and the apex court had construed the same as being mandatory in nature, thus holding the arbitration agreement as valid. The BHC in the present case, however, observed that the word `may` has a non-binding implication, and thus can be differentiated from the use of words such as `should` and `will`.

MHCO Comment:

The Court takes a conservative view in terms of construction of an arbitration clause. In terms of business efficacy as well as encouragement of Alternative Dispute Resolution mechanism, Indian courts have time and again construed badly worded arbitration clauses as valid arbitration agreements, giving due consideration to the intention of the parties. The present judgment contrasts with the liberal approach which is generally taken by the Courts.

Cases such as these emphasise the importance of well-drafted, water-tight and unambiguous arbitration clauses, leaving no room for any party to escape the procedure of arbitration by convenient interpretation in case of any dispute. Even though the judiciary has generally been construing rather weak or ambiguous arbitration clauses as valid arbitration agreements, it should not be taken for granted by the parties and the parties should take enough care at the time of drafting the clause.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.comfor any assistance

     THE CONSUMER PROTECTION (E-COMMERCE) RULES, 2020 

The Government of India recently notified the provisions of the Consumer Protection (E-Commerce) Rules, 2020 (E-Commerce Rules) under the Consumer Protection Act, 2019 (Act) from 24 July 2020. This update summarizes and analyses the E-Commerce Rules which lists down the scope, duties and liabilities of the e-commerce entities.

SCOPE AND APPLICABILITY OF THE E-COMMERCE RULES

• The E-commerce Rules shall apply to all goods and services bought or sold over digital or electronic network including digital products, all models of e-commerce, including marketplace and inventory models of e-commerce; all e-commerce retail, including multi-channel single-brand retailers and single-brand retailers in single or multiple formats; and all forms of unfair trade practices across all models of e-commerce.
  
  
• These E- Commerce Rules shall apply to an e-commerce entity which is not established in India, but systematically offers goods or services to consumers in India.
  
  
• The E-Commerce Rules now provide for several key definitions to understand the applicability of the E-commerce Rules. Key definitions are as follows:
  
  ``e-commerce entity`` defined as any person who owns, operates, or manages digital or electronic facility or platform for e-commerce;
  
  ``inventory e-commerce entity`` which is an e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers; and
  
  ``marketplace e-commerce entity`` which is defined to mean an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.
  

DUTIES OF E-COMMERCE ENTITIES

• An e-commerce entity shall be incorporated as a company under the Companies Act, 1956 or the Companies Act, 2013, or an office, branch, or agency outside India which is owned or controlled by persons resident in India.
  
  
• This entity shall appoint a nodal person of contact or an alternate senior designated functionary who is resident in India, to ensure compliance with the provisions of the Act or the rules there-under.
  
  
• Every e-commerce entity shall disclose on its platform all the information about themselves, including their legal name, location of offices, details of website, and contact details of customer care and a grievance officer; and location from where goods are imported, the details of the importer or the seller.
  
  
• No e-commerce entity shall adopt any unfair trade practice.
  
  
• Every e-commerce entity shall establish an adequate grievance redressal mechanism and shall ensure that the grievance officer acknowledges the receipt of any consumer complaint within forty-eight hours and redresses the complaint within one month from the date of receipt of the complaint.
  
  
• No e-commerce entity shall impose cancellation charges on consumers cancelling after confirming purchase unless similar charges are also borne by the e-commerce entityif they cancel the purchase order unilaterally for any reason.
  
  
• Every e-commerce entity shall only record the consent of a consumer for the purchase of any good or service offered on its platform where such consent is expressed through an explicit and affirmative action, and no such entity shall record such consent automatically, including in the form of pre-ticked checkboxes.
  
  
• No e-commerce entity shall manipulate the price of the goods or services offered on its platform or discriminate between consumers of the same class or make any arbitrary classification of consumers affecting their rights under the Consumer Protection Act.
  

LIABILITIES OF MARKETPLACE E-COMMERECE ENTITIES

• E-Commerce Rules recognizes that marketplace e-commerce entities may seek benefit of being regarded as an intermediary by complying with the Information Technology (Intermediary Guidelines) Rules, 2011. Accordingly, the marketplace e-commerce entities are now required to disclose on their platforms i.e. (a) details of sellers; (b) information relating to return;(c) refund, exchange, warranty and guarantee; (d delivery and shipment, payment methods, and grievance redressal mechanism; terms and conditions; details of the grievance officer; ensure that descriptions, images, and other content pertaining to goods or services on their platform is accurate and corresponds directly with the appearance, nature, quality, purpose and other general features of such good or service.
  
  
• Every marketplace e-commerce entity shall include in its terms and conditions generally governing its relationship with sellers on its platform, a description of any differentiated treatment which it gives or might give between goods or services or sellers of the same category.
  
  
• Every marketplace e-commerce entity shall take reasonable efforts to maintain a record of relevant information allowing for the identification of all sellers who have repeatedly offered goods or services that have previously been removed or access to which has previously been disabled under the Copyright Act, 1957 , the Trade Marks Act, 1999 or the Information Technology Act, 2000:
  

DUTIES OF SELLERS ON MARKETPLACE

• Sellers offering goods and services through a marketplace e-commerce entity are required to, not to adopt unfair trade practices.
  
  
• Ensure that advertisements are consistent with the goods or service.
  
  
• There is no misrepresentation of facts or falsely post false reviews on the platform.
  
  
• No seller shall refuse to take back goods, or withdraw or discontinue services purchased or agreed to be purchased, or refuse to refund consideration, if paid, if such goods or services are defective, deficient or spurious, or if the goods or services are not of the characteristics or features as advertised or as agreed to, or if such goods or services are delivered late from the stated delivery schedule.
  
  
• Execute a written contract with the marketplace e-commerce entity; and
  
  
• Appoint a grievance officer and ensure that the grievance officer acknowledges the receipt of any consumer complaint and redresses within 1 month of the receipt of the complaint;
  

DUTIES AND LIABILITES OF INVENTORY E-COMMOERCE ENTITIES

• Shall disclose all the information related to return, refund, warranty and guarantee, all information about payment methods, all mandatory notices and information as required by applicable laws, grievance redressal and total price.
  
  
• Shall not falsely represent itself and post reviews about its goods and services.
  
  
• Ensure that all the advertisement are consistent with the goods and services
  

The provisions of Consumer Protection Act, 2019 shall apply for violation of the provisions of the E-commerce Rules.

MHCO Comment: The new norms empower the central government to act against unfair trade practices on e-commerce platforms. They require e-commerce entities to facilitate easy returns, address customer grievances and prevent discriminating against merchants on their platforms. These E-commerce Rules do, at instances, seem to address consumer issues and lay out wider guidelines which can be adopted for change in market practice and technology. Further it also imposes duties on the e-commerce entities and seller to set up a grievance redressal mechanism which will help the consumer to address their complaints.

SUPREME COURT JUDGMENT | RIGHT TO SUE UNDER THE LIMITATION ACT

The Supreme Court of India recently passed a judgment in Shakti Bhog Food Industries Limited vs The Central Bank of India & Anr, and held that accrual of right to sue under Article 113 of the Schedule of the Limitation Act, 1963 (Limitation Act) did not necessarily arise when the right to sue first accrued but rather, when there was a clear and unequivocal threat of infringement of rights.

This update analyses this Supreme Court Judgment.

BACKGROUND OF CASE

• In July 2000, Shakti Bhog Food Industries Limited (Appellant) informed and raised a grievance that they were being overcharged interest and commission in respect of certain facilities availed by it from the Central Bank of India (Bank). The Appellant brought to the knowledge of the Bank and sought for a refund of the excess amount charged.
  
  
• The Bank, in May 2020 after due deliberation informed the Appellant that the interest and commission had been charged by it as per applicable policy and the Appellant was not entitled to any refund.
  
  
• After exchange of several communications between the parties, both parties were adamant on their stand. In these circumstances, in February 2005, the Appellant filed a suit against the Bank seeking rendition of true and correct accounts of the commission and interest charged by it and refund of the excess amount charged.
  
  
• The Bank, being the defendants in the suit, filed an application for rejection of plaint on the ground that the suit was time barred.
  
  
• The trial court applied Article 113 of the Schedule of the Limitation Act, which is the residuary entry governing a suit in respect of which there is no specific entry in the Schedule. Article 113 provides a limitation period of 3 years from ``when the right to sue accrues``. The trial court held that at best, the right to sue could be taken to accrue in favour of the Appellant in October 2000, which was till the time the Appellant availed the credit facilities from the Bank. This would mean that the suit had to be filed by October 2003, rendering the instant suit barred by limitation. The plaint was therefore rejected and the suit dismissed.
  
  
• This view was affirmed by the first appellate court and the second appellate court, which was the Delhi High Court. Aggrieved, the Appellant filed a Special Leave Petition before the Supreme Court.
  
  

SUPREME COURT HELD

• The issue for consideration before the Supreme Court was whether the present suit was liable to be rejected as barred under the Limitation Act.
  
  
• The Supreme Court thereafter examined Article 113 in light of other entries in the schedule of the Limitation Act and observed that unlike other articles, Article 113 does not specify any event as the starting point of computation of limitation. Further, as opposed to entries like Article 58 which require limitation to be calculated from when the right to sue “first” accrues, Article 113 merely requires limitation to be computed from when the right to sue accrues.
  
  
• In the scheme of the Limitation Act, wherever it was intended that the period of limitation be calculated from the occurrence of an event earliest in point of time, it had been specified. The legislature had consciously worded Article 113 liberally. For the purposes of Article 113, the right to sue would only arise when there was a clear and unequivocal threat of infringement of rights.
  
  
• The Supreme Court further held that the trial court had failed to read the plaint as a whole and did not consider specific averments in the plaint. Since limitation is a mixed question of fact and law, courts were required to be circumspect while considering applications for rejection of plaint on the ground of the suit being time barred on the basis of the whole plaint and not one stray averment that the Appellant.
  
  
• In these circumstances, the Supreme Court allowed the appeal and restored the plaint to the file.

MHCO Comment: This judgment of the Supreme Court clarifies that limitation for the purposes of Articles 113 would start running when there is a clear and unequivocal threat to one’s rights and not merely when the breach happened. The Supreme Court by this judgment has judicially established the starting point of limitation under Article 113 of the Limitation Act. Further, it laid emphasis on the importance of considering the entire plaint and circumstances, whilst dealing with an application for rejection of a plaint under the Civil Procedure Code.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.comfor any assistance