Commercial Law

Honourable Supreme Court of India has held that an Exclusion Clause in a contract of insurance puts an onus as well as the burden lies with the insurer when reliance is made on such a clause. This is for the reason that insurance contracts are special contracts premised on the notion of good faith. It is not a leverage or a safeguard for the insurer, but is meant to be pressed into service on a contingency, being a contract of speculation. An insurance contract by its very nature mandates disclosure of all material facts by both parties. 14. An exclusion clause has to be understood on the touch-stone of the doctrine of reading down in the light of the underlining object and intendment of the contract. It can never be understood to mean to be in conflict with the main purpose for which the contract is entered. A party, who relies upon it, shall not be the one who committed an act of fraud, coercion or mis-representation, particularly when the contract along with the exclusion clause is introduced by it. Such a clause has to be understood on the prism of the main contract.

Section 36 of the A&C Act, an arbitral award is required to be enforced in accordance with the provisions of CPC, in the same manner as if it were a decree of the Court. In view of Section 13(1A) of the Commercial Courts Act, against a judgment or order of the Commercial Court or the Commercial Division of the High Court, an appeal would lie to the High Court’s Commercial Appellate Division. However, as per the proviso to Section 13(1A), an appeal shall lie only from such orders that are specifically enumerated under Order XLIII of the CPC, as amended by the Commercial Courts Act and Section 37 of the A&C Act. Further, Section 13(2) of the Commercial Courts Act expressly proscribes an appeal against any order or decree of a Commercial Division or Commercial Court, other than in accordance with the provisions of the Commercial Courts Act

An order passed under section 26(1), directing investigation by Director General is an administrative order passed only to determine whether allegations made by informant under section 19(1), about possible violations of competition law are true. Once information is received under section 19(1) , CCI, based on material produced by informant has to form a prima facie opinion regarding possible competition law violations. • While forming a prima facie opinion, CCI has to only determine if allegations along with material produced are taken to be true, will that result in breach of competition law. CCI cannot determine legality or correctness of allegations by going into merits of case. It only has to see whether allegations, prima facie, constitute violation of competition law. • Scope of interference of High Courts under Article 226 of Constitution of India, in an order passed directing investigation under section 26(1) is extremely limited. CCI and authorities under Act, 2002 are well equipped to conduct investigation and possess expertise in said field. High Courts cannot interfere with such investigation unless there is an abuse of process and primafacie it appears that investigation was marred by mala fides.

STATEMENT OF LIABILITY IN BALANCE SHEET OF THE CORPORATE DEBTOR AMOUNTS TO ACKNOWLEDGMENT OF LIABILITY AND GIVES RISE TO FRESH PERIOD OF LIMITATION U/S 18 OF LIMITATION ACT.Hon’ble Supreme Court of India in the case of Asset Reconstruction Limitedv.Bishal Jaiswal & Anr has set aside the five-member Bench judgment of the National Company Law Appellate Tribunal (“NCLAT”) in V Padma Kumar v. Stressed Assets Stabilization Fund (the “Padma Kumar case”) and has held that an acknowledgement of liability in the balance sheet of the corporate debtor is an acknowledgment of debt.The Supreme Court also averted to the fact that “the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law”. However, what is of importance is that notes that are annexed to or forming part of such financial statements are expressly recognised by Section 134(7) of the Companies Act, 2013. Equally, the auditor’s report may also enter caveats with regard to acknowledgements made in the books of accounts including the balance sheet.It is now apparent that creditors who intend to initiate proceedings under Section 7 and/or 9 of Insolvency and Bankruptcy Code 2016, will need to ensure thata)Borrowers admit the liabilities owned by them to creditors in their balancesheets till the monies along with interest are repaid/settled; andb)There are no Observations/ Objections/Caveats made by the borrowerseither in the notes, auditors report etc with regard to acknowledgment made in the books of accounts including the balance sheet.