This article is authored by Pankhuri Pankaj, a 3rd-year student pursuing BA-LLB (Hons.) from Vivekananda Institute of Professional Studies, affiliated to GGSIPU. She is currently interning with Lexpeeps. This article summarises certain key provisions of “unlawful consideration and unlawful object” under the Contract Law and is qualified in its entirety by reference to the Indian Contract Act, 1872.

INTRODUCTION

In India it is said that for a contract to be understood as a valid contract two things are a must: a lawful object and a lawful consideration. To ensure the regulation of such valid contracts in the country naturally legal provisions have been implemented. Under Section 23 of the Indian Contract Act, 1872 certain restrictions have been imposed on an individual while indulging into any agreement and limits the freedom of that individual and his said privileges by drawing a parallel with the contemplations of public policies and various other provisions that have been articulated under this section.

Under Section 23 the term ¨object” indicates “purpose” of that contract does not really imply importance in a similar sense as the term ¨consideration¨. It is understood that even if the consideration of the contract is purely legally valid but the object of that contract is found to be unlawful in nature, then the contract would be termed an invalid contract. Similarly, if consideration, which has been defined under Section 2(d) of the Act, is found to be unlawful, then even if the object of the contract is legally valid, the contract would be considered an unlawful contract.

UNLAWFUL CONSIDERATION IN A CONTRACT

As discussed under section 23 of the Indian Contract Act, 1872, the legality of a consideration is only valid if:

The Consideration Is Not Forbidden By Law: It is understood that if the consideration in a contract is prohibited by law then it is considered to be an unlawful consideration and the contract is said to become invalid. It is important to note that for an act forbidden by law to account as an unlawful consideration it would generally include acts that are explicitly punishable by the law and it can also include those acts that are prohibited through the medium of either rules or regulations.
The Consideration Is Not Immoral In Nature: A consideration in a contract is considered to be an unlawful one if it has been regarded as an immoral act by the honourable court. In case of an immoral consideration the contract would end up being invalid and void.
In Case The Consideration Is Not Fraudulent In Nature: A contract becomes invalid or void by nature if the consideration of the contract is fraudulent in nature. Here, it is important to understand what may fall under a fraudulent act. To understand the term fraud better Section 17 of the Indian Contract Act, 1872, can be referred to which states that any act committed by a party to a contract with the intent to deceive another party or to induce that party into entering into the contract.
The Consideration Does Not Defeat the Provisions Set Under The Law Of The Country: A consideration is termed as an unlawful consideration of a contract, and end up making the contract an invalid and void contract, when the said consideration aims at defeating the provision of law or the intentions of law. In case the court finds the consideration to be in contradiction with the provisions of the law then it can discard the contract as void.
The Consideration Does Not Involve Harm Or Injury To Any Other Person Or Property: A Consideration is denied to be considered a lawful consideration of a contract if the consideration includes an act which involves causing harm to any other person or property. It can be understood with the simple example of a person taking money as an object and in return as a consideration killing a third person or vandalising a third party’s property. This type of consideration can be broadly included under an act forbidden by law as well since the consideration includes an unlawful act.
The Consideration Does Not Defeat Any Rules Already In Effect: A Contract is said to become invalid or void in nature if the consideration of that contract is against the essence of any rules already implemented in the country or if it intends to defeat the intention of any rules in effect in the country at that time. Such a consideration is also termed as an unlawful consideration.
The Consideration Does Not Oppose The Public Policies: The ultimate motive of the Indian judiciary is to maintain the essence of natural justice in the community. In case the consideration of a contract is oppressive of the public policy then such a consideration is said to be an unlawful consideration and the contract becomes an invalid contract or void by nature.

It is important to understand what would fall under the term ¨public policy¨ here. Public Policy can be understood as a very broad concept but for the purpose of consideration of a contract it is not referred to in the wider sense but in general terms- for the good community. If the act included in the consideration is not particularly in the favour of the good of the community but rather brings inconvenience then such an act makes the consideration unlawful.

Various examples can be discussed under this heading to further illustrate this field, like: Trading with the enemy of the country, or interfering with the courts, or stifling a prosecution by removing evidence or witness and multiple other things, etcetera.

UNLAWFUL OBJECT IN A CONTRACT

As discussed under Section 23 of the Indian Contract Act, 1872, an object of a contract is not considered to be legally valid if:

The Object Of The Contract Is Forbidden By The Law: It is understood that if the object in a contract is prohibited by law then it is considered to be an unlawful object and the contract is said to become invalid and void by nature. It is important to note that for an act forbidden by law to be counted as an unlawful object it would generally include acts that are explicitly punishable by the law and it can also include those acts that are prohibited through the medium of either rules or regulations in the country.
The Object Of The Contract Is Immoral In Nature: An object of a contract is considered to be an unlawful one if it has been regarded as an immoral act by the honourable court. In the case of an immoral object, the contract would end up being invalid and void. An immoral object would generally include acts which are frowned upon in our society, like taking money to file for divorce. Here, the party cannot file a case in case the consideration for the immoral object is not received.
The Object Of The Contract Is Fraudulent In Nature: A contract becomes invalid or void by nature if the object of the contract is understood to be fraudulent in nature. Here, it is important to define what may fall under a fraudulent act. To understand the term fraud better one can refer to Section 17 of the Indian Contract Act, 1872, or the definition given above under ¨unlawful consideration of a contract¨.
The Object Of The Contract Defeats The Provisions Of The Law: An object of a contract is termed as an unlawful object if the said act under the object aims at defeating the provision of law or the intentions of the law. In case the court finds the consideration to be in contradiction with the provisions of the law then it can discard the contract as void.
The Object Of The Contract Involves Harm Or Injury To Another Person Or Property: Just as discussed under unlawful consideration an object of a contract will be denied the status of a lawful object of a contract if the object includes an act which involves causing harm to another person or property. It can be understood with the simple example of a person taking money as a consideration for the act of killing another person, which would make it the object. This type of an object can be broadly included under an act forbidden by law as well since the object here includes an unlawful act.
The Object Of The Contract Defeats Any Rules In Effect: A Contract is said to become invalid or void in nature if the object of that contract is found to be against the essence of any rules already implemented in the country or if it intends to defeat the intention of any rules in effect in the country at that time. Such an object is also understood as an unlawful object.

CONCLUSION

For a contract to be considered as a valid contract it is important to have a lawful object and a lawful consideration. If either of the two is found to be missing, the contract is to be found as invalid in total. To maintain fairness in the society it is important to follow the norms and in case of an unlawful object or unlawful consideration, which in turn would affect the society, this purpose cannot be pursued.

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The following article has been submitted by Aaditya Kapoor, a law-aspiring student of Vivekananda Institute of Professional Studies. Through his research, Aaditya strived to shed light upon the process of Winding-Up of a Company, and the various types of said process.

In a world that quickly pokes itself further and further towards industrialization, the corporate world is maybe the most fundamental component of what holds together a country’s economy – and India is no special case. As indicated by the Indian Companies Act, 2013, a company can be characterized as an affiliation enrolled with the Registrar of Companies, where the affiliation itself is an artificially but legitimate individual having an autonomous, lawful substance and a typical capital containing transferable offers.

A company can be all the more distinctively depicted as a business element going about as a legitimate individual, shaped by a solitary or a gathering of lawful people to commence business. There is no prerequisite of need for there to be a gathering of people associated with the arrangement of a company, as it is conceivable for one individual to do likewise – as long as the previously mentioned legitimate individual is perceived by law as somebody with certain lawful rights and commitments.

The Companies Act, 2013 provides insight into what qualifies as a company, and the different classifications of the same; a detailed description of which can be referred to here. The act also prescribes provisions regarding the process of Winding Up of a company.

Winding up is a process through which a company dissolves itself, ceasing to exist as a legal entity thereby. The aforementioned process involves selling off stock, paying back creditors and after resolving all debts, the remaining monetary or non-monetary funds are paid back to the members, as per their contribution to the company’s capital. According to Section 2(94A) of the Companies Act, winding up also means “liquidation” in the Insolvency and Bankruptcy Code, 2016. Once the necessary prerequisites are met with, the company undergoing this process is dissolved; however, it doesn’t lose its legal identity until after the dissolution is achieved. Therefore, it can be ruled out that the winding up of a company is the final stage of that company’s existence.

WHY DOES A COMPANY LEAD TO WINDING UP?

A number of reasons can contribute to winding up of a company. These reasons may include failure to commence a proper business, bankruptcy, and even voluntary interests of members in dissolving the company. At certain instances, death of promoters can also cause the company into undertaking the winding-up process. The courts can order such process to be ensured on a particular company as well, depending upon circumstances that may contribute to breach of law on any grounds prescribed by the courts.

MODES OF WINDING UP

There are a number of ways by which a company can launch itself into the winding-up process, and said ways include both voluntary actions as well as a judicial sanction.

Compulsory Winding Up of Company: The felicitation of the winding-up process by a tribunal constitutes compulsory winding up of the company; the guidelines for which are contained under Section 272 of Companies Act. A Court can commence winding up of company through the following scenarios
Special Resolution: If the company itself has maintained for it to be dissolved by the court through a special resolution, such company is deemed to achieve dissolution through compulsory winding up.
Company’s Default: If a default is made by the company in the delivery of the statutory report to Registrar of Companies, or if the same is made in holding the statutory meeting of the company, the court has the authority to initiate compulsory winding up of a company. This rule shall also apply if the company fails to file its financial statements or annual returns for five consecutively preceding financial years.
Non-commencement or Suspending of business: In case the company, even after registering itself and following due process for its formation, fails to commence business within a year from its inception, a winding-up proceeding can be initiated by the court – wherein the same effect can be achieved if the company after commencing business suspends the same for over a year.
Reduction of Members: One of the prerequisites that need to be followed in order to formulate a viable company is for it to contain a certain minimum number of members – which is set at seven for a public company and 2 for a private company. However, if the number of members of the company goes below that required figure, the court has the authority to commence the winding-up process.
Failure in paying debts: If a company renders itself unable to pay off its debts, it becomes prone to compulsorily winding up by order of the court.
Indulging Fraudulent Acts: The court can order winding up of a company if said company is found to be indulging or partaking in fraudulent acts or other unlawful business. The same effect, based on principles of public benefit, can be achieved in case a member of management connected with the formation of company is found guilty of any kind of misconduct.
Just & Equitable Clause of Court: Lastly, a court can initiate a process of compulsory winding up of a company if it deems the same to be a just and equitable action and one that furthers the public interest.

A petition to initiate compulsory winding up of a company has to be filed in the Tribunal. Such a petition can be furthered by anyone of the following persons/entities:

The Company itself: As conferred earlier, a company can be compulsorily wound-up by passing a Special Resolution to achieve the aforementioned result; wherein this resolution is brought about members of the company itself.
The Contributories: A contributory of the company is also entitled to file a petition for winding up of a company by the court, regardless of whether or not such contributory has tangible interests in the shares or assets of the company.
The Registrar: The registrar, in consonance with the sanction of Central Government, can file a petition for winding up of the company to the tribunal only in a few exceptional cases. They are: (i) in case the company defaults in filing its financial statements with the registrar; (ii) If the company happens to act against public interest or interests of the nation itself; and (iii) if, based on an application made by the Registrar, the tribunal is led to believe that the company was formed for fraudulent or unlawful behaviour.
The Central or State Government: The governing bodies themselves can file a petition of winding up of a company if there’s proof of said company acting against interests of the nation and public welfare.

2. Voluntary Winding-Up of Company: Not much different from the passing of the special resolution, the members of the company also hold the authority to trigger winding up of company in certain scenarios. According to Section 484 of the Companies Act, a company can be wound-up voluntarily under the following circumstances:

By an Ordinary Resolution: In case the duration of the company was fixed by its articles since its inception, and the same has expired, a company can be led into the process of winding itself up.
By a special resolution: To recall once again, a company can move into the winding-up proceeding bypassing of a special resolution – one that must be notified to the public via an advertisement in the Official Gazette, as well as in a local newspaper.

A company can be voluntarily wound-up through three different processes.

In case the company has not arrived at a status of insolvency at the time of winding up, such that upon dissolution it is able to pay off its debts and settle other payments, it is considered to be a Members’ Voluntary Wind-up. The director(s) of the company must make a declaration to that effect, and the same must be verified by means of an affidavit. This individual process involves the following steps in succession:
1. Declaration of solvency;
2. Legal declaration to Registrar of Companies;
3. Passing or issuing of resolution in the company’s general meeting within five weeks of the declaration of solvency;
4. Liquidator’s appointment;
5. Paying off all liabilities of the company post collection of its assets.
In hindsight, if there is no declaration of solvency, it is presumed that the company has arrived to a point of insolvency. This process is called Creditors’ Voluntary Winding-up. In most cases, a situation of initiating voluntary winding up arises when the creditors realize that the particular company has turned insolvent; in which case, the shareholders arbitrarily decide to commence the company’s winding up. By default, the company is required to hold a meeting with its creditors in order to pass the resolution for winding up. This process also involves a few steps that need to be followed in succession:
1. Proposing resolution for winding up of company in its general meeting.
2. On the same day as the aforementioned proposal, there is a requirement of a meeting amongst creditors, and there is a requirement of formulating a list of creditors by the company’s Director(s).
3. Appointment of Liquidator by the meeting of members and creditors.
4. Appointment of a committee of inspection to reassure the status of insolvency.
5. Commencement of winding-up according to the statute.
After passing of the resolution for winding up of company, a court order can subject the process to supervision by the Court itself. Such order is ruled for protection of creditors and contributories of the company, so as to prevent them from incurring any loss.

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This article has been written by Mansi Tyagi, a student at Symbiosis Law School, Pune. How spending almost all the time together now, is inversely proportional to the happy endings of marital couples is what the current lockdown has been portraying. Thus, in the article here she has tried to bring up the factors leading to divorces in couples amidst the lockdown.

Introduction

While most nations are busy talking and searching solutions for the consequential economic depression in the future as a result of lockdown and several other migrant problems, there are some problems which are taking toll almost everywhere. Amidst the worldwide lockdown, there are three things concerning the domestic limits which are expected to experience a surge in numbers: Baby boom, domestic violence and divorces. While states overpowering the novel coronavirus COVID-19 are showing these trends, the numbers are already shocking in states still going through strict lockdowns. While baby booms are expected to happen during the aftermath of the worldwide isolation, domestic violence cases are already getting registered with the state authorities at an unprecedented rate. However what is much surprising to the marital relations’ authorities is, the rates of divorces amidst this quarantine process. A more gigantic wave is yet to hit the domestic world once the lockdown is lifted. With elongated lockdowns, the rates of divorces are all set to take place. And there is just one central explanation to this: the restriction on movement and staying together has led the spouses to question their relationships.

Why is it becoming difficult to live with spouses?

There are several differences which were formerly non-existent that the mandatory lockdown has made irresistibly difficult to ignore now between the spouses leading to them agreeing to separate mutually. While the mandatory lockdown has become a blessing in disguise for couples otherwise not having much time to spend together owing to professional commitments, on the other side of the reality it has made the spouses live under the same roof irrespective of their wishes, in most cases making a negative impact on the marriage. Man is a social animal. And unlike the general socializing process, when people are made to sit at homes, it is normal for them to be frustrated psychologically. However, this tendency of getting aggressive does not necessarily mean there should be a physical outburst of it on the fellow person staying with oneself. And between spouses, this somehow is leading to silent strains in marital relations. While in some cases the spouses are keeping themselves under immense pressure for the sake of their kids, in others it is taking the ugly shape of domestic violence. And the worrying issue is that despite the psychological congestion with the same person, a spouse cannot take a break by getting out of the household. The need for space is essential not just amongst spouses but any group of people irrespective of the relationship they share. And what the lockdown took away from the most intimate relationships, like those of spouses is their private spaces. Studies have shown that the absence of personal space often leads to relationships turning toxic. The inundation in the marital lives is making spouses despise each other’s presence for too long. But forced proximity is just one reason for such breakdowns of marriages. Apart from this lack of personal freedom and space, there are other factors too that are leading to the growing tensions between married couples during lockdowns. However, the problem is not the tension, it is the escalation of this despise which is leading the couples to adopt the legal way and ending their marital ties completely.

The home is a safe abode for people, but somehow is turning into a house of hell for the silent victims of patriarchal abuse, especially in a country like India which is notoriously famous for its gender inequalities. And the worst part about all this is, the mandatory lockdown has kept the victims confined behind the violent and abusive walls of their houses irrespective of their wishes. It will be incorrect to state that lockdown is the only factor leading to domestic violence since spouses are in more proximity than before. But at the same time, the numbers of such cases cannot be ignored. The national commission for women stated a rise of 94% in the crimes reported against women amidst the lockdown[1]. Females are made easy targets since now amidst the nationwide lockdown, they don’t even have a way out. And thus, somewhere these domestic violence cases are also taking the marital ties to the edge of a complete breakdown. Moreover, we still don’t know how many more are just silent under the threat of husbands and are unreported.

The unbalanced economy has also led to these unhealthy trends. There are salary cuts, there are delayed promotions, and in extreme yet common cases, there are layoffs. And the need for economic mitigation should not just be aimed to lift the economy, but also to save the domestic households from collapsing. In many cases, when one or both the spouses are losing their jobs, the monetary tension of the household is leading to another strain in the relationship. While in more other cases, the economic strain is seen on the sharing of household work. For women who lost their meagre jobs owing to the lockdown, and those who are completely dependent on the domestic income, they have no other option but to endure everything to make sure they have financial living support. However, the male being ignorant of any sharing of work despite being in the house, and even leaving the kids to their mothers, is making the women realize the patriarchal storms hitting them in the face more than ever in their lives. The division of labour is practised in less than 30% of households, and even lesser when it comes to quarantined houses. Thus, the latent tendencies of either spouse are now becoming clearer and non-negotiable when the couples are spending almost all their time together.

These trends will be more visible amongst the netizens, who are made to shift from their online communication to physical time-spending. The constant physical presence of their partners is making the netizens run out of communication despite the virtual barrier of language getting dragged down. Thus, even though they are together, couples are having communication gaps between them.

It cannot be denied that in many other cases, the continuous proximity has led to resolution of issues that existed earlier. Couples are getting the time and environment to sit and discuss the problems they never addressed. But, as of now, these cases are not as many as those of separations. The problem is not these tensions, these tensions existed earlier than the isolation phase too. The problem is the absence of a gap to leave either spouse, vent the pressure outside and outcast the tension. The lockdown has put the spouses under the same roof whatsoever. Thus, individuals are unable to escape valves which are necessary to preserve marriages.

Conclusion

Currently, the unavailability of courts for such domestic cases might look like the solution to restrict the separations and giving the couples time to judge such steps; however such prolonged delay is, in fact, leading to restlessness amongst the couples to break up from each other. The lifting of lockdown will therefore won’t make a better change. In fact, it will give the chance to the couples to file for separation unless they want to give their marriage a chance, which under the current circumstances is highly improbable. The lifting of lockdown won’t help in erasing the strains that it has already created in marriages. China, where the coronavirus situation is much to the relief now, is the first state to show the divorce trends on the real ground. The marital courts and the divorce lawyers have claimed to be approached twice the rate they were before the lockdown. India has a six-month cooling-off period before formalising the divorces, China has also come up with a three-month cooling-off period to give the estranged couples a chance to give another thought to separation procedures; however, in some first world countries like the USA, divorce procedures are speedier and easier and thus the upcoming divorce trends in such states is going to be worrisome. Therefore, it is important that before finalising the divorce, the state authorities shall mandatorily give a cooling-off period to the couples. Lifting of lockdown will give them an opportunity to think about separations in the absence of the lockdown leading them to it. After all, only if the marriage is beyond repair, divorce favourable. But, where mandatory lockdowns are the reason for it, a chance shall be given to rethink in the absence of such lockdowns as well.

References

^[1] NCW Chief Rekha Sharma On Its Initiatives To Address Domestic Violence <https://www.shethepeople.tv/news/ncw-chief-rekha-sharma-domestic-violence>.

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This article has been authored by Ritesha Das, pursuing BBA LLB from Symbiosis Law School Hyderabad. It outlines the essential remedies for the breach of contract under the Indian Contract Act, 1872.

INTRODUCTION

It’s rightly said that there is a remedy of everything except death. The remedies for breach of contract are elucidated under section 73-75 of the Indian Contract Act of 1872. A breach of contract simply means that the defaulting party either fully suspends its obligations and liabilities under the contract or performs partly or simply refuses to meet such obligations in full or in part or renders the failure of performing its obligations through its own actions. Breach of the contract amounts to infringement of the rights and interests of the aggrieved party and the call for alternatives or remedies for the restoration of these infringed rights and interests is one of the essential elements of the Indian Contract Act. The Indian Contract Act lay down 5 remedies for the breach of contract: Suit for damages, Restitution, Specific Performance, Quantum merit and injunction. Under the category of remedies, damages are the primary remedy, while other remedies are discretionary remedies at Equity and are only granted where damages are not an adequate remedy.

SUIT FOR DAMAGES

The provisions relating to damages are defined under Section 73 of the Indian Contract Act of 1872 [i]according to which the defaulting party breaching the contract is liable to pay for the injuries or losses incurred by such breach of the contract to the aggrieved party.

The essential elements of awarding damage under this section are: The damage should be a natural ramification of such breach of contract and such damage or injury must be reasonably anticipated by the parties to arise from such breach of contract. The burden of proof rests with the aggrieved party throughout the provision.

This section outlines that damages under this section are compensatory in nature and the parties suffering remote or indirect damages are not entitled for compensation. In addition, this section also specifies that, in calculating the injury or loss arising from the breach of contract, the actual costs of mitigating the inconvenience must be taken into consideration.

The principle concerning the remoteness of the damage were identified in Hadley vs. Bexendale

According to the first principle, money has the power to compensate the damages suffered hence the compensation must put the aggrieved party in the same position as would have been if the contract had been performed.
The second principle imposes a duty on the defaulting party to take appropriate action to alleviate the repercussions arising from the breach of contract.

The exceptional circumstances that are completely unknown to the party breaching the contract, the defaulting party can only be supposed to have had in his contemplation the amount of injury which would arise generally and in a great multitude of cases not affected by any special circumstances from such breach of contract.[ii]

In the case of Union of India vs. Raman Iron Foundry[iii], it was held that the damages are compensation which the aggrieved party may be entitled to obtain at the court of law, but it does not seek them by virtue of any contractual responsibility or liability on the part of the party, in breach of the contract, who has no monetary duty until the court has decided the infringement and the value of the settlement. The court will not ascertain any pre-existing liability. Furthermore, because the breach of the contract does not give rise to any existing duty or obligation on the defaulting party, the right to seek damages is not an actionable claim and cannot be granted.

Types of damages

Ordinary damages

The damages emerging from the ordinary, natural and foreseeable sequences of actions resulting in the breach of contract are known as ordinary damages. For example, W agreed to sell bags of rice at Rs 40 per bag to X, on the basis of payment on delivery but by the time of delivery, the market suddenly price spiked to Rs 50 per bag and as a result, W refused to sell it less than Rs 50 per bag. In this case, X can then claim damages of Rs 10 per bag.

Liquidation damages

Liquidation damages are penalties which are specified explicitly in the contract agreed upon both the parties. They are generally specified in those contracts where the anticipation and estimates of the damages are difficult to foresee. However, the courts have the discretion to minimize the amount of penalty if an excessive amount is stipulated.

For instance, W contracts X to build a new house by a certain date mentioning a clause where he is entitled to claim Rs 2000 per day if the house is not built by the stipulated date. In such a case, W will be entitled to claim Rs 2000 per day if X fails to build the house as per the due date of the contract.

Section-74 of the Act concerns the scenario where the contracting parties agree to the imposition of penalty (liquidation damage) for the breach of the contract. The main principle underpinning this section is the assurance of certainty in commercial contracts. Section-74 stipulates that, in breach of the contract, the amount of damage granted to the aggrieved party can’t exceed the amount stipulated as the penalty in the contract and such damage shall be awarded regardless of the proof of damage or loss by the aggrieved party. Drawing distinction between the estimated damages and penalty is a significant element while interpreting both section-73 and -74 of the Indian Contract Act, 1872. The former doesn’t have any pre stipulated amount as ‘penalty’ to be awarded to the aggrieved party in case of breach of contract. In the latter, the courts have the discretion to minimize the amount of penalty if an excessive amount is stipulated. Nevertheless, it is important to note that no lawsuits for liquidated losses will be made until the contract has been proven to have suffered a loss due to the defaulting party.

Punitive damages

Punitive damages generally aim to punish and deter the defaulting parties from committing wrongs. They are rarely awarded for contract breaches however; they may be awarded in some tort or fraud cases that overlap contract cases.

Compensatory damages

Compensatory damages are the monetary damages that are awarded with the purpose of reimbursing the aggrieved party for the injuries incurred as a result of the breach of contract. The primary aim of awarding compensatory damage is to put the aggrieved party in the same position as would have been if the contract had been performed.

The spectrum of compensatory damages is further divided into two categories:

Expectation damages: These are intended to cover whatever the aggrieved party would expect from the contract calculated on the basis of terms of contract or market value.

Consequential damages. They are intended to reimburse the aggrieved party for any indirect damages other than those covered by the contract. For example, a loss of company profits resulting from an undelivered piece of machinery. In order to receive consequential damages, the injury must arise either to a direct consequence of a breach of contract or to have been reasonably anticipated by both parties at the time of the contract.

In the case of Murlidhar v. Harishchandra[iv], the Apex Court stated that the party suffering from the breach of contract should take reasonable steps to mitigate the extent of damage caused by the breach. If, he fails to take such step then, he won’t be held entitled to claim compensation for such loss which could have been mitigated. While he could also get debarred from claiming any part of the damage which is due to his neglect to take such steps.

Nominal damages

Nominal damages are the damages that are awarded if a legal right has been infringed even if there is no actual damage. If the defaulting is held liable for breach of contract, the plaintiff is entitled to claim nominal damages even though no real injury is proved. Nominal damages were described as an amount of money that can be spoken of but that does not exist in quantity terms as the degree of injury is very minimal.

In the following circumstances, nominal damages are awarded to the plaintiff:

The aggrieved party did not wish to carry out the contract himself due to a minor technical fault committed by the defaulting party.
The aggrieved party fails to establish the damage or loss incurred as a result of the breach of contract.
The real injury sustained by the aggrieved party was not because of the wrongful act of the defendant but because of his own actions or any outside event.

SPECIFIC PERFORMANCE OF THE CONTRACT

Specific performance is an equitable remedy, provided by the court to impose the duties and obligations on the defaulting party to perform its promises under the contract. The remedy of specific performance is totally in contrary to the remedy of damages as it includes pecuniary redress for the breach of the contract, whereas, in specific performance, no such monetary compensation is awarded. The aggrieved party while seeking this remedy must convince the court that awarding usual remedy of damages is insufficient to compensate the degree of injury especially in the cases of contracts for the transfer of immovable property; awarding damages would not be adequate. Even after the continuous pleas before the court, specific performance is not always provided as it is a discretionary remedy. The relief has to be claimed specifically. If the plaintiff argues specific performance of any particular clause in the contract or any agreement, the lawsuit could be asserted for specific performance of only that clause or agreement.

The period of limitation for a suit of specific performance is three years from the date fixed for performance, or in absence of any date, the period when the aggrieved party noticed that performance has been refused.

Contracts exempted from specific enforcement

According to Section 14 of the Specific Relief Act 1963[v], there are certain cases where contracts are exempted from specific enforcement:

Pecuniary or monetary compensation is an adequate relief: Under this exception, the court does not grant specific performance of a contract as it is presumed that the aggrieved party relies upon the standard recourse for infringement of contract i.e. remedy of compensation. For example contract of mortgage of immovable property, contract of sale of goods, contract of repair of premises etc. In the case of Adcon Electronics Pvt. Ltd vs Daulat And Anr,[vi] the court held that in case of breach of contract to transfer immovable property, the court would presume, unless the contrary is proved, that such breach cannot be adequately relieved by monetary compensation, whereas the principle is quite opposite for movable property (except with two exceptions carved out in Explanation-(ii) of Section 10) that the court is to presume, unless the contrary is proved, that the breach of contract to transfer movable property can be relieved by monetary compensation.

Unless the contradiction is proven, the court shall assume:

The infringement or breach of a contract for the transfer of immovable property cannot be sufficiently relieved by awarding pecuniary compensation.
The breach of a contract for the transfer of movable property may be presumed to be relieved, except in the following cases:
If the property is not an ordinary item of trade or is of exceptional interest or consists of goods which are not easily accessible in the market;
If the property is owned by the defendant as the agent or trustee of the aggrieved party.

Contracts stemming from the element of personal skills: This exception encompasses the contracts that stem on the personal competence or skills of any party. The court cannot impose specific performance of the contract if the defaulting party or the promisor or any third party possessing that skill suffers ailment or death or any other serious issues. In the case of Robinson Davison, it was established by the court that the arrangement to play in concert relies upon the personal skill of defendant’s wife, and the contract cannot be specifically imposed owing to her sickness.

Determinable Contracts: Determinable contract means a contract that can be determined or revoked or terminated by a party to the contract. For example: In the case of a partnership business, each partner may withdraw by giving written notice to other partners and may dissolve the firm.

Contracts involving the performance of continuous duty which cannot be supervised by the court: Earlier under the Specific Relief Act, 1877, a continuous duty which cannot be supervised by the court shall be considered for a period of 3 years which has been omitted under the Specific Relief Act, 1963. The Specific Relief Act, 1963 is not refrained by any time limit for the execution of a continuous duty. Contract of execution of a sale deed is an example of the contract involving the performance of continuous duty.

RESTITUTION

Restitution is a category of remedy available in both several civil and criminal cases in which the evaluation of remedy is done on the basis of the defendant’s benefits or profits, rather than losses suffered by the aggrieved party. Restitution drives the defendant to surrender the benefits that they have unlawfully gained from the aggrieved party. The remedy of restitution is mostly used under the contract law. Restitution in contract law is structured to revert to the same position as the injured person before sustaining damages prior to the existence of the contract. The aggrieved party must make this claim in the initial lawsuit in order to seek restitution.

A party breaching a valid contract may be required to pay restitution. The amount should be determined on the basis of the value have been earned from the violation, which is generally the sum specified in the contract. In addition, restitution may not be granted if the amount cannot be computed with certainty. Parties seeking to restitution may not claim the loss of profits or revenues incurred by the breach. In the event of a breach of contract, restitution damages are limited to the amount specified in the contract. For example, W offers a contract to sell his bike only to X for Rs 40000. If W sells the bike to another entity, he will be obliged to pay the restitution for a sum of Rs 40000 to X as this was the price specified in the contract. Thus, even if the bike was sold for more than Rs 40000, X can only collect on the contract price of Rs 40000.

The remedy of restitution under Contract law is mainly granted for two primary reasons:

Mould the victim as a whole and reinstate them to their financial status before the event of a breach.
To prevent the unjust enrichment of the defendant.

The distinction between restitution and compensation is drawn on the manner of computation of the monetary reward. In the former, the amount of reward is computed on the basis of the unjust enrichment of the defendant, whereas in the latter, the amount is evaluated on the basis of the monetary loss suffered by the plaintiff.

INJUNCTION

Injunction can be defined as an equitable remedy under which the court either orders or restricts the parties to perform certain actions. There are mainly three kinds of injunctions granted as a remedy for breach of contract: Interlocutory injunction, Mandatory injunction and Prohibitory injunction. The aim of the interlocutory injunction is to preserve the status quo of something in an ongoing suit. In simple words, the interlocutory injunction means stopping the occurrence of any action. Interlocutory injunction is applied in before the beginning of something, or stops something from being continued. For example, an interlocutory injunction can be applied in the case where two people are fighting over the ownership of a land.

Mandatory injunction refers to the enforcement of some action by the court. In other words, if the defaulting party back off from fulfilling his promises set out in the contract, the aggrieved party can claim the remedy of the mandatory injunction on the defaulting party before the court to perform the promised action. For example, if the contractor fails to end the construction of a new property by the due date, the court may impose a mandatory injunction for finishing the work.

The term prohibitory injunction means to prohibit conducting some particular act. If two parties had been in a contractual relationship and one of them had decided to sign the same contract with any third party, the court may impose a prohibitory injunction to refrain the defaulting party signing the same contract with the third party.

QUANTUM MERUIT

Quantum meruit is a legal recourse based on fair compensation. It is a potential alternative redress for the partial execution of the contract. A claim can at reasonably be defined as residual equity in quantum meruit. Quantum meruit is the name of a legal action brought against the accomplishment of work and performance of labour without an agreement on price. The concept of quantum merit is outlined as the legal formula of appropriate compensation and restitution. It must be noted that this remedy is only available for the part of the accomplished work by any third party other than the defaulting party making a breach of contract. While, if the defaulting party breaching the contract has done the part of the work, the aggrieved party cannot claim anything in respect of it.

In the case of Parshad and Sons Ltd. v. Union of India, [vii] Supreme Court held that Compensation under quantum meruit shall be granted for work performed or services rendered, if the price of such work is fixed by contract. In the case of work performed or services rendered in accordance with the provisions to the terms of the contract, compensation for quantum meruit may not be granted where the contract provides for consideration payable in that behalf.

CONCLUSION

A contract is the source of a specific compendium of rights and duties of the parties that would be of no benefit if there is no contractual provision for redress for damages or injuries suffered by the aggrieved party. Chapter VI of the Indian Contract Act, 1872 allows for the recourse to be rendered to the aggrieved party by means of restitution for damages or injuries suffered by the breach of the contract by the other party. It also allows for compensation for actual damages or injuries suffered by the party in infringement of the contract. Reasonable liquidated damages shall be compensated without evidence of loss. It also provides that in the event of a breach, the contracting parties must agree that the defaulting party shall pay the agreed amount to the other party or may agree that, in the event of a breach by one party, any sum paid to that party shall be relinquished. If it is not a valid pre-estimation of the loss, but a sum expected to ensure the execution of the contract can be considered ‘penalty.’ However, the simple stipulation does not grant the right to compensate through penalty, evidence must be provided for injuries or damages incurred by a breach of contract. Apart from damages, there are several other equitable remedies available in case of breach of a contract but these involve overcoming an abundance of challenges and rebuttals to prove a case of breach of contract.

REFERENCES

[i] S. 73, Indian Contract Act of 1872
[ii] (1854) 9 Exch 341
[iii] 1974 (2) SC 231
[iv] A.I.R. 1962 S.C. 366
[v] S.14, Specific Relief Act 1963
[vi] (2001) 7 SCC 698
[vii] 1960 AIR (SC) 588

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My name is Anurag Maharaj and I am from Bokaro, Jharkhand. I am a student of law at Lloyd Law School, Greater Noida. I have tried to define the “Position and the Nature/Effect of Minor’s Agreements under the Indian Contract Act” in this article.

Introduction

A contract is a legally binding agreement that acknowledges and administers the rights and duties of the contracting parties. A contract is enforceable if it meets the conditions and the approval of the law. “Section 10 of the Indian Contract Act states that” all agreements shall be contracts if they are concluded by free consent for a legitimate reason and with a lawful intent of the parties competent to contract, and are not explicitly declared void” and Section 11 of Indian Contract Act 1872 defines “Who is competent to contract” .Everyone is competent to contract who is of the majority age in accordance with the law to which he is subject and who has a sound mind and is not disqualified by any law to which he is subject. Before entering into a contract, it can be said that the majority is necessary.

For the purpose of making a contract, a person is said to have a sound mind if, at the time he makes it, he is able to understand it and form a fair opinion about its impact on his interest.

Two conditions prevail here:-

He had to be able to grasp the deal,
He should be able to make a reasoned decision about the contract’s effect on his interest.

Age of majority:- Section 3 of the Indian Majority Act declares that every person is of majority age who has reached the age of 18. However, when a guardian is assigned to a minor or his property, at the age of 21, he obtains a majority. By looking at Indian law, the agreement of the minor is null and void, meaning that it has no value in the eye of the law, and is null and void as it can not be enforced by either party to the contract. And even though he secured a majority, he did not ratify the same agreement.

Illustration:- This case is the best example on the matter. In this case, a minor mortgaged his house to secure a Rs. 20,000 loan in favour of a moneylender and obtained Rs. 8,000 from the mortgagee. In case of default, the mortgagee filed a claim for his mortgage money to be recovered and for property sales. The Privy Council held that an agreement by a minor against him was completely null and therefore the mortgagee could not recover the mortgage money.

Nature/effect of minor’s agreement:-

1) The agreement of a minor on reaching a majority can not be ratified by a minor:

Ratification means consent or confirmation. A minor can not confirm an agreement after attaining majority that he actually made during his/her minority. This is because ratification relates to the date of the contract and therefore a contract that was null and void from the outset can not be validated by subsequent ratification.

A famous case in this respect is Suraj Narain v Sukhu Aheer. In this case, when he was a minor, a person borrowed money and then made a fresh pledge after gaining a majority to pay back the amount along with interest. The problem to be understood was whether the consideration obtained during minority could constitute a good consideration after majority attainment. The Allahabad High Court held that, after reaching the age of majority, consideration obtained by a person during minority can not be a legitimate consideration and can not be made legitimate for a fresh pledge. The Promiser was found not to be responsible for such a contract that would constitute a void deal

2) A minor’s agreement is void ab initio:-

A contractual agreement in India dealing with a person below the age of 18 is deemed void from the outset in the same way that a minor can not enter into a contract. This can be better understood with the above example.

3) Rule of estoppel:

If one person has intentionally induced or encouraged another person to assume by his act that something is real, he or his members will not be able to dispute the very reality in the future. It determines the Estoppel Principle. Nevertheless, minors are an exception to this law, and they can bargain with a minority, even if they misrepresented their age at the time of agreement.

4) No restitution:

When a contract is void, any person who receives any benefit under the contract must restore the same to the other party or render due compensation. Minors, however, are an exception to this doctrine. They are removed from the other party’s repayment of benefits.

5) Minor’s responsibility in tort:

The word ‘tort’ implies a legal error for which the party concerned can file a lawsuit. “If a minor signs an arrangement by misrepresenting his age, he can not be liable for damages for breach or in the form of damages for wrongdoing” (i.e., deceit) because this would be indirectly enforcing the agreement which is void. However, if a minor ‘s wrongful act (i.e., torture) is independent of the contract, then minor shall be liable in tort for damages. Example- A, a minor borrowed a mare from B for riding only under instructions to take care of it. B loaned his friend the horse, the horse got out of control of A and jumped and badly injured someone. Therefore, A has been held liable for misconduct.

6) Minor agent:

A minor can act as an agent, but he will not be responsible personally for any of his acts. In the usual course of business, the principal would be liable to third parties for the actions of the minor agent that he does.

7) Minor Partner:

Section 30 of the Partnership Act provides that, with the consent of all other Partners, a minor may be admitted to partnership benefits. His liability is limited to partner shares. He can’t get involved in the management

8) Necessities down to minor

Minor is liable to pay for the necessaries supplied to him by the other out of his property. “Necessaries” means things that are important to a person’s life intent and to his real requirements, and that are sold to him. For example, a house given to a minor on rent for his studies can be recovered from minor ‘s property in a requirement and rent

9. Minor Shareholder:

A minor in a corporation can not become a shareholder because he is incapable of entering into a contract. A business can also refuse to record, pass or forward shares in favour of a minor unless the shares are paid out in full. In the event that a minor inherits such securities, it may become a shareholder working through its legal guardian.

Exceptions to the general rule of minor’s agreement:-

1.Obligation by a Minor

A minor can be a promisee in a contract, but not a promisor and if he has fulfilled his promise portion, he can impose the obligation on another party.

2. A contract entered into for the benefit of the minor by his guardian:

In this case, if a party fails to fulfil its promise, the minor may sue the non-performing party.

3) Apprenticeship Contract

A minor shall only be engaged as an apprentice when his guardian has concluded a contract with the employer on his behalf. Such contracts would be binding on minors

CONCLUSION

A minor’s contract is void from the beginning except in cases of obligation by a minor, guardian’s agreement and apprenticeship. All the agreements are contracts if they are concluded for a lawful reason and with a lawful intent by the free consent of the parties competent to contract, and are not explicitly declared void. Now, every person is competent to contract who is of the majority age according to the law to which he is subject and who is of sound mind, and is not disqualified under any law to which he is subject from contracting.

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The article has been written by Nikhilesh Koundinya a student of Symbiosis Law School, Pune. In this article, he has spoken about the concept of euthanasia. Furthermore, he has discussed the decisions taken by the Indian judiciary with regards to this practice. He has gone onto to the law commission report and provides suggestions for the practice. He would like to thank Grishma Mahatme for her support on this article.

INTRODUCTION

Every human being has a right to live a desirous and happy healthy life until he dies. This is a fundamental right that is even guaranteed by the constitution in Article 21. But sometimes the person may not want to live the years granted to him/her and would want to end his life voluntarily. This way of ending life is considered to be unnatural and the person committing the act is termed as someone who has a mental problem or abnormality. There are two ways in which a person can end his/her life. One way is by killing oneself by committing acts which will lead to death eventually. There are many ways such as shooting yourself, hanging yourself or consuming substances which may cause death and many others. This action of a person is predominantly categorised as “suicide”.

But there is another way by which a person can end his life which is requesting someone else to take his life. This under the law is categorised as “Euthanasia” or in layman’s term as “mercy killing”. The context of how India and other countries have dealt with this phenomenon will be addressed in the paper but first, we must observe the origins of this practice.

The term euthanasia was derived from the Greek word “eu” and “Thanatos” which means “good death” or “easy death”. Euthanasia or mercy killing is an act of painlessly putting one’s life to death who is suffering from extreme pain and incurable disease by withholding treatment or withdrawing artificial life support measures. Euthanasia was first legalized in Holland, Netherlands in the year 2008.

According to the Black’s Law Dictionary (8^th edition), euthanasia means the act or practise of killing or bringing about the death of a person who suffers from an incurable disease or condition, esp. a painful one, for reasons of mercy.

The understanding of the definition provides us with the rationale of committing the act of euthanasia. The practice is limited to doctors taking their patient’s life when requested to avoid the irresistible pain and terminal illness. Therefore, the rationale is that a patient can be killed today rather than having ongoing pain for years to come.

TYPES OF EUTHANASIA

Active or Positive– In this kind of practice the person directs somebody else to take his life. This is essentially the patient making a request to be dead. Since the patient suffering makes the request for death from the doctor this is covered as active euthanasia as the patient plays an active role.
Passive or Negative- Passive euthanasia as a practice differs from active euthanasia as this process is affected by omission of a person to do something. So the doctor may not administer certain medicines he should have or will remove the support which he should have which will lead to the person’s death. Hence in this practice the result of death is not promulgated by the patient but due to the intentional omission on part of the doctor or any other person.
Voluntary– The most important term under this ambit would refer to willingness to die and consenting to die. This means that a person who is conscious and can make a decision states that he wants to be killed and this will classify as active euthanasia.
Involuntary– This kind of euthanasia may also amount to an offence under criminal law. If a doctor without taking consent of the patient who is fully conscious to take the decision kills him, it would classify as murder. But the offence would represent the concept of involuntary euthanasia.
Non-voluntary– If a patient is fully incapacitated and isn’t conscious enough to tell his wish and is undergoing a lot of pain, a close family member can make the call to relieve that person from the pain and provide for euthanasia to be performed and this will also classify as passive euthanasia as even in this case the doctors may remove the life support which would lead the person to die.

There are various ways for performing the practice of euthanasia and the most popular ones are: –

Lethal Injection– Injection of a lethal dose of a drug, such as a known poison, KCl, etc.
Asphyxiation– The most popular gas used is Carbon monoxide (CO). Nerve gases like sarin & tabun etc. are also added in small amounts to fully ensure death.

EUTHANASIA IN INDIA

The practice of euthanasia was not recognised for a long time in the Indian scenario. But then the landmark judgement of the supreme court came about which was called “Aruna Shanbuag v Union of India”. The facts of the case are as follows:

The Aruna Shanbuag was a nurse in King Edward Memorial Hospital located in Mumbai in the Parel area. On 27^th November 1973 when she was changing clothes in the basement a sweeper named Sohanlal tries to molest and sexually assault her but when he failed to do so he strangled her with a chain and sodomized.
The perpetrator was later tracked and was sentenced to jail but the case of rape was never filed due to the lack of police investigation. Thus, the mention of sexual assault and anal rape wasn’t presented in the court.
When the incident took place, the court observed that due to strangling of the neck with a metallic chain the oxygen to the body did not pass and thus she was left in a vegetative state ever since. After the incident she was taken to KEM hospital for treatment and was kept alive using a feeding tube.
Pinky Virani who was a social activist wanted to help her and thus instituted a case in the Supreme court to end the life of Aruna because she was in a vegetative state and this violated her fundamental right to live a life with dignity. The court rejected the petition as the court realised that the doctors and the staff working with Aruna did not want to take her life. Thus, the court while rejecting the petition allowed the practice of passive euthanasia in India.
Aruna died of pneumonia in 2015 being in a coma and vegetative state for the past 42 years.
The judgement was considered to be against the fundamental right under article 21 which is right to life and thus in a case in 2014 the court directed the decision of passive euthanasia to be reheard under a constitution bench.
The government in the same year on 23^rd December 2014 the government stated that it agrees with the decision of the Supreme court with regards to passive euthanasia and because the guidelines have already been issued by the Supreme court they would be followed.

LEGAL ASPECTS OF EUTHANASIA IN INDIA

Euthanasia has not been completely legalized in the Indian subcontinent. Only the concept of passive euthanasia has found support from the court and from the law makers. There have been various decisions passed in relation to euthanasia under Indian law:

State of Maharashtra v Maruty Shripati Dubal– In this case, the main contention raised was the fact section 309 of the Indian Penal Code (IPC) is violative of articles 19 and 21 of the constitution. The court held that this section would be scrapped and held that there is nothing illegal in trying to end one’s life. In fact, when article 21 of the constitution gives a right to live it must also give a right to die. The court held that though it is abnormal to end one’s life yet it is not illegal to do it.
Gian Kaur v State of Punjab– In this case, the court held that a person who is terminally ill or is in a constant vegetative state is not being killed and nobody is infringing on his right to life whereas we are only accelerating the process of death so that the person doesn’t undergo untoward pain.
In the case of Airedale NHS Trust v Bland for the first time right to die was allowed in English law system where life support services were cut out for the patient. This case was a landmark case because it gave powers to the judiciary to decide what to do and when to allow passive euthanasia after judging and coming to a conclusion on the patient’s state.
In the case of Mckay v Bergsted the court for the patient and state interest removed the breathing system from the patient’s mouth. Thus, even in this case, the patient’s interest was taken into consideration.

GUIDELINES REGARDING EUTHANASIA

After the Aruna case there were several guidelines issued by the Supreme court in relation to what steps are to be followed to conduct the procedure of passive euthanasia:

First of all, for the process of euthanasia to be administered the high court must allow the practice only after observing that the due procedure has been followed.
Whenever a petition is raised for the grant of passive euthanasia for a person who is terminally ill or in a vegetative state the chief justice of the high court will appoint two judges to loom into the matter presented before the court and then take a decision on whether to approve or disregard the petition.
Before arriving at the decision, the two-judge bench must consult with at least three doctors to know the exact repercussions of their decision and also the patient’s present state and the hope for recovery. In the meantime, a letter will also be issued to the close relatives of the patient and a copy of the doctor’s report will be made available to them as soon as the report is completed. On the basis of all this the high court will make a decision regarding the person’s request.

LAW COMMISSION OF INDIA AND ITS RECOMMENDATIONS

The law commission of India had recommended few changes with regards to the law related to suicide where suicide should not be looked like an offence but it should rather be defined as a disease and required treatment should be provided to the concerned person. Furthermore, it had also recommended repealing section 309 of the Indian Penal Code, 1860.

Accordingly, keeping these factors in mind, the Law Commission of India in one of its report has laid down certain necessary guidelines which should be considered.

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The Centre is looking to engage a Research Associate to support the research and ancillary activities of the Committee.

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The Research Associate shall be assigned any other such responsibility as the Committee may deem fit.

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This post is written by Anushree Tadge, 3rd-year law student of ILS Law College, Pune, she tries to explain briefly what the concept of Alternative Dispute Resolution is? Its meaning, nature and genesis.

Introduction

Indian judiciary is one of the few very old judiciaries throughout the globe and is a carefully designated one under the Constitution of India. Even after being efficient enough, the Indian courts are known worldwide for their slow judicial procedure. More than 43 lakh cases are pending in the high courts all over the country and it was reported to the Rajya Sabha in 2019 that over 8 lakh of these cases are over a decade old. This is a big problem and the major reason for it is the increasing population and with it the ‘unsatisfactory’ proportion of judges to citizens.

Long unsettled cases disturb the mental as well as the financial health of both the parties. This problem persists long after establishing more than a thousand fast track Courts but the filing of a case requires a day, but disposal of cases take months. So, Courts alone efficiently handling pending cases while disposing of new ones is possible only in a Utopian country.

What is ADR?

Hence, dealing with such problems requires external help other than Judicial setups and in such Alternative Dispute Resolution (ADR) can be a helpful one, it is an umbrella term for various methods that resolve conflict in a peaceful manner acceptable to both the parties. ADR as a concept can be substituted to the conventional methods in order to resolve disputes. ADR as a process can efficiently resolve all type of matters – civil, commercial, family, companies etc. ADR uses the assistance of a neutral third party who helps both the parties to communicate as well as discuss the differences in order to reach a settlement that will take into consideration the arguments of both the parties. This includes Arbitration, Mediation, Negotiation as well as Conciliation (the most popular ADR methods).

Arbitration

Arbitration is a substitute to court trials, it cannot exist without a valid arbitration agreement clause, inserted before the dispute emerges. In this kind of ADR system, the proceedings shall be with arbitrators (substitute to judges in Court), they can be one or two in number. The decision of an arbitrator is binding on the parties (just like Court proceedings) and the decision is called ‘Award’. The sole object of Arbitration proceedings instead of conventional one is to obtain a just and fair settlement of disputes outside court without necessary delay and expense that is expected out of Court trials.

Either of the parties (in a contract with arbitration clause) can invoke the clause either himself or by way of an authorized agent. Here, the arbitration clause is a clause that mentions the course of actions in case a party wants to go for arbitration, language involved, number of arbitrators to be seated, and place where the arbitration is to be conducted.

Mediation

Mediation is another form of Alternative Dispute resolution where a third neutral party aims to resolve disputes between the parties and assist them in reaching an agreement. It is an easy and uncomplicated process, extremely party centred. A third party is appointed as a mediator to resolve the dispute amicably by using appropriate communication and negotiation techniques. Mediator’s sole objective to help parties reach a common point, he doesn’t impose his views and make no such decision imposing on the parties, what a fair settlement should be. Four stages of mediation are- Opening statement, Joint session, Separate session and finally Closing.

Conciliation

Conciliation can be called as another form of arbitration but it is comparatively less formal in nature. It is different because ‘clause’ for conciliation to be invoked by either of the parties is not a mandate of this ADR, but since a conciliator does a similar job to an arbitrator, the proceedings work on similar lines. Also, it is actually not possible for the parties to have a conciliation agreement before the dispute. It is stated in Section 62 of The Arbitration and Conciliation Act, 1996 that,

If a party wishes to initiate conciliation, it shall send to the other party a written invitation to offer the same, along with a brief introduction of the subject of the dispute.
The proceedings shall commence only when the other party accepts the same
If the other party wishes to reject the invitation, there will be no question of conciliation proceedings.

Nature of ADR: Explained-

‘Alternative dispute resolution’ as a word literally means to solve the dispute by alternative mechanisms. As mentioned above, these are techniques of dispute settlement outside of the government judicial process and solve disputes by mutual understanding. ADR is extra supports the judicial system by easing the burden on the same. It is less expensive and time-efficient. According to Justice Mustafa Kamal, “it is a non-formal settlement of legal and judicial dispute as a means of disposing of cases quickly and inexpensively”

ADR process are-
• Settled with the assistance of a neutral third person
• the third person is familiar with the nature of the dispute
• involved with proceedings that are informal,
• consumed with lesser procedural technicalities
• cost and time-efficient
• efficient because the confidentiality of the subject matter (related to the dispute) is maintained to a great extent

Genesis of ADR: Explained-

Alternate Dispute Resolution System is not a new experience for the people in our country. It has been prevalent for a long time. System of Dispute Resolution, anciently, made a significant contribution in matters related to family, social groups, and trade and property. Disputes were also resolved at village level where elders comprised the ‘Panchayat’ and performed the informal ‘mediation’. More such institutions like Kulas, Srenis and Parishads adjudicated disputes before ‘kings’. Further with the entry of East India Company, Modern Arbitration Law was introduced by way of Bengal Regulation of 1772, 1780 and 1781 In the common law countries, ADR has its roots in the English legal development. Charters and documents reveal that some respected male members in the community often resolved disputes as extended legal authorities of kings, creating one of the first forms of arbitration. In the modern times, dispute resolution refers to both Alternate Dispute Resolution subsequent to which is the Online Dispute Resolution. ADR system includes the mechanism, short of litigation, rather with the help of a third party. This may refer to Arbitration, Mediation, and Negotiation and Conciliation, sometimes. With technology seeping into this whole arena of ADR, Online dispute resolution is the new face of Dispute Resolution.

ADR in India

The ADR mechanism has proven to be one of the most effective mechanisms to resolve disputes of commercial matters. In India, laws relating to resolution of disputes are three in number. The Judiciary itself also encourages out-of-court settlements to meet with the pending cases in the courts. Few important provisions related to ADR in India-

Section 89 of the Civil Procedure Code, 1908 – It provides the opportunity to people, to settle matters outside the court by way of Arbitration, Conciliation, Mediation or Lok Adalat.
The Acts dealing with Alternative Dispute Resolution are Arbitration and Conciliation Act, 1996 and,
The Legal Services Authority Act, 1987
To effectively implement the ADR mechanisms throughout India, organisations like the Indian Council of Arbitration (ICA), The International Centre for Alternative Dispute Resolution (ICADR) were established in the year 1965 and 1993 respectively. The ICADR is an autonomous organisation, working to promote and develop ADR facilities and techniques throughout India. While the main objective of the Indian Council of Arbitration- ICA is to promote amicable and quick settlements of matters by arbitration. Arbitration and Conciliation Act, 1996, law, is based on the United Nations Commission on International Trade Law (UNCITRAL) model of the International Commercial Arbitration Council.

References

Md. Aktaruzzaman, Concept and Law on ADR and Legal Aid, 2nd ed., (Dhaka, Shabdakoli Printers, 2008), p.9.