History of Law and Legal Institutions: Bengal Indigo Contract Act 10 of 1836

History of Laws needs to be captured for younger generation to know more about the laws and legal institutions. This page is our focus to capture that part.

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Dinabandhu Mitra wrote his famous play Nil Darpan translated in English later by Michael Madhusudan Dutta, which brought to focus the plight of the Indigo planters blinded by the profits of blue dye in Europe. The Indigo revolt in Bengal in 1859 has its history rooted within a 178-year-old law — Bengal Indigo Contracts Act, Act 10 of 1836 — which triggered it still remains in vogue. According to the Times of India report, which brought out this discussion, the law hasn’t been formally repealed even in its 68th year of Independence. The present status needs to be further checked. This may be the oldest law to be repealed.

The Law Commission of India in its Second Interim Report dated October 13, 2014, report titled” Obsolete Laws: Warranting Immediate Repeal” The Report stated:

“Prior to independence, the British controlled the entire trade in indigo and this Act, which was enacted by the Governor-General-in-Council, helped consolidate British rule over indigo farming by enforcing its cultivation by farmers in the erstwhile Bengal province. This Act is in disuse and a remnant of colonialism and should be repealed. However, according to Article 372(1), the competent legislature for repeal of this Act is that of the State where the Act is in force. Therefore, the Central Government should write to the concerned State Governments recommending a review of this law by the State with a view to repeal. The Central Government should also remove this law from its lists of Central Acts in force. This Act has also been recommended for repeal by the PC Jain Commission Report .” 

Article 372(1) of the Constitution of India says pre-Independence laws continue to remain in force unless amended or repealed by a competent legislature.  The report, therefore, mentions that while recommending the repeal of these laws, the legislature competent to repeal the law must also be established in accordance with Article 372(1) of the Constitution. As explained in Chapter 4 of the 248th Report, pre-Constitutional laws, even where they have been passed by the Centre, can only be repealed by the Centre if the subject matter of the law now falls within List I or III of the Seventh Schedule to the Constitution. Where a law falls within the domain of List II, it should be referred to the relevant State Governments for repeal.


1. The photograph on the top page is copyright work of French Photographer Oscar Mallittee.

IPL Controversy and the Legal Developments

Cricket is not just game but religion in India. Match fixing and spot fixing issue around IPL raised several concerns which led to filing of petition before Supreme Court. The article compiles the issues dealt in 138 page judgment.

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Cricket is not a passion but a great unifying force in the country, therefore a zero tolerance approach towards any wrongdoing

Supreme Court of India in BCCI vs. Cricket Association of Bihar

A. Background of the IPL Controversy

The Indian Premier League (“IPL”) is a professional Twenty20 format cricket league in India and contested for nominating players during the month of April and May of every year by franchise teams representing different Indian cities. The Board of Control for Cricket in India (“BCCI”), a society registered under the Tamil Nadu Societies Registration Act, 1975 founded the IPL in the year 2007. IPL was to be run by a committee to be constituted by a general body of BCCI and the governing body to be called IPL Governing Council.

In December 2007, the IPL Governing Council invited tenders for grant of IPL franchises on an open competitive bidding basis, in which only corporate bodies were allowed to participate. India Cements Ltd. was one of those who participated in the auction for the Chennai franchise and emerged successful in the same. Franchise Agreements were, pursuant to the auction, signed by BCCI with the franchisees concerned.

The IPL came into legal attention from April 2013 when issues relating to spot-fixing and betting case arose based on secret information received by Delhi Police about the involvement of underworld and this led to the arrest of three cricketers, S Sreesanth, Ajit Chandila and Ankeet Chavan on the charges of spot-fixing. Mumbai Police arrested film actor Vindu Dara Singh and BCCI Chief’s son-in-law and CSK’s former team principal Gurunath Meiyappan for alleged betting and having links with bookies. Others included in dispute was Raj Kundra. On 26 May 2013 BCCI announced that a three-member Commission who would investigate the role of G. Meiyappan in the spot-fixing and betting scandal.


Image Source: http://cricket-cup.blogspot.com


BCCI constituted a three-member commission consisting of two members of BCCI and one Independent Member. This was followed by formation of Probe Commission consisting of two former Judges of Madras High Court and Shri Sanjay Jagdale. N. Srinivasan resigned till the probe was going on. It was in the backdrop of developments taking place, the Cricket Association of Bihar had filed a PIL in the High Court at Bombay for issuance of writ of mandamus[1] to recall BCCI order constituting a probe panel comprising of two retired Judges of the Madras High Court to enquire into the allegations of betting and spot-fixing in the IPL made among others and against one Gurunath Meiyappan who was also arrested by Mumbai Police. Additionally, the PIL had petition prayed for suspension of N. Srinivasan pending probe and other proceedings.

The Mumbai High Court by its order dated July 30, 2013, granted relief but declined a possible reconstitution of the panel. Aggrieved, BCCI has assailed the order passed by the High Court in a Civil Appeal. In the connected Civil Appeal, Cricket Association of Bihar has prayed for further and consequential orders which according to the appellant could and indeed ought to have been passed by the High Court, inter alia, for removal of respondent from the post of President of BCCI and cancellation of the franchise agreement favouring Chennai Super Kings and Rajasthan Royals for the IPL matches to be conducted in future.  The Division Bench of the Mumbai High Court held that Probe Commission set up by BCCI is not validly constituted and is in violation of the aforesaid IPL Operational Rules. However, the Court declined to constitute the panel to conduct an enquiry under the supervision of the high court, as the same was the prerogative of BCCI. This order of the Division Bench was assailed by both the BCCI and Cricket Association of Bihar to the extent that the Probe Commission ultra vires and no consequential relief respectively.

Finally, the aggrieved parties approached the Supreme Court in BCCI vs. Cricket Association of Bihar and Cricket Association of Bihar vs. BCCI [SLP 4235 and 4236 of 2014] and in another connected matter in which the apex court issued a notice to Srinivasan, in regards to the public interest litigation (PIL) filed by the Cricket Association of Bihar, in regards to the formation of a new probe panel into illegal activities in the IPL. While the hearing was going on N. Srinivasan was elected as the President of BCCI on September 29, 2013. The Hon’ble court vide orders dated October 8, 2013 constituted a three-member Probe Committee, headed by former Chief Justice of High Court of Punjab and Haryana, Judge Mukul Mudgal (Chairman) and Additional Solicitor General, L Nageswara Rao (Member) and Senior Advocate, Nilay Dutta (Member), Guwahati High Court (hereinafter referred to as the “Mudgal Committee”) to conduct an independent inquiry into the allegations of corruption against Meiyappan, India Cements, and Rajasthan Royals team owner Jaipur IPL Cricket Private Ltd, as well as with the larger mandate of allegations around betting and spot-fixing in IPL matches and the involvement of players.

The direction to constitute Probe Committee was done by this Court in the exercise of appellate powers vested with this court under Article 226 and also under Article 142 of the Constitution.

The article focusses on the outcome of the litigation before Supreme Court.


A. Issues Decided by Court

1. BCCI is ‘State’ or not within the meaning of the Article 12 of the Indian Constitution

Article 12[2] of the Constitution of India gives an inclusive definition of ‘State’. The law as to what constitutes a ‘State’ is fairly well settled with regard to this due to the decision of the Constitution bench in this regard. The apex court observed to decide the present issue observed that the BCCI is involved in certain public functions discharged by the BCCI and therefore are under scanner, which makes it amenable to the writ jurisdiction of the Court. The following precedents were cited:

  • In Sukhdev and Ors. vs. Bhagat Ram Sardar Singh Raghuvanshi (1975) 1 SCC 421 the Constitution bench in their concurring judgment referred to Marsh vs. Alabama Case (3) 326 US 501 case to hold that even where Corporation is private performing a public function it is bound by Constitutional standards applicable to all State actions.
  • In Ramana Dayaram Shetty vs. International Airport Authority of India (1979), 3 SCC 489 the apex court held that one issue that should be kept in mind is whether the operation of cooperation is an important public function.
  • In Ajay Hasia vs. Khalid Mujib Sehravadi (1981), 1 SCC 722 this Court enunciated certain test applicable for determining whether the entity is an instrumentality of a State or not. However, in Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology (2002) 5 SCC 111 a Seven judge bench of the Court decided by 5:2 ratio that tests provided in Ajay Hasia Case (Supra) were not a rigid set of principles which may be used to decide the body falls within definition of State. On the contrary, be considered to be a ‘State’. The question in each individual case, declared this Court, would be whether on facts the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive to make any such body State within the meaning of Article 12. Mere regulatory control whether under statute or otherwise would not be sufficient. Overruling an earlier decision of this Court in Sabhajit Tewary v. Union of India and Ors. (1975) 1 SCC 485, this Court held that Council of Scientific and Industrial Research even when registered as Society was ‘State’ within the meaning of Article 12.
  • In BCCI vs. Netaji Cricket Club and Ors. (2005) 4 SCC 741 Supreme Court considered the role and function of the discharged by the BCCI. The Board control over the sports of cricket was deep and pervasive and it exercised enormous public functions, which made it obligatory to follow the doctrine of fairness and good faith.

The question whether BCCI is a State or not arose in Zee Telefilms vs. Union of India and Ors. (2005) 4 SCC 649 the apex court held that BCCI is not State within the meaning of Article 12 as the same was not created by the Statute nor the share was held by Government. The Court observed that the government was not giving any financial assistance to the BCCI. Therefore, there was no deep and pervasive State control and whatever was there was of regulatory nature as applicable to similar bodies. So it was on the basis of Pradeep Kumar’s Biswas Case that the Hon’ble Court held that BCCI was not functionally, financially and administratively dominated by the Government. The apex court repelled the contention that Board being of nature, where the public function was being discharged by it was of public nature does not tantamount to be a State within the meaning of Article. The Court recognised that the BCCI is discharging certain public functions so it comes under the scanner of writ jurisdiction in the case of any violations. The Government of India has allowed the BCCI to select the national team and those do well are duly awarded by government and the role of Board has never being diluted. So, BCCI is not a State within the meaning of Article 12 of the Constitution but within the purview of writ jurisdiction due to the public functions performed by it.

2. Whether Gurunath Meyiappan and Raj Kundra falls within the bracket of Team Officials?

  • The Probe Committee found the liability of Gurunath Meiyappan is fastened irrespective of the fact, that he is team official or owner of CSK, under the present rules, the consequences of betting would therefore flow. The fact that Mr Gurunath was a team official was an admitted position. Contrary to the claim of Mr Meiyappan, the Court held that the opinion of this court was not binding upon the criminal court and it can arrive at its own findings. For the purpose of this matter, he was held liable for betting.
  • The allegations against Raj Kundra and his wife Shilpa Shetty needs further investigations, which if proved would be liable under IPL Operational Rules, IPL Anti-Corruption Code, IPL Code of Conduct for Players and Team Officials. Mr Nilay Gupta, the third member of the Probe Commission also arrived at the similar observations.
  • The Court observed that the IPL Operational Rules requires the formation of ‘Disciplinary Procedure Commission’ for hearing and deciding such matters. The procedure to be followed includes proving by way of admission and strict proof. The BCCI did not adhere to the prescribed procedure and instead of forming this Commission formed two-member judges and Mr Jagdale. Later Mr Jagdale resigned still the constituted committee was asked to go ahead and complete the probe with reduced strength under the instructions of the Board. This was the complete departure from IPL Operational Rules. The Committee submitted its inability to probe in the absence of necessary evidence, which BCCI took as conclusive, prove and thus took a quietus approach.
  • The imputation against Gurunath Meiyappan and Raj Kundra under the terms under Rule 6.4 of the IPL Operational Rules. The quantum of punishment need to be imposed on Gurunath and Raj Kundra would be done by the Committee Justice R.M.Lodha, Former Chief Justice of India (Chairman); Justice Ashok Bhan, Former Judge Supreme Court of India (Member); Justice R.V. Raveendran, Former Judge Supreme Court of India (Member) [Committee for Imposition of Punishment and for other Mandate of this Judgment].

3. Permissible Action under the IPL Operational Rules and Anti-Corruption Code against Wrong Doer

  • The IPL Operational Rules is set of Rules that provides for punishment for misconduct along with Anti-Corruption Code. In terms of Section 6 of the IPL Operational Code, upon consideration of relevant factors, the Disciplinary Committee of the BCCI, is empowered to impose an appropriate sanction upon the delinquent having regard to the provisions of Article 6.2 and the Table appearing thereunder. There is, therefore, no manner of doubt that even under the Anti-Corruption Code for participants any act like betting can attract sanctions not only for the person who indulges in such conduct but also for all those who authorise, cause, knowingly assist, encourage, aid, abet, cover up or are otherwise complicit in any act of omission or commission relating to such activity.
  • IPL Operational Rules Applicable on Whom: A careful reading of the Operational Rules extracted above would show that every franchise, player, team official and/or match official is subject to the said rules. In terms of Rule 2.1 of the IPL Operational Rules participation or other involvement with the league is deemed to constitute an acceptance by each person subject to these operational rules of an agreement with an obligation owed to BCCI to be bound by the regulations, the laws of cricket, the terms of the player contract and the jurisdiction of the BCCI in connection therewith.

  • Appendix I of the Anti-Corruption Code of the Participants: The BCCI claims to have adopted the Anti-Corruption Code for achieving, what it describes as certain “fundamental sporting imperatives”. It has given the definition of for different terms appearing in the said Code including a definition for expressions like a bet, Corrupt Conduct, domestic match, event, ineligibility, inside information, match, participant, player, player support personnel etc. Sanctions prescribed under Article 6 of the Code include suspension ranging from six months to a lifetime depending upon the nature and gravity of offence/misconduct proved against the person concerned.
  • Betting as an Actionable Wrong under Anti-Corruption Code: It is manifest that Article 2.2.1 treats betting as one of the actionable wrongs under the Code. In terms of Article 2.5.2 the participant who authorises, causes, knowingly assists, encourages, aids, abets, covers up or is otherwise complicit in any act or omission of the types described in Articles 2.1. to 2.4 committed by his/her coach, trainer, manager, agent, family member, guest or another associate shall be treated as having committed such an act or omission himself and shall be liable accordingly under the Anti-Corruption Code. The expression ‘participant’ has been defined to include any player, player support personnel, Umpire, match Referee or Umpire Support Personnel. What is important is that apart from Gurunath Meiyappan in his capacity as the team official if any participant connected with CSK, authorises, causes, knowingly assists, encourages, aids, abets, covers up or is otherwise complicit in any act or omission he/she will also be liable to action under the Anti-Corruption Code as if he/she had himself/herself committed the act of misconduct.

  • Mr Gurunath Meiyappan having been found to be a team official of Chennai Super Kings is a “player support personnel” hence a participant within the meaning of the Anti- Corruption Code.
  • Franchise Agreement: question, refer to the Franchise Agreement executed between BCCI on the one hand and the franchisees on the other. Clause 11.3 of the said agreement reads:

    “11.3 BCCI-IPL may terminate this Agreement with immediate effect by written notice if:

    (a) there is a Change of Control of the Franchise (whether direct or indirect) and/or a Listing which in each case does not occur strictly in accordance with Clause 10;

    (b) the Franchisee transfers any material part of its business or assets to any other person other than in accordance with Clause 10;

    (c) the Franchisee, any Franchisee Group Company and/or any Owner acts in any way which has a material adverse effect upon the reputation or standing of the League, BCCI-IPL, BCCI, the Franchisee, the Team (or any other team in the League) and/or the game of cricket.”

    In terms of Clause 11.3 (c) (supra) if the franchisee, any franchisee group company and/or any owner acts in a manner that has a material adverse effect upon the reputation or standing of the league, BCCI-IPL, BCCI, the franchisee, the team or any other team and/or the game of cricket, the BCCI-IPL is empowered to terminate the agreement. The expression ‘owner’ has been defined in Clause 1.1 as under: “Owner shall mean any person who is the ultimate Controller of the Franchisee;”

    It is evident from the above provisions that the BCCIIPL is in situations stipulated under Clause 11.3 competent to direct the termination of the agreement. What would constitute “material adverse effect” upon reputation or standing of the league or BCCI-IPL, BCCI, the franchisee, the team or game of cricket shall, however, depend upon the facts and circumstances of each case?

The Court held that what cannot be disputed is that the right to terminate the agreement is available to the BCCI-IPL even in accordance with the provisions of the franchise agreements themselves.

4. Allegations against N. Srinivasan

The appointment of a Probe Committee comprising former Judges of the High Court cannot be seen as an attempt to cover up nor can Mr. Srinivasan be accused of withholding any incriminating material from the Probe Committee especially when there is nothing to show that Mr Srinivasan was indeed in possession of any incriminating material that was withheld from him. Mr Srinivasan had in fact stepped aside while the probe was on to avoid any accusation being made against him. Similarly, the allegation that an effort was made to suppress facts before the Mudgal Committee or that Mr Gurunath was shown only as a cricket enthusiast whereas he was a team official, may, at best, raise a suspicion against Mr Srinivasan but suspicion can hardly be taken as proof to hold him guilty of the alleged cover up. We cannot, therefore, with any amount of certainty, say that the charge of attempted cover up levelled against Mr Srinivasan stands proved.

5. Impugned Amendment in light of the ‘Public Policy’

(a) The Ground of Challenge: The third ground on which the amendment came under challenge was that the same is opposed to public policy and good conscience.  The court has while dealing with issues held that BCCI is amenable to writ jurisdiction under Article 226 of the Constitution as it discharges “Public Functions”. The natural corollary flowing from that finding is that all actions which BCCI takes while discharging such public functions are open to scrutiny by the Courts in an exercise of their powers under Article 226 of the Constitution. It also implies that such actions shall when that govern similar actions when taken by the State or its instrumentalities. The approach which a Court exercising powers of judicial review of administrative action adopts will remain the same irrespective of whether the action under review is taken by the State or its instrumentality or by any non-statutory non-government organisation like the BCCI in the case at hand. It follows that Rule 6.2.4 will be subject to the same tests and standards as would apply to any similar provision emanating from a statute or the general executive power of the State.

(b) Legislative Competence of Body bringing Amendment: Seen in the light of the Articles of Association, the court found no infirmity in the amendment to Rule 6.2.4 in so far as the legislative competence of the authority that brought about the amendment is concerned. It is nobody’s case that the amendment was beyond the competence of the authority that made it. So also, there is in our opinion no merit in the argument that the amendment should fall because the same did not figure as an item on the agenda for the meeting in which the same was passed. The Contention that the amendment came as a side wind on the basis of a report of a Committee that was supposed to examine issues touching anti-racism also does not carry any conviction. It is true that the circumstances, in which the amendment came about, may create a suspicion as to the bona fides of the exercise but a mere suspicion may not be enough to strike the same down. So long as the forum where the matter was taken up, discussed and a resolution passed was competent to deal with the subject, procedural deficiencies which do not affect the competence of the authority do not matter much. The court rejected the submission that the amendment is bad because the same came up all too suddenly for discussion, without any real research or other work to support it and without adequate notice to the members to think about and usefully contribute to the deliberations.

6. Amendment Violates the Principle of Natural Justice

What is contended is that inasmuch as the amendment permits commercial interest to be held by administrators in the events organised by BCCI it violates a fundamental tenet of law that no one can be a judge in his own cause, recognized universally as an essential facet of the principles of natural justice which must permeate every action that BCCI takes in the discharge of its public functions. That contention is not without merit and needs to be carefully explored from different angles. But before we do so we may usefully refer to the decision of this Court in A.K. Kraipak & Ors. v. Union of India & Ors. (1969) 2 SCC 262where a Constitution bench of this Court was examining whether Principles of Natural Justice have any application to purely administrative actions as distinguished from those described as quasi-judicial in nature. The following precedents were relied upon:

  • Mathew J. speaking for the Court in Murlidhar Aggarwal and Anr. v. State of U.P. & Ors. (1974) 2 SCC 472 referred to Winfield’s definition in Public Policy in English Common Law 42 Harvard Law Review 76 to declare that:

31. Public policy does not remain static in any given community. It may vary from generation to generation and even in the same generation. Public policy would be almost useless if it were to remain in fixed moulds for all time.”

“..……However, there is no alternative under our system but to vest this power with Judges. The difficulty of discovering what public policy is at any given moment certainly does not absolve the Judges from the duty of doing so. In conducting an enquiry, as already stated Judges are not hidebound by precedent. The Judges must look beyond the narrow field of past precedents, though this still leaves open the question, in which direction they must cast their gaze. The Judges are to base their decisions on the opinions of men of the world, as distinguished from opinions based on legal learning. In other words, the Judges will have to look beyond the jurisprudence and that in so doing, they must consult not their own personal standards or predilections but those of the dominant opinion at a given moment, or what has been termed customary morality. The Judges must consider the social consequences of the rule propounded, especially in the light of the factual evidence available as to its probable results. Of course, it is not to be expected that men of the world are to be subpoenaed as expert witnesses in the trial of every action raising a question of public policy. It is not open to the Judges to make a sort of referendum or hear evidence or conduct an inquiry as to the prevailing moral concept. Such an extended extra-judicial enquiry is wholly outside the tradition of courts where the tendency is to “trust the Judge to be a typical representative of his day and generation”. Our law relies, on the implied insight of the Judge on such matters. It is the Judges themselves, assisted by the bar, who here represent the highest common factor of public sentiment and intelligence. No doubt, there is no assurance that Judges will interpret the mores of their day more wisely and truly than other men. But this is beside the point. The point is rather that this power must be lodged somewhere and under our Constitution and laws, it has been lodged in the Judges and if they have to fulfil their function as Judges, it could hardly be lodged elsewhere.”

  • What is meant by “Public Policy” as it is understood in legal parlance? The expression has been used in Section 23 of the Indian Contract Act, 1872 and in Section 34 of the Arbitration and Conciliation Act, 1996 and a host of other statutes but has not been given any precise definition primarily because the expression represents a dynamic concept and is, therefore, incapable of any strait-jacket definition, meaning or explanation.

  • There is no gainsaying that in the ever-expanding horizons of the principles of natural justice, it makes little or practically no difference whether the action or the nature of the proceedings being tested are administrative or quasi-judicial. The principles apply to either more or less uniformly.

  • The above position was reiterated in Central Inland Water Transport Corporation Limited and Anr. v. Brojo Nath Ganguly and Anr. etc. (1986) 3 SCC 156. This Court observed as under:

    “95. The principles of natural justice have thus come to be recognised as being a part of the guarantee contained in Article 14 because of the new and dynamic interpretation are given by this Court to the concept of equality which is the subject-matter of that article. Shortly put, the syllogism runs thus: violation of a rule of natural justice results arbitrariness which is the same as discrimination;where discrimination is the result of State action, it is a violation of Article 14: therefore, a violation of a principle of natural justice by a State action is a violation of Article 14. Article 14, however, is not the sole repository of the principles of natural justice. What it does is to guarantee that any law or State action violating them will be struck down. The principles of natural justice, however, apply not only to legislation and State action but also where any tribunal, authority or body of men, not coming within the definition of State in Article 12, is charged with the duty of deciding a matter. In such a case, the principles of natural justice require that it must decide such matter fairly and impartially.”

    (emphasis supplied)

  • The significance of the principles of natural justice vis-a-vis Article 14 of the Constitution is no longer res Integra. The principles have been held to be a part and parcel of the guarantee contained in Article 14. The court briefly referred in this regard to the decision of this Court in Union of India and Ors. etc. v. Tulsiram Patel etc. (1985) 3 SCC 398 where this Court declared that Principles of natural justice have now come to be recognised as being a part of the constitutional guarantee contained in Article 14 of the Constitution.

  • Repelling the contention that BCCI was not amenable to principles of natural justice while discharging public function, this Court held that horizons of natural justice were constantly expanding and that the principles apply only in areas not covered by any law validly made.

  • In Central Inland Water Transport Corporation (supra) this Court was also considering the import of the expression ‘Public Policy’ in the context of the service conditions of an employee empowering the employer to terminate his service at his sweet will upon service of three months notice or payment of salary in lieu thereof. Explaining the dynamic nature of the concept of public policy this Court observed:

Public policy, however, is not the policy of a particular government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the courts and similarly where there has been a well-recognized head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public policy.


“……..It is thus clear that the principles governing public policy must be and are capable, on a proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to the public conscience. If there is no head of public policy which covers a case, then the court must in consonance with a public conscience and in keeping with the public good and public interest declare such practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority our courts have before them the beacon light of the Preamble to the Constitution. Lacking precedent, the court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in our Constitution.”

  • We may also refer to the decision of this Court in Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705, where this Court was considering the meaning and import of the expression “Public Policy of India” as a ground for setting aside an arbitral award.

31. Therefore, in our view, the phrase “public policy of India” used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for the public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence, in our view in addition to narrower meaning given to the term “public policy” in Renusagar case, it is required to be held that the award could be set aside if it is patently illegal. The result would be — award could be set aside if it is contrary to:

(a) the fundamental policy of Indian law; or

(b) the interest of India; or

(c) justice or morality, or

(d) in addition, if it is patently illegal.

Illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that award is against the public policy. The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court. Such award is opposed to public policy and is required to be adjudged void.”

  • In Oil and Natural Gas Corporation Ltd. v. Western GECO International Ltd. (2014) 9 SCC 263, this Court was examining the meaning of ‘Fundamental Policy of Indian Law’ an expression used by this Court in Saw Pipes’ case (supra). Extending the frontiers of what will constitute ‘Public Policy of India’ this Court observed:

“35. What then would constitute the “fundamental policy of Indian law” is the question. The decision in ONGC does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as provide a basis for administration of justice and enforcement of the law in this country. Without meaning to exhaustively enumerate the purport of the expression “fundamental policy of Indian law”, we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the fundamental policy of Indian law. The first and foremost is the principle that in every determination whether by a court or other authority that affects the rights of a citizen or leads to any civil consequences, the court or authority concerned is bound to adopt what is in legal parlance called a “judicial approach” in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of a judicial approach in judicial and quasi-judicial determination lies in the fact that so long as the court, tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial The approach, they cannot act in an arbitrary, capricious whimsical manner. The judicial approach ensures that the authority acts bona fide and deals with the subject in a fair, reasonable and objective manner and that its decision is not actuated by any extraneous consideration. The judicial approach in that sense acts as a check against flaws and faults that can render the decision of a court, tribunal or authority vulnerable to challenge.

” 38. Equally important and indeed fundamental to the policy of Indian law is the principle that a court and so also a quasi-judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated audi alteram partem rule one of the facets of the principles of natural justice is that the court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the court or authority is taking. The requirement that the adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law.

“39. No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a court of law often in writ jurisdiction of the superior courts but no less in statutory processes wherever the same are available.”

The Court ruled that the:

(a) Public Policy is not a static concept. It varies with times and from generation to generation. But what is in public good and public interest cannot be opposed to public policy and vice-versa. Fundamental Policy of Law would also constitute a facet of public policy. This would imply that all those principles of law that ensure justice, fair play and bring transparency and objectivity and promote probity in the discharge of public functions would also constitute public policy. Conversely, any deviation, abrogation, frustration or negation of the salutary principles of justice, fairness, good conscience, equity and objectivity will be opposed to public policy.

(b) Any rule, contract or arrangement that actually defeats or tends to defeat the high ideals of fairness and objectivity in the discharge of public functions no matter by a private nongovernmental body will be opposed to public policy.

(c) Applied to the case at hand Rule 6.2.4 to the extent, it permits, protects and even perpetuates situations where the Administrators can have commercial interests in breach or conflict with the duty they owe to the BCCI or to the people at large must be held to be against public policy, hence, illegal. That is particularly so when BCCI has in the Anti-Corruption Code adopted by it recognised public confidence in the authenticity and integrity of the sporting contest as a fundamental imperative. It has accepted and, in our opinion rightly so, that all cricket matches must be contested on a level playing field with the outcome to be determined solely by the respective merits of the competing teams. The Anti-Corruption Code of the BCCI does not mince words in accepting the stark reality that if the confidence of the public in the purity of the game is undermined then the very essence of the game of cricket shall be shaken. The BCCI has in no uncertain terms declared its resolve to protect the fundamental imperatives constituting the essence of the game of cricket and its determination to take every step in its power to prevent corrupt betting practices undermining the integrity of the sport including any effort to influence the outcome of any match. However, the amendment to Rule 6.2.4 clearly negates the declarations and resolves of the BCCI by permitting situations in which conflict of interest would grossly erode the confidence of the people in the authenticity, purity and integrity of the game. An amendment which strikes at the very essence of the game as stated in the Anti-Corruption Code cannot obviously co-exist with the fundamental imperatives.

6. Argument of Conflict of Interest raised by Sr. Adv. Kapil Sibal for Impugned Amendment

(a) BCCI is an important institution that discharging public functions. Demands of institutional integrity are, therefore, heavy and need to be met suitably in larger public interest.

(b)The expression ‘Administrator’ appearing in Rule 6.2.4 has been defined to mean and include present and past Presidents, Honorary Secretaries, Honorary Treasures, Honorary Joint Secretaries of the BCCI. Presidents and Secretaries present or past of members affiliated to BCCI are also treated as administrator along with the representative of a member or an associate member or affiliate member of the Board. That apart, any person connected with any of the committees appointed by the Board are also treated as administrator; none of whom could have any commercial interest in any BCCI event but for the impugned amendment to Rule 6.2.4. What is important, however, is that the challenge in the present proceedings arises in the context of Mr Srinivasan, President of BCCI having a commercial interest in the IPL by reason of the company promoted by him owning Chennai Super Kings. It is common ground that the owner of a team buys the franchise in an open auction. India Cements Ltd. owner of CSK has also bought the Chennai franchise in an open auction held by BCCI. This sale and purchase of the franchises is a purely commercial/business venture for India Cements Ltd. involving an investment of hundreds of crores. The franchise can grow as a ‘brand’ and in terms of franchise agreement executed between them.

It is common ground that the owner of a team buys the franchise in an open auction. India Cements Ltd. owner of CSK has also bought the Chennai franchise in an open auction held by the BCCI. This sale and purchase of the franchises is a purely commercial/business venture for India Cements Ltd. involving an investment of hundreds of crores. The franchise can grow as a ‘brand’ and in terms of franchise agreement executed between franchises and the BCCI be sold for a price subject to the conditions stipulated in the agreement. There is, therefore, no manner of doubt that the investment made by India Cements Ltd. is a business investment no matter in a sporting activity. To the extent, the business investment has come from India Cements Ltd. promoted by Mr Srinivisan and his family, India Cements and everyone connected with it as shareholders acquire a business/commercial interest in the IPL events organised by BCCI. The association of India Cements Ltd. and Mr Srinivasan with IPL is being faulted on account of this commercial interest which India Cements Ltd. has acquired for itself. Whether or not players engaged as mentors, coaches, managers or commentators in connection with the events for remuneration payable to them will also be ineligible for any such assignment does not directly fall for our consideration in these proceedings. That apart, it may well be argued that there is a difference between commercial interest referred to in Rule 6.2.4 and ‘professional engagement’ of a player on account of his proficiency in the game. It may be logically contended that the engagement of a player even though made on a remuneration remains a professional engagement because of his professional skill in the game of cricket and not because he has made any investment in India Cements Ltd.

It has done in acquiring a franchise or in any other form. Be that as it may, we do not consider it necessary or even proper to authoritatively pronounce upon the question whether such engagement of players, as are mentioned above, would fall foul of the prohibition contained in Rule 6.2.4 as it stood before the amendment. The issue may be examined as and when the same arises directly for consideration.

(c) All that we need to say at this stage is that whether or not a player who is an ‘administrator’ by reason of an existing or earlier assignment held by him can acquire or hold a commercial interest in any BCCI event, will depend upon the nature of the interest that such person has acquired and whether the same is purely professional or has any commercial element to it. Amendment to Rule 6.2.4 permitting Administrators of BCCI to acquire or hold commercial interests in BCCI like IPL, champions league and T-20 held to be bad for the reasons we have set out in the foregoing paras.


  • Gurunath Meiyappan and Raj Kundra were held guilty of betting, so misconduct against these two individuals was actionable as per relevant rules. The quantum of punishment to be decided by the new Committee mentioned below.
  • The Court held that the action against the franchise can be taken as well.
  • The Probe Committee has recorded a specific finding that the allegations of Match fixing, spot fixing or betting were not proved against Mr Srinivasan in the course of the enquiry.
  • The Hon’ble Court on the issue of quantum of punishment held that BCCI or the court could either do the same. However, the power to punish for misconduct vest with BCCI and it would be inappropriate to clutch that power.
  • The New Committee to decide the quantum of punishment instead of the Mudgal Committee, to whom matter can also be sent for the purpose, would examine the role played by Sunder Raman.
  • The constitution of the New Committee or its deliberations shall not affect the ensuing elections which the BCCI shall hold within six weeks from the date of this order in accordance with the prevalent rules and regulations subject to the condition that no one who has any commercial interest in the BCCI events (including Mr N. Srinivasan) shall be eligible for contesting the elections for any post whatsoever.
  • It is the amendment of Regulation 6.2.4 “excluding events like IPL or Champions League Twenty 20.” was declared void and ineffective.
  • The mandate of the New Committee formed to which Shri B.B. Mishra (Investigating Team) shall for that purpose be available to the newly constituted Committee to carry out all such investigations as may be considered necessary, with all such powers as were vested in it in terms of our order dated 16th May 2014.

(i) Amendments considered necessary to the memorandum of association of the BCCI and the prevalent rules and regulations for streamlining the conduct of elections to different posts/officers in the BCCI including conditions of eligibility and disqualifications, if any, for candidates wanting to contest the election for such posts including the office of the president of the BCCI.

(ii) Amendments to the memorandum of association, and rules and regulation considered necessary to provide a mechanism for resolving conflict of interest should such a conflict arise despite Rule 6.2.4 prohibiting creation or holding of any commercial interest by the administrators, with particular reference to persons, who by virtue of their proficiency in the game of Cricket, were to necessarily play some role as Coaches, Managers, Commentators etc.

(iii) An amendment, if any, to the Memorandum of Association and the Rules and Regulations of BCCI to carry out the recommendations of the Probe Committee headed by Justice Mudgal, subject to such recommendations being found acceptable by the newly appointed Committee.

(iv) Any other recommendation with or without suitable amendment of the relevant Rules and Regulations, which the Committee may consider necessary to make with a view to preventing sporting frauds, conflict of interests, streamlining the working of BCCI to make it more responsive to the expectations of the public at large and to bring transparency in practices and procedures followed by BCCI.

(v)  The three-member Committee shall also examine the role of Mr Sundar Raman with or without further investigation, into his activities, and if found guilty, impose a suitable punishment upon him on behalf of BCCI.

(vi)The three-member Committee is also requested to examine and make suitable recommendations to the BCCI for such reforms in its practices and procedures and such amendments in the Memorandum of Association, Rules and Regulations as may be considered necessary and proper on matters set out by us in Para number 109 of this order.


[1] Mandamus is a Latin word, which means “We Command”. Mandamus is an order from the Supreme Court or High Court to a lower court or tribunal or public authority to perform a public or statutory duty. This writ of command is issued by the Supreme Court or High court when any government, court, corporation or any public authority has to do a public duty but fails to do so.

[2] 12. Definition In this part, unless the context otherwise requires, the State includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.

E- Contracts and the Law

With online commerce on a high rise, the original physical contracts are now being replaced by E-Contracts. This has given rise to various legal issues relating to jurisdiction etc. The article is work on the subject for our readers.

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Contracts are a most basic document for any commercial transactions. With the growth of the business in virtual space, they are now executed in e-formats. The principal laws governing rights and obligations under the contracts are the Indian Contract Act, 1872 (“Contract Act”) and the Specific Relief Act, 1963 for specific performance of the contracts. Within the charter of the Act, parties are free to contract on any terms, they choose. The contracting parties themselves decide the rights and duties. E-Contract now provides for execution of the contract within the virtual space itself saving valuable time. Affixation of the digital signature further helps in authentication of an electronic copy of the contract. E-contracts are now recognised across the globe. With the execution of e-contracts, the Information Technology Act (“IT Act”) comes into play alongside the principal Acts.

A. Laws Governing E-Contracts

The following provisions come into play for interpretation of E-contracts. It is important to read the IT Act and the Contract Act in true conjunction. Types of e-contracts are browse wrap, shrink wrap and click wrap. Like a physical contract, an electronic contract also requires to satisfy the following necessary ingredients:

  1. Essentials of a Contract:There are few essential preliminary steps before formalising a contract, which includes offer, acceptance, consideration, and lawful object. An offer needs to be made in many transactions to translate into a contract by its acceptance. Let me illustrate with a case of e-commerce. The consumer ‘browses’ the available goods and services displayed on the merchant’s website and then chooses what he would like to purchase. The offer is not made by website by displaying the items for sale at a particular price. This is actually an invitation to offer and hence is revocable at any time up to the time its acceptance. The customer on placing the products in the virtual ‘basket’ or ‘shopping cart’ for payment makes the offer. The offer needs to be accepted as stated earlier; the acceptance is usually undertaken by the business after the offer has been made by the consumer in relation with the invitation to offer. An offer is revocable at any time until the acceptance is made. Offers and acceptances can be exchanged entirely by e-mail, or can be combined with paper documents, faxes, telephonic discussions etc. Any contract to be enforceable by law must have lawful consideration i.e. when both parties give and receive something in return. There should be an intention to create legal relations while entering into a contract. If there is no intention on behalf of the parties to create legal relationships, then no contract is possible between them. Further, the parties must be competent to contract. Contracts by minors, lunatics etc are void. There must be free and genuine consent. Consent is said to be free when there is an absence of coercion, misrepresentation, undue influence or fraud. Usually, in online contracts, especially when there is no active real-time interaction between the contracting parties, e.g., between a website and the customer who buys through such a site, the click-through procedure ensures free and genuine consent. The object of the contract must be lawful. A valid contract presupposes a lawful object. There must be certainty and possibility of performance a contract, to be enforceable, must not be vague or uncertain and there must be a possibility of performance. A contract, which is impossible to perform, cannot be enforced, e.g., where a website promises to sell land on the moon.
  1. Relevant Provisions of the IT Act: The essential points to be remembered for e-contracts under the IT Act are discussed herein. Section 11 of the IT Act provides for attribution of electronic records to the originator, if it was sent by the originator himself or by a person who had the authority to act on behalf of the originator in respect of that electronic record or by an information system programmed by or on behalf of the originator to operate automatically.


Section 12 provides for the acknowledgement of receipt.

(1) Where the originator has not stipulated that the acknowledgement of receipt of electronic record be given in a particular form or by a particular method like-

  • Any communication by the addressee, automated or otherwise; or
  • Any conduct of the addressee, sufficient to indicate to the originator that the electronic record has been received.

(2) Where the originator has stipulated that the electronic record shall be binding only on receipt of an acknowledgement of such electronic record by him, then, unless acknowledgement has been so received, the electronic record shall be deemed to have been never sent by the originator.

(3) Where the originator has not stipulated that the electronic record shall be binding only on receipt of such acknowledgement, and the acknowledgement has not been received by the originator within the time specified or agreed or, if no time has been specified or agreed to within a reasonable time, then, the originator may give notice to the addressee stating that no acknowledgement has been received by him and specifying a reasonable time by which the acknowledgement must be received by him and if no acknowledgement is received within the aforesaid time limit he may after giving notice to the addressee, treat the electronic record as though it has never been sent.

Section 13 of the IT Act provides for time and place of dispatch and receipt of electronic record.

  • Subject to what has been agreed between the originator and the addressee, the dispatch of an electronic record occurs when it enters a computer resource outside the control of the originator.
  • Subject to agreement between the originator and the addressee, the time of receipt of an electronic record shall be determined as follows, namely: -if the addressee has designated a computer resource for the purpose of receiving electronic records, receipt occurs at the time when the electronic record enters the designated computer resource; or otherwise receipt occurs at the time when the electronic record is retrieved by the addressee. If the addressee has not designated a computer resource along with specified timings receipt occurs when the electronic record enters the computer resource of the addressee.

(3) Subject to agreement between the originator and the addressee, dispatch of an electronic record is deemed to be the place where the originator has his place of business, and receipt is at the place, where the addressee has his place of business.

(4) The provisions of sub-section (2) shall apply notwithstanding that the place where the computer resource is located may be different from the place where the electronic record is deemed to have been received under sub-section (3).


According to section 2(1)(b) of the IT Act, Addressee means a person who is intended by the originator to receive the electronic record but does not include any intermediary.

B. Jurisdiction for E-Contracts

E-Contract can give rise to issues of jurisdiction while pursuing any issue related to e-contracts. In Casio India Co. Ltd. vs. Ashita Tele Services Pvt. Ltd. [2003 27PTC 265 Delhi], the Delhi High Court held that once the website is accessed from Delhi, it is enough to invoke the territorial jurisdiction of Delhi. The Allahabad High Court with respect to the formation of electronic contracts gave a landmark judgment. P.R. Transport Agency vs. Union of India & others AIR 2006 All23. Background of the case: Bharat Coking Coal Ltd (BCC) held an e-auction for coal in different lots. P.R. Transport Agency’s (PRTA) bid was accepted for 4000 metric tonnes of coal from Dobari Colliery. The acceptance letter was issued on 19th July 2005 by e-mail to PRTA’s e-mail address. Acting upon this acceptance, PRTA deposited the full amount of Rs. 81.12 lakh through a cheque in favour of BCC. This cheque was accepted and encashed by BCC. BCC did not deliver the coal to PRTA. Instead, it e-mailed PRTA saying that the sale, as well as the e-auction in favour of PRTA, stood cancelled “due to some technical and unavoidable reasons”. The only reason for this cancellation was that there was some another person whose bid for the same coal was slightly higher than that of PRTA. Due to some flaw in the computer or its programme or feeding of data, the higher bid had not been considered earlier. This communication was challenged by PRTA in the High Court of Allahabad. BCC objected to the “territorial jurisdiction” of the Court on the grounds that no part of the cause of action had arisen within U.P. Anticipating the difficulties likely to arise from this, the IT Act in Section 13 (3) as aforesaid provides was read. Thus, the acceptance of the tender, communicated by the respondents to the petitioner by e-mail, will be deemed to be received by the petitioner at Varanasi/Chandauli, which are the only two places where the petitioner has his place of business. In view of the facts mentioned in the supplementary affidavit, read with IT Act, the acceptance having been received by the petitioner at Chandauli/Varanasi, the contract became complete by receipt of such acceptance at Varanasi/Chandauli, both of which places are within the territorial jurisdiction of this Court. Therefore, a part of the cause of action having arisen in U.P., this Court has territorial jurisdiction to entertain the writ petition. Further, the court held:

“…..However, it has to be examined whether the “ouster’ Clause (No. 10.5) of the tender agreement has the effect of excluding the writ jurisdiction of this Court. Jurisdiction of civil courts is created by statute and cannot be created or conferred by the consent of the parties upon a court, which has not been granted territorial or pecuniary, or other (subject matter related) jurisdiction by statute. Under Section 28 of the Indian Contract Act, 1872, the parties by their agreement are not permitted to totally exclude the jurisdiction of civil courts which has been created by statute, However, where several civil courts have territorial jurisdiction in respect of a suit, parties may by agreement confine themselves to any one or more of such civil courts and such an agreement would not be violative of Section 28 of the Contract Act. The above principles apply to civil suits and civil courts. …….We, therefore, hold that the ouster clauses can oust a territorial jurisdiction only of civil courts and not of the High Court in respect of however under Article 226 of the Constitution of India, provided such power exists in the High Court on account of part of cause of action having arisen with its territorial jurisdiction.”

Thus, interpretation of E-Contracts is an interplay of the principal Acts read with intention of the parties.

© This article was created for circulation in Achromic Point Newsletter and is re-published here.

Commercial Law Update: 2016

Commercial law is important in a globalized economy. Our initiative is to give a free flow of important developments in law that affects the corporates, individuals and entrepreneurs. Keep watch on the section for all the updates in 2016.

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1. Missing Trade Facilitation Agreement in Services: India will submit a proposal to the World Trade Organisation (WTO) to start discussions on the Trade Facilitation Agreement (TFA) in services.  India is the 76th WTO member to accept the TFA. A Trade Facilitation Agreement Facility (TFAF) was created at the request of developing and least-developed countries to help ensure that they receive the assistance needed to reap full benefits of the TFA and to support the ultimate goal of full implementation of the new agreement by all members. Implementation of the WTO Trade Facilitation Agreement (TFA) has the potential to increase global merchandise exports by up to $1 trillion per annum, according to the WTO’s flagship World Trade Report released on 26 October 2015.

There is a total absence of collective recognition of services sector as part of trade in the WTO. Trade is no longer just in finished goods therefore services should be put under the definition of commodity. India is pitching for this agreement as the services sector contribute about 60% in the country’s GDP, and 28% in the total employment.

In December 2013, WTO members concluded negotiations on a Trade Facilitation Agreement at the Bali Ministerial Conference.  In line with the decision adopted in Bali, WTO members adopted on 27 November 2014 a Protocol of Amendment to insert the new Agreement into Annex 1A of the WTO Agreement.

Important Clauses of the FTA

11. Table for WTO (1)

11. Table for WTO 2

11. Table for WTO3

Section II: Special and Differential Treatment Provisions for Developing Country Members and Least Developed Country Members

Article 2. Categories of provisions

2.1. There are three categories of provisions:

  • Category A contains provisions that a developing country Member or a least developed country Member designates for implementation upon entry into force of this Agreement, or in the case of a least developed country Member within one year after entry into force, as provided in paragraph 3.
  • Category B contains provisions that a developing country Member or a least developed country Member designates for implementation on a date after a transitional period of time following the entry into force of this Agreement, as provided in paragraph 4.
  • Category C contains provisions that a developing country Member or a least developed country Member designates for implementation on a date after a transitional period of time following the entry into force of this Agreement and requiring the acquisition of implementation capacity through the provision of assistance and support for capacity building, as provided for in paragraph 4.

Each developing country and least developed country Member shall self-designate, on an individual basis, the provisions it is including under each of the Categories A, B and C.

MoU vs. Agreement

MoU and Agreements are two most basic documents used by every individual and business enterprises. So its important to understand the difference to guide the individual about the fine line of difference.

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In every business, understanding between the parties is zeroed down to documentations, which begans with Memorandum of Understanding (“MoU”). MoU preceeds formal agreements and their drafting is a challenge especially in huge transactions. A simple definition of memorandum will mean an informal written record of an agreement which has not yet become official. MoU can be called as “Gentleman’s Agreement” simplicitor or a stage preceding formal understanding into an agreement to govern a future relationships. The legal jargons needs to be understood well even for the signatories as the same may be basis of future litigations. Whether or not a document constitutes a binding contract would depend upon the following elements- offer, acceptance, consideration and intention to be legally bound which are essential for a contract. In international relations, MoU falls in broad category of treaties.  It is important to go through each and every word of the document as there are many documents that are not legally binding in spite of the fact that they are drafted by a lawyer and signed by the witnesses. Although there can be legal distinctions between the two aforesaid types of documents, there may be no legal or practical difference if they are written with similar language. The key is whether the parties intend to be legally bound by the terms of the agreement or not. The article focusses on key to understanding the drafting of the two documents.

A. Difference between MoU and an Agreement

According to section 10 of the Indian Contract Act, 1872, states what agreements are contracts- All agreements are contracts, if they are made by the:

  • Free consent of parties competent to contract,
  • Lawful consideration and with a lawful object, and
  • Not hereby expressly declared to be void.

Agreement contains proposals and its acceptance and intention of the parties is to bind each other with the terms of the agreement. It is the intention of the parties that if anyone violates the terms of the concerned agreement, the other will go to the court and get it enforced.

In case of MoU, both the parties proposed their intention and a commitment to follow the intention in future. It does not create a valid contract, but if one party do anything on reliance of the MoU and sustains any loss, he can recover back the losses but cannot enforce the same. Both the parties of MoU are bound by the estoppels and any of them cannot take the adverse. For instance, an MoU could be useful while making a real estate deal. Suppose you have chosen a house that you would like to buy but can only pay for it after six months. In the meantime, you could make a small advance payment and draw up a MoU with the seller stating the terms and conditions from both the sides. The house owner can include that if you fail to make full payment within six months, he would have the right to refund the advance payment and sell the house to somebody else. However, after six months when the sale actually takes place, you would need a more concrete document that is legally binding.

An agreement is a legal document that is formed after finalising the deal and it is binding document.

Memorandum of Understanding (MoU) is actually just a means for two parties to reach a decision. It is used two gauge the intention of the transaction parties before a deal is officially signed between them and doesn’t grant either of them any rights. So, in some cases it may make more sense to opt for a softer, non- legal document, than a legally binding one. MoU specify mutually accepted expectations between two or more parties or organisations as they labour together towards a common objective. For example, two agencies that have similar goals, may agree to work together to solve a problem or support each other’s activities by using an MoU. The MoU is nothing more than a formal handshake. In U.S law, a MoU is synonymous with a Letter of Intent (LoI), which is a non- binding written agreement that implies a binding contract is to follow. MoU becomes binding on all parties if it has been drafted for a monetary exchange.

B. Essential Ingredients of Drafting a MOU and an Agreement

Before we learn to draft MoU or Agreement, we look at the systems of law- Common Law system and Civil Law System. Former was prevalent in England and its colonies whereas the latter is more so in rest of the Europe derived from Roman Law. The Common Law emphasises on role of judge whereas the Civil Law focusses on codes and commentaries. In common Law system there is a established practice of recording court decisions, so that the same can be used to resolve the later disputes and this principle is enshrined in doctrine of stare decis. Whereas on one hand common law is very analytical the civil law is more precise in its dealing. So before understanding the drafting of contract for domestic or international parties it was important to have a preview into understanding legal background of the parties.

C. Drafting the MoU and Agreement

1. Title

The title of the MoU/agreement should reflect the nature of transactions between the parties.

2. Identification of the Parties

The introduction of drafting a MoU and Agreement is more or less same. Before discussing the structure and content of MoU, it is important to discuss the following principles:

(a) There is a mutual desire of both the parties of equal commitment to work together.

(b)The provisions of MoU should not be in conflict with any existing MoU or agreement entered by the organization between the parties inter se and the third party.

(c)The language of MoU should be simplicitor, unambiguous and open to review.

(d) MoU is a living document so it should be kept alive for review.

(e)Since MoU is a formal document it should be drafted with legal, technical and financial experts.

A contract on the other hand may be defined as exchange of relationship created by oral or written agreement between two or more persons containing atleast one promise and recognized in law as enforceable.

5E. Figure 1

5E. Figures3. Background/Recitals

MoU: Statement defining the context and general agreements and benefits of the MoU. A brief summary of circumstances leading to the MoU. The status of MoU in relation to other existing agreements should be mentioned.

Agreements: Most transaction agreements begain with the Preamble/Recitals/Whereas. In many cases where it begins with Whereas the entire terms of recital commences with the term “Whereas”. This outlines the purpose of the entire transaction.

4. Legislative Context

The MoU should contain the legislative context i.e. the statement to the extent it is legally binding as well as relevance to any law to which the parties are subjected to.

5. Definitions

The goal of drafting a transactional material is that it speaks unambiguously for future readers, which include your client, judge, third party. A good way to achieve this is by using “Definitions”.  This should find place in both MoU and Agreements.

6. Purpose of MoU

This broadly defines what a particular MoU actually covers i.e probable outcome of MoU and societal benefits. It defines every area that both the parties are going to cover in the MoU.

For example– This MoU covers the roles of the organisation X and Y in the operation of the severe weather and flood warning and emergency management systems for a place in Maharashtra, that includes-

  • Severe weather and flood advice, forecasting and warning systems
  • Rainfall, water level and flood data information collection and sharing, and
  • Effective X and Y coordination of consistent and timely information to flood-prone residents in Maharashtra.

Within the purpose of the Agreement, you can add the mode of implementation of the Agreement if any reference to any special law/ principal/regulations or guidelines needs to be adhered the same can find reference.

5E. Figure

7. Consideration of an Agreement

The consideration of an agreement should be clearly stated or exchange of mutual promises. This must be expressly stated since agreement must be supported by consideration and there must be mention of exchange of dollars/rupees or goods or mutual promises. The most common form of consideration is money but goods and services are also valid consideration.

If it is an international agreement, it would be good to mention the currency in which the consideration would be paid to avoid hassles including the conversion date as well. This can help the court also to award damages or cost accordingly.

8. Joint Undertaking and Responsibilities

A statement describing the joint responsibilities and action of each party including the   description of cooperative activities, description of exchange of resources. Reference to relevant timelines, milestones, protocols of communication between the parties.

9. Other Clauses

5F. Figure 1

10. Indemnification Clause

As per section 124 of the Indian contract Act 1872- a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a ” contract of indemnity”. 

The definition raises question itself, whether indemnification clause should find place in MoU 

(a) Damages on breach of contract under section 74 of Indian contract Act 1872:  Compensation for breach of contract where penalty stipulated for: When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.

Explanation-A stipulation for increased interest from the date of default may be a stipulation by way of penalty.

The kind of damages that can find place are-

(i) Compensatory Damages – money to reimburse for costs to compensate for your loss.

(ii) Consequential and Incidental Damages – money for losses caused by the breach that were foreseeable. Foreseeable damages mean that each side reasonably knew that, at the time of the contract, there would be potential losses if there was a breach.

(iii) Attorney fees and Costs – recoverable, if expressly provided for in the contract.

(iv) Liquidated Damages – these are damages specified in the contract that would be payable if there is any issue as to its performance.

(v) Punitive Damages – This is money given to punish a person who acted in an offensive manner in an effort to deter the person and others from repeated occurrences of the wrongdoing. You generally cannot collect punitive damages in contract cases.

(vi) Rescission – The contract is canceled and both sides are excused from further performance and any money advanced is returned.

(vii) Reformation – the terms of the contract are changed to reflect what the parties actually intended.

(b) Damages on breach of contract of indemnity under section 125 of Indian contract Act 1872 The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor—

(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;

(2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;

(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorized him to compromise the suit.

(c) Section 73-Compensation for loss or damage caused by breach of contract-When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. —When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.”

Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach. Compensation for failure to discharge obligation resembling those created by contract.—When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract. —When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.” Explanation.—In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.

11. Clause for Restraint of Legal Proceedings

Section 28 :Agreements in restraint of legal proceedings, void.

Every agreement:

(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or

(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.

Exception 1.— Saving of contract to refer to arbitration dispute that may arise. —This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.

Exception 2.— Saving of contract to refer questions that have already arisen. —Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration. 

12. Termination Clause

Each party will have right to terminate the MoU/agreement after serving the notice period. The clause will also reflect its impact of ongoing activities on the termination.

13. Dispute Resolution Clause

The parties generally do not have considerations involved in MoU unless it has binding effect of an agreement therefore, formal means of dispute resolution like arbitration should be avoided.


The Supreme Court of India (“Supreme Court”) in the recent case of Ashapura Mine-Chem Ltd v. Gujarat Mineral Development Corporation  has addressed the issue of separability and survival of an arbitration clause contained in a Memorandum of Understanding (“MoU”). The Supreme Court held that the arbitration agreement in the MoU was valid as it constitutes a stand-alone agreement independent from its underlying contract. The Supreme Court relying on several judgments including Reva Electric Car Co. Pvt Ltd. v. Green Mobil 2002 (2) SCC 93 and Today Homes and Infrastructure Pvt. Ltd. v. Ludhiana Improvement Trust 2014 (5) SCC 68 and Enercon v Enercon 2014 (5) SCC 1  concluded that in addition to the fundamental nature of the separability presumption, the dispute between the parties relates to the relationship created by way of the MoU and so the arbitration agreement contained therein would bind the parties.

The Supreme Court found that irrespective of whether the MoU fructified into a full-fledged agreement, the parties had agreed to subject all disputes, arising out of and in connection to the MoU, to arbitration. Such an agreement would constitute a separate and independent agreement in itself. Since no consensus was reached on the appointment of a Sole Arbitrator, it would be open to the parties to invoke Section 11 of the Act. Based on this ground alone, the Supreme Court set aside the order of the Gujarat HC, and appointed a Sole Arbitrator due to existence of a valid arbitration agreement.

12. Dispute Resolution


The Parties will attempt in good faith to resolve any dispute or claim arising out of or in relation to this MoU/ Agreement through negotiations between a director of each of the Parties with authority to settle the relevant dispute. If the dispute cannot be settled amicably within fourteen (14) days from the date on which either Party has served written notice on the other of the dispute then the remaining provisions of this Clause shall apply.


In the event of a dispute between the Owner and the parties concerning the interpretation of any provision of this agreement or the performance of any of the terms of this Agreement, such matter or matters in dispute shall be finally settled: –

  1. under the Rules of _______________________;
  2. by one/three arbitrators, one appointed by each Party, and the third, who shall be the chairman, selected by the two appointed arbitrators and failing agreement by the Chairman of the International Chamber of Commerce;
  3. the language of the arbitration shall be English; and
  4. the place of the arbitration shall be _________________.
  5. The award will be final and binding to both the parties

Referral to the Expert (may be appropriate for technical/ financial matters)

The following provisions shall apply between the Parties with respect to any matter, difference or dispute which this Agreement provides is to be referred to an Expert:

(a) Where any matter is referred to an Expert in accordance with this Clause [ ], the Expert shall be appointed by the Parties, or in default of agreement upon such appointment within _______ days of a Party notifying the other Party of its decision to refer the matter to an Expert, an Expert appointed by

In relation to disputes of a primarily technical nature; or

Failing agreement between the parties as to the nature of the dispute, the Expert shall be appointed by the _____________(person nominated by some specialized body)

The Expert will resolve or settle such matter or dispute in such matter as he shall in his absolute discretion see fit. The Expert shall be requested to reach his decision within ________days of the matter being referred to him. Any decision of the Expert shall be final and binding on the Parties.

The cost of the Expert in settling or determining such matter or dispute shall be borne equally by the Parties unless the Expert otherwise determines.

13. Performance to Continue During Dispute

Performance of the Agreement shall continue during arbitration proceedings or any other dispute resolution mechanism as per the agreement between the parties

14. Intellectual Property Rights

The IPR Clause should include the following components:

(a)  What is intellectual property rights?

(b) Who owns the intellectual property rights?

(c) Who may use the intellectual property rights and who may have the funds?

(d)Dispute resolution

5F. Intellectual Property

14. Language for Drafting Agreements

5F. Figure 2


Every contract or ageement should be carefully drafted with insight into minds of parties to contract. The clauses may be standard but facts may vary from party to party.

The research work of the article is done by Ms. Aparna Agarwal, Second Year Law Student at Symbiosis Law College, Noida.

Sahara Issue & Updates

Sahara, a well known organisation which ran into news for its dues. This article is to update its readers on the development taking place in the area from decisions on the issues to various action points. Keep reading.

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1. Selling Sahara Stakes (June 2016): Taking forward its task of recovering dues from Sahara, markets regulator SEBI will sell a total of 61 land parcels belonging to the Sahara group through e-auction next month, at a reserve price of about Rs 1,900 crore. SBI Capital Markets and HDFC Realty would conduct the auction, which have been tasked to auction a total of 61 land parcels, on July 13 and July 15, 2016 respectively. The Securities and Exchange Board of India (“SEBI“) roped in HDFC Realty and SBI Cap after being asked by the Supreme Court to initiate the process of selling properties of the beleaguered group whose titles have been deposited with it by the group. HDFC Realty has been asked to auction a total of 31 land parcels at Rs 2,400 crore, while SBI Cap has been tasked to auction another 30 land properties with an estimated market value of about Rs 4,100 crore. These properties are located in Rajasthan, Tamil Nadu, Madhya Pradesh, Uttar Pradesh, Bihar and Jharkhand. The assets being sold are residential, agricultural and non-agricultural land. As per the court directions, these properties cannot be sold at less than 90 per cent of circle rates.

Amendments introduced in the Cheque Bounce Cases

Cheque is most common form of negotiable instrument used by all of us. The recent judgment had triggered jurisdiction debate however, the ordinances and amendment had taken care of concerns of all stakeholders.

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Following the apex court ruling in the famous Dashrath Rupsingh judgment, representations have been made to the government by various stakeholders, including industry associations and financial institutions, expressing concerns about the wide impact the judgment on the business interests as it was offering undue protection to defaulters, at the expense of the aggrieved complainant.

As you are aware, to resolve the concerns, the President of India had promulgated an Ordinance called the “Negotiable Instruments (Amendment) Ordinance, 2015” on June 15, 2015 as per which, certain amendments have been made in the Negotiable Instruments Act, 1881. Jurisdiction in cheque bounce matter has been in debate in light of the recent decisions until off recently same was settled by way of ordinances and now amendment replacing the ordinance. Jurisdiction to file cases of cheque bouncing changed by the Ordinance superseding the judgment dated, August 1, 2014 of the Supreme Court in the case of Dashrath Rupsingh Rathod v. State of Maharashtra (2014) 9 SCC 129, and all other similar judgments on this issue. So, now a cheque dishonor case under Section 138 of the Negotiable Instruments Act, 1881, was to be filed in a court at a place as per the provisions of Section 142(2) of the Negotiable Instruments Act, 1881 which had been inserted by the new Ordinance and thereafter by the amendment, and even all pending cheque bouncing cases were also be transferred to the courts, as per this new provision.

Recently, on August 1, 2014, a three Judge bench of the Supreme Court in Dashrath Rupsingh Rathod (Supra), in Criminal Appeal No. 2287 of 2009 gave its verdict in order to settle this issue as to which court has the territorial jurisdiction in an offence committed under Section 138 of the Negotiable Instruments Act, 1881, for dishonor of a cheque, commonly known as a case of cheque bouncing. The Supreme Court held that the territorial jurisdiction is restricted only to the court within whose local jurisdiction the offence was committed, which is where the cheque is dishonored by the bank on which it is drawn. Thus, it was held that such a case couldn’t be filed, for example, in a court in whose area the cheque was presented in a bank by the payee or where the notice was issued, etc. This judgment was aimed at ensuring that such cases are not filed at places other than the place where the bank account from which the cheque was issued (i.e., the branch of the bank on which the cheque was drawn) is located. Thus, the Supreme Court set an old controversy about the territorial jurisdiction in cheque bouncing cases to rest. However, within a month of the aforesaid judgment of the Supreme Court, a single judge bench of the Bombay High Court, vide its judgment dated August 25, 2014 in the case of Ramanbhai Mathurbhai Patel v. State of Maharashtra [in Criminal Writ Petition No. 2362 of 2014], has reignited the old controversy again and has again created the uncertainty as to where a cheque bouncing case can be filed.

On September 22, 2015, the President of India had promulgated another new ordinance on the subject, namely, the Negotiable Instruments (Amendment) Second Ordinance, 2015, which shall be deemed to have come into existence with effect from June 15, 2015, i.e., the date from which the first such Ordinance had come into effect. This was to ensure continuity from the first such ordinance issued on June 15, 2015. This means that the period from August 31, 2015 to September 22, 2015, during which there was no such Ordinance in operation, shall also be deemed to have been covered under this new Ordinance issued on September 22, 2015

Negotiable Instruments (Amendment) Act, 2015 was passed in the Lok Sabha seeking to overturn a Supreme Court 2014 ruling. The amendment passed by the Lok Sabha provides that cases of bouncing of cheques can be filed only in a court in whose jurisdiction the bank branch of the payee (person who receives the cheque) lies. If a complaint against a person issuing a cheque has been filed in the court with the appropriate jurisdiction, then all subsequent complaints against that person will be filed in the same court, irrespective of the relevant jurisdiction area. The Bill has now passed inserting section 142 (2) and the highlights of amendment is shared below.

Highlights of Amendment

  • The amendment has come into force from June 15, 2015.
  • A cheque in electronic form has been defined as cheque drawn in electronic form by using any computer resource and signed in a secure system with a digital signature (with or without biometric signatures) and asymmetric cryptosystem or with electronic signatures as the case may be.
  • Section 142 has been amended to include that the cheque bounce matter is to be filed within court within whose jurisdiction the branch within whose jurisdiction of the payee or holder in due course, cheque is delivered for collection through an account.
  • If the cheque is presented for payment, by the payee or holder in due course or otherwise through an account, the branch of the drawee bank where the drawer maintains the account, then the case would be filed in same jurisdiction.

Effect of Amendment

The amendment paved the way for transfer of all cases in appropriate jurisdiction as per the amendment notwithstanding anything contained in any judgment, decree and order. Post transfer, all subsequent cheque bounce matters against the drawer would be filed in same jurisdiction where the transfer has been affected under the amended Act.

New Law for Black Money of Indians in Foreign Jurisdiction

In common parlance, Black money is a term used to refer to money that is not fully legitimate in the hands of the owner. The term “black money” is not defined per se in the Indian Tax laws.

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In common parlance, Black money is a term used to refer to money that is not fully legitimate in the hands of the owner. The term “black money” is not defined per se in the Indian Tax laws. However, a definition of black money was adopted in the “White Paper issued on Black Money” by Government of India in May 2012. As per the above report, ‘black money’ is defined as an assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point of time during their possession. The Parliament has already enacted the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (“Act”). This Act is applicable to whole of India and has come into force from April 2016. The article reflects on the new law.

A. Source of Black Money

Black money could arise broadly due to two possible reasons outlined below:

(a) Illegitimate/Illegal Activities: The first is that the money may have been generated through illegitimate activities not permissible under the law, like crime, drug trade, terrorism, and corruption, all of which are punishable under the legal framework of the State. Some of these offences are included in the Schedule of the Prevention of Money Laundering Act, 2002.

(b) Failure to Pay Tax but Income undisclosed is through Illegal Activities: The second and perhaps more likely reason is that the wealth may have been generated and accumulated by failing to pay the dues to the public exchequer in one form or other. In this case, the activities undertaken by the perpetrator could be legitimate and otherwise permissible under the law of the land but s/he has failed to report the income so generated, or comply with the tax requirements, or pay the dues to the public exchequer, thereby converting such income into black money.

B. The Objective Behind the Act

The Act was legislated due to following developments taking place: Supreme Court directives regarding the issue
(a) Disclosure of Swiss Bank about the bank account held by Indians

(b) India signs the Multilateral Competent Authority Agreement (MCAA) pact on Automatic Exchange of Information (AEOI) wide in scope and obliges the treaty partners to exchange a wide range of financial information, including that about the ultimate controlling persons and beneficial owners of entities.

(c) To deal with problem of black money that is undisclosed foreign income and assets

(d) To lay down procedures to deal with such foreign income and assets (punishment and prevention of such income and asset outside India)

(e) To impose of tax on any undisclosed foreign income and assets and matters connected or incidental

(f) Noted jurist and former law minister Ram Jethmalani along with many other well known citizens filed a Writ Petition (Civil) No. 176 of 2009 in the Supreme Court of India seeking the court’s directions to help bring back black money stashed in tax havens abroad and initiate efforts to strengthen the governance framework to prevent further creation of black money.

C. Global Automatic Exchange of Information on Tax Matters

Once the global exchange system comes into force, the holders of black money will have no escape routes. India, Switzerland and 45 other nations had agreed upon automatic exchange of tax information, which is seen as a major step forward in global efforts against banking secrecy practices. The endorsement of the ‘Declaration on Automatic Exchange of Information in Tax Matters’ under the aegis of think-tank OECD last week had paved the way for finalising a single global standard in this regard later this year in September. “The effectiveness of AEOI (Automatic Exchange of Information) will come only when the standard is translated into domestic legislations and hardware in banks’ IT. This means that AEOI will take place in 2017 at the earliest,” Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration, told PTI from Paris. Paris-based Organisation for Economic Cooperation and Development (OECD) sets the global tax standards and frames conventions against tax frauds, among others.

D. Important Clauses and Terms to understand the Act

  • The Act extends to whole of India
  • The Assessment year would commence from first day of April each year
  • The meaning of Assessee within the Act is:
    •  The person being resident other than not ordinarily resident within India within the meaning of section 6 (6) of the Income Tax Act
    •  Tax in respect of an undisclosed income and assets is payable under the Act
    •  Assessee in default under the Act
  • The definition of person not defined under the UFIA Act but the definition under ITA will be adopted. Thus, it will include
     – Individuals
     – Hindu Undivided Family (HUF)
     – Company
     – Firm
     – Association of Persons (AOP)
     – Body of Individuals (BOI)
     – Local authority
     – Every other artificial and jurisdictional person
  • The undisclosed foreign income and assets under the Act would mean:
    • Assets and income located outside India
    • Value of undisclosed income outside India
    • Assets held by assesse in his own name or name of beneficial owner
    • This income is not disclosed otherwise in source of income
  • The Income Tax Authorities for the purpose of the Act are:
    • The Central Board of Direct Taxes constituted under the Central Boards of Revenue Act, 1963 (54 of 1963),
    • Principal Directors General of Income-tax or Principal Chief Commissioners of Income-tax
    • Directors-General of Income-tax or Chief Commissioners of Income-tax,
    • Directors of Income-tax or Commissioners of Income-tax or Commissioners of Income-tax (Appeals)
    • Additional Directors of Income-tax or Additional Commissioners of Income-tax or Additional Commissioners of Income-tax (Appeals),]
    • Joint Directors of Income-tax or Joint Commissioners of Income-tax,]
    • Deputy Directors of Income-tax or Deputy Commissioners of Income-tax or Deputy Commissioners of Income-tax (Appeals),
    • Assistant Directors of Income-tax or Assistant Commissioners of Income-tax,
    • Income-tax Officers,
    • Tax Recovery Officers,
    • Inspectors of Income-tax
    • The tax authorities have power of a civil court. The appeal from the appellate tribunal of Income Tax would go to the High Court which can be heard minimum of two judges bench

Summary of Key Highlights of the Act

The Act deals with menace of black money and following are key highlights:

  • Flat 30% tax rate (without surcharge and cess) on the value of undisclosed foreign income and assets and assets would be valued on current FMV.
  • No set off of foreign tax credit would be allowed
  • No exemption, deduction or carry forward of losses under the Income Tax Act,1961
  • Additional 300% penalty for non-disclosure of foreign income and assets
  • Rs. 10 Lakh for non-filing of return and not furnishing of complete details of foreign assets
  • Prosecution for violation is rigorous imprisonment from 3 to 10 years
  • Tax and penalty would be assessed on current value of assets and not on purchase value.
  • Only bank account upto Rs. 5 lacs are exempted
  • One time compliance opportunity is available before September 30, 2015