30 Common Law Principles Ruling The Litigation Front In India

Shivam Goel

6 April 2020 4:25 AM GMT

  • 30 Common Law Principles Ruling The Litigation Front In India

    "The law should not be seen to sit by limply, while those who defy it go free, and those who seek its protection lose hope." Jennison V/s Baker, (1972) 1 All ER 997 Principle 1: "Where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by the statute only must be availed of." In the matter of: Wolverhampton...

    "The law should not be seen to sit by limply, while those who defy it go free, and those who seek its protection lose hope."

    • Jennison V/s Baker, (1972) 1 All ER 997

    Principle 1: "Where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by the statute only must be availed of."

    In the matter of: Wolverhampton New Waterworks Co. V/s Hawkesford, (1859) 6 CB (NS) 336, Willes, J., observed that:

    "… There are three classes of cases in which a liability may be established founded upon a statute. One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law: there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, and the party suing has his election to pursue either that or the statutory remedy. The second class of cases is, where the statute gives the right to sue merely, but provides no particular form of remedy: there, the party can only proceed by action at common law.

    But there is a third class, viz. where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it. The present case falls within this latter class, if any liability at all exists. The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to."

    Principle 2: "Many a time, what seems to be an open and shut case, upon hearing the accused persuades the decision maker to reach a different conclusion."

    In the matter of: John V/s Rees, (1969) 2 All ER 274, Megarry, J., observed that:

    "… It may be that there are some who would decry the importance which the courts attach to the observance of the rules of natural justice. 'When something is obvious,' they may say, 'why force everybody to go through the tiresome waste of time involved in framing charges and giving an opportunity to be heard? The result is obvious from the start.' Those who take this view do not, I think, do themselves justice. As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were of unanswerable charges which, in the end, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change. Nor are those with any knowledge of human nature who pause to think for a moment likely to underestimate the feelings of resentment of those who find that a decision against them has been made without their being afforded any opportunity to influence the course of events."

    Principle 3: "If there is a conflict between the earlier clause and the later clauses of a deed and it is not possible to give effect to all of them, then the rule of construction is well established that it is the earlier clause that must override the later clauses of the deed and not vice versa."

    In the matter of: Forbes V/s Git, [1922] 1 AC 256, Lord Wrenbury, observed that:

    "… If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails. In this case the two clauses cannot be reconciled and the earlier provision in the deed prevails over the later."

    Principle 4: "A taxing statute is to be strictly construed."

    In the matter of: Cape Brandy Syndicate V/s Commissioners of Inland Revenue, [1921] 1 K.B. 64 [71], Rowlatt, J. observed that:

    1. In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax.
    2. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.

    Principle 5: "When a statute provides a particular thing to be done in a particular manner then it is mandatory to do the same in the manner provided and not otherwise."

    In the matter of: Taylor V/s Taylor, (1875) LR 1 Ch D 426, and in the matter of: Nazir Ahmad V/s King Emperor, AIR 1936 Privy Council 253, it was held that:

    If a statute has conferred a power to do an act and has laid down the method in which the power is to be exercised, the statute necessarily prohibits doing so in any manner other than the one prescribed.

    Principle 6: "There are degrees of proof within the standard of proof."

    There is a strong and marked difference as to the effect of evidence in civil and criminal proceedings. In the former a mere preponderance of probability, due regard being had to the burden of proof, is a sufficient basis of decision: but in the latter, especially when the offence charged amounts to treason or felony, a much higher degree of assurance is required.

    In the matter of: Bater V/s Bater, [1950] 2 All ER 458 [459], it was observed that:

    "… It is true that by our law there is a higher standard of proof in criminal cases than in civil cases, but this is subject to the qualification that there is no absolute standard in either case. In criminal cases the charge must be proved beyond reasonable doubt, but there may be degrees of proof within that standard. So also in civil cases there may be degrees of probability."

    Similarly, in the matter of: Hornal V/s Neuberger Products Ltd., [1956] 3 All ER 970 [977], it was observed that:

    "… Just as in civil cases the balance of probability may be more readily fitted in one case than in another, so in criminal cases proof beyond reasonable doubt may more readily be attained in some cases than in others."

    Lastly, in the matter of: Hawkins V/s Povells Tillary Coal Co. Ltd., (1911) 1 K.B. 988, it was held that, proof does not mean proof of rigid mathematical demonstration (absolute certainty or accuracy of statements), because that is impossible; it must mean such evidence (such degree of probability) as would induce a reasonable man to come to a just conclusion in the matter. In the matter of Hawkins (Supra) it was observed that:

    "… Proof does not mean proof to rigid mathematical demonstration, because that is impossible; it must mean such evidence as would induce a reasonable man to come to a particular conclusion."

    Principle 7: "A party cannot approbate and reprobate at the same time."

    In the matter of: Dexters Ltd. V/s Hill Crest Oil Co., (1926) 1 KB 348 (358), Scrutton L.J. observed that:

    "… So in my opinion, you cannot take the benefit of a judgment as being good and then appeal against it as being bad… It startles me to hear it argued that a person can say the judgment is wrong and at the same time accept payment under the judgment as being right…"

    Principle 8: "Unless they reveal a contrary intention all statutes are to be interpreted as 'always speaking statutes'."

    In the matter of: Comdel Commodities Ltd. V/s Siporex Trade S.A., [1990] 2 All ER 552 [HL], Lord Bridge observed that:

    "… When a change in social conditions produces a novel situation, which was not in contemplation at the time when a statute was first enacted, there can be no a priori assumption that the enactment does not apply to the new circumstances. If the language of the enactment is wide enough to extend to those circumstances, there is no reason why it should not apply…"

    In the matter of: McCartan Turkington Breen (A Firm) V/s Times Newspapers Ltd., [2000] All ER 913, it was observed that:

    "… Unless they reveal a contrary intention all statutes are to be interpreted as "always speaking statutes". This principle was stated and explained in R v. Ireland, R v. Burstow [1997] 4 All ER 225 at 233, [1998] AC 147 at 158. There are at least two strands covered by this principle. The first is that courts must interpret and apply a statute to the world as it exists today. That is the basis of the decision in R v. Ireland where 'bodily harm' in a Victorian statute was held to cover psychiatric injury. Equally important is the second strand, namely that the statute must be interpreted in the light of the legal system as it exists today"

    Principle 9: "Evidence Obtained by Undesirable Methods- Whether Admissible? The test to be applied in considering whether evidence is admissible is whether it is relevant to the matter in issue. If it is, it is admissible and the court is not concerned with how it was obtained."

    In the matter of: R V/s Sang, [1979] 2 All ER 1222, it was observed that, the House of Lords would sanction the exclusion of such evidence only where the accused had been lured into incriminating himself by deception after the commission of an offence.

    Similarly, in the matter of: R V/s Christou, [1992] 4 All ER 559, the police operated for about 3 months by establishing a shop of jewellers and putting up the shady image of being interested in buying 'stolen property'. The object was to recover stolen goods and to obtain evidence against those involved in theft and handling. All the transactions in the shop were filmed and conversations recorded. The evidence so collected was admitted at the trial. The court reasoned, "the trick was not applied to the appellants [accused persons]: they voluntarily applied themselves to the trick. It is not every trick producing evidence against an accused which results in unfairness".

    Principle 10: "How the word "include or includes" used in the interpretation clauses of a statute is to be read and interpreted?"

    In the matter of: Dilworth V/s Commissioner of Stamps, (1899) AC 99, Lord Watson made the following classic statement:

    "… The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of words or phrases occurring in the body of the statute; and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include. But the word "include" is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to "mean and include", and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions…"

    Principle 11: "Mischief Rule of Interpretation of Statutes"

    The literal construction should not obsess the Court because it has only prima facie preference, the real object of interpretation of statutes is to find out the true intent of the law maker and that can be done only be reading the statute as an organic whole, with each part throwing light on the other.

    In the Heydon's Case, (1584) 76 ER 637, Lord Coke observed that four (4) things are required to be discerned and considered before arriving at the real statutory meaning of a provision in a statute /legislation:

    • What was the law before the statute or legislation was passed?
    • What was the defect/ mischief for which the statute/ legislation had not provided?
    • What remedy the legislature has appointed?
    • The reason of the remedy?

    Principle 12: "Golden Rule of Interpretation"

    In the matter of: Grey V/s Pearson, (1857) LR 6 HL Cas 61, substantiating on the Golden Rule of Literal Interpretation, it was observed that:

    "… I have been long and deeply impressed with the wisdom of the rule, now, I believe, universally adopted, at least in the Courts of Law in Westminster Hall, that in construing wills and indeed statutes, and all written instruments, the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no farther. This is laid down by Mr. Justice Burton, in a very excellent opinion, which is to be found in Warburton V/s Loveland [Warburton V/s Loveland, (1831) 2 Dow & Cl 480: 6 ER 806]…"

    Principle 13: "Doctrine of Adverse Possession"

    In the matter of: Perry V/s Clissold, 1907 AC 73 (PC), it was held that:

    "… It cannot be disputed that a person in possession of land in the assumed character of owner and exercising peaceably the ordinary rights of ownership has a perfectly good title against all the world but the rightful owner. And if the rightful owner does not come forward and assert his title by the process of law within the period prescribed by the provisions of the Statute of Limitations applicable to the case, his right is forever extinguished, and the possessory owner acquires an absolute title…"

    Principle 14: "Lochner Doctrine stands buried: Judicial hands-off qua economic legislation"

    In the matter of: Ferguson V/s Skrupa, 372 U.S. 726 (1962), the Hon'ble Supreme Court of United States observed that:

    "… Both the District Court in the present case and the Pennsylvania court in Stone adopted the philosophy of Adams V/s Tanner, and cases like it, that it is the province of courts to draw on their own views as to the morality, legitimacy, and usefulness of a particular business in order to decide whether a statute bears too heavily upon that business and, by so doing, violates due process. Under the system of government created by our Constitution, it is up to legislatures, not courts, to decide on the wisdom and utility of legislation. There was a time when Due Process Clause was used by this Court to strike down laws which were thought unreasonable, that is, unwise or incompatible with some particular economic or social philosophy. In this manner, the Due Process Clause was used, for example, to nullify laws prescribing maximum hours for work in bakeries, Lochner V/s New York, 198 U.S. 45 (1905), outlawing "yellow dog" contracts, Coppage V/s Kansas, 236 U.S. 1 (1915), setting minimum wages for women, Adkins V/s Children's Hospital, 261 U.S. 525 (1923), and fixing the weight of loaves of bread, Jay Burns Baking Co. V/s Bryan, 264 U.S. 504 (1924). The intrusion by the judiciary into the realm of legislative value judgments was strongly objected to at the time, particularly by Mr. Justice Holmes and Mr. Justice Brandeis. Dissenting from the Court's invalidating a State statute which regulated the resale price of theatre and other tickets, Mr. Justice Holmes said,

    "I think the proper course is to recognize that a State Legislature can do whatever it sees fit to do unless it is restrained by some express prohibition in the Constitution of the United States or of the State, and that Courts should be careful not to extend such prohibitions beyond their obvious meaning by reading into them conceptions of public policy that the particular Court may happen to entertain."

    And, in an earlier case, he had emphasized that, 'The criterion of constitutionality is not whether we believe the law to be for public good' [Adkins V/s Children's Hospital, 261 U.S. 525, 567, 570 (1923) (dissenting opinion)].

    The doctrine that prevailed in Lochner, Coppage, Adkins, Burns, and like cases- that due process authorizes courts to hold laws unconstitutional when they believe the legislature has acted unwisely- has long since been discarded. We have returned to the original constitutional proposition that courts do not substitute their social and economic beliefs for the judgment of legislative bodies, who are elected to pass laws. As this Court stated in a unanimous opinion in 1941, "We are not concerned… with the wisdom, need, or appropriateness of the legislation. [Olsen V/s Nebraska ex. rel. Western Reference & Bond Assn., 313 U.S. 236, 246 (1941)]".

    Legislative bodies have broad scope to experiment with economic problems, and this Court does not sit to, "subject the State to an intolerable supervision hostile to the basic principles of our government and wholly beyond the protection which the general clause of the Fourteenth Amendment was intended to secure" [Sproles V/s Binford, 286 U.S. 374, 388 (1932)]. It is now settled that States "have power to legislate against what are found to be injurious practices in their internal commercial and business affairs, so long as their laws do not run afoul of some specific federal constitutional prohibition, or of some valid federal law" [Lincoln Federal Labor Union, etc. V/s Northwestern Iron & Metal Co., 335 U.S. 525, 536 (1949)].

    In the face of our abandonment of the use of the "vague contours" [Adkins V/s Children's Hospital, 261 U.S. 525, 535 (1923)] of the Due Process Clause to nullify laws which a majority of the Court believed to be economically unwise, reliance on Adams V/s Tanner is as mistaken as would be adherence to Adkins V/s Children's Hospital, overruled by West Coast Hotel Co. V/s Parrish, 300 U.S. 379 (1937). Not only has the philosophy of Adams been abandoned, but also this Court, almost 15 years ago, expressly pointed to another opinion of this Court as having "clearly undermined" Adams. [Lincoln Federal Labor Union, etc. V/s Northwestern Iron & Metal Co., 335 U.S. 525 (1949)]. We conclude that the Kansas Legislature was free to decide for itself that legislation was needed to deal with the business of debt adjusting. Unquestionably, there are arguments showing that the business of debt adjusting has social utility, but such arguments are properly addressed to the legislature, not to us. We refuse to sit as a "super-legislature to weigh the wisdom of legislation" [Day-Brite Lighting, Inc. V/s Missouri, 342 U.S. 421, 423 (1923)] and we emphatically refuse to go back to the time when courts used the Due Process Clause "to strike down state laws, regulatory of business and industrial conditions, because they may be unwise, improvident, or out of harmony with a particular school of thought" [Williamson V/s Lee Optical Co., 348 U.S. 483, 488 (1955)]. Nor are we able or willing to draw lines by calling a law "prohibitory" or "regulatory". Whether the legislature takes for its textbook Adam Smith, Herbert Spencer, Lord Keynes, or some other is no concern of ours. The Kansas debt adjusting statute may be wise or unwise. But relief, if any be needed, lies not with us, but with the body constituted to pass laws for the State of Kansas.

    Nor is the statute's exception of lawyers a denial of equal protection of the laws to non-lawyers. Statutes create many classifications which do not deny equal protection; it is only "invidious discrimination" which offends the Constitution. The business of debt adjusting gives rise to a relationship of trust in which the debt adjuster will, in a situation of insolvency, be marshalling assets in the manner of a proceeding in bankruptcy. The debt adjuster's client may need advice as to the legality of the various claims against him [,] remedies existing under State laws governing debtor-creditor relationships, or provisions of the Bankruptcy Act- advice which a non-lawyer cannot lawfully give him. If the State of Kansas wants to limit debt adjusting to lawyers, the Equal Protection Clause does not forbid it. We also find no merit in the contention that the Fourteenth Amendment is violated by the failure of the Kansas statute's title to be as specific as appellee thinks it ought to be under the Kansas Constitution."

    That the ratio in the matter of Ferguson (Supra) was affirmatively read into the Indian jurisprudence by the Hon'ble Supreme Court of India in the matter of: Swiss Ribbons (P) Ltd. & Anr. V/s Union of India & Ors, Writ Petition (C) No. 99/ 2018 (Date of Decision: 25.01.2019), while testing the constitutionality of the Insolvency & Bankruptcy Code, 2016.

    Principle 15: "Quicquid plantatur solo, solo cedit: What is attached to or erected on the land, becomes part of the land."

    In the matter of: Green V/s Green, 90 U.S. (23 Wall.) 486, it was held that growing trees are immovable property however 'standing timber' is not an immovable property. This is because, in the case of growing trees they require further nourishment from the soil but in the case of standing timber such wood can be cut at once for the use in house-building or other such purposes.

    Further, in the matter of: Holland V/s Hogdson, L.R. 7 C.P. 328, it was held that, the looms fixed to the floor of a mill by nails are to be treated as immovable property.

    Moreover, in the matter of: Leigh V/s Taylor, 1902 AC 157, it was held that, certain valuable capacities affixed by a tenant to the walls of a house for ornamental purposes and for the better enjoyment of them as chattels, do not become part of the house, but are part of the personal estate of the tenant for life.

    It is important to note that the rule in Green (Supra) was applied with approval in the matter of: Smt. Shanta Bai V/s State of Bombay, AIR 1958 SC 532, by the Hon'ble Supreme Court of India.

    Principle 16: "Contract to Assign and Doctrine of Relation Back"

    In the matter of: Holroyd V/s Marshall, (1862) 10 HLC 191 (at pp. 210-11), Lord Westbury observed that:

    "… It is quite true that a deed which professes to convey property which is not in existence at the time is as a conveyance void at law, simply because there is nothing to convey. So, in equity a contract which engages to transfer property, which is not in existence, cannot operate as an immediate alienation merely because there is nothing to transfer.

    But if a vendor or mortgagor agrees to sell or mortgage property, real or personal, of which he is not possessed at the time, and he receives the consideration for the contract, and afterwards becomes possessed of property answering the description in the contract, there is no doubt that a Court of Equity would compel him to perform the contract, and that the contract would, in equity, transfer the beneficial interest to the mortgagee or purchaser immediately on the property being acquired. This, of course, assumes that the supposed contract is one of that class of which a Court of Equity would decree the specific performance."

    Similarly, in the matter of: Collyer V/s Isaacs, LR 19 Ch. D. 342 (at p. 351), Jessel, M.R., observed that:

    "… A man can contract to assign property which is to come into existence in the future, and when it has come into existence, equity, treating as done that which ought to be done, fastens upon that property, and the contract to assign thus becomes a complete assignment."

    However, observations of Lord Cave in the matter of: Performing Right Society V/s London Theatre of Varieties, LR (1924) AC 1, are pertinent and warrant notice especially on the point that assignment has to be in terms of the mandate contained in the specific statute. In this case, in 1916 a firm of music publishers, being members of the plaintiff Society, assigned by an indenture of assignment to the Society the performing right of every song, the right of performance of which they then possessed or should thereafter acquire, to be held by the Society for the period of the assignor's membership. Subsequently, a certain song was written, and the copyright in it, together with the right of performance, was assigned by the author to the said firm, but there was no fresh assignment in writing by the firm to the plaintiff Society such as was required by Section 5 (2) of the Copyright Act, 1911. The defendants, who were music hall proprietors, permitted this song to be publicly sung in their music hall without the consent of the plaintiff Society. The plaintiff Society then sued the defendants for infringement of their performing rights and claimed a perpetual injunction. The defence was that as there was no assignment in writing of the copyright subsequently acquired by the firm to the plaintiff Society, thus, the latter was not the legal owner and, therefore, was not entitled to a perpetual injunction. Discussing the nature of the right acquired by the plaintiff Society under the indenture of 1916 and its claim to the after-acquired copyright secured by the firm and referring to Section 5 (2) of the Copyright Act, 1911, Viscount Cave, L.C., observed that:

    "… There was on the respective dates of the instruments under which the appellants claim no existing copyright in the songs in question, and therefore no owner of any such right; and this being so, neither of those instruments can be held to have been an assignment signed by the owner of the right within the meaning of the section. No doubt when a person executes a document purporting to assign property to be afterwards acquired by him, that property on its acquisition passes in equity to the assignee: Holroyd V/s Marshall, 10 HLC 191; Tailby V/s Official Receiver, 13 AC 523; but how such a subsequent acquisition can be held to relate back, so as to cause an instrument which on its date was not an assignment under the Act to become such an assignment, I am unable to understand. The appellants have a right in equity to have the performing rights assigned to them and in that sense are equitable owners of those rights; but they are not assignees of the rights within the meaning of the statute. This contention, therefore, fails." (emphasis added)

    Principle 17: "An absolute restraint on alienation (immovable property) is void."

    In the matter of: Rosher V/s Rosher, (1884) 26 Ch. D. 801:

    Rosher transferred his estate to his son. He transferred it upon a condition that, if his son or heirs desire to sell the estate, his widow should have the option to purchase it at a fixed price, that is, one-fifth of the real market value of the estate, during her lifetime.

    It was held that the condition to sell at a fixed price much below its real value was equivalent to an absolute restraint on the sale, and hence, it was void.

    In India, as per Section 10 of the Transfer of Property Act, 1882, a transferor cannot impose an absolute condition or limitation restraining the alienation of the immovable property. According to Section 10 of the Transfer of Property Act, 1882, an absolute condition restraining the alienation is void, but, not partial conditions, for example: (i) restraint for a particular period of time, say for a period of 5 years, and/or, (ii) definite class of persons restrained such as: doctors, lawyers etc.

    Principle 18: "Rule against alienability of an immovable property."

    In the matter of: Hobson V/s Tulloch, (1898) 1 Ch 424, a house was conveyed to the transferee subject to a covenant on his part to not to use it for any purpose other than a private house. The transferee conveyed it to another for the purpose of boarding house. It was held that, the covenant not to use the house for any other purpose was not repugnant to the nature of the estate and might be enforced by an injunction.

    It is important to note that as per Section 11 of the Transfer of Property Act, 1882, an interest created in favour of a person must be absolute and free; any limitation directed or imposed against the free enjoyment of the property is void. Nonetheless, an immovable property cannot be used for a purpose repugnant to the nature of the estate.

    Principle 19: "Fraudulent transfers are not void, but only voidable at the option of the creditor."

    In the Twyne's case, (1601) 76 ER 809, P was indebted to T and C. C brought an action of debt against P. Pending the case, P being possessed of goods and chattels of the value of £300, in secret made a general deed of gift of all his goods and chattels real and personal whatsoever to T, in satisfaction of his debt. Debtor (P) transferred the whole of his property without giving possession to C.

    The court held that the transfer which was made secretly had a badge of fraud, and hence was a fraudulent transfer. The court observed that the transfer made was not against a fair consideration and the transferor continued to be in the possession of the transferred property, and hence, it was a fraudulent transfer effected in secret, when an action was already pending against the transferee (P). The court further enunciated that consideration paid by the transferee itself never gives any protection unless, it is bona fide transfer, dehors fraudulent intention.

    Therefore, the burden lies on the creditor to show that: (i) the transfer was intended to defeat or delay his claim; and (ii) he was the creditor on the date of the transfer. The term creditor includes a decree holder whether he has or has not applied for execution of the decree obtained by him. Nonetheless, a creditor whose decree is barred by the statute of limitation so far as the aspect of execution of decree is concerned cannot be treated as creditor.

    According to Section 53 of the Transfer of Property Act, 1882, any fraudulent transfer cannot be rendered as one which is void ab initio, but only as voidable. The transfer is voidable only at the option of the creditor whose interest is either defeated or delayed by fraudulent transfer effected by the debtor. The aggrieved creditor has the option of moving to the court of law to get the fraudulent transfer declared as void.

    To attract Section 53 of the Transfer of Property Act, 1882, two conditions are to be fulfilled:

    1. There must be a transfer of an immovable property;
    2. The transfer of such immovable property must have been made with an intent to defeat or delay the interest of the aggrieved creditor.

    Principle 20: "There is distinction between actual bias and apparent bias."

    In the matter of: Director General of Fair-Trading V/s The Proprietary Association of Great Britain, Court of Appeal (Civil Division), Date of Decision: 21.12.2000, Case No. C/2000/3582, it was held that:

    "… 38. The decided cases draw a distinction between 'actual bias' and 'apparent bias'. The phrase 'actual bias' has not been used with great precision and has been applied to the situation:

    • Where a Judge has been influenced by partiality or prejudice in reaching his decision and
    • Where it has been demonstrated that a Judge is actually prejudiced in favour of or against a party."

    'Apparent bias' describes the situation where circumstances exist which give rise to a reasonable apprehension that the Judge may have been, or may be, biased.


    … 42. Had Lord Hewart asked the question 'was there any likelihood that the Clerk's connection with the case influenced the verdict?' he would have answered in the negative on the basis that he accepted the evidence that the Clerk had not intervened in the Justices' discussion. Had he asked the question 'would a reasonable onlooker aware of all the material facts, including the fact that the Clerk did not speak to the Justices after retiring, have concluded that the Clerk's connection with the case might have influenced the verdict?' he would equally have answered in the negative. His decision was reached on the premise that what actually transpired between the Clerk and the Justices behind closed doors was not relevant. The fact that the Clerk had retired with the Justices gave an appearance of the possibility of injustice, and that was enough to lead to the quashing of the verdict."

    Thus, in order to determine whether a decision is hit by bias, answer to the following questions is essential:

    1. Whether a Judge (or Arbitrator) has been influenced by partiality or prejudice in reaching his decision?
    2. Can it be demonstrated that the Judge (or Arbitrator) is actually prejudiced in favour of or against a party?
    3. Did it appear to the Court that there was a real danger that the Judge (or Arbitrator) had been biased?
    4. Would an objective onlooker with knowledge of the material facts have a reasonable suspicion that the Judge (or Arbitrator) might have been biased?

    Principle 21: "Ideas cannot be copyrighted."

    In the matter of: Jeffreys V/s Bosey, (1854) 4 HLC 815, it was held that for a copyright, there should be a work and not a mere idea. Idea does not have any copyright protection. To claim copyright, the work should be in a material form which involves the ideas translated.

    Principle 22: "Cause of action comprises of every fact which is necessary to be proved."

    In the matter of: Read V/s Brown, (1889) 22 QBD 128, it was observed that:

    "… Every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved."

    Principle 23: "The court never orders a defendant to give particulars of facts and matters which the plaintiff has to prove in order to succeed."

    In the matter of: Weinberger V/s Inglis, (1916-17) All ER Rep. 843, it was observed that (Astbury, J.):

    "… As a general rule, the court never orders a defendant to give particulars of facts and matters which the plaintiff has to prove in order to succeed, and this is especially the case where a defendant has confined himself to putting the plaintiff to the proof of allegations in the statement of claim, the onus of establishing which lies upon him."

    Principle 24: "Rule as to evidence beyond pleadings: When pleadings are silent on an issue, the party is precluded from adducing evidence in respect of that issue."

    It is settled law that a party cannot adduce evidence and set a case inconsistent with its pleadings. No amount of proof can substitute pleadings which are the foundation of a claim of a litigating party. Therefore, when pleadings are silent on an issue, the party is precluded from adducing evidence in respect of that issue.

    In the matter of: Throp V/s Holdsworth, (1876) 3 Ch. D. 637, it was observed that:

    "… The whole object of pleadings is to bring parties to an issue, and the meaning of the rules was to prevent the issue being enlarged, which would prevent either party from knowing when the cause came on for trial, what the real point to be discussed and decided was. In fact, the whole meaning of the system is to narrow the parties to definite issues, and thereby to diminish expense and delay, especially as regards the amount of testimony required on either side at the hearing."

    Principle 25: "Claim for damages on breach of contract: Reasonable Compensation Principle"

    In the matter of: Hadley V/s Baxendale, (1854-9) Ex. 341 (354), it was held that:

    "… Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it."

    Principle 26: "When an agreement is invalid every part of it including the clause as to arbitration contained therein must also be invalid."

    In the matter of: Heyman V/s Darwins Ltd., (1942) AC 356, the question that arose for adjudication before the House of Lords was whether repudiation of a contract by a party thereto had the effect of annulling the arbitration clause contained therein. It was held that it had not. It was in this context that the law as to the circumstances under which an arbitration clause in an agreement would become unenforceable came in for elaborate discussion. Summing up the law on the subject Viscount Simon, L.C., observed:

    "… If the dispute is whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission. Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself also is void. But, in a situation where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been breach by one side or the other, or whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen "in respect of" or "with regard" or "under" the contract and an arbitration clause which uses these, or similar, expressions should be construed accordingly."

    Lord Macmillan with whom Lord Russel agreed observed:

    "… If it appears that the dispute is whether there has ever been a binding contract between the parties, such a dispute cannot be covered by an arbitration clause in the challenged contract. If there has never been a contract at all, there has never been as part of it an agreement to arbitrate. The greater includes the less. Further, a claim to set aside a contract on such ground as fraud, duress or essential error cannot be the subject-matter of a reference under an arbitration clause in the contract sought to be set aside."

    Thus, the position of law is that an arbitration clause embodied in an agreement is an integral part thereof and that if that agreement is non est either because it was never legally in existence or because it was void ab initio, then the arbitration clause would also perish with it.

    Principle 27: "What is a debt?"

    In the matter of: Commissioner of Wealth Tax V/s Pierce Leslie & Co. Ltd., AIR 1963 Mad 356, relying upon the report in the matter of: Webb V/s Stenton, (1883) 11 QBD 518, it was observed that the essential requisites of a debt are:

    • An ascertained or readily calculable amount;
    • An absolute unqualified and present liability in regard to the amount with the obligation to pay forthwith or in future within an ascertained time;
    • The obligation must have accrued and be subsisting and should not be that which is merely accruing.

    Thus, a contingent liability or a contingency debt is neither a liability nor a debt. A debt is a debitum in praesenti, solvendum in futuro.

    Principle 28: "What is an interlocutory decision?"

    In S. Kuppuswami Rao V/s The King, 1947 FCR 180: AIR 1949 FC 1, the Federal Court referred to the following observations made in the matter of: Salaman V/s Warner, (1891) 1 QB 734:

    "If their decision, whichever way it is given, will, if it stands, finally dispose of the matter in dispute, I think that for the purposes of these rules it is final. On the other hand, if their decision, if given in one way, will finally dispose of the matter in dispute, but, if given in the other, will allow the action to go on, then I think it is not final, but interlocutory."

    Principle 29: "A pure question of law can be examined at any stage, including before the court of last resort."

    In the matter of: Connecticut Fire Insurance Co. V/s Kavanagh, 1892 A.C. 473, by Lord Watson it was observed that:

    "… When a question of law is raised for the first time in a court of last resort upon the construction of a document or upon facts either admitted or proved beyond controversy, it is not only competent but expedient in the interests of justice to entertain the plea. The expediency of adopting that course may be doubted when the plea cannot be disposed of without deciding nice questions of fact in considering which the court of ultimate review is placed in a much less advantageous position than the courts below."

    Further, relying upon the aforenoted enunciation of law, in the matter of: K. Lubna & Ors V/s Beevi & Ors, Civil Appeal No. 2442-2443/ 2011 (Date of Decision: 13.01.2020), the Hon'ble Supreme Court of India observed that:

    "… 9. On the legal principle, it is trite to say that a pure question of law can be examined at any stage, including before this Court. If the factual foundation for a case has been laid and the legal consequences of the same have not been examined, the examination of such legal consequences would be a pure question of law."

    Principle 30: "Disobeying the order of the court does not put a bar on a party's right of being heard."

    In the matter of: Hadkinson V/s Hadkinson, 1952 (2) All ER 567, Lord Denning observed that:

    " I am of the opinion that the fact that a party to a cause has disobeyed an order of the court is not of itself a bar to his being heard, but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed." (emphasis added)

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