Principle of – Business Efficacy

A commercial document cannot be interpreted in a manner to arrive at a complete variance with what may originally have been the intendment of the parties. Such a situation can only be contemplated when the implied term can be considered necessary to lend efficacy to the terms of the contract. If the contract is capable of interpretation on its plain meaning with regard to the true intention of the parties it will not be prudent to read implied terms on the understanding of a party, or by the court, with regard to business efficacy as observed in Satya Jain v. Anis Ahmed Rushdie, (2013) 8 SCC 131, as follows:
“The principle of business efficacy is normally invoked to read a term in an agreement or contract so as to achieve the result or the consequence intended by the parties acting as prudent businessmen. Business efficacy means the power to produce intended results. The classic test of business efficacy was proposed by Bowen, L.J. in Moorcock, (1889) LR 14 PD 64 (CA). This test requires that a term can only be implied if it is necessary to give business efficacy to the contract to avoid such a failure of consideration that the parties cannot as reasonable businessmen have intended. But only the most limited term should then be implied—the bare minimum to achieve this goal. If the contract makes business sense without the term, the courts will not imply the same. In Moorcock, (1889) LR 14 PD 64 (CA), it was held as under:
“In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both the parties who are businessmen; not to impose on one side all the perils of the transaction, or to emancipate one side from all the chances of failure, but to make each party promise in law as much, at all events, as it must have been in the contemplation of both parties that he should be responsible for in respect of those perils or chances. Transmission Corporation of Andhra Pradesh Ltd. v. GMR Vemagiri Power Generation Ltd., (2018) 3 SCC 716.

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Filed under Business Efficacy, Contract Law

Parole and Furlough – Difference Between

A “regular parole” may be given in the following cases:
(i) Serious illness of a family member;
(ii) Critical conditions in the family on account of accident or death of a family member;
(iii) Marriage of any member of the family of the convict;
(iv) Delivery of a child by the wife of the convict if there is no other family member to take care of the spouse at home;
(v) Serious damage to life or property of the family of the convict including damage caused by natural calamities;
(vi) To maintain family and social ties;
(vii) To pursue the filing of a special leave petition before the court against a judgment delivered by the High Court convicting or upholding the conviction, as the case may be.
Furlough on the other hand, is a brief release from the prison. It is conditional and is given in case of long term imprisonment. The period of sentence spent on furlough by the prisoners need not be undergone by him as is done in the case of parole. Furlough is granted as a good conduct remission.

The differences between parole and furlough are as under:
(i) Both parole and furlough are conditional release.
(ii) Parole can be granted in case of short-term imprisonment whereas in furlough it is granted in case of long-term imprisonment.
(iii) Duration of parole extends to one month whereas in the case of furlough it extends to fourteen days maximum.
(iv) Parole is granted by Divisional Commissioner and furlough is granted by the Deputy Inspector General of Prisons.
(v) For parole, specific reason is required, whereas furlough is meant for breaking the monotony of imprisonment.
(vi) The term of imprisonment is not included in the computation of the term of parole, whereas it is vice versa in furlough.
(vii) Parole can be granted number of times whereas there is limitation in the case of furlough.
(viii) Since furlough is not granted for any particular reason, it can be denied in the interest of the society. Asfaq v. State of Rajasthan, (2017) 15 SCC 55.

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Eligibility for Selection – Possession of Prescribed Qualification

The principle enunciated by the Hon’ble Supreme Court in State of U.P. v. Vijay Kumar Mishra, (2017) 11 SCC 521 are as under:
“The position is fairly well settled that when a set of eligibility qualifications are prescribed under the rules and an applicant who does not possess the prescribed qualification for the post at the time of submission of application or by the cut-off date, if any, prescribed under the rules or stated in the advertisement, is not eligible to be considered for such post. It is relevant to note here that in the rules or in the advertisement no power was vested in any authority to make any relaxation relating to the prescribe qualifications for the post. Therefore, the case of a candidate who did not come within the zone of consideration for the post could not be compared with a candidate who possessed the prescribed qualifications and was considered and appointed to the post. Ramesh Chand v. State of Haryana, (2017) 11 SCC 516.

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Existence of A Concluded Contract – Is a Sine Qua Non in a claim for compensation

Section 7 of the Contract Act, 1872 provides that in order to convert a proposal into a contract, the acceptance must be absolute and unqualified. The existence of a concluded contract is a sine qua non in a claim for compensation for loss and damages under Section 73 of the Contract Act arising out of a breach of contract. If instead of acceptance of a proposal, a counter – proposal is made, no concluded contract comes into existence.
In U.P. Rajkiya Nirman Nigam Ltd. v. Indure (P) Ltd., also related to a proposal and counter-proposal. Holding that no concluded contract had come into existence, the Hon’ble Apex Court held as under:
“As seen, the material alterations in the contract make a world of difference to draw an inference of concluded contract.” Vedanata Ltd. v. Emirates Trading Agency LLC, (2017) 13 SCC 243.

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Jurisdiction of First Appellate Court – To accept additional evidence

As far as the principles governing the jurisdiction of the First Appellate Court to take/accept the additional evidence on record under Order XLI, Rule 27, CPC, the guidelines had been issued by the Apex Court in Union of India v. Ibrahim Uddin, (2012) 8 SCC 148 as under:
1. The general principle is that the Appellate court should not travel outside the record of the Lower Court and cannot take any evidence in appeal.
2. The powers under Order XLI, Rule 27 CPC given to the first appellate court to take additional evidence is in the nature of exception and has to be exercised in exceptional circumstances with due care and caution.
3. The Appellate court may permit additional evidence only and only if the conditions laid down in the said rule are found to exist. The parties are not entitled, as of right, to the admission of such evidence.
4. The matter is entirely within the jurisdiction of the court and is to be used sparingly as the discretion provided therein circumscribed by the limitations specified in the rule.
5. The court shall not ordinarily allow new evidence to be adduced in order to enable a party to raise a new point in appeal. Similarly, where a party on whom the onus of proving a certain issue lies fails to discharge the same, would not be entitled to a fresh opportunity to adduce evidence as in such a case the court can pronounce judgment against him and does not require any additional evidence to enable it to pronounce its judgment in appeal.
6. Under Order XLI, Rule 27, CPC, the power given to the appellate court to allow a document to be produced or a witness to be examined, is limited to those cases where it is found necessary to obtain such evidence for enabling it to pronounce judgment. It does not entitle the Appellate Court to allow a party to remove lacuna in the evidence or supplement the evidence adduced by one party.
7. In the absence of satisfactory reasons for the non production of the evidence in the trial court, additional evidence could not be admitted in appeal as a party guilty of remissness in the lower court is not entitles to the indulgence of being allowed to give further evidence under this rule. Thus a party who had ample opportunity to produce certain evidence in the lower court but failed to do so or chose not to do so, cannot have it admitted in appeal.
8. The inadvertence of the party or his inability to understand the legal issue involved or the wrong advice of the pleader or the negligence of the pleader or that the party did not realize the importance of the document does not constitute a “substantial cause” within the meaning of this rule. Mere fact that certain evidence is important, is not in itself a sufficient ground for admitting that evidence in appeal.
9. The words “for any other substantial cause” must be read with the word “requires” in the beginning of the sentence, meaning thereby the rule that the appellate court requires additional evidence for any substantial cause, will apply in such a case where it is felt by the appellate court that the evidence had been so imperfectly taken by the trial court that it cannot pass a satisfactory judgment.
10. Wherever the appellate court admits additional evidence, it should record its reasons for doing so, as per sub rule (2) of Rule 27 of Order XLI, CPC. The requirement in the said sub rule is with a view to put a check against too easy reception of evidence at a later stage of the litigation and further that the statement of reasons inspires confidence of the litigant and disarm objection. The omission to record the reasons must, therefore, be treated as a serious defect. However, the said provision is only directory and not mandatory, if the admission of such evidence can be justified under the rule.
11. The reasons so required, are not necessarily to be recorded in a separate order and may be embodied in the judgment of the Appellate Court.
12. Mere reference to the peculiar circumstance of the case or mere statement that the evidence is necessary to pronounce judgment or that the additional evidence is required to be admitted in the interest of justice, or there is no reason to reject the prayer for admission of the additional evidence, is not enough compliance with the requirement as to recording of reasons.
13. Where the additional evidence sought to be adduced removes the cloud of doubt over the case and the evidence has a direct and important bearing on the main issue in the suit and interest of justice clearly renders it imperative that it may be allowed to be permitted on record, such application may be allowed. Smt. Sendal (deceased) v. Smt. Hamida, 2018 (138) RD 535.

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Principles of – Passing-Off

Certain Principles that govern the law of passing-off have been considered by the Hon’ble Apex Court Court in S. Syed Mohideen v. P. Sulochana Bai, (2016) 2 SCC 683 in the context of the right of a registered owner of a particular mark to bring an action for passing-off against another registered owner of an identical or largely similar trade mark. It was further held:
“that the action for passing-off which is premised on the rights of prior user generating a goodwill shall be unaffected by any registration provided under the Act.”
Which proposition actually stood approved in an earlier decision of the Court in N.R. Dongre v. Whirlpool Corporation, (1996) 5 SCC 714. The trinity test laid down in Reckitt & Colman Ltd., (1990) 1 WLR 491 was again reiterated by the Court in S. Syed Mohideen v. P. Sulochana Bai, (2016) 2 SCC 683 by holding that to prove and establish an action of passing-off, three ingredients are required to be proved by the plaintiff i.e. his goodwill, misrepresentation and damages. Toyota Jidosha Kabushiki Kaisha v. Prius Auto Indutries Limited, (2018) 2 SCC 1.

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Filed under Intellectual Property Law, Passing-Off, Trade Marks Act

Delegation of Power vis-à-vis Authorisation

Delegation of power is made by an authority to do an act for which the authority himself is competent, by any other officer whereas authorization is made by the authority empowered to do so under a statute or any other lawful instrument. The ordinary dictionary meaning of the word “Delegate” is to send or authorize a person as a representative to depute (Oxford Concise English Dictionary). The word ‘Delegate’ in Black’s Law Dictionary has been defined to mean to entrust another with the authority or empower another to act as an agent or a representative. The word “Authorise” as defined in Oxford Concise English Dictionary means to give an authority to a person or a body or to sanction or commission a person to do some act. The Black’s Law Dictionary defines the word “Authorise” to mean to give legal authority or to empower the authorized person to act for the person giving such an authority.
Thus, it is clear that delegation is done by an authority to a person or a body or a subordinate to do an act which the delegate is himself otherwise empowered or authorized to do under the statute or any other legal instrument. Whereas authorization would mean empowering an officer to do something for which the authority authorizing the person or body to do an act is empowered. Ranbir Singh v. State of U.P., 2018 (126) ALR 227.

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