WHEN GIFT TAKES EFFECT?

In view of Venkat Subba Srinivas v. Subba Rama', AIR 1928 PC 86 (A) it has been held that a gift would be a valid gift if the gift has been accepted, even though the document may not have been registered at the time of the execution. 

In the above case the court has observed that Section 47 of Registration Act lays down that a registered document shall operate from the time 'from which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration. The deed of gift was executed on 20th February 1946, and was registered on 28th March 1946. It, therefore, became operative on 20th February 1946.

Gift takes effect from the date of execution and not from the date of registration.

E-Mail and informal contracts are valid – SC held in “Trimex International FZE Limited, Dubai vs. Vedanta Aluminium Limited, India

The  Hon’ble Supreme Court (SC) in a recent judgment in the case of “Trimex International FZE Limited, Dubai vs. Vedanta Aluminium Limited, India” in Re (2010) 3 SCC 1”. It was held that in the absence of signed agreement between the parties, it would be possible to infer from   various documents duly approved and signed by the parties in the form of exchange of emails, letter, telex, telegram and other means of communication. 

The Hon’ble Supreme Court has accepted the unconditional acceptance through emails and held the same to be a valid contract which satisfies the requirements of Section 4 and 7 of the Contract Act 1872 and further it satisfies Section 2(1)(b), 7 of the Arbitration and Conciliation Act 1996.  In the absence of a signed agreement inference can be from documents approved and signed by the parties in the form of exchange emails, letters, telegrams which come within Section 10 and 2(e) of the Contract Act 1972.

As per Section 4: The communication of a proposal is complete when it becomes to the knowledge of the person to whom it is made.

As per Section 7: In order to convert a proposal into a promise the acceptance must - be absolute and unqualified; and be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted.
If respondent accepts the offer of petitioner following a very strict time schedule, he cannot escape from the obligations that flowed from such an action -

• Arbitration clause can be inferred from various documents duly approved and signed by the parties in the form of exchange of e-mails, letter, telex, telegrams and other means of tele-communication even in the absence of signed agreement -
• If no inference can be drawn from the facts that the parties intended to be bound only when a formal agreement had been executed, the validity of the agreement would not be affected by its lack of formality -
• On facts, the Commercial Offer carried no clause making the conclusion of the contract incumbent upon the Purchase Order -Therefore, the moment commercial offer was accepted by the respondent, the contract came into existence - Since the contract contained arbitration clause, petitioner made out case for appointment of arbitrator - Arbitration.

Petitioner's case was that on 15.10.2007, it submitted a commercial offer through e-mail for supply of Bauxite to the respondent. After exchange of several e-mails, respondent conveyed acceptance of offer through e-mail on 16.10.2007 confirming the supply of 5 shipments of Bauxite. Dispute arose and petitioner served arbitration notice on the respondent. Respondent rejected the arbitration notice stating that there was no concluded contract between them. Petitioner filed arbitration petition for appointment of arbitrator.

Every director not liable in cheque dishonor case -Supreme Court held in National Small Industries Corporation vs Harmeet Singh

The Supreme Court reiterated that every director connected with a company could not be held liable in a case of cheque which was dishonored for want of sufficient funds in the bank. Only those who were in charge of and responsible for the conduct of the business of the company at the time of the offense under Section 138 of the Negotiable Instruments Act will be liable for criminal action, the court said in the case, National Small Industries Corporation vs Harmeet Singh. A mere bald statement that a particular director among many was responsible for the conduct of the business would not be sufficient to clamp vicarious liability on him.

Termination of dealership must be fair - Held by Supreme Court in Hindustan Petroleum Corporation v. Super Highway Services

The Supreme Court has dismissed the appeal of Hindustan Petroleum Corporation which had terminated its dealership agreement with Super Highway Services, a retail dealer. The action was taken after a check on the private company’s stock of high speed diesel for its quality.

The dealer moved the Patna high court, which set aside the termination. The appeal of the public sector undertaking was dismissed by the Supreme Court stating that the dealer did not get proper notice of the quality test. “Cancellation of dealership agreement of a party is a serious business and cannot be taken lightly,” the judgment said.

“The concerned authority has to act fairly and in complete adherence to the rules and guidelines framed for the purpose. No person should be condemned unheard.”

THE STAMP PAPERS DO NOT HAVE ANY EXPIRY PERIOD

Brief: According to a recent Supreme Court judgement dated 19/02/2008 in the case of Thiruvengada Pillai Vs Navaneethammal and Anr,     

Citation: Thiruvengada Pillai Vs Navaneethammal and Anr.

Judgment:According to a recent Supreme Court judgment dated 19/02/2008 in the case of Thiruvengada Pillai Vs Navaneethammal and Anr, the stamp papers do not have any expiry period. Relevant extract from SC Judgment is reproduced herein below:

 "The Indian Stamp Act, 1899 nowhere prescribes any expiry date for use of a stamp paper. Section 54 merely provides that a person possessing a stamp paper for which he has no immediate use (which is not spoiled or rendered unfit or useless), can seek refund of the value thereof by surrendering such stamp paper to the Collector provided it was purchased within the period of six months next preceding the date on which it was so surrendered.

The stipulation of the period of six months prescribed in section 54 is only for the purpose of seeking refund of the value of the unused stamp paper, and not for use of the stamp paper. Section 54 does not require the person who has purchased a stamp paper, to use it within six months.

 Therefore, there is no impediment for a stamp paper purchased more than six months prior to the proposed date of execution, being used for a document.