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India: Termination of Contract

March 5, 2019
VOL IV
ISSUE No. 7
March 05, 2019


India: Termination of Contract

In order to carry out business operations, parties are required to enter into an arrangement which has the effect of creating binding obligations on them. A contract is an agreement, the terms of which are enforceable by law. Governed under the provisions of the Indian Contract Act, 1872 (hereinafter referred to as the “Act”), failure to fulfil the duties set out under the contract entails liability on the party causing the breach.

Events of termination

Some of the circumstances which result in termination of a contract between the parties are listed as below:

  • Coercion – A contract can be terminated on the account that a party has exercised coercion by committing or threatening or detaining tactics to obtain the consent of the other party (Section 15 of the Act).
  • Undue Influence – Where a party is in a position to dominate the will of another and exercises such position to obtain unfair advantage over the other party by obtaining their consent, such party has the option to terminate such contract (Section 16 of the Act).
  • Fraud – A contract may be terminated by a party in the event where the other party has committed a fraudulent activity to obtain the consent of the innocent party by deceiving them (Section 17 of the Act).
  • Misrepresentation – Where consent of a party is obtained on account of false statement made by party which believed it to be true, the innocent party has the option to terminate the contract (Section 18 of the Act).
  • Mistake – A contract becomes void from its conception if either or both parties are mistaken in regards to a matter of fact (Section 20 of the Act).
  • Frustration of contract – Attributable to supervening event that was beyond the control of either party making the performance of the contract impossible, discharges both the parties from performance of the duties enumerated thereunder (Section 56 of the Act).
  • Breach of obligations – A party may commit breach of their obligations under the contract by renouncing their liability, by making the performance impossible owing to own acts or totally or partially failing to fulfil the requisite duties.
  • Terms in termination clause – Parties may terminate the contract subject to the terms stated therein which may include expiry of the duration or termination at will by issuance of notice or any incapacity or change of circumstances hampering the performance of the obligations.

Consequences of termination

In the event where the contract between the parties is terminated, payment of consideration should be made in respect of the fulfilment of the promises by the other party in terms of delivery of goods or services.

Even if the contract is discharged and the other party has fulfilled their obligations as stated in the original contract which have been accepted by the first party, payment of consideration is required to be made on Qunatum Meruit basis.

In the case of breach of the conditions of the contract committed by either party, the other party may be made liable for compensation in terms of recession, liquidated/ unliquidated damages, injunction or specific performance subject to the terms of the contract.

 

In the news…

One of the country’s largest multiplex chain Inox Leisure (hereinafter referred to as “Inox”) terminated its contract with online ticketing platform BookMyShow (hereinafter referred to as “BMS”), after a disagreement over payments being demanded by Inox. While BMS challenged the said termination in the High Court of Bombay, the judicial authority referred the matter for arbitration vide its order dated September 18, 2018. [1]

It has been contended by BMS that the difference between the parties arose in respect of payments hike sought by Inox arises for the rights to sell tickets through the booking partner. However, Inox alleged breach of the terms of the contract between parties by BMS.

Only after careful scrutiny of the terms and conditions of the contract governing the parties, can the issue between them be resolved. The arbitration proceedings ordered will delve into the depth of the matter to understand the nature and intent of the parties involved while formulating the terms of the contract between themselves before identifying the violation of the same and providing available relief to the innocent party.

[1]https://economictimes.indiatimes.com/industry/media/entertainment/inox-leisure-takes-cinemas-off-bookmyshow-pvr-cinepolis-gain/articleshow/65927592.cms

 


 

 

India: Prevention of Workplace Sexual Harassment Laws

Introduction

 

The implementation of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (hereinafter referred to as the “Act”) was a win for all women employees. However, it was anything far from an easy or quick win. Sexual harassment at workplace is not only a wrong against the body of the woman but also wrong against her mentally. It is yet another form of discrimination, deterring her to be the part of the work force, and therefore refraining her from exercising her fundamental right to work as enshrined in Article 19 of the Constitution of India. It is a wrong against her life and against her dignity. The Supreme Court of India gave the landmark judgment in the case of  Vishakha v. State of Rajasthan[1] in 1997, wherein the Court laid down the guidelines that the employers are required to follow. However, even after the direction of the Supreme Court, the guidelines were seldom followed. Finally, in 2013 the Parliament enacted the Act and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013 (hereinafter referred to as the “Rules”) framed thereunder.

 Vishakha v. State of Rajasthan

A writ petition was filed before the Supreme Court for the enforcement of the fundamental right of working women under Article 14, 19 and 21 of the Constitution of India. The petition was filed to find suitable methods for realization of the true concept of ‘gender equality’; and to prevent sexual harassment of working women in all work places through judicial process, to fill the vacuum in existing legislation. This came in the wake of a brutal gang rape of a social worker Bhanwari Devi when she was petitioning to curb the evil of child marriage. This incident exposed the hazards that a working woman may be exposed to.

The Supreme Court acknowledged that sexual harassment at workplace is in violation of Article(s) 14, 15, 19(1)(g), 21, 42, 51A, 51 and 253. Thus, the Court laid down 12 guidelines and directed strict compliance in all workplaces for enforcement of gender equality at workplace until suitable legislation is enacted.

 Evolution of POSH Laws

Convention on the Elimination of all Forms of Discrimination against Women (CEDAW) to which India is signatory in this 11th session in 1992 laid down General Recommendation No. 19. These recommendations correlate sexual harassment with violation of a women’s human and fundamental rights. It urges states to ensure that women are not coerced into sexual harassment at workplace.

Since 1997, even after the Vishakha Judgment the Parliament did not take any significant steps to enact a suitable legislation. In Apparel Export Promotion Council v. A.K. Chopra[2], the Court yet again upheld that any action which may not necessarily result in molestation can be covered under the ambit of harassment at work place if it creates a hostile work environment for the woman involved. Ten years after the judgment, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Bill was introduced in 2007. The Union Cabinet approved the bill in 2010 after much deliberation. The bill was later referred to the Parliamentary Standing Committee on Human Resources Development which published its report in November 2011. The delay only resulted in array of cases of sexual harassment at workplace before Courts all over the country. The media started picking up cases and implementation of legislation became the dire need of the hour.

The Supreme Court came heavily on the legislators for ignoring such a crucial issue in Medha Kotwa Lele v. Union of India[3]. The Court ordered the states to ensure strict adherence of the guidelines until suitable legislation is enacted. Finally, the bill was passed by the Lok Sabah in September 2012 and the Rajya Sabhah approved the bill in February, 2013.

 Salient Features of the Act

The Act incorporates the guidelines of the Vishakha Judgment. It covers within its ambit women which may or may not be employed at the workplace. This is crucial as any woman who comes in contact with the workplace such as Interns can avail relief under the Act. Further, the Act includes household workers within its scope.

The Act stipulates a specialized committee known as Internal Complaints Committee to be appointed at workplace with more than ten employees for ensuring all complaints of sexual harassment are dealt with utmost diligence. For other workplace a local complaints committee is constituted in every district.

The Act and the Rules made thereunder prescribes procedure to be followed by the committee. The provisions aim to afford maximum support and ease to the aggrieved. The Act also lays down duties of the employer for safeguarding the interest and dignity of all employees.

 Conclusion

The Act and the Rules made thereunder is unquestionably a positive step in the direction of achieving equality in the professional sphere. This has resulted in empowering working women to work at par with their male counter parts without the fear of harassment. Moreover, the Act attempted to create awareness towards the problem previously so conveniently ignored.

[1] 1997 (7) SCC 323.

[2] (1999) 1 SCC 759.

[3] Civil Appeal No. – 5009-5010 of 2006; decided on October 19, 2012.

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