We may well have 10 Supreme Courts in one building: AM Singhvi on inconsistent contract law rulings

Senior Advocate Abhishek Manu Singhvi on Monday raised concerns over inconsistency in judicial decision-making, remarking that India may effectively have “10 Supreme Courts” within the same building.

Singhvi was speaking at the launch of The Fundamentals of Indian Contract Law, authored by Advocates Aman Ahluwalia and Thomas Sebastian. He said,

“In an effort to do justice in the case at hand - and that’s the biggest problem in the Indian system - the cohesiveness of the general principles is often diluted. This creates the risk of subjectivity and inconsistency. (Patrick) Atiyah had set out various conceptual reasons for the decline of contractual intent. But in India, we must guard against a much more pedestrian, but real operational and institutional reason: the subjective and polyvocal nature of Indian court judging. As somebody said, and I frequently say, we may not have 17 [Supreme Courts], but we have 17 courtrooms. We may well have 10 Supreme Courts in that building."

Singhvi was referring to the work of contract law scholar Patrick Atiyah, whose book on the rise and fall of freedom of contract he encountered as an undergraduate at Cambridge in 1979. The Senior Advocate said that if the decline of contractual intent was already a concern in England 45 years ago, it was even more relevant in India today.

“Contracts begin with consent. They survive on trust, and they endure through the rule of law. A society that honours its contracts ultimately honours its citizens," he added.

Ahluwalia, meanwhile, said that the Indian Contract Act, 1872, was once a pioneering law that was adopted in Malaysia, Myanmar, parts of East Africa and British-administered Cyprus.

“In the 1870s, along with opium and jute and rice and cotton, we were exporting contract law. If I fast forward 150 years to today, what we’re doing today is we’re no longer exporting contract law, but we’re exporting disputes.”

Ahluwalia identified five structural constraints on the development of Indian contract law. These included the incomplete nature of the Contract Act, the difficulty of updating a codified law, the import of English principles despite conscious departures in the Indian statute, inequality in bargaining power and the movement of major commercial disputes into arbitration.

He said that arbitration had deprived contract law of precedent. Arbitral awards bound only the parties and did not create law for later cases. Courts hearing challenges to such awards also applied a deferential standard of review instead of determining the correct legal position.

This had led to an “ossification, or a stunting, of the law,” Ahluwalia said.

Sebastian said that the book took 13 years to complete and was organised thematically instead of as a section-by-section commentary. This allowed the authors to discuss subjects such as contractual interpretation that did not correspond neatly to individual provisions of the Contract Act.

It was deliberately selective, unlike existing works running into several volumes, and was intended to be accessible even to first-year law students.

The book also took a normative approach by identifying conflicting or incorrectly decided cases and stating what the authors believed the law ought to be.

“This is not just a description of the propositions that make up contract law. It has a normative edge to it. We are constantly thinking about what the law should be. We’re doing it like lawyers who are looking for consistency and simple principles that work.”

A panel discussion moderated by Senior Advocate Gopal Sankaranarayanan followed the launch. It featured Senior Advocate Amit Sibal, S&R Associates Partner Niti Dixit and Advocate Suhasini Sen.

Sankaranarayanan questioned whether judges accustomed to deciding public-law disputes sometimes carried the same principles into private contractual cases.

“Our High Courts and Supreme Court are peopled by judges who are used to adjudicating a lot of public law. They bring those thoughts and forget which cap they are wearing when they are looking at cases. Sometimes, on the same day, five minutes apart, they start applying some public interest principle to private law.”

He pondered whether importing public-law considerations into contractual disputes was necessarily undesirable, particularly when courts were dealing with unequal bargaining power and unconscionable terms.

Sibal said that arbitration depended heavily on court judgments but did not contribute to the development of publicly available law. He also cautioned against importing English law without first examining the Indian Contract Act and Indian judgments.

Dixit addressed whether courts should apply standards of fairness to private contracts. She said that Indian courts had long tested contracts involving public bodies against Article 14 standards.

“I see nothing inherently problematic in placing a standard of fairness in contractual relationships and I don’t see why we should not find perhaps a clearer legislative framework for it, rather than leaving it to the discretion of whichever judge just decided a public law case and then decided, in the next contractual matter, to apply the same principle," she said.

Sen discussed the power under the Consumer Protection Act, 2019 to strike down unconscionable contractual clauses. However, she said that the statutory change had not led to a corresponding change in the way standard-form agreements were drafted. Parties continued to enter such contracts expecting courts to correct unfair terms later.

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