Read Order: PRIYANKA JAISWAL v. THE STATE OF JHARKHAND AND OTHERS [SC- CRIMINAL APPEAL NO. 2344 of 2024]
LE Correspondent
New Delhi, May 2, 2024: While observing that the averments made in the complaint filed by a woman clearly disclosed a prima facie case of dowry harassment, the Supreme Court has set aside the order quashing proceedings against her husband and his parents.
The marriage between the appellant and the respondent No. 8 came to be solemnised under the Special Marriages Act at Kolkata and as per the prevalent customs at Jamshedpur. As respondent No. 8 was residing in Germany, appellant traveled with her husband to Frankfurt-Germany. The grievance of the appellant was that her father-in-law and mother-in-law (respondent Nos. 3 and 4) were complaining of not having brought sufficient dowry and she was abused for the said reason. Though she had returned to India for a short stay, she was said to have traveled back to Germany and on returning back she found her husband behaving strangely.
The appellant claimed that she was badly treated and was abused by the respondent Nos. 6 and 7 when she went back to her in-laws house at Kolkata. She was forcibly restrained from entering the marital home and was physically assaulted. She also claimed that she was compelled to leave her marital house both at Kolkata and Frankfurt. She lodged a complaint and an FIR was registered against respondents 3 to 8.
When notices were not answered,the Magistrate issued non-bailable warrants against all the 6 accused namely respondent Nos.3 to 8. They were ultimately arrested their applications for grant of bail were partly successful. The complainant/informant approached the Top Court calling in question the order passed by the Jharkhand High Court whereby the proceedings initiated against respondents for the offences punishable under Sections 323, 498A, 504 and 506 IPC read with Section 3 and 4 of the Dowry Prohibition Act, 1961 (DP Act) and the non-bailable warrants issued against them came to be quashed.
The High Court quashed the proceedings against respondent Nos.3 to 8 on 3 grounds that the respondents were arrested without following the due process of law, the allegations made in the complaint was omnibus and the Court of Jamshedpur was not having any jurisdiction.
The 3-Judge Bench comprising Justice B.R. Gavai, Justice Aravind Kumar & Justice Sandeep Mehta, at the outset, observed, “This Court in catena of Judgments has consistently held that at the time of examining the prayer for quashing of the criminal proceedings, the court exercising extra-ordinary jurisdiction can neither undertake to conduct a mini trial nor enter into appreciation of evidence of a particular case. The correctness or otherwise of the allegations made in the complaint cannot be examined on the touchstone of the probable defence that the accused may raise to stave off the prosecution and any such misadventure by the Courts resulting in proceedings being quashed would be set aside.”
It was opined that the averments made in the complaint clearly disclosed prima facie case made-out against these three accused persons viz, respondents 3, 4 and 8 and correctness or otherwise of the same was a matter which required to be investigated. The High Court erred in entering into the merits of the said allegation by virtually conducting a mini trial which was clearly impermissible. Hence, on this ground, the impugned order couldn't be sustained.
However, the Bench partly accepted the arguments of the respondents in so far as respondent Nos.5 to 7 were concerned, since the allegations made against them were not only omnibus but also without any specific allegation of overt act imputed against them.
It was further observed that the appellant having been driven out of her matrimonial home continued to reside at her parental home and as such the court at Jamshedpur had jurisdiction. Taking note of these aspects, the Magistrate had rightly arrived at the conclusion that the court at Jamshedpur was having jurisdiction
“The findings recorded by the High Court being contrary to the factual aspects narrated in the complaint, cannot be accepted and accordingly it is set aside”, the Bench held while partly allowing the Appeal.
The Apex Court set aside the order of quashing passed against respondent Nos.3, 4 and 8 and affirmed the order of quashing of the proceedings passed against respondent Nos.5 to 7.
Read Order: LIFE INSURANCE CORPORATION OF INDIA v. THE STATE OF RAJASTHAN AND ORS [SC- CIVIL APPEAL NO. 3391 OF 2011]
Tulip Kanth
New Delhi, May 2, 2024: While observing that the State of Rajasthan has the power and jurisdiction to levy and collect stamp duty on policies of insurance issued within the state, the Supreme Court has rejected the contention of Life Insurance Corporation regarding the lack of legislative competence of the state. However, the Top Court has granted relief to the appellant-Corporation by directing the State Govt to refrain from collecting stamp duty as per the orders issued in 2004.
The factual background of this case was that the appellant issued various insurance policies within the state of Rajasthan between 1993-94 and 2001-02. As per the prevailing law relating to stamp duty, the appellant was required to affix stamps by paying stamp duty on the policies of insurance issued by it in accordance with the Indian Stamp Act, 1899, as adapted to the state of Rajasthan by the Rajasthan Stamp Law (Adaptation) Act, 1952.
In 1991, the appellant wrote to the Collector regarding the non-availability of Agents License Fee stamps. Thereafter, the Inspector General (Registration and Stamps) Rajasthan issued a letter to the appellant to deposit a sum of Rs. 1.19 crore for causing loss of revenue to the state of Rajasthan as it had purchased insurance stamps between 1993-94 and 2001-02 from the state of Maharashtra for insurance policies that were issued within the state of Rajasthan. Pursuantly, the Additional Collector (Stamps), Jaipur issued a show-cause notice under Section 37(5) of the Rajasthan Stamp Act, 1998 for payment of the amount. On 16.09.2004, the Additional Collector (Stamps) confirmed the show-cause notice and directed the appellant to deposit the amount. Similar orders were passed on 16.10.2004 for Rs. 1.07 crores, 11.10.2004 for Rs. 1.18 crores, 01.11.2004 for Rs. 1.87 crores, and 28.10.2004 for Rs. 43.68 lakhs.
The appellant filed a writ petition challenging the order of the Additional Collector which came to be dismissed by the High Court on the ground that the appellant had an alternative efficacious remedy of filing a revision under Section 65 of the Rajasthan Stamp Act. Later, the appeal was restored and decided in the impugned judgment by which the order of the Collector dated 16.09.2004 was upheld.
Referring to the timelines in the case, the Bench opined that at the time when the relevant instruments were executed, the Rajasthan Stamp Law (Adaptation) Act, 1952 was still in force and the stamp duty was leviable under the same.
It was further explained by the Bench that Insurance policies, which are the relevant instrument for the purpose of the present case, fall under Entry 91 of List I for the purpose of prescription of rate of duty. Only the Parliament holds the exclusive power and the legislative competence under the Constitution to prescribe the rate of stamp duty on insurance policies.
Placing reliance upon the judgment in VVS Rama Sharma v. State of Uttar Pradesh [LQ/SC/2009/867] and Vijay v. Union of India 2023 SCC Online SC 1585, 2023 INSC 1030, wherein it has been held that the power to levy stamp duty on all documents is concurrent under Entry 44 of List III, the Bench said, “From the above precedents, it is clear that the state of Rajasthan has the power to impose and collect stamp duty on insurance policies under Entry 44 of List III, albeit such duty must be imposed as per the rate prescribed by a Parliamentary legislation under Entry 91 of List I.”
It was further opined that the state legislature has the legislative competence to impose and collect stamp duty on policies of insurance under Entry 44 of List III, as per the rate prescribed by the Parliament under Entry 91 of List I.
Section 3 of Indian Stamp Act, 1899 as adapted to the state of Rajasthan is the charging provision as per which the appellant must pay stamp duty to the state government on insurance policies executed within the state. The rate at which stamp duty is payable on policies of insurance under the 1952 Act has been adopted from Schedule I of the central Act, in accordance with Entry 91 of List I. As per the Bench, the charging provision has thus been validly enacted by the state government under Entry 44 of List III. Therefore, the state government in the present case can impose stamp duty on the issuance of insurance policies within its territory and require the payment of such stamp duty by the appellant. Under these circumstances, it was held that the commencement of proceedings for recovery of stamp duty under the state law and the rules made thereunder was legal, valid, and justified.
After a perusal of the facts of the case, the Division Bench of Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar noted that the department had admitted the non-availability of India Insurance stamps and had also stated that it was not concerned with their supply and distribution as they were the property of the central government. The appellant submitted that due to such representation by the respondent-government, they were compelled to purchase the stamps from Maharashtra, without which they could not have issued the insurance policies in the state of Rajasthan.
Thus, observing that the High Court committed an error in holding that the appellant could have paid the stamp duty in cash, the Bench was of the view that the appellant had no choice but to purchase the insurance stamps from outside the state. While it made every endeavour to purchase the stamp from within the state, due to the letter by the department and the lack of mechanism for payment of stamp duty under the 1952 Act in case of unavailability of insurance stamps, it was unable to purchase the stamps and pay the stamp duty to the Rajasthan government.
The conclusions drawn by the Top Court are as follows:
- We hold that the state legislature has the legislative competence to impose and collect stamp duty on policies of insurance under Entry 44 of List III, as per the rate prescribed by the Parliament under Entry 91 of List I.
- We hold that for the execution of insurance policies within the state of Rajasthan, the appellant is bound to purchase India Insurance Stamps and pay the stamp duty to the state of Rajasthan.
Dismissing the appeals, the Bench directed the State Government not to demand and collect stamp duty as per the orders dated 16.09.2004, 16.10.2004, 11.10.2004, 01.11.2004, and 28.10.2004.
Read Order: Deependra Yadav and others v. State of Madhya Pradesh and others [SC- Civil Appeal No. 5604 of 2024]
Tulip Kanth
New Delhi, May 2, 2024: In a case pertaining to the 2019 Madhya Pradesh State Service Examination, the Supreme Court has confirmed the decision of the Division Bench of the Madhya Pradesh High Court upholding the judgment of the Single-Judge Bench which passed directions for preparation of a fresh list of selected candidates on the basis of the results of two main examinations by merging and normalizing the two lists.
This litigation, impacting multitudes of job aspirants in the State of Madhya Pradesh emanated from the amendment of an existing service rule on 17.02.2020 which was recalled thereafter on 20.12.2021, restoring the rule to its original position. In the interregnum, that amended rule was applied to an ongoing recruitment process. This prompted several challenges before the High Court of Madhya Pradesh at Jabalpur resulting in a spate of orders and directions leading up to these cases before the Top Court.
The Madhya Pradesh Public Service Commission (MPPSC) issued an advertisement on 14.11.2019 proposing to select candidates for 571 posts in the State services in accordance with the Madhya Pradesh State Service Examination Rules, 2015. The total number of candidates who registered for the preliminary examination stood at 3,64,877 but only 3,18,130 of them actually appeared for the examination. At that stage, on 17.02.2020, Rule 4 of the Rules of 2015 was amended by the State of Madhya Pradesh.
As per the pre amended Rule 4, the result of the preliminary examination was to be declared by clubbing meritorious reservation category candidates, who had not availed any reservation benefit, with the meritorious unreserved category candidates and not with their respective reservation category candidates. Post amended Rule 4 provided that adjustment and segregation of meritorious reservation category candidates with meritorious unreserved category candidates would be only at the time of final selection and not at the time of the preliminary/main examination. The amended Rule 4 was applied to the ongoing recruitment process relating to the notified 571 vacant posts. Thus, there was no segregation of meritorious reservation category candidates with those from the unreserved category and they were shown in their respective reservation categories only.
The number of candidates who cleared the preliminary examination on this basis were 10,767. On 20.12.2021, the Rules of 2015 were again amended by the State of Madhya Pradesh. Thereby, the position existing prior to the amendment effected on 17.02.2020 was restored.The result of such omission and Rule 4(1)(a)(ii), as it presently stands, is that meritorious reservation category candidates, who did not avail any benefit of relaxation, are to be clubbed with meritorious unreserved category candidates at the time of declaring the result of the preliminary examination itself. In effect, status quo ante was restored.
The MPPSC issued another Advertisement. The MPPSC declared the revised result of the preliminary examination, in tune with the unamended Rule 4 of the Rules of 2015. In consequence, 13,080 candidates were declared qualified for the main examination, instead of the 10,767 candidates declared eligible earlier as per amended Rule 4(3)(d) (III). After a series of litigation, a Single-Judge Bench of Madhya Pradesh directed the MPPSC to merge and normalize the result of the first main examination and the result of the special main examination, held on the strength of the revised preliminary examination result. 398 candidates out of the 1918 candidates, who were declared eligible for the interview earlier, stood ousted and were no longer eligible.
Few candidates had approached the High Court and by an Order, Single-Bench directed that, on the basis of the results of two main examinations, a fresh list of selected candidates should be prepared in terms of the Rules of 2015 for the interview, by merging and normalizing the two lists, as per the process adopted by the MPPSC on previous occasions. On 25.01.2023, the Division Bench confirmed this order. This order was challenged before the Top Court in the present case.
Noting that there was no lacuna in the process adopted or the formula applied, whereby injustice was done to any candidate or any arbitrariness crept in, the Division Bench of Justice C.T. Ravikumar & Justice Sanjay Kumar held that the process of normalization and the consequential merger of the marks secured by the candidates who appeared in the two main examinations couldn’t be found fault with.
The Bench also added that Rule 4(3)(d)(III) of the Rules of 2015 patently harmed the interests of the reservation category candidates, as even meritorious candidates from such categories, who had not availed any reservation benefit/relaxation, were to be treated as belonging to those reservation categories and they were not to be segregated with meritorious unreserved category candidates at the preliminary examination result stage.
Referring to the judgment in Kishor Choudhary and Ors v. State of Madhya Pradesh, the Bench said, “It appears that the State of Madhya Pradesh itself realized the harm that it was doing to the reservation category candidates and chose to restore Rule 4, as it stood earlier, which enabled drawing up the result of the preliminary examination by segregating deserving meritorious reservation category candidates with meritorious unreserved category candidates at the preliminary examination stage itself. As this was the process that was undertaken after the judgment in Kishor Choudhary (supra), whereby a greater number of reservation category candidates cleared the preliminary examination and were held eligible to appear in the main examination, there can be no dispute with the legality and validity of such process”, the Bench said.
Thus, dismissing the appeal, the Bench held that the impugned judgment dated 25.01.2023 passed by the Division Bench of the High Court of Madhya Pradesh did not need interference on any ground, be it on facts or in law.
Read Order: SHARIF AHMED AND ANOTHER v. STATE OF UTTAR PRADESH AND ANOTHER [SC- CRIMINAL APPEAL NO. 2357 OF 2024]
Tulip Kanth
New Delhi, May 2, 2024: Taking note of the fact that in some states the chargesheets merely carry a reproduction of the details mentioned by the complainant in the FIR without any elucidation on the evidence, the Supreme Court has held that an Investigating Officer must make clear and complete entries of all columns in the chargesheet so that the Court can clearly understand which crime has been committed by which accused and what is the material evidence available on the file.
Adjudicating upon a batch of criminal appeals, the Division Bench of Justice Sanjiv Khanna and Justice S.V.N. Bhatti further added, “Statements under Section 161 of the Code and related documents have to be enclosed with the list of witnesses. The role played by the accused in the crime should be separately and clearly mentioned in the chargesheet, for each of the accused persons.”
The appellants, in this case, had been involved in a drawn-out litigation with several parties over the ownership of a property. Appellant No.2 – Sharif Ahmad and Appellant No.3 – Anwar Ahmad (since deceased), purchased a part in the subject property on behalf of their partnership firm, while Appellant No.1 – Vakil Ahmad (since deceased) had done so in his individual capacity. The challenge before the Top Court related to the First Information Report filed by Respondent No.2/complainant - Mohd. Iqbal, under Sections 420, 406 and 506 IPC against the appellants.
The FIR stated that the appellants had agreed to sell the subject property to Respondent No. 2 and had received part payment for the registry of the subject property. However, the appellants did not register the property and also failed to refund the concerned amount to Respondent No. 2. A complaint was filed against Respondent No. 2 by relatives of the appellants on account of receiving threats to their life. The appellants challenged the FIR before the Allahabad High Court and sought quashing of the proceedings.
The High Court stayed the arrest of the appellant until filing of the chargesheet. In 2016, a chargesheet was filed against the appellants under Sections 405 and 506 IPC. The appellants approached the Allahabad High Court seeking the quashing of the proceedings but the same was dismissed. Hence, the appellants filed the present appeal before the Top Court.
The chargesheet stated that the offence under Section 420 was not made out. The offence of cheating under Section 415 of the IPC requires dishonest inducement, delivering of a property as a result of the inducement, and damage or harm to the person so induced. The offence of cheating is established when the dishonest intention exists at the time when the contract or agreement is entered, for the essential ingredient of the offence of cheating consists of fraudulent or dishonest inducement of a person by deceiving him to deliver any property, to do or omit to do anything which he would not do or omit if he had not been deceived. As per the investigating officer, no fraudulent and dishonest inducement was made out or established at the time when the agreement was entered.
It was further opined that the threat communicated or uttered by the person named in the chargesheet as an accused, should be uttered and communicated by the said person to threaten the victim for the purpose of influencing her mind. The word ‘threat’ refers to the intent to inflict punishment, loss or pain on the other. Injury involves doing an illegal act.
“Mere expression of any words without any intent to cause alarm would not be sufficient to bring home an offence under Section 506 of the IPC. The material and evidence must be placed on record to show that the threat was made with an intent to cause alarm to the complainant, or to cause them to do, or omit to do an act. Considering the statutory mandate, offence under Section 506 is not shown even if we accept the allegation as correct”, the Bench said.
Thus, quashing the chargesheet and the summoning order, the Top Court discharged the appellants.
In another appeal, the assertions made in the FIR alleged that the accused were frauds who had taken bainama (earnest money on the property), but thereafter were making excuses. The complainant had visited the accused at their house who had then threatened them to implicate them in false cases. They denied having received the money. In this case, the Bench allowed the appeal and directed that in the event of the appellant being arrested, he shall be released on bail.
The Bench also emphasized on the need for a Magistrate to be cautious in examining whether the facts of the case disclose a civil or a criminal wrong. Attempts at initiating vexatious criminal proceedings should be thwarted early on, as a summoning order, or even a direction to register an FIR, has grave consequences for setting the criminal proceedings in motion, it added.
In the third appeal, the facts suggested that the complainant and Respondent No. 2 – Rajesh Wangvelu had made a written complaint alleging that two officers of the National Research Laboratory for Conservation of Cultural Property, Lucknow had attacked him with a helmet and lathi, and had threatened to kill him. The FIR was registered against both accused persons under Section 323, 504 and 506 IPC. A chargesheet was also filed with an addition of Sections 308, 325 and 120B IPC, and impleading the appellant-Manager Singh (Director) as an accused.
The Bench held that the non- bailable warrants issued against Manager Singh were unsustainable. The Bench quashed the summoning order against Manager Singh after noting that the chargesheet was bereft of all details and particulars.
Referring to the judgments in Inder Mohan Goswami and Another v. State of Uttaranchal and Others [LQ/SC/2007/1225] and Vikas v. State of Rajasthan [LQ/SC/2013/901], the Bench concluded, “It is a settled position of law that non-bailable warrants cannot be issued in a routine manner and that the liberty of an individual cannot be curtailed unless necessitated by the larger interest of public and the State. While there are no comprehensive set of guidelines for the issuance of non- bailable warrants, this Court has observed on several occasions that non- bailable warrants should not be issued, unless the accused is charged with a heinous crime, and is likely to evade the process of law or tamper/destroy evidence.”
Read Order: AJAY ISHWAR GHUTE & ORS v. MEHER K. PATEL & ORS [CIVIL APPEAL NO. 4786 OF 2024]
LE Correspondent
New Delhi, May 2, 2024: The Supreme Court has set aside a Bombay High Court judgment passed in terms of the Minutes of Order, as it failed to call upon the respondents to implead such persons who were likely to be affected by construction of a compound wall. The Top Court clarified that the advocates must consider whether an order, if passed by the Court in terms of the Minutes of Order, would be lawful.
Arbitration Petitions, in this case, were filed under Section 9 of the Arbitration and Conciliation Act, 1996 before a Single Judge of the Bombay High Court. Consent terms were filed in the Arbitration Petition preferred by the 1st respondent. During the pendency of the proceeding of the Arbitration Petition, Urvaksh Naval Hoyvoy was arrested by police based on a First Information Report. The dispute in the Arbitration Petitions related to the lands of Parsi Dairy Farm.
The High Court had directed the police to give police protection to the parties for completing the process of handing over possession. A compound wall was to be constructed in terms of the consent terms. The occasion for filing the application arose as, according to the 7th respondent in the Arbitration Petition, local persons obstructed the work of the construction of the compound wall. The persons who had admittedly obstructed the construction of the wall were not parties to the proceedings of either the Arbitration Petition or the interim application.
An application was filed to the Deputy Superintendent of Land Records at Talasari by the 1st respondent and five others for measuring the lands subject matter of the Arbitration Petition The Deputy Superintendent of Land Records, in his letter informed the 1st respondent that several persons named in the letter had objected to carrying out a survey. Thereafter, the 1st and 2nd respondents filed a Writ Petition under Article 226 of the Constitution regarding non-compliance with the orders in the aforesaid Arbitration Petition by the government authorities regarding carrying out the survey and construction of the compound wall. The persons who raised objections to the survey were not impleaded in the Writ Petition. The Petition was disposed of by a cryptic order directing that the Writ Petition stands disposed of in terms of the Minutes of Order taken on record.
The Division Bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan noted that the Deputy Superintendent of Police and the Superintendent of Land Records stated in their respective affidavits that the tribals who own and possess various parcels of adjacent lands were likely to be affected by the construction of the compound wall.
The scenario presented before the Court was that under police protection, survey work and construction of the compound wall had been carried out by 1st and 2nd respondents. An illegality was allowed to be perpetrated under the protection of the police. Even the Government counsel did not perform his duty by submitting before the Court as an officer of the Court about the failure to implead the necessary parties.
Next, the Bench dealt with the concept of Minutes of Order, which is peculiar only to the Bombay High Court. “As a courtesy to the Court, the advocates appearing for the parties to the proceedings tender Minutes of Order containing what could be recorded by the Court in its order. An order passed in terms of the Minutes of Order tendered on record by the advocates representing the parties to the proceedings is not a consent order. It is an order in invitum for all purposes…If the Court finds that all the parties likely to be affected by an order in terms of the Minutes of Order are not parties to the proceedings, the Court will be well advised to defer passing of the order till all the necessary parties are impleaded to the proceedings”, the Bench said.
On the issue of lawfulness of the Minutes, the Bench stated, “After Minutes of Order is tendered before the Court, it is the duty of the Court to decide whether an order passed in terms of the Minutes of Order would be lawful. If the Court is of the view that an order made in terms of the Minutes of Order tendered by the advocates will not be lawful, the Court should decline to pass an order in terms of the Minutes of Order.”
It was opined that the senior district-level officials of the State had stated on oath that the construction of the compound wall, in respect of which relief was sought in the Writ Petition, would affect the rights of several third parties. However, the Court completely ignored the same. Even in clause 6 (iii) of the Minutes of Order, there was enough indication that the compound wall, if not appropriately constructed, would affect the rights of owners of the other lands.
According to the Bench, it was the duty of the Court to have called upon the 1st and 2nd respondents to implead the persons who were likely to be affected. The 1st and 2nd respondents could not have pleaded ignorance about the names of the concerned parties as they have referred to the owners of the other lands in the Minutes of Order.
It was also noted that the Division Bench of the High Court failed to make even an elementary enquiry whether third parties would be affected by the construction of the compound wall under police protection. Hence, the order passed in the Writ Petition in terms of the Minutes of Order was held to be entirely illegal.
Noticing the fact that the construction of the compound wall was complete, the Bench remanded the Writ Petition to the High Court and asked the Court to decide whether all the necessary parties likely to be affected by the construction of the compound wall in terms of the Minutes of Order were impleaded as party respondents. While doing so, the case of the petitioners’ case has also been ordered to be considered.
Read Order: COMMISSIONER OF CENTRAL EXCISE BELAPUR v. JINDAL DRUGS LTD [SC-CIVIL APPEAL NO. 1121 OF 2016]
LE Correspondent
New Delhi, May 2, 2024: While dismissing the appeal of the Revenue Department and ruling that the process of re-labelling amounts to ‘manufacture’, the Supreme Court has affirmed the decision of the CESTAT holding Jindal Drugs Ltd. eligible for availing CENVAT credit of the duty paid by its Jammu unit.
The Division Bench of Justice Abhay S. Oka & Justice Ujjal Bhuyan was considering an appeal by the revenue under Section 35L (1)(b) of the Central Excise Act, 1944 ( Central Excise Act) against the order passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (CESTAT).
By the impugned order, the CESTAT allowed the appeal filed by the respondent holding that as per Note 3 to Chapter 18 of the Central Excise Tariff Act, 1985, the activity of labelling amounted to manufacture and hence the activity of the respondent fell within the ambit of the definition of manufacture as per the said Note. Therefore, the respondent was eligible for availing the cenvat credit of the duty paid by its Jammu unit and was also eligible for rebate on the duty paid by it while exporting its goods. CESTAT further held that there was no suppression by the respondent and, therefore, the extended period of limitation was not available to the department (revenue).
The Respondent, in this case, has been engaged in the business of exporting cocoa butter and cocoa powder. Its factory at Jammu manufactures cocoa butter and cocoa powder. Respondent has another unit located at Taloja in the State of Maharashtra. Cocoa butter and cocoa powder manufactured at Jammu are received by the respondent’s unit at Taloja. In the Taloja unit, respondent affixed two labels on two sides of the packages of the said goods received from its Jammu factory and cleared the same for export on payment of duty and claimed rebate of the duty paid on the exported goods. Further, respondent availed cenvat credit of the duty paid on those two goods at the time of clearance from Jammu. The Respondent also imported cocoa butter and cocoa powder from China and Malaysia, receiving the same in its factory at Taloja.
The factory of the respondent at Taloja was visited by officials of the appellant and it was found that the respondent was only putting labels on the goods brought from Jammu as well as on the imported goods. As the labels were already fixed on the boxes containing the two goods, additional labels affixed by the respondent did not amount to manufacture since affixing of additional label did not enhance the marketability of the goods which were already marketable.
In such circumstances, appellant issued show cause cum demand notice to the respondent to show cause as to why the activity of labelling undertaken by the respondent on the product cocoa butter received from the Jammu unit and also on the imported goods should not be held as activities not amounting to manufacture in terms of Note 3 to Chapter 18 of the Central Excise Tariff Act. It was alleged that respondent had wrongly availed cenvat credit amounting to Rs 23,02,53,752.00 for the period from June, 2008 to July, 2012 and rebate claims amounting to Rs. 13,22,30,368.00 for the period from June, 2008 to July, 2011.
It was the case of the appellant that the activity undertaken by the respondent at its Taloja unit i.e. putting labels on the two sides of the cartons which were already labelled at Jammu, couldn’t be said to be a manufacturing activity. Note 3 to Chapter 18 of the Central Excise and Tariff Act couldn’t be read in a manner to hold that the activity of labelling amounted to manufacture.
The main issue before the Bench was whether the activity of labelling carried out by the respondent amounts to manufacture.
At the outset, it was clarified that the Central Excise Act which has since got subsumed in the Central Goods and Services Tax Act, 2017 was enacted to provide for levy of central duties of excise on goods manufactured or produced in India and for matters connected therewith or incidental thereto. Therefore, the word manufacture includes any process which is incidental or ancillary to the completion of a manufacture product; any process which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act as amounting to manufacture; or any process which in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer.
The Bench referred to Chapter 18 of the Central Excise Tariff Act which deals with cocoa and cocoa preparations and has undergone amendment with effect from 01.03.2008. Note 3 now contemplates 3 activities. The composite activity of labelling or re-labelling of containers and repacking from bulk packs to retail packs has been split up into two activities i.e. labelling or re-labelling of containers is one and the other is repacking from bulk packs to retail packs. The other activity of adopting any other treatment to render the product marketable to the consumers remains the same. Therefore, Note 3, post amendment, as it exists today contemplates three different processes; if either of the three processes are satisfied, the same would amount to manufacture.
If any of the below mentioned three processes is satisfied then the same would amount to manufacture:
- labelling or re-labelling of containers; or
- repacking from bulk packs to retail packs; or
- the adoption of any other treatment to render the product marketable to the consumer.
Referring to the definition of manufacture in the Central Excise Act, the Bench opined that any one of the processes indicated in Note 3 to Chapter 18 of the Central Excise Tariff Act would come within the ambit of the definition of manufacture under Section 2(f)(ii) of the Central Excise Act.
“There is no factual dispute as to the activity carried out by the respondent at its Taloja unit. Whether the goods are brought from the Jammu unit or are imported, those are relabelled on both sides of the packs containing the goods at the Taloja unit of the respondent and thereafter, introduced in the market or sent for export. In terms of Note 3 to Chapter 18, this process of re-labelling amounts to manufacture”, the Bench held.
Thus, affirming the impugned order of CESTAT, the Bench dismissed the appeal of the Revenue.
Read Order: SWAMI VEDVYASANAND JI MAHARAJ (D) THR LRS v. SHYAM LAL CHAUHAN & ORS [SC- CIVIL APPEAL NOS. 5569-5570 OF 2024]
LE Correspondent
New Delhi, May 2, 2024: While remitting a civil matter to the Patna High Court for fresh decision on substitution of legal representatives, the Supreme Court has observed that in the course of dealing with the report sent by the Subordinate Court under Order 22 Rule 5 of the Code of Civil Procedure, 1908, the Appellate Court may consider the findings of the Subordinate Court and then give its reasons before reaching any conclusion.
Respondent Nos.1 to 4 were plaintiffs in a civil suit where Swami Shivdharmanand Ji Maharaj @ Deo Shankar Tiwary (Swami Shivdharmanand) was one of the defendants. It was a title suit seeking declaration regarding the suit property situated in Bihar. The suit was dismissed by the Trial Court. The First Appellate Court allowed the appeal and decreed the suit. Consequently, the defendant Swami Shivdharmanand filed a second appeal, which is still pending before the Patna High Court.
Meanwhile the defendant, who had filed the second appeal passed away in 1999. There were two claimants, or successors of the Gaddi of Swami Shivdharmanand, who sought substitution in place of Swami Shivdharmanand in the Second Appeal. These were Swami Triyogan and Swami Satyanand who is respondent no.6 in the present appeal.
Initially, Patna High Court directed the Trial Court to conduct an enquiry in the matter as laid down under Rule 5 of Order 22 of Civil Procedure Code, for the purpose of substitution. The Trial Court did its enquiry and submitted the report before the Patna High Court, where the findings were that Swami Satyanand (i.e., present respondent No.6) is the Legal Representative (LR) of Swami Shivdharmanand and was liable to be substituted as the appellant before the High Court. Objections were filed to the said report by the other party, which is the predecessor-in-interest of the appellant.
The Patna High Court instead of giving a decision based on the report and the objections, passed an order allowing both the parties (Swami Satyanand and Swami Triyoganand) to be substituted as LRs to Swami Shivdharmanand. Thereafter, Swami Satyanand was ordered to be substituted as the appellant in the pending Second Appeal.Swami Triyoganand too passed away in 2018 and the Patna High Court went ahead and passed the order in favour of Swami Satyanand on the ground that the Trial Court in its report has found Swami Satyanand to be the LR of the appellant-Swami Shivdharmanand, and it was herefore needless to adjourn the matter any further.
The Division Bench of Justice A.S. Bopanna & Justice Sudhanshu Dhulia was considering the appeals arising out of the order pending Second Appeal before the Patna High Court.
The scenario before the Bench was that Swami Vedvyasanand had passed away and now Sadhavi Sarojanand, who claimed to be the legal heir of Swami Vedvyasanand, was seeking substitution as appellant in the pending second appeal before the High Court.
Referring to the judgment in Jaladi Suguna v. Satya Sai Central Trust [LQ/SC/2008/1088], the Bench said, “The only purpose of substitution is the continuation of the case. The substitution as LR in a case by itself will not give any title in favour of the person so substituted. It only confers the right to represent the estate of the deceased in the pending proceedings.”
The Bench was of the view that the High Court while substituting Swami Satyanand (Respondent No.6) as the appellant and dismissing the claim of appellants predecessor-in-interest i.e., Swami Triyoganand did not follow the correct procedure.
Placing reliance upon Order 22 Rule 5 of CPC, the Bench explained that the Rule mandates that in case of death of plaintiff or defendant, if a question arises as to whether any person is or is not the legal representative of the deceased party, the court shall first determine such a question. Proviso of this Rule is only an enabling provision where the appellate court may before deciding the question can refer the matter to a subordinate court to try and record its findings which may be considered by the Appellate Court while taking a final call on the issue.
As per the Bench, the High Court had earlier fallen into error by substituting both the claimants as legal representatives of the deceased defendant for the purpose of hearing the appeal and thus, the matter was remanded by this Court. “We are afraid that the High Court has again misread Rule 5 as well as our order, as it failed to consider the objections against the Trial Court report while making its determination on substitution”, it added.
The High Court did not discuss the evidence in support of the claim of the Respondent No. 6 nor did it consider the objections of the other party on such claims. Moreover, there was already another substitution application pending before the Court which was not considered.
The Top Court further held that the Proviso to Rule 5 does not say that the Appellate Court can direct the subordinate court to decide the question as to who would be the legal representative, it only provides that the Appellate Court can direct the subordinate court to try the question and return the records to the Appellate Court, along with the evidence and the subordinate court has then to send a report in the form of a reasoned opinion based on evidence recorded, upon which the final decision has to be made ultimately by the Appellate Court, after considering all relevant material.
“While dealing with the report sent by the subordinate court under Order 22 Rule 5 of CPC, the Appellate Court may consider the findings of the subordinate court and then give its reasons before reaching any conclusion. The words the Appellate Court may take the same into consideration in determining the question used in the proviso to Rule 5 gives discretion to the Appellate Court to make its own separate opinion notwithstanding the opinion of the subordinate court. The proviso cannot be construed to be a delegation of the powers of the Appellate Court to substitute the deceased party, but is merely to assist it in ultimately deciding the issue of substitution. Thus, the Appellate Court may take into consideration the material referred by the subordinate court under Rule 5 of Order 22, CPC along with the objections, if any, against the report while deciding on the substitution of the appellant”, the Bench said.
Thus, the Bench set aside the earlier orders passed in 2019 and remitted the matter back to the High Court for a fresh decision on substitution.
Read Order: FIRDOSKHAN KHURSHIDKHAN v. THE STATE OF GUJARAT & ANR [CRIMINAL APPEAL NO(S). 2044 OF 2010 WITH 2045 OF 2010]
Tulip Kanth
New Delhi, May 2, 2024: While upholding the conviction of one appellant accused in NDPS Act case, the Supreme Court has acquitted another with the observation that the very manner in which the second accused was apprehended and brought to the NCB Office was full of doubt and created grave suspicion.
The facts of the case were such that the Intelligence Officer in the Narcotic Control Bureau (NCB), Ahmedabad received a secret information that two persons would be delivering contraband/illicit substance at a Bus Stand. The information also provided that the contraband substance had been received from one Adilkhan and that the miscreants would be delivering it to a third person.
Two panchas were summoned to the NCB office where a preliminary panchnama taking their consent to participate in the proceedings was drawn. The first raiding group after disclosing their identity to the suspect who was holding the bag, made enquiry about his identity and he gave out his name to be Anwarkhan(A-1). The second suspect, however, escaped from the spot. The bag held by Anwarkhan(A-1) was opened and two polythene bags containing suspected contraband material were found therein. The gross weight of the two polythene bags came out to be 2kg and 30 grams. Summon under Section 67 of the Narcotic Drugs and Psychotropic Substances (NDPS) Act was issued to Anwarkhan(A-1) by Deepak Pareek(PW-2) which was duly received by him. Statement of Anwarkhan(A-1) was recorded under Section 67 of the NDPS Act by Deepak Pareek(PW-2) and thereafter, he was arrested.
The appeals before the Top Court were preferred by the appellants- Anwarkhan Jahilkhan Pathan and Firdoskhan Khurshidkhan Pathan, challenging the judgment rendered by the Division Bench of the Gujarat High Court whereby their Criminal Appeals were dismissed. The High Court had upheld the order convicting the appellants for the offences punishable under Section 21 read with Section 8(c) and Section 29 of the Narcotic Drugs and Psychotropic Substances Act, 1985 and sentencing them to undergo rigorous imprisonment for ten years and fine of Rs. 1 lakh each in default of payment of fine to undergo simple imprisonment for two years.
At the outset, the Division Bench of Justice Sandeep Mehta and Justice Prasanna B. Varale opined that the contention of the appellants that the search and seizure was undertaken without associating an independent witness was untenable on the face of record.
Manubhai(PW-1), the panch witness associated in the search and seizure proceedings was serving in the Income Tax Department and hence it couldn't be accepted that the witness was a stock witness of the NCB or was an interested witness. Manubhai(PW- 1) in his sworn testimony proved the recovery panchnama and also fully supported the prosecution case regarding the search and seizure of contraband effected from Anwarkhan(A-1). Thus, it was well established that an independent panch witness was associated in the search and seizure procedure.
The Bench also brushed aside the contention that non-compliance of the requirement of Section 42(2) vitiates the search and seizure on the ground that when the search and seizure is affected from a public place, the provisions of Section 43 of the NDPS Act would apply.
The Bench rejected the argument of the appellants that the search and seizure proceedings were vitiated on account of the non-compliance of Section 50 of the NDPS Act because admittedly, the seizure in this case was not effected during personal search of the appellant Anwar Khan(A-1). Admittedly, the contraband was being carried in a polythene bag held by the appellant Anwar Khan(A-1) in his hand and hence, there was no requirement for the Seizure Officer to have acted under the provisions of Section 50 of the NDPS Act before conducting the search and seizure proceedings. Thus, it was opined that the prosecution had duly proved the guilt of Anwarkhan(A-1) beyond all manner of doubt by leading convincing and satisfactory evidence.
The appellant Firdoskhan(A-2) was not apprehended on the spot or at the time of seizure and his name cropped up for the first time in the statement of Anwarkhan(A-1) recorded under Section 67 of the NDPS Act.
As per the Bench, the admissibility of a confessional statement of the accused recorded under Section 67 of the NDPS Act was examined by this Court in the case of Tofan Singh v. State of Tamil Nadu [LQ/SC/2020/754] and it was laid down that such confessional statements are not admissible in evidence. “Hence, the statement(Exhibit-42) of Anwarkhan(A-1) wherein he allegedly identified the appellant Firdoskhan(A-2) as the person who had escaped from the spot cannot be read in evidence against the appellant Firdoskhan(A-2) because the manner in which the said statement was recorded leaves much to be desired and creates a grave doubt on the sanctity thereof, in addition to the same having rendered inadmissible by virtue of Tofan Singh(supra)”, the Bench added.
Moreover, the very manner in which the said accused was apprehended and brought to the NCB Office at Ahmedabad in the purported exercise of recording his statement under Section 67 of the NDPS Act was full of doubt and created grave suspicion. It was also noticed that no contraband substance was recovered from the possession of appellant Firdoskhan(A-2).
Thus, the Bench dismissed the appeal of the appellant Anwarkhan(A-1) while allowing the appeal of Firdoskhan(A-2) and acquitting him of all the charges.
Read Order:JASOBANTA SAHU v. STATE OF ORISSA[SC- CRIMINAL APPEAL NO. 493 OF 2022]
Tulip Kanth
New Delhi, May 1, 2024:In a case of murder where some of the witnesses turned hostile and it was doubtful as to whether the witnesses had actually witnessed the incident or not, the Supreme Court has acquitted a convict sentenced to life. The Top Court also noted that the recovery of the weapon was made from an open space and conviction couldn’t be solely based on it.
On October 9, 1988, an oral information was received to the effect that Laxminarayan Sahu had been murdered. On the basis of the oral information, the Office In-Charge (IO) registered a First Information Report (Exhibit-1) for the offence punishable under Section 302 of the IPC. The IO also arrested the appellant and thereafter, the appellant led to discovery of the weapon of offence, i.e., knife. He also made a query to the doctor and sent the incriminating articles for chemical examination.
The prosecution case was that the appellant and deceased were having strained relationship on account of property dispute. Laxminarayan Sahu (deceased), one BrajabandhuSahu and Bhagaban Sahu (PW-14) were brothers. The appellant is the son of BrajabandhuSahu. There was a partition of family properties between the three brothers and their mother, in which their mother was allotted Ac.1.80 decimals of land for her maintenance. She was staying mostly either with PW14-Bhagaban Sahu or with the deceased.
After her death, about four years prior to the date of occurrence, BrajabandhuSahu wanted to divide the landed property belonging to his mother, which was objected to by the other brothers. Disputes thus arose between BrajabandhuSahu and the appellant on one side and the other two brothers on the other side. This led to litigations between the parties. On October 9, 1988, Laxminarayan Sahu (deceased) went to his land to plough, the appellant reached there at about 12:30 PM and stabbed Laxminarayan Sahu repeatedly by using a knife, as a result of which Laxminarayan Sahu died at the spot.
On completion of investigation, the I.O. submitted a chargesheet against the appellant. The appellant pleaded not guilty and claimed to be tried.The criminal appeal, before the Top Court, challenged the final judgment of the Orissa High Court, Cuttack affirming the judgment whereby the appellant was convicted under Section 302 of the Indian Penal Code, 1860 and sentenced to imprisonment for life.
From the perusal of the evidence on record, the Division Bench of Justice B.R. Gavai and Justice Sandeep Mehta observed that the Trial Court and the High Court had basically rested the conviction on the basis of the testimonies of PW1-Kirtan Sahu, PW2-Nagendra Pradhan and PW3-Hrusikesh Sahu. The High Court also believed the extra-judicial confession made by the accused-appellant to PW6-Purna Chandra Pradhan, who is a co- villager.
Another incriminating circumstance that the Trial Court and the High Court found against the appellant was with regard to the recovery of knife, as proved in the depositions of PW5-Harihar Behera and PW20-Choudhury Sasmal. Going through the evidence of PW-1 and PW-2, the Bench observed that a serious doubt arose from the conduct of PW1 and PW2 as to whether they were really the eyewitnesses to the incident or not.
PW1 admitted that his statement was recorded 4-5 days after the date of the incident. The conduct of PW2 was more abnormal, particularly, when his son himself is a Police Havildar.
It was noticed that after seeing such a gruesome incident, he chose to go to his Taila, which was about 2 miles away from the place of occurrence, and he returned from his Taila after 5 days and voluntarily gave his statement to the I.O. The I.O.s not going to his Taila to record his statement cast a serious doubt on the question as to whether this witness (PW2) was really an eyewitness or not.
Considering that there were inconsistencies in the evidence of PW1 and PW2, the Bench opined that it was doubtful as to whether both these witnesses had actually witnessed the incident or not.Moreover PW15 and PW16, who were also the eyewitnesses to the incident, had turned hostile and did not support the prosecution's case.
Though PW-6 referred to the extra-judicial confession made by the accused-appellant to him, however, on a perusal of his evidence, it was revealed that his evidence was full of improvements.
“The evidence of the I.O. and the Panch witnesses i.e., PW5 and PW20, would reveal that the recovery of weapon was made from an open place. The recovery is made from a Bhalupadi Bush of Naga Sahu Mango Tope of Village Uggi. As such, much reliance cannot be placed on such recovery. In any case, the conviction, solely based on such recovery, would not be tenable”, the Bench said.
The Bench found that the prosecution had failed to prove the case beyond reasonable doubt. Thus, allowing the appeal, the Top Court acquitted the appellant of all the charges.
Read Order: SURESH @ UNNI @ VADI SURESH v. THE STATE OF KERALA [SC- CRIMINAL APPEAL NO. 2332 OF 2024]
Tulip Kanth
New Delhi, May 1, 2024: Taking note of the fact that the testimonies of the witnesses, in a 2006 murder case, were recorded almost four-and-a-half years after the date of the incident and the appellant was arrested 2 years later, the Supreme Court has acquitted him of all the charges.
The incident is of the year 2006 when the Control Room, Ernakulam received information about an unlawful assembly that had broken into a video shop run by Ajeesh (PW- 2) with the common object of murdering him and had thereafter proceeded to cause grievous injuries to PW-2 and his friend Kapil (hereinafter referred to as the deceased) with deadly weapons, before hurling country-made bombs into the said video shop and an adjacent grocery store, run by PW-2s father, and had subsequently fled from the scene. On receiving the said information, the ASI (PW-6) along with a flying squad reached the spot of the incident, where they found the deceased in an injured state and took him to RCM Hospital, Tripunithura, where he was declared dead upon medical examination.
PW-1 went to Hill Palace Police Station, Tripunithura and furnished a statement (Ext. P1 F.I.) on the basis of which a First Information Report was registered against the members of the unlawful assembly. Subsequently, the post mortem of the deceased was conducted wherein it was concluded that his death had been caused by a stab injury involving the aorta.
The prosecution case was that Ajeesh (PW-2) and his father Rajappan were close to the family of one Vidyadharan who had been kidnapped and murdered by a group led by Jaison (Accused No.1) on account of prior enmity between them, since Vidyadharan had opposed the drug trade which was led by Jaison (Accused No.1). In the investigation and trial that followed, PW-2 and his father lent their assistance to the prosecution case therein, which instigated Jaison (Accused No.1) and 10 of his other associates, including the present Appellant, to hatch a criminal conspiracy to commit the murder of PW-2.
Pursuant to the same, the 11 accused persons formed an unlawful assembly with the common object of murdering PW-2, and set out in a silver Qualis car towards the video shop run by PW-2. The car bore a fake registration plate and had been rented from Ajith (PW-9) by Jaison (Accused No.1) after the deposit of a signed blank cheque and his driving license.
It was alleged that the accused persons hurled country-made bombs into the video shop and the grocery store run by PW-2s father and thereafter, they fled the scene.
Upon the conclusion of the investigation and after the Appellant was arrested in 2008, an additional chargesheet was filed against him before the Court of the Additional Chief Judicial Magistrate, Ernakulam wherein he was arrayed as Accused No.6.
The appeal was filed before the Top Court against the judgment passed by the Division Bench of the High Court of Kerala wherein the High Court partly allowed the said Criminal Appeal preferred by Suresh @ Unni @ Vadi Suresh, the present Appellant, and set aside the conviction of the present Appellant under Sections 3(a) and 4(a)(i) of the Explosive Substances Act, 1908 and Section 27(1) of the Arms Act, 1958 while confirming the conviction of the present Appellant under Sections 302, 307,143, 147, 148, 324, 326, 427 and 449 read with Section 149 of the Indian Penal Code, 1860 (IPC) as recorded by the Trial Court.
The Division Bench of Justice B.R. Gavai and Justice Sandeep Mehta opined that the incident took place on March 6, 2006 whereas the testimonies of the witnesses were recorded in the month of August 2010 i.e., approximately four and half years after the date of the incident.
It was noted that though the incident is of the year 2006, the present Appellant was arrested in the year 2008. It was further to be seen that apart from the identification parade not being held, the accused/present Appellant was shown to the witnesses by the Police.
“As such, we are of the considered view that conviction only on the basis of identification of the accused in the Court for the first time after four and half years of the incident would not be sufficient for maintaining the same”, the Bench said.
Insofar as the motive was concerned, the motive was attributed only to Accused No.1-Jaison and not to the present Appellant. The prosecution also relied on the recovery of iron rod allegedly on the memorandum of the present Appellant under Section 27 of the Indian Evidence Act, 1872. However, the incident took place on March 6 2006, whereas the recovery was made on May 11, 2008 i.e., after about 2 years and 2 months.
Noting that the prosecution had stated that the said iron rod also had blood stains, the Bench said, “It is difficult to believe as to how the blood stains still remained on the said iron rod which was recovered from an open place after about 2 years and 2 months and when in the intervening period two monsoons had passed. As such, no credence could be given to the said recovery.”
The Bench also observed that the possibility of mistaken identity also couldn’t be ruled out. In the first charge-sheet, the present Appellant was described as Unni, whereas in the second charge-sheet, he was described as Suresh alias Vadi Suresh.
“In that view of the matter, we find that the prosecution has failed to prove the case beyond reasonable doubt”, the Bench held while allowing the appeal and acquitting the appellant of all the charges.
Read Order:ZULFIKAR @ BOBBY v. STATE OF NCT OF DELHI [DEL HC- CRL.A.424/2023]
LE Correspondent
New Delhi, May 1, 2024: In a case where a 60-year-old woman set herself on fire, the Delhi High Court has acquitted her son alleged to have abetted her suicide after considering the fact that the prosecution’s case had not been supported by any of the independent witnesses but was only based on the testimony of interested witnesses. The High Court noted that the appellant had made efforts to douse the flames.
It was the case of the prosecution that SI Rizwan along with Constable Rakesh reached at MCD Primary School situated in Seelampur, Delhi where a lady had set herself on fire and had been shifted to Lok Nayak Jai Prakash (LNJP) Hospital by the PCR van. SI Rizwan proceeded to LNJP Hospital, wherein injured Ezaz Fatima refused to give her statement. On reaching back at the spot, the SI met an eye-witness Iftekhar Ali (PW-18), who alleged that Ezaz Fatima along with her son Zulfikar @ Bobby (appellant) had come to the school premises, wherein she set herself on fire in the compound/playground of the school, after taking out a plastic bottle and pouring the contents upon her. The appellant was alleged to have handed over her a lighter. He further alleged that in view of hue and cry, teachers and other staff members assembled at the spot and called the police.
Accordingly, on the statement of Iftekhar Ali (PW-18), FIR was registered initially under Section 309/114/120B IPC. During the course of investigation, Ezaz Fatima expired on 05.11.2013. In the post morterm report, the cause of death was opined as “septicemia consequent upon infected burn injuries”.Section 306 IPC was thereafter invoked after completion of investigation and chargesheet was filed under Section 306/114/120B IPC against the appellant.
Charge was framed against the appellant/accused under Section 306 IPC.The Trial Court had concluded that though the deceased was carrying a plastic bottle, from which she poured the contents over her, the action of appellant in providing a lighter made a clear case of instigation, provocation, incitement or encouragement on his part. As such, the appellant provided the cannon fodder in abetting the deceased to set herself on fire and commit suicide.
The appeal was filed before the Delhi High Court challenging the order on sentence passed by ASJ whereby the appellant had been sentenced to undergo rigorous imprisonment (RI) for five years and fine of Rs 2,000 for offence punishable under Section 306 IPC (in default of payment of fine, to undergo SI for 15 days) with benefit of Section 428 Cr.P.C.
The Single-Judge Bench of Justice Anoop Kumar Mendiratta explained, “To bring a case within the purview of "abetment to suicide" under Section 306 IPC, there must be a commission of suicide and in the commission of said offence, the person who is alleged to have "abetted" the commission of suicide must have played an active role by instigation or engage with one or another person in any conspiracy for doing that thing or intentionally aid by any act or illegal omission”
It was opined that there must be a criminal intent (mens rea) when carrying abetment which could be by way of encouragement, intentional incitement in the form of verbal threats, provocation, persuading, commanding or encouraging someone to commit suicide through acts or omissions. There has to be some proximate active role in the act of instigation or aiding or doing or omitting to act.
In this case, as per statement given by the deceased, which was recorded after registration of FIR, Razi Hasan (PW-19/husband) had called her at the School, since there had been some settlement regarding Talaq. She further stated that Razi Hasan (PW-19) had brought the bottle containing the oil and put her on flames and was aided by Nade Ali (PW-17) and Payamberaza (PW-16) who were also present at the aforesaid time. Further, her son (appellant Zulfikar @ Bobby) had saved her.
Moreover, abetment by appellant was alleged not by way of instigating, urging, provoking or inciting to do an act but was sought to be inferred by way of ‘aiding’ the deceased by providing a lighter which was taken by deceased from the appellant. “It also needs to be kept in perspective that appellant did not remain a silent spectator but immediately intervened to put down the flames with his shirt, which has been seized during investigation and also sustained some burn injuries in the process. Further, the deceased categorically exonerated the appellant of playing any role in the incident and if alive, would have been the best witness in favour of the appellant”, it added.
The facts of the case suggested that deceased Ezaz Fatima and Razi Hasan (PW-19), after marriage had strained relations for several decades since Razi Hasan (PW-19) had re-married without obtaining divorce from the deceased.
“It is well settled that in criminal prosecution when a witness is cross-examined and contradicted with the leave of the Court by the party calling him, the evidence cannot be treated to be completely washed off the record. It needs to be analysed whether as a result of such cross-examination and contradictions, the witness stands thoroughly discredited or can still be believed in regard to a part of his testimony before the Court”, the Bench stated.
It was also clarified by the High Court that the statement before the Investigating Officer under Section 161 Cr.P.C. can be used for contradiction after compliance with Section 145 of the Indian Evidence Act i.e. by drawing the attention of the maker to the parts of the statement intended for contradiction.
On cross-examination on behalf of Amicus Curiae for the appellant, PW-3 (Madan) admitted that Nade Ali (PW-17) was in Room No.3 and was the first one to reach the spot where the deceased had put herself on fire. The version put forth by PW-3 (Madan) was of immense significance since he was posted at the gate of the school and was the first person to meet the deceased and appellant. a Adeliberate attempt was also made by Nade Ali (PW-17) to aggravate the role of the appellant, which put a question mark on his veracity. The witness being related to Razi Hasan (PW-19) was also an interested witness and his testimony needed to be considered with caution. Moreover, the presence of Nade Ali (PW-17) and Iftekhar Ali (PW-18) prior to the deceased setting herself on fire stood refuted by PW-3 Madan and the aforesaid contradiction went to the root of the prosecution case. Thus, the testimony of PW-17 & PW-18 couldn’t be relied for convicting the appellant.
Since the case of prosecution had not been supported by any of the independent witnesses, but was only based upon the testimony of Nade Ali (PW-17) and Iftekhar Ali (PW-18), who were interested witnesses under influence of Razi Hasan, the Bench held that it would not be safe to convict the appellant.“Intentional aiding and complicity are the gist of the offence of abetment which have not been proved beyond reasonable doubt, in view of serious infirmities in the testimony of witnesses”,the Bench observed.
Thus, setting aside the judgment of conviction passed by theTrial Court, the Bench acquitted the appellant subject to his furnishing personal bond in the sum of Rs10,000.
Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur
Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.
Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?
A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.
Q: So you have had the feeling that the establishment is trying to interfere in the matters?
A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.
Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?
A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.
Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?
A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.
Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?
A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.
Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?
A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.
Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?
A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.
Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?
A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.
Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?
I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.
Q: What kind of technology would you recommend that courts should have?
A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.
Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?
You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.
Q: Do you think law should permit this to death row convicts?
A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.
Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?
A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.
Q: What about capital punishment as a means of punishment itself?
A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.
Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?
A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.
Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?
A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?
Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?
A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).
Q: You think giving proper training to police to prepare a case will make a difference?
A: Yes, it will make a difference.
Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?
A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.
Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?
A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.
Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?
A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.
Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?
A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.
Q: What will happen if in a democracy these rights are controlled by hook or by crook?
A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.
Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?
A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.
Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?
A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.
Q: Is there any other thing you would like to say?
A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.
‘A major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013.’- Aakash Parihar
Aakash Parihar is Partner at Triumvir Law, a firm specializing in M&A, PE/VC, startup advisory, international commercial arbitration, and corporate disputes. He is an alumnus of the National Law School of India University, Bangalore.
How did you come across law as a career? Tell us about what made you decide law as an option.
Growing up in a small town in Madhya Pradesh, wedid not have many options.There you either study to become a doctor or an engineer. As the sheep follows the herd, I too jumped into 11th grade with PCM (Physics, Chemistry and Mathematics).However, shortly after, I came across the Common Law Admission Test (CLAT) and the prospect of law as a career. Being a law aspirant without any background of legal field, I hardly knew anything about the legal profession leave alone the niche areas of corporate lawor dispute resolution. Thereafter, I interacted with students from various law schools in India to understand law as a career and I opted to sit for CLAT. Fortunately, my hard work paid off and I made it to the hallowed National Law School of India University, Bangalore (NSLIU). Joining NLSIU and moving to Bangalorewas an overwhelming experience. However, after a few months, I settled in and became accustomed to the rigorous academic curriculum. Needless to mention that it was an absolute pleasure to study with and from someof the brightest minds in legal academia. NLSIU, Bangalore broadened my perspective about law and provided me with a new set of lenses to comprehend the world around me. Through this newly acquired perspective and a great amount of hard work (which is of course irreplaceable), I was able to procure a job in my fourth year at law school and thus began my journey.
As a lawyer carving a niche for himself, tell us about your professional journey so far. What are the challenges that new lawyers face while starting out in the legal field?
I started my professional journey as an Associate at Samvad Partners, Bangalore, where I primarily worked in the corporate team. Prior to Samvad Partners, through my internship, I had developed an interest towards corporate law,especially the PE/VC and M&A practice area. In the initial years as an associate at Samvad Partners and later at AZB & Partners, Mumbai, I had the opportunity to work on various aspects of corporate law, i.e., from PE/VC and M&A with respect to listed as well as unlisted companies. My work experience at these firms equipped and provided me the know-how to deal with cutting edge transactional lawyering. At this point, it is important to mention that I always had aspirations to join and develop a boutique firm. While I was working at AZB, sometime around March 2019, I got a call from Anubhab, Founder of Triumvir Law, who told me about the great work Triumvir Law was doing in the start-up and emerging companies’ ecosystem in Bangalore. The ambition of the firm aligned with mine,so I took a leap of faith to move to Bangalore to join Triumvir Law.
Anyone who is a first-generation lawyer in the legal industry will agree with my statement that it is never easy to build a firm, that too so early in your career. However, that is precisely the notion that Triumvir Law wanted to disrupt. To provide quality corporate and dispute resolution advisory to clients across India and abroad at an affordable price point.
Once you start your professional journey, you need to apply everything that you learnt in law schoolwith a practical perspective. Therefore, in my opinion, in addition to learning the practical aspects of law, a young lawyer needs to be accustomed with various practices of law before choosing one specific field to practice.
India has been doing reallywell in the field of M&A and PE/VC. Since you specialize in M&A and PE/VC dealmaking, what according to you has been working well for the country in this sphere? What does the future look like?
India is a developing economy, andM&A and PE/VC transactions form the backbone of the same. Since liberalization, there has been an influx of foreign investment in India, and we have seen an exponential rise in PC/VA and M&A deals. Indian investment market growth especially M&A and PE/VC aspects can be attributed to the advent of startup culture in India. The increase in M&A and PE/VC deals require corporate lawyersto handle the legal aspects of these deals.
As a corporate lawyer working in M&A and PE/VC space, my work ranges from drafting term-sheets to the transaction documents (SPA, SSA, SHA, BTA, etc.). TheM&A and PE/VC deal space experienced a slump during the first few months of the pandemic, but since June 2021, there has been a significant growth in M&A and PE/VC deal space in India. The growth and consistence of the M&A and PE/VC deal space in India can be attributed to several factors such as foreign investment, uncapped demands in the Indian market and exceptional performance of Indian startups.
During the pandemic many businesses were shut down but surprisingly many new businesses started, which adapted to the challenges imposed by the pandemic. Since we are in the recovery mode, I think the M&A and PE/VC deal space will reach bigger heights in the comingyears. We as a firm look forward to being part of this recovery mode by being part of the more M&A and PE/VC deals in future.
You also advice start-ups. What are the legal issues or challenges that the start-ups usually face specifically in India? Do these issues/challenges have long-term consequences?
We do a considerable amount of work with startupswhich range from day-to-day legal advisory to transaction documentation during a funding round. In India, we have noticed that a sizeable amount of clientele approach counsels only when there is a default or breach, more often than not in a state of panic. The same principle applies to startups in India, they normally approach us at a stage when they are about to receive investment or are undergoing due diligence. At that point of time, we need to understand their legal issues as well as manage the demands of the investor’s legal team. The majornon-compliances by startups usually involve not maintaining proper agreements, delaying regulatory filings and secretarial compliances, and not focusing on proper corporate governance.
Another major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013. Keeping up with these requirements can be time-consuming for even seasoned lawyers, and we can only imagine how difficult it would be for startups. Startups spend their initial years focusing on fund-raising, marketing, minimum viable products, and scaling their businesses. Legal advice does not usually factor in as a necessity. Our firm aims to help startups even before they get off the ground, and through their initial years of growth. We wanted to be the ones bringing in that change in the legal sector, and we hope to help many more such startups in the future.
In your opinion, are there any specific India-related problems that corporate/ commercial firms face as far as the company laws are concerned? Is there scope for improvement on this front?
The Indian legal system which corporate/commercial firms deal with is a living breathing organism, evolving each year. Due to this evolving nature, we lawyers are always on our toes.From a minor amendment to the Companies Act to the overhaul of the foreign exchange regime by the Reserve Bank of India, each of these changes affect the compliance and regulatory regime of corporates. For instance, when India changed the investment route for countries sharing land border with India,whereby any country sharing land border with India including Hong Kong cannot invest in India without approval of the RBI in consultation with the central government,it impacted a lot of ongoing transactions and we as lawyers had to be the first ones to inform our clients about such a change in the country’s foreign investment policy. In my opinion, there is huge scope of improvement in legal regime in India, I think a stable regulatory and tax regime is the need for the hour so far as the Indian system is concerned. The biggest example of such a market with stable regulatory and tax regime is Singapore, and we must work towards emulating the same.
Your boutique law firm has offices in three different cities — Delhi NCR, Mumbai and Bangalore. Have the Covid-induced restrictions such as WFH affected your firm’s operations? How has your firm adapted to the professional challenges imposed by the pandemic-related lifestyle changes?
We have offices in New Delhi NCR and Mumbai, and our main office is in Bangalore. Before the pandemic, our work schedule involved a fair bit of travelling across these cities. But post the lockdowns we shifted to a hybrid model, and unless absolutely necessary, we usually work from home.
In relation to the professional challenges during the pandemic, I think it was a difficult time for most young professionals. We do acknowledge the fact that our firm survived the pandemic. Our work as lawyers/ law firms also involves client outreach and getting new clients, which was difficult during the lockdowns. We expanded our client outreach through digital means and by conducting webinars, including one with King’s College London on International Treaty Arbitration. Further, we also focused on client outreach and knowledge management during the pandemic to educate and create legal awareness among our clients.
‘It’s a myth that good legal advice comes at prohibitive costs. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.’ – Archana Balasubramanian
Archana Balasubramanian is the founding partner of Agama Law Associates, a Mumbai-based corporate law firm which she started in 2014. She specialises in general corporate commercial transaction and advisory as well as deep sectoral expertise across manufacturing, logistics, media, pharmaceuticals, financial services, shipping, real estate, technology, engineering, infrastructure and health.
August 13, 2021:
Lawyers see companies ill-prepared for conflict, often, in India. When large corporates take a remedial instead of mitigative approach to legal issues – an approach utterly incoherent to both their size and the compliance ecosystem in their sector – it is there where the concept of costs on legal becomes problematic. Pre-dispute management strategy is much more rationalized on the business’ pocket than the costs of going in the red on conflict and compliances.
Corporates often focus on business and let go of backend maintenance of paperwork, raising issues as and when they arise and resolving conflicts / client queries in a manner that will promote dispute avoidance.
Corporate risk and compliance management is yet another elephant in India, which in addition to commercial disputes can be a drain on a company’s resources. It can be clubbed under four major heads – labour, industrial, financial and corporate laws. There are around 20 Central Acts and then specific state-laws by which corporates are governed under these four categories.
Risk and compliance management is also significantly dependent on the sector, size, scale and nature of the business and the activities being carried out.
The woes of a large number of promoters from the ecommerce ecosystem are to do with streamlining systems to navigate legal. India has certain heavily regulated sectors and, like I mentioned earlier, an intricate web of corporate risk and compliance legislation that can result in prohibitive costs in the remedial phase. To tackle the web in the preventive or mitigative phase, start-ups end up lacking the arsenal due to sheer intimidation from legal. Promoters face sectoral risks in sectors which are heavily regulated, risks of heavy penalties and fines under company law or foreign exchange laws, if fund raise is not done in a compliant manner.
It is a myth that good legal advice comes at prohibitive costs. Promoters are quick to sign on the dotted line and approach lawyers with a tick the box approach. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.
Investment contracts, large celebrity endorsement contracts and CXO contracts are some key areas where legal advice should be obtained. Online contracts is also emerging as an important area of concern.
When we talk of scope, arbitration is pretty much a default mechanism at this stage for adjudicating commercial disputes in India, especially given the fixation of timelines for closure of arbitration proceedings in India. The autonomy it allows the parties in dispute to pick a neutral and flexible forum for resolution is substantial. Lower courts being what they are in India, arbitration emerges as the only viable mode of dispute resolution in the Indian commercial context.
The arbitrability of disputes has evolved significantly in the last 10 years. The courts are essentially pro-arbitration when it comes to judging the arbitrability of subject matter and sending matters to arbitration quickly.
The Supreme Court’s ruling in the Vidya Drolia case has significantly clarified the position in respect of tenancy disputes, frauds and consumer disputes. It reflects upon the progressive approach of the court and aims to enable an efficient, autonomous and effective arbitration environment in India.
Law firms stand for ensuring that the law works for business and not against it. Whatever the scope of our mandate, the bottom line is to ensure a risk-free, conflict-free, compliant and prepared enterprise for our client, in a manner that does not intimidate the client or bog them down, regardless of the intricacy of the legal and regulatory web it takes to navigate to get to that end result. Lawyers need to dissect the business of law from the work.
This really involves meticulous, detail-oriented, sheer hard work on the facts, figures, dates and all other countless coordinates of each mandate, repetitively and even to a, so-called, “dull” routine rhythm – with consistent single-mindedness and unflinching resolve.
As a firm, multiply that effort into volumes, most of it against-the-clock given the compliance heavy ecosystem often riddled with uncertainties in a number of jurisdictions. So the same meticulous streamlining of mandate deliverables has to be extrapolated by the management of the firm to the junior most staff.
Further, the process of streamlining itself has to be more dynamic than ever now given the pace at which the new economy, tech-ecosystem, business climate as well as business development processes turn a new leaf.
Finally, but above all, we need to find a way to feel happy, positive and energized together as a team while chasing all of the aforesaid dreams. The competitive timelines and volumes at which a law firm works, this too is a real challenge. But we are happy to face it and evolve as we grow.
We always as a firm operated on the work from anywhere principle. We believed in it and inculcated this through document management processes to the last trainee. This helped us shut shop one day and continue from wherever we are operating.
The team has been regularly meeting online (at least once a day). We have been able to channel the time spent in travelling to and attending meetings in developing our internal knowledge banks further, streamline our processes, and work on integrating various tech to make the practice more cost-effective for our clients.
Right to Disclosure – Importance & Challenges in Criminal Justice System – By Manu Sharma
Personal liberty is the most cherished value of human life which thrives on the anvil of Articles 14 and 21 of the Constitution of India (“the Constitution”). Once a person is named an accused, he faces the spectre of deprivation of his personal liberty and criminal trial. This threat is balanced by Constitutional safeguards which mandate adherence to the rule of law by the investigating agencies as well as the Court. Thus, any procedure which seeks to impinge on personal liberty must also be fair and reasonable. The right to life and personal liberty enshrined under article 21 of the Constitution, expanded in scope post Maneka Gandhi[1], yields the right to a fair trial and fair investigation. Fairness demands disclosure of anything relevant that may be of benefit to an accused. Further, the all-pervading principles of natural justice envisage the right to a fair hearing, which entails the right to a full defence. The right to a fair defence stems from full disclosure. Therefore, the right of an accused to disclosure emanates from this Constitutional philosophy embellished by the principles of natural justice and is codified under the Code of Criminal Procedure, 1973 (“Code”).
Under English jurisprudence, the duty of disclosure is delineated in the Criminal Procedure and Investigations Act, 1996, which provides that the prosecutor must disclose to the accused any prosecution material which has not previously been disclosed to the accused and which might reasonably be considered capable of undermining the case for the prosecution against the accused or of assisting the case for the accused, except if such disclosure undermines public interest.[2] Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence.[3] The duty of disclosure under common law contemplates disclosure of anything which might assist the defence[4], even if such material was not to be used as evidence[5]. Under Indian criminal jurisprudence, which has borrowed liberally from common law, the duty of disclosure is embodied in sections 170(2), 173, 207 and 208 of the Code, which entail the forwarding of material to the Court and supply of copies thereof to the accused, subject to statutory exceptions.
II. Challenges in Enforcement
The right to disclosure is a salient feature of criminal justice, but its provenance and significance appear to be lost on the Indian criminal justice system. The woes of investigative bias and prosecutorial misconduct threaten to render this right otiose. That is not to say that the right of an accused to disclosure is indefeasible, as certain exceptions are cast in the Code itself, chief among them being public interest immunity under section 173(6). However, it is the mischief of the concept of ‘relied upon’ emerging from section 173(5) of the Code, which is wreaking havoc on the right to disclosure and is the central focus of this article. The rampant misuse of the words “on which the prosecution proposes to rely’ appearing in section 173(5) of the Code, to suppress material favourable to the accused or unfavourable to the prosecution in the garb of ‘un-relied documents’ has clogged criminal courts with avoidable litigation at the very nascent stage of supply of copies of documents under section 207 of the Code. The erosion of the right of an accused to disclosure through such subterfuge is exacerbated by the limited and restrictive validation of this right by criminal Courts. The dominant issues highlighted in the article, which stifle the right to disclosure are; tainted investigation, unscrupulous withholding of material beneficial to the accused by the prosecution, narrow interpretation by Courts of section 207 of the Code, and denial of the right to an accused to bring material on record in the pre-charge stage.
A. Tainted Investigation
Fair investigation is concomitant to the preservation of the right to fair disclosure and fair trial. It envisages collection of all material, irrespective of its inculpatory or exculpatory nature. However, investigation is often vitiated by the tendencies of overzealous investigating officers who detract from the ultimate objective of unearthing truth, with the aim of establishing guilt. Such proclivities result in collecting only incriminating material during investigation or ignoring the material favourable to the accused. This leads to suppression of material and scuttles the right of the accused to disclosure at the very inception. A tainted investigation leads to miscarriage of justice. Fortunately, the Courts are not bereft of power to supervise investigation and ensure that the right of an accused to fair disclosure remains protected. The Magistrate is conferred with wide amplitude of powers under section 156(3) of the Code to monitor investigation, and inheres all such powers which are incidental or implied to ensure proper investigation. This power can be exercised suo moto by the Magistrate at all stages of a criminal proceeding prior to the commencement of trial, so that an innocent person is not wrongly arraigned or a prima facie guilty person is not left out.[6]
B. Suppression of Material
Indian courts commonly witness that the prosecution is partisan while conducting the trial and is invariably driven by the lust for concluding in conviction. Such predisposition impels the prosecution to take advantage by selectively picking up words from the Code and excluding material favouring the accused or negating the prosecution case, with the aid of the concept of ‘relied upon’ within section 173(5) of the Code. However, the power of the prosecution to withhold material is not unbridled as the Constitutional mandate and statutory rights given to an accused place an implied obligation on the prosecution to make fair disclosure.[7] If the prosecution withholds vital evidence from the Court, it is liable to adverse inference flowing from section 114 of the Indian Evidence Act, 1872 (“Evidence Act). The prosecutor is expected to be guided by the Bar Council of India Rules which prescribe that an advocate appearing for the prosecution of a criminal trial shall so conduct the prosecution that it does not lead to conviction of the innocent. The suppression of material capable of establishment of the innocence of the accused shall be scrupulously avoided. [8]
C. Scope of S. 207
The scope of disclosure under section 207 has been the subject of fierce challenge in Indian Courts on account of the prosecution selectively supplying documents under the garb of ‘relied upon’ documents, to the prejudice of the defence of an accused. The earlier judicial trend had been to limit the supply of documents under section 207 of the Code to only those documents which were proposed to be relied upon by the prosecution. This view acquiesced the exclusion of documents which were seized during investigation, but not filed before the Court along with the charge sheet, rendering the right to disclosure a farce. This restrictive sweep fails to reconcile with the objective of a fair trial viz. discovery of truth. The scheme of the code discloses that Courts have been vested with extensive powers inter alia under sections 91, 156(3) and 311 to elicit the truth. Towards the same end, Courts are also empowered under Section 165 of the Evidence Act. Thus, the principle of harmonious construction warrants a more purposive interpretation of section 207 of the code. The Hon’ble Supreme Court expounded on the scope of Section 207 of the Code in the case of Manu Sharma[9] and held that documents submitted to the Magistrate under section 173(5) would deem to include the documents which have to be sent to the magistrate during the course of investigation under section 170(2). A document which has been obtained bona fide and has a bearing on the case of the prosecution should be disclosed to the accused and furnished to him to enable him to prepare a fair defence, particularly when non production or disclosure would affect administration of justice or prejudice the defence of the accused. It is not for the prosecution or the court to comprehend the prejudice that is likely to be caused to the accused. The perception of prejudice is for the accused to develop on reasonable basis.[10] Manu Sharma’s [supra] case has been relied upon in Sasikala [11] wherein it was held that the Court must concede a right to the accused to have access to the documents which were forwarded to the Court but not exhibited by the prosecution as they favoured the accused. These judgments seem more in consonance with the true spirit of fair disclosure and fair trial. However, despite such clear statements of law, courts are grappling with the judicial propensity of deviating from this expansive interpretation and regressing to the concept of relied upon. The same is evident from a recent pronouncement of the Delhi High Court where the ratios laid down in Manu Sharma & Sasikala [supra] were not followed by erroneously distinguishing from those cases.[12] Such “per incuriam” aberrations by High Court not only undermine the supremacy of the Apex Court, but also adversely impact the functioning of the district courts over which they exercise supervisory jurisdiction. Hopefully in future Judges shall be more circumspect and strictly follow the law declared by the Apex Court.
D. Pre-Charge Embargo
Another obstacle encountered in the enforcement of the right to disclosure is the earlier judicial approach to stave off production or consideration of any additional documents not filed alongwith the charge sheet at the pre-charge stage, as the right to file such material was available to the accused only upon the commencement of trial after framing of charge.[13] At the pre-charge stage, Court could not direct the prosecution to furnish copies of other documents[14] It was for the accused to do so during trial or at the time of entering his defence. However, the evolution of law has seen that at the stage of framing charge, Courts can rely upon the material which has been withheld by the prosecutor, even if such material is not part of the charge sheet, but is of such sterling quality demolishing the case of the prosecution.[15] Courts are not handicapped to consider relevant material at the stage of framing charge, which is not relied upon by the prosecution. It is no argument that the accused can ask for the documents withheld at the time of entering his defence.[16] The framing of charge is a serious matter in a criminal trial as it ordains an accused to face a long and arduous trial affecting his liberty. Therefore, the Court must have all relevant material before the stage of framing charge to ascertain if grave suspicion is made out or not. Full disclosure at the stage of section 207 of the code, which immediately precedes discharging or charging an accused, enables an accused to seek a discharge, if the documents, including those not relied upon by the prosecution, create an equally possible view in favour of the accused.[17] On the other hand, delaying the reception of documents postpones the vindication of the accused in an unworthy trial and causes injustice by subjecting him to the trauma of trial. There is no gainsaying that justice delayed is justice denied, therefore, such an approach ought not to receive judicial consent. A timely discharge also travels a long way in saving precious time of the judiciary, which is already overburdened by the burgeoning pendency of cases. Thus, delayed or piecemeal disclosure not only prejudices the defence of the accused, but also protracts the trial and occasions travesty of justice.
III. Duties of the stakeholders in criminal justice system
The foregoing analysis reveals that participation of the investigating agency, the prosecution and the Court is inextricably linked to the enforcement of the right to disclosure. The duties cast on these three stakeholders in the criminal justice system, are critical to the protection of this right. It is incumbent upon the investigating agencies to investigate cases fairly and to place on record all the material irrespective of its implication on the case of prosecution case. Investigation must be carried out with equal alacrity and fairness irrespective of status of accused or complainant.[18] An onerous duty is cast on the prosecution as an independent statutory officer, to conduct the trial with the objective of determination of truth and to ensure that material favourable to the defence is supplied to the accused. Ultimately, it is the overarching duty of the Court to ensure a fair trial towards the administration of justice for all parties. The principles of fair trial require the Court to strike a delicate balance between competing interests in a system of adversarial advocacy. Therefore, the court ought to exercise its power under section 156(3) of the Code to monitor investigation and ensure that all material, including that which enures to the benefit of the accused, is brought on record. Even at the stage of supply of copies of police report and documents under section 207 of the Code, it is the duty of the Court to give effect to the law laid down by the Hon’ble Supreme Court in Manu Sharma (supra) and Sasikala (supra), and ensure that all such material is supplied to the accused irrespective of whether it is “relied upon” by the prosecution or not.
IV. Alternate Remedy
The conundrum of supply of copies under section 207 of the code abounds criminal trials. Fairness is an evolving concept. There is no doubt that disclosure of all material which goes to establish the innocence of an accused is the sine qua non of a fair trial.[19] Effort is evidently underway to expand the concept in alignment with English jurisprudence. In the meanwhile, does the right of an accused to disclosure have another limb to stand on? Section 91 of the Code comes to the rescue of an accused, which confers wide discretionary powers on the Court, independent of section 173 of the Code, to summon the production of things or documents, relevant for the just adjudication of the case. In case the Court is of the opinion that the prosecution has withheld vital, relevant and admissible evidence from the Court, it can legitimately use its power under section 91 of the Code to discover the truth and to do complete justice to the accused.[20]
V. Conclusion
A society’s progress and advancement are judged on many parameters, an important one among them being the manner in which it administers criminal justice. Conversely, the ironic sacrilege of the core virtues of criminal jurisprudence in the temples of justice evinces social decadence. The Indian legislature of the twenty first century has given birth to several draconian statutes which place iron shackles on personal liberty, evoking widespread fear of police abuses and malicious prosecution. These statutes not only entail presumptions which reverse the burden of proof, but also include impediments to the grant of bail. Thus, a very heavy burden to dislodge the prosecution case is imposed on the accused, rendering the right to disclosure of paramount importance. It is the duty of the Court to keep vigil over this Constitutional and statutory right conferred on an accused by repudiating any procedure which prejudices his defence. Notable advancement has been made by the Apex Court in interpreting section 207 of the Code in conformity with the Constitutional mandate, including the right to disclosure. Strict adherence to the afore-noted principles will go a long way in ensuring real and substantial justice. Any departure will not only lead to judicial anarchy, but also further diminish the already dwindling faith of the public in the justice delivery system.
**
Advocate Manu Sharma has been practising at the bar for over sixteen years. He specialises in Criminal Defence. Some of the high profile cases he has represented are – the 2G scam case for former Union minister A Raja; the Religare/Fortis case for Malvinder Singh; Peter Mukerjee in the P Chidambaram/ INX Media case; Devas Multimedia in ISRO corruption act case; Om Prakash Chautala in PMLA case; Aditya Talwar in the aviation scam case; Dilip Ray, former Coal Minister in one of the coal scam cases; Suhaib Illyasi case.
**
Disclaimer: The views or opinions expressed are solely of the author.
[1] Maneka Gandhi and Another v. Union of India, (1978) 1 SCC 248
[2] S. 3 of the Criminal Procedure and Investigations Act, 1996
[3] R v. H and R v. C, 2004 (1) ALL ER 1269
[4] R v. Ward (Judith), (1993) 1 WLR 619 : (1993) 2 ALL ER 577 (CA)
[5] R v. Preston, (1994) 2 AC 130 : (1993) 3 WLR 891 : (1993) 4 ALL ER 638 (HL), R v. Stinchcome,
(1991), 68 C.C.C. (3d) 1 (S.C.C.)
[6] Vinubhai Haribhai Malaviya and Others v. State of Gujarat and Another, 2019 SCC Online SC 1346
[7] Sidhartha Vashishth alias Manu Sharma v. State (NCT of Delhi), (2010) 6 SCC 1
[8] R. 16, part II, Ch. VI of the Bar Council of India Rules
[9] Manu Sharma, (2010) 6 SCC 1
[10] V.K. Sasikala v. State, (2012) 9 SCC 771 : AIR 2013 SC 613
[11] Sasikala, (2012) 9 SCC 771 : AIR 2013 SC 613
[12] Sala Gupta and Another v. Directorate of Enforcement, (2019) 262 DLT 661
[13] State of Orissa v. Debendra Nath Padhi¸(2005) 1 SCC 568
[14] Dharambir v. Central Bureau of Investigation, ILR (2008) 2 Del 842 : (2008) 148 DLT 289
[15] Nitya Dharmananda alias K. Lenin and Another v. Gopal Sheelum Reddy, (2018) 2 SCC 93
[16] Neelesh Jain v. State of Rajasthan, 2006 Cri LJ 2151
[17] Dilwar Balu Kurane v. State of Maharashtra, (2002) 2 SCC 135, Yogesh alias Sachin Jagdish Joshi v. State of Maharashtra, (2008) 10 SCC 394
[18] Karan Singh v. State of Haryana, (2013) 12 SCC 529
[19] Kanwar Jagat Singh v. Directorate of Enforcement & Anr, (2007) 142 DLT 49
[20] Neelesh, 2006 Cri LJ 2151
Disclaimer: The views or opinions expressed are solely of the author.
Validity & Existence of an Arbitration Clause in an Unstamped Agreement
By Kunal Kumar
January 8, 2024
In a recent ruling, a seven-judge bench of the Supreme Court of India in its judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, overruled the constitutional bench decision of the Supreme Court of India in N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. and has settled the issue concerning the validity and existence of an arbitration clause in an unstamped agreement. (‘N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III’)
Background to N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
One of the first instances concerning the issue of the validity of an unstamped agreement arose in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. In this case, the Hon’ble Apex Court held that if an instrument/document lacks proper stamping, the exercising Court must preclude itself from acting upon it, including the arbitration clause. It further emphasized that it is imperative for the Court to impound such documents/instruments and must accordingly adhere to the prescribed procedure outlined in the Indian Stamp Act 1899.
With the introduction of the 2015 Amendment, Section 11(6A) was inserted in the Arbitration & Conciliation Act 1996 (A&C Act) which stated whilst appointing an arbitrator under the A&C Act, the Court must confine itself to the examination of the existence of an arbitration agreement.
In the case of M/s Duro Felguera S.A. v. M/s Gangavaram Port Limited, the Supreme Court of India made a noteworthy observation, affirming that the legislative intent behind the 2015 Amendment to the A&C Act was necessitated to minimise the Court's involvement during the stage of appointing an arbitrator and that the purpose embodied in Section 11(6A) of A&C Act, deserves due acknowledgement & respect.
In the case of Garware Wall Ropes Ltd. v. Cosatal Marine Constructions & Engineering Ltd., a divisional bench of the Apex Court reaffirmed its previous decision held in SMS Tea Estates (supra) and concluded that the inclusion of an arbitration clause in a contract assumes significance, emphasizing that the agreement transforms into a contract only when it holds legal enforceability. The Apex Court observed that an agreement fails to attain the status of a contract and would not be legally enforceable unless it bears the requisite stamp as mandated under the Indian Stamp Act 1899. Accordingly, the Court concluded that Section 11(6A) read in conjunction with Section 7(2) of the A&C Act and Section 2(h) of the Indian Contract Act 1872, clarified that the existence of an arbitration clause within an agreement is contingent on its legal enforceability and that the 2015 Amendment of the A&C Act to Section 11(6A) had not altered the principles laid out in SMS Tea Estates (supra).
Brief Factual Matrix – N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Indo Unique Flame Ltd. (‘Indo Unique’) was awarded a contract for a coal beneficiation/washing project with Karnataka Power Corporation Ltd. (‘KPCL’). In the course of the project, Indo Unique entered into a subcontract in the form of a Work Order with N.N. Global Mercantile Pvt. Ltd. (‘N.N. Global’) for coal transportation, coal handling and loading. Subsequently, certain disputes arose with KPCL, leading to KPCL invoking Bank Guarantees of Indo Unique under the main contract, after which Indo Unique invoked the Bank Guarantee of N. N. Global as supplied under the Work Order.
Top of FormS
Subsequently, N.N. Global initiated legal proceedings against the cashing of the Bank Guarantee in a Commercial Court. In response thereto, Indo Unique moved an application under Section 8 of the A&C Act, requesting that the Parties to the dispute be referred for arbitration. The Commercial Court dismissed the Section 8 application, citing the unstamped status of the Work Order as one of the grounds. Dissatisfied with the Commercial Court's decision on 18 January 2018, Indo Unique filed a Writ Petition before the High Court of Bombay seeking that the Order passed by the Commercial Court be quashed or set aside. The Hon’ble Bombay High Court on 30 September 2020 allowed the Writ Petition filed by Indo Unique, aggrieved by which, N.N. Global filed a Special Leave Petition before the Supreme Court of India.
N. N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. – I
The issue in the matter of M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unqiue Flame Ltd. & Ors. came up before a three-bench of the Supreme Court of India i.e. in a situation when an underlying contract is not stamped or is insufficiently stamped, as required under the Indian Stamp Act 1899, would that also render the arbitration clause as non-existent and/or unenforceable (‘N.N. Global Mercantile Pvt. Ltd. v. Indo Flame Ltd. – I’).
The Hon’ble Supreme Court of India whilst emphasizing the 'Doctrine of Separability' of an arbitration agreement held that the non-payment of stamp duty on the commercial contract would not invalidate, vitiate, or render the arbitration clause as unenforceable, because the arbitration agreement is considered an independent contract from the main contract, and the existence and/or validity of an arbitration clause is not conditional on the stamping of a contract. The Hon’ble Supreme Court further held that deficiency in stamp duty of a contract is a curable defect and that the deficiency in stamp duty on the work order, would not affect the validity and/or enforceability of the arbitration clause, thus applying the Doctrine of Separability. The arbitration agreement remains valid and enforceable even if the main contract, within which it is embedded, is not admissible in evidence owing to lack of stamping.
The Hon’ble Apex Court, however, considered it appropriate to refer the issue i.e. whether unstamped instrument/document, would also render an arbitration clause as non-existent, unenforceable, to a constitutional bench of five-bench of the Supreme Court.
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II
On 25 April 2023, a five-judge bench of the Hon’ble Supreme Court of India in the matter of N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. held that (1) An unstamped instrument containing an arbitration agreement cannot be said to be a contract which is enforceable in law within the meaning of Section 2(h) of the Indian Contract Act 1872 and would be void under Section 2(g) of the Indian Contract Act 1872, (2) an unstamped instrument which is not a contract nor enforceable cannot be acted upon unless it is duly stamped, and would not otherwise exist in the eyes of the law, (3) the certified copy of the arbitration agreement produced before a Court, must clearly indicate the stamp duty paid on the instrument, (4) the Court exercising its power in appointing an arbitration under Section 11 of the A&C Act, is required to act in terms of Section 33 and Section 35 of the Indian Stamp Act 1899 (N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II).
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
A seven-judge bench of the Supreme Court of India on 13 December 2023 in its recent judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, (1) Agreements lacking proper stamping or inadequately stamped are deemed inadmissible as evidence under Section 35 of the Stamp Act. However, such agreements are not automatically rendered void or unenforceable ab initio; (2) non-stamping or insufficient stamping of a contract is a curable defect, (2) the issue of stamping is not subject to determination under Sections 8 or 11 of the A&C Act by a Court. The concerned Court is only required to assess the prima facie existence of the arbitration agreement, separate from concerns related to stamping, and (3) any objections pertaining to the stamping of the agreement would fall within the jurisdiction of the arbitral tribunal. Accordingly, the decision in N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II and SMS Tea (supra) was overruled, by the seven-judge bench of the Supreme Court of India.
Kunal is a qualified lawyer with more than nine years of experience and has completed his LL.M. in Dispute Resolution (specialisation in International Commercial Arbitration) from Straus Institute for Dispute Resolution, Pepperdine University, California.
Kunal currently has his own independent practice and specializes in commercial/construction arbitration as well as civil litigation. He has handled several matters relating to Civil Law and arbitrations (both domestic and international) and has appeared before the Supreme Court of India, High Court of Delhi, District Courts of Delhi and various other tribunals.
No Safe Harbour For Google On Trademark Infringement
By Mayank Grover & Pratibha Vyas
October 9, 2023
Innovation, patience, dedication and uniqueness culminate in establishing a distinct identity. A trademark aids in identifying the source and quality, shaping perceptions about the identity's essence. When values accompany a product or service's trademark, safeguarding against misuse and infringement becomes crucial. A recent pronouncement of a Division Bench of the Delhi High Court dated August 10, 2023 in Google LLC v. DRS Logistics (P) Ltd. & Ors. and Google India Private Limited v. DRS Logistics (P) Ltd. & Ors. directed that Google’s use of trademarks as keywords for its Google Ads Programme does amount to ‘use’ in advertising under the Trademarks Act and the benefit of safe harbour would not be available to Google if such keywords infringe on the concerned trademark.
Factual Background
Google LLC manages and operates the Google Search Engine and Ads Programme, while, Google India Private Limited is a subsidiary of Google that has been appointed as a non-exclusive reseller of the Ads Programme in India. The Respondents, DRS Logistics and Agarwal Packers and Movers Pvt. Ltd. are leading packaging, moving and logistics service providers in India.
On 22.12.2011, DRS filed a suit against Google and Just Dial Ltd. under provisions of the Trademarks Act, 1999 (‘TM Act’) inter alia seeking a permanent injunction against Google from permitting third parties from infringing, passing off etc. the relevant trademarks of DRS. The core of the dispute revolved around Google’s Ads Programme. DRS claimed that its trade name 'AGARWAL PACKERS AND MOVERS' is widely recognized and a 'well-known' trademark. Use of DRS’s trademark as a keyword diverts internet traffic from its website to that of its competitors and they were entitled to seek restraint against Google for permitting third parties who are not authorized to use the said trademark. DRS further argued that Google benefits from these trademark infringements. This practice involved charging a higher amount for displaying these ads, constituting an infringement of their trademarks. Whereas, Google contended that the use of the keyword in the Ads Programme does not amount to ‘use’ under the TM Act notwithstanding that the keyword is/or similar to a trademark. Thus, the use of a term as a keyword cannot be construed as an infringement of a trademark under the TM Act, and being an intermediary, it claimed a safe harbour under Section 79 of the Information Technology Act, 2000. (‘IT Act’).
In essence, the dispute between the parties was rooted in DRS’s grievance concerning the Ads Programme. The Learned Single Judge vide judgment dated 30.10.2021interpreted relevant provisions of the TM Act and drew on multiple legal precedents to arrive at the decision that DRS can seek protection of its trademarks which were registered under Section 28 of the TM Act and issued directions to investigate complaints alleging the use of trademark and/or to ascertain whether a sponsored result has an effect of infringing a trademark or passing off.
Being aggrieved, Google LLC and Google Pvt. Ltd. filed appeals before the Division Bench. Google LLC argued that the Single Judge’s findings were erroneous and the directions issued were liable to be set aside. Google India claimed that it doesn’t control and operate the Search Engine and the Ads Programme making it unable to comply with the directions passed in the impugned judgment.
Analysis & Decision of Court
The Division Bench found Single Judge’s rationale for assessing trademark infringement through keywords and meta-tags valid. Meta-tags are a list of words/code in a website, not readily visible to the naked eye. It serves as a tool for indexing the website by a search engine. If a trademark of a third party is used as a meta-tag, the same would serve as identifying the website as relevant to the search query that includes the trademark as a search term. The use of keywords in the Ads Programme also serves similar purpose. The Division Bench was unable to accept that using a trademark as a keyword, even if not visible, would not be considered trademark use under the TM Act.
Google placed heavy reliance on the decisions rendered by Courts across jurisdictions of United Kingdom, United States of America, European Union, Australia, New Zealand, Russia, South Africa, Canada, Spain, Italy, Japan and China; in the cases of Google France SARL and Google Inc. v. Louis Vitton SA & Ors.[1], Interflora Inc. v. Marks & Spencer Plc.[2], and L’Oreal SA v. eBay International AG[3] in support of the contention that the use of trade marks is by the advertiser and not by Google. However, the Division Bench rejected Google’s passive role; highlighting its active involvement in recommending and promoting trademark keywords for higher clicks in its Ads Programme. Division Bench referred to a few judicial decisions rendered in the United States of America that captured the essence of the controversy for perspective, concluding that Google actively promotes and encourages trademarks associated with major goods and services, rather than having a passive role.
It was held that the contention that the use of trademarks as keywords, per se constitutes an infringement of the trademark is unmerited; the assumption that an internet user is merely searching the address of the proprietor of the trademark when he feeds in a search query that may contain a trademark, is erroneous.
The Doctrine of 'Initial Interest Confusion' addresses trademark infringement based on pre-purchase confusion. The doctrine is applied when meta-tags, keywords, or domain names cause initial confusion similar to a registered trademark. If users are misled to access unrelated websites, trademark use in internet advertising may be actionable and reliance was placed on US precedents. Referring to Section 29 of the TM Act, it was directed that Section 29 does not specify the duration for which the confusion lasts but, even if the confusion is for a short duration and an internet user is able to recover from the same, the trade mark would be infringed and would offend Section 29(2) of the TM Act.
It was held that the Ads Programme is a platform for displaying advertisements. Google, being an architect and operator of its own programme makes it an active participant in the use of trademarks and determining the advertisements displayed on search pages. Their use of proprietary software makes them utilize trademarks and control the distribution of information related to potentially infringing links, ultimately leading to revenue maximization. Hence, a substantial link exists between Google LLC and Google India, rendering it impossible for Google India to deny its role in operating the Ads Programme. It was further held that Google sells trademarks as keywords to advertisers and encourages users to use trademarks as keywords for ads. It is contradictory for Google to encourage trademark use while claiming data belongs to third parties for exemption. After 2004, Google changed policies to boost revenue and subsequently, introduced a tool that searches effective terms, including trademarks. Google's active involvement in its advertising business and online nature does not necessarily qualify it for benefits under Section 79 of the IT Act. The Division Bench agreed with the view of the Single Judge that Google would not be eligible for protection of safe harbour under Section 79(1) of the IT Act, if its alleged activities infringe trademarks.
Conclusion
This is a seminal decision governing (and rather, restricting) the operations of intermediaries and redefining the jurisprudence of safe harbour under the IT Act. The decision is well-reasoned and establishes a significant precedent for safeguarding trademarks by uniquely holding Google accountable under its Ads Programme. The same will prevent usage of tradenames as a third-party trademark in keyword search or metatags by advertisers on Google’s search engine. While keywords and meta-tags have different levels of visibility, their purpose is similar i.e. advertising and attracting internet traffic. The use of trademarks as meta-tags by a person who is neither a proprietor of the trademark nor permitted to use the same leads to confusion amongst public at large due to the automated processes of search engines and consequently, constitutes trademark infringement.
About the Authors: Mayank Grover is a Partner and Pratibha Vyas is an Associate at Seraphic Advisors, Advocates & Solicitors
[1] C-236/08 to C-238/08 (2010) [2011] All ER (EC) 41
[2] [2014] EWCA Civ 1403
[3] 2C- 324/09 (2010)
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