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.
Read Order: RAJAN SINGH v. THE STATE GOVT OF NCT DELHI & OTHERS [DEL HC- W.P.(CRL) 1307/2024]
Tulip Kanth
New Delhi, April 30, 2024: Highlighting that the duty lies on the State for safeguarding and enforcing the rights of the transgenders guaranteed under the Constitution, the Delhi High Court has directed the Police to provide necessary security to a transgender candidate for filling up his nomination form from South Delhi Parliamentary Constituency for the upcoming Lok Sabha Elections.
The petitioner had approached the Delhi High Court with a petition under Article 226 of the Constitution read with Section 482 of the Code of Criminal Procedure, 1973 (Cr.P.C.) praying for issuance of directions to Respondent No.3 and grant police protection for the life of the Petitioner.
The petitioner had also put up a plea for issuance of a direction to Respondent No.2 for protection of the fundamental rights of the Petitioner as the Petitioner is going to contest election in upcoming Lok Sabha Election 2024 as a candidate from South Delhi Parliamentary Constituency.
It was the case of the petitioner that petitioner is a member of transgender community and intends to file his nomination for Lok Sabha Election, 2024 from South Delhi Parliamentary Constituency, supported by Rashtriya Bahujan Congress Party. He further stated that he suffered a life-threatening attack on 12.04.2024 in his office at Badarpur, whereupon a complaint was lodged with the Commissioner of Police, Delhi. Further, a request was made by the petitioner to Election Commission of India for providing security to contest the upcoming Lok Sabha Election, 2024 but no response had been received
ECIC’s Counsel submitted that since the nomination process had only been commenced w.e.f. 29.04.2024, petitioner would be at liberty to apply in accordance with law. He further submits that respondent Nos.1, 3 and 4 may be able to provide necessary security in accordance with law, in case the petitioner apprehends any threat.
The counsel for the State/respondent Nos.1, 3 and 4 submitted that complaint lodged by the petitioner would be further looked into in accordance with law and the outcome of the same shall be communicated to the petitioner within a period of two weeks. It was also informed that the incident as alleged by the petitioner could not be corroborated during initial inquiry.
The ASC had also submitted that in case the petitioner needs any security for the purpose of filling up the nomination form, the same can be provided subject to sharing of date and time by the petitioner.
The Single-Judge Bench of Justice Anoop Kumar Mendiratta, at the outset, asserted, “It may be observed that Article 14 of the Constitution of India ensures equal protection of laws in all spheres of State activity including participation in the election process. Any discrimination on the ground of sexual orientation or gender identity impairs the equality before law and violates the Article 14 of the Constitution of India. The duty lies on the State for purpose of safeguarding and enforcing the rights of the transgenders guaranteed under the Constitution.”
Taking the statement of the ASC for the State on record, the Bench disposed of the petition with directions to DCP (South) to provide necessary security to the petitioner for filling up the nomination form from South Delhi Parliamentary Constituency. SHO concerned has also been asked to share his mobile number with the petitioner for aforesaid purpose.
The High Court also directed the ASC for the State to ensure that the outcome of the complaint filed by the petitioner is communicated to him within two weeks.
Read Order: MANSOOR ASGHAR PEERBHOY v. STATE [DEL HC-CRL.A. 947/2023]; MUBEEN KADAR SHAIKH v. STATE OF NCT OF DELHI [CRL.A. 343/2022]; SAQUIB NISAR v. STATE[CRL.A. 450/2022]
Tulip Kanth
New Delhi, April 30, 2024: In a latest development in the 2008 bomb blast case, the Delhi High Court has dismissed the bail applications of three accused men --Mubeen Kadar Shaikh, Mansoor Asghar Peerboy and Saquib Nisar. The High Court has also asked the Special Court to conclude the trial in the present matter by taking it up at least twice a week.
The Division Bench of Justice Suresh Kumar Kait and Justice Shalinder Kaur was considering the pleas of Mubeen Kadar Shaikh and Saquib Nisar while Mansoor Asghar Peerboy’s plea was heard by the Division Bench comprising Justice Suresh Kumar Kait and Justice Manoj Jain.
The case of prosecution was that on 13.09.2008, serial bomb blasts occurred at different places, i.e. Karol Bagh, Cannaught Place and Greater Kailash, in Delhi. In addition, three live bombs were also detected and defused. These serial blasts had created a panic in Delhi resulting in the death of 26 persons and causing injury to 135 persons besides destruction of property. On the same day, a terrorist organisation namely Indian Mujahideen took the responsibility of these serial blasts by sending e-mails to various electronic and print media also mentioning that the blasts which occurred in Jaipur, Rajasthan on 13.05.2008 and Ahmedabad, Gujarat on 26.08.2008 were also organized by them.
Consequently, FIRs was registered for offences punishable under Sections 121/121- A/122/123/307/323/427/120-B IPC,Sections 3/4/5 Explosive Substances Act,Sections 16/18/20/23 of UAPA,Section 66 of Information and Technology Act. During interrogation, it was revealed that Saquib Nisar is one of his associates of the outfit Indian Mujahideen, who is also involved in Delhi serial bomb blasts. On 13.09.2008, the terrorist group “Indian Mujahideen” sent an e-mail to various electronic/print media of Pakistan, India and other countries including Darul Uloom Deoband, Central Waqf Council, Al Jamia Tussalafiah (MarkaziDarul-Uloom Varanasi) with the heading “MESSAGE OF DEATH” and claiming intense, accurate and successive bomb attacks exactly 5 minutes from the said mail.
Other arrested accused persons described the involvement of Mubeen Kadar Shaikh with co-accused Mansoor Asghar Peerboy, Akbar Ismail Chaudhary and Asif Basir Shaikh, all residents of Pune, Maharastra; in Delhi Bomb Blast case and revealed that “Media Cell” of Indian Mujahideen was being run by them.
The appeals before the Delhi High Court were filed challenging the impugned order passed by the Court of Sessions whereby the applications seeking bail had been dismissed.
It was noted by the Bench that the Trial Court while rejecting the bail application of accused observed that no accused person of an offence punishable under Chapter 4 and Chapter 6 of UAPA, can be released on bail unless the Court is of the opinion that the accusation against the accused is prima-facie not true.
The High Court reiterated that at the time of grant or refusal of bail, each case has to be seen on its own facts and the role of accused has to be considered individually, especially in cases where a larger conspiracy is involved.
During investigation, it revealed that Appellant Saquib Nisar was working as recruitment assistant in Talent Pro India HR Private Limited in Delhi and was an associate of accused Mohd Atif Ameen. Nisar had joined the conspiracy for Ahmadabad serial bomb blasts on 26.07.2008. He hadalso gone to Karol Bagh for conducing reccee of the places for blasts.In February-March 2007, Mansoor Asghar Peerboy met Iqubal Bhatkal and Riyaz Bhatkal, both residents of Bhatkal, Karnataka at the house of his known Asif Bashir Shaikh (also arrested in present case) in Pune where he got inspired by them and joined them for Jihad.
They gave him the task of sending emails claiming the responsibility of blasts by secure means. Mansoor was leading the Media Group of terrorist outfit “Indian Mujahiddin” and at the time of his arrest, Mumbai Crime Branch recovered a laptop, Wi-Fi hot spot finder, RF (Radio Frequency) signal detector, one hard disc make one spy hidden camera locator from his possession.
It was noted that accused Mubeen Kadar Shaikh, who is admittedly a qualified Computer Engineer, and had been alleged to be an active member of Media Cell of Indian Mujahideen and as a part of large conspiracy, had prepared the text and content of terror mail sent in the name of Indian Mujahideen. For this purpose, he had visited Mumbai and purchased laptops. He had been identified by the shop owner from where the said laptops were purchased and used for sending the warning email. The PDF files retrieved from recovered laptops were emphasized on behalf of State connecting the appellant in 2008 serial blasts.
It was opined that the allegations against the appellants and the role attributed to them, did not persuade the Court to release the appellants on bail.The Court was also informed that total 497 witnesses were cited, out of which 198 witnesses were dropped and so far 282 witnesses had already been examined and only 17 witnesses were left to be examined.
“We are informed that the learned Special Court is conducting proceedings on every Saturday so as to expedite conclusion of trial, which is already at its fag end. However, in the peculiar facts of the present case and keeping in view that the appellant is behind bars since the 2008, we direct the concerned Special Court to conclude the trial in the present matter by taking it up at least twice a week”, the High Court held.
Read Order: DEEPAK v. STATE OF NCT OF DELHI [DEL HC- W.P.(CRL.) 3253/2023]
LE Correspondent
New Delhi, April 30, 2024: The Delhi High Court has granted furlough to the petitioner convicted for raping a minor victim after he undertook to stay at his maternal uncle’s home in Bihar, as the victim lives in Delhi. The High Court also noted that he has been in judicial custody for more than seven years and has also earned three annual good conduct reports.
The Single-Judge Bench of Justice Swarana Kanta Sharma was considering a petition filed under Article 226 of the Constitution of India read with Section 482 of the Code of Criminal Procedure, 1973 (‘Cr.P.C.’) seeking quashing of rejection order passed by the respondent, and for issuance of wit in the nature of mandamus directing the respondent to release the petitioner on first spell of furlough for a period of three weeks.
In this case, the petitioner was convicted in a case registered under Sections 376 of IPC and Section 6 of POCSO Act. After completion of trial, the petitioner was held guilty for the offence under Section 376(2)(i) of IPC and accordingly convicted and awarded the sentence of rigorous imprisonment for life and fine of Rs. 20,000 and in default of payment of fine, simple imprisonment for 60 days. The appeal against his conviction filed by the petitioner was dismissed.
It was the petitioner’s case that he had applied to Director General, Prisons, for grant of first spell of furlough for a period of three weeks, however the same was rejected.
It was contended from the petitioner’s side that the petitioner has been in judicial custody for about seven years and eight months, and has unblemished jail record. It was further stated that the petitioner has earned three annual good conduct reports and as per Rule 1223 of Delhi Prison Rules, 2018, he is entitled to 1st spell of furlough. It was also submitted that the petitioner undertakes to not reside at the address which is in the vicinity of the house of victim, and he shall rather reside at the address of his maternal uncle, who lives in Bihar.
The Bench opined that the rejection of petitioner’s furlough was based on two grounds i.e. he is guilty of a heinous offence, and that if he will stay in the house next to the house of the victim, there can be a threat to both the victim and the petitioner.
However, after going through the status report filed on record, the Bench noted that the petitioner had furnished the address of his maternal uncle at Bihar and stated that he would be staying at the said address during the period of furlough. This address was also verified by the State.
The High Court also took note of the fact that the petitioner has been in judicial custody for more than seven years and eight months, and has never been released either on parole, bail or furlough. His consistent conduct in the jail had been satisfactory. He has been working as ward sahayak and in the last more than seven years, he has never been awarded any punishment inside the jail. It was also noticed that he is not a habitual offender, and has earned three annual good conduct reports, which also entitle him to furlough under Rule 1223 of Delhi Prison Rules, 2018.
“Considering the fact that he undertakes to stay at his maternal uncle’s home at Bihar whereas the victim stays in Delhi, and since the address of his maternal uncle at Bihar has been verified by the State, this Court directs that the petitioner be released on first spell of furlough for a period of three weeks”, the Bench ordered while also enumeration certain conditions.
Read Order: VINOD YADAV v. THE STATE [DEL HC- BAIL APPLN. 3124/2023]
LE Correspondent
New Delhi, April 30, 2024: In a case of recovery of approximately 2.3 kg of opium, the Delhi High Court has granted bail to the NDPS accused after considering certain facts such as the contraband seized was of intermediate quantity, he is the sole bread earner of the family and that the completion of trial would take time.
The incident is of the year 2022 when the applicant and co-accused Ravinder were intercepted at the Shakur Basti Railway Station on the basis of secret information. It was alleged that on checking, it was found that the towel had two transparent polythene bags and a total of 2.330 kg of Opium was recovered from the same. It was alleged that co-accused Ravinder had a white bag in his hand which also had two transparent polythene bags in it therefrom 3.086 Kg of Opium was recovered.
It was the prosecution’s case that the accused persons stated in their disclosure statements that they used to work as labourers, however, they did not earn enough to fulfill their requirements They stated that they had been tasked to deliver the contraband to a man in Bathinda, Punjab by one person, namely, Vinod Paswan who had given the contraband to the accused persons near a Bus Stand in Jharkhand. Thereafter, the accused persons had travelled to Delhi where they were intercepted by the police officials. The bail application filed by the present applicant before the learned Trial Court was dismissed. Aggrieved thereby, the accused approached the Delhi High Court with a plea seeking regular bail.
At the outset, the Single-Judge Bench of Justice Amit Mahajan said, “ It is settled law that the Court, while considering the application for grant of bail, has to keep certain factors in mind, such as, whether there is a prima facie case or reasonable ground to believe that the accused has committed the offence; circumstances which are peculiar to the accused; likelihood of the offence being repeated; the nature and gravity of the accusation; severity of the punishment in the event of conviction; the danger of the accused absconding or fleeing if released on bail; reasonable apprehension of the witnesses being threatened; etc. However, at the same time, period of incarceration is also a relevant factor that is to be considered.”
One of the arguments raised by the applicant was that the bar under Section 37 of the NDPS Act would not be attracted in the present case as only intermediate quantity of the contraband has allegedly been recovered from the applicant. On the other hand, the State Counsel contended that the rigours of Section 37 of the NDPS Act would be attracted as the total amount of the recovered contraband was more than the threshold of commercial quantity since both the accused persons were travelling together.
Noting that the present FIR was registered against the applicant only for the offence under Section 18 of the NDPS Act and no allegation of conspiracy under Section 29 had been levelled against the applicant, the Bench said, “Prima facie, the contraband recovered from the accused persons cannot be clubbed together and treated as commercial quantity.”
“It is not denied that the contraband recovered from the applicant is Opium weighing 2.330 Kg which is an intermediate quantity, and the rigours of Section 37 of the NDPS Act therefore would not apply”, it further added. It was made clear that in such circumstances, the Court has to consider the parameters as enshrined in relation to grant of bail.
Furthermore, the charges had not been framed in the present case till now as the FSL report of the seized samples was still awaited. Noticing that there are 15 witnesses who are to be examined in the present case, the Bench said, “Speedy trial in such circumstances does not seem to be a possibility. The object of jail is to secure the appearance of the accused persons during the trial. The object is neither punitive nor preventive and the deprivation of liberty has been considered as a punishment without the guilt being proved. The applicant cannot be made to spend the entire period of trial in custody especially when the trial is likely to take considerable time.”
The applicant has been in custody since 26.12.2022. The Bench also considered the fact that the applicant has clean antecedents and is the sole bread earner in his family.Thus, the High Court directed the applicant to be released on bail on furnishing a personal bond for a sum of Rs. 25,000 with two sureties of the like amount, subject to the satisfaction of the learned Trial Court/ Duty.
Read Order: FERTILIZER CORPORATION OF INDIA LIMITED & ORS v. M/S. COROMANDAL SACKS PRIVATE LIMITED [SC- CIVIL APPEAL NOS. 5366-5367 OF 2024]
LE Correspondent
New Delhi, April 30, 2024: While upholding the order of the Telangana High Court awarding 24 per cent interest to the original plaintiff - M/s Coromandal Sacks Private Limited - on its dues as per the provisions of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, the Supreme Court has excluded the period during which the defendant company - Fertilizer Corporation of India Ltd. - was a sick company as per the Sick Industrial Companies (Special Provisions) Act, 1985 for the purposes of calculation of interest.
M/s Coromandal Sacks Private Limited-original plaintiff has been established with the assistance of the Andhra Pradesh Industrial Development Corporation Limited (APIDC) and is engaged in the manufacturing of High Density Poly Ethylene (HDPE) bags. The defendant company-Fertilizer Corporation of India Ltd. (FCIL) is a Public Sector Undertaking (PSU) established for the manufacturing of fertilisers.
The original defendants required HDPE bags for the purpose of packaging and supply of fertiliser to their customers. They had been placing orders for the same with the original plaintiff since 1986-87 onwards. The terms and conditions including the technical specifications of the bags and terms of payment were specified in the notices inviting tender (NIT) issued from time to time and the purchase orders issued in pursuance thereof. As per the terms of the NIT, the original defendants were required to make the entire payment within 20 days of the receipt of the bags and approval of the same. The terms of the purchase orders also entitled the original defendants to deduct up to a maximum of 5% of the contract price towards liquidated damages upon delay in supply of bags by the original plaintiff.
The case of the original plaintiff before the trial court was that it supplied 42,000 bags over and above the quantity mentioned in the purchase orders to meet with the urgent requirements of the original defendants. When a formal purchase order was subsequently issued by the original defendants to account for the extra bags supplied by the original plaintiff, the price per bag mentioned in the said order fell short of the price agreed upon between the parties. The original plaintiff was also aggrieved by the deductions made by the original defendants towards the liquidated damages for the alleged delay in supply of the bags and the penalty imposed towards the supply of the alleged poor quality of the bags. The original plaintiff also claimed to have suffered losses due to the refusal of the original defendants to accept 25,000 bags after placing the order, which were printed as per the specifications prescribed by the original defendants and had to be sold as scrap due to non-acceptance by the original defendants.
With a view to recover the aforesaid losses, the original plaintiff instituted the civil suit for the recovery of Rs 8,27,100.74 along with Rs 10,31,803.14 towards interest up to the date of institution of the suit. The appeals before the Top Court were filed challenging the impugned common judgment of the Telangana High Court partly allowing the Appeal Suits preferred by the original defendants and the original plaintiff respectively against the judgment of the Senior Civil Judge decreeing the suit partly in favour of the original plaintiff. The original defendant were also aggrieved by the impugned judgment as regards the awarding of 24% interest in favour of the original plaintiff which had inflated the principal decretal amount to mammoth proportions.
Referring to Section 3 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, the Bench opined that where any supplier supplies any goods, the buyer shall make payment on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day. In the instant case, as per the terms of the NIT, payment was to be made within 20 days from the receipt of the goods.
“While there is no doubt that the rate of interest applicable to the dues of the original plaintiff as determined by the High Court is correct, we think it is necessary to examine if the compound interest can be said to have continued to accrue even when FCIL was declared a sick company and was awaiting its revival before the BIFR”, the Bench said.
The Top Court also made it clear that in the absence of the express permission of the BIFR, Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 suspends any legal proceedings in the nature of execution during the pendency of the scheme before the BIFR, as execution would necessarily result in negatively impacting the assets of a sick company, thereby affecting the preparation, sanction or implementation of scheme and as a net effect, would bring down the chances of revival of the sick company.
In this case, the suit was decreed in favour of the original plaintiff by the trial court. However, while the adjudication of the suit of the original plaintiff could not have been said to be barred under Section 22(1) of the 1985 Act as it was for the mere determination of liability of the parties inter-se, the execution of decree obtained as a result thereof was expressly suspended during the period as mentioned in the said provision, unless the requisite permission from the BIFR or the AAIFR could be obtained.
“Thus, while there is a stay on proceedings in the nature of distress and execution, etc. against the properties of the sick company, to safeguard its assets, awarding interest for that very same period, though not expressly barred under any provision of the Act, could not have been the intention of the legislature”, it said while also adding, “...revival of a sick industry should be given utmost priority and any interpretation which may result in a newly revived company becoming sick again should be avoided at all costs.”
Herein, the decree in favour of the original plaintiff was not a part of the scheme of rehabilitation approved by the BIFR. Had it been so, it was nothing but obvious that the scheme would have proposed to settle the dues of the original plaintiff at a scaled down value, since a similar approach was adopted in the scheme to settle the dues of all the other creditors. In that scenario, the original plaintiff would not have had any other option but to accept the scaled down value and settle its dues.
Noting that no material was placed to show whether any steps were taken by the original plaintiff to obtain the permission of the BIFR for the execution of the decree of the trial court, or for the inclusion of the said decree in the rehabilitation scheme, the Bench observed that original defendants too failed to bring anything on record to show if any steps were taken by them for the inclusion of the dues of the original plaintiff in the rehabilitation scheme.
“Thus, only for the reason that the dues of the original plaintiff were not a part of the scheme and thus could not be settled at a scaled-down value, it cannot be held that it will now be open for the original plaintiff to recover its dues along with compound interest for the entire period in a manner that will saddle the defendant company with enormous liability, thereby possibly rendering the entire process of its revival futile. This, in our view, could never have been the object of the 1985 Act and the provisions of the 1993 Act thus have to be harmonised so as to give effect to the true object of the 1985 Act”, the Bench said.
The 1993 Act was replaced by the Micro Small and Medium Enterprises Development Act, 2006 during the pendency of the proceedings. However, both the District Court and the High Court dismissed the challenge petition for not complying with the Section 19 of the MSMED Act, 2006, which mandates that 75% of the decretal/award amount has to be deposited by the appellant before the appeal can be entertained by the appellate court.
It was further observed that for the period during which the defendant company was sick and before the BIFR, it couldn’t be said that the withholding of the payment of the dues of the original plaintiff was wilful and intentional. The Bench also found it fit to exclude the period commencing from the date when FCIL was declared to be a sick company under the 1985 Act going up to the date when it was discharged by the BIFR and declared to be no longer a sick industrial company from the purview of the applicability of the interest provision under the 1993 Act.
It was held that the suit instituted by the original plaintiff before the trial court was not hit by the embargo envisaged under Section 22(1) of the 1985 Act. Thus, the decree awarded in favour of the original plaintiff by the trial court and modified by the High Court, couldn’t be said to be coram nonjudice.
The High Court committed no error in awarding 24% interest to the original plaintiff on its dues as per the provisions of the 1993 Act. However, the period during which the defendant company was a sick company as per the 1985 Act should be excluded for the purposes of calculation of interest. As a result, the impugned judgment of the High Court was upheld subject to the modification of the period for which interest may be granted. The interest has been ordered to be calculated at 24% p.a. with monthly compounding.
Disposing of the appeals in these terms, the Bench directed that the final amount that may be determined in accordance with the final decree shall be paid to the original plaintiff within 4 weeks.
Read Order:ANJUMOL V.A. & ORS v. KERALA PUBLIC SERVICE COMMISSION & ORS [SC- Petition(s) for Special Leave to Appeal (C) No. 13242/2021]
LE Correspondent
New Delhi, April 30, 2024: In light of the practical issues arising in the maintenance of SLP paper books, which is causing difficulty in the Court’s day-to-day functioning, the Supreme Court has ordered for preparation of standard operating procedure for proper maintenance of the same.
The Division Bench of Justice J.K. Maheshwari and Justice Sanjay Karol noticed that during hearing of the cases, either on miscellaneous days or non-miscellaneous days, the Court is experiencing various practical difficulties. The orders passed in the proceedings are not attached to the paper books.
In service matters, counsels for the petitioner are not attaching the relevant Rules with appendix in the SLP paper books or even not referring the same in pleadings. Some time, those Rules are being filed in piecemeal with applications or with additional documents, due to which matters are required to be postponed, which causes extra financial burden on the parties and delay in adjudication.
Not only this but counter affidavits are sometime attached to the main SLP paper book without flagging and inviting attention and sometime as separate paper book, which require unnecessary search and to waste time by Judges.Another issues is that on the directions and after filing the convenience compilation, it is not sent to the residential offices of the Judges either in hard copy or by way of emailing and even during hearing.
Moreover, The I.A. number is not properly exhibited on its face. The applications are not attached datewise with the paper books, which causes inconvenience to the Judges. Alongwith these, the Bench notes that there were other ancillary issues as well.
“In view of above, we direct that the Secretary General and the Registry Officers, in particular the Registrar (Judicial) shall prepare standard operating procedure for properly maintaining the SLP paper books and to eradicate the said difficulties and be notified after seeking appropriate orders from Hon. the Chief Justice of India”, the Bench held.
The Top Court also granted two week’s time to file an affidavit clarifying how many persons had been appointed and what were their qualifications and what was the status of the petitioners in the Special Leave Petition.
The Bench concluded the matter by observing, “We hope and trust, for efficient functioning of the Court, due compliance shall be made as expeditiously as possible.”
Read Order: IN RE : v. T.N. GODAVARMAN THIRUMULPAD [SC- Writ Petition(s)(Civil) No(s). 202/1995]
Tulip Kanth
New Delhi, April 30, 2024: In a case involving the settlement rights of villagers with regard to the alteration of the areas of the Pobitora Wildlife Sanctuary, the Supreme Court has held that such alterations can’t be done without permission of the National Board for Wildlife.
The Counsel for the State of Assam submitted that there were certain issues with regard to the boundaries of the Pobitora Wildlife Sanctuary and the settlement of rights of the villagers, including the Scheduled Castes, Scheduled Tribes, Other Backward Classes and marginalized communities residing within the notified boundaries of the Pobitora Wildlife Sanctuary before 1998.
It was also submitted that the inhabitants in the Pobitora Wildlife Sanctuary areas and the villages in the fringe areas should be treated as active partners in the settlement process and not as adversaries.
The State, through an affidavit, indicated that a Cabinet meeting was held with an aim to protect the rights of the villagers and to ensure that the same were appropriately addressed and resolved. A Committee of officials had also been constituted.
It was submitted from the applicant’s side that except a bald statement that the rights of the villagers residing in the Pobitora Wild Life Sanctuary area were not settled, no material had been placed on record to substantiate the said stand.
Prima facie, from the perusal of the map, it appeared to the Division Bench of Justice B. R. Gavai and Justice Sandeep Mehta that the State proposed to delete a smaller area from the Wild Life Sanctuary and include a much larger area so as to account for the lands of the settlers and also address the issue of the growing population of the rhinoceros.
“We find that even if the State proposes to alter the areas of the Pobitora Wild Life Sanctuary, the same cannot be done without prior permission of the National Board for Wild Life (NBWL)”, it held.
The Bench found that no prejudice would be caused to anyone if the Committee did the exercise as proposed in the affidavit. In any case, the Bench opined that the same will always be subject to the final decision by NBWL and a scrutiny by this Court.
On the issue of non-representation of the wild life wing of the Forest Department in the Committee, the Bench found that in addition to the Members of the Committee as proposed, it would be appropriate to include the Chief Wild Life Warden of the State of Assam and also the Field Director of the Pobitora Wild Life Sanctuary as Members of the said Committee so that the concerns with regard to the wild life are also addressed by the said Members.
The applications have now been listed on 23.10.2024.
Read Order: VINOD KUMAR & ORS. ETC v. UNION OF INDIA & ORS [SC- CIVIL APPEAL NOS. 5153-5154 OF 2024]
Tulip Kanth
New Delhi, April 30, 2024: The Supreme Court has set aside a judgment of the Allahabad High Court upholding the Central Administrative Tribunal’s order which negated the plea of railway employees for regularization and absorption into the posts of 'Accounts Clerk' against which they were temporarily appointed.
Pursuant to a notification dated 21.02.1991, the appellants were initially appointed to ex-cadre posts of Accounts Clerks after a selection process involving written tests and viva voce interviews. After the rejection of their representation for regularization to the Divisional Railway Manager in 1999, the appellants approached the Central Administrative Tribunal by way of Original Applications. The Tribunal dismissed the applications of the appellants, concluding that their appointments were temporary and for a specific scheme, thus not entitling them to regularization or absorption into permanent posts.
Thereafter, the appellants approached the High Court and the High Court upheld the order of the Tribunal and dismissed their Writ Petitions observing that the appellants' employment under a temporary scheme could not confer upon them the rights akin to those held by permanent employees.
The aggrieved appellants approached the Top Court arguing that the High Court erred in its judgment by failing to recognize the substantive nature of their duties, which align with regular employment rather than the temporary or scheme-based roles they were originally appointed for.
“This Court believes that the essence of employment and the rights thereof cannot be merely determined by the initial terms of appointment when the actual course of employment has evolved significantly over time. The continuous service of the appellants in the capacities of regular employees, performing duties indistinguishable from those in permanent posts, and their selection through a process that mirrors that of regular recruitment, constitute a substantive departure from the temporary and scheme-specific nature of their initial engagement”, the Division Bench of Justice Vikram Nath & Justice K.V. Viswanathan held.
It was noted that the appellants' promotion process was conducted and overseen by a Departmental Promotional Committee and their sustained service for more than 25 years without any indication of the temporary nature of their roles being reaffirmed or the duration of such temporary engagement being specified, merits a reconsideration of their employment status.
As per the Bench, the application of the judgment in Secretary, State of Karnataka vs. Umadevi [LQ/SC/2006/324] by the High Court did not fit squarely with the facts at hand, given the specific circumstances under which the appellants were employed and had continued their service. The reliance on procedural formalities at the outset cannot be used to perpetually deny substantive rights that have accrued over a considerable period through continuous service. Their promotion was based on a specific notification for vacancies and a subsequent circular, followed by a selection process involving written tests and interviews, which distinguished their case from the appointments through back door entry as discussed in the case of Uma Devi (supra).
The Bench found merit in the appellants' arguments and held that their service conditions, as evolved over time, warranted a reclassification from temporary to regular status.
“The failure to recognize the substantive nature of their roles and their continuous service akin to permanent employees runs counter to the principles of equity, fairness, and the intent behind employment regulations”, it added.
Thus, allowing the appeals and holding the appellants entitled to be considered for regularization in their respective posts. The Bench ordered, “The respondents are directed to complete the process of regularization within 3 months from the date of service of this judgment.”
Read Order: Shivani Tyagi v. State of U.P. & Anr [SC- Criminal Appeal Nos.1957-1961 of 2024]
Tulip Kanth
New Delhi, April 29, 2024: In a case of acid attack where a 31-year-old woman suffered permanent disfiguration, the Supreme Court has cancelled the bail of five accused men who were earlier released by the Allahabad High Court as they had offered to pay Rs 25 lakh.
The Top Court also noted that instead of considering the parameters laid down by the Apex Court for grant of bail or suspension of sentence, the High Court had noticed and directed that the convicts have offered to pay compensation to the victim for grant of suspension of sentence, which when she refused to accept, was directed to be deposited in the court.
The Supreme Court also noted that it was in a way kind of “Blood Money” offered by the convicts to the victim for which there is no acceptability in our criminal justice system.
A Division Bench of Justice C.T. Ravikumar and Justice Rajesh Bindal was considering the quintuplet appeals of the victim of the acid attack assailing the suspension of sentence of life imprisonment of the convicted persons, the private respondents and their consequential enlargement on bail. Justice Ravikumar and Justice Bindal penned down separate but concurrent judgments.
The private respondents in the appeals, five in numbers, were convicted finding guilty of offences, including under Sections 307/149 and 326A/149, IPC. The appellant- victim was then aged about 31 years and, in the incident, she suffered an attack with sulfuric acid and her body was burnt 30 to 40 percent. PW-6, Dr. Uttam Jain revealed that she suffered deep burn on the face, chest and both hands and injuries on her were grievous in nature.
Referring to Section 389 of the Code of Criminal Procedure (Cr.PC) which deals with the suspension of execution of sentence pending the appeal against conviction and release of appellant(s) on bail, Justice Ravikumar made it clear that this provision mandates for recording of reasons in writing leading to the conclusion that the convicts are entitled to get suspension of sentence and consequential release on bail.
Reference was also made to the judgments in Rama Shinde Gosai & Ors. v. State of Gujarat [LQ/SC/1999/557]; Kishori Lal v. Rupa & Ors. [LQ/SC/2004/1084]; Anwari Begum v. Sher Mohammad & Anr. [LQ/SC/2005/934]; Khilari v. State of Uttar Pradesh [LQ/SC/2009/146].
“It is also relevant to state that the mere factum of sufferance of incarceration for a particular period, in a case where life imprisonment is imposed, cannot be a reason for invocation of power under Section 389 Cr.PC without referring to the relevant factors”, the Bench said while also adding, “...we are deeply peeved on perusing the impugned judgment, for the same reflects only non-application of mind and non-consideration of the relevant factors despite the fact that the case involved an acid attack on a young woman resulting into permanent disfiguration.”
Noting that the impugned order was infected with non-application of mind and non- consideration of the relevant factors required for invocation of power under Section 389 in the light of the settled position of law, he held, “An acid attack may completely strip off the victim of her basic human right to live a decent human life owing to permanent disfiguration. We have no hesitation to hold that in appeals involving such serious offence(s), serious consideration of all parameters should be made. Even a cursory glance of the impugned order would reveal the consideration thereunder was made ineptly. The serious nature of the offence involved was not taken into account besides the other relevant parameters for the exercise of power under Section 389, Cr. PC.”
Justice Bindal stated that the disfigurement of the face of the victim, as was evident from the photographs placed on record, could not even be seen. “It is a case in which after hearing the arguments raised by the appellant and going through the paper book our conscience was shocked. By a short order we granted the leave in the matters and allowed the appeals”, he added.
The High Court had ordered suspension of sentence of the respondents, who had been awarded life imprisonment was that the counsel for the accused submitted that in the evidence it had come on record that about Rs 21 lakh had been spent on her treatment as she suffered disfigurement of her face. The High Court had accepted the offer made by them and directed that, over and above, the amount of compensation paid by the District Legal Services Authority to the victim, the private respondents had offered to pay a sum of Rs 25 lakh for her treatment.
However, Justice Bindal noticed that there was no question of acceptance of money by the victim as she had challenged the order of suspension of sentence of the private respondents.
Noticing the fact that the High Court had ruled that the convicts had offered to pay compensation to the victim for grant of suspension of sentence, which when she refused to accept, was directed to be deposited in the court. “It was in a way kind of “Blood Money” offered by the convicts to the victim for which there is no acceptability in our criminal justice system”, he said.
Thus, setting aside the impugned order, the Bench ordered the appellants to surrender before the trial Court for the purpose of their committal to judicial custody within 4 days.
Read Order: GLOBAL CREDIT CAPITAL LIMITED & ANR v. SACH MARKETING PVT. LTD. & ANR. [SC- CIVIL APPEAL NO. 1143 OF 2022]
Tulip Kanth
New Delhi, April 29, 2024: While confirming the view of the NCLAT that the amounts covered by security deposits under the agreements constituted a financial debt, the Supreme Court has asked the Resolution Professional to continue with the Insolvency process of the corporate debtor.
In this case, there were two agreements of April 1, 2014 and April 1, 2015 between the corporate debtor and the first respondent in the form of letters. By the agreement, the corporate debtor appointed the first respondent as a Sales Promoter to promote beer manufactured by the corporate debtor at Ranchi (Jharkhand) for twelve months. One of the conditions incorporated by the corporate debtor was that the first respondent should deposit a minimum security of Rs.53,15,000/- with the corporate debtor, which will carry interest. The terms of the 2015 agreement/letter were identical, however, under the second agreement/letter, the corporate debtor was to pay the interest on Rs.32,85,850/- @21% per annum.
The Oriental Bank of Commerce invoked the provisions of Section 7 of the IBC against the corporate debtor. The National Company Law Tribunal (NCLT) admitted the application. The second respondent was appointed as the Interim Resolution Professional. Initially, the first respondent filed a claim with the second respondent as an operational creditor but the same was rejected.
Therefore, an application was moved before the NCLT under sub-section (5) of Section 60 of the IBC by the first respondent seeking a direction to the second respondent to admit the first respondent's claim as a financial creditor but the same was rejected. Aggrieved by the said order, the first respondent preferred an appeal before the NCLAT whereby it was held that the first respondent was a financial creditor and not an operational creditor. The NCL approved the resolution plan of M/s. Kals Distilleries Pvt. Ltd. (Respondent no.6) in the CIRP of the corporate debtor.
In another Civil Appeal, the second respondent was the resolution professional. The corporate debtor was the same as in the other appeal. The fifth respondent had provided financial assistance to the corporate debtor of Rs.75,00,000. The fourth respondent provided financial assistance to the corporate debtor of Rs.1,62,00,00. The first respondent advanced a sum of Rs.25,00,000 to the corporate debtor and the third respondent advanced a sum of Rs.1,00,000.
The Resolution Professional rejected the claims of the four creditors as financial creditors. Therefore, they filed separate applications before the NCLT but those were rejected. In the appeals preferred by them before the NCLAT, the NCLAT allowed the appeals by relying upon its judgment, which was the subject matter of challenge.
The Bench made it clear that where one party owes a debt to another and when the creditor is claiming under a written agreement/arrangement providing for rendering service, the debt is an operational debt only if the claim subject matter of the debt has some connection or co-relation with the service subject matter of the transaction. The written document cannot be taken for its face value. Therefore, it is necessary to determine the real nature of the transaction on a plain reading of the agreements.
“Therefore, there is no manner of doubt that there is a debt in the form of a security deposit mentioned in the said two agreements”, it held.
As there was no clause regarding forfeiture of the security deposit or part thereof, the corporate debtor was liable to refund the security deposit after the period specified therein was over with interest @21% per annum. It was opined that since the security deposit payment had no correlation with any other clause under the agreements, as held by the NCLAT, the security deposit amounts represented debts covered by sub- section (11) of Section 3 of the IBC.
“The reason is that the right of the first respondent to seek a refund of the security deposit with interest is a claim within the meaning of sub- section (6) of Section 3 of the IBC as the first respondent is seeking a right to payment of the deposit amount with interest. Therefore, there is no manner of doubt that there is a debt in the form of a security deposit mentioned in the said two agreements”, it added.
It was further observed that a transaction has been defined in sub-section (33) of Section 3 of the IBC, which includes an agreement or arrangement in writing for the transfer of assets, funds, goods, etc., from or to the corporate debtor. In this case, there was an arrangement in writing for the transfer of funds to the corporate debtor, therefore, the first condition incorporated in clause (f) is fulfilled.
In light of such factual and legal aspects and considering the letter mentioned as well as the financial statements of the corporate debtor, the Bench held that the amount raised under the said two agreements had the commercial effect of borrowing as the corporate debtor treated the said amount as borrowed from the first respondent.
Concurring with NCLAT’s view that the amounts covered by security deposits under the agreements constituted financial debt, the Bench enumerated its conclusion as follows:
- There cannot be a debt within the meaning of sub- section (11) of section 5 of the IB Code unless there is a claim within the meaning of sub-section (6) of section 5 of thereof;
- The test to determine whether a debt is a financial debt within the meaning of sub-section (8) of section 5 is the existence of a debt along with interest, if any, which is disbursed against the consideration for the time value of money. The cases covered by categories (a) to (i) of sub-section (8) must satisfy the said test laid down by the earlier part of sub-section (8) of section 5;
- While deciding the issue of whether a debt is a financial debt or an operational debt arising out of a transaction covered by an agreement or arrangement in writing, it is necessary to ascertain what is the real nature of the transaction reflected in the writing; and
- Where one party owes a debt to another and when the creditor is claiming under a written agreement/ arrangement providing for rendering service, the debt is an operational debt only if the claim subject matter of the debt has some connection or co- relation with the service subject matter of the transaction.”
Consequently, the Bench upheld the NCLAT's view, dismissed the appeals and ordered the Resolution Professional to continue with the CIRP.
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.
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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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