Read Order:Joseph V. The State of Kerala &Ors
Chahat Varma
New Delhi, September 26, 2023: The Supreme Court has recently ordered the immediate release of a man who had been serving a life imprisonment sentence for rape and murder committed in 1996.
During the hearing, it was brought to the court’s attention that the petitioner's case had been reviewed by the Advisory Committee/Jail Advisory Board under the Kerala Prison Rules, 1958 and the Kerala Prisons and Correctional Services (Management) Rules, 2014. These reviews had taken place on nine separate occasions, and notably, the Board had recommended the petitioner's premature release three times. However, the state government had declined his request for premature release on all three occasions.
In the said case, the petitioner had approached the court seeking to enforce his right under Article 32 of the Constitution of India. He sought an appropriate direction to the state government to prematurely release him, having been in custody for over 26 years and having served a sentence of over 35 years, which included more than 8 years of remission earned.
It was alleged that the petitioner had visited his sister-in-law's (the deceased victim) workplace and, under false pretences that her mother was seriously ill and hospitalized, convinced her to leave with him. According to the prosecution, he made her walk along the railway line and, at a secluded location, allegedly raped her, stole the jewellery she was wearing, and then left her on the tracks to be runover by a passing train.
The division bench of Justice S. Ravindra Bhat and Justice Dipankar Datta noted that the prison laws in India, when read with Articles 72 and 161 of the Constitution, are rooted in a profound rehabilitative objective. It was emphasized that implementing a guideline that automatically denies the consideration of a premature release request from a convict who has served more than 20 or 25 years, solely based on the nature of the crime committed in the distant past, would effectively extinguish any hope of reformation and a fresh start for such an individual.
“Excluding the relief of premature release to prisoners who have served extremely long periods of incarceration, not only crushes their spirit, and instils despair, but signifies society’s resolve to be harsh and unforgiving,” said the division bench.
The bench also took note of Rule 376 of the 2014 Rules, which stipulates that prisoners can earn remission for displaying peace and good behaviour while incarcerated. It was noted that according to the state's records, the petitioner had earned over 8 years of remission, indicating his exemplary conduct while serving his sentence. Additionally, the minutes of the meetings of the Jail Advisory Board provided positive assessments of the petitioner, describing him as hardworking, disciplined, and a reformed inmate.
Therefore, in the interest of justice, the court deemed it appropriate to order the immediate release of the petitioner.
Read Order:Suhail Ahmad Thokar V. National Investigation Agency
Chahat Varma
New Delhi, September 26, 2023: The Delhi High Court has dismissed the bail appeal of an accused booked under the Unlawful Activities (Prevention) Act (UAPA) for allegedly providing shelter to members of terrorist organizations.
The present appeal had challenged the order dated January 7, 2023, passed by the Special Judge (NIA), related to a case registered by the National Investigation Agency (NIA) under Sections 120B, 121A, 122, and 123 of the Indian Penal Code (IPC), as well as under Sections 18, 18A, 18B, 20, 38, and 39 of the UAPA. The order in question pertained to the dismissal of the bail application filed on behalf of the appellant.
The prosecution's case revolved around the registration of an FIR, following an intelligence received, regarding a larger conspiracy taking shape in the Kashmir valley. According to the prosecution, this conspiracy had dual dimensions, both in the physical realm and the digital domain, and was allegedly orchestrated by proscribed terrorist groups, including Lashkar-e-Taiba (LeT), Jaish-E-Mohammed (JeM), Hizb-ul-Mujahideen (HM), Al-Badr, and others. It was further claimed that these terrorist groups, in collaboration with their facilitators and leaders based in Pakistan, as well as their Over-Ground Workers within India, were actively involved in influencing and radicalizing vulnerable local youth. The prosecution alleged that this conspiracy was hatched following the revocation of Article 370, with the primary objective of reigniting acts of terrorism in Jammu and Kashmir and other parts of India. According to their case, the appellant played an active role in providing shelter to members of the aforementioned terrorist organizations and their associates within his residence, with the assistance of his acquaintances. Consequently, the appellant was arrested on October 20, 2021, and a chargesheet was filed against him and co-accused individuals.
The division bench of Justice Siddharth Mridul and Justice Anish Dayal observed that at the stage of bail under the UAPA it is a well-established practice that a comprehensive or in-depth examination of the evidence is not required. Instead, the court's role is to establish findings based on general probabilities regarding the accused's potential involvement in the alleged offense.
The bench noted that upon the appellant's arrest, two mobile phones were confiscated from his possession. An analysis report of the digital data extracted from these seized mobile phones, conducted by Cert-In, revealed the presence of images associated with deceased militants and terrorist organizations.
The bench further took note of the appellant's disclosure statement, wherein the appellant affirmed that he had a previous association with the militant Rouf Dar. Additionally, he disclosed that he had provided assistance to militants Rouf Dar and Walid by arranging accommodation for them in his hometown.
The bench emphasized that the UAPA mandates proactive measures against organizations that present a threat to national security. Once an organization is designated as unlawful under the UAPA, any individual associated with it can be prosecuted for offenses outlined within the Act, in addition to any relevant criminal statutes.
The bench placed reliance on Arup Bhuyan versus State of Assam and Anr. [LQ/SC/2023/329], where the Supreme Court had expressed the view that mere membership in a banned organization constitutes an offense under the UAPA.
Thus, the court concluded that, after carefully considering the provisions of the UAPA and evaluating the material included in the charge-sheet, along with a collective assessment of the evidence and a preliminary analysis of its probative value, there were prima facie reasonable grounds to believe in the truth of the allegations against the appellant.
Accordingly, the present appeal was dismissed.
Read Order:D S Cargo Agency V. Commissioner of Customs
Chahat Varma
New Delhi, September 26, 2023: In a favourable ruling for D S Cargo Agency (appellant), the Delhi High Court has clarified that a Customs Broker is not required to report an offense committed by an importer once the goods have been cleared and the Customs Broker's role in the clearance process has ended.
In summary, the appellant was a proprietorship firm owned by Mr. Diva Kant Jha, a Customs Broker. The appellant claimed to have interacted with an individual named Mr. Lalit Dongra on behalf of M/s Accturists Overseas (OPC) Pvt. Ltd., and all inquiries related to filing B/Es were directed by Mr. Sanjeev Maggu, who represented himself as the Chief Manager of the three importer firms. On July 14, 2017, the Directorate of Revenue Intelligence (DRI) received information suggesting that the importer firms were evading customs duties by diverting imported goods stored in the customs bonded warehouse into the domestic market without paying the applicable customs duty. It was also alleged that forged documents were used to indicate the re-export of the warehoused goods. Consequently, the Commissioner issued an order-in-original on February 4, 2019, revoking the appellant's CB license, forfeiting the security deposit, and imposing a penalty. This action was taken as the appellant had allegedly failed to fulfil its obligations under the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018)along with Customs Brokers Licensing Regulations, 2013 (CBLR, 2013)and had acted in contravention of these regulations. Subsequently, the appellant filed a Customs Appeal before the Customs, Excise and Service Tax Appellate Tribunal (Tribunal). However, the Tribunal, in its order dated March 26, 2021, upheld the Commissioner's order-in-original.
The key question at hand was whether the appellant, under the CBLR, 2018 read with the CBLR, 2013, held a responsibility to report an offense related to goods stored in a bonded warehouse after the goods had been imported and the Customs Broker's professional involvement in clearing the goods had concluded.
The division bench of Justice Yashwant Varma and Justice Manmeet Pritam Singh Arora recognized that the appellant's obligation in the given circumstances was limited to facilitating the clearance of goods for warehousing at the Customs Station, and no further. Therefore, the appellant's role as a Customs Broker concluded once the imported goods, after being cleared at the Customs Station, arrived at the public bonded warehouse. The imported goods intended for re-export were stored at these public bonded warehouses, and the illegality committed by the importer firms occurred when they diverted these goods into the domestic market without paying the required customs duty. The bench acknowledged that the appellant had no role to play at this subsequent stage when the importer firms submitted false documents for re-export to the Customs authorities.
The bench further observed that the evidence showed that the individuals in control of the importer firms had acted independently when they conspired to defraud the revenue. There was no indication that they were acting under the guidance or advice of the appellant.
The bench also noted that the Supreme Court, in the case of Collector of Customs, Cochin v. Trivandrum Rubber Works Ltd., Chacki [LQ/SC/1998/1083], held that a Customs Broker serves as an agent for the specific purpose of arranging the release of goods. Once the goods are cleared, the Customs Broker has no further role, and they are not liable for any duty, liability, or actions that should be taken exclusively against the importer.
Thus, the bench ruled that the appellant was not obligated to report an offense committed by the importer firms concerning goods stored in the public bonded warehouse after the Customs Broker's professional duties in clearing the goods had concluded. Regulation 10(d) of CBLR, 2018 does not impose any such responsibility on the Customs Broker to report such offenses. The appellant's duty to bring issues of non-compliance to the attention of the Customs authorities was limited to the documents submitted by the Customs Broker during the clearance of goods from the Customs Station at the time of entry or departure. In this case, there was no finding that there was any error or discrepancy in the warehousing bill of entry submitted by the appellant at the Customs Station.
However, the bench did take note that the appellant failed to provide the KYC records of the importer firms to the DRI and Customs authorities, despite committing to do so. In the bench’s opinion, this inaction on the appellant's part did not warrant the imposition of the maximum punishment, which was the revocation of the license.
Therefore, in consideration of the principle of proportionality, the court determined that the orders of the Tribunal and the order-in-original, to the extent that they revoked the appellant's license and forfeited the security deposit, should be set aside. However, the penalty of Rs. 50,000 imposed by the orders was upheld.
Read Order:Ram Kishor Arora V. Director, Directorate of Enforcement &Anr
Chahat Varma
New Delhi, September 26, 2023: In a significant development, the Delhi High Court has rejected Supertech promoter Ram Kishor Arora's plea for immediate release in a money laundering case. The Court affirmed that his arrest by theEnforcement Directorate (ED)under the Prevention of Money Laundering Act (PMLA) was legal and justified.
In the matter at hand, the present petition was filed, seeking a writ, order, or directive to declare petitioner’s arrest as illegal and a violation of his fundamental rights guaranteed under Articles 14, 20, and 21 of the Constitution. The petitioner contended that the ED violated his fundamental rights by arresting him without informing him of the grounds for arrest and by denying him the right to consult and be defended by a legal practitioner of his choice. The petitioner argued that Section 19 of the PMLA was not followed in this case and sought his immediate release.
On the other hand, the ED argued that the statute mandates the grounds of arrest to be conveyed to the arrestee as soon as possible, and it is not a requirement for a copy of these grounds to be provided to the arrestee at the time of the arrest itself.
The single-judge bench of Justice Dinesh Kumar Sharma referred to the legal interpretation provided in the case of V. Senthil Balaji v. The State Represented by Deputy Director and Ors [LQ/SC/2023/803], particularly concerning Section 19 of the PMLA. It was established in this case that an authorized officer had to carefully assess and evaluate the material evidence in their possession. Through this assessment, they were required to form a reasonable belief that a person had committed an offense under the PMLA. Once this belief was formed, the authorized officer was empowered to carry out their mandatory duty, which included recording the reasons for the arrest. Furthermore, it was emphasized that this process had to be followed by informing the arrestee about the grounds for their arrest. The Supreme Court, in its judgment, made it clear that any failure to comply with the provisions of Section 19(1) of the PMLA would vitiate the arrest itself. The Apex Court explicitly stated that all the requisite mandates of Section 19(1) had to be followed in letter and spirit.
The bench also noted that in the PMLA, the legislature had chosen to use the term ‘informed’ without specifying any particular method for such notification in the statute or rules. In the absence of a prescribed mode of informing in the statute, the court determined that it should rely on common law principles. Consequently, the bench concluded that in the case at hand, the grounds for arrest were properly provided to the petitioner, and he acknowledged them in writing by signing them.
The bench also took note of the fact that there was no infringement of the petitioner's fundamental rights. There was no evidence to suggest that the petitioner had been denied the right to consult and be defended by a legal practitioner. Additionally, based on the discussion, there was no indication in the records that the ‘reason to believe’, as mandated under Section 19(1) of the PMLA, had not been properly recorded in writing.
Therefore, the courtconcluded that it cannot be held that petitioner was arrested illegally.
Read Order:Ashok Singh Bhadauria and Ors V. Central Bureau of Investigation
Chahat Varma
New Delhi, September 26, 2023: The Delhi High Court has granted bail to two former police officials, Ashok Singh Bhadauria and Kamta Prasad Singh, who were convicted for the custodial death of the father of the Unnao rape victim.
In the case at hand, appellant Ashok Singh Bhadauria (appellant no. 1) was found guilty of various offenses, including Sections 120B, 166, 167, 193, 201, 203, 211, 218, 323, 341, and 304 of the Indian Penal Code, 1860 (IPC), along with a violation of Section 3 of the Arms Act, 1959. Appellant Kamta Prasad Singh (appellant no. 2) was convicted under Sections 120B, 166, 167, 193, 201, 203, 211, 218, 323, 341, and Section 304 of the IPC, as well as Section 3 of the Arms Act. The present applications were filed, seeking suspension of the appellants' convictions, while the ongoing appeals were pending.
The single-judge bench of Justice Dinesh Kumar Sharma noted that it is an established legal principle that during the stage of suspending a sentence, the court's role is to primarily assess whether there are any glaring errors or flaws in the conviction order. However, this process does not entail reevaluating or reanalysing the evidence presented in the case.
The bench noted that, in cases of conviction and custody, especially those that do not involve life sentences, the broad parameter of 50% of the actual sentence undergone can be the basis for the grant of bail.
The bench further observed that considering the fact that there were pending appeals regarding the sentences already served by the accused individuals, it was on record that an appeal in the case was admitted on July 31, 2020. However, the court has been unable to conduct the hearing for these appeals thus far.
The bench also took note of the fact that the appellants had not misused the interim bail that had been periodically granted to them. According to the Nominal Roll, appellant no. 1 had served a sentence of approximately four years, eight months, and seven days, while appellant no. 2 had served a sentence of approximately four years, five months, and 28 days.
In the facts and circumstances of the case, as well as the duration of their incarceration, the court decided to grant bail to both appellants.
Read Order:Muhammad Salmanul Faris K V. The Superintendent
Chahat Varma
New Delhi, September 26, 2023: The Kerala High Court has set aside an order cancelling the GST registration of a petitioner, holding that the competent authority had taken an independent decision without following the due process of law.
The petitioner had filed the present writ petition, challenging an order, that cancelled their GST registration. The cancellation was primarily based on allegations that the petitioner had issued invoices and bills to other dealers without actually supplying goods or providing services, which was deemed a violation of the Goods and Services Tax Act (GST Act) and Rules.
In the said case, a communication was sent to the petitioner, referring to the investigation initiated by DGGI, Kochi Zonal Unit into a fake invoicing cartel. This communication indicated that the petitioner was allegedly involved in fraudulently availing fake input tax credit from multiple firms. Consequently, the Deputy Director of DGGI, Kochi Zonal Unit had requested the Range Officer in Ottapalam to cancel the petitioner's GST registration. After the notices and opportunities for personal hearings, the GST registration was ultimately cancelled.
The petitioner's counsel argued that the cancellation order was issued without following the due process of law and was against the provisions of the GST Act and Rules.
On the other hand, the department's counsel argued that the cancellation was based on evidence of a large cartel engaged in fraudulent input tax credit claims. They claimed that the petitioner had the opportunity to present evidence and dispute the allegations during the personal hearing but failed to do so.
The bench of Justice Dinesh Kumar Singh found that there was no dispute over the fact that the DGGI, Kochi Zonal Unit had already made a decision to cancel the petitioner's GST registration. Therefore, the bench was of the opinion that the competent authority was only expected to follow the formal procedures, and they should not have made an independent decision.
With the above observations, the Court decided to set aside the impugned cancellation order and directed the petitioner to appear before the Superintendent of Central Tax & Central Excise, on September 18, 2023. The petitioner was required to bring relevant records to dispute the allegations contained in the show cause notice. The court held if the show cause is cancelled, the petitioner would be entitled for restoration of the GST registration certificate. However, if the authority takes a decision to cancel the GST registration of the petitioner, he may take recourse to appropriate proceedings as available under law.
The court provided a clarification that the Superintendent of Central Tax should make an independent decision without being influenced by the direction of the DGGI, Kochi Zonal Unit.
Read Order: In Re: Sirupooluvapatti Common Effluent Treatment Plant Private Limited
Chahat Varma
New Delhi, September 26, 2023: The Tamil Nadu bench of the Authority for Advance Rulings has ruled that the treated effluent water, sold by M/s Sirupooluvapatti Common Effluent Treatment Plant Private Limited (applicant), was exempt from GST.
In the present case, the applicant had submitted that they were a common effluent treatment plant engaged in rendering hazardous waste treatment and disposal services. They planned to buy the effluents from dyeing units and have the effluents delivered from the dyeing units to the applicant through pipelines. The effluent would then be processed at the plant, and the resultant treated water was intended to be sold to the dyeing units. The applicant sought an advance ruling on the appropriate classification of the treated water that would be sold by the applicant, after various treatment processes had been carried out on the purchased effluent water, and they also inquired about the applicable GST rate on the said treated water that would be sold by the applicant.
The two-member bench of D Jayapriya (CGST) and N. Usha (SGST) observed that, upon reviewing the processes carried out by the applicant, the effluent water had undergone micro-filtration and sand filtration processes to eliminate suspended impurities. Subsequently, a series of RO units had been employed to remove minerals. Despite the RO treatment, the TDS level of the treated water remained high. In the case of the applicant, the recovered water still contained chlorides, sulphates, bicarbonates, and other substances. According to the test report, the TDS level of the treated water was measured at 616 mg/l, clearly indicating that the treated water did not meet the standard norms for demineralized water. Therefore, it was evident that the treated water could not be classified as demineralized water.
Therefore, the bench affirmed that the water recovered from the effluent treatment process was essentially ordinary water, suitable for reuse by dyeing and bleaching units as a solvent and washing or rinsing medium. Consequently, it was deemed to be appropriately classified under Sl. No. 99 of Notification No. 02/2017, CT (Rate), dated 28.06.2017, falling under the heading 2201, rather than Sl. No. 24 of Notification No. 01/2017-Central Tax (Rate), also dated 28.06.2017, but under the same heading 2201.
Furthermore, the bench noted that in accordance with Circular No. 179/11/2022 dated 03.08.2022, issued by the Ministry of Finance, it had been explicitly clarified that treated sewage water falls under the Nil rate of tax for GST applicability.
The bench also took note of the fact that the Tamil Nadu Pollution Control Board had mandated Zero Liquid Discharge for all highly polluting industries, including Textile Dyeing and Bleaching industries, with the aim of preventing pollution of river water and groundwater. This indicated that the common effluent treatment plant had been established to comply with legislative and environmental regulations, with the primary objective of conserving water through recovery and reuse, rather than manufacturing water or chemicals. Therefore, it was concluded that the effluent treated water qualified for exemption as per Notification No. 2/2017-Central Tax Rate, as amended by Notification No. 7/2022-Central Tax (Rate) dated July 13, 2022.
Read Order: DDA Tyres and Services v. Deputy Commissioner of GST & Ors.
Chahat Varma
New Delhi, September 26, 2023: The Madras High Court has closed a writ petition filed by DDA Tyres (petitioner), allowing the petitioner to approach the relevant authorities in accordance with the provisions of the notification giving amnesty to taxpayers whose registration has been cancelled under the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act).
In the said case, the petitioner had challenged the impugned order dated 21.11.2022, passed in an Appeal. This order had refused to grant an extension for the delay of 132 days in filing an appeal against the order dated 06.05.2022, which had cancelled the petitioner's GST Registration.
The single-judge bench of Justice C. Saravanan referred to the Notification No. II(2)/CTR/351(a-2)/2023, giving amnesty to taxpayers whose registration under the TNGST Act has been cancelled under clause (b) or clause (c) of sub-section (2) of Section 29 of the TNGST Act on or before 31st December 2022. These taxpayers can apply for revocation of cancellation of their registration up to 30th June 2023.
In light of the notification mentioned above, the bench decided to close the petition and provided the petitioner with the liberty to approach the relevant authorities. Additionally, the bench specified that the petitioner would be required to pay the necessary charges, which include late filing fees and any other amounts as specified in the notification.
Finally, the bench clarified that if the petitioner proceeds to file the application as permitted under the notification, the restoration of the petitioner's GST registration will be carried out in accordance with the terms of the said notification.
Read Order: Rainbow Motors v. The Assistant Commissioner (ST)
Chahat Varma
New Delhi, September 26, 2023: In a recent judgment, the Madras High Court has ruled in favour of Rainbow Motors (petitioner), by quashing a GST assessment order and remitting the matter back to the Assistant Commissioner (ST) for a fresh consideration. The Court found that the order had been passed arbitrarily without due consideration of the petitioner’s reply.
Briefly stated, the petitioner, had challenged an assessment order dated 20.06.2023, which levied interest and penalty on the ground of excess credit claim of Input Tax Credit (ITC). The petitioner challenged the order on the ground that the Assistant Commissioner (ST) had not considered its reply, while passing the elaborate order.
The single-judge bench of Justice C. Saravanan agreed with the petitioner and found that the order was passed in an arbitrary manner. It noted that the Assistant Commissioner (ST) had simply reproduced the petitioner's reply without any discussion.
Accordingly, the bench remitted the matter back to the Assistant Commissioner (ST), to pass a fresh order on merits and in accordance with law.
Read Order: Kenechukwu Joseph V. The State
Chahat Varma
New Delhi, September 26, 2023: The Delhi High Court has rejected the bail plea of a Nigerian national who was arrested in a case registered under Section 21(c) of the Narcotic Drugs and Psychotropic Substances Act (NDPS Act) and Section 14 of the Foreigners Act.
In brief, the case involved the receipt of secret information regarding the transportation of narcotics substances. A specialized team was formed, and surveillance was conducted near Hotel Radisson Blu in Paschim Vihar, Delhi. A person, identified as Kenechukwu Joseph from Nigeria (petitioner), was apprehended. A search led to the discovery of a polybag containing narcotics substances/contraband. As a result, the present case was registered, and the petitioner was arrested.
The single-judge bench of Justice Dinesh Kumar Sharma observed that a careful examination of Section 37 of the NDPS Act reveals that, before granting bail to the accused, the court must establish that there were reasonable grounds to believe the accused was not guilty of the alleged offense. Additionally, the court must be satisfied that the accused is unlikely to commit any further offenses upon release from custody.
The bench cited the case of State of Punjab v. Balbir Singh [LQ/SC/1994/291], where the Supreme Court addressed the issue of defects in sampling. The court clarified that Sections 52 and 57 of the Act come into play after the arrest and seizure have occurred. It was emphasized that if there is any violation of these provisions, the court must assess the impact of such violations. Regarding whether the provisions of the Act following an arrest or search are to be considered mandatory or directory, the court noted that provisions creating a public duty are generally treated as directory.
The bench also referred to Quentin Decon v. Customs [LQ/DelHC/2023/3061], where a Co-ordinate bench had emphasized that Section 52 of the NDPS Act is of a directory nature. The court had further ruled that non-compliance with this provision alone cannot invalidate the actions of the investigating officers.
Thus, the bench concluded that the issues raised by the petitioner's counsel regarding the defect in sample withdrawal, contradictions in sample weight, FSL reports, and sealing should be addressed during the trial proceedings before the Special Judge.
Based on the above considerations, the court determined that the petitioner was not eligible for bail. Consequently, the present bail application was rejected.
Read Order: Rajesh & Anr v. The State of Madhya Pradesh
Chahat Varma
New Delhi, September 25, 2023: In a significant decision, the Supreme Court has acquitted three individuals who had been convicted for murder, with two of them facing the death penalty. The Top Court found that the prosecution's case was riddled with discrepancies and that the police had conducted a shoddy investigation.
In this case, a 15-year-old boy named Ajit Pal, was brutally killed in the last week of July 2013. The accused in the case included a neighbour named Om Prakash Yadav, along with his brother Raja Yadav, and son Rajesh, also known as Rakesh Yadav. They were tried for the murder of Ajit Pal and related offenses. On 29.12.2016, the Additional Sessions Judge found all three of them guilty of various charges. Dissatisfied with the verdict, all three convicts appealed to the Madhya Pradesh High Court. However, a Division Bench of the Madhya Pradesh High Court upheld their convictions and the sentences, including the death penalty imposed on Raja Yadav and Rajesh Yadav.
A three-judge bench of Justice B.R. Gavai, Justice J.B. Pardiwala and Justice Sanjay Kumar identified significant discrepancies in the foundational aspects of the case.
The bench pointed out that there was a lack of clarity regarding the time when Ajit Pal went missing. The 'missing person' report, marked as Ex. P1, mentioned that Ajit Pal left home at 9 o'clock and went somewhere, and despite a search, he could not be located. Importantly, the report did not specify whether this incident occurred at 9 am or 9 pm. Furthermore, the bench highlighted that the prosecution's case included various inconsistent figures for the ransom amount. Given that the alleged motive for the offense was to collect ransom, it raised doubts about why the kidnappers would be so unclear about their demand.
The bench further observed that it was unclear why sniffer/tracking dogs would be deployed after the police had already discovered the dead body, the murder weapon, and other relevant evidence. The bench found it puzzling that the Investigating Officer (PW-16) did not make any mention of the use of sniffer/tracking dogs during the course of the investigation. It was held that this omission, regardless of the reason behind it, casted a negative light on the prosecution's case.
Additionally, the bench pointed out that even though the call data statement was enough to establish a connection between Om Prakash Yadav and the ransom calls, the police chose to label the accused as 'Unknown' in the FIR. Moreover, if Ex. P31's statement indeed implicated Om Prakash Yadav, as asserted by the Investigating Officer (PW-16), there was no clear explanation provided as to why the police initially arrested Rajesh Yadav.
The bench emphasized that under Section 27 of the Evidence Act, it was crucial that the individual in question must be ‘accused of an offence’ and in the ‘custody of a police officer’. Only in such a situation can information leading to the discovery of a fact be admissible, and so much of that information, whether it amounts to a confession or not, which distinctly relates to the fact discovered, may be used as evidence against the accused. Therefore, both elements, being in ‘the custody of a police officer’ and being ‘accused of an offence’, were essential prerequisites for making a confession to the police admissible to a limited extent under Section 27 of the Evidence Act.
The bench determined that in the said case, Rajesh Yadav couldn't be considered to be in 'police custody' until he was arrested at 18:30 hours on 29.03.2013, as he was not named as an 'accused' in the FIR and was not 'accused of any offence' until his arrest. Consequently, any confession made by him before his arrest and prior to being 'accused of any offence' would be governed by Section 26 of the Evidence Act, rendering it inadmissible. Therefore, the purported discovery of the dead body, the murder weapon, and other material objects, even if they were made at Rajesh Yadav's behest, cannot be proven against him because he was not 'accused of any offence' and was not in 'police custody' at the time of the alleged confession. The same would apply to Raja Yadav and Om Prakash Yadav, as they were also not named as 'accused' in the FIR and were not 'accused of any offence' until they were arrested and taken into 'police custody,' well after the recording of their confessions and the alleged seizures based on those confessions.
Before concluding the case, the bench expressed profound concern over the disappointing standards of police investigation. The bench criticized the way the police conducted their investigation, highlighting their indifference to essential investigative norms, their failure to follow important leads, and their tendency to ignore evidence that didn't fit their preconceived narrative.
“It is high time, perhaps, that a consistent and dependable code of investigation is devised with a mandatory and detailed procedure for the police to implement and abide by during the course of their investigation…..,” said the court.
In its concluding remarks, the bench expressed perplexity at the fact that despite the numerous weaknesses and loopholes in the prosecution's case, both the Trial Court and the High Court not only accepted it without question but also imposed and upheld the death penalty for Rajesh Yadav and Raja Yadav. The bench noted that no valid and convincing reasons were provided to justify why this case should be considered as the ‘rarest of rare cases’, necessitating such a severe punishment.
Based on the above analysis, the court allowed the appeals and overturned the convictions and sentences of all three appellants on all charges.
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.
Environment and Sustainable Development – A Balanced Approach - Nayan Chand Bihani
The debate between protection of the environment and sustainable development is an age old one and is growing in proportion with every passing day all over the world, in general and specifically with respect to developing countries like India, in particular.
The Stockholm Declaration on the Human Enviornment,1972 categorically stated that man is both the creator and the moulder of his environment, which gives him physical sustenance and affords him the opportunity of intellectual, moral, social and spiritual growth. In the long run and tortuous evolution of the human race on this planet a stage has been reached when through the rapid acceleration of science and technology man has acquired the power to transform his environment in countless ways and on an unprecedented scale. Both aspect of man’s environment, the natural and the man-made, are essential to his wellbeing and to the enjoyment of basic human rights-even the right to life itself. It also states that the protection and improvement of the human environment is a major issue which affects the wellbeing of peoples and economic development throughout the world, it is the urgent desire of the people of the whole world and the duty of all the Governments. The Declaration, in Principle 2, states that the natural resources of the earth, including the air, water, land, flora and fauna and especially representative samples of natural eco-systems, must be safeguarded for the benefit of present and future generations through careful planning or management, as appropriate. It further, in Principle 8, states that economic and social development is essential for ensuing a favourable living and working environment for man and for creating conditions on earth that are necessary for the improvement of the quality of life.
A milestone in this field is the Rio Declaration on Environment and Development, 1992. It, interalia, states that human beings are at the centre of concern for sustainable development and that they are entitled to a healthy and productive life in harmony with nature. It also states that the right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations. It states that in order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it and that to achieve sustainable development and a higher quality of life for their people, States should reduce and eliminate unsustainable patterns of production and consumption and promote appropriate demographic policies. It contemplates that the States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and developmental context to which they apply. The Declaration states that in order to protect the environment, the precautionary approach shall be widely applied by the states according to their capabilities and that environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority.
Initially, the trend was to use ‘Polluter Pays’ principle and punish the offending unit. Subsequently, vide judicial decisions, the principle of sustainable development was widely applied so as to balance the two principles.
The Polluter Pays principle talks about the liability of the polluter. With the increase in the industrial development what subsequently also increased is the waste emitted out of these industries and as a result of these wastes not only were the immediate surroundings adversely affected but also the environment at large. There is no specific definition of the Polluter Pays principle, rather it is a practice emphasising on the fact that one who pollutes the environment should be held accountable and responsible for the same with consequential steps to be taken. The principle not just focuses on punishing the polluter but its main criterion is to ensure that the polluted environment returns back to its original state. The reason behind it is to promote ‘Sustainable Development’. Thus it can be summed up that Polluter Pays principle is an essential element of sustainable development. Therefore, whosoever causes pollution to the environment will have to bear the cost of its management. The principle imposes a duty on every person to protect the natural environment from pollution or else he will be responsible for the cost of the damage caused to the environment. The main reason behind imposing a cost is two folds. Firstly, to refrain any person from polluting the environment and secondly, if in the case there is pollution then it is the polluter’s duty to undo the damage. Hence, both of the above ensures that there should be sustainable development. It is pertinent to mention that the Polluter Pays principle is not a new concept. It was first referred to in 1972 in a Council Recommendation on Guiding Principles Concerning the International Economic Aspects of Environmental Policies of the Organisation for Economic Co-operation and Development. The same is also enshrined in Principle 16 of the Rio Declaration, which states that ‘the polluter, in principle, bear the cost of pollution.’ The need of the hour is a demonstrable willingness to adhere to the essence of the principle in order to ensure that there is development, but not at the cost of causing environmental degradation.
The Hon’ble Supreme Court of India in the case of Indian Council for Enviro-legal Action vs Union of India reported in LQ/SC/1996/358, interalia, putthe absolute liability upon the polluter for the harm caused to the environment.
The Hon’ble Supreme Court of India in the case of Vellore Citizens Welfare Forum vs Union of India, reported in LQ/SC/1996/1368, interalia, accepted the Polluter Pays Principle as a part of the Article 21 of the Constitution of India and also emphasised Article 48A and Article 51A(g) of the Constitution of India.
The Hon’ble Supreme Court of India in the case of Amarnath Shrine reported in LQ/SC/2012/1121, has categorically stated the right to live with dignity, safety and in a clean environment.Article 21 of the Constitution of India, guaranteeing the right to life is ever widening and needs to maintain proper balance between socio-economic security and protection of the environment.
The Hon’ble Apex Court in the case of Bombay Dyeing and Manufacturing Co Ltd- vs – Bombay Environmental Action Group reported in LQ/SC/2006/206, interalia, states that the consideration of economic aspects by Courts cannot be one and it depends on the factors of each case. However, strict views ought to be taken in cases of town planning and user of urban land so as to balance the conflicting demands of economic development and a decent urban environment. Ecology is important but other factors are no less important and public interest will be a relevant factor.
The Hon’ble Supreme Court in the case of Dahanu Taluka Environment Protection Group –vs- Bombay Suburban Electricity Supply Company Ltd reported in LQ/SC/1991/157, has held that it is primary for the Government to consider importance of public projects for the betterment of the conditions of living of people on one hand and necessity for preservation of social and ecological balance, avoidance of deforestation and maintenance of purity of atmosphere and water from pollution and the role of the Courts is restricted to examine the whether the Government has taken into account all the relevant aspects and has not ignored any material condition.
The Hon’ble Supreme Court of India in the case of Narmada BachaoAndolan vs Union of India reported in LQ/SC/2000/1509, interalia, reiterated the Polluter Pay Principle.
A milestone case is that of M C Mehta vs Union of India reported in LQ/SC/2004/397, wherein the Hon’ble Supreme Court explained the Precautionary principle and the principle of Sustainable Development. It was, interalia, stated that the development needs have to be met but a balance has to be struck between such needs and the environment. The Hon’ble Supreme Court also reiterated similar views in a series of cases, some of which are stated hereinbelow;
LQ/SC/2007/1421
- M C Mehta vs Union of IndiaLQ/SC/2009/1231
- Tirpur Dyeing Factory Owners Association vs Noyyal River Ayacutdars Protection Association &Ors.LQ/SC/2009/1891
An interesting question came up before the Hon’ble Supreme Court with regard to the setting up of nuclear power plants with regard to the possibility of considerable economic development weighed against risk of feared radiological hazard. The Hon’ble Apex Court in the case of G.Sundarrajan –vs- Union of India reported in LQ/SC/2013/536, interalia, held that the Courts will be justified to look into the aspect as to the opinions of experts and the adequacy of safety measures and will be justified to look into the safety standards being followed by the Nuclear Power Plant.
The Hon’ble Supreme Court, in the case of Lal Bahadur vs State of UP reported in LQ/SC/2017/1384, interalia, emphasised the importance of striking a balance between the two principles.
An important development is the advent of the National Green Tribunal which has the jurisdiction over all civil cases where a substantial question relating to environment (including enforcement of any legal right relating to environment) is involved and relates to the Acts specified in Schedule I, namely the Water (Prevention and Control of Pollution) Act, 1974, the Water(Prevention and Control of Pollution) Cess Act, 1977, the Forest Conservation Act, 1980, the Air (Prevention and Control of Pollution) Act, 1981, the Environment (Protection) Act, 1986, the Public Liability Insurance Act, 1991 and the Biological Diversity Act, 2002. The National Green Tribunal, since its inception, has been looking into the aspects of environmental pollution and the mitigation thereof.
It can thus be said that both the environment and development are essential in the modern world for the betterment and living standards of the people. However, rampant and unplanned development at the cost of the environment is not to be entertained and the Courts will keep a close watch into the aspect of sustainable development, interalia, based on the criteria and guidelines, as specified.
Nayan Chand Bihani is a practising advocate at Calcutta High Court. Mr. Bihani pursued his LL.B from the Calcutta University College of Law, Hazra Campus and was enrolled as an Advocate in December,1998. Mr. Bihani deals mainly with Writ petitions, specially in Environmental laws, Election laws, Educational laws, Municipal laws, Service laws and Public Interest Litigations. He also represents several authorities like the West Bengal State Election Commission, the West Bengal Pollution Control Board, the State of West Bengal, several Educational Institutions and Universities and several Municipalities and Municipal Corporations and the Odisha Pollution Control Board. He can be contacted at nayanbihani@gmail.com.
Exploring The Right To Be Forgotten & Its Relevance In India’s Digital Landscape
By Shivender Kumar Sharma
By Shivender Kumar Sharma
The "right to be forgotten" has emerged as a crucial legal right in the digital age. It refers to an individual's right to request the removal of their personal information from the internet. This right is based on the principle that individuals should have control over their personal data and the right to be able to move on from past mistakes or embarrassing incidents that are no longer relevant to their current life.
The right to be forgotten is particularly important in a world where social media, online search engines, and other digital platforms, hold vast amounts of personal data. In the absence of this right, individuals would have limited control over their personal information, leaving them vulnerable to identity theft, cyberstalking, and other forms of online harassment.
The European Union (EU) was one of the first governing bodies to recognise the importance of the right to be forgotten. In 2014, the EU's Court of Justice ruled that individuals have the right to request the removal of personal data from search engines if the information is inaccurate, irrelevant, or no longer necessary.
The EU's decision sparked a global debate about the right to be forgotten and its implications for freedom of expression and access to information. Some argued that the right to be forgotten could be used to censor legitimate journalism and limit the public's right to know about important issues.
However, the right to be forgotten is not an absolute right. It must be balanced against other fundamental rights, such as freedom of expression and access to information. For example, if information is of public interest, such as a public figure's criminal record, it may not be possible to remove it from search engines.
The right to be forgotten is also not a panacea for all digital privacy concerns. Individuals must still take steps to protect their personal data online, such as using strong passwords, avoiding public Wi-Fi, and being cautious about sharing personal information on social media.
The right to be forgotten is a legal concept that allows individuals to request the removal of their personal information from online platforms and search engines. This right is based on the idea that individuals should have control over their personal data and should be able to determine how it is used and shared.
The right to be forgotten is not an absolute right and must be balanced against other rights such as freedom of expression, public interest, and the right to access information. However, in certain circumstances, the right to be forgotten may be considered an essential right.
For example, if an individual’s personal information has been unlawfully obtained, used for fraudulent purposes, or is causing them harm or distress, the right to be forgotten may be essential to protect their privacy and personal safety. In these cases, the right to be forgotten can be a powerful tool for individuals to regain control over their personal data and protect themselves from harm.
Additionally, the right to be forgotten can be essential for individuals who have been the victim of cyberbullying, revenge porn, or other forms of online harassment. In these cases, the right to be forgotten can help individuals remove harmful and embarrassing information from the internet and prevent further harm to their reputation and mental wellbeing.
The right to be forgotten can also be essential for individuals who have made mistakes in the past and wish to move on with their lives. For example, a person who has a criminal record may find it difficult to obtain employment or housing due to their past mistakes. The right to be forgotten can allow individuals to have their past mistakes removed from the internet and start fresh without the burden of their past mistakes following them.
Another challenge is enforcing the right to be forgotten. Online platforms and search engines may be based in different countries, making it difficult to enforce the right to be forgotten globally. Additionally, online platforms and search engines may not have the resources to handle the large volume of requests they receive for the removal of personal information.
The right to be forgotten is an essential right in today’s digital age. It allows individuals to protect their privacy, personal safety, reputation, and mental wellbeing. While the right to be forgotten must be balanced against other rights, such as freedom of expression and the right to access information, in certain circumstances, it can be a powerful tool for individuals to regain control over their personal data and protect themselves from harm.
The right to be forgotten is a relatively new legal concept, and its status in India is currently unclear. India does not have a specific law that recognises the right to be forgotten, nor has any case law been established on the issue.
However, there have been several instances in India where individuals have sought the removal of their personal information from online platforms and search engines. In 2017, the Delhi High Court ordered Google and Facebook to remove content related to an individual's alleged extramarital affairs. The court held that the right to privacy was a fundamental right under the Indian Constitution, and that individuals have the right to control their personal information.
In 2019, the Madras High Court ordered the removal of a video that was allegedly defamatory towards a politician. The court held that individuals have the right to be forgotten, and that the removal of personal information from online platforms was necessary to protect an individual's privacy and reputation.
However, it is important to note that these cases do not establish a legal precedent for the right to be forgotten in India. The Indian government has not yet recognised the right to be forgotten in any law or policy.
In addition, India's approach to privacy and data protection is currently evolving. In 2017, the Indian Supreme Court recognised the right to privacy as a fundamental right under the Constitution. In 2018, the Justice BN Srikrishna Committee on Data Protection submitted its report to the government, which included recommendations on the right to be forgotten. The committee recommended that individuals should have the right to request the removal of their personal data from online platforms and search engines under certain circumstances, such as if the information is inaccurate or outdated. The Bill seeks to regulate the collection, storage, and processing of personal data. The Bill includes provisions related to the right to be forgotten, but it has not yet been enacted into law.
In conclusion, the right to be forgotten is an important right in today's digital age, and its recognition in India is still evolving. While there is no specific law governing the right to be forgotten in India, the courts have recognized it in some cases. It is important to strike a balance between the right to be forgotten and other fundamental rights such as freedom of speech and expression. As India continues to develop its laws and regulations on data protection and privacy, it will be interesting to see how the right to be forgotten is further recognized and protected.
Shivender Kumar Sharma is Managing Partner, SKS Law Chambers.
A Case For Mediation In Indian Insolvency Resolution Regime
By Ameya Vikram Mishra & Balram
Linguistic philosopher Buckminster Fuller famously observed that “synergy” is the only word in our language that means the behaviour of whole systems unpredicted by the separately observed behaviours of any of the system’s parts or sub-assembly of the system’s part. Insolvency resolution through mediation is an obvious context for giving meaning to this definition of “synergy” as it furthers commercial sense as opposed to expensive litigation, often followed by liquidation.
Mediation offers several advantages in the process of insolvency resolution. It is a structured process where the mediator is responsible for engaging with various stakeholders and sustaining discussions between them. It allows the stakeholders to share their specific concerns and expectations from the resolution plan. This, in turn, allows them to share their capacity and constraints to compromise in a voluntary and risk-free process.
Why does India need to mediate insolvency disputes?
The synergy of mediation assists the parties in shifting from a claim-based resolution to an interest-based resolution that accommodates the needs of a varied group of stakeholders. Mediation cuts through the formal categorization of classes of creditors. This identifies particular needs of vulnerable categories of creditors who may not be in a position to wait or suffer an impairment, such as small businesses for whom the debtor is their only customer.
As courts are not involved in a mediation process, it offers greater flexibility not only procedurally but also concerning substantive terms, combining informal and formal restructuring options [1]. This often leads to viable commercial arrangements between stakeholders, which increases the probability of value maximisation of the corporate debtor.
Similarly, mediation permits out-of-the-box remedies which facilitates a resolution plan which is more likely to be beneficial for all stakeholders than a conventional resolution/settlement plan comprising asset sales and business interest reconsolidation. Accordingly, a resolution plan reached through mediation (as opposed to an adversarial process) is often more likely to be enforced and complied with by the stakeholders.
As an illustration, under the Insolvency & Bankruptcy Code, 2016 (“IBC”), operational creditors do not form part of the committee of creditors and thus do not vote on resolution plans for the revival of the corporate debtor. However, they often comprise relevant groups such as suppliers and employees. Bringing their issues to mediation will allow them to be heard. The method, emphasizing compromise and win-win possibilities, can aid in relationship preservation instead of litigation. Even if mediation fails to result in a resolution, it can nevertheless promote communication and dialogue between disputing parties.
Mediation is already being used to settle post-resolution issues such as the distribution of a trust created for settlement of creditors in class action claims (such as allotment of property in a development project) and transnational claims—where courts in multiple jurisdictions are involved for settlement of claim and recovery of assets arising in liquidation for creditors located in their respective countries.
What can India borrow from global practices?
India is one of many jurisdictions to confront this issue. The case for mediation in insolvency resolution is apparent from its adoption in various jurisdictions such as the United States, Singapore, Spain, the United Kingdom, and the European Union. Regulations for insolvency resolution in these jurisdictions incorporate mediation at multiple stages and as part of an array of resolution tools that strengthen an effective insolvency resolution framework.
United States
Mediation in insolvency resolution has been used most extensively in the United States. Bankruptcy courts use their inherent powers under Section 105 of the Bankruptcy Code to make rules for mediation insolvency resolution. This effort was consolidated by the Alternative Dispute Resolution Act of 1998, which mandated rule-making by the federal and district courts to use ADR in "all civil actions including adversary proceedings in bankruptcy." Courts in the United States have set up court-annexed ADR programs in bankruptcy resolution, with mediator panels of experienced professionals. The court can mandate mediation under these rules. Mediation has been used for single creditor claims [2], large group claims [3], restructuring plan negotiations [4], and in resolving disputes arising from claims against the debtor [5], recovery of assets of the company [6], as well as in preference actions [7], future claims against the debtor[8], etc.
A provision similar to Section 105 of the Bankruptcy Code may also find a suitable place in India's insolvency law framework.
Singapore
Singapore endorsed mediation into the insolvency resolution process in 2017 to address the same problem. The committee constituted for this purpose had recommended that Judges encourage parties to consider mediation in insolvency disputes. To facilitate this process, existing institutional mediation centers should have a panel of mediators with experience in cross-border restructuring.
Singapore utilized the existing infrastructure at Singapore Mediation Centre (SMC) and Singapore International Mediation Centre (SIMC) to turn them into a global mediation hub. In the case of Re IM Skaugen SE[9], the Singapore High Court emphasized the importance of mediation in insolvency resolution[10]. Establishing a mediation center like the one in Singapore will transform insolvency resolution in India.
Spain
Under the Spanish Insolvency Act, 2013, an insolvency mediator can be appointed in a pre-insolvency resolution process to resolve claims between the creditor and the debtor through the negotiation of a payment plan. If the mediation does not reach a settlement in two months, or on breach of the agreed plan, the insolvency mediator can request the start of insolvency proceedings before a court. A similar mechanism has been designed for small enterprises as well.
The strict timelines for the mediation process must also be adopted in India to ensure that the sanctity of the process is not defeated.
United Kingdom
The United Kingdom has a general policy on mediation as an adjunct to resolving all litigation before courts, including insolvency resolution. The Chancery Court Guide 2016, which sets out the procedures for the Chancery Division of the High Court, including the Bankruptcy Courts, requires the courts to, where appropriate, 'encourage the parties to use alternative dispute resolution,' including mediation and early neutral evaluation (ENE) during insolvency resolution. To enable mediation[11], the courts grant a stay on the proceedings, and the consent of all the parties generally guides the lengths of the stay.
Such practices to promote mediation may also be considered to be adopted by Indian courts even in the absence of legislation.
European Union
In the EU, mediation is used in structuring pre-insolvency workout plans, which are court proceedings aiming to finalize a restructuring agreement negotiated voluntarily and privately ('workout') but did not find the support of all required creditors.
The European Commission Recommendations[12] on a New Approach to Business Failure and Insolvency also suggests that insolvency resolution should be undertaken through the use of a mediator on a case-by-case basis. The World Bank Principles for Effective Insolvency and Creditor Rights Systems[13] also urge mediation in the pre-insolvency resolution/ workout process.
In addition to the foregoing, mediation to resolve insolvency disputes is also prevalent in jurisdictions such as France[14] and Belgium[15].
What can be changed in the existing IBC regime?
Mediation may be availed at various stages in the insolvency process by including specific provisions in the IBC.
Recently, the Supreme Court of India, in Patil Automation Private Limited v. Rakheja Engineers Private Limited, held that the statutory pre-litigation mediation under Section 12A of the Commercial Courts Act of 2015 (“Act”) is mandatory. Any suit instituted violating the mandate of Section 12A must be visited with the rejection of the plaint under Order VII Rule 11 of the Civil Procedure Code, 1908. This power can even be exercised suo moto by the court.
The CIRP under IBC is initiated on a single default without demonstrating the corporate debtor’s commercial insolvency. Therefore, it is submitted that a similar mechanism as specified in Section 12A of the Act should be incorporated in the IBC where both upon notice for payment of debt and after the filing of the CIRP application, the corporate debtor and the creditor in question can work to resolve the claims and disputes, if any, through mediation. Mediation at this stage of the proceedings may help eliminate insolvency applications intended for debt recovery, and invoking the full-fledged machinery of CIRP can be avoided.
In order to strengthen the mediation framework within IBC, it is indispensable that the National Company Law Tribunal (“NCLT”) is conferred with powers to refer a matter to meditation. In exercise of this power, NCLT can direct the promoters and erstwhile management of the corporate debtor to settle through mediation by way of a scheme or plan that accommodates these claims and evaluate it through each creditor or class of creditors. Where the corporate debtor is able to address the multiple claims of creditors, mediation assists in this endeavor, thus ensuring that only genuine cases of insolvency proceed to the resolution process. Mediation at this stage helps renew communications between the debtor and the creditors, including addressing the creditors' resentment of the default and likely impairment and enabling forward-looking arrangements between them.
In circumstances where it is clear that the CIRP has been initiated on account of a lack of cooperation between parties, the NCLT must attempt to refer the parties to mediation. This may be permitted even at appellate stages of the proceedings if required. This is especially important when the corporate debtor is commercially viable and can be run as a going concern.
Further, efficiency and efficacy being the hallmarks of ADR, the mediation process mustn’t be frustrated by undue delays. Thus, provisions for strict timelines for the mediation process, akin to amendments brought (in 2015 and 2019) to the Arbitration & Conciliation Act, 1996 (“Arbitration Act”), may be incorporated. A fast-track procedure envisaged under Section 29B of the Arbitration Act can also go a long way in ensuring the success of mediation in insolvency.
Way Forward for India
India possesses the necessary legal mechanism to promote mediation in the form of Section 89 of the Code of Civil Procedure, 1908, which encourages the resolution of disputes through appropriate ADR methods, including mediation. Even the Companies Act 2013 specifies the establishment of a panel of mediators to which the NCLT may refer relevant matters.
Nevertheless, the inclusion of necessary changes within the IBC remains a crucial decisive step for the success of mediation in this area of disputes.
Besides legislative changes in the IBC, institutional capacity in terms of qualified mediators with experience in commercial disputes is equally necessary. Establishing the International Arbitration and Mediation Centre in Hyderabad is a welcome step. However, it is important that the government provides necessary administrative support to such initiatives. The market for insolvency experts has proliferated in India, and permitting mediation with the CIRP process will encourage many insolvency professionals to qualify as mediators and assume these responsibilities.
The authors are presently working as Associate(s) in the office of Justice A.K. Sikri, International Judge, Singapore International Commercial Court and former Judge of the Supreme Court of India. The views/opinions expressed in the transcript are personal and do not represent the views of our employer or any other firm.
[1] See European Law Institute—Rescue of Business in Insolvency Law (2014-17), Available at:
https://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Publications/Instrument_INSOLVENCY.pdf
[2] In re Sacred Heart Hospital of Norristown, 190 B.R. 38 (Bankr. E.D. Penn. Dec. 20, 1995).
[3] The Lehman Brothers case. See also, Nancy A Welsh, 'Integrating Alternative Dispute Resolution into Bankruptcy: As Simple (and Pure) as Motherhood and Apple Pie?', Nevada Law Journal, Vol 11:397, Spring 2011, p. 397, on the difficult decisions arising in mass claims against the debtor in bankruptcy.
[4] In re Public Service Co. of New Hampshire, 99 B.R. 177 (Bankr. D.N.H. 1989).
[5] In re P.A. Bergner, Case Nos. 91-05501 to 05516, Order Approving Implementation of An Alternative Dispute Resolution Procedure Including Mandatory Mediation (Bankr. E.D. Wisc. Feb 11, 1993).
[6] See Dennis C. O'Donnell, Transnational Alternatives: Growing Role of Alternative Dispute Resolution in Transnational Insolvency Cases. This paper provides an account of using an Examiner as a mediator in the Eron bankruptcy and Lehman bankruptcy cases. Available at: https://www.iiiglobal.org/sites/default/files/transnationalalternativesgrowingrolesofalternativedisputeresolutionintransnationalinsolvencycases.pdf.
[7] In re Collins & Aikman Corp., 376 B.R. 815, 815-16 (Bankr. E.D. Mich. 2007).
[8] In re Piper Aircraft Corp., 376 B.R. 815, 815-16 (Bankr. S.D. Fla. 1994). Here future claims anticipated against the debtor company but not raised during the bankruptcy proceedings (that resulted in a resolution plan) were structured in trust. 100% of the claims that arose after the bankruptcy proceeding was settled through mediation.
[9] Re IM Skaugen SE, [2019] 3 SLR 979.
[10] The High Court held that, at para 98
"98. ….[T]he mediator can assist to iron out many of the wrinkles and creases that frequently erupt in a restructuring and which perhaps are not best resolved in the adversarial cauldron of the court. It is important that this be explored with vigour, as it seems to be as it seems to me to be self-evident that bridging differences and the trust divide is fundamental to a successful restructuring outcome…"
[11] Including settlement conferences by the Judges, who will thereafter cease to hear the matter unless all parties agree.
[12] European Commission Recommendations[12] on a New Approach to Business Failure and Insolvency, 12 March 2014, Vienna. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32014H0135, last accessed on 13 October 2022.
[13] Available at:https://www.worldbank.org/en/topic/financialsector/brief/the-world-bank-principles-for-effective-insolvency-and-creditor-rights, last accessed on 13 October 2022.
[14] The French Commercial Code has a three-stage process for insolvency resolution using mediation. Under 'Mandat ad hoc', a mediator is appointed by the court at the request of the corporate debtor.
[15] Under the Belgium Act on the Continuity of Companies, a company intermediary assists in negotiating between the company and creditors to restructure debts.
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