A person filed an RTI application seeking information regarding a global tender for a grid-connected solar park. The concerned Public Information Officer sat on the RTI application for months. Later, the Public Information Officer rejected the application on the ground that the applicant and one of the companies that participated in the above-mentioned tender were represented by the same lawyer. Therefore, the said applicant filed an appeal. 

Transparency and accountability are essential tenets of a democracy. Access to information concerning the functioning of public bodies is a step that promotes these principles. The Right to Information Act, 2005 (hereinafter the “the RTI Act”) was designed for “citizens to secure access to information under the control of public authorities”. Thus the letter and spirit of the RTI Act promote transparency and accountability and consequently check corruption and malpractices in governance. 

The RTI Act is a comprehensive legal tool as it provides the right to access information held with public authorities and lists out exceptions under which information can be withheld. The Act, also provides a mechanism to appeal in case such information is denied. Any person may make a request in writing or in electronic form to seek information held by, or under control of a public authority. An important pillar of the RTI Act is that one need not spell out the reason for seeking information. Once such a request is received, the Public Information Officer concerned is mandated to either furnish the information sought or reject the request within 30 days (see Section 7 of the RTI Act, 2005). 

The Supreme Court of India, in the case of Union of India v. Namit Sharma – 2013 (10) SCC 309  held that “while deciding whether a citizen should or should not get particular information which is held by or under the control of any public authority, the Information Commission does not decide a dispute between two or more parties concerning their legal rights other than their right to get information in possession of a public authority. This function obviously is not a judicial function, but an administrative function conferred by the Act on the Information Commission.” Thus, the role of the Public Information Officer is just to see whether the information sought may be provided or denied within the four corners of the RTI Act. He need not bother about the merit of the information sought or settling of the dispute between the two or more parties.

The RTI Act provides for denial of information sought based on individual privacy and protection of national secrets etc., with a view that transparency should be balanced with individual privacy, public and national interests. Hence, the information sought can be refused only if it falls within the ambit of exemptions under section 8 & 9 of the RTI Act. In Bhagat Singh v Chief Information Commissioner & Ors. –Delhi High Court WP(C) No.3114/2007 , it has been held that “access to information under Section 3 of the Act, is the rule and exemptions under Section 8, the exception. Section 8 being a restriction on this fundamental right, must, therefore, be strictly construed.” Since the Supreme Court has observed that exemptions should be rigidly interpreted, therefore, the information sought cannot be denied on grounds other than those specified under the Act. Said differently, grounds of denial of the information can not be interpreted benevolently and liberally.

But here a question arises – what if the information sought has been rejected without any basis? An appellate mechanism for a first and second appeal has also been incorporated under Section 19 of the RTI Act. Rightly, in the appeal proceedings, the burden to prove that the information was justifiably denied rests on the Public Information Officer concerned. Such officers may be able to discharge this burden only if the reason for rejecting the application is covered by the exemptions under section 8 & 9 of the RTI Act. An illustration of the exemptions includes; information expressly forbidden by order of a court or tribunal, information relating to trade secrets, information received in confidence from a foreign government, information, the disclosure of which would lead to a copyright infringement etc. 

In the example cited above, the ground for rejecting the RTI application was frivolous and not covered by the exemptions listed under section 8 & 9 of the RTI Act. Further, the burden to prove that such rejection is covered by the exemptions under the RTI Act rests on the public information officer. If the public information officer cannot discharge the burden of proof, he would be mandated to accept the RTI application and provide the information sought. Malafide intention in rejecting information, destruction of information and even obstruction by public information officers would expose them to be penalized (see section 20 of the RTI Act,2005). 

During the hearing of the appeal, the Information Commissioner rejected the ground taken by the Public Information Officer as it was not a valid exemption under the RTI Act, 2005. The officer then raised another frivolous objection. He stated that the information sought is voluminous and would require printing thousands of pages. The applicant stated that he was willing to bear the cost of printing. Therefore, the Information Commissioner rejected the second objection of the Public Information Officer as well and directed to provide the information sought. 

In the last 15 years, the RTI Act, 2005 has not stayed as a law only. Instead, it has become a movement. Though with certain safeguards, it has empowered citizens to ask questions and seek information from public bodies. Not only does this check the opaque functioning of public bodies, but also makes them more transparent, fair, accessible and accountable to the public. Obviously, this has enhanced the ease of living of the common man.

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Ansh is a practicing lawyer at the High Court of Delhi and can be contacted at anshsinghluthra@gmail.com

Responsible Freedom: Understanding the Concept and its Origin

Rights are those entitlements which are conferred upon an individual to provide her with opportunities to grow to her best potential. There are certain inalienable rights (1) which are available with a person by virtue of her being a human and which cannot be taken away by a man-made entity.  ‘Freedom of speech and expression’ as enshrined in the Universal Declaration of Fundamental Rights (UDHR) (2), 1948 and u/a 19 Constitution of India, 1950 is one such right. Liberty to express becomes all the more important and relevant for two reasons; (a) freedom of expression gives an individual an opportunity to bring forth a manifestation of her personhood or personality and thus, furthers an individual’s understanding of herself and her surroundings; (b) liberty comes with a parallel duty and responsibility of not exercising it to the deterrence of another being and disadvantage of society. 

Our founding fathers were also confronted with various questions on how a balance between individual liberty and reasonable restrictions could be maintained. An elaborate discourse took place in our Constituent Assembly on the nature of ‘freedom’ and scope of ‘restrictions’ (3) imposed in draft art. 13 (4) . The Assembly came to the conclusion that these ‘fundamental rights’ are not absolute and thus ‘reasonable restrictions’ can be imposed only on the grounds specified in clauses (2) to (6) of art 19 of Indian Constitution. 

The Changing Dynamics of Freedom and Media (Including Social Media and Cinema)

There is no explicit provision governing press freedom in India. However, it is protected by the provisions of u/a 19 (1) (a) of Indian Constitution. Shri Damodar Swaroop Seth, a member of the Constituent Assembly, was particularly apprehensive of power given to the State to restrict freedom of Speech and Expression. He was of the opinion that: (a) there should be a separate provision for Press Freedom; and (b) imposing restriction by state would virtually take us to the limited press freedom we had during British regime (5). Although media is considered the fourth and important pillar of democracy, yet it is plagued by problems of fake news, paid news, political ownership of news organisations, propagation of political-religious agendas, popularisation of majoritarian opinions, promoting hatred, to name a few. A mere perusal of prime time shows run by major news channels is sufficient to trace their political and ideological inclinations.

The scope of reasonable freedom has time and again come under scrutiny but the problem is all the more aggravated with the advent and amoebic expansion of social media. It has pressed worrisome challenges like; 

(a) An individual’s access to freedom has expanded manifold. On the one hand, it has empowered an investigative journalist to expose the truth with a click, on the other hand it is a weapon in the hands of those who are hiding behind a virtual identity and propagating violence, inciting religious and communal hatred, promoting disharmony and hate speech. Apparently, everyone has turned into self- proclaimed guardians of principles or schools of thoughts they pay their allegiance to;

(b) The second challenge is ‘blurring boundaries of hurting sentiments.’Dissent is confronted with hurting religious, racial, ethnic or linguistic sentiments. 

Social media has implications for the press as well and as a consequence, a tweet can drag you into bunch of law suits, while a fake news (online) can lead to communal riots, mob lynching, marginalization and hatred. 

Hate Speech and Propaganda: Anti-Thesis to Responsible Freedom

Curbing hate speech and propaganda leading to incitement of violence and disharmony has been a challenge for the legal fraternity and police administration. Black’s Law Dictionary identifies hate speech as the “speech that carries no meaning other than expression of hatred for some group, such as a particular race, especially in circumstances in which the communication is likely to provoke violence.” (6)

There is no concrete definition of hate speech in Indian legal regime. Judiciary has also refrained from defining speech due to fear of use of this definition to curtail fundamental freedom of expression. Recently, the Law Commission was directed by the Apex Court (7) to suggest changes/ solution to this issue. The Commission in its 267^th Report also refrained from giving structured definition of hate speech. Interestingly, 2018 was considered as the ‘year of online hate.’ (8)

Legal Remedies against Hate Speech and Locus of an Individual 

There are several statutes which provide remedy to an individual (alone and collectively as a member of any religious, linguistic, ethnic, regional group) against hate speech and propaganda. The following are the statutory provisions: 

The problem however is that these legal provisions are acquiring nature similar to that of  Strategic Law Suits against Public Participation (SLAPP) suits, in terms of their use. SLAPP Suits are often filed by large business corporations against anything published against them which is derogatory in their eyes. The purpose of these suits is not primarily to claim damages but to exhaust the criticizing entity of its resources, time and faith in due process. 

Just like SLAPP Suits, which literally are slaps on the face of freedom of speech and expression, these provisions are often slapped on anyone who either criticizes a duly elected government, its foul policies, or protest against any arbitrary action/ practice of any group or represent unpopular opinion without any deliberate act/ attempt and intention to promote hatred. 

Owing to these developments, the space for dissent is shrinking day by day. Therefore, it becomes important to have a look at the judicial stance taken by Indian Courts in some of these provisions and the tests (31) of ‘hate speech/ propagation’ as laid down by various democracies; 

1) Extremity of Speech- The offending expression should be reflecting extreme speeches capable of ‘inciting’ hatred, ill-will and disharmony. 

While looking into the constitutionality of sec. 295A of IPC (32), SC stated that not every act or attemptto insult religion or religious belief of a class of citizen are penalized rather penal provisions are attracted when these acts or attempts are made with deliberate or malicious intentions of outraging the religious feelings of that class. Also, the court put forth an important legal proposition, that is, ‘in interest of public order’ and ‘maintaining public order’ is different from each other. For example, propaganda against a marginalized community may not incite physical violence but may lead to propagation of discrimination. 

2) Incitement- An overt act with an intention to incite violence and discrimination is liable for penal sanctions. Equality and liberty go hand in hand. The reason being; in absence of equality the voices or opinion of weaker sections will not form a part of mainstream thoughts/ opinions. 

The Supreme Court drew distinction between discussion and advocacy from incitement, in the famous case of Shreya Singhal v Union of India (33). It was laid down by the court that restrictions u/a 19 (2) should be resorted to only when the offending material/ speech/ propaganda, reaches the stage of ‘incitement.’ Resort to restricting freedom has to be taken when community interest is ‘endangered.’ The anticipated danger should not be remote. Further, while judging the effect of expression of an offending material, the test of reasonableness should be judged from the mind of a prudent, firm and strong individual.(34)

3) Status of the Author or the Speech- Status of an author or orator of a speech is also a significant test. Authors who are public figures, like politicians, are subjected to greater scrutiny. The consequences that follow from their speeches are far reaching and thus need to be more responsible. The Election Commission had put in place Model Code of Conduct under Representation of People Act to make hate speeches during elections accountable. 

4). Status of Victim- The status of a victim is also a relevant consideration. For instance, referring to members of Scheduled Castes and Schedule Tribes as ‘Chamaar’ is covered under the ambit of these provisions. Therefore, the nature of the offending expression is also considered keeping in view its targeted victims. 

5). Potentiality of the Speech- Potential of the offending expression plays a significant role. For instance, SC has time and again held that films using its audio-visual expression of an idea have wider potential of moving its audience. (35) A cinematographic work should not be restricted merely to its depiction of unpopular ideas, rather the test is to examine the entire plot of the film to reach to the core principles it is seeking to reflect. One scene in isolation should not form a part of scrutiny.

In the opinion of the author, with the level of primetime TV news debates degrading to mere dramatic rhetoric fueling communal tendencies news channels should also be subjected to this scrutiny.

6) Context of Speech- An offending expression should be weighed keeping in view the context in which it is made. For instance, the recent tweet by Senior Advocate Prashant Bushan became a subject of an FIR filed u/ss. 295 A and 505 (1) (b), IPC. The senior advocate in his petition before the Supreme Court (for quashing the FIR) took the plea that the context of his tweet should be understood. He further contended that the object of the tweet was to criticize the minister (named in the tweet) for watching TV and relaxing during this pandemic in which thousands of migrant workers were suffering. 

It is pertinent here to mention that the test of ‘arbitrariness’ as provided for u/a 14, should be resorted to while testing whether any restriction imposed on a freedom is justified or not. In order to carry on this test, the primary need is to see if: (a) there is legislation in place; (b) there’s a benevolent state object which is sought to be achieved by imposing such restrictions; and (c) there’s a reasonable nexus between the means adopted by the state and the object sought to be achieved, that is, if the law made (which restricts freedom) is relevant and in compliance with the reason for imposing such restrictions.  

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Monika is a fourth year student of Law (B.A., LL.B.) at the University Institute of Legal Studies (UILS), Chandigarh. 

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(1) Propounded by Jurist and political thinkers like Thomas Hobbes and John Locke

 (2) Article 19 

 (3) The provision which was to contain restrictions was proposed to have ‘likely to cause hatred’ as on the grounds- but this proposal did not make it to the final draft 

 (4) Which is now Article 19 of Constitution of India 

 (5) Excerpts of Constituent Assembly Debate, accessible at https://www.constitutionofindia.net/constitution_assembly_debates/volume/7/1948-12-01?paragraph_number=195%2C228%2C194%2C193#7.64.228

 (6) Accessible at http://ili.ac.in/pdf/csi.pdf 

 (7) Pravasi Bhalai Sangathan v Union of India, AIR 2014 SC 1591

(8) Accessible at http://ili.ac.in/pdf/csi.pdf 

 (9) Promoting enmity between different groups on ground of religion, race, place of birth, residence, language, etc., and doing acts prejudicial to maintenance of harmony

 (10) Imputations, assertions prejudicial to national integration

 (11) Deliberate and malicious acts intended to outrage religious feelings of any class by insulting its religion or religious beliefs

 (12) Uttering words, etc., with deliberate intent to wound religious feelings

 (13) Statements conducing public mischief

(14)  Power to issue directions for interception or monitoring or decryption of any information through any computer resource 

 (15) Power to issue directions for blocking for public access of any information through any computer resource

 (16) Disqualification on conviction for certain offences

 (17) Corrupt Practices 

(18) Promoting enmity between classes in connection with election

(19)  Punishment for other offences arising out of “untouchability”

 (20) Prohibition of use of religious institutions for certain purposes- for the doing of any act which promotes or attempts to promote disharmony or feelings of enmity, hatred or ill-will between different religious, racial, language or regional groups or castes or communities

(21) No person shall transmit or re-transmit through a cable service any programme unless such programme is in conformity with the prescribed programme code

 (22) No person shall transmit or re-transmit through a cable service any advertisement unless such advertisement is in conformity with the prescribed advertisement code

 (23) Examination of films

 (24) Principles for guidance in certifying films

 (25) Penalties for contraventions

 (26) Power to declare certain publications forfeited and to issue search warrants for the same

(27) Security for keeping the peace in other cases

 (28) Power to issue order in urgent cases of nuisance of apprehended danger

 (29) Arrest to prevent the commission of cognizable offences

(30)  Police officer’ s power to require attendance of witnesses

 (31) More information on the parameters of tests discussed in this portion can be found in the 267^th report of Law Commission of India on Hate Speech 

 (32) Ramji Lal v State of UP, AIR 1957 SC 620 

 (33) (2013) 12 SCC 73

 (34) Ramesh v Union of India, AIR 1988 SC 775

(35) K A Abbas v Union of India,  1971 AIR 481

The recognition of the right to privacy as a Fundamental Right has accelerated new debates relating to different aspects of law and governance like data protection regime, Aadhar Card controversy, and admissibility of illegally obtained evidence in the area of Law of Evidence (1). Under the Indian Evidence Law regime, an illegally obtained evidence is admissible in the Court if it is ‘relevant’ to the case and the admission of such evidence has not been expressly or impliedly barred by the Constitution or any other law (2). However, with the emergence of the Fundamental Right to Privacy which prohibits unwarranted search and seizures, this position of law needs to be revamped to secure the privacy rights of the citizens.  

Rule of Admissibility of Illegally Obtained Evidence in other Common Law Jurisdictions-

United States- In the United States, illegally obtained evidence is inadmissible due to the application of the exclusionary principle and the doctrine of ‘Fruits of Poisonous Tree’. While the former rule suggests that illegally obtained evidence cannot be made admissible in a criminal trial, the latter doctrine suggests that even the evidence obtained from primary illegality in the procedures which includes both physical evidences and live testimonies are inadmissible as the evidence evolves from the poisonous tree i.e. the illegal procedure (3). Both these doctrines were formulated to support the Fourth Amendment Rights to the U.S. Constitution which warrant the right of citizens against any unwarranted search and seizures in their persons, houses, or papers (4). In the case of Boyd v. U.S. (5), the US Supreme Court held that illegal search and seizure is an unreasonable interference to the right to privacy of an individual and compelling a person to produce private papers is violative of Fourth Amendment Rights. Further, the US Supreme Court made the exclusionary rule mandatory in all state prosecutions and held that exclusionary rule also acts as a safeguard against Fifth Amendment Rights which include right against self-incrimination (6). The scope of the exclusionary rule was also expanded by US Supreme Court in the case of Katz v. U.S. (7) when it was held that eavesdropping and recording of private conversions of accused also amount to ‘unreasonable search and seizure’ and is violative of Fourth Amendment Rights.

The exclusionary principle is not an absolute rule and certain exceptions have been carved to its application for example, if the evidence is found by the private individual instead of law officer (8), if the evidence would inevitably appear through an illegal search (9), and if the officer conducted the search in good faith and subsequently the warrant was found to be invalid (10), then the exclusionary rule will not be applicable. The extent of applicability of exclusionary rule to exclude the illegally obtained evidence from all purposes in a trial was shifted in the case of Harish v. New York (11), wherein the US Supreme Court held that previously excluded evidence if satisfies the test of ‘trustworthiness’ can be used to shake the credibility of the accused in a trial. Thereby, in the United States, the exclusionary rule is made applicable to safeguard Fourth Amendment Rights but the exceptions posed to this rule acts as a balance to prevent the abuse of power and rights. 

United Kingdom- Under the Queen’s rule, the evidence is made admissible even if it is illegally obtained through the unlawful procedure (12). In the landmark case of Kuruma v. the Queens (13), it was held an illegally obtained evidence is admissible if it is relevant to the case and it is the discretion of the Court to exclude such illegally obtained evidence if it leads to unfairness to the accused which was later known to be ‘Unfair Operation Rule.’ This rule is now codified under section 78 of the Police and Criminal Evidence Act 1984 (PACE) wherein Court has the discretion to exclude evidence if it leads to unfairness to the accused (14). Here, evidence also includes improperly obtained evidence and confessions obtained in defiance of the Rule of the land. 

Canada- As a general rule of evidence, the Canadian Courts follows discretionary rule which entails that Courts exercise discretion to govern the admissibility of an illegally obtained evidence (15). Elaborating further on this rule in the case of R. v. Collins (16), the Supreme Court of Canada held that the use of any evidence that violates the rights enshrined under the Charter is a violation of fair trial and is thereby rendered inadmissible, however, the misbehaviour of officer is not a ground to exclude the illegally obtained evidence. Furthermore, Canadian Court has decreed the rule of absolute exclusion wherein previously excluded evidence cannot be admitted to impeach the credit of the accused (17), which is in exact contrast to the US Supreme Court Ruling in the Harris case.

India Jurisprudence before recognition of Right to Privacy:

The Indian Evidence Act, 1872, formulated during the British Rule contemplates that the admissibility of evidence depends on the extent of its relevancy (18) in the case. Thereby, Indian Judiciary in the case of Natwarlal Damodardas Soni (19) , and R.M. Malkani (20), held that any illegally obtained evidence is admissible in the Court of Law if it is relevant to the matter, but the value of such evidence is to be dealt with care and caution by the Courts. Further, in the landmark case of Pooran Mal v. Director of Inspection of Income Tax (21), the Indian Supreme Court held that no Constitutional or Statutory construction prescribes to exclude the illegally obtained evidence thereby the only test of admissibility of evidence is the relevancy of the evidence. This case also decreed the ‘Unfair Operation Rule’ of England wherein the Courts have the discretion to exclude the illegally obtained evidence if it leads to unfair treatment to the accused.(22)

This position of law was shifted a little when in the case of State of Punjab v. Baldev Singh (23), Supreme Court held that illegally obtained evidence is not admissible in the Court of Law if it is obtained in violation of Section 50 of the NDPS Act, as this provision confers procedural rights to the accused which are statutorily mandated thus are deemed to be followed. This standing of law to exclude the illegally obtained evidence is only confined to the provisions of the NDPS Act and does not apply to other situations.(24)

Thus, the rule of admissibility of illegally obtained evidence after these judicial pronouncements are as follows:

Indian Legal Position after recognition of Right to Privacy:

The 9 Judge Bench in the landmark Supreme Court Case of Justice K.S. Puttaswamy and Anr. v. Union of India and Ors. (26) , has recognized that the right to privacy forms an integral part of the right to life and personal liberty under Article 21 of the Constitution and citizens have the right to give consent in relation to the physical body, personal data, and property. The recognition of the right to privacy under Article 21 defies the reasoning given in the Pooran Mal (27) case that there is no Constitutional construction which prescribes the exclusion of illegally obtained evidence (28). Since citizen has the right to protect their personal data from unreasonable interference by the State through the means of right to privacy it can be presumed that there exists a reasonable expectation of privacy against ‘unreasonable search and seizure’ and any evidence obtained through illegal search should not be made admissible as it would violate the Fundamental Right to privacy of the citizens (29). However, to admit such illegal evidence procured in violation of the right to privacy of any individual there must be legislation in place authorizing the admissibility of such evidence, and such law must have rational nexus with the legitimate aim and must be proportional. (30)

In the recent Rafael Judgment (31) , the Supreme Court retaliated the Pooran Mal (32) case and held the test of admissibility of any evidence lies in its ‘relevancy’ unless it is expressly or impliedly barred by the Constitutional provision or Statutory mandate. This entire judicial regime suggests that India has not settled its position in regards to the admissibility of illegally obtained evidence and it depends on the discretion of Court to settle the position of law in absence of any legislatively enacted law to govern this matter.

Conclusion:

Indian Law regime has largely been influenced by the British jurisprudence and its effects can be seen in the applicability of various legal concepts. Like Britain, Indian Courts also admit illegally obtained evidence and the test of ‘relevancy’ is applied subject to any Constitutional or Statutory restrictions. However, with the recent recognition of the right to privacy as a fundamental right of the citizens, it is imperative to revamp this position of law and to shift towards the exclusionary rule of American jurisprudence in case of violation of privacy rights of citizens to obtain evidence. Further, it is imperative for the Legislature to enact a law to govern this controversy instead of leaving this issue to the Judiciary to give a differential interpretation following the case at hand.  

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Clarion is a neophyte venture by three passionate legal aficionados who plan to devote their lives to churning out a new age legal fraternity that goes beyond basic client services and legal predicaments.

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1. Prachi Gupta and Aqib Khan, Right to Privacy: Issues and Challenges in the Technological Era, Law Brigade (2019), http://thelawbrigade.com/wp-content/uploads/2019/05/Prachi-Aqib.pdf.

2. Pooran Mal etc. v. Director of Inspection (Investigation) of Income Tax, AIR 1974 SC 348 (¶ 25); see also Bharati Tamang v. Union of India & Ors., (2013) 15 SCC 578 (¶ 37).

3. Dushyant Kishan Kaul, Fruit of the Poisonous Tree: A Comparative Analysis, 4 Commonwealth Law Review-Journal 206 (June 4, 2018).  

4. Constitution of the United States, Fourth Amendment, Constitution Annotated Analysis, and Interpretation of the U.S. Constitution.

5. Boyd and Ors. v. United States, 116 U.S. 616 (1886) (¶ 20).

6. Mapp v. Ohio, 367 U.S. 643 (1961).

7. Katz v. U.S., 389 U.S. 347 (1967).

8. Lefkowitz v. United States Attorney, 52 F.2d (2d Cir. 1931).

9. Nix v. Williams, 467 U.S. 431 (1984).

10. United States v. Leon, 468 U.S. 897 (1984); Arizona v. Evans, 514 U.S. 1 (1995).

11. Harris v. New York, 401 U.S. 222 (1971).

12. R. v. Leathem, 8 Cox CC 498, 501 (1861) (U.K.).

13. Kuruma v. Queen, (1955) AC 197 (U.K.).

14. Siddharth Shukla, Is illegally obtained evidence admissible under the Indian Laws? A comparative analysis of illegally obtained evidence, Ipleaders Blog (Sept. 27, 2018).

15. Gysbert Niesing, The Admissibility of Unconstitutionally Obtained Evidence: Issues Concerning Impeachment, Stellenbosch University (Apr. 2005), https://core.ac.uk/download/pdf/37370861.pdf.

16. R. v. Collins, (1987) 1 S.C.R. 265 (¶ 37) (Can).

17. R. v. Calder, (1996) 1 S.C.R. 660 (Can).

18. The Indian Evidence Act, 1872, No. I, Acts of Parliament, 1872, § 5. 

19. State of Maharashtra v. Natwarlal Damodardas Soni, (1980) 4 SCC 669

20. R.M. Malkani v. State of Maharashtra, AIR 1973 SC 157.

21. Pooran Mal, etc. v. Director of Inspection (Investigation) of Income Tax, AIR 1974 SC 348.

22. Id. 

23. State of Punjab v. Baldev Singh, (1999) 6 SCC 172.

24. Id.

25. Khagesh Gautam, The Unfair Operation Principle and the Exclusionary Rule: On the Admissibility of Illegally obtained evidence in Criminal Trials in India, 27(2) Indiana Int’l & Comp. Law Review 163-164 (2017).

26. Justice K.S. Puttaswamy and Anr. v. Union of India and Ors., (2017) 10 SCC 1, ¶ 489.  

27. supra note 21.

28. supra note 14.

29. Paras Marya, A Relook at the Admissibility of Illegally or Improperly obtained evidence, 8(2) NLIU Law Review 225.

30. supra note 26.

31. Yashwant Sinha and Ors. v. Central Bureau of Investigation, (2020) 2 SCC 338. 

32. supra note 21.

The  suspension of rent of tenants due to COVID is a hot topic of discussion nowadays. Ever since the lockdown was ordered, tenants have been raising the demand for suspension of rent during this crises. However the demand to suspend rents of the tenants failed to take into account that there are many landlords whose sole source of income is the rent and any suspension would cause great hardship to the landlords. The demand for rent suspension, however, remains. 

Hon’ble Delhi High Court had the occasion of analysing the law w.r.t suspension of rent vis-a-vis COVID in the recent judgement dated 21.05.2020 passed in Ramanand & Ors. Vs Dr. Girish Soni & Anr being RC.REV. 447/2017. In the said case the tenant in a pending rent revision petition had moved an interim application seeking suspension of rent of Rs. 3,50,000/- per month due to closure of business activities during the lockdown thereby pleading frustration of contract as envisaged in section 56 of the Indian Contract Act, 1872. The Hon’ble High Court consequently analysed the concept of frustration of contract as envisaged under section 56 of the Indian Contract Act, 1872 and came to the conclusion that the same has no applicability to the case at hand as agreement of lease are executed contracts as different from executory  contracts inasmuch as an executory contract is a contract that has not yet been fully performed or fully executed. It is a contract in which both sides still have important performance outstanding and that the lease agreement of this nature are not executory contract rather they are executed contracts.  The concept of frustration of contract can only be applied to executory contracts. It was further held by the Hon’ble Court that frustration of contract makes the whole contract void. The necessary implication of the same is that the tenant must then surrender the possession of the premises.

The facts of the case at hand as mentioned in the judgment would show that the Hon’ble High Court has failed to examine an issue which actually arose in the case. 

The facts of the case was that revision petition was filed by the Appellants/Tenants challenging the order dated 18th March, 2017 passed by the ld. Senior Civil Judge-cum-Rent Controller granting a decree of eviction in respect of Shop No. 30-A, Khan Market, New Delhi (hereinafter, “tenanted premises”). The Tenants ran a shoe store called ‘Baluja’ in Khan Market where they sold various types of foot wear. The Landlord i.e., Respondent No.1 (hereinafter, “Landlord”) is a dentist. The tenanted premises were given on rent for commercial purposes through a lease deed executed on 1st February, 1975 at Rs.300/- per month. In 2008, the Respondents filed an eviction petition under Section 14(1)(e) of the Delhi Rent Control Act, 1958 (hereinafter, “DRC Act”). Initially, leave to defend was granted by the RC on 31st March, 2012. However, vide order dated 18th March, 2017, a decree for eviction was passed. 

The Tenants thereafter filed an appeal against the said order which was dismissed by the ld. Rent Control Tribunal (hereinafter, “RCT”) vide order dated 18th September, 2017 on the ground that the same is not maintainable. Hence, the revision petition before the Hon’ble High Court was filed challenging the eviction order dated 18th March, 2017. 

The said impugned order dated 18.03.2017 was stayed by the Hon’ble High Court vide order dated 25.09.2017 and the operative part of the order is as under:-

“….Subject to the petitioners, with effect from the month of October, 2017, paying to the respondents a sum of Rs.3.5 lakhs per month, month by month, in advance for each month by the 10th day of the English Calendar month, there shall be stay of the order of eviction.

If there is any default in payment, the stay of execution of the order of eviction shall stand vacated and the respondents shall be entitled to execute the order of eviction.”

The aforesaid would show that the contractual rate of rent was Rs. 300 per month and that the payment of rent of Rs. 3.5 lakhs per month was fixed by the Court as a condition precedent for granting stay on eviction. 

In this background, the Hon’ble High Court ought to have examined the applicability of doctrine of frustration under section 56 or applicability of section 32 of the Indian contract Act. In other words the question that should have been dealt with and decided by the Hon’ble High Court was the applicability of section 56 or section 32 vis-a-vis orders of the Courts as the rent of Rs. 3.5 lakhs per month was decided by the Court and was not contractual rate of rent. It is inconceivable that had the rent been Rs. 300 per month, the tenant would have ever filed an application seeking suspension of rent. 

The applicability of doctrine of frustration to the agreement of lease was settled long ago by Hon’ble Supreme Court in Raja Dhruv Dev Chand v. Raja Harmohinder Singh & Anr. AIR 1968 SC 1024 and the same also finds mention in the judgment of the Hon’ble High Court. The said judgement very clearly laid down that once a lease is executed the same would be governed by the provision of section TPA. The relevant portion of the said judgement is as under:-

“…Under a lease of land there is a transfer of right to enjoy that land. If any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purpose for which it was let out, because of fire, tempest, flood, violence of an army or a mob, or other irresistible force, the lease may, at the option of the lessee, be avoided. This rule is incorporated in Section 108(e) of the Transfer of Property Act and applies to leases of land, to which the Transfer of Property Act applies, and the principle thereof to agricultural leases and to leases in areas where the Transfer of Property Act is not extended. Where the property leased is not destroyed or substantially and permanently unfit, the lessee cannot avoid the lease because he does not or is unable to use the land for purposes for which it is let to him.”

The above judgment would show that the issue of applicability of doctrine of frustration or contingent contract w.r.t lease agreement was no longer res-integra and the issue that ought to have been decided by the Hon’ble High Court was the applicability of section 56 or section 32 vis-a-vis orders of the Courts ? 

The answer to the aforesaid question of law would have to be an emphatic no as there can be no contract between a litigant and Court. Once the revisionist/tenant accepted the rent fixed by the Court so as to avail the benefit of stay of eviction, then there cannot be any applicability of provisions of the Contract Act at all insofar as payment of rent of Rs. 3.5 lakhs is concerned. The  payment of rent anyhow is never dependent on the earning capacity of the tenant more so when in the present case the tenant had agreed to pay to the rent of Rs. 3.5 lakhs per month for stay on his eviction. 

In para 31 of the judgment, the Hon’ble High Court has laid down certain broad parameters to be considered for suspension of rent. It is, however, respectfully submitted that the said discussion is completely misplaced, as the factors enumerated therein are to be considered only for fixing the rent and not for suspension of rent. It’s a matter of common parlance that everyone wants to start their business from posh area/market and the cost of such place is already considered by a prudent businessman. The suspension of rent has no nexus at all with the loss or profits earned by the tenant. Further, the observations contained in para 31(iv) are also incorrect as once the Hon’ble High Court has already stayed the eviction decree then the tenants are not unauthorised occupants. 

The above discussion would show that the Hon’ble High Court thus could have cut short the whole issue by directly analysing the law w.r.t applicability of section 56 or section 32 vis-a-vis orders of the Courts and that would have settled the entire law on the subject. 

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Advocates Ishan Jain and Neeraj Jha are Partners at Suvigya Legal, a Delhi-based law firm.

While the nation was under a lockdown due to the COVID-19 pandemic, styrene gas leaked through the storage tank of the LG polymers plant in Vizag, Visakhapatnam in the early hours of May 7^th, 2020 when the plant was about to restart after relaxation in lockdown norms. The gas leakage which claimed 11 lives and left several others injured brought reminiscence of the 1984 Bhopal Gas Tragedy.[1] The disastrous impact of the leaked gas on the environment and thousands of lives which are exposed to it is not beyond comprehension. It appears that even after three decades of one of the world’s worst chemical disasters we failed to learn anything significant, leading to the Vizag Gas leak on similar lines. Fortunately, the damage to human life and ecology, though irreparable, is still not close to the scale of the Bhopal disaster.

Comparison between the two chemical disasters

In the Bhopal tragedy Methyl Isocyanate (MIC) gas leaked from Union Carbide India Limited’s (UCIL) plant in Bhopal. The safety device designed to neutralize the discharge of the gas was turned off three weeks before the actual leakage and a faulty valve led to tons of water mixing with the toxic gas leading to an exothermic reaction in the storage tank which caused the leakage.[2] However, till this date, there has been no definitive answer as to what caused the leakage of toxic gas, the government has largely put the burden on negligence in maintenance and workers’ irresponsibility.[3] The recent styrene gas leak in LG polymers plant, owned by a South Korean Company, could be attributed to a similar situation wherein the plant has been shut down due to the nationwide lockdown and the temperature of the storage tank of styrene gas could not be maintained at appropriate temperature leading to vaporization of gas resulting in the leakage,[4] demonstrating lack of proper maintenance.

Following the Bhopal disaster, several individual claims for compensation were filed in the American Court against Union Carbide Corporation. Later on, the Central Government took the responsibility to represent the claims of those affected by the disaster,[5] but the American Court referred the case to Indian Court on grounds of forum non-convenience.[6] The Supreme Court of India ordered a settlement at an amount of US $470 million between the Union of India and Union Carbide Corporation wherein the responsibility of allocating the amount amongst the proposed victims vested with the central government.[7] Several questions and review petitions were filed against this settlement ordered by the Apex Court which set aside the criminal liability of the industry but the Apex Court upheld the validity of the settlement as well as the Bhopal Act, 1985 which authorized the Central Government to be representatives of the claimants.[8] Furthermore, in another petition for criminal prosecution against the Corporation, the Supreme Court held that there is no prima facie evidence to form a charge against the Corporation under Section 304A IPC and overlooked all the negligent behaviour and lack of implementation of safety measures on the part of Corporation.[9]

Due to the pro-environmental measures taken after the tragic Bhopal Disaster, National Green Tribunal formulated under the NGT Act, 2010 took suo moto cognizance of the Styrene gas leak case in Vishakhapatnam and ordered LG Polymers Ltd. to deposit an initial sum of Rs. 50 crores by applying the principle of ‘Strict Liability’ against the hazardous substance industry.[10] This application of strict liability principle in the Vizag Gas leak case by NGT has raised another debatable issue over the non-application of ‘Absolute Liability’[11] the principle, which entails that if any industry is engaged in ‘hazardous substance’ then it shall be liable for any damage caused due to the escape of such substance irrespective of any exceptions. Absolute Liability had been recognized by the Apex Court as the law of the land in the Oleum Gas Leak Case 1987 and is regarded as a better alternative to strict liability principle,[12] however, the current NGT order attracting ‘Strict liability’ of LG Polymers may provide an opportunity to the Corporation to dodge the liability by devising exceptions to the Strict Liability doctrine.[13]

India’s approach to deal with Chemical Disasters has largely been compensatory thereby neglecting the long-term medical and socioeconomic effects of such disasters.[14] In the Bhopal Disaster, the victims were promised a hefty sum of compensation by way of settlement ordered by the Apex Court, however, till 2003 only half of the sum dispersed to the victims while an estimated 30% of the sum was lost to bureaucratic corruption.[15] The plight of the victims to claim compensation is still unheard even after 32 years of the incident and the number of claimants seeking the ordered compensation has seen an increment due to the long-term effects of the gas leak. This setup showcases that the entire system favours big corporations to ensure economic prosperity instead of serving the needs of the victims.

The plight of victims in the recent Vizag gas leak is not different from the previous occurrence, as several petitions were filed in the Andhra Pradesh High Court seeking appropriate medical and financial aid from the LG Polymers Ltd for the styrene gas leakage, however, the court has ordered the premises to be sealed with no definitive order on the compensation.[16] While NGT had ordered interim amounts to be deposited by the perpetrator industry, however, there is no definitive timeline to assure when the victims will be provided with the compensation. The lack of proper implementation authority and red-tapism leads to the utter failure to attain justice in these chemical disaster occurrences.

Significant legislative measures after the Bhopal Disaster and its impact on Vizag situation

During the Bhopal Gas Tragedy, the Indian Penal Code was the only authoritative law to govern these types of gas leakage incidents by charging the industry with the criminal negligence, culpable homicide not amounting to murder, and causing hurt and endangering the life of others,[17] however, the law has not proven effective to achieve the ends of justice as the Apex Court had dropped the criminal charges against the Industry. Thereby, taking insights from the negligence evident from the Bhopal Disaster, Central Government took the pro-environmentalism approach and adopted various legislation to safeguard the environment and mitigate future disasters-

Despite such laws in force, the Vizag Gas Leak incident highlight that there certainly are some loopholes in the enforcement of these laws. It has been claimed that Styrene falls within the category of Hazardous chemicals provided in the Hazardous Chemicals Rules, 1989,[23] but the LG Polymers Ltd. dodged the legal norms provided by the legislature and even violated the provision of complying with the emergency response mechanisms under the Rules, 1989.[24] Apart from this violation of the legal norm, the culprit LG Polymers has admitted that it lacked environmental clearance for the manufacturing unit of Vizag as contemplated under the Environmental Impact Assessment Notification, 2006 of the Ministry of Environment and Forest.[25] Taking note of these kinds of incidents, one can readily understand default is not of the legislative capacity rather the enforcement agencies had been creating a mockery of the legislative measures.

Conclusion

A simple analogy of the two chemical disasters that lead to widespread loss of life indicates that India has still not learned anything from its past experience and the plight of victims of such chemical disaster is never resolved appropriately. Despite the enactment of enormous legislative measures to combat the aftermath of the Bhopal Tragedy, the current negligence and bypassing of legal norms suggest that future occurrences of such incidents are inevitable. Amidst the recent Vizag Gas leak, the Andhra Pradesh Government claims to formulate a new law for imposing heavy penalties on violators of environmental norms,[26] but the Government has significantly forgotten that such incidents do not occur due to lack of proper laws, rather due to inefficient enforcement agencies. 

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Clarion is a neophyte venture by three passionate legal aficionados who plan to devote their lives to churning out a new age legal fraternity that goes beyond basic client services and legal predicaments.

[1] Nityanand Jayaraman, Vizag gas leak very similar to Bhopal tragedy. India must probe before blaming workers, The Print, May 7, 2020.

[2] Edward I Broughton, The Bhopal disaster and its aftermath: A review, Environmental Health: A Global Access Science Source 3 (Feb. 2005).

[3] Harmandeep Singh and Arvind Rehalia, Case Study: Bhopal Gas Tragedy, 2 (6) INTERNATIONAL Journal of Advanced Engineering Research and Applications (Oct. 2016).

[4] Sundaram Ramanathan, Nivit Kumar Yadav and Digvijay Singh Bisht, Vizag gas leak: Who is liable, Down to Earth news, May 7, 2020.

[5] The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, No. 21, Acts of Parliament, 1985, § 3.

[6] Bhopal Gas Tragedy 1984, A report from Sambhav Trust, Bhopal, India 16 (Nov., 1996), http://www.unipune.ac.in/snc/cssh/HumanRights/10%20STATE%20ENVIRONMENT%20%20SCIENCE%20AND%20TECHNOLOGY/B%20bhopal%20gas%20tragedy/10.pdf.

[7] Union Carbide Corporation v. Union of India, (1989) 1 SCC 674.

[8] Charan Lal Sahu v. Union of India, (1990) 1 SCC 613.

[9] Keshub Mahindra v. State of Madhya Pradesh, (1996) 6 SCC 129.

[10] In re Gas Leak at LG Polymers Chemical Plant in RR Venkatapuram Village Visakhapatnam in Andhra Pradesh, National Green Tribunal, Principal Bench, New Delhi, Order dated 8.05.2020, Original Application No. 73/2020, available at https://greentribunal.gov.in/orderpdf/orderlist.pdf.

[11] M.C. Mehta v. Union of India, AIR 1987 SC 1086.

[12] Id.

[13] Arnav Sharma and Dr. Anita Yadav, Vishakhapatnam And Bhopal: A Look at Our Morbid Past on the Road To Justice, Live Law Columns (May 23, 2020).

[14] Sally Howard, Bhopal’s legacy: three decades on and residents are still being poisoned, 349 BMJ: British Medical Journal (Dec. 8- Dec. 14, 2014).

[15] Id. at 2.

[16] Devika, Vizag Gas Leak Incident| A.P. HC | LG Polymers to be seized and passports of directors shall not be released without leave of Court, SCC Online blog (May 26, 2020).

[17] S. Muralidhar, Unsettling truths, Untold Tales, The Bhopal Gas Disaster Victims ‘Twenty-Year’ of Courtroom Struggles for Justice [Bhopal Gas Leak Disaster- Legal Issues] (2004), http://www.ielrc.org/content/w0405.pdf.

[18] The Environmental (Protection) Act, 1986, No. 29, Acts of Parliament, 1986, § 3.

[19] The National Green Tribunal Act, 2020, No. 19, Acts of Parliament, 2010, Preamble.

[20] The Public Liability Insurance Act, 1991, No. 6, Acts of Parliament, 1991, Preamble, § 3.

[21] The Factories (Amendment) Act, 1987, No. 20, Acts of Parliament, 1987, § 41B.

[22] Manufacture, Storage, And Import of Hazardous Chemicals Rules, 1989, Ministry of Environment and Forests (Department of Environment, Forests, and Wildlife) Notification (Nov. 27, 1989).

[23] Id. at Schedule I, Entry 583.

[24] N.D. Jaya Prakash, Toxic Chemical Leak at LG Polymers India, Yet Another Harrowing Experience: No Lessons Learned from Bhopal, The leaflet (May 25, 2020).

[25] Vizag LG Polymers Plant Lacked Environmental Clearance Before Chemical Gas Leak, News18 (May 13, 2020), https://www.news18.com/news/india/indian-lg-polymers-plant-lacked-environmental-clearance-before-chemical-gas-leak-2617449.html.

[26] PV Ramana Kumar, After Vizag Gas Leak, Andhra to Frame New Law for Environment Protection with Heavy Fine for Violators, News18 ( (May 21, 2020), https://www.news18.com/news/india/after-vizag-gas-leak-andhra-to-frame-new-laws-for-environment-protection-with-heavy-fine-for-violators-2629877.html.

Let’s begin at the beginning

We have a very old relationship with debt and credit. It is so old that this relationship precedes our most recent infatuation – money. Society at its inception divided humans into debtors and creditors. The anthropological evidence points to the existence of ‘human economies’, where debts were and could be repaid in human beings. Humans were commodities, currencies, some more valuable than others [2].

Thankfully, due to the social innovation of fungible money, human economies gave way to the ‘monetary economies’ we know and love today. The main cause of this shift appears to be a sound(er) political system. A means for the people of the time to organize at scale. From the seashells of the early tribes in Central Africa, to the Lydian Stater, arguably the world’s first currency. The point here is that money and political stability seem to go hand in hand.  

We trace the evolving notion of debtors, creditors, insolvents, corporations, and liquidators starting from the rise of the British Empire and concluding with the role of Insolvency Resolution Professionals in the current pandemic. We are no doubt currently writing a significant chapter of human history and though uncertainties abound, it is our duty and prerogative to look at the past and the present to arrive at a sustainable model for the future.

Development of an Official Liquidator [3]

In primitive times, credit as an institution had its basis in an individual’s confidence in the counter parties’ good faith. Therefore, payment was contemporaneous with delivery of goods. However, with economic progress, suspension of payment was introduced, although suspension was an aberration. Non-payment entailed severe consequences, for e.g., servitude, labour, violence against the creditor, confinement of the creditor’s family, etc.

In Roman law, the borrower was said to be Author the creditor, i.e., his person was pledged for repayment of a loan. The non-repayment of debt often entailed slavery. Whilst initially recovery of debts was restricted to the person of the debtor, there was a gradual shift towards execution against proprietary interests/holdings of the debtor as well. The concept of an individual being assigned/nominated to manage the debtors estate traces its history back to the days of the Roman emperor, Marcus Aurelius, and it was under his regime that creditors obtained a private right to recover dues from the estate of the debtor. It is here that we first see the development of what we now call an Official Liquidator or an Insolvency Professional, i.e., someone responsible for managing the estate and settling the debts of the debtor. Under this regime, a curator was committed with the management of the estate of a debtor. The curator’s duty was to settle the debts of the debtor with the creditor on a pro rata basis.

The Tudor touch to bankruptcy laws [4]

A good place to start our journey into English Bankruptcy laws is the reign of Henry VIII of England. It turns out that he played a significant role in the development of the bankruptcy laws as we recognize them today. It is during his reign, in 1542, that the word ‘bankrupt’ was first used in an English Legislation, though it was ‘not applied to the agent or person, but to the act or thing, as in the title to the Statute 34 & 35 Henry VIII: “An act against such persons as do make bankrupt.“’

Prior to the reign of Henry VIII, debt and credit was mostly created by the private traders and  merchants   and  was regulated by the Lex mercatoria (the Law Merchant), a set of customary rules and regulations that existed in Europe during the Medieval Age. In 1283, the Statute of Acton-Brunell was passed by Edward I which sought to remedy the, still current, mischief of debtors not paying their debts in a timely manner and there being no speedy resolution process. To curb this mischief, the now common right of a merchant (creditor) to summon his debtor through a court process was introduced, and if  ‘the debts were not paid, the debtor’s goods were to be sold at a fair appraisement and the proceeds delivered to the creditor. If the debtor was insolvent, he was to be imprisoned until a settlement with the creditor should be made’ (2).  Edward I was trying to increase the ease of doing business, especially for foreign traders.

There were certain other issues that existed in the bankruptcy laws prior to Henry VIII, like, ‘the withdrawal of assets by fraudulent alienations for the benefit of favored creditors, and the withdrawal of debtors so as to evade legal process, there was also the lack of such a thing as rateable distribution of an insolvent’s assets among all creditors.’

Through the Acts of 34 and 35, Henry VIII tried to fix these issues. He ‘aimed to establish a summary proceeding, by which the property of the fraudulent debtor should be at once seized and secured for the benefit of all the creditors, and by which all unfair alienations, even to favored creditors, should be avoided.’ Thus, through his Acts of 34 and 35, Henry VIII laid down the statutory framework for thecompulsory administration and distributionof the fraudulent debtor’s assets ‘on the basis of a statutable equity or equality among all the creditors… Hence the two great features of all bankruptcy law, as we know it today, have their origin in the Acts of 1542 : a summary collection or realization of the assets, and then an administration or distribution for the benefit of all creditors.’

As the reign of Henry VIII was winding down, bankruptcy law has the developed the power to summon, examine debtors and to collect and then to administer and distribute the assets, rateably. It, however, has to be noted, that despite its intent, the said Acts of Henry VIII ‘does not seem to have been of much practical effect’. None the less, it set the ball rolling.

This was followed by the Fraudulent Conveyances Act 1571 (The Act Of 13 Elizabeth) which realized that despite earlier statutes, fraudulent bankrupts were on the rise and this naturally had to be curtailed. It was also deemed necessary to determine who was to be declared a bankrupt. This Act laid the formal groundwork for avoiding fraudulent transactions.

So far, though Debtors could be summoned, the formal concept of ‘examination’ of a debtor was not yet found in  any statute. This power was introduced during the reign of James I, in the amending Act Of I Jac., c. 15 (1603). It was complained that thepractices of bankrupts  ‘were so secret and so subtle that they could hardly be found out or brought to light, and the commissioners were given enlarged powers to imprison offenders, if they were endeavouring to evade full inquiry’ 2. This was a very harsh provision at the time, as James I out did Henry VIII and Elizabeth I in punishing debtors by enacting  laws that required ‘pillory and the loss of an ear should be the penalty imposed upon debtor who failed to show that bankruptcy was due solely to misfortune.’.

However as the early 1700s came to a close, insolvents who were guilty of little more than bad fortune were finally catching a break. The Statutes of 4 Anne, c. 17 (1705), and 10 Anne, c. 15 (1711 ), introduced the concept of a ‘discharge’ of a debtor, a concept that entered our statute books through the Presidency-Towns Insolvency Act, 1909.  This aspect of discharge is what truly completes the history of English bankruptcy. “This provision was probably the consequence not only of pity, but also of the feeling that mercantile credit is given in the interest of the creditor as well as of the debtor; that the giving of credit necessarily involves some risk; that it should be the business of the trader to insure against this loss by adding on a percentage for the credit which he advances; and that all the debtor ought to pledge is his estate, not his future earnings, and certainly not his personal liberty.” [2]

From the individual to the corporation

Forming enterprises is a very human thing to do. But beginning any enterprise saddled in debt is no way to start. The only way to raise capital for the longest time was through debt. There was no equity. With the birth of the concept of equity, many individuals could contribute to one undertaking, importantly, without the undertaking becoming a debtor and not being bound to pay, often usurious, interests. This mechanism is first noted to have its origins in China, under the Tang Dynasty (618-907)  and the  Song Dynasty (960-1279). Though the phrase ‘joint-stock company’ had not been coined at the time. yet this is precisely what these undertakings were.

Around 1250, joint stock companies showed up on France as the Société des Moulins du Bazacle, or Bazacle Milling Company, and in 1553, in England as the Company of Merchant Adventurers to New Lands. They also caused the infamous South Sea Bubble.

About 50 years later came the East India Company, incorporated by way of an English Royal Charter by Elizabeth I on 31^st December, 1600.  The Dutch East India Company was also formed in 1602. A worthy mention here is of the Mississippi Company (Compagnie du Mississippi)  which created a bubble so big that when it popped in 1719-20, it took out the world’s first and then only central bank issuing paper money, Banque Générale. The crash of the bank and the Mississippi Company laid the groundwork for the French revolution in 1789, which in turn laid the groundwork for the rise of the British Empire with their successful corporations and their solvent central bank, Bank of England which was founded in 1694.

1844-1855

In 1844, two historically important acts were passed; the Joint Stock Company Act, and the Winding-Up Act. The Joint Stock Company Act ‘enabled companies to become incorporated by registering their Deeds of Settlement with the Board of Trade” and, for the first time, attempted to draw a clear-cut distinction between companies and partnerships by providing that associations of more than 25 persons (reduced to the present 20 in 1856) should be unlawful unless registered under the Act or formed under charter or statute. This Act, however, denied one of the most sought after consequences of incorporation-freedom from personal liability; its object was to regulate, not to encourage, speculation.’ [5]

Under Section 66 of this Act, a judgment against the Company ‘could be enforced by execution not only against the assets of a company but also against the property of any shareholder who had not ceased to be such for three years. And by section 67 a shareholder who had suffered from execution had a remedy over against the company’ [6]. The distinction between the individual and the corporation was still blurry.

To regulate the winding up of companies, the Parliament of the time passed a series of legislations, starting with the Winding-Up Acts of 1844, 1848 and 1849.  These Acts were the first bloc of legislations regulating the dissolution and winding-up of Companies. They, however, did not provide any respite from personal liability because the members of the Joint Stock Company were still fundamentally responsible for the debts of the Company.  

This issue was fixed by way of the Limited Liability Act, 1855 which gave members immunity from being tried for the debts of the Company. This Act also required the directors of a Company to initiate winding up of their company if three fourths of its capital was lost. Since the members could no longer be held personally liable, this was incorporated to protect the company’s creditors.

1856 onwards

The second tranche of litigations begin with the introduction of the Joint-Stock Companies Act, 1856, which sought to combine the Acts of 1844, the Winding-Up Acts, and the Limited Liability Act of 1855. This was also the Act gives us the concepts of ‘Memorandum of Association’ and ‘Articles of Association’. This segues into the Companies Act, 1862, on which much of modern day companies law practices are based. The separation of the individual and the corporation is finally complete with the judgment  in Salomon v A Salomon & Co Ltd [1896] UKHL 1, in which the House of Lords established the concept of the ‘corporate veil’ and liberated shareholders from any personal liability for the debts incurred by a Company they held shares in.

To round things up, the water fall mechanism that forms such an important part of modern day insolvency practice, was introduced by way of the Preferential Payments in Bankruptcy Act, 1888, which ‘gave priority in winding up to certain debts, e. g., parochial rates, and wages, to a certain limit, of clerks, servants, laborers and work- men’ (4).

The Evolution of Insolvency, Bankruptcy and Resolutions in India.

India starts in corporate journey with the introduction of the Indian Companies Act of 1882, which was in large part modeled on the Companies Act of 1862. Official Liquidators were introduced by way of Section 141 of this Act. To deal with individual insolvencies, the Presidency- Towns Insolvency Act, 1909 was introduced, wherein under,  a court in the Presidency Towns had the power to appoint Official Assignees to receive the property of the debtors and the manage the debtor’s affairs. However, this Act barred any petition for insolvency against any corporation or against any association or company, which were to be regulated by Part IV of the Act of 1882. The Provincial Insolvency Act, 1920 was applicable to the rest of India.

The role of the Official Liquidator stayed fairly stable and static during the many iterations our Companies Acts’ underwent. From the 1882 Act, the Companies Act, 1913 was introduced. This gave way to the Act of 1956, which was the Act that was ruling the roost when most legal practitioners of this generation joined the profession. We may say that the law once again evolved with the current Companies Act of 2013. However, the largest departure we saw in terms of insolvency and bankruptcy laws was with the Insolvency and Bankruptcy Code, 2016, (“Code”) which introduced a new class of professionals, the Insolvency Professionals (“IPs”).

From fairly early on, it was realized that it was not sufficient to provide a mechanism for a company to be able to declare itself insolvent and wind up its operations. A need was felt for the company to have a chance at revival, restarting its business, even if it be under a different management. The first step towards this was the Sick Industrial Companies Act, 1985 (SICA), under which a two- tiered board system was set up to help reconstitute sick companies and help creditors mitigate their potential losses. A wound-up company is usually bad for the economy, the creditor, the shareholders, the workers – everyone really.

In 1986, the Sick Industrial Companies (Special Provisions) Act, 1985 was enacted with the avowed objective of “…securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto…”, and under SICA, the Board for Industrial and Financial Reconstruction (BIFR) and Appellate Authority for Industrial and Financial Reconstruction (AAIFR) were established. Whilst the avowed objective of SICA was laudable, the BIFR and AAIFR went on to acquire notorious reputations as cases continued to languish. When SICA was found wanting, the Recovery of Debts Due to Banks and Financial Institutions Act, 1996 was introduced which created the Debt Recovery Tribunals. The idea here was to provide institutional lenders a forum to seek recovery of their debts that would be swifter than filing suits before the Civil Courts.  Under this regime too, debts kept ballooning and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) was introduced. Whilst this sought to give institutional lenders a strong tool to start recovery of their debts under Section 13 of SARFAESI, results were once again, less than ideal.  Recently, even the Reserve Bank of India has introduced the Prudential Framework for Resolution of Stressed Assets in 2019 with a view to providing a framework for early recognition, reporting and time bound resolution of stressed assets.

This brings us back to the Insolvency and Bankruptcy Code of 2016.

The Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy. As we have noted above, prior to the IBC, the insolvency was governed by two legislations: (i) the Presidency Towns Insolvency Act, 1909 which covered the insolvency of individuals and of partnerships and associations of individuals in the three erstwhile Presidency towns of Chennai, Kolkata and Mumbai; and (ii) the Provincial Insolvency Act, 1920 which was the insolvency law for individuals in areas other than the Presidency towns, and dealt with insolvency of individuals, including individuals as proprietors. As the law relating to insolvency in India was scattered, complex, overlapping, and increasingly ineffective, it was proposed to replace the existing insolvency laws with a unified legislation that would comprehensively resolve insolvency for all companies, limited liability partnerships, partnership firms and individuals. The rationale for the Code was first set out in the Bankruptcy Law Reforms Committee Report (BLRC Report). The BLRC Report suggested the creation of an industry of regulated professionals, i.e., Insolvency Professionals, who would be delegated the task of monitoring and managing matters of business of the undertaking undergoing the insolvency (resolution) process.

The admission to the rolls of an Insolvency Professional (IP) is governed by the Insolvency & Bankruptcy Board of India (Insolvency Professional) Regulations, 2016 (IP Regulations). These regulations mandate, inter alia, the clearance of an examination before one can be empaneled as an Insolvency Professional. [7]

An IP is appointed as an Insolvency Resolution Professional (“IRP”) under the Code in one of two ways-

(i) if he/she is nominated as the IRP in the insolvency application; or

(ii) if no nomination is made in the insolvency application, the Adjudicating Authority makes a reference to the Insolvency & Bankruptcy Board of India (IBBI), which shall recommend the name of a person to be appointed as the IRP. [8]

A series of repercussions flow from the appointment of an individual as an IRP-

(i) the management of the Corporate Debtor vests with the IRP;

(ii) the powers of the Board of Directors of the Corporate Debtor stand superseded and all powers will be exercised by the IRP;

(iii) the IRP shall have access to all documents and records of the Corporate Debtor and all officers and managers of the Corporate Debtor shall report to the IRP; and

(iv) financial institutions maintaining the accounts of the Corporate Debtor shall act on the instructions of the IRP. [9] Section 18 of the Code outlines the duties of the IRP. Section 20 requires the IRP to manage the Corporate Debtor as a going concern, and for the purposes of such, to appoint accountants, legal, or other professionals, to enter into agreements/contracts on behalf of the Corporate Debtor or to amend or modify existing agreements/contracts, to raise interim finance, to issue instructions to the personnel Corporate Debtor to keep the Corporate Debtor as a going concern, and take all other such actions that are required to keep the Corporate Debtor as a going concern.

Subsequent to the admission of an insolvency application, one often sees individuals based in cities other than where the Corporate Debtors registered office is, being appointed as an IRPs. Since, in the first instance, it is the duty of the IRP to take over the management and records of the Corporate Debtor, it is our understanding that the IRP must physically himself/herself initially take over the management of the Corporate Debtor, and we say this because neither the Code nor any of the Regulations permit for an IRP’s ‘authorised representative’ to perform or undertake the duties of the IRP. Of significance is also the Form-2 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (which is the written communication to be provided by the proposed IRP), and which is also a self-certification by the IRP to him/herself of his/her eligibility.Perhaps it is for this reason as well that even judgments/orders admitting insolvency applications never provide for an IRP’s authorised representatives to assume the powers of and carry out the functions of the IRP, but specifically name only the IRP. The restriction on delegation is also contained in Regulation 7(2)(bb) of the IP Regulations and the circular dated 03^rd January 2018 No. IP/0003/2018. [10]

How then is such an IRP to comply with Section 18 of the Code? Prior to the Covid-19 lockdown, this was certainly unproblematic as travel was unrestricted. IRP’s could therefore travel to the registered office of the Corporate Debtor to physically effect a take over the management and records of the Corporate Debtor. However, admission of insolvency proceedings during the lockdown has now raised some interesting legal issues-how is an IRP sitting in New Delhi to comply with Section 18 of the Code for a Corporate Debtor whose registered office is in, say Madras, or Bombay? Can the powers under Section 18 of the Code be delegated by an IRP to an ‘authorised representative’? Can an IRP’s functions be demarcated into essential and non-essential functions? If so, what should be classified as essential and non-essential functions?

The nationwide Covid-19 pandemic has thrown up some major challenges to the legal world, and in particular, how certain functions are to be carried out. Take for example, an insolvency application which is admitted. The insolvency application is admitted during the lockdown period; the Corporate Debtor has its registered office in Madras; the insolvency application nominates an IRP from New Delhi. The public announcement has to be made within 3 days of admission of the insolvency application [11]; proof of claims has to be submitted within fourteen days of the appointment of the IRP [12]; the RP has to be appointed at the first meeting of the Committee of Creditors (COC) [13]; and the Corporate Insolvency Resolution Process (CIRP) has to be completed within 330 days from the commencement date [14]-the IRP and RP are therefore on strict timelines. However, to deal with the current predicament of Covid-19, Regulation 40C has been introduced in the CIRP Regulations to exclude the lockdown period from the CIRP timelines. [15] Yet, we are still witnessing an urge to initiate the CIRP within the lockdown period itself. So practically, how does this play out? What we are now witnessing, and perhaps will for time to come, is the delegation of an IRP’s functions, especially those u/s 17 of the Code.

This is of significance because the neither the Code nor any of the Regulations allow for any delegation of an IRP’s powers. In contrast, the Code provides for delegation of a RP’s authority, with prior approval of 60% voting share of the CoC. [16] Since the Code is silent on the issue, this can be interpreted in one of two ways-

(i) since delegation is not expressly prohibited, it is permissible or

(ii) since delegation is not expressly conferred, it is impermissible. The interpretation must however be in a context. Clearly, the Code provides the RP with much greater powers than the IRP. Thus, if there is a restriction on the RP’s powers to delegate, it is incomprehensible that an IRP would have the power to delegate. The silence in the Code on this issue must therefore necessarily be taken to mean that the Code does not permit for an IRP to delegate powers/duties.

Also,  the Code and Regulations provide for appointment of an IRP by name, not optionally through their ‘authorised representative’.

To sum up, the history of insolvency and bankruptcy law assumes ease of travel and physical presence of the receiver, liquidator, Insolvency Professional — by whatever name called, and in this new era of lock downs and  ‘new-normals’, the old laws will have to adapt to the exigencies and vagaries of the present. What form this will take is yet unclear, but we note this as a point to consider meaningfully, as bankruptcies and insolvencies, for individuals and corporations, are bound to multiply once the dust from the present pandemic clears.  Unprecedented times demand unprecedented measures.

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Angad Mehta is an advocate with an independent practice at the NCLT, NCLAT, and Delhi High Court. Apart from court-focused litigation, he specializes in construction project arbitrations and has represented several public companies against the Government of India and the National Highways Authority of India. In 2019, he was empaneled as a panel counsel for the Govt. of Delhi, and has represented the government in several arbitrations before tribunals and before the Delhi High Court.

[1] Authored by Dhrupad Das and Angad Mehta, Counsels. Dhrupad is the founding partner of Panda Law, a boutique firm advising, inter alia, on blockchain technology law and corporate-commercial litigation. Angad is a corporate commercial litigator based in New Delhi. Angad practices at the NCLT, NCLAT and the Delhi High Court.

[2] Debt, the first 5000 years.

[3] https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=7663&context=penn_law_review

[4] University of Pennsylvania Law Review (Volume 67 January, 1919 , Number I)

[5]THE ENGLISH PRIVATE COMPANY L. C. B. Gower

[6] Columbia Law Review, Vol. 8, No. 6 (Jun., 1908), pp. 461-480

[7] Regulation 3 of the regulations.

[8] Section 16 of the Code.

[9] Section 17 of the Code.

[10] https://taxguru.in/corporate-law/insolvency-professional-outsource-responsibilities.html

[11] Regulation 6(1) of CIRP Regulations, 2016.

[12] Regulation 6(2)(c) of CIRP Regulations, 2016.

[13] Section 22(2) of the Code.

[14] Section 12 of the Code.

[15] https://www.financialexpress.com/industry/ibbi-excludes-lockdown-from-resolution-time-frame/1939728/

[16] Section 28 of the Code.

‘Suo Moto’ or ‘Suo Motu’ in simple words means taking control over a matter by your own. In legal terms Suo Moto means “on its own motion”. It is a Latin legal term, approximately equivalent to the term ‘Sua Sponte’ which means “of his, her, its or their own accord”. Suo Moto describes an act of authority taken without any formal request from another party. The Suo Moto has originated from the concept of “Epistolary Jurisdiction”, which emerged in the late seventies through judicial activism in order to make the judicial process more accessible to poor, socially and economically disadvantaged sections of the Society. Generally in legal system a matter is brought to a court by one of the interested or affected parties. But there are instances where the judiciary takes up a matter on its own on several grounds such as gross violation of law, gross constitutional violation, grave injustice or to maintain public order. Therefore, inSuo Moto cognizance generally a great amount of public interest is involved. A court or an authority takes a Suo Moto Cognizance of a matter when it receives some information about such violations or injustice through a third party. The rationale behind such actions is the desire of the courts to broaden the reach of justice to those who might not be able to access the court because of one reason or other.

SUO MOTO INTERVENTION AND THE INDIAN JUDICIARY

In India, Article 32 and Article 226 of the Indian Constitution provide the provisions for Public Interest Litigation (PIL) which connects the public with the judiciary. By virtue of these provisions and emergence of PIL which allowed the Indian Courts to initiate legal actions on their own cognizance. A Public Interest Litigation may be introduced in a court by the court itself rather than any of the aggrieved party. The concept of PIL or Suo Moto cognizance reflects the judicial activism of judiciary and also helps in speedy delivery of justice. In past the courts by taking Suo Moto cognizance have many times put themselves in the shoes of the legislature and executives by supervising them. Although the legislature, executive and judiciary are independent in their own; however, through judicial activism that line has been blurred. The Hon’ble Apex Court or various High Courts in India have taken Suo Moto cognizance of the issues and initiated legal proceedings on their own based on media reports or protests. Generally, suo moto actions are taken in Court Contempt Cases or probe into new matter where grave injustice is being done to a person or a Section. The ambit or scope of Suo Moto action of the courts has not been defined in any Indian statue or in any act, therefore, the courts takes Suo Moto cognizance where it deems fit. There are no prescribed rules or situations where the courts can take Suo Moto cognizance.

The world is going through a pandemic and India is also fighting hard against this pandemic. During such a difficult time, there has been a constant increase in the number of PIL’s being filed in the Hon’ble Supreme Court and various High Courts across the country. Recently, a lot of instances can be seen where the Indian judiciary has taken up Suo Moto cases.

Also, several High Courts across the Country have taken several suo moto cases in the interest of public at large.

JUDICIAL ACTIVISM OR JUDICIAL ADVENTURISM

There is a very thin line between judicial activism and judicial adventurism. While judicial activism is considered as a positive sign to highlight and cure the fallings of executive, but the overreach into executive’s domain is considered an intrusion into proper functioning of democracy. The recent suo moto cognizance taken by the Hon’ble Apex Court and several High Courts are really appreciable as the same are taken keeping in mind the public at large. 

In cases of judicial activism, the judiciary had called upon the executive to perform its obligations under the constitution and the laws. However, there are few instances which had gone against the scheme the constitution wherein the judiciary overstepped and made its interference in executive and the legislature. Generally, the matters related to fiscal policy, political affairs, legislature proceedings etc. can amounts to cases of judicial overreach.

The former Chief Justice of India Justice J S Verma once said that:- “the judiciary should only compel performance of duty by the designated authority in case of its inaction or failure, while a takeover by the judiciary of the function allocated to another branch is inappropriate. Judicial activism is appropriate when it is in the domain of legitimate judicial review. It should neither be judicial ‘adhocism’ nor judicial tyranny.”

There are several instances of judicial adventurism in our Country which include the sealing of unauthorised commercial operations in Delhi [viii]; the judgment of the Supreme Court laying down that the Presidential Proclamation dissolving a State Legislative Assembly is subject to judicial review and that if the court strikes down the proclamation, it has the power to restore the dismissed State Government to office [ix]; interference in the educational policies of the Government in examples such as the TMA Pai Foudation case [x] and the Islamic Academy case [xi]. Further, the Supreme Court in 2016, passed its judgment in the case of Shyam Narayan Chouksey Versus Union of India [xii], which makes it mandatory, that all the cinema halls in India shall play the National Anthem before the feature film starts along with other directives. The recent case which was a topic of debate for quite a few time was the case of allegations against the former Chief Justice of India Justice Ranjan Gogai, wherein the Hon’ble Apex Court suo moto taken up the matter and passed an order for media to restraint and act responsibly [xiii]. The proceedings in the said matter were even questioned by few retired Judges.

Very recently, the Supreme Court order for private laboratories not to charge for covid-19 tests [xiv] has sparked a debate on whether it is a case of judicial overreach. The government has powers under the Essential Commodities Act to regulate prices of testing by private labs and it is better placed to decide such issues that have implications for the public exchequer.

CONCLUSION

The acknowledgement of this difference between “judicial activism” and “judicial adventurism” is vital for the smooth functioning of a constitutional democracy with the separation of powers as its central characteristic and supremacy of the constitution as the foundation. The interference by judiciary is ought to be restricted towards public interest only and it should not affect the normal functioning of legislature and executive. The Courts should not overreach in the Executive domain. Further, to uphold the democratic values, it is high time that we should come out with some Rules or Regulations governing such interference. No doubt that the judiciary has done an appreciable job at several instances in past and present but yet it is under scanner because of several instances of interference more than the required. With all due respect, if this will continue without any check it will hamper the confidence of common man in elected government. The judiciary sometimes also face criticism for under reacting and all this needs to be balanced in very systemic way so that the people can develop their faith and participation in all these three pillars.

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Ashutosh K. Sharma is an Advocate, practicing in High Court of Delhi, subordinate courts and tribunals. He is enrolled with Bar Council of Delhi. He is working on broad range of legal issues, primarily focused on Corporate and Commercial matters, Arbitration & Conciliation matters. He represents his clients from preliminary stage to appeals and also provides legal opinion to business entities.

Neha Malik is an Advocate, practicing in High Court of Delhi and subordinate courts. She is enrolled with Bar Council of Delhi and represents clients before various judicial and quasi-judicial fora. 

[i]  Mahua Moitra Versus Union of India [Writ Petition (Civil) No.470 of 2020]

[ii] IN   RE   CONTAGION   OF   COVID   19   VIRUS   IN   CHILDREN PROTECTION HOMES [Suo Moto Writ Petition (Civil) No.4 of 2020]

[iii] IN RE : CONTAGION OF COVID 19 VIRUS IN PRISONS [Suo Moto Writ Petition (Civil) No.1 of 2020]

[iv] IN RE : REGARDING CLOSURE OF MID-DAY MEAL SCHEME [Suo Motu Writ Petition (Civil) No.2 of 2020]

[v]  IN RE : COGNIZANCE FOR EXTENSION OF LIMITATION [Suo Motu Writ Petition (Civil) No.3 of 2020]

[vi]  Writ Petition (PIL) No.42 of 2020 [Suo Moto Versus State of Gujarat & Ors.]

[vii]  IN RE. POISONOUS GAS LEAKAGE IN VISAKHAPATNAM [Suo Motu WP (PIL) No.112 of 2020]

[viii]  M.C. Mehta Versus Union of India [Writ Petition (Civil) No.4677 of 1985]

[ix]  Rameshwar Prasad & Ors. Versus Union of India & Ors. [Writ Petition (Civil) No.257 of 2005]

[x]  T.M.A. Pai Foundation Versus State of Karnataka [Writ Petition (Civil) No.317 of 1993]

[xi]  Islamic Academy of Education & Anr. Versus State of Karnataka [Writ Petition (Civil) No.350 of 1993]

[xii]  Shyam Narayan Chouksey Versus Union of India [Writ Petition (Civil) 855 of 2016]

[xiii]  IN RE: MATTER OF GREAT PUBLIC IMPORTANCE TOUCHING UPON THE INDEPENDANCE OF JUDICIARY- MENTIONED BY SHRI TUSHAR MEHTA, SOLICITOR GENERAL OF INDIA [Suo Moto Writ Petition (Civil) No.1 of 2019]

[xiv] Shashank Deo Sudhi versus Union of India & Ors. [Writ Petition (Civil) Diary No.10816 of 2020]

Introduction:

Zoom is a web-based video conferencing tool with a local, desktop client and a mobile app that allows users to meet online, with or without video. Zoom users can choose to record sessions, collaborate on projects, and share or annotate on one another’s screens. It allows one-to-one chat sessions that can grow into group calls, training sessions and webinars for internal and external audiences. It offers different subscription plans with the constant 40-minute free meeting and longer meeting with additional features that can be availed by prescribed payment. The app can be downloaded or operated through computer or phone and one can join any meeting with a supplied meeting ID. One can also choose to disable audio or video before joining. 

Position in UK: Zoom Inc. in UK has been accused of sharing personal data with third-party advertisers, use video content from Zoom sessions for targeted advertising campaigns and to develop facial recognition, record and share calls with anyone they want without taking proper consent from users and thus violates obligations under GDPR and consequently the Data Protection Act, 2018 (formed in pursuance of GDPR). [1]  

Position in US: A class action lawsuit is filed in US against Zoom as it notifies Facebook when any Zoom user opens the app and provides details about the user’s device, the time zone and city from which the user connects, the user’s service provider, and the user’s unique advertising identifier (built into users’ devices). The information is allegedly transmitted to Facebook regardless of whether the user has a Facebook account and has violated California Consumer Privacy Act. Section 1798 of CCPA specifically prevent Zoom from sharing class members’ non-encrypted and non-redacted personal information as unauthorized disclosure and failed to implement and maintain reasonable security procedures and practices appropriate to the nature of the information to protect their personal information.[2]

Facts:

The petitioner, a part time private tutor, feeling concerned about data privacy and security risk posed by Zoom, filed a PIL before the SC u/a. 32 of Indian Constitution for violation of right to privacy enshrined u/a. 21 of Indian Constitution to ban the Zoom App on central level until adequate law is prescribed for their functioning. The SC has admitted the PIL and sought responses from Centre and Zoom Inc. over the allegations involved.  

Issues:

(i) Whether Zoom App violates the right to privacy of users as enshrined u/a. 21 of Indian Constitution?

(ii) Whether the Zoom App should be banned until an appropriate data protection framework is in place?

Rule:

Article 14 and 21 of Indian Constitution. 

Arguments by Petitioner:

Certain allegations put forward by the Petitioner against the Zoom Inc. includes:

(i) Breach of Data Privacy: Zoom App practices data hoarding and cyber hoarding which includes mass storage of personal data of its users and stores cloud recordings, instant messages, files, whiteboards, etc. 

(ii) Data Theft & Hacking: There are also instances of Zoom bombing whereby unauthorized person or stranger joins a Zoom meeting/chat session and causes disorder to the existing meeting. There are many instances to suggest data theft that can take place due to improper monitoring of entering and exiting of participants. 

(iii) Breach of Data Security: Zoom is reported to have a bug that can be abused intentionally to leak information of users to third parties. It is reported to have sold user data to Facebook Inc. without user consent, even when the users haven’t logged into their FB account. Further, on 12.04.2020 the Cyber Coordination Committee issued a public advisory as to how the app is unsafe and laid out certain steps to take care of while using the said app. It has failed to ensure reasonable security practices and procedures as enshrined under IT Act and IT SPDI Rules, 2011. 

(iv) No E2EEE: The app has falsely claiming calls are End-to-End Encryption (E2EE) for video calls and merely uses transport encryption, which is not end-to-end encrypted. 

Zoom Inc. CEO has already apologized publically and has accepted the app to be faulty in terms of providing a secure environment digitally which is against the norms of cyber security. 

Analysis:

Since Zoom is not a one-to-one video calling application but a unified communication and collaboration platform, end-to-end encryption forms the heart of the application to secure collected data and maintain privacy. The concept of end-to-end encryption serves a foundation in maintaining trust in terms of data privacy and is intended to prevent data being read or secretly modified, other than by the true sender and recipient(s). The messages are encrypted by the sender but the third party does not have a means to decrypt them, and stores them encrypted. Although the latest updates on the App shows that it has incorporated an enhanced encryption facility; however, the same is not end-to-end encrypted. Since it is not end-to-end encrypted there remains a possibility of hacking in the processing chain. 

Zoom has time and again manipulated the consumers with false and misleading statements and has been highlighted in the PIL by Harsh Chugh. Although, the petition doesn’t talk about any credible sources and merely quotes newspaper articles that deal with the alleged bug which shares personal information of users with Facebook; however, for the purposes of case study, if assumed that such a bug is intentionally utilized to sell consumer data to FB can result in heavy commercial gains and loss of privacy to consumers. FB can through that data create targeted ads or other updates which works to its benefits. The bigger concern is not selling of the data but without the permission of the user, which may at times result in the detriment to the consumer interest. 

Such digital hoarding of data can result in excessive breach of privacy as most of these data is not deleted even when it is not required and increases the possibilities of breach of such data either at the helm of the data controller or any third-party. IT SPDI Rules, 2011 at present do not recognize a situation whereby data must be disposed of when not required and therefore the PDP Bill, 2019 pipeline is the appropriate legislation in this respect and therefore this excessive retention of data must be deleted when not required. 

Cisco Talos recently confirmed critical issues with the Zoom version 4.6.12 that poses a threat to data security regarding chatbox and sending of GIFs [3]. To illustrate, if a user send the GIF through the chatbox to another user in the meeting then it pings Giphy’s servers (popular GIF search engine) and the hacker/attacker can receive the platform to ping on a different, unauthorized server which can later be used to leak sensitive information. Such issues with Zoom goes on to show that updating an application on constant basis is so essential. 

Although, Zoom has incorporated various measures to curb the practice of Zoombombing including by enabling “waiting room” or “password protection” so that the meeting host as some control over the participants entering the meeting; however there still exists lacunae as to the freedom of passwords wherein people may use lax passwords like 1234 which can be easily cracked by professional hackers resulting in threat to privacy of the documents or data shared during the meeting. Further, the usage of “name changing” feature has also raised certain brows and can result in manipulating by several meeting participants. Thus it is the need of the hour that Zoom either incorporates measures which curbs this name changing practice such that “indirectly” the data of users are not compromised. 

Conclusion:

The Zoom features have to analyse from a technologically neutral standpoint and requires a technologically advanced law to understand and regulate the ramifications arising out of the use of the technology. The IT Act and SPDI Rules are largely inept to deal with such novel nuances and there is a greater need to move towards the PDP Bill, 2019. The controversy surrounding Zoom never seems to end and has more often than not found itself at crossfires with different legal and regulatory requirements of jurisdictions across the world. To illustrate, recently the App through a blogpost clarified that it is developing a technology that would allow it to block participants based on geography in light of the Beijing’s Tiananmen Square controversy [4]. In mainland China, Zoom is attempting to restrict its free videoconferencing facility of 40-minutes to enterprise customers only due to “regulatory requirements”[5] and is only under the scanner of regulatory authorities of various countries for number of violations including anti-trust law. 

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Neha Gyamlani is a founding partner at J&G Advocates. She has extensive experience in litigations arising out of trade and commerce, contracts, employment contracts, Arbitration, Banking laws, Family laws, and also litigations arising out of Transfer of Property Act, Specific Relief Act, Negotiable Instruments Act, Consumer Protection Act, RERA, Labor Laws, Insolvency and Bankruptcy Code, Recovery proceedings under RDDBFI Act, SARFAESI Act etc. Neha appears before various tribunals and quasi-judicial authorities.

Aditya Jain is a Partner at J&G Advocates and an Advocate on Record in the Supreme Court. Aditya is also practicing at the Rajasthan High Court. Aditya graduated from Gujarat National Law University, Gandhinagar and has pursued his PG Diploma in Business Laws from NUJS Kolkata. He handles cases pertaining to Commercial Litigation, Arbitration, Real Estate, Healthcare Care, IT and Maritime Laws. 

Urmil Shah is a third year BA LL.B student at AURO University, Surat. Urmil’s area of interest lies in commercial laws and public policy and he has a keen interest in writing. Urmil has work experience in fields of public policy, regulatory laws and human rights. He is also an avid mooter and had won the accolade for Best Researcher at 5^th GNLU Moot on Securities & Investment Law, 2019. 

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 [1] Jessica Goodfellow, Zoom’s practices violate our human right to privacy, The Campaign (2020).

[2] Hopkins & Carley, What Businesses Can Learn From the Privacy Lawsuit Filed Against Zoom, Lexlogy https://www.lexology.com/library/detailx?g=67e96652-748c-42b6-8b66-4e1ff66be09a

 [3] The critiques can be accessed from Cisco Talos website https://blog.talosintelligence.com/2020/06/vuln-spotlight-zoom-code-execution-june-2020.html

 [4]] Zoom caught in China censorship crossfire as meetings foiled, ET June 12, 2020 https://tech.economictimes.indiatimes.com/news/internet/zoom-caught-in-china-censorship-crossfire-as-meetings-foiled/76340161

 [5] Yifan Yu,  Zoom suspends free service to individuals in China, Nikkie Asian Review, May 19, 2020 https://asia.nikkei.com/Business/Technology/Zoom-suspends-free-service-to-individuals-in-China

Amid the coronavirus pandemic, several countries across the world resorted to lockdowns to “flatten the curve” of the infection. These lockdowns meant confining millions of citizens to their homes, shutting down businesses and ceasing almost all economic activity. India is one of the most impacted countries, not only on the number of people being infected but also on the front of loss and lack of employment due to the lockdown. 

Despite the current situation, economically this is an opportunity and can become a blessing in disguise for the Indian market. It is well known that China is the hub of product manufacturing for companies across the globe. However, with the current scenario, the global market is now exploring other countries to outsource their manufacturing. The disruption caused by COVID-19 may offer India the opportunity to reinvent itself as a manufacturing powerhouse. But in order to encourage business in India, it is essential to bring in clarity in employment-related laws especially in the field of outsourcing. 

Outsourcing in the global economy is a much wider term now. Not just the non-core and incidental activities, but even the core and basic ones are being delegated to smaller firms and factories outside. Over a decade ago, outsourcing implied only call centres and BPOs, whereas now even multinational companies and big brands like Google, Apple, Facebook, Microsoft, CISCO etc. are outsourcing their jobs to various agencies across the world. The advantage of outsourcing is that not only does it save time of these big brands but also makes a powerful impact on the growth of smaller firms by generating more employment.

The outsourcing contracts are on principal-to-principal basis. One of the main reasons for entering into an outsourcing contract is to prevent employee-related issues apart from other factors. Since outsourcing is the future and will help boom India’s economy, therefore, it is essential that laws in India are made more compatible to the needs of outsourcing. The grey area which needs to be covered is distinction of genuine principal-to-principal arrangements, where the total manufacturing or the service is outsourced, from the age-old contract labour system of the country.

Under the contract labour system, a part of the process, such as finance, administration, human resources, housekeeping, security, catering, etc. is outsourced. It is a tripartite arrangement where there is a principal employer for whom the work is being done, a contractor who undertakes to carry out the work, and the workers of the contractor who carry out the work at the principal employer’s premises. In such an arrangement, Courts may have to dive deep and examine the nature of arrangement in case of employee-related claims. Courts in such cases are required to see that the arrangement is not sham or camouflage, meant only to flout laws, especially the termination-related procedures. 

However, unlike the contact labour system, in modern-day outsourcing the entire product manufacturing is outsourced. In order to encourage the incoming of outsourcing in India, it is very much essential and the need of the hour that such contracts be clearly kept outside the web of contact labour litigation.  Since the principal employer has entirely outsourced the entire manufacturing of the product to another, there is no reason for the principal to be held liable/responsible. 

Under the Indian laws, the key question in most of the litigations pertaining to outsourced contracts is whose baby is the employee. Cases are generally filed by employees seeking reinstatement after termination and also seeking regularisation, higher pay scales, etc. Courts have been given immense power to lift the veil and see the real nature of arrangement. Some of the major factors considered by the Courts are as to who is the appointing authority, who is paying salary, who takes disciplinary action, who has the power of supervisions and control, etc. The party which is seen to be taking care of these factors is saddled with the responsibility. Further, it is also seen if the particular entity to which work is outsourced, is catering to only one company or is it catering to a number of them. 

Even with respect to compliance of provisions such as minimum wages, provident fund, employees’ state insurance and other statutory benefits, as is the case of the three-tier contract labour system, the law is clear that even during non-compliance by the contractor, the principal employer shall be responsible. In the case of complete outsourcing, however, there is no reasonable justification for the brands to face such liabilities when they are not even remotely connected with the employee.

It is due to such litigation in India that the companies outside fear to outsource and invest in India. Laws on this aspect are ambiguous and often confused with contract labour arrangements. Therefore, it becomes crucial that the arrangement of outsourcing is clearly kept immune and outside the scope of such litigations. The crux of the issue is that if our laws are clarified, we can surely expect more foreign investments and growth of business houses, thereby generating income and creating large source of employment. Clarifying and easing out outsourcing laws would lead to a rapid growth in the number of companies outsourcing to India. 

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Cauveri Birbal is an advocate practising primarily in the areas of labour and service laws. 

The United Nations defines violence against women (the “VAW”) as, “any act of Gender based violence (the“GBV’) that results in, or is likely result in physical, sexual, psychological harm or suffering to women, girls, men and boys, as well as threats of such acts, coercion, or arbitrary deprivation of liberty” (United Nations Declaration on the Elimination of Violence against Women, 2013; Krantz, 2005). Increasing research has highlighted the health burdens, intergenerational effects, and demographic consequences of such violence (Ram, 2019).

GBV is widely recognized as a violation of basic human rights (National Health Family Survey, 2015-2016). GBV is a global pandemic that affects 1 in 3 women in their lifetime. It is estimated that 35 percent of women worldwide have experienced either physical and/or sexual intimate partner violence or sexual violence by a non-partner (not including sexual harassment) at some point in their lives (WHO, 2013). Domestic Violence (the “DV”) is one of the most common forms of GBV against women (World Bank, 2019).

DV is a global issue

DV is a worldwide crisis. It is not only an individual’s problem but also a problem for the community, society, and a nation with serious consequences for the victims, their families, and their workplaces (Sallh, 2018). DV has no boundaries and affects all genders, religions, racial groups and cultural groups, and different socioeconomic and sociopolitical classes (Javier and Harron, 2018, p.15). DV cuts across class, caste, age, economic strata, geographic region, employment status, and literacy level and has culminated into a social phenomenon justifying marginalization and exclusion of women (National Health Family Survey-3, 2005-2006).

The UN Women reports that an estimated 87,000 women who were intentionally killed in 2017 globally, more than half (50,000 – 58 per cent) were killed by intimate partners or family members, meaning that 137 women across the world are killed by a member of their own family every day. More than a third (30,000) of the women intentionally killed in 2017 were killed by their current or former intimate partner (UN Women, 2017). According to the World Bank violence against women is estimated to cost countries up to 3.7% of their GDP, more than double what most governments spend on education (World Bank, 2019).

DV is a serious issue in India with 37% of women reporting being beaten at some point in their lives in national surveys (Chattopadhyay, 2016). As per the National Family and Health Survey – 4 2015 -16 (the “NFHS-4”) data shows a general fall in the overall percentage of married women who experienced violence at the hands of their partners. Spousal violence of ever-married women in Haryana increased from 27.3% to 32% in 2017.

The National Crimes Record Bureau 2017-2018 (the “NCRB 2017-2018”) provides that the number of cases registered under the “crime against women” category in 2018 was 3,78,277, up from 3,59,849 in 2017 and 3,38,954 in 2016 (NCRB, 2017 – 2018; NCRB, 2016-2017; NCRB, 2015-2016). More than an increase in crime rate, it can be said that this is an increase in reporting due to factors such as, greater awareness and women coming forward to report such crimes (Mallapur, 2017).

No universally accepted definition of DV

DV is generally defined as violence that occurs within the domestic sphere perpetrated by both private and state actors, constitutes a violation of the human rights of women (Coomaraswamy, 1999). The practice of DV constitutes a breach of internationally recognized rights such as the right to be free from torture and inhuman or degrading treatment; the right to private and family life; and, in some circumstances, the right to life itself. It is only relatively recently that DV has been analysed through the lens of human rights law (McQuigg 2016, p.1009).

However, there is no universally accepted definition of DV (Department for Constitutional Affairs 2004, p.7). There is little or no consensus about the definition of DV. In part, this is because definitions of violence depend on social valuations and these, in turn, depend on changing socio-cultural conditions (Summers and Hoffmann 2002, p. 40). Different professional groups vary widely on how they define violence. Each is likely to adopt a definition that best fits its own overall mission and social function. Thus, definitions range from the very broad (“if a woman experiences it as violence then it is violence”; Schweikert, 2000, p.69) to the very narrow (the batterer’s violent conduct is recognized as such only if it violates provisions of the criminal code) (Summers and Hoffmann 2002, p. 40).

None of the UN Human Rights Treaties make any express reference to DV.  However, the UN Human Rights bodies have brought the issue of DV within the scope of right to life; right to not be subjected to torture, or other forms of cruel, inhumane and degrading treatment; the right to equality; the right to be free from all forms of discrimination; the right to the highest standard attainable of physical and mental health (McQuigg, 2017). 

It is noteworthy that Radhika Coomaraswamy, the former United Nations Special Rapporteur to violence against women, its causes and consequence in her 1996 report on ‘violence in the family”, provided a framework for model legislation on DV. The report defines violence in the family as violence perpetrated in the domestic sphere which targets women because of their role within that sphere or as violence which is intended to impact, directly and negatively, on women within the domestic sphere. Such violence may be carried out by both private and public actors or agents (Radhika Coomaraswamy, 1996).

This conceptual framework intentionally departs from traditional definitions of DV, which address violence perpetrated by intimates against intimates, or equates DV with woman ­battering. It is more in keeping with the United Nations Declaration on the Elimination of Violence Against Women which, in article 2, defines violence as encompassing, but not being limited to “physical, sexual and psychological violence occurring in the family, including battering, sexual abuse of female children in the household, dowry­ related violence, marital rape, female genital mutilation and other traditional practices harmful to women, non-­spousal violence and violence related to exploitation” (Radhika Coomaraswamy,1996).

International Law and DV

International instruments relevant to the issue of DV include Convention on Elimination of Discrimination against Women (the “CEDAW”), General Recommendation No. 19 of the CEDAW Committee, resolutions of the UN General Assembly, including the UN Declaration on the elimination of discrimination against women, its causes and consequences, and the resolutions on the Commission on Human Rights. Of these instruments in strict legal terms, only CEDAW is binding on states. The Convention was adopted by the UN General Assembly in 1979 and came into force in 1981 (McQuigg, 2017). 

The protection of human rights has advanced significantly since India achieved independence. The adoption of the first democratic Constitution in 1949 marked progress towards developing a normative framework conducive to the protection of women’s human rights. India has ratified numerous international human rights instruments, including the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, the CEDAW (Manjoo 2014, p.9).

The Indian Constitution, special legislation and DV

The Indian Constitution 1950, is a significant instrument for the protection of women in India (Misra, 2007). The preamble of the Constitution seeks to secure to its citizens justice – social, economic, political, liberty of thought, expression, belief, faith and worship, equality of status and opportunity, and promote fraternity assuring the dignity of women (Preamble, Constitution of India, 1950). It provides for equality (Article 14), non-discrimination on the basis of sex (Article 15), positive discrimination in favour of women (or affirmative action) (Article 15(3)), equality and non-discrimination in employment and service conditions (Article 16), and right to life and liberty (Article 21) (Agnes, 2009).

The Government of India has enacted several laws to tackle DV, including the Dowry Prohibition Act, 1961 (the “DPA”) which is applicable in cases of violence inflicted in connection with demands for dowry. The DPA codified and made explicit the definition of “dowry” as “any property or valuable security given or agreed to be given either directly or indirectly. Dowry death refers to when a husband or his family abuses or kills a bride in retaliation for his not having received sufficient dowry from the bride’s family either by one party of the marriage to another, or by any other person; or by the parents or any other person to either party or any other person. The DPA provides a penalty of imprisonment for a minimum of six months and a maximum of two years for demanding a dowry (Wilcox, 2012).

Another legislative measure to combat DV includes the amendment of the IPC and introduction of Section 498A in the year 1983 to protect married women from being subjected to cruelty by the husband or his relatives. ‘Cruelty’ has been defined comprehensively and includes inflicting physical or mental harm to the body or health of the woman and indulging in acts of harassment with a view to coerce her or her relations to meet any unlawful demand for any property or valuable security. Harassment for dowry falls within the definition of cruelty in the IPC.  The IPC prescribes a punishment extending to 3 years and fine. The offence under Section 498A is cognizable, non-compoundable and non-bailable (Government of India, Law Commission of India, Section 498A, Report 243, 2012).

In 2005, the Parliament passed the PWDVA, which was a result of a consistent campaign by the women’s movement which also played a role in its drafting (Patherya, 2017). It is a wide-ranging law that protects women from various types of violence (physical, sexual, verbal, and economic) and imposes positive obligations on the state to protect women from violence (Jain and Abeyratne, 2012). It was enacted with a view to provide for more effective protection to the rights of women who are victims of violence of any kind within the family (The Government of India, Law Commission of India, Section 498A, Report 243, 2012).

The PWDVA provides a comprehensive definition of DV. It includes not only physical, but also verbal, emotional, sexual and economic violence. The PWDVA provides for criminal sanctions and civil reliefs of protection and injunction. The act includes within its scope urgent, protective injunctions, dispossession from the matrimonial home or alternate residence. In addition, it provides for economic rights including maintenance and compensation (Agnes, 2019).

The Government of India has taken measures for the successful implement of DV laws in India. One such measure is the founding of the National Commission for Women (the “NCW”) and the National Human Rights Commission (the “NHRC”) have, which have mandates related to DV. The NCW’s main function is to look into the implementation of safeguards provided for women under the Constitution and other laws and to make recommendations to the central government on how to improve these measures. The NHRC has a broad to investigate human rights violations, including cases relating to DV (Wilcox, 2012).

DV during COVID-19: Pandemic within a Pandemic

As countries around the globe go on lockdown due to the current pandemic, victims of DV have been confined at home with their abusers. Isolated from their families, the general public and resources that could aid them; most perpetrators have used the lockdown to further isolate victims. Protecting individuals from the virus has adversely affected victims of domestic violence.

DV encompasses intimate partner violence as well as family violence and refers to patterns of coercive and abusive behavior by a partner or members of a family or household in order to maintain power and control over an individual (Hasselbacher, 2010). It is a form of gender-based violence which has its roots in exploiting power dynamics between genders. In 1989, the UN Report on Violence against Women in the family stated that DV can be associated with the notion of inequality between men and women. Indian society with its strong patriarchal norms has provided women with little to no autonomy and has treated them as second class citizens from birth. There is no reduction in crimes against women even during the lockdown. In April 2020 alone, 27 dowry deaths were recorded while 22 dowry deaths occurred in April 2019 and overall a rise of 30.4% has been recorded (Thakur, 2020).

Reports on the increasing rates of DV cases in various countries around the world are beginning to surface. China has reported that the cases of DV have tripled during the lockdown, France observed a 30% increase in DV cases, reports of DV in Brazil have increased 40-50%, calls to DV helpline have increased in Cyprus and Singapore by approximately a third (Sandoiu, 2020). Calls to helpline services in Argentina has risen by 25%, a charity centered around domestic abuse in the UK reported a 700% increase in calls by victims while the separate line for perpetrators who wish to change their behavior only saw an increase of 25% in calls (Sandoiul, 2020). Italy, one of the countries severely hit by the pandemic, has also reported that the cases of DV are on a rise (Campbell, 2020).

In Spain, a DV related homicide has been reported (Campbell, 2020). In the United States, across 15 metropolitan cities, the lockdown led to a 10.2% increase in DV cases reported (Grierson, 2020). The World Health Organization’s regional director for the European Union, Hans Kluge, stated that countries are reporting a 60% increase in calls by women experiencing DV at the hands of their intimate partners in April 2020 as compared to April 2019 (AFP, 2020). The Technical Officer for Gender and Health at the WHO also reported an increase in reporting of DV cases from almost all countries. The UN agency for sexual and reproductive health (UNFPA) estimates 31 million more cases of DV in the world if the lockdowns are extended for another six months (AFP, 2020).

In India, between March 23 and April 16, 587 DV complaints were received by the National Commission for Women’s Complaint and Investigation Cell which was a significant increase from the 396 cases reported between February and March (Agarwal, 2020). Tamil Nadu police reported that they had received a total of 5740 complaints of DV since the lockdown began, of these only 5702 were settled while 38 cases were registered and the perpetrators were arrested (Nair, 2020). The growth in the DV cases around the world is likely to continue throughout the pandemic and the present cases may only be a minute representation of the actual instances of violence as victims cannot report abuse in the presence of their perpetrators.

Some reasons for the sudden surge in DV cases

DV involves a pattern of psychological, physical, sexual, financial and emotional abuse. Acts of assault, threats, humiliation, and intimidation are also considered acts of violence. Social distancing and isolation during lockdown has put women suffering from DV at a higher risk. Children as well have faced increased vulnerability to DV during this hard time. The pandemic lock down has created a harsh financial crisis with increased expenses and lower incomes. This lockdown has resulted in financial stress in the shape of pay cuts coupled with job cuts including lower morale and expectations of getting employment opportunities post-lockdown. This has been the reason which has contributed to higher levels of stress, uncertainty, anxiety and other such emotions adversely affecting mental health of all the members of the families (Jha, 2020). Disturbed mental health of abusers has become a justifiable reason and defence for the beating and the bruising of their wives and children.

Another prominent reason for a spurt in cases of DV all around the world has been disconnect from social support systems. Absence of vent has added to the build-up of frustration in all family members. Due to lack of social activities and dissociation from social groups have pushed the male members of the family to take their frustration out on their wives and children through quarrels, humiliations and assaults. This lockdown in no way has been merciful on women, they don’t just have to deal with intimate partner violence but also perform all household duties.

The absence of any household help in congruence the patriarchal mindset of participating in household chores has added salt to the misery of the women. Alongside this burden they have to run their households with minimum financial resources and restricted access groceries and other utilities. These victims of DV are facing severe physical and mental health difficulties like depression, sexual disorders, unwanted pregnancies, chronic diseases and post-traumatic stress disorder.

There is another complication in the Indian family system, where the wives living in joint families are subjected to double harassment and violence (Deshapnde, 2020). The situation could not have been worse for women members of the family to escape from domestic violence, with limited or no access to police, distress women help centres and even courts. On one hand the police stations were either closed for the general public or police personnel were busy in pandemic related duties and on the other Courts were handling only the urgent cases. This is the reason why the abusers have not hesitated in assaulting and hurting their family members.

Other contributing factors of intimate terrorism includes the possibility of the husbands to exercise constant surveillance over their wives through monitoring phones and inability to travel to counselling centres for seeking remedies and recourse (Kasarla, 2020). “Additionally, increased home drinking or forced abstinence from alcohol due to the closure of local wine shops has aggravated the complicated relationship between alcohol and domestic violence” (Kasarla, 2020). It is ironic that the quote “Stay Home, Stay Safe” is not of much significance to women who are subjected to this unwanted domestic brutality and cruelty also during the Coronavirus pandemic lockdown. These are some of the dominant reasons of stress of confinement that have caused such an unforeseen multiplication of intimate partner violence.

Potential solution

The sudden rise in DV cases in India, compels the stakeholders to adopt a multi-pronged approach. Free movement of social workers and categorizing support services for DV survivors as ‘essential services’, by the government, is one potential solution. Better policy frameworks for mental health and volunteering amongst professional counselors, lawyers, trained mediators, psychiatrists, and psychologists, is the need of the hour. The Government should announce a financial support package of non-governmental organizations providing support in terms of helplines, counselling, access to shelter homes, medical treatments and other support services to victims of DV (Sinha, 2020). The media should act more responsibly and refrain from sensationalizing cases of DV, especially during times of distress (Joy, 2020). While the intervention by police under normal times, proves to be an effective tool to deal with DV cases, during these unprecedented times, approaching the police for their services should be a matter of last resort.

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Shireen Moti is Assistant Professor of Law and Director of Alumni Relations at O.P.Jindal Global University. Michelle D’souza and Mahak Jain are both third year law students at JGLS. 

I. BACKGROUND

The Covid-induced lockdowns across India have meant a catena of life altering consequences ranging from the material to the mundane. For commercial transactions in M&A and financing, the disablement of essential public and private transactional services (notarization, stamping, offices, printers, photocopiers, and travel to name a few) – have dealt a serious blow to the prospect of a ‘physical signing’.  Whilst government mandated ‘formal’ lockdowns have begun to ease, informal restrictions on physical movement and infrastructure may remain. Also, unsaid, is the enduring stigma around physical contact that may remain – including the fear of prolonged physical proximity during a signing, the prospect of sharing stationery, stamps and seals, of the thought of hundreds of execution pages changing hands amidst multiple signatories. In this context, virtual and electronic executions may be the new normal, at least for some time to come.  

The law in India on electronic execution of documents (‘digital signing’) has evolved favourably in recent years, with statutory amendments and case law recognizing the validity of electronic contracts. In certain sectors such as fintech and platform-based trade receivable financings, e-signings and ‘click-wrap agreements’ are the norm. M&A and debt transactions have continued to rely on the physical and have, traditionally speaking, been far less adaptable to electronic executions. Necessity now, may need to be the mother of all invention.

This note therefore analyses : (A) the law on electronic signatures in India, and its application in a rapidly evolving landscape of service providers in electronic execution; and (B) the different methods by which electronic signatures can take place, and (C) whether these methods could be deployed for a full-fledged virtual execution of deals given the physical constraints in place today.

II. THE LAW ON ELECTRONIC SIGNATURES 

India’s Information Technology Act, 2000 (“IT Act”) recognises duly constituted electronic contracts as valid. Further, an amendment to the Indian Evidence Act, 1872 (“IE Act”) provides that electronic contracts are admissible as evidence in a court of law, subject to certain standard tests and protocols. Furthermore, Indian case law on the subject has been liberal and enabling. Not only are electronic contracts recognised, the Supreme Court of India – as long back as 2010 – validated a contract where the offer and acceptance were unconditionally conveyed over email [1]. In a later case, the Madras High Court [2] accepted the validity of electronic auction of property under SARFAESI Act, 2002, suggesting the increasing acceptability of electronic agreements in commercial transactions under Indian law.

For an electronic document to be valid, it should be capable of electronic storage and accessible in its original form i.e. in a format that is demonstrably tamper-proof (e.g. watermarked and encrypted) whenever called for in a future reference. The document should also be capable of being produced when required electronically, without human intervention. All of these are achievable given strides in technology (such as cloud based third party signature applications), digital security and regulatory enablers. These make a compelling case for incorporating and adopting electronic executions and digital signings as the new norm.

III. DIGITAL SIGNATURE CERTIFICATES AND ELECTRONIC SIGNATURES – A PRIMER

There are two kinds of electronic signature formats that are currently available under Indian law. These are:

(1) Digital Signature Certificate or DSCs:  Under the IT Act, a party may sign a document using a ‘digital signature’. To obtain a digital signature, a person will need to apply one of the Certifying Authorities (CAs) recognised by India’s Ministry of Corporate Affairs (MCA), to issue a Digital Signature Certificate (DSC). A DSC is, essentially, a secure digital key that certifies the unique identity of the individual signatory who is e-signing the document. The concerned document and the digital signature on it are then encrypted together with a watermark/tamper-proof seal. DSCs are popular in domestic transactions in India because they are ‘explicitly’ recognised by the MCA and thus by the Government of India giving it an appearance of being more legitimate compared to new and emergent electronic signing technologies. 

(2) Electronic Signatures offered by private third party applications: Instead of a DSC, a party signing a document may also use cloud based third party applications (TPA) such as Adobe or DocuSign, that are rapidly gaining popularity for their user-adaptability, security features and seamless cross border use across countries with technology neutral e-signature laws.  TPAs have useful features such as:

The features above go the extra mile to ensure fraud-proofing and security in contract executions. Moreover, some TPAs offer features such as allowing a single party to control the execution. For example, once the ‘execution version’ of a document is in agreed format, a law firm orchestrating the signing can actually ‘control’ the electronic signing process through the TPA platform or portal, and thus ensure that each signatory affixes her electronic signature to the document. The ‘signed’ document is then returned to the custody of the originator (for example, the law firm) for storage or for transmission by email to all the parties involved. TPAs also offer features that are the electronic equivalent to ‘initialing every page’, by allowing the digital imprint of each signatory to appear on every page of the document being signed. 

In terms of validity, enforceability and evidentiary value, Indian law does not discriminate between DSCs and other forms of secure electronic signatures through TPAs. The legal test is simply that of immutability – i.e. a guarantee that the document is encrypted and tamper-proof, capable of storage and recall in original form, and containing definitive marks of source identification such as the IP address used, the identity of the person signing, and date and time of e-signing. The rest is up to the commercial comfort of the parties, business familiarity and assurance of seamlessness – especially when multiple signatories or multiple signing locations or country jurisdictions are involved.

IV. PLANNING A VIRTUAL EXECUTION IN A DEAL – AND WHAT IT MIGHT TAKE

This section examines to what extent can electronic processes replace the absence of physical signing. Up until the point in time that ‘Execution Versions’ (EV) of transaction agreements and definitive documents are agreed between the parties, the process– whether physical and virtual – will be the same. Virtual signings differ from the point in time when ‘EVs’ and agreed forms of agreements and resolutions are frozen, ready for signature. 

The table below ‘buckets’ a typical signing checklist into three colour coded categories – green, yellow and red, depending on how amenable to electronic signature various documents are. These range from:

V. SUMMING UP – RISKS AND MITIGANTS 

At a time when panic regulations and ordinances are the norm, our accommodative legislative framework on electronic execution offers a beacon of hope. Together with emerging technologies that provide fast and secure cloud-based e-signing applications, parties to M&A and financing transactions have a genuinely credible alternative to physical signing. However, below are some of points to keep in mind : 

(1) Documents that cannot be signed electronically: Where documents are legally required to be signed in physical form, transaction parties should therefore consider including provisions for risk mitigation, such as consideration holdbacks, and (in debt deals) additional interest until such documents are satisfactorily executed and registered post lockdown. Where feasible, parties may also consider including a specific indemnity, hold harmless provision and a further assurances clause that will specifically bind an obligor to undertake physical signing within a stipulated period post lockdown.

(2) Have an electronic signing protocol: For lawyers orchestrating an e-signing, consider having in place a detailed e-signing protocol before execution. This protocol should set out all the steps and requirements for electronic signing, which parties will affirm over email. Once the e-signing is concluded, the entity in control of all “electronic originals” (e.g. the law firm or security trustee) will confirm electronic ‘custody’ of executed versions. Each signatory should provide an unconditional affirmation over email (or in a digitally signed undertaking) agreeing to be bound by the same.

(3) Affidavits and sworn statements:Depending on lockdown easing, consider procuring affidavits or undertakings from the signatories, estopping a party from disowning or challenging an electronic signature on a later date. 

(4) Counterparts : In multiparty agreements, if some parties are able to sign in physical form, ensure that the contract has a counterparts clause allowing for the same.

(5) Articles: Check that the constitutional documents of the company in no way restricts the use of electronic signatures, and signing without a company seal. If required, the Articles may need to be amended first and filed with the MCA

(6) M&A involving foreign parties: Where one signatory is not in India, parties will need to check whether the foreign country follows open technology neutral e-signature laws that are compatible with laws in India. Certain third-party electronic portals operate across countries and may be used to sign a common document. Alternatively, if compatible services are not available, the parties will need to accede to a private e-signature protocol. This will include mutual recognition of the execution version of the document and ‘virtual exchange’ wherein parties sign electronically in counterparts, with each party thereafter transmitting the signed version via email to the other.

(7) Stamp duty: E-signing by signatories spready across different states in India could prove expensive from a stamp duty perspective. Unless the Indian Stamp Act, 1899 is amended, digital signings will be liable for stamp duty at the highest rate of stamp duty amongst such states. 

(8) Technology Risk : Lastly, like all conundrums facing new and emergent technology, there are risks to e-signings – including cyber-security, hacking and fraud, and questions around the credibility and robustness of new third party applications and the solutions that they offer. Some applications offer a level of assurance against hacking, etc.  Before using a portal or TPA service, check the terms and conditions for the level of protection that is offered.

Annexure 1

Procedure for e-signing

DSC: 

A person that has a digital signature can simply affix the digital signature on the pdf version of the document in the following manner:

a) Open the pdf version of the document to be signed.

b) Click on the tool section at the top of the menu.

c) Click on the Certificates option, then select digital signature to be affixed.

d) Drag the digital signature on the page to be signed.

e) A pop-up will come, enter the password to authenticate the digital signature and then the document will be digitally signed.

Third party applications (for instance, on Leegality):

a) The originating party (OP) has to upload the final version of the document (after it is agreed by all parties) in PDF format on to the TPA portal.

b) The OP shall insert the details of the signatories, including email address.

c) Following this, a hyperlink will be shared with the concerned person on her mobile/email.

d) The recipient will authenticate themselves by giving details of their Aadhar and an OTP sent to the number registered with that Aadhar card.

e) In case of multiple signatories to the document the portal automatically compiles the document. Further, the OP can ensure through the ‘Settings’ tabs to give parties the option to replicate signature on each and every page.

f) Each signature affixed on a document shall carry the date and time at which such document was signed. In addition to this, there is an audit trail which is shared by each portal, which provides the parties with all the details regarding the execution like the IP Address used to sign the document along with the device used for affixing the electronic signature.

[This article includes excellent research inputs from Swapnil Sant, Associate, K Law]

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Pradeep Ratnam is a Senior Partner at K Law (Krishnamurthy & Co.) His practice areas include Mergers and Acquisitions, private equity venture capital, Infrastructure (renewable energy, conventional power, roads, EPC contracts, water, telecom and ports), Regulation, PPP, Banking, Finance and Project Finance, Restructuring, and Commercial Arbitration and Disputes. In addition to commercial contracts and transactional work, Mr. Ratnam’s bouquet of value-added legal services includes pre-litigation advice to banking and finance clients, NBFCs and fintech companies on wide ranging matters such as pre-litigation advisory, restructuring, mediation and arbitration. Mr. Ratnam also appears before the Delhi High Court, NCLT, Central Electricity Regulatory Commission (CERC), Securities Appellate Tribunal (SAT) and in the Supreme Court of India where he continues to represent financial institutions, consortium lenders, distress debt funds, private equity and asset reconstruction companies and promoters on a range of issues. Mr. Ratnam did his LL.B from National Law School of India University and his LL.M from University of Warwick. 

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[1] Trimex International FZE Ltd. Dubai Vs. Vedanta Aluminium Limited

[2] Tamil Nadu Organic Private Limited Vs. State Bank of India AIR 2014 MAD 103

[3] States like Delhi, Himachal Pradesh and Karnataka can print stamp paper for an amount up to Rs. 500 using the portal of Stock Holding Corporation of India Limited (SHCIL). Parties in other states like Haryana and Maharashtra can use e-Gras and e-SBTP for procuring non-judicial stamp paper. Alternatively, there is a third party application like e-drafter which a party can use to procure non-judicial stamp paper.

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