I. Background

While announcing extension of the lockdown, Prime Minister Narendra Modi had urged everyone to download  the ‘Aarogya Setu’ (“the app”), an application developed by the Government of India as a measure to combat the severe respiratory syndrome COVID-19. 

The app essentially requires access to the location and bluetooth of the device to find out proximity with anyone who might have tested positive for COVID-19. As per clause 1(a) of the privacy policy of the app, it collects the following information:

It further states that instead of storing the information itself, it creates a Digital ID (“DiD”) unique to each person. Hence when two people with the app on their phone come in contact with each other, the information will get stored on the other person’s device for a period of 30 (thirty) days and will be stored on the government’s servers as well. If a person has not tested positive for COVID-19, the information from the government’s server will get deleted in 45 (forty-five) days. 

II. Privacy and other concerns

a. Aarogya Setu is not an open source app

An open source programme is where the developer shares the source code for people to evaluate the application. Therefore, it is difficult for people to rely on whether the data is anonymised or that the application actually functions as has been advertised to the users.

If the app was made open source, any code developers could point out a bug or fix it. This would have also ensured transparency. 

b. Collection of Data

The data collected at the time of registration has been listed above. The primary principle of any data collection is that it should be limited to what is essential for the purpose of providing services (as is also provided by the upcoming Personal Data Protection Bill, 2019). The government has stated it will create a DiD from the data provided and use location and bluetooth to identify COVID-19 cases. There is a lack of clarity on the kind of data collected by the government, e.g. sex and profession of a person. This is in complete contrast with a similar app created by the Government of Singapore called ‘trace together’ where the data stored is limited to a mobile number which then creates an ID for every phone number collected. Therefore, the Government of India should clarify the purpose of collecting each detail of the user. 

The data retention time, for those users who have not been tested positive for COVID-19, on other user’s devices is 30 (thirty) days and 45 (forty-five) days on government’s servers. This data retention time is far exceeding the incubation period for COVID-19 which is 14 (fourteen) days, as declared by the World Health Organisation (“WHO”). Therefore, it shall be noted that the retention of data is beyond the period of incubation. 

c. Retention of Data

Clause 3 (a) of the privacy policy of the app states that the data shall be retained “as long as your account remains in existence or for such period thereafter as required under any law for the time being in force.”

The clause states that the data which has been collected at the time of registration shall be retained till the account of a user is active “or” as required by any law in force. The issue is with the vaguely structured language of the clause. The laws of India are not yet adequate to safeguard its citizens’ personal data. Therefore, to collect such information, and not deleting it after the said purpose of providing services has been fulfilled, raises a concern over how long shall the data actually be retained by the government. This allows the government to turn the data collected into a permanent architecture instead of deleting it after the purpose has been served. Moreover, this is also in contradiction to 

the upcoming Personal Data Protection Bill, 2019 which clearly states that the data shall be removed once the purpose of processing the data has been fulfilled.

Clause 3(c) of the privacy policy of the app states “nothing herein shall apply to the anonymised, aggregated datasets generated by personal data”. This gives the government the right to store the anonymised data even after the user has deleted its account for as long as it wishes. The concern is that firstly, ‘anonymised’ has not been defined either in the privacy policy or the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. Therefore, if the data is anonymised in such a way that it is possible to reverse engineer it, the privacy is not actually secured and the data protection concerns emerge. Further, the measures taken for the security of the aggregate datasets has not been laid down. Aggregate data sets denote the aggregate groups of places in the form of a summary. Therefore, one cannot be certain of the security of any community, which may be at risk. 

d. Storage of data on other devices and on the government server

It has been highlighted in the privacy policy of the app that the data is stored on the devices of those people with whom you have come in contact. The government has further clarified in the policy that the data will not be accessible by the people on whose device the data has been stored. However, the government has not stated if only they DiD is stored on other devices, or the anonymised data, or data in any other encrypted format. For example, Singapore’s app ‘trace together’ clarifies that the devices only exchange a temporary ID which is encrypted by a private key which is only held with the Ministry of Health.

Further, by virtue of the government having access to the devices itself, it is unclear as to whether the government also has access to other information like contacts or any other details that might be stored on the device. 

Further, clarity is required by the government as to which ministry shall have access to the data uploaded on the government’s server. For example, the privacy policy of ‘trace together’ clearly states that the data shall be held by the ministry of health. Further, it needs to be identified whether inter-ministerial data sharing shall be permitted.

e. Third party transfers

Clause 6 of the privacy policy of the app states that the data may be provided to “the persons carrying out medical and administrative intervention necessary in relation to COVID-19”. Therefore, the government can also broaden the scope of those people whose “medical and administrative” intervention is necessary. It is suggested that the 

government should have been more specific about the third-party transfers and transfer such data to ANY third party only after obtaining specific consent before such transfer, in order to uphold the spirit of privacy. Moreover, any medical and administrative intervention may also be carried out by private entities which may be involved in research sciences pertaining to COVID-19 or any medical agency which is helping the government with infrastructure required for COVID-19. Therefore, the government holds the power to broaden the scope of third-party transfers at any point in time. 

f. Limitation of liability

The Government of India absolves itself from any liability including inability to access the app or failure to accurately identify a person who has contracted COVID-19 or any unauthorised access to the information collected. Firstly, this portrays a clear lack of accountability on the part of the government. The government needs to consider a scenario where the false alarm may go to users, and their information is transferred to the third party without their specific consent. Further, as per the privacy policy, the data retention period is 60 (sixty) days after the cure of COVID-19. Therefore, in case of a false alarm, the event after which the data shall be deleted needs to be clarified. In such cases, the lack of accountability portrays miniscule concern to user’s data protection. Secondly, once the data is collected by any entity or organisation, it is their responsibility to ensure that there is no “unauthorised access” and shall take full responsibility in case of any misuse. Further, it is essential to define what an unauthorised access is, in order to ensure that reasonable security measures are in place. 

Lack of such assurance calls for a severe reconsideration on the introduction of the app to the general public and for it to be recalled until all such questions with regards to the citizens’ privacy have been answered. 

On a positive note, the government has designated the grievance officer who is the Deputy Director General of National Informatics Centre.

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Shivani Agarwal practices corporate and commercial law and is the founder of W-Investment (winvestment.wordpress.com). She closely follows developments in cryptocurrencies and blockchain laws. Her areas of work include banking laws, restructuring and project and finance.

Samaksh Khanna is the Co-founder of W-Investment (winvestment.wordpress.com), a blogging platform for mainly exploring the usage of blockchain in law and research on cryptocurrencies. He closely follows privacy laws and digital assets laws.

The Government of India, through the Procurement Policy Division, Department of Expenditure at the Ministry of Finance (MoF), has recently issued an office memorandum on May 13, 2020 (O.M. No. F. 18/4/2020-PDD) pertaining to force majeure (MoF Memorandum). The MoF Memorandum seeks to provide relief to parties who have contracted with the Government under and in accordance with Manual for Procurement of Goods, 2017 (Goods Procurement Manual); Manual for Procurement of Works, 2019 (Works Procurement Manual); Manual for Procurement of Consultancy and other services, 2017 (Consultancy Procurement Manual) (collectively Procurement Manuals); and public private partnership (PPP) contracts.

Notably, the MoF had earlier issued another office memorandum on February 19, 2020 (February Memorandum), stating that disruption of supply chain due to corona virus in China or any other country would be regarded as a natural calamity and the force majeure clause, as provided under the Goods Procurement Manual, may be invoked ‘wherever considered appropriate’. The February Memorandum was issued prior to Covid-19 affecting operations in India and recognized hardship faced by contractors with regard to import of equipment and goods from other countries which were impacted by the pandemic.

The MoF Memorandum goes a step further from the February Memorandum and provides clarity on the applicability of force majeure on account of disruption in transportation, manufacturing and distribution of goods and services in India and the restrictions placed by directives of the Ministry of Home Affairs under the Disaster Management Act, 2005, as well as those placed by the respective State Governments and Union Territories. Consequently, the MoF Memorandum seeks to remedy the effects of ‘extraordinary events or circumstances beyond human control leading to delays in or non-fulfilment of contractual obligations’ for parties contracting under the aegis of Procurement Manuals.

Restrictions imposed by the Government on economic activity during the lockdown have impacted the transportation, manufacturing and distribution of goods and services throughout the country, which have caused unforeseen delays to ongoing projects. The MoF Memorandum is a welcome step by the Government and provides relief to contractors and concessionaires who have been impacted by Covid-19 but did not have adequate relief factored into their contracts with government agencies.

There being no unified legislation for PPP projects, these are governed by plethora of guidelines, policies, manuals, and sectoral legislations and, most importantly, the terms of the contract executed between parties. It is noteworthy that the MoF Memorandum finds mention of PPP projects and states that ‘period of the contract may have become unremunerative’ with respect to PPP contracts.

While the settled law is that a contract becoming onerous does not lead to frustration, however, the MoF Memorandum seeks to address the extraordinary exigencies owing to the pandemic. Per the MoF Memorandum, under contracts for construction/works, goods and services and PPP with Government Agencies, parties can invoke the force majeure clause ‘after fulfilling due procedure’ and ‘wherever applicable’. This position of giving primacy to the contractual terms appears to be in sync with the position taken by the MoF under the February Memorandum.

The MoF Memorandum supplements the contractual agreement between the parties and not supersede it. However, this would apply only to agreements which do not have adequate provision for force majeure events. Having said that, it will not aid parties who have signed contracts with restrictive covenants. The settled legal position is that relief or excuse from performance on account of force majeure would be governed as per the wording of the contract. Notably, concession agreements based on the model concession agreements (MCA) provide for a robust mechanism for force majeure, which are unforeseen circumstances beyond reasonable control of the parties. The MCA’s further classify them into non-political, indirect-political and political force majeure events, with separate treatment and consequences for each. Therefore, a critical analysis of the underlying contract is imperative and sole reliance upon the MoF Memorandum in seeking relief may not be prudent.

The MoF Memorandum also provides that for such contracts, obligations which were required to be fulfilled on or after February 20, 2020 under PPP contracts would be extended for a minimum period of three months and not exceeding six months, without any cost or penalty on the contractors or concessionaires. Interestingly, the cut-off date is one day after the February Memorandum. The term of concession agreements for PPP projects is also stated to be extended by a similar period (three to six months), depending on specific circumstances of the case and for the period affected by the force majeure event.

The MoF Memorandum goes on to provide that a party would only be entitled to seek relief for force majeure if they were not in default as on February 19, 2020 (date of the February Memorandum). However, it does not specify if a single breach, which may not be material or cause impediment to completion of the project, would recuse the concessionaire or the contractor for claiming relief under force majeure. A non-material breach which is incidental to the performance of the concessionaire or contractor should not preclude them from claiming relief due to force majeure event. There needs to be greater clarity by the Government to avoid any ambiguity in interpretation.

Lastly, the MoF Memorandum also states that invoking force majeure would only apply in respect of non-performance attributable to the lockdown situation or restrictions imposed by legislation or executive orders of the Government on account of COVID-19 and that obligations of parties would resume upon expiry of the period specified in the MoF Memorandum.

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Hemant Sahai is the Founding Partner of HSA Advocates, a leading law firm in India and is recognized by peers, clients and diverse international legal publications as an “astute lawyer”, and one of the “leading lawyers” in India. For the last three decades, Mr. Sahai has been a trusted legal counsel to some of the largest corporates in India and overseas and is widely recognized for his role in shaping the Indian legal industry. In addition to the traditional legal transactional and advisory assignments for corporate groups, Mr. Sahai has also been an adviser to central government ministries, PSUs, regulatory authorities, multilateral institutions (World Bank, IFC, ADB, etc.), banks and financial institutions, etc. on a range of policy and regulatory issues. Mr. Sahai has served as an adviser to several working groups and committees formed by top government bodies/institutions including certain extra ministerial policy advisory bodies set up by the Prime Minister’s Office, Ministry of Power, Ministry of New and Renewable Energy and other government bodies, from time to time. He has advised the Planning Commission, Niti Aayog and other Governmental bodies on policy issues, drafting model transaction and policy documents, etc.

Introduction

The 18^th of May marked 65 years since the enactment of the Hindu Marriage Act,1955 (“The Act”). The Act was part of the gamut of the Hindu Code Bill (“The Bill”) which attempted to codify, unify and liberalise Hindu Personal Laws. The Act granted individuals, especially women, greater autonomy in terms of marriage, dissolution of marriage, absolute ownership of property, equal parity in terms of inheritance, adoption, maintenance and guardianship. The Bill applies to Hindu, Sikh, Jain and Buddhist faiths.[1]

It was initially drafted by a committee chaired by BN Rau and this draft was significantly reviewed by Dr. B.R. Ambedkar who introduced it on 11.04.1948 in the Constituent Assembly. The Bill faced severe opposition and an All India Anti-Hindu Code Bill Committee was formed on the grounds that the Constituent Assembly had no right to interfere with the personal laws of Hindus which are based on the dharma shastras. Several other organisations carried out various protests against the enactment of the Bill. The Bill was eventually passed in the Parliament owing to the relentless efforts of Dr. BR Ambedkar and Pandit Jawaharlal Nehru. The Hindu Marriage Act, 1955 is one of the four acts that are a product of the Bill.[2]

The Act, being a social welfare legislation, is constantly evolving, through amendments and judicial precedents, in order to incorporate the interests of the prevalent social and economic milieu and to account for the enlarging and dynamic interests of the people. Further, these judicial pronouncements assist in filling any lacunae in the Act and in expanding the ambit and purpose of the Act. Through the course of this essay, certain important amendments and judicial pronouncements that have helped widen the ambit and applicability of the Act are analysed and explained.

Certain Salient Provisions:

One of the most significant features of the Act is that it granted considerable autonomy to individuals, especially women in terms of marriage, divorce, maintenance, custody rights. The Act is an all-encompassing legislation in terms of granting several legal remedies to those who seek a decree of dissolution of marriage or a decree of restitution of conjugal rights. Among the most important features of the Act is that it specifically lays down conditions of a valid Hindu marriage. A marriage is considered to be valid only if at the time of marriage neither party has a living spouse, neither party is incapable of giving valid consequent due to unsoundness of mind, neither party though capable of giving a valid consent has been suffering from mental disorder making him or her unfit for marriage and procreation of child, person is not subject to recurrent attacks of insanity, the bride has attained the age of 18 years and the groom has attained the age of 21 years[3].  However, some conditions of a void marriage, like if the parties are within the degrees of prohibited relationship and/ or sapindas of each other, are permissible if the custom permits such type of marriages. Therefore, in some instances, there has been some room for customs and traditions, wherein these permissible customs take precedence over the codified law and thus, the custom permits such relations. Further, in the event that a marriage has been entered into wherein the bridegroom is under the age of 21 years and the bride is below the age of 18 years, then a punishment of rigorous imprisonment for a period that may extend up to two years or with a sum that may extend to Rs.1,00,000/- or both is attracted.[4] In the event that a marriage takes place wherein the parties are within the degrees of prohibited relationship or are sapindas to each other and their custom does not provide for it, then a punitive action of simple imprisonment which may extend to one month or with a fine which may extent to Rs.1,000/- or both is attracted.[5] The Act has outlawed bigamy, even if it is customary in certain communities and the punishment for bigamy is imprisonment for a period of seven years, and a fine[6].

Another important aspect of the Act was the differentiation between void and voidable marriages. A void marriage is one wherein the parties are within the degrees of prohibited relationship or are sapindas to each other or the marriage is bigamous in nature[7].  In the event that a marriage is void, then a decree of nullity can be sought. The conditions that make a marriage voidable is enumerated in Section 12 of the Act. In the event that a marriage is voidable, then it may be annulled by a decree of nullity.

The Act provides interim and permanent maintenance to the husband or wife in the proceedings, depending on who files the claim for maintenance, thereby removing any gender barriers in terms of accessing financial support and maintenance. Further, it has been recognised that a woman who actually earns is not entitled to any maintenance.[8] The Act also grants permanent and interim custody of children to either the husband or the wife, depending upon whom the welfare of the child lies with.

Dissolution of marriage through a decree of divorce and important amendments

One of the most important features of the Act is that it introduced the concept of divorce or dissolution of marriage. Prior to the enactment of the Act, the concept of divorce did not exist in India and an aggrieved person could not ask for a grant of dissolution of marriage. Even after the enactment of the Act, it was not easy to get a of decree of divorce from the Courts due to the limited grounds available for dissolution of marriage. Prior to the Marriage Laws (Amendment) Act 1976, the grounds under which a person could seek a grant of divorce was if a person was “living in adultery”, “ceased to be a Hindu”, etc. These grounds were limited, for example a person had to be continuously committing acts of adultery and a single digression would not have sufficed to constitute as grounds for a divorce. Further, mutual consent was not recognised as a ground for divorce and two individuals could not amicably separate from one another.

The Marriage Laws (Amendment) Act 1976 brought with it crucial changes. One crucial change brought about by it was the insertion of the provision of seeking a divorce on the grounds of mutual consent[9]. A petition or first motion petition can be presented by both the parties after the parties have been living separately for a period of one year or more. Thereafter, the second motion petition has to be presented after a period of six months has lapsed and then a decree of divorce is granted to the parties. The statutorily mandated “cooling off period” of six months can be “waived” in certain occasions.

The Hon’ble Supreme Court, in the case of Amardeep Singh v Harveen Kaur[10]  held that since the period of six months mentioned in Section 13B(2) of the Act is not mandatory but directory in nature, it will be the discretion of the concerned Court to exercise its powers, depending on  the facts and circumstances of each case, to waive the cooling off period of six months, where there is no possibility of parties to resume cohabitation and there are chances of alternative rehabilitation. In the event that the concerned Court is satisfied that  all efforts for mediation/conciliation including efforts in terms of Order XXXIIA Rule 3 CPC and Section 23(2) of the Act and Section 9 of the Family Courts Act, 1984 to reunite the parties have failed and there is no likelihood of success in that direction by any further efforts and that the parties have genuinely settled their differences including alimony, custody of child or any other pending issues between the parties and the waiting period will only prolong their agony, the concerned Court can waive the period of six months mentioned in Section 13B(2) of the Act. The aforementioned judgment of the Supreme Court is helpful as it provides a remedy to parties who wish to reducing the waiting period of 6 months in order to get a grant of decree of divorce. However, the statutorily prescribed waiting period of 6 months has not been invalidated and is still in place which ensures that parties always have the discretion to exercise the waiting period in order to re-think or re-evaluate their decision for dissolution of their marriage. Therefore, the two legal aspects co-exist and are available to parties who either want a decree of divorce be granted immediately or want to exercise the “cooling off period” of six months.

In India, the fault theory of divorce exists which means that the petitioner or the person seeking a divorce has to show that he or she is not at fault and is innocent and the fault lies with the respondent or the spouse. Further, the petitioner has to sufficiently and specifically lay down the fact that he or she has not taken any advantage of his or her wrong or been an accessor to or connived at or condoned the acts of the other party on which the dissolution of marriage has been sought. The Respondent in turn has to prove that he is not at fault. The fault theory of divorce embodies the concept that a marriage is a sacrament that has to be saved and protected. Further, due to the fault theory of divorce occupying centre stage in divorce proceedings in India, grounds such as irretrievable breakdown of marriage does not find a place in the grounds for divorce, despite the Parliament and various Law Commission Reports highlighting the importance of it being a ground for divorce.

Irretrievable breakdown of marriage essentially means that a divorce can be sought by one party on the basis that the marriage is irredeemable, dead letter and beyond repair and the husband and wife are living separately for several years and despite mediation and conciliatory efforts, it is still impossible for the parties to reside together as husband and wife. Even though irretrievable breakdown of marriage is not a statutory provision, the Hon’ble Supreme Court of India has recognised the concept of irretrievable breakdown of marriage, the lacunae in the statute with regard to this as a ground and has granted a divorce in several cases where the marriage has irretrievably broken down by exercising its inherent jurisdiction under Article 142 of the Constitution of India (“the Constitution”) in a plethora of judgments. In the case of Munish Kakkar vs Nidhi Kakkar, the Hon’ble Supreme Court of India held that since the continuity of the marriage between the parties was fruitless and was causing further emotional trauma and disturbance to both the parties, the sooner it comes to an end, the better it would be, for both the parties. Therefore, the Court exercised its inherent jurisdiction under Article 142 of the Constitution and granted a decree of divorce and dissolved the marriage between the parties since  an end to this marriage would permit the parties to go their own way in life after having spent two decades battling each other and have a better life separately.

In another case of R.Srinivas Kumar v R. Sametha, the Supreme Court exercised its inherent power under Article 142 of the Constitution by granting a decree of divorce since the parties have been living separately for more than 22 years and it will not be possible for them  to live together and that the marriage is totally unworkable, emotionally dead, beyond salvage and has broken down irretrievably. The Supreme Court also clarifies that if both the parties amicably agree for separation permanently and for a divorce through mutual consent, then they can approach the appropriate forum to seek a divorce. However, if only one party does not agree, then the powers of the Supreme Court under Article 142 of the Constitution can be invoked. There are several other cases in which the Supreme Court has invoked Article 142 of the Constitution such as Naveen Kohli v Neelu Kohli[11] which also recommended the Government to consider amending the Act to incorporate irretrievable breakdown of marriage as a ground for divorce., Samar Ghosh v Jaya Ghosh[12], Sukendhu Das v Reeta Mukherjee[13] amongst others.  

The Law Commission of India in its 71^st Report, in as early as April 1978 recommended the Act to be amended in order to insert irretrievable breakdown of marriage as a ground for divorce. Thereafter, in its 217^th Report dated 30.03.2009 once again recommended that irretrievable breakdown of marriage should be incorporated as a ground for granting a decree of divorce in light of several Supreme Court precedents that did not exist during the recommendation made in its 7st Report. Further, the Marriage Laws (Amendment) Bill, 2010 was introduced and passed in the Rajya Sabha which sought an amendment to the Act to incorporate irretrievable breakdown of marriage as a ground for divorce. However, the Bill lapsed as the Parliament’s session also lapsed and was thereafter never introduced. Therefore, the prevailing sentiment is that the Act be amended in order to insert irretrievable breakdown of marriage as a ground for divorce and the same has been recognised as being imperative by various Law Commissions.

Another curial feature of the Act is that it conferred legitimacy upon children born from void and voidable marriages and did not automatically render them illegitimate due to no fault of theirs. Before the Marriage Laws (Amendment) Act 1976 was enacted, under Section 16, a child begotten from a void or voidable marriage was considered legitimate only if a degree of nullity was awarded for the marriage between the parents of the child. Further, such a child would be considered to be legitimate as if the marriage between the parents of the child had been dissolved instead of being annulled [14]. Ergo, in the event that the parents of the child did not obtain a declare of nullity for their marriage, the child would be considered an illegitimate child and therefore would be precluded from various inheritance rights. However, after The Marriage Laws (Amendment) Act, 1976 was passed,  a child born from a void or voidable marriage will be considered to be a legitimate child in the same manner as though he was begotten from a valid marriage even if a degree of nullity or annulment has not been obtained by the parents of the child. This was a crucial and important amendment as now illegitimate children’s familial rights would not suffer any infirmity[15].

Another provision of the Act which has been under challenge numerous times and is also presently under challenge is the provision regarding restitution of conjugal rights. Section 9 of the Act provides that in the event that a husband or wife without reasonable cause withdraws from the society of the other, then a petition for the restitution of conjugal rights may be presented by the aggrieved party. The constitutional validity of this provision is presently under challenge in the Supreme Court on the grounds that it is violative of the right to privacy, individual autonomy and dignity of individuals guaranteed under Article 21 of the Constitution. Several countries such as United Kingdom, South Africa and Ireland have abolished provisions and legal actions of restitution of conjugal rights. 

Therefore, to conclude, the Hindu Marriage Act, 1955 is an important piece of social welfare legislation that has provided  a codified framework along with legal remedies with regard to issues of marriage and divorce. Further, the Act is constantly evolving and changing to incorporate the prevailing sentiments and interests of people and the milieu. While there does exist certain lacunae in the Act, the lacunae are filled through various judicial pronouncements. Further, certain provisions are becoming a little gender neutral and are accounting for other circumstances, thereby giving all parties an equal and fair opportunity. 

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Prachi Dutta is a practising Advocate in New Delhi. She studied History at Hindu College, Delhi University and thereafter pursued LLB Hons. from Jindal Global Law School, Sonepat.

[1] India After Gandhi by Ramchandra Guha

[2] Ibid

[3] Section 5 of the Act

[4] Section 18 of the Act

[5] Ibid

[6] Section 494 Indian Penal Code, 1860

[7] Section 11 of the Act

[8] K.N. vs R.G. [MAT. App. (F.C.) 93/2018] , Rupali Gupta vs Rajat Gupta (2016) 234 DLT 693 (DB)

[9] Section 13B of The Act

[10] (2017) 8 SCC 746

[11] (2006) 4 SCC 558

[12] (2007) 4 SCC 511

[13] (2017) 9 SCC 632

[14] Section 16 (pre-amendement)- Legitimacy of children of void and voidable marriages.—Where a decree of nullity is granted in respect of any marriage under section 11 or section 12, any child begotten or conceived before the decree is made who would have been the legitimate child of the parties to the marriage if it had been dissolved instead of having been declared null and void or annulled by a decree of nullity shall be deemed to be their legitimate child notwithstanding the decree of nullity:

Provided that nothing contained in this section shall be construed as conferring upon any child of a marriage which is declared null and void or annulled by a decree of nullity any rights in or to the property of any person other than the parents in any case where, but for the passing of this Act, such child would have been incapable of possessing or acquiring any such rights by reason of his not being the legitimate child of his parents.

[15] Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi [(1996) 4 SCC 76]

Abstract

This article elucidates the general meaning, idea, and extent of the legal doctrine of ‘frustration’ and clause of ‘force majeure’ in regard to section 56 of the Indian Contract Act, 1972. It deals briefly with the concept and submission of force majeure in India along with other jurisdictions’ and addresses what can amount to force majeure excuse. There is always a sense of confusion when it pertains to ‘Doctrine of Frustration’ and clause of ‘Force Majeure’ in an operating contract. This uncertainty sometimes brings either of the parties of the agreement, to the court of law and brings an end to the contract. Therefore both Doctrine of Frustration and clause of Force Majeure is comprehensively analyzed and interpreted herein.

Keywords

Force Majeure; Frustration of contract; concept; Section 56; Indian Contract Act; Application; reasons; case laws[1]

1. INTRODUCTION

The principle of freedom to contract is a founding principle upon which the world of commercial contracts operates. This strictly means that the parties to a contract are free to agree on their own rights and obligations to be included in their agreement. Problems can occur however, where one party is prevented from, or unable to, carry out his/her obligations under the contract due to a supervening events beyond their control. As a result, a doctrine has accordingly emerged in the law of contract to provide for situations where such an eventuality occurs.

Under the doctrine of frustration, a promisor is relieved of any liability under a contractual agreement in the event of a breach of contract where a party to the agreement is prevented from performing their obligations, due to some event, which become impossible to perform and outside their control. In such circumstances, the law deems it unfair to compel the injured party to comply with the terms of the agreement. Hence, the law relieves this person from their obligations by regarding the contract as frustrated for all purposes.

Therefore, structurally this article will proceed in three parts. Part I will discuss about the notion behind doctrine of frustration with the help of judgments’. The second part deals with the explanation behind Force Majeure in India along with other jurisdictions’ followed by a conclusion.

I. Section 56 of Indian Contract Act, 1872

Agreement to do impossible act – An agreement to do an act impossible in itself is void. —An agreement to do an act impossible in itself is void.

Section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties. (Naithati Jute Mills Ltd. V. Khyaliram Jagannath, AIR 1968 SC 522) (Para 7)

To attract and apply Section 56, the following conditions must be filled:

(a) There should be a valid and subsisting contract between the parties,

(b) There must be some part of the contract yet to be performed,

(c) The contract after it is entered, becomes impossible to be performed,

(d) The impossibility is by reason of some events which the promisor could not prevent, and

(e) The impossibility is not induced by the promisor or due to his negligence

Paragraph 2 of section 56 makes the contract to do an act void on account of following events:

Paragraph 3 of section 56 postulates that where a person has promised to do something, which –

Which promisee did not know to be impossible or unlawful, such promisor will be held liable to make compensation to the other party for any loss sustained through non-performance of the promise.

Frustration of Contract:

(U.P. State Electricity Board v. Kanoria Chemical, AIR 1986 SC 156) (Para 41)

Specific grounds of frustration

The principle of impossibility/frustration of contract of performance is applicable to a great variety of contracts. The following grounds of frustration have become well established:

(1) Destruction of Subject-Matter

The doctrine of impossibility applies where the actual and specific subject matter of the contract has ceased to exist.

(2) Change in Circumstances

Similarly, the contract may be declared as frustrated by the courts if the parties to an executory contract, which is not fully performed or fully executed face in the course of carrying it out with a turn of events, which they did not anticipate prior to the execution of the contract like the following:

Escalation

(3) Death or incapacity to perform

A party to a contract is excused from performance if it depends upon the existence of a given person or becomes too ill to perform.

For example:

(a) A contract to act at a theatre for six months in consideration of a sum, paid in advance by B. On several occasions A is too ill to act. The contract to act on those occasions becomes void. (Section 56 Illustration (e) from the Contract Act)

(4) Government or Legislative Intervention –

(i) A contract will be dissolved when legislative or administrative intervention has taken place.

(ii) Where the intervention makes the performance unlawful, the courts will have no choice but to put an end to the contract.

(5) Intervention of War

(6) Application to Leases

(7) Frustration of contract of sale

(8) Frustration of contract? Award on Interest

(9) No party can say they will be bound by only one part of the agreement and not the other part, unless such other part is impossible of performance

(10) If the performance of the contract comes to an end on account of repudiation, frustration or breach of contract, arbitration agreement would survive for the purpose of resolution of disputes

(11) Delay in performance of contract

(12) Forfeiture of earnest money

(13) Specific Performance of contract

(14) Doctrine of frustration – Induced frustration – whether contract stood frustrated due to non- performance of obligation by the other party

(15) Doctrine of frustration can apply only to executory contracts and not the transaction which have created a demise in presenti

(16) Contract of Guarantee – Doctrine of Frustration, inapplicability

II. FORCE MAJEURE: A DETAILED ANALYSIS

Some events are unavoidable, nobody can dodge them and no specific class of people can avert its effects by using any power be it of money, strength etc. Everybody gets affected, some more than the others.

The following report will make your understanding better about this concept.

COVID- 19 has been declared as a pandemic by the World Heath Organisation, and the Ministry of Health and Family Welfare has issued an advisory on social distancing, w.r.t. mass gathering and has put travel restrictions to prevent spreading of COVID-19.

On 19^th February, 2020, vide an office memorandum O.M. No. 18/4/2020-PPD, the Government of India has clarified that the disruption of the supply chains due to spread of coronavirus in China or any other country should be considered as a case of natural calamity and “force majeure clause” may be invoked, wherever considered appropriate, following the due procedure.

In view of the current situation where COVID- 19 has a global impact, and is resulting in a continuous sharp decline in the market, it is important to understand the relevance of force majeure clauses, and the effect thereof.

INDIA

1. What’s Force Majeure in Indian law?

2. What is the legal provision of claims for Force Majeure in Indian law?

“Section 56. Agreement to do impossible act—An agreement to do an act impossible in itself is void.

Contract to do act afterwards becoming impossible or unlawful.—A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.”

Invocation of force majeure

The sine qua non for invocation of Section 56 is as below:

It is imperative to note that force majeure is present in common law as the doctrine of contract. In other words, Doctrine of Frustration is an inbuilt factor in Section 56 of the Act. However, it can neither be invoked in case of commercial hardship nor can be used as a device to avoid a bad bargain.

In Ganga Saran v. Ram Charan AIR 1952 SC 9, where Fazl Ali J speaking for the three member bench of Supreme Court held that;

“It seems necessary for us to emphasize that so far as the courts in this country are concerned, they must look primarily to the law as embodied in sections 32 and 56 of the Indian Contract Act, 1872.”

The heart to the Doctrine of frustration travels through Section 32 and hence it should be read together for the purpose of Section 56.

3. How do the Indian precedents define Force Majeure?

Over the years, Courts in India have dealt with various situations where they have defined force majeure in different manners. Some of those are enlisted below.

Force majeure clauses vary. They can be specific (a list of specific events that are treated as being force majeure, such as fire, flood, war or similar) or general (referring simply to events outside the reasonable control of a party to the contract), or a combination of both.

“19. McCardie J. in Lebeaupin v. Crispin ([1920] 2 K.B. 714), has given an account of what is meant by “force majeure” with reference to its history.

The expression “force majeure” is not a mere French version of the Latin expression “vis major”. It is undoubtedly a term of wider import. Difficulties have arisen in the past as to what could legitimately be included in “force majeure”.

Judges have agreed that strikes, breakdown of machinery, which, though normally not included in “vis major” are included in “force majeure”.

An analysis of rulings on the subject into which it is not necessary in this case to go, shows that where reference is made to “force majeure”, the intention is to save the performing party from the consequences of anything over which he has no control.

This is the widest meaning that can be given to “force majeure”, and even if this be the meaning, it is obvious that the condition about “force majeure” in the agreement was not vague. The use of the word “usual” makes all the difference, and the meaning of the condition may be made certain by evidence about a force majeure clause, which was in contemplation of parties.

In this case, the court held that force majeure will not include economic problems like insufficient funds, it will only include unforeseeablt and unpredicted circumstances.

“Force majeure” is governed by the Indian Contract Act, 1872. The Supreme Court held: “In so far as a force majeure event occurs de hors the contract, it is dealt with by a rule of positive law under Section 56 of the Contract. The performance of an act may not be literally impossible but it may be impracticable and useless from the point of view”.

“the Act does not enable a party to a contract to ignore the express covenants thereof and to claim payment of consideration, for performance of the contract at rates different from the stipulated rates, on a vague plea of equity. Parties to an executable contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate, for example, a wholly abnormal rise or fall in prices which is an unexpected obstacle to execution. This does not in itself get rid of the bargain they have made.”

At various points of time, different Courts of India and England have dealt with the subject matter but the concept and substance of the entire concept more or less remains the same subject to facts and contracts, which vary from case to case.

a. The event shall render the contract impossible to perform –

b. The event shall be unavoidable and economic hardship alone cannot result in Force Majeure – a rise in cost or expense has been stated not to frustrate a contract.

c. The event must be unforeseeable – the event must be incapable of being anticipated or predicted by common due diligence. An advance warning for an expected Force Majeure event, shall not trigger the Force Majeure clause.¹⁶

d. Causal test or ‘but for’ test – The event shall have occurred not by default of the party but only as a result of the supervening event. This is referred to as the “causal test” where the Court examines whether the non-performance is a direct result of a supervening event; and “but for” such supervening event, the contract would have otherwise been performed. This causal test is the most crucial test, which shall be satisfied by adducing evidence. In a situation where Force Majeure event has indeed occurred, and if such event did not preclude the party from performing the contract, such party cannot take benefit of Force Majeure clause.

e. Conditions precedent must be fulfilled – Most Force Majeure clauses provide that a non-performing party seeking benefit of Force Majeure clause in the contract, shall put the other party to such notice. These terms are conditions precedent for invocation, failing compliance of such clauses, a party may not be able to take shelter under Force Majeure.

f. Duty to mitigate – A party relying on Force Majeure clause is supposed to take all the necessary measures to mitigate the loss caused due to its non-performance.

g. The party seeking to rely on the clause may also need to show it was not aware, at the time of entering the contract, that the circumstances giving rise to the event of force majeure was likely to occur.

In Taylor vs. Caldwell, (1861-73) All ER Rep 24, the law in England was extremely rigid. A contract had to be performed after its execution, notwithstanding the fact that owing to an unforeseen event, the contract becomes impossible of performance, which was not at the fault of either of the parties to the contract. This rigidity of the common law was loosened somewhat by the decision in Taylor (supra), wherein it was held that if some unforeseen event occurs during the performance of a contract which makes it impossible of performance, in the sense that the fundamental basis of the contract goes, it need not be further performed, as insisting upon such performance would be unjust.

In Gulf Oil Corp. v. FERC 706 F.2d 444 (1983), the U.S. Court of Appeals for the Third Circuit considered litigation stemming from the failure of the oil company to deliver contracted daily quantities of natural gas. The court held that Gulf- as the non- performing party- needed to demonstrate not only that the force majeure event was unforeseeable but also that the availability and delivery of the gas were affected by the occurrence of a force majeure event.

Inability to sell at a profit is not the contemplation of the law of a force majeure event excusing performance and a party is not entitled to declare a force majeure because the costs of contract compliance are higher than it would have liked or anticipated. In this regard, the following cases are relevant:

“Performance may be impracticable because extreme and unreasonable difficulty, expense, injury, or loss to one of the parties will be involved. A severe shortage of raw materials or of supplies due to war, embargo, local crop failure, unforeseen shutdown of major sources of supply, or the like, which either causes a marked increase in cost or prevents performance altogether may bring the case within the rule stated in this Section. Performance may also be impracticable because it will involve a risk of injury to person or to property, of one of the parties or of others, that is disproportionate to the ends to be attained by performance. However, “impracticability” means more than “impracticality.” A mere change in the degree of difficulty or expense due to such causes as increased wages, prices of raw materials, or costs of construction, unless well beyond the normal range, does not amount to impracticability since it is this sort of risk that a fixed-price contract is intended to cover.”

JUDGMENTS

UNITED KINGDOM

Given the relatively narrow scope of the doctrine of frustration, parties who find they are unable to perform their contractual obligations due to the COVID-19 outbreak, quarantine measures or other government actions should consider whether their contracts contain express force majeure or similar clauses and whether they fall within the protection offered by the relevant clause. Typically, a force majeure clause in a contract will: 

UNITED STATES OF AMERICA

CANADA

The key criteria for establishing frustration: the occurrence of an unforeseen event that causes a radical change in performance of contract for the relying party.

This radical change is generally one that makes performance under existing circumstances impossible, impractical or frustrates the original purpose of the agreement. The onus would be on the party alleging frustration of the contract to prove these elements.

Despite the occurrence of an extreme and impairing event, Canadian courts (excluding Quebec) have not implied a force majeure provision in common law. This infers the standard rules of force majeure interpretation would not apply if there is no force majeure clause expressly written in the contract. However, there have been some cases where courts have pondered the applicability of force majeure in contracts missing such express provisions.

In Royal Bank v. Netupsky, the court acknowledged the novel question of whether a force majeure term could be implied or operate as a matter of law.  In this case, the Royal Bank of Canada had negotiated a line of credit agreement without a force majeure clause with a company that had substantial ties to Iraq.

At the time of contract, the bank was aware that Canada had set trade prohibitions with Iraq; i.e. the alleged force majeure event that led to the borrowing company’s credit default.  Although the court did not decide on the issue of whether a force majeure provision could be implied, analysis was conducted on the foreseeability of the alleged force majeure event.

It was held that there was no basis for a force majeure argument because both parties had agreed to a contract that did not contemplate the effects of the trade prohibitions despite having full knowledge of the inhibition.

In Naylor Group Inc. v Ellis-Don Construction Ltd., the doctrine is applied where, “a situation has arisen for which the parties made no provision in the contract and the performance of the contract becomes ‘a thing radically different from that which was undertaken by the contract.’ ” This statement can be broken down into three considerations:

The Situation: Similar to how force majeure clauses trigger upon force majeure events, the doctrine of frustration is activated by a supervening event that occurs through no fault of either party. Furthermore, according to Capital Quality Homes Ltd. v Colwyn Construction Ltd. and Gerstel v Kelman the event must not have been contemplated by the parties or foreseeable at the time of contracting.

The Absence of Contractual Provision: The lack of a contractual provision, generally referring to an express force majeure clause, is a prerequisite for the general doctrine of frustration to apply. This means that courts will choose to apply either frustration or force majeure—parties are not meant to rely on both.

The Radically Different Performance of Contract: According to a case of Bang v Sebastian, this consideration can be interpreted as a situation, which “renders the performance of the contract substantively different than the parties had bargained for”.  As McLean v Miramichi (City) further elaborates with reference to legal scholarship, the basis of changing circumstances can be categorized into three types of circumstances: (1) where the frustrating event has rendered performance impossible; (2) cases in which performance remains possible, but the purpose for which one or both parties entered the agreement has been undermined; and (3) cases where temporary impossibility has grounded discharge for frustration. 

CHINA

The China Council for the Promotion of International Trade (CCPIT) is offering force majeure certificates enabling Chinese companies, seeking to rely on such provisions, to suspend their contractual obligations after the submission of relevant documents.

According to the Contract Law of The People’s Republic of China, Article 117, and Article 118 state the situations under which a party can invoke force majeure. It is only in case of any unforeseeable, unavoidable, as well as impossible to overcome events, that a firm can do so.

But, any company invoking FM must establish a link between the non-performance of their contractual duties and the FM event. The FM event must result in non-performance directly and must be occurring during the performance period of the contract, i.e., after signing and before termination. Just because the process might have gotten a bit more time-consuming or costlier, the contractor may not be excused from their obligations. The affected party must produce sufficient evidence to prove that their working is impacted.

Under PRC General Provisions of the Civil Law, FM is an excuse for non-performance of the civil obligations. If a contract does not have the provision for FM, it is automatically implied. But, in case the clause is enlisted, the affected party can depend on it. However, any dispute that arises out of contractual non-performances, the final decision will be made by the court or an arbitrary body.

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Preeti Ahluwalia is an Advocate, who is currently practicing under a Senior Advocate at the Delhi High Court. She  graduated from the University of Leeds, the United Kingdom with a specialisation in International Business Law (LL.M) in 2018 and from Amity University, Noida with a specialisation in Commercial Law (BA LL.B) (Hons.) in 2017. She is a highly qualified Legal Researcher with impeccable editing and legal citation abilities to support comprehensive and readable research outcomes. She is also well-versed in Civil, Arbitration, and Company’s law and skilled in case analysis.

[1] Fareya Azfar, ‘The Force Majeure ‘Excuse” [2012] 26(2) Arab Law Quarterly 249-253

It is time for India to shift from a flourishing service economy to a manufacturing economy which is one of the most viable solutions to deal with the menace of fiscal deficit, rising unemployment and to climb up the ladder in the global economy. 

This article is not an insight into complex economic nuances and analysis, since I am no economist, rather it is only a broad checklist which is ensuing out of the day to day difficulties experienced by investors in setting up industries across the length and breadth of the country.

This blog is also in the wake of the discussion the Government of India recently had to lay down a road map to woo foreign investors in India.

In the above checklist, each and every bullet point is amenable to detailed discussions and brain storming to execute them into action. Losing this opportunity would be a failure of the economic mandate and the inability of India to introduce to the world a second large-scale manufacuring hub in Asia, which happens to be the need of the hour as well as the calling by the West and the Far East. 

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Advocate Matrugupta Mishra is Partner at New Delhi-based Praxis Counsel that specialises in infrastructure-related litigation and arbitration matters. 

“The caged bird sings with a fearful trill, of things unknown, but longed for still, and his tune is heard on the distant hill, for the caged bird sings of freedom.”[1] – Maya Angelou

Maya Angelou has eloquently and beautifully described the agony of being borne and bred in captivity. She speaks about longing for freedom, even if you have never actually known it. While the caged bird might be also understood as a metaphor for a person who has been enslaved or captivated, it cannot be denied that it is an apt and plausible description of animals who have been captivated and kept in a zoo.

Zoo, as we understand it today is a public place where wild animals are kept in captivation for the purpose of exhibition, scientific study, etc. This article aims to examine the origin of zoo, the applicable legal framework present in India, moral responsibility towards welfare of animals, etc., in order to determine the relevance and need of urban zoos present in the country today.

How did the practice start?

While, it is impossible to ascertain the exact time period when the practice of captivating animals began, there is considerable evidence to prove that it has been a part of human culture since ancient times. One of the earliest appearances of a concept akin to the modern zoo is dated back to 2500 BC Egypt. Paintings on ancient Egyptian tombs where wild animals such as antelope, gazelle, etc., are depicted wearing collars have been discovered. Historians have also found evidence that this practice was also found in other civilizations such as Chinese, Roman, Aztec, Greek, etc. However, zoos or zoological parks as we know them today only came into existence in 1800 century. The first zoo in the world is supposed to be in Paris.[2] While the Thiruvananthapuram Zoo is popularly considered to be the first zoo in India.[3] The usage of the term zoo only became prevalent in 19^th century in London as an abbreviation of zoological gardens.[4]  

It is pertinent and fair to mention that with the passage of time, there has been a significant transformation in the way zoo is build. From museum like structures with compact cages for keeping the animals, the structure of zoo has gradually evolved to more habitable enclosure for ensuring the conservation of wild-life. The biggest reason behind this transformation is the change in objective, i.e., from show of power and entertainment to scientific study and conservation of endangered species. 

What are the applicable laws?

The Indian Constitution: The Constitution of India recognizes the importance of protecting the wildlife and accordingly has not only entrusted the responsibility to the State but also to the citizens of India. Article 48A of Part IV of the Constitution, charges the State with the responsibility of protection and improvement of environment and safeguarding of forest and wild-life. While Article 51A(g) of Part IVA states that it is the fundamental duty of every citizen of India to protect and improve the environment including wild-life and to show compassion towards living creatures. However, being part of ‘the Directive Principles of State Policy’ and ‘Fundamental Duties’ respectively, the same are not enforceable by any court of law and merely acts as a guideline.

The constitution empowers both the parliament as well as the state legislature to pass statutes for preventing cruelty to animals and protecting wild-life and birds under the concurrent list of Schedule-VII of the Constitution.

Interestingly, it was the infamous 42^nd Amendment[5] to the Constitution that inserted Article 48A, 51A(g) and the abovementioned entries. Overshadowed by the other more notorious changes it brought about, the pivotal role played by the amendment in giving animal rights a greater representation under the Constitution, is often forgotten.

The Wildlife (Protection) Act, 1972: The Wildlife (Protection) Act, 1972 (“Act”) was enacted in September, 1972 with the objective “to provide for the protection of wild animals, birds and plants and for matters connected therewith or ancillary or incidental thereto with a view to ensuring the ecological and environmental security of the country”. Repealing all the other repugnant acts dealing with protection of wildlife[6], the Act became the primary statute for protection of wild animals and birds. However, it was only 19 years after the enactment of the Act, that the parliament first chose to incorporate provisions in respect to regulation of zoos vide the Wildlife (Protection) Amendment Act, 1991.

The term “zoo” is defined very broadly under the Act to mean “an establishment, whether stationary or mobile, where captive animals are kept for exhibition to the public and includes a circus and rescue centers but does not include an establishment[7] of a licensed dealer in captive animals.”[8] Inclusion of circus[9] and rescue shelters ensured that these establishment had to abide by the Act and hence gave greater protection to animals. Nonetheless, it is still debatable if the abovementioned establishment which are so distinctive in nature can be efficiently clubbed together for the purpose of regulation.  

Chapter IVA of the Act deals with central zoo authority and recognition of zoo. As per the provisions of the Act, not only a zoo requires to be recognized by the central zoo authority in order to operate, but post April 2003 a zoo may be only established after procuring prior approval from the Authority. In the year 2018-2019, there are 142 zoos which are recognized by the authority and are in operation.[10] 

The Central Zoo Authority is a statutory body established by the Central Government as the apex governing body. Apart from its role of granting recognition and approval to zoos, the Central Zoo Authority is also entrusted with functions such as specifying minimum standards for housing, vet care and upkeep of animals in the zoo, coordination of acquisition, exchange and loaning of animals for breeding in captivity, coordinating research, training, etc. Furthermore, the Authority also has the power to deny granting recognition, suspending recognition or canceling it if it has reasons to believe that  zoo is functioning in a manner which is prejudicial to the protection and conservation of wild life and/or is not abiding by the standards, norms and other matters as may be prescribed from time to time. Some of the general requirements prescribed[11] are to establish and sustain population of physically, genetically and behaviorally healthy animals, proper landscaping to provide a naturalistic environment, to refrain from display of sick and injured animals to the visitors, etc.

Apart from the above regulatory provisions, it is worthy to mention that the Act also penalizes any person who teases, molest, injures, feeds, or disturbs animals in the zoo with fine of rupees 2000/- or 6 months imprisonment or both. The penalty slightly increases for repeated or subsequent offenses.

Other relevant policies and guidelines: One of the earliest attempts to giving proper direction to the management of zoo by the government was in 1983 when the Indian Board of Wildlife decided to prepare and adopt national Wild-Life Action Plan. The first wildlife action plan was adopted in the year 1983 and was in effect till 2001. Presently, the third national wildlife action plan is in operation and shall be in operation till the year 2031.[12]

The government took the next major step towards regulating the zoos in India through the National Zoo Policy, 1998[13] issued on October, 1998. The policy recognized and emphasized on the role played by zoo in ex-situ conservation[14]. The policy laid down guidelines and strategies on acquisition, housing, health care of animals as well as the general planning and management of the zoo. Apart from the above the government has also come up with guidelines from time to time for the purpose of management of the zoos operating in the country.

Does zoo ensure the well-being of animals?

The applicable laws depict zoo to be a sanctum aiming to protect its inhabitants, however the accuracy of this utopian image is quite questionable. The inhuman beating of elephants in Mysore in 2005  [15], the rampant increase in death tolls of animals of National Zoological Park, Delhi[16] in the past few years are all reminders that this sanctuary is not that sacrosanct after all. What is even more perturbing is that many zoos present in the country today are negligent and deficient in providing the basic amenities such as proper drinking water, food, housing, veterinary care, environmental enrichment, safety and security to the animals.[17]

Only a very limited amount of credible information about such instances trickles down to the common man and even those often gets lost in the hustle of the usual news. The main source of information in respect to the animals in the zoo are the annual reports published by the zoo authorities. However, allegations that the figures of such reports are manipulated for the purpose of manifesting a more favorable condition of the animals in captivity has been a major concern for the environmentalist and animal activists for a long time.[18] Such circumstances highlight the lack of transparency. Therefore there is a need for re-evaluation of the present system and introduction of a better check and balance machinery in order to ensure the safety of these animals.

The big question: is it moral?

While the provisions of the Act and the National Zoo Policy make tall claims that the central purpose of a zoo is conservation of wildlife and education, the reality is that it majorly functions as a place for amusement. Hence, the question that stares us in the face is: ‘is it humane to strip wild animals from their natural habitat for the purpose of human entertainment?’.

It is necessary to address right in the start that the concept of zoo is not totally deprived of merit. Many species which were dangerously close to extinction have indeed been saved by breeding in captivity. Hence it is safe to conclude that zoo does act as an effective tool of ex-situ conservation. But the question remains that ‘is keeping animals in captivity the only way of saving them from extinction?’. The answer is in negative, as other methods of In-situ conservation do exist. It may also be argued that Ex-situ conservation is actually less desirable, as once animals become adapted to captivity it is difficult for them to survive in their natural habitat and are made dependent on human care forever.

Furthermore, many animals which are kept in zoo are not endangered species and therefore their captivity does not serve the purpose of conservation at all. Interestingly, a very similar question was raised before the Hon’ble Bombay High Court in People for Ethical Treatment of Animals vs. Commissioner, Brihan Mumbai Mahanagarpalika & Others[19]. In the said case it was argued that keeping animals which are not declared to be endangered in the zoo can’t be said to be done in furtherance of animal conservation and hence is not in line with the objective of the Act. However, the Hon’ble High Court restrained itself from making any observation or ruling on this contention and only noted the reply of the central government on this issue, which weakly claimed that the practice was necessary to inspire empathy among zoo visitors. The stand of the government here was quite oxymoronic as it claimed that for ensuring public empathy towards wild-animals, it is necessary to deprive them from their natural habitat and way of life. An act which may be reasonably argued to be sign of indifference itself.

Even though a case can be made both for and against the relevance and desirability of zoos in the country today, it is necessary to remember that Article 51A(g) of the Constitution charges each citizen with the moral responsibility to show compassion towards all living creatures and it is this test of morality that the urban zoo of present times miserably fails to qualify.

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Bhavya is a graduate of KIIT School of Law, Bhubaneswar. Since her graduation she has been working as an associate with Alliance Law Group. She is primarily involved in the corporate commercial practice of the firm including but not limited to corporate advisory, company law litigation and consumer disputes.

[1] ‘I know why the caged bird sings’ by Maya Angelou, first published in the year 1969.

[2] Zoo, National Geographic, resource library, https://www.nationalgeographic.org/encyclopedia/zoo/(Last accessed on 17.05.2020)

[3] Zoological Garden, Thiruvananthapuram, Department of Cultural Affairs, Government of Kerala, http://www.keralaculture.org/thiruvananthapuram-zoo/542 (Last accessed on 17.05.2020)

[4]Encyclopaedia Britannica, https://www.britannica.com/science/zoo(Last accessed on 17.05.2020)

[5]The Constitution (Forty-Second Amendment) Act, 1976, Legislative Department, government of India,  http://legislative.gov.in/constitution-forty-second-amendment-act-1976, (Last accessed on 17.05.2020)

[6] Section 66 of the Wildlife (Protection) Act,1972.

[7] It was the Wildlife (Protection) Amendment Act, 2002 (Act 16 of 2003) which substituted “but does not include a circus and an establishment” with “and includes a circus and rescue centres but does not include an establishment” and hence broadened the definition of the term. The Amendment came into effect from 1-4-2003.

[8] Section 2(39) of the Wildlife (Protection) Act,1972.

[9] Section 2(7A) of the Wildlife (Protection) Act,1972 defines it as “an establishment, whether stationary or mobile, where animals are kept or used wholly or mainly for the purpose of performing tricks or manoeuvres”

[10] The annual report by Central Zoo Authority for the FY 2018-19.

[11] Schedule of the Recognition of Zoo Rules, 2009 

[12] Central Zoo Authority website, http://cza.nic.in/page/en/national-wild-life-action-plan (Last accessed on 17.05.2020)

[13]National Zoo Policy, 1998,  available at http://cza.nic.in/page/en/national-zoo-policy-1998 (Last accessed on 17.05.2020)

[14] Off-site conservation.

[15] Elephants illtreated at Mysore Zoo by Hindu, published on September, 2014 https://www.thehindu.com/news/national/karnataka/elephants-illtreated-in-mysore-zoo-says-animal-welfare-group/article6462583.ece (Last accessed on 17.05.2020)

[16] The annual report by Central Zoo Authority for the FY 2017-18 and FY 2018-19 available at http://cza.nic.in/uploads/documents/reports/english/ar2018-19.pdf .

[17] India’s: Zoos a grim report by PETA India, https://www.petaindia.com/issues/animals-in-entertainment/indias-zoos/ (Last accessed on 17.05.2020)

[18] Delhi Zoo records 245 animal deaths in 14 months: Report published by Indian Express on 21^st July, 2019, https://indianexpress.com/article/cities/delhi/delhi-zoo-records-245-animal-deaths-in-14-months-report-5839808/ (Last accessed on 17.05.2020)

[19] Writ Petition No. 2825 Of 2004, judgment dated 18.07.2005.

After Article 370 of the Constitution of India was abrogated, the External Affairs Minister of India, Dr. S. Jaishankar stated to a foreign correspondent “you know what..? this Government actually does what it says in its election manifesto!”. While in this particular case the government actually did what it promised to, that has not always been the case with any dispensation whatsoever. Should we not ensure that each promise made in the election manifestos by every State and Central Government is actually enforced, to the hilt? Unfortunately, most Election Manifestos and the promises made in it by each political party are conveniently forgotten.

An election manifesto is generally defined as a published declaration of the intentions, motives or views of an individual, group, political party or the government, in certain cases. It therefore serves as a reference document or benchmark for the public at large on what a political party stands for. By comparing the ideologies, policies and programmes of political parties, electors can decide which party they should vote for, based on which election manifesto best aligns with their expectations and aspirations.[1] Political parties have published such election manifestos since the year 1952.

However, there are basic issues that every political manifesto has and this problem has persisted for 73 years. The first and fundamental problem with an election manifesto, across the political spectrum, is that it does not contain adequate details of the manner in which the policy would be implemented, the source of funds for such implementation, etc. Illustratively, political parties promised, in their election manifestos, to float schemes for the downtrodden with certain benefits on a daily, monthly or yearly basis with the intent to sway the electorate. However, the schemes in the election manifestos conveniently did not apprise the electorates as to how the ex-chequer would fund the scheme nor how an individual would qualify for receiving money under a particular scheme. In short, the scheme was absolutely bereft of any particulars.

In some manifestos, certain regional political parties offered freebies such as pressure cookers, stoves etc., with the sole intention to induce the electorate into voting for a particular party.

Finally, in the present political scenario, most manifestos tend to have offensive campaign material, which is inserted to stir a particular feeling or inclination.

The bottom line still is that despite each of these problems, election manifestos issued by the different parties have always played a crucial part in the formation of governments at the state as well as at the central level. Each government has in fact been brought to power purely on the strength of its election manifesto.

Unfortunately, the political parties who have been elected either on the strength of their manifestos or otherwise, tend to ignore, indefinitely delay, or even outright reject manifesto policies, which were popular with the public at the time of elections. These political parties can do this simply because there is no enforcement mechanism, parameter or guideline in respect of election manifestos, whether in the Representation of Peoples Act, 1951 or set by the Election Commission, despite repeated directions by the Supreme Court of India.

One aspect as described above and its growing trend, i.e. regional parties offering freebies in their election manifestos such as pressure cookers, gas stoves, washing machines, laptops, gold thalis, electric fans etc. came to the attention of the Supreme Court. It was argued that offering these freebies was contrary to the principles set out in Article 282[2] of the Constitution of India. To curb this growing problem of providing freebies and to provide a proper code of conduct, the Supreme Court[3]directed the Election Commission of India to frame guidelines on election manifestos to be included as part of the Model Code of Conduct for elections. The direction of the Supreme Court is set out hereunder:

 “79. Therefore, considering that there is no enactment that directly governs the contents of the election manifesto, we hereby direct the Election Commission to frame guidelines for the same in consultation with all the recognized political parties as when it had acted while framing guidelines for general conduct of the candidates, meetings, processions, polling day, party in power etc. In the similar way, a separate head for guidelines for election manifesto released by a political party can also be included in the Model Code of Conduct for the Guidance of Political Parties & Candidates. We are mindful of the fact that generally political parties release their election manifesto before the announcement of election date, in that scenario, strictly speaking, the Election Commission will not have the authority to regulate any act which is done before the announcement of the date. Nevertheless, an exception can be made in this regard as the purpose of election manifesto is directly associated with the election process.”

In terms of the directions of the Supreme Court thus, the Election Commission on August 12, 2013 held consultations with various political parties. However, despite express directions of the Supreme Court of India, the Election Commission did not issue guidelines whether in respect of freebies, timing of release of election manifesto, implementation of promises etc.

Instead, the Election Commission came up with generic guidelines stating that the election manifesto is to be in compliance with the Model Code of Conduct, the promises should not vitiate the purity of elections and that “in the interest of transparency, level playing field and credibility of promises, it is expected that manifestos also reflect the rationale for the promises and broadly indicate the ways and means to meet the financial requirements for it”. The guidelines were so broad and generic that the entire exercise further to the Supreme Court’s directions was rendered futile.

Some political parties, in the Lok Sabha election for the year 2014, exploited these patently weak guidelines when they released their manifestos on the day of voting in the first phase, with a view to sway voters. Unfortunately, the Election Commission at that point in time did not take any steps whatsoever against this behavioural pattern of these political parties.

Instead, after a period of 5 years, belatedly, the Election Commission only came up with additional guidelines for the Lok Sabha elections in 2019 stating that manifestos should not be released 48 hours before polling before each phase. However, such a guideline was and is actually of no particular use as the prospective voter would have already been swayed by the manifesto. It seemed that the Election Commission, in essence, completely forgot about the directions of the Supreme Court.

The ground reality however still is that even after 7 years of the directions of the Supreme Court, the problems in election manifestos continues. In other words, each manifesto continues to have virtually no detail, continues to offer freebies in some cases and has offensive campaign material. It is inconceivable that this problem has not been and could not have been addressed for 73 years since India’s independence.

The unfortunate truth is that after elections, these written manifestos are forgotten by the political parties and not enforced in law by courts, since there is no mechanism provided in any law whatsoever. [4] The opposition also does not seek to raise questions on enforcement of poll promises after elections.

The question that therefore begs an answer is if a prospective voter has voted on the basis of a promise, should s/he not have the legitimate expectation that the government voted to power perform such poll promises in full? Making the government perform its poll promises would ensure that tall promises merely to induce voters are not made and the promises made are sincere and well conceived.

As a solution, a mechanism ought to be set out in the Representation of Peoples Act, 1951 in respect of when the Election Manifesto is to be released by political parties, guidelines as to what such Election Manifestos should indicatively contain (including long term and short term agendas), indicate the ways and means to meet the financial requirements for such promises.

Further, if it is a manifesto of the party of the incumbent government, it should also contain the poll promises made in the previous election and as to how its MP’s, MLA’s and the ruling government have enforced and implemented the previous poll promises with data and statistics. A mechanism also ought to be put in place in order to impose penalties if this mechanism under the Representation of Peoples Act is not followed. This factor coupled with the potential to enforce the promises would deter political parties from making promises, which they cannot keep.

In countries such as Bhutan and Mexico, political parties are required to submit a copy of their election manifesto to the Election Commission before primary round of National Assembly elections. Manifestos are issued to the public only with the approval of the Election Commission, after thoroughly vetting and filtering out issues with potential to undermine the security and stability of the nation. In fact, in the United Kingdom and the Netherlands legal provisions applicable to offensive campaign material are screened and taken out. Such a principle ought to be applied to India as well. Each Election Manifesto ought to be screened by the Election Commission before it is released (to remove any objectionable or misleading campaign material) and a mechanism ought to be provided to enforce an election manifesto of a ruling party, if the party promising them is not implementing such poll promises. Messages, which evoke a certain feeling, ought to be screened and consequently removed.

It may be argued that it is best left to the political parties to regulate its own Election Manifesto and be critiqued by the media and academicians. It may also be argued that a political party may not be able to give a complete diagnosis or solution at the time of making the promise. However, if that be the case, it is incomprehensible how political parties are making promises in the first instance, without there being a basis, adequate information or “diagnosis” or a “solution”.

The question that one should ask is: Shouldn’t every process have absolute transparency? Should people exercising their franchise not be entitled to enforce and avail the benefit of an implied promise, which was the basis of their vote?

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Aaditya Vijaykumar is a lawyer practicing in the Delhi High Court. His practice areas include arbitration, litigation relating to contractual disputes, consumer disputes, gaming laws, anti-trust issues, litigation before the Debt Recovery Tribunal, NCLT, litigation for and on behalf of the government and PSUs, as well as litigation relating to property disputes and election laws.

[1]https://eci.gov.in/election-manifestos/

[2] Article 282 of the Constitution of India: The Union or a State may make any grants for any public purpose, notwithstanding that the purpose is not one with respect to which Parliament or the Legislature of the State, as the case may be, may make laws.

[3] S. Subramaniam Balaji v. Government of Tamil Nadu, dated 5th July 2013 in SLP(C) No. 21455 of 2008

[4]https://timesofindia.indiatimes.com/india/Promises-in-poll-manifesto-not-legally-enforceable-Supreme-Court/articleshow/49146022.cms, https://www.tribuneindia.com/news/punjab/hc-can-t-direct-parties-to-implement-poll-manifestos/727965.html

Our Constitution, the most fundamental document which every one of us has pledged to defend and protect, has been based on certain fundamental ethos, which seeps throughout the whole scheme of provisions including the Preamble.

The Preamble very authoritatively has been adopted and enacted in the name of “We the People of India” and declares unequivocally that India is a sovereign, socialist, secular, democratic, republic and further secure to all its citizens; Justice, social, economic and political; equality of status and of opportunity and also Fraternity, assuring the dignity of individuals, among other things.

If we look at the words very carefully, our Constitution provides for protecting the rights of the citizens irrespective of their economic status and also assures human dignity. This sentiment further finds its roots and is echoed in the form of other provisions under Part III (Fundamental Rights) and Part IV (Directive Principles of State Policy) of the Constitution. Article 21 talks about rights to life and further Articles 38, 39, 41, 43, 46 creates an obligation on the state to undertake necessary steps towards the fulfilment of an egalitarian state. 

Though Directive Principles of State Policy (DPSP) are unenforceable unlike fundamental rights (FR), Dr B.R. Ambedkar referred to DPSP as “instrument of instructions” and stated “We do not want merely to lay down a mechanism to enable people to come and capture power.  The Constitution also wishes to lay down an ideal before those who would be forming the government.  That ideal is of economic democracy.” The Supreme Court further in the case of Minerva Mills v. Union of India (1980) held that FR and DPSPs are like two wheels of the same chariot, one no less important than other, snap one and the other will lose its efficacy, the Court further declared that the harmony between FR and DPSP is the basic structure of the Constitution. Reiterating the words of the Supreme Court itself, the edifice of Indian Constitution is built upon the concepts crystallised in the preamble. 

The recent instances with respect to the plight of migrant workers should really make us wonder whether this is the failure of the promises made by the Constitution to those who the Constitution had put up at the higher pedestal and made an obligation on the State to protect their rights and dignity at all costs and also, whether such incidents are not a violation of oath by Constitutional authorities to defend and protect the Constitutional principles. All hopes were rested on the Hon’ble Supreme Court,  being the sentinel qui vive and have had the likes of Justice Krishna Iyer, Justice Bhagwati and Justice Khanna, to assume the role and act as a crusader of human rights, which it has been successfully performing since independence and would be sympathetic towards the constitutionally guaranteed rights of the migrant workers and the poor and downtrodden in the society by drawing attention towards their needs by the other organs of the Government and the well-off section of the society, but, alas, in the recent pronouncement by the apex court of the country, it stated its inability to monitor and implement the movement of the migrant workers across the country. It is noteworthy to mention that earlier, the Supreme Court had disposed of the PIL seeking migrant workers’ welfare during the pandemic and consequential lockdown saying that the Centre and states are taking appropriate steps to provide them relief. The judgment aforementioned and the approach of the organs of the Government (judiciary being one of the important pillars) have failed to assure the Constitutional rights to the migrant workers and it is a blatant violation of their guaranteed fundamental rights, to say the least. The Constitution under Art 21 assures right to life and with so many lives being lost on the roads, it poorly reflects on the Government’s attitude to protect the vulnerable. Even Justice Lokur, in his recent interview, pointed out that “the Supreme Court, he said, is not fulfilling its constitutional functions adequately. Certainly, it should be more pro-active than it has been.” Though as a ray of hope, Madras High Court on Saturday (16.05.2020) took suo moto cognizance and directed the Central Government and the State Government to submit an action report on measures taken to alleviate sufferings of migrant workers amid Covid-19 lockdown situation. 

In another important instance, one of the major facts that must not be ignored in this matter is also that how far the law has played its role to protect and restore the constitutional and fundamental rights of these migrant labourers of India.  No doubt they are a substantial part of the nation’s population, and as a country, we are accountable to them. This is to note that in the hindsight some state governments (Uttar Pradesh, Madhya Pradesh, Rajasthan, Punjab, Haryana, Himachal Pradesh and more states likely to join) have provided for a relaxation of operation of certain provisions of labour laws to attract investments or have completely suspended its applicability for the time being. These labour legislations of India also known as social security legislations establish a system that ensures protection of the labour community from exploitation. Recently, ILO in this context has stated that “labour laws protect the well-being of both employers and workers. They are an important means to advance social justice and promote decent work for all. Consequently, the formulation of labour laws and revisions is most effective when it emanates through a strong dialogue.” These actions are so ghastly that in addition to being violative of Constitutional provisions are also in blatant violation to India’s international obligations, especially the ILO Declaration on Fundamental and Principal Rights of Work which India had adopted in 1998. 

The followings are some of the highlighted reforms brought by different states, overtime of up to 72 hours and the period of working shifts in factories to increase from 8 hours to 12 hours, no inspection in the firms employing less than 50 workers and in the small and medium enterprises, the inspection will take place only with the permission of the labour commissioner or in case of complaint (Madhya Pradesh Government). Uttar Pradesh Government by an audience defunct the substantial labour laws for the next three years to provide a cushion to the sagging businesses and factories in the state. Now, the industrial units will also not have to worry about inspection or enforcement officials knocking on their doors as they would not be looking if the labour laws are implemented. 

Rajasthan government with addition to raising the working hours from 8 hours per day to 12 hours per day, the state has amended Industrial Disputes Act to increase the threshold for lay-offs and retrenchment to 300 from 100 earlier. In order to recognise the trade union, the threshold membership of the trade union has been increased from 15 per cent to 30 per cent. 

Leaving the technicality of law apart, the major question as a sovereign, socialist, secular, democratic, republic we have to face is, how far as a nation we are successful to ensure the basic rights of these citizens to remain intact. This leaves us in a question unanswered, despite having the best constitutional regime in place, is the law becoming an instatement of oppression?  

Poverty is the society’s malady and sympathy, not sternness is the judicial response.

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Neha Tripathi and Soumya Rajsingh are both Assistant Professors (Law) at the Maharashtra National Law University, Aurangabad.

The Finance Act, 2020 has made several amendments to the CGST Act, 2017 and corresponding amendments to the IGST Act, 2017 and UTGST Act, 2017. We have attempted to analyse the provision wise amendment made by the Finance Act, 2020 to the CGST Act, 2017.

Analysis:

The above amendment has been made due to reorganization of Union Territories by way of merger in case of ‘Dadra and Nagar Haveli and Daman and Diu’ and constitution of new Union Territory ‘Ladakh’.

Analysis:

Section 10(1) of the CGST Act, 2017 provides that a class of registered person may opt to pay a fixed rate of tax on his aggregate turnover subject to conditions and restrictions as may be prescribed. This facility is referred as Composition Scheme or Composition Levy. Section 10(2) of the CGST Act, 2017 provides the conditions upon satisfaction of which a person will be eligible to opt for Composition Scheme.

The above amendment provides for additional condition on the person who wants to opt for Composition Scheme under Section 10(1) of the CGST Act, 2017. The additional conditions are as under:

There might be a confusion that ‘not leviable to tax under CGST Act’ will include supply of services which are exempt. In our view, ‘non-leviable to tax under CGST Act’ will only include non-taxable supplies and not exempt supplies.

“(47) “exempt supply” means supply of any goods or services or both which attracts  nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

(78) “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;”

It is important to note that the above conditions shall be applicable to the proviso to Section 10(1) of the CGST Act, 2017 which allows the person paying tax under Composition Scheme to make Supply of services upto 10% of turnover in a State or UT. Thus, the person who wants to opt for Composition Scheme can make Supply of services upto 10% of turnover but such supply of services shall not be a:

Analysis:

Section 16(4) of the CGST Act, 2017 provided a time limit for availing Input Tax Credit with respect to an invoice or debit note. The time limit for availing Input Tax Credit against a debit note was linked with the date of invoice against which such debit note was issued.

For example: An invoice was issued in FY 2017-18 and a debit note against the said invoice was issued in November 2018, than the recipient of supply shall not be eligible to avail Input Tax Credit based on such debit note as the due date for availing Input Tax Credit was the due date of furnishing of the GSTR-3B for the month of September following the end of financial year to which such invoice relating to such debit note pertains.

The lacuna in the law is addressed by the above amendment. However, unless the Central Government makes the above amendment effective from 1st July 2017, the said amendment will lead to the litigation with respect to its date of applicability.

Analysis:

After the amendment, the person who has taken voluntary registration under Section 25(3) of the CGST Act, 2017, who was otherwise not required to get registered under Section 22 or Section 24 of the CGST Act, 2017, can now apply for cancellation of registration.

Analysis:

Section 30(1) of the CGST Act, 2017 provides that if the registration of any person has been canceled suomotu by the proper officer than such person can apply for revocation of cancellation within 30 days of the order of cancellation. Many taxpayers faced difficulty to revoke the cancellation as they could make the revocation application within 30 days from the service of the order and the proper officer had no authority to condone the delay.

Accordingly, the Central Government inserted a proviso to Section 30(1) of the CGST Act, 2017 to provide that the registered persons who registration has been cancelled till 31st March 2019 can file a revocation application till 22nd July 2019.

The above amendment has addressed the above issue and empowered the Additional Commissioner and the Joint Commissioner to extend the time period of filing of application for revocation of cancellation by 30 days and thereafter, the Commissioner has been empowered to extend the said period further by 30 days. In other words, delay of upto 60 days, after the expiry of initial 30 days for filing of application for revocation of cancellation, can be condoned by the appropriate authorities.

Analysis:

The proviso to Section 31(2) of the CGST Act has been amended to widen the powers to the Central Government to notify the categories of services in respect of which a tax invoice shall be issued within such time and in such manner as may be prescribed.

Thus, the Central Government can now even prescribe a different time limit for issuance of tax invoices for such categories of services as may be notified.

Analysis:

Section 51(1) of the CGST Act, 2017 mandates certain class of person, specified therein and as notified by the Central Government, to deduct tax at source at the time of making payment to the supplier.

The above amendment provides that the form and manner of issuing certificate for deduction of tax at source shall be provided in the CGST Rules, 2017. Further, the provision imposing late fee for not issuing the certificate within the prescribed time limit has been omitted.

The amendment seems to protect the interest of the Government as the class of persons liable to deduct tax includes the department of Central or State Government, Local Authorities, Government Agencies and PSUs.

Analysis:

The above amendment has been made due to reorganization of erstwhile State of Jammu and Kashmir. The Central Government has been empowered to notify the bench of Appellate Tribunal for the newly constituted Union Territory of Jammu & Kashmir.

Analysis:

Sub Section (1A) has been inserted to Section 122 of the CGST Act, 2017 to provide that the transactions where:

a) any goods or services or both have been supplied without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;

b) any invoice or bill has been issued without supply of goods or services or both in violation of the provisions of the CGST Act, 2017 or the rules made thereunder;

c) input tax credit has been taken or utilised without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;

d) input tax credit has been taken or distributed in contravention of section 20, or the rules made thereunder

then a person who retains the benefit of the above transaction and at whose instance such transaction is conducted shall be liable to penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.

The purpose of the above amendment is to penalize the person who is the ultimate beneficiary of the fraud transactions and the person at whose direction the fraud transaction has been conducted.

Analysis:

The purpose to amend Sub-section (1) of Section 132 of the CGST Act, 2017 is to penalize the person who actually gets benefited from the fraudulent transactions and the person at whose instance such fraudulent transactions are committed.

Analysis:

The term “within such time” has been inserted among various provisions of Section 140 of the CGST Act, 2017. The said amendment has been given a retrospective effect from 1st July 2017.

There were several petitions filed before various High Courts challenging the validity of the time limit provided under Rule 117 of the CGST Rules, 2017 to carry forwards the balance of Cenvat Credit of the existing laws. However, the validity of Rule 117 of the CGST Rules, 2017 has been recently upheld by the Hon’ble High Court of Bombay in the case of NELCO Ltd. vs. UOI & Ors. (Writ Petition No.6998 of 2018).

The amendment seeks to regularize the lacuna in the law and end the litigation with respect to validity of Rule 117 of the CGST Rules, 2017.

Analysis:

Section 168(2) of the CGST Act, 2017 provides that the Commissioner specified in various provisions of the Act mentioned therein shall mean the Commissioner or Joint Secretary posted in the Board and such Commissioner or Joint Secretary shall exercise the powers specified in the said sections with the approval of the Board.

The above amendment removed sub-section (5) of section 6 and the second proviso to sub- section (1) of section 143 from Section 168(2) of the CGST Act, 2017. In other words, the Commissioner determining the expenses and the remuneration for the special audit directed under Section 66 of the CGST Act, 2017 need not be the Commissioner or Joint Secretary posted in the Board.

Similarly, the Commissioner empowered under the second proviso to Section 143(1) of the CGST Act, 2017 to extend the period for bringing back the goods given for job-work shall also need not be the Commissioner or Joint Secretary posted in the Board.

Analysis:

Section 172 of the CGST Act, 2017 empowers the Central Government to issue orders to remove difficulties (for examples: extending due date of filing of annual return) arising in giving effect to the provisions of the CGST Act, 2017 or rules made thereunder.

The above provision was due to expire on 30th June 2020 but now the same has been extended upto 30th June 2022.

Analysis:

The above amendment has been given retrospective effect from 1st July 2017. Schedule II of the CGST Act, 2017 provides classification of certain transaction or activities as goods or services.

In terms of Section 7(1)(c) of the CGST Act, 2017 the transaction or activities which will be deemed to be ‘Supply’ under the CGST Act, 2017 even if made without consideration are already enlisted under Schedule I of the CGST Act, 2017.

The intention of the above amendment may be the possible overlapping of Schedule II into Schedule I of the CGST Act, 2017.

Analysis:

The GST Council in its 37th meeting recommended that the Fishmeal shall be exempted from GST for the period 1st July 2017 to 30th September 2018 due to classification issue.

Similarly, the Council also recommended for concessional rate of GST @12% on supply of pulley, wheels and other parts used as a part of agriculture machinery for the period 1st July 2017 to 31st December 2018.

The above amendment give effect to the decision of the GST Council. The amendment also provides that if any tax (in case of Fishmeal) or tax at the higher rate (in case of supply of pulley, wheels and other parts) has been collected than the same shall not be refunded.

Analysis:

The above amendment gives retrospective effect to Notification No. 3/2019-CT (Rate) dated 30.09.2019. The said notification has been issued under Section 54(3)(ii) of the CGST Act, 2017 and prohibits refund of accumulated Compensation Cess credit on account of inverted duty structure to the manufacturer of Tobacco and manufactured tobacco substitutes.

Thus, the manufacturer of Tobacco and manufactured tobacco substitutes will not be eligible to claim refund of accumulated Compensation Cess credit on account of inverted duty structure w.e.f. 1st July 2017.

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Anandaday Misshra is the Founder & Managing Partner, AMLEGALS, a multi-specialized law firm. He is a practising High Court Advocate with two decades of experience in litigation and arbitration. He specializes in GST, Contractual Laws, Arbitration, Business Laws & Insolvency Laws. He has authored book on GST- Law & Procedure (Taxmann). His other two upcoming books are on Insolvency & Bankruptcy Code and Arbitration.

Introduction 

Businesses are currently dealing with a multitude of issues as a result of the measures taken to stop the global spread of the COVID-19. One aspect that might not currently feature at the top of the list is the maintenance of corporate tax residency.

This has the potential to fall through the cracks when faced with bigger and more urgent issues. But it is an issue on which tax and legal teams needs to address over the coming weeks and months.

Corporate tax residency dictates where a company will be taxed on its worldwide profits (subject to any exemptions).

A company is generally tax resident in the country where it is incorporated or where it has its ‘Place of Effective Management’ (“POEM”)

What is Place of Effective Management (“PoEM”)? 

The OECD MC has defined POEM as: 

The place where key management and commercial decisions that are necessary for the conduct of the business as a whole are in substance made and that all relevant facts must be examined to determine POEM.

POEM has being recognized in India by amendment in section 6(3) of Income tax Act, 1961 under finance act, 2015, which states that a company is said to be resident in India in any previous year, if it is an Indian company, or its place of effective management in that year is in India.

POEM is an internationally recognized residency concept adopted in tie-breaker rule of Indian treaties as also adopted in many jurisdictions.

Creation of Place of Effective Management 

OECD Guidelines, 2020 has shown its view on the COVID-19 crisis that it may raise concerns about a potential change in the “place of effective management” of a company as a result of a relocation, or inability to travel, of chief executive officers or other senior executives. 

The concern is that such a change may have as a consequence in company’s residence under relevant domestic laws and affect the country where a company is regarded as a resident for tax treaty purposes.

It seems that the current pandemic situation might not create any changes to an entity’s residence status under a tax treaty as a temporary change in location of the the directors, or chef officers is an extraordinary and temporary situation due to the COVID-19 crisis and such change of location should not trigger a change in residency of corporates in view of tie breaker rule.

Key Factors determining PoEM 

Producing the results that is required or intended, in reality, although not officially intended, the term “effective” should be understood in sense of “real”.

Key management and commercial decisions should mean decisions which are concerned with broader strategic and policy decisions and tend to be made by members of the Senior Management / Key Management personnel’s.

Senior Management Personnel’s (“SMPs”) / Key Management Personnel’s (“KMPs”) means the top level executives / employees of a company who are generally responsible for taking the key Management and Commercial decisions for the Company.

Dual Residency 

COVID-19 may trigger an issue of double residency i.e. the company gets considered having its Place of effective management at two different countries simultaneously in their domestic laws. 

Tie-breaker rules are included in tax-treaties to help to determine, which country has the right to tax an individual as the country of residence in case the individual qualifies as a resident (for tax purposes) under the domestic laws of both countries.

During this extraordinary situation tax treaties between two countries provides for tie breaker rules to determine the double residence of an entity, ensuring that the entity is resident in only one of the country.  

Tie Breaker Rules – Way to determine Dual Residency 

As per recent OECD Guidelines, 2020; 

If the treaty contains a provision like the 2017 OECD Model tie-breaker rule, competent authorities deal with the dual residency issue on a case-by-case basis by mutual agreement. This determination will take into consideration all of the facts and circumstances over the determination period.

In particular, paragraph 24.1 of the OECD Commentary on Article 4 illustrates the range of factors that the competent authorities are expected to take into consideration to make their determination. 

In situations where the treaty contains the pre-2017 OECD Model tie-breaker rule, the place of effective management will be the only criterion used to determine the residence of a dual-resident entity for tax treaty purposes. 

Continuing need for Local Country Guidance 

The OECD Analysis recognizes that the threshold presence required by domestic law to register for tax purposes may be lower than under tax treaties, and tax registration requirements may be triggered under local law. 

There also are taxes that are not covered by treaties, including sub-national taxes (e.g., state and local income taxes) and indirect taxes such as sales tax or value-added taxes.

Tax administrations are encouraged by the OECD to provide guidance that would minimize or eliminate unduly burdensome compliance requirements for taxpayers during the COVID-19 crisis.

To this end, certain jurisdictions have issued guidance on to COVID-19 providing various relaxation to the foreign companies in view of COVID-19.

Irish Revenue 

In light of the numerous travel restrictions and other measures imposed by countries arising from the COVID-19 outbreak, companies may need to consider how they conduct their business in the coming weeks and months in order to ensure that their corporate tax residency status is safeguarded. 

On 23 March 2020, Irish Revenue released eBrief No. 046/20 to provide advice and information to taxpayers and their agents during the COVID-19 pandemic.

Irish Revenue has provided guidance on the topic of corporate tax residency and presence in or outside Ireland resulting from COVID-19 related travel restrictions

Irish Revenue have advised that, in the above scenarios, the relevant individual and company should both maintain records of the fact and circumstances of the bonafide presence in or outside Ireland (as the case may be) should Irish Revenue seek evidence that such presence in fact resulted from COVID-19 related travel restrictions.

Her Majesty’s Revenue and Customs (HMRC) – UK 

On 7 April, 2020, HMRC updated its published guidance to discuss the concern on Permanent Establishments in current pandemic era

In relation to whether the presence of employees or directors in the UK could result in foreign companies becoming UK tax resident, certain guidelines are issued such as:

If a company is considered dual-resident (i.e. in the UK and another country) then a Double Tax Treaty (“DTT”) tie-breaker test would operate to settle this. There are two possible tie-breakers depending on the treaty.

Place of effective management (e.g. the UK-Germany DTT) – This test will require consideration of all facts and circumstances and a company’s place of effective management can only be in one place at any one time.

Mutual agreement procedure (“MAP”) – This will be the test adopted in many of the DTTs amended by the OECD Multilateral Instrument (“MLI”). Residence will be decided by mutual agreement between the two tax authorities concerned. Various factors will be taken into account by the tax authorities – however, importantly the outcome of such a procedure cannot be predicted.

Tax Residency – Jersey 

The Government of Jersey’s Comptroller of Revenue has issued certain guidelines in line with HMRC: 

Government of Jersey’s Comptroller of Revenue has confirmed that where companies’ operating practices have to be adjusted in response to the COVID-19 pandemic.

The Comptroller will not treat the company as having failed the economic substance test.

The Comptroller has also confirmed that such adjustments will not disturb the tax residence in Jersey of foreign registered companies, provided that the changes are temporary. 

Australian Taxation Office 

The Australian Taxation Office (“ATO”) has issued frequently asked questions (“FAQs”) to provide guidance on tax questions about the impact of COVID-19, including on corporate residence: 

A non-Australian incorporated company can be treated as resident in Australia if it carries on business in Australia and has its central management and control in Australia. 

The FAQs state that if the only reason for holding board meetings in Australia or directors attending board meetings from Australia is because of impacts of COVID-19 (i.e., travel bans or the board deciding to halt international travel due to COVID-19),

Thus the above situation that by itself will not affect the company’s residency status for Australian tax purposes.

Conclusion 

Authorities across the globe are rapidly employing short-term protective measures against the economic impacts of COVID-19. The efforts include measures support businesses and their employees.

The company must self-assess the location of its place of effective management. Where the treaty has a tie-breaker which depends on the agreement of the competent authorities of the two states.

The potential effect of the changes during the COVID-19 era could be a trigger of double residency, which, according to the OECD Secretariat, is a relatively rare case. Nonetheless, it is of the view that the tie-breaker rule in tax treaties would deal with this challenge.

Though the POEM, guidelines issued by the OECD and various other local government are clear on the aspect of corporate tax residency but time would be the essence to understand as to the applicability of these laws, and guidelines during COVID-19.

It is very crucial for companies to analysis and plan their tax structures to stand out in the present pandemic era.

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AMLEGALS is a specialised Corporate Law Firm. They advise, handle litigation & render non-litigation services. Their specialised areas of practice are in Arbitration, Goods & Services Tax (GST), Insolvency & Bankruptcy Code (IBC), Contracts & Agreements, IPR & Corporate Laws. AMLEGALS has offices in Ahmedabad, Mumbai, Kolkata & New Delhi to handle matters in High Courts, NCLT, NCLAT, CESTAT, VAT Tribunal, Income Tax Tribunals, Advance Ruling in GST, DRT & Arbitral Tribunals.  

Introduction 

Across the globe, the spread of the Covid19 is having a significant humanitarian impact and increasingly, an economic impact from stock markets to global supply chains. The government has moved rapidly to contain the spread of the virus; global employers are also working to address how to manage employees in affected areas while continuing business operations.

People working in countries other than their usual ones because of the coronavirus pandemic are likely to trigger new taxation requirements for employers under global treaty rules.

The work scenario has changed across the world due to COVID-19 with most employees working from homes while others may have got stuck in foreign countries because of the lockdown which has created many questions for companies as to the existence of their Permanent Establishments. 

What are Permanent Establishments? 

The most important issue in the treaty based international fiscal law is the concept of Permanent Establishment (PE). All the models of conventions namely:

All these three important models use PE as the main instrument to establish taxing jurisdiction over a foreigner’s business activities.

Article 5(1) of OECD Model Tax Convention defines a permanent establishment as “a fixed place of business through which the business of an enterprise is wholly or partly carried on”. This is what is commonly referred to as ‘basic rule of PE’. 

Creation of Permanent Establishments 

If an individual finds that he or she spends longer time than the intended time in a jurisdiction, e.g. due to travel restrictions resulting from COVID-19 measures, there could be the situation where the individual create a sufficient presence to trigger a taxable presence e.g. a branch or agency under domestic law or a permanent establishment under a double tax treaty.

The threshold presence required to establish a permanent establishment in a jurisdiction under a tax treaty usually refers to a“habitual” presence in a jurisdiction.

Where an individual’s presence and business activities carried on in a jurisdiction arise due to exceptional circumstances.

The individual’s presence in any other country during the current pandemic situation might be said not to be habitual in character.

It seems that COVID-19 situation will not create any changes to a PE determination as the exceptional and temporary change of the location of employees to exercise their employment because of such pandemic situation. 

Situations such as working from home should not be the criteria to create new PEs for the employer/ company. 

Similarly, the temporary conclusion of contracts in the home of employees or agents because of the COVID-19 crisis should not create PEs for the businesses. 

A construction site PE may not be regarded as ceasing to exist when work is temporarily interrupted.

Fixed Permanent Establishment (“Fixed PE”)

A fixed place PE exists if the business of the enterprise is carried out at a fixed place within a jurisdiction, typically for a specified period.

Paragraphs 5, 8 and 9 of the OECD Guidelines, provides that under existing treaty principles it is unlikely that a business will be considered to have a fixed PE in a jurisdiction as a result of the temporary presence of its employees during the COVID-19 crisis. 

For a home office to be considered a PE of an enterprise, the home office must be used on a continuous basis for carrying on the business of the enterprise, and the enterprise must require the individual to use that location to carry on the enterprise’s business.

As per the latest OCED guidelines on impact of COVID-19 dated April, 2020, work from home that is incident to the COVID-19 crisis is not to the result of the mandatory requirement of the enterprise. 

Apex Court in the case of the Formula One World Championship Ltd. v. CIT (International Taxation) [2017] 394 ITR 80/248 Taxman 192/80 taxmann.com 347 (SC) in which the conditions for the constitution of PE were explained at length. 

The Apex Court has recently delivered another important ruling in the case of E-funds IT Solutions Inc which relied on ruling in case of Formula One and held that:

The Apex Court held that a Fixed Place PE can be created only if all the tests for the constitution of a Fixed Place PE are satisfied, i.e., there is a ‘fixed place’ at the ‘disposal of the foreign enterprise’, with some ‘degree of permanence’, from which the ‘business is carried on’ 

A typical remote work from home scenario is typically a result of force majeure, i.e., government travel restrictions or work from home directives which are imposed during the COVID-19 pandemic.

Though law seems to be clear, time is essence to show the Court’s interpretation under Fixed PE under Covid19.

Agency Permanent Establishment (“Agency PE”)

 The concept of PE has taken birth in the context of two tax principles i.e. Residence and Source Principle of taxation.

As per the source principle, if a tax resident of a particular country earns income through another person (separate legal entity) in another country, then such person creates an Agency PE in the later country. 

The question may also arise whether the activities of an individual temporarily working from home for a non-resident employer during this present pandemic situation could give rise to a dependent Agent PE.

OECD guidelines states that if the individual employee is present in the jurisdiction as a result of the COVID – 19 pandemic, such employee may not likely to be regarded as “habitually” concluding contracts. 

In case of Reuters Limited vs. Deputy Commissioner of Income Tax (ITA No 7895/Mum/2011) the concept of Agency PE was discussed in detail wherein it was held that; 

A qualified character of an agency is providing authorization to act on behalf of somebody else as to conclude the contracts

OCED guidelines clearly states that paragraph 33.1 of the commentary on Article 5 of the 2014 OECD Model provides that the requirement that an agent must “habitually” exercise an authority to conclude contracts.

It means that the presence which an enterprise maintains in a country should be more than merely transitory if the enterprise is to be regarded as maintaining a PE, and thus a taxable presence, in that country. 

Construction Site Permanent Establishment (“Construction PE”) 

Occurrence of permanent establishment has significant tax consequences for entrepreneur. Profits generated with reference to conducted construction works will be taxed in the country, in which the permanent establishment (construction site) is placed. In the country of residency that income will be exempted from taxation. 

It appears that many activities on construction sites are being temporarily interrupted by the COVID-19 crisis.

In general, a construction site will constitute a PE if it lasts more than 12 months under the OECD Model or more than six months under the UN Model.

As per paragraph 55 of the commentary on Article 5(3) of the OECD Model explains, a site should not be regarded as ceasing to exist when work is temporarily discontinued (temporary interruptions should be included in determining the duration of a site). 

Usually, the Indian tax authorities do not assume that interruptions of works at site are to be excluded from the project period. They tend to refer to an example given by the OECD in its comment to the OECD Model Tax Commentary (“OECD MTC”)

In case of Joint Director of Income Tax vs. Krupp Uhde Gmbh, Mumbai ITA No. 5004 and 5084 of 2003 & 2276 of 2004. 

It was held that according to Article 5 of Double Tax Avoidance Rules (DTAA) between  India – Germany building or construction, installation of projects, in India and if it  continues for more then 6 months than it would be considered as PE as per Article 5(2)(i)  of DTAA 

However, it is questionable whether this case can be applied to current pandemic situation which was simply unpredictable. It is a natural event, but not seasonal. It is not even predictable with a sufficient probability like bad weather. It is simply not calculable, it is classic force majeure. 

It is advisable to take suitable opinion on the subject issue as the implications can be grave. One must take expert legal opinion before acting upon the subject matter to avoid the unforeseen liabilities in the future. 

Secondment of Employees 

Globalization has led Multinational Companies (MNCs) to increase cross border secondment of technical, managerial and other employees to their subsidiaries located in low cost jurisdictions such as India. The rationale behind seconding such employees is sometimes to help the subsidiaries avail the benefit of skill and expertise of the seconded employees in respective fields and sometimes to exercise control. 

Secondment of Employees has become a really significant area, given that some bank staff or company’s staff on assignments or secondments may be trapped in their non- native country due to the travel restrictions, while others may have come back earlier than expected, such situation might create a Service Permanent Establishments (Service PE) for the companies. 

Forced quarantine may delay the intended secondment of an employee abroad or make a person employed on a foreign contract decide to return to India due to reasons beyond     the control. In this case, work for a foreign employer will be performed from India. This may result into a creation of taxability of employee’s income in India, and in some cases, creates permanent establishment. It is pertinent to note that each case should of course be analyzed on its own merits. 

Australia – Australian Tax Office (“ATO”)

The Australian Taxation Office (ATO), in April has released an FAQ answering common tax questions in regards to the Covid19 situation. The FAQ includes information relevant to individuals, employers, interest and penalties, deadlines for payments, and international business. The FAQ clarifies:

For multinational corporations, the unplanned presence of employees in Australia will not result in an Australia permanent establishment if all the following requirements are met:

The foreign incorporated company did not have a permanent establishment in Australia before the impacts of Covid19;

There are no other changes in the company’s circumstances;

The unplanned presence of employees in Australia is the short-term result of them being restricted in their travel as a result of the Covid19 situation.

If the company didn’t otherwise have a permanent establishment in Australia before the effects of COVID-19 and the presence of employees in Australia is because they are temporarily relocated or restricted in their travel as a consequence of COVID-19, then ATO will not apply compliance resources to determine if company have a permanent establishment in Australia. 

Her Majesty’s Revenue and Customs (“HMRC”) – UK

On 7 April, 2020, HMRC updated its published guidance to discuss the concern on Permanent Establishments in current pandemic era

With regard to Permanent Establishments (PEs), HMRC has a view that the current legislation, treaties and related guidance provides sufficient flexibility with regard to whether a PE has been created in the UK.

HMRC considers that a non-resident company will not have a UK fixed place of business PE after a short period of time as a degree of permanence is required.

The existing HMRC guidance in UK makes it clear that the Courts and tribunals might take a holistic view of the facts and circumstances of each case during this extra ordinary situation

Like HMRC in UK has issued guidelines on PE, other countries might take an initiative and issue necessary guidelines which might clear the clouds of cousins for companies under exceptional and temporary change of the location of employees to exercise their employment because of such pandemic situation which might create new PEs for the employer/ company.

Irish Revenue (“Revenue”)

On 26th March, 2020, Irish Revenue has released detail guidelines regarding corporation tax and presence in the state or outside the state resulting from COVID-related travel restrictions.

The Revenue guidance outlines that in cases where an individual is present in Ireland and that presence is shown to result from travel restrictions related to COVID–19, Revenue will be prepared to disregard such presence in Ireland for corporation tax purposes for a company in relation to which the individual is an employee, director, service provider or agent.

In addition, and where relevant, if an individual is present in another jurisdiction as a result of COVID-related travel restrictions, and would otherwise have been present Ireland, Revenue will be prepared to disregard such presence outside of Ireland for corporation tax purposes for a company in relation to which the individual is an employee, director, service provider or agent.

The individual and the company should maintain a record of the facts and circumstances of the bonafide relevant presence in or outside Ireland, for production to Revenue if evidence that such presence resulted from COVID-related travel restrictions is requested.

Singapore Government 

As the world faces an extraordinary health and economic crisis, Singapore Government has introduced a series of relief measures, in order to maintain economic stability and resilience of Singapore enterprise.

Temporary unplanned physical presence of foreign companies’ employees in Singapore, in the year 2020 (for up to 183 days), due to COVID-19 travel restrictions, will not result in permanent establishment (PE) implications.

But there’s also been provided that the foreign company shall have no PE in Singapore in Year of Assessment (YA) 2020 and its economic circumstances shall remain same. 

Internal Revenue Services – IRS 

The Treasury Department and the Internal Revenue Service on 21.04.2020 issued guidance and FAQs that provides relief to individuals and businesses affected by travel disruptions arising from the COVID-19 emergency.

Considering the current pandemic situation the IRS has issued certain FAQs to clarify the position of PE during COvid19 times wherein it says that: 

U.S. business activities conducted by a nonresident alien or foreign corporation will not be counted for up to 60 consecutive calendar days in determining whether the individual or entity is engaged in a U.S. trade or business or has a U.S. permanent establishment, but only if those activities would not have been conducted in the United States but for travel disruptions arising from the COVID-19 emergency. 

Another master stroke by US government in line with OECD and other countries which may result into silver lining for the Indian and other foreign companies who has their operations in US in terms of the existence of PE. 

CONCLUSION 

The concept of PE has been defined extensively in various places, but the interpretation    of the same continues to be complex and subjective. The distinct nature of each transaction makes the interpretation of the law and the judicial precedents worth noting.

The decision of the Apex Court in the case of Formula One (supra) was far-reaching in many ways, but it was nonetheless given in the context of specific facts, the application of this judgment under current Pandemic situation would be very interesting aspect which may arise in future.

There can be no thumb rule which can be inferred from the OECD guidelines at present to the current crisis. Whether the virus-induced duration of interruption would be included in the deadline in individual cases will depend upon the specific circumstances. 

Although the OECD Analysis may be considered persuasive in many jurisdictions (and may be considered persuasive even in the absence of a treaty in some jurisdictions), the ultimate decision as to whether an employee’s presence in a jurisdiction creates a PE depends on the jurisdiction, its domestic law, and any relevant treaty. 

However, due to Covid-19 times, it may be considered in a different manner altogether as entire world has been affected.

It is emphasized to take an informed decision under proper guidance of a legal expert so that litigation can be avoided.

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