A discomforting new danger hovers around the world, putting lives at risk, life-altering personal and professional routines, and unsettling the global economy. Amidst the COVID-19 crisis, intellectual property (IP) attorneys, like everyone else, are adjusting to a new reality and facing new challenges – figuring out how to keep going while trying to mitigate effects of the crisis with resilience and calm.
India’s coronavirus cases have crossed 26,000, and governments – Central as well as states – are bracing up to face possible surge in infections requiring large scale hospitalisations and intensive care units (ICUs). Efforts are also on war-footing to procure more protective gears, diagnostic kits, ventilators and so on. One missing piece could be the country’s preparedness to build local capabilities to supply intellectual property rights (IPR) protected products, ingredients or spare parts that are essential in the fight against COVID-19, if the situation warrants it.
With the present situation of the Novel Coronavirus at hand and the lockdown situation in India, various courts, tribunals and other judicial bodies have taken different steps for functioning amidst the unprecedented situation. The Intellectual Property Offices including the Trademark office, Copyright Office, Patent Office and Design Office have issued various notifications regarding scheduled hearings and also document submissions.
India’s Office of the Controller General of Patents, Designs, and Trademarks (CGPDTM)
Following the announcement by our Prime Minister, Shri Narendra Modi, that India would enter a nationwide lockdown to prevent the spread of the coronavirus, the CGPDTM issued a public notice on March 25 that it will remain closed for a 21 day period, in conformity with the announcement made. Subsequently, any Intellectual Property related deadlines that would otherwise fall within this period were deferred further to the date on which the lockdown will be lifted, i.e. April 14, 2020.
However, after the expiration of the initial April 14 deadline, the CGPDTM confirmed on April 15 that it will remain closed to the public until May 4, 2020. Consequently, any IP-related deadlines are now further extended until May 4. The registry has also cancelled all hearings that were scheduled on lockdown dates, with parties being notified of new dates at a later time. Nonetheless, e-filing services of CGPDTM remain unaffected by the lockdown.
Thereafter, as per public notice dated 4th May, 2020, all operations have been suspended till May 18th, 2020 and the deadlines to be met during this period will automatically be extended until May 18, 2020.
Opportunistic Trade Mark filings in India
In the wake of this pandemic outbreak, few trade mark owners could not resist the chance for opportunistic trademark filings in India. Some of the active/ongoing trade mark applications as filed forming part of the Trade Marks Register are as follows:
Source: Public Search of Trade Marks
Vienna Codification implies that if a trademark includes figurative elements or logo, then all such applications will be processed under Vienna codification.
Marked for Examination implies that the application filed has been assigned to a Trademark Officer, and is under examination (or is due to be examined)
Formalities Chk Pass implies that the registrar will check the basic information and documents provided along with the application and as per the status above, the preliminary documentary requirements have been met.
Delhi High Court advancing through tough times
On April 9, the Delhi High Court decided to cancel its summer vacation holidays, which runs from June 1 to June 30. The High Court and lower courts shall therefore continue to function during this period. Because of the extended lockdown, the Court has issued a new order suspending its activity till May 3, but mentioning and hearings of urgent matters shall continue as before through video conferencing.
Empathetic to the difficulties faced by the litigants, the Court assured that the number of Benches, hearing matters through video conferencing, would in turn be increased further to minimise the burden. Urgent mentioning of matters shall continue before designated Registrars/ Joint Registrars only by the ‘Counsel on Record’, as before.
Wherever any request for urgent mentioning is declined by the designated Registrar/Joint Registrar, the concerned “Counsel on Record” shall have an option to re-submit/appeal for consideration before the Court that the case merits an urgent hearing. A one-page document explaining the urgency can be uploaded through a clickable link in a .pdf file (not more than 5 MB in size). The request shall not be processed in case of insufficient particulars. The aforesaid link is active on all working days of the Court from 12 noon to 2.00 pm. However, in case any ‘counsel on record’ is unable to use the link on account of any technical glitch, he may contact Mr. Sarsij Kumar, Joint Director (IT), Mobile No. 9650006723.
The World Intellectual Property Organisation (WIPO)
Despite reserving access to its Geneva, Switzerland headquarters, the WIPO has said that its operations under the Patent Cooperation Treaty, the Madrid System for the International Registration of Marks, the Hague System for the International Registration of Industrial Designs, the Lisbon System for the International Registration of Geographical Indications as well as administering other intellectual property (IP) and related systems are continuing during the current crisis.
Taking stock of IP proceedings around the world
The chart provides the impact of coronavirus on patent and trademark proceedings at several IP offices worldwide as of April 16, 2020.
Unique times require unique responses and thus, we have to force/persist, create an ecosystem, innovate and infuse new practices and strive for technological advancements whether the Indian courts and varied forums rise up to the challenge that the Indian legal system faces in the wake of this horrific pandemic.
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Yashvardhan Rana is an Intellectual Property Lawyer with a particular focus on IP prosecution – from registrability analysis and risk management to providing legal opinion on the use, adoption and registrability of trademarks to be launched by Fortune 500 companies as well as top FMCG’s in India. He is a part of the Trademarks, Copyright and Design Prosecution team at Inttl Advocare, Noida, India. He is based out of New Delhi and is a member of Bar Council of Delhi, Delhi High Court Bar Association, APAA and INTA. In January, 2020 he was appointed as a Member of INTA sub-committee – The Trade Mark Reporter Committee and in 2019, he was listed in the Top 50 Emerging IP Players Award worldwide by The IPR Gorilla, 2nd Edition held in Dubai. His educational qualification includes an LL.M. in Intellectual Property Law from the Queen Mary University of London (2015-16).
What does the economy need?
For an economy to grow and its consumer society to prosper, intellectual property serves as an underpinning factor for the country. To fight the present Pandemic, it is even more quintessential as it is a fundamental instrument to help nations fight together. Globally, the pharmaceutical and biotechnological companies are striving their best to help find relief from the impact of the pandemic.
However, amidst this international emergency, domestically as well as globally, there is a rise in dearth of intellectual property laws which is being affected by the outbreak of COVID – 19 with regard to public health services, including instances of hurdles in R&D of drug and restricted access to medical equipments.
To counter this pandemic, there is an ardent need for Governments across the world to intervene and liberalise the IP restrictions for a short term for effective deployment of protective medical equipments for public health and safety.
Dilemma of IP Holders
Whilst experts are battling to develop a cure, the claim of intellectual property rights for exclusive use of the cure poses a dilemma as it is not considered the most rational thing to do at the moment.
In an open letter by Carlos Correa addressed to organizations like WHO, WTO and WIPO, support is sought for WTO countries that invoke the ‘security exception’ contained in Article 73 of the Agreement on Trade Related Intellectual Property Rights (TRIPS) Agreement, to take ‘actions it considers necessary for the protection of its essential security interests’ in the wake of COVID-19 threat.
It is opined that invocation of exception under Article 73 will be warranted to procure medical products and devices or to use the technologies to manufacture them as necessary to address the present public health emergency. By suspension of enforcement of any IP right under Article 73(b) of TRIPS Agreement, an obstacle for the procurement or local manufacturing of the medical equipments and necessary devices to protect the population of the world will be outcasted.
Then arises the question of IP rights which are aimed to aid the public by promoting technological advancement in return of providing the inventor an exclusive right over the invention, though for a limited time.
However, these IP rights are at a standstill as IP Registry offices all over have limited their functioning and with regards to pharmaceutical, there is a bigger question about exclusivity rights.
Next question that bangs up is the rights of the existing IP holders in the present situation of pandemic and the concept of Compulsory Licensing and government use.
COMPULSORY LICENSING
Compulsory License is a method of intervention by the State Machinery to reach to an equilibrium between awarding the patent holders for their hard earned invention and making the invention available to a third party in the need of the hour, just like the current pandemic.
In other words, Compulsory licenses are defined as permitting or authorizing a third party to make, use or sell a patented invention without the patent owner’s consent.
Under the Indian Patent Act, 1970, Section 84 and Section 92 stipulates the conditions that needs to be fulfilled in order to obtain a compulsory licence to be granted.
As per Section 84, an interested person can make an application to the Controller of the Patent requesting for grant of Compulsory Licence on patent, after three years from the date of grant of that patent on the existence of conditions stipulated therein.
As per Section 92, the Central Government, in light of outbreak of COVID – 19, may declare a national emergency and notify the patents in questions after which a person interested in manufacturing the said patent may make an application to the Controller of Patent who may issue a compulsory license on satisfaction of the conditions stipulated in the Section. In such a situation, the patentee shall be paid a reasonable royalty rate as fixed by the Controller of Patents.
Further, in accordance with Section 100, the Government can also acquire and break the monopoly of the patent holder by authorising certain companies to use the patent for public ‘for the purpose of the government’. For the same, the patent holder can be paid a rationale amount by the authorized company or the government.
Alternatively, under Section 102, the Governments can acquire the rights to critical medical products and services to fight the virus in the public interest. In this situation, the Patent holder can be paid a reasonable royalty by the government.
Challenges Ahead!
Though the patent specification is available in public domain after the grant of patent to the inventor, yet a ‘know-how’ of the product may act as a hurdle for the licensee.
Where the Government decides or moves ahead to interrupt the monopoly, in the present situation of public health crisis, technical limitation with regard to ‘know-how’ of the invention may be a challenge.
Further the approach required for R&D of drugs and manufacture of medical equipments and products, necessitates the command over industrial process involved in it.
INDIA’S FIRST COVID – 19 IP DISPUTE
The High Court of Bombay decided the first COVID – 19 IP dispute between Hindustan Unilever (HUL) and Reckitt Benckiser (RB), in COMIPL/300/2020, wherein HUL challenged the advertisement of Dettol Handwash by RB that disparages the trademark of Lifebuoy soap owned by HUL.
RB’s advertisement promoting Dettol Handwash represented that soap bars are not as effective as the liquid soap for washing the hands, which is predominantly important for containment of COVID-19.
In the present case, HUL contended that advertisement of Dettol Handwash disparaged the Lifebuoy soap bar by displaying a soap with the same shape, configuration and colour as red Lifebuoy soap registered in the name of HUL and further copied the advertisement of HUL which was published earlier.
Thereafter, HUL claimed that RB in order to promote awareness and alertness about COVID-19 by encouraging the habit of washing hands repeatedly, using not just Lifebuoy soaps, but rather any soap, RB had aimed to disparage and degrade the trademark of HUL.
In addition to the above, HUL in light of WHO’s guidelines, made a claim that to use soap and water for regular hand washing, the advertisement as depicted by RB creates a false image that soap bars are ineffective for containment of COVID – 19.
For the same, HUL got a relief of Rs. 1 crore as damages and permanent injunction against RB. Prior the Court, venturing into substantial claims and averments, RB agreed to suspend the use of the impugned ad from 22.03.2020 to 21.04.2020 i.e. for a period of one month.
IP Prosecution and FAQs
In the unprecedented times, where the outbreak of COVID – 19 has brought the World economies to its knees, the top-most concern of IP owners remains about meeting deadlines in IP prosecution. Usually, if the deadlines are not met, and if extendable, involves a fee and at times require the filing or re-filing of signed/ notarised/ stamped documents.
On the other hand, as a precautionary measure – to practice social distancing, offices of intellectual properties around the world have addressed the impact by taking various measures including extension of deadlines for prosecution.
Therefore, in view of advisory issued by Ministry of Health and Family Welfare, the Office of Controller General Patents, Designs and Trademarks had vide Public Notice No. CG/F/Public Notice/2020/215 on 19.03.2020 had directed that all in-person hearings in Patents and Designs matters scheduled on or before 15.04.2020 by the Controller should be changed to Video Conferencing (VC) hearings.
Wherever the applicant is unable to agree for the VC hearing, the Controller shall adjourn such hearing for a date later than 15.04.2020. The hearings scheduled after 15.04.2020 will remain unchanged.
Further, as per sub-rule (6) of Rule 6 of the Patents Rules, the delay in transmitting or resubmitting documents to the Patent Office will be condoned/timeline be extended by the Controller on a petition for such condonation of delay/extension of time made not later than one month from the date when such COVID – 19 outbreak ceases to exist.
Thereafter, in view of the concerns raised by the Stakeholders relating to submission of document in time in prevailing conditions, the Ministry of Commerce and Industries vide Public Notice No. CG/Office/Public Notice/2020 on 23.03.2020 had extended the time for filing of documents in view of Section 131 of the Trade Marks Act, 1999 and Rules 109 & 110 of Trade Marks Rules, 2017.
However, in light of the notice issued in the wake of pandemic, following common questions arising in the minds of IP holders are discussed.
FAQs
1.Whether the government can let loose the already granted IP protection during Pandemic?
Answer: Yes.
By way of issuance of compulsory license, government can authorize or permit a third party to make, use or sell a particular product or use a particular process which has been patented, without the need of the permission of the patent owner.
However, there are certain pre-requisites stipulated in the Indian Patent Act, 1970. Therefore, on fulfilment of such conditions only, government can issue compulsory license to a third party permitting the use of the invented product or a process.
2. Whether the filing for a fresh patent application can be done during the period of lockdown?
Answer: Yes.
Filing of a fresh application for patent protection can be done during the period of lockdown at www.ipindiaonline.gov.in.
3. What smart strategies can be adopted for protection of IP rights during COVID – 19?
Answer: Following smart strategies can be adopted for the protection of IP:
a. Ensure that an exhaustive NDA is signed between the IP holder and its employees and the Key Managerial Personnel’s having knowledge of the proprietary information;
b. Ensure that a policy for Confidentiality and Communication is entered into between the persons entrusted with IP knowledge;
c. Ensure that a detailed Employer – Employee Agreement is entered into in view of protection of IP rights and the privileged trade information;
d. In case if the invention or development is novel and not in public domain, an application may be filed for the protection of IP;
e. Pursuant to e-filing, follow-up with the authorities via e-mail may be done;
f. In case if trademark is applied for and pending for registration, symbol of (™) must be used;
g. Once the trademark is registered, symbol of (®) shall be used;
h. Where infringement has taken place, as a primary step a Cease and Desist Notice ought to be sent for restricting any further infringement of one’s IP right;
There are various measures to protect rights of an IP holder even during the times of COVID – 19.
For advisory on specific issues, please get in touch with our legal expert.
4. How are IP rights to be protected in case of Remote Working or Work from Home Policy due to lockdown?
Answer: Compliance with data privacy laws is an ever-growing concern especially as technology evolves and in the present pandemic, it has become the need of the hour for the businesses.
This is a time for business owners to revisit existing agreements and consider revising and/or adding new clauses and policies to better handle the current business landscape, forced remote work requirements and continued evolution of technology utilization.
5. Can the urgent hearings be taken up by the Court during the period of lockdown?
Answer: Yes, a party may apply to the Court in case urgent matters are essential to be taken up without any further delay.
6. What is the procedure for conducting the urgent hearings by the Court?
Answer: For a Court to take up the urgent matters, a party has to do the following:
a. Firstly, establish the urgency in cases that cannot be held back until the period of lockdown ceases to exist along with placing on record all the relevant pleadings,
b. The relevant Bench taking up the concerned matters would decide if the urgency is valid or not,
c. The parties would be communicated the date of hearing,
d. The hearing shall take place through Video Conferencing as per the scheduled day fixed by the Court.
7. What about the period of limitation which is expiring for filing pleadings, documents and applications during the lockdown?
Answer: The period of limitation to file any necessary pleadings, appeals, or application, shall remain suspended. The Delhi High Court and courts subordinate to it have been ordered to be considered as “closed” in view of Section 4 of the Limitation Act 1963.
Therefore, if the period of limitation to file any pleading, appeal, lawsuit, or application is expiring during the period of suspension, the party shall not be considered to be in default as stipulated therein.
In line with the order of the Supreme Court dated 23.03.2020 in Suo Motu Writ Petition (Civil) No(s).3/2020, the period of limitation in all proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further orders are passed by the Supreme Court.
Fighting the BATTLE together!
Nations like Germany, Israel, Chile, Canada, amongst others who have been in the forefront in rising cases of the disease have endeavoured to combat it by issuing orders to facilitate compulsory licenses for IP protected equipment by making necessary amendments in their respective legislations.
The use of such licenses prevents patent holders from using their rights in a manner that might restrict trade practice, i.e., an obligation of the authorised party to obtain authorisation from the holder of the IP right on reasonable commercial terms and conditions would be waived.
Furthermore, the prerogative over data exclusivity should be lifted, regardless of violation of IP rights. This is pertinent as if data sharing and transfer of technology is not done, then it would delay the complete treatment of the virus. WHO has recommended voluntary emergency Technology Intellectual Property pool of rights related to COVID diagnostics, in order to help the under developing nations, to combat the pandemic situation.
This would fundamentally address all IP barriers, facilitate open and collaborative R&D and data sharing and further mobilize the available manufacturing capacity to meet the industry needs in every country.
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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.
I. INTRODUCTION
Human beings organized themselves into a civilized society. They established the State bestowing with it the power of collecting taxes, policing, defending and to enforce civil contracts. The king was the supreme law giver and had the state machineries to enforce laws, by awarding punishment against crimes. With no idea of why crimes are committed, only the retributive and deterrence theories were offered as justification for punishment. All crimes committed were assigned punishment usually greater than the magnitude of the offence committed to instill fear in prospective criminals and deter them from following the footsteps of the criminal. The theory of retribution hence fulfilled a twin purpose: punishment to the offender along with a lesson of deterrence to like-minded individuals. The degree of retribution or punishment varied according to the gravity of the crime. Some crimes were let off with a fine while others were dealt with mild to strong sentences, some extending to lifetime. The gravest punishment for the gravest offence was death sentence or capital punishment. Such punishments given were full and final. However, it came to be accepted that the punishment made by the king could be modified or cancelled by him.
The judicial system of criminal proceeding, the evidence act, the standard of proof being beyond reasonable doubt, discretion of sentencing being left to the judge etc. were adopted in India during the long period of British Rule. The principle that ‘all crime is local’ is embodied in the criminal law in India[1]. A series of judicial reforms which included the enactment of Indian penal code, 1860, Indian evidence act 1872, and the earlier code of criminal procedure took place. The concept of clemency is too attributable to the British rule. The government of India act, 1935[2] expressly provided in Section 295 the power of clemency, vested in the Governor General, being the representative of the Crown.
The makers of the Indian Constitution had no plan or intent of removing the power of pardon/clemency. So, there was no formidable debate on the existence of this power and its entry was allowed into the Constitution with minor modifications. The Indian law was to retain all kinds of punishment, except transportation. Capital punishment was allowed to be retained. The power of Clemency was retained as some kind of reserve power, probably with a view to provide for checks and balances.
II. CONSTITUTIONAL POWER OF PRESIDENT AND GOVERNOR
The power of Clemency has been conferred upon the President of India and the Governors of the States by Articles 72 and 161 of the Constitution of India[3] respectively.
Article 72 reads as follows:
“72. Power of President to grant pardons, etc., and to suspend, remit or commute sentences in certain cases.
Article 161 reads as follows:
“161. Power of Governor to grant pardon etc., and to suspend, remit, or commute sentences in certain cases.
Both the above-quoted Articles are to be read together with certain other articles in order to get the essence and extent of the power of Clemency enshrined in the Constitution. The executive power of the union and the state are to be seen from articles 73 and 162 of the Constitution, while the occasion to exercise such power arises only on the aid and advice of the respective council of ministers, as provided in Articles 74 and 163 of the Constitution.
Though the articles 72 and 161 are similarly worded, the areas of exercising these powers of pardon are clearly demarcated, as the executive powers of the state and the union governments have been demarcated. The power of Clemency by the head of state, except in the case of death sentence, would rest with either the President or the Governor, but not both. In reality, the question of overlap of clemency power between the President and the Governor in case of death sentence remained an academic issue, as there was no state law, referable to list-II of the seventh schedule, providing for death penalty, until the Maharashtra Control of Organized Crime Act, 1999 (MCOCA)[4] was enacted.
The distinction between the powers of the President and the Governor are obvious, and the reasons for which are easily fathomable. In the case of a punishment by a Court-martial, providing for judicial trial for misconduct and offences under the acts of parliament relating to the Army, the Navy, and the Air force, the power of clemency is with the officers concerned, and in addition, the President gets constitutional powers. The states do not deal with defense of the country, and obviously, the Governors could not be vested with power of clemency in such cases.
The Statutes, such as the Indian penal code, 1860, the prisons act, 1894, and the code of criminal procedure code, 1973 provide for differential treatment in the case of post-conviction good behavior by the prisoners. These powers are exercisable by functionaries of the state government [except in case where the Delhi Special Police Establishment (Central Bureau of Investigation) has conducted the prosecution], and are saved by the Constitution itself.
III. ANALYSIS OF ARTICLE 72 OF THE CONSTITUTION OF INDIA
A plain reading of Article 72[5] reveals that ―
(a) the extent of clemency jurisdiction of President extends to matters falling within the executive power of the union, and to all cases of death sentences, even if it falls within the executive power of any state; and
(b) it is of non-exclusive nature, i.e., it does not purport to derogate from statutory powers of clemency vested with the functionaries of the Union (such as Court martial) or the State, even if the case would otherwise fall within the clemency jurisdiction of the President.
The cases in which the power of clemency of the President can be exercised are in relation to “any person convicted of any offence” of the description given in the enacting provisions. Clemency is exercisable against “punishment” or “sentence”. While, in criminal law, punishment is imposed by medium of sentence, and the Court martials also issue a formal sentence to impose punishment which could even be forfeiture of seniority or pay and allowances (See Chapter VII, of say, Air Force Act, 1950[6]) apart from the kinds of punishment provided for under the Indian Penal Code.
Any act of Clemency may be either absolute or conditional. It is conditional where it does not become operative until the grantee has performed some specified act, or where it becomes void when some specified event happens. The Supreme Court has observed that the difference between a reprieve and respite is too technical and practically the effect of both of them is the same, i.e., the execution of the sentence is postponed to a future date.
IV. STATUTORY POWER OF CLEMENCY
The Statutory powers of Clemency are to be found in the Army act, Navy act, and Air force act, 1950 in respect of court martial and the Code of Criminal Procedure, 1973 for Civilian offences. As noted above, these are not affected by the Articles 72 and 161 of the Constitution.
To keep the discussion concise, only the provisions of the Air Force act, 1950 in relation to powers of Clemency are cited. Chapter XIV of the Air Force Act, 1950[7] [covering Sections 177 to 188] deals with “Pardons, Remission and Suspensions”.
The kinds of relief that can be granted fall within the following defined Terminologies:
Pardon:–The convict is absolved completely, and restored to the position before he was even charged with the offence. It releases the convict from the guilt as well as the punishment and restores all his social rights.
Reprieve: – Reprieve gives the prisoner an opportunity to find a means or reason for reducing the sentence imposed or to secure a pardon. It is a moratorium on the execution of sentence.
Respite: – A suspension of a sentence, which is to be executed at a future time.
Suspend: – A suspension of a sentence, which is to be executed at a future time.
Remission:–Reduction of the amount of punishment without changing its character.
Commutation: – Substitution of punishment of one form for another of lighter character.
V. MANNER AND EXERCISE OF POWER UNDER THE ARTICLE 72
In a Parliamentary form of Government, the head of the state functions on the aid and advise of the council of Ministers. The controversy has been set to rest after the enactment of the 42nd and 44th Amendment Acts[8], in respect of the President. Also, the Hon’ble Supreme Court in MaruRam Vs Union of India[9] has left no doubt about the role of the President and Governor in matters of Clemency. It held:
“The President is symbolic; the Central Government is the reality even as the Governor is the formal head and sole repository of the executive power but is incapable of acting except on, and according to, the advice of his council of ministers. The upshot is that the State Government, whether the Governor likes it or not, can advise and under Article 161, the Governor being bound by that advice. The action of commutation and release can thus be pursuant to a governmental decision and the order may issue even without the Governor’s approval although, under the Rules of Business and as a matter of constitutional courtesy, it is obligatory that the signature of the Governor should authorise the pardon, commutation or release. The position is substantially the same regarding the President. …”
The power of clemency is a Constitutional power, falling outside the definitions of the usual triad of executive, legislative and judicial nature of State power. In fact, the higher Court too has the power to suspend or reduce the sentence or to acquit the person convicted by a lower Court; but such is not the case with the exercise of power of Clemency. The judicial record is not altered upon exercise of the power of Clemency; thus it is not a judicial power. That it is not an executive power would be clear from a reading of Articles 72 and 73 of the Constitution; and had it been executive power, it would have been covered by the provisions of Article 73 of the Constitution itself, which defines the extent of such executive power. This is a unique extraordinary power, and is bound only by limitations arising from other provisions of the Constitution (such as Part III). It being a function to be exercised by the President or Governor, it is subject to judicial review, by virtue of Articles 53 and 154 of the Constitution.
VI. PRESIDENTS AND CLEMENCY PETITIONS – INDIAN PERSPECTIVE
Tracing the trends of “mercy” in mercy petitions post independence, India has come a long way but only downhill. With the first President, Dr. Rajendra Prasad commuting 180 out of 181 mercy petitions, the recent president, while leaving office, rejected 90% of the mercy petitions. For the sake of brevity, it would be convenient to only cover highs and lows in the trends in mercy petitions.
The period where mercy petitions hardly saw any mercy was that of President Venkataraman who left office of President disposing of 40 petitions; all rejected. K R Nayaranan, adopting a dormant policy, disposed of 0 petitions during his tenure. The only President, in the latter half of independence, to take an active role in granting clemency was Smt. Pratibha Patil, commuting 19 out of 22 petitions before retiring.
The policy followed by the executive has, however, largely been that of non-interference or rejection in the recent years. The misnomer “mercy petition” has been criticised by many as non-reflective of the pattern followed. The number of mercy petitions, however, went down post 1980 after the Bachan Singh[10] dictum which provided awarding of death sentence in “rarest of rare” cases. With that, life imprisonment became the rule and capital punishment an exception and a similar amended affecting the same was brought about in the CrPC.
The Law Commission in its 2015 report noted the influence a president has on deciding mercy petitions, saying, “A perusal of the chart of mercy petitions disposed by Presidents suggests that a death-row convict’s fate in matters of life and death may not only depend on the ideology and views of the government of the day but also on the personal views and belief systems of the President.”[11]
Thus, with every President the fate of the applicant becomes solely depended not on any specific rules binding the executive but on the call taken by the President on the aid and advice of the Council of ministers.
A bare reading of Article 72 provides that no time period for disposing of a mercy petition has been prescribed by the Constitution makers. The absence of this provision has provided the Presidents with an unrestricted period to sit on petitions, leaving the death row convicts in limbo. Parliament attack convict, Afzal Guru for instance had to undergo a period of 5 years before his petition was decided, making a disappointed statement while in solitary confinement he said, “I really wish L.K. Advani becomes India’s next prime minister as he is the only one who can take a decision and hang me. At least my pain and daily suffering would ease then.”[12]
Similar inordinate delay was faced by the convicts in the Rajiv Gandhi assassination case, facing a total of 11 years in a period of cluelessness. [13]
It is argued that trauma of being hanged or pardoned, marked by a period of uncertainty along with conditions of solitary confinement create a harsh impact on the mental and physical health of the convict, and this period has often been termed as “death row phenomenon” called by many as degrading to human life.
The government contended that the court cannot prescribe a period for deciding such petitions as the same goes against the letter of law as provided in Article 72 & 161 of the Constitution. (This was in response to the judgement delivered by the Supreme Court in Sher Singh’s[14] case, laying down that the executive must follow a self-imposed rule and all petitions must be disposed of expeditiously within a period of 3 months of receipt).
The court similarly took a note of cruelty embedded in such lengthy delays in Jagdish v State of MP[15], as being aggravative of the already existing severe conditions. It cited a US Supreme Court judgement which observed, “the cruelty of capital punishment lies not only in the execution itself and the pain incident thereto, but also in the dehumanising effects of the lengthy imprisonment prior to execution. The prospects of pending executions exacts a frightful toll during the inevitable long wait between the imposition of the sentence and the actual infliction of death.”[16]
In K. M. Nanavati v. State of Maharashtra[17], the Supreme Court held that though it would be open to the President or Governor to grant pardon at any time, it ought not to be exercised after the convict has approached the appellate Court for proving his innocence, in which case it would be within the power of the appellate Court to suspend the execution of the sentence.
The contrary question is whether the Courts could have any jurisdiction when the President or Governor is in seisin of a Petition for Clemency. It may be noted that the question is now not of the Applicant proving his innocence, it is only about reduction of the rigours of a sentence which has otherwise attained finality. Therefore, the narrow compass is that the consideration of the Clemency Petition being a function of the President or Governor, whether such function has been performed, or not performed, in accordance with the Constitution.
The Supreme Court has in several cases, commuted death sentences into sentences of life imprisonment, on account of the delay in disposal of the Petitions for Clemency. It held that the constant suspense about the fate of the convict, due for execution but for the pendency of the Petition for clemency operates in a harsh and burdensome manner and affects his basic human rights, referable to Article 21 of the Constitution.
The Supreme Court in T.V. Vatheeswaran v. State of Tamil Nadu[18], held that a delay of two years in disposing of a Clemency Petition was a good ground to commute a sentence of death to one of life imprisonment. However, very soon thereafter, a three-judge Bench in Sher Singh v. Union of India[19], over-ruled the view in Vatheeswaran (supra) and held that delay alone is not a good ground for commutation. The Constitution Bench in Triveniben v. State of Gujarat[20], held that ‘inordinate delay’ would, considering the pain caused to the convict, entitle the Petitioner to have his death sentence commuted to one of life sentence. However, the Court refused to fix any time-limit for disposal of Clemency Petition.
The Supreme Court commuted the death sentences of three convicts in the Rajiv Gandhi murder case into those of life sentence, holding that the delay of about eleven years in disposal of the Clemency Petition was ‘inordinate’. Soon thereafter, the power to release the prisoners, under Sections 432, 433 and 433A, as they had served about 21 years, more than the statutory minimum of fourteen years, was sought to be exercised by the State Government. However, the case having been dealt with by the Central Bureau of Investigation, the Central Government claimed the power of remission/ release to itself and that the State stood denuded of its power.
VII. SCOPE OF JUDICIAL REVIEW ON POWER OF PARDON
The Merriam Webster Dictionary of law says that judicial review is the power of a court to review the action of public sector bodies in terms of their Constitutionality in some jurisdiction; it is also possible to review the Constitutionality of law itself[21].
The power of judicial review, which has indeed been held as part of the inviolable basic structure of the Constitution, is traced to multiple sources: Articles 13, 32, and 226, and Articles 53 and 154 of the Constitution[22], as regards exercise of power generally by the Central and the State Government.
Judicial review in India can be broadly divided into judicial review of legislative action, judicial review of judicial decisions and judicial review of administrative action.
The contours within which judicial review is performed by the Courts is laid down in Tata Cellular v. Union of India[23].
In Epuru Sudhakar v. Government of Andhra Pradesh[24], the Supreme Court struck down the grant of remission to the convict for the reason that he was a good worker of a particular political party that had recently been returned to power in the General Elections. It approved the law stated by the United States Supreme Court in Biddle v. Vuco Perovich[25] and Burdick v. United States[26], that
“A pardon in our days is not a private act of grace from an individual happening to possess power. It is a part of the constitutional scheme. When granted it is the determination of the ultimate authority that the public welfare will be better served by inflicting less than what the judgment fixed.”
The decision of the President or the Governor under Article 72 or Article 161 are open to judicial review, if the Petitioner can make out any of the following grounds:
The question whether the President or Governor is bound to give reasons for the decision was discussed by the Supreme Court in Kehar Singh v. Union of India[27], and it was held that: “There is no question involved in the case of asking for reasons for the President’s Order”. However, this observation was explained in Epuru Sudhakar (supra) as follows:
“The same obviously means that the affected party need not be given the reasons. The question whether reasons can or cannot be disclosed to the Court when the same is challenged was not the subject matter of consideration. In any event, the absence of any obligation to convey the reasons does not mean that there should not be legitimate or relevant reasons for passing the order”.
As may be seen from the above, earlier the Supreme Court was of the opinion that if the President gives no reason whether for accepting or rejecting clemency petitions, the Court could not review. If the President or Governor came forward with reasons, they would subject to judicial review. However, with changing trends, the Supreme Court has now held that guiding principle in Public Interest is that there must be a reason to support the view that clemency must be exercised.
VIII. GLOBAL SCENARIO OF POWER OF CLEMENCY
In the United Kingdom, the Monarch (“Crown”) exercises the power of Clemency on the advice of the Home Secretary, the Governors of colonies and the Governors-General of the dominions. The power of Clemency is usually invoked after the final decision of the case is rendered by the judiciary. A report of the U.K. Royal Commission has observed that should the Home Secretary be of the opinion, notwithstanding the verdict of the jury, that there is a ‘scintilla of doubt’ about the prisoner’s guilt, the power of Clemency could be exercised. This would seem to be flowing straight from an acknowledgement of the fallibility of the judicial process. However, the power is subjected to Judicial Review.
As per Article II (2) of the Constitution of the United States of America[28], the President has been vested with power of Clemency. However, it does not extend to cases of impeachment (which usually results in ouster from the Office held). Although it is subject to judicial review the courts have confined themselves to cases of gross misuse.
In Canada, the Governor General of Canada has been vested with the power of Clemency by virtue of the letters patent and as set out in specific Sections (Ss. 748 and 749) of the Criminal Code of Canada[29].
In Nigeria, the President has powers to pardon, or wholly or in part, commute, or remit any punishment or of any penalty or forfeiture, in respect of offences created by the Acts of National Assembly. The powers of the President shall be exercised by him after consultation with the Council of State.
IX. CONCLUSION
The above discussion shows that Power of Clemency is not an act of private grace, but is to be used only in Public Interest. Whether or not reasons are expressly given in the Order, there must be reasons to show that Public Interest is involved in exercising the power of clemency for the case of a particular convict.
The authors are uncomfortable with the idea of the power of clemency being one based on the theory of “Rectification of judicial error”. If that were true in a criminal case, the same would be true of all civil cases as well as constitutional cases. In fact, cases are not unknown where the judgments of Constitution Benches have been upturned by subsequent Constitution benches. If there should be scope with the Executive to mitigate or correct a judicial error, then the question why such power should not be extended to the sphere of constitutional law. Thus, as it is not permissible for the Executive to interfere with a judicial pronouncement, however harsh its effect might be, the power of the Executive in the sphere of Clemency ought not to be traced to possibility of judicial error.
Factors that can be taken into consideration for determining public interest are not to be put in straight jacket. They demand circumstantial flexibility. From the literature available, it would seem that such considerations may include the following:
(i) Shri H.M. Seervai[30], the noted Constitutional expert has opined that:
“Judges must enforce the laws, whatever they be, and decide according to the best of their Lights; but the laws are not always just and the lights are not always luminous. Nor, again are Judicial methods always adequate to secure Justice. The Power of pardon exists to prevent injustice whether from harsh, unjust laws or from judgments which result in injustice; hence the necessity of vesting that power in an authority other than the judiciary has always been recognized.”
(ii) The Model Jail Manual, prepared by the Indian Prison echelons plus a leading criminologist, Dr. Panakkal, back in 1970, has stated, right at the outset, in its Guiding Principles:
“Social reconstruction and rehabilitation as objectives of punishment attain paramount importance in a Welfare State. The supreme aim of punishment shall be the protection of society. Through the rehabilitation of the offender Imprisonment and other measures which result in cutting off an offender from the outside world are afflictive by the very fact of taking away from him the right of self-determination. Therefore, the prison system should not except as incidental to justifiable segregation or maintenance of discipline, aggravate the suffering inherent in such a situation. The institution should be a center of correctional treatment, where major emphasis shall be given on the re-education and reformation of the offender. The impacts of institutional environment and treatment shall aim at producing constructive changes in the offender, as would be having profound and lasting effects on his habits, attitudes, approaches and on his total value schemes of life.”
The above discussion shows that the power of clemency is not a bounty from the government to the convicted criminal. It is to be exercised in public interest which may have several ramifications and components. One such component could be judicial fallibility but it is not the justification for clemency.
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Chirag Madan is a practicing advocate and a former junior associate of Mr. Ram Jethmalani.
G. Sai Krishna Kumar is a practicing advocate.
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[1] Munna Lal Vs State, 1964 CriLJ 700.
[2] The Government of India Act, 1935.
[3] INDIA CONST. art 72, art 161.
[4] Maharashtra Control of Organized Crime Act, 1999 (Act No. 30 of 1999).
[5] INDIA CONST. Art 72.
[6] The Air force Act, 1950 (Act of 45 1950).
[7] The Air force Act, 1950 (Act of 45 1950).
[8] THE CONSTITUTION (FORTY-SECOND AMENDMENT) ACT, 1976, (Bill No. 91 of 1976)
[9] MaruRam Vs Union of India, A.I.R. 1980 S.C. 2147 (India).
[11] Law Commission Report 262, Pg 199
[12] ‘I Don’t Wish To Be Part Of Living Dead’ , The Hindu, June 13, 2016
[13] ‘No Death Sentence For Rajiv Gandhi Assassins-SC’, First Post, Feb 18 2014
[16] Furman v. Georgia 408 U.S. 238, 288-289 (1972)
[17] K. M. Nanavati v. State of Maharashtra AIR 1961 SC 112 : 1961 SCR (1) 497.
[18]T.V. Vatheeswaran v. State of Tamil Nadu AIR 1983 SC 361.
[19]Sher Singh v. Union of India AIR 1983 SC 465.
[20]Triveniben v. State of Gujarat (1988) 4 SCC 574.
[21] Mariam Webster (Since 1828 )
[22] Supra
[23] Tata Cellular v. Union of India AIR 1996 SC 11.
[24] Epuru Sudhakar v. Government of Andhra Pradesh AIR 2006 SC 3385.
[25] Biddle v. Vuco Perovich, 274 US 480 (1927).
[26]Burdick v. United States 236 U.S. 79 (1915).
[27] Kehar Singh v. Union of India AIR 1989 SC 653.
[28] US CONST. Art II (2)
[29] Criminal Code, RSC, 1985
[30]Constitutional Law of India, 4th edition, Page 2004.
In India, before 1970s the judiciary in the first two decades after independence exercised a greater degree of judicial restraint than seen later. It was continuous unconstitutional actions of the other two pillars, namely the legislature and the executive, which lead to the formation of various theories in constitutional law by the courts in India, particularly the Supreme Court, to limit the powers of the legislatures and executives by creating exceptions to the rule of separation of power.
The problem of drawing a line between judicial and legislative power is always strenuous in any legal system. While exercising the power to review legislative actions there may be a threat of judiciary exceeding its limits and there may also be a scenario wherein the judiciary may become so subservient to the legislative will so as to render nugatory the safeguards enshrined under various provisions of the Constitution.
Even after more than 70 years of the successful working of the Indian Constitution the peace among two extreme positions requires some more efforts. Therefore, instead of arriving at a hurried conclusion of judicial review and policy consideration, it will be more appropriate to consider the constitutional history of judicial review in India.
The foundation of this problem was laid down from the very beginning in the year 1951 with the enactment of the First Amendment Act. The First Amendment Act was introduced within a year and half of working of the Constitution of India. The main object behind this amendment was to nullify certain judicial decisions and forestall future judicial action.
The Courts have never shied away from asserting authoritatively that in case of grave constitutional violation by the Legislature, the Courts are well within their powers to intervene and declare such act to be invalid. Way back in the year 1950 itself, the Supreme Court in A.K. Gopalan v. State of Madras, AIR 1950 SC 27, held that
“The inclusion of Article 13(1) and (2) in the Constitution appears to be a matter of abundant caution. Even in their absence, if any of the fundamental rights was infringed by any legislative enactment, the Court has always the power to declare the enactment, to the extent it transgresses the limits, invalid.”
Thereafter, in State of Madras v. V.G. Row, AIR 1952 SC 196, the Court pointed out that they are not out to seek clashes with the legislature of the country. The relevant para reads as under:
“……. our Constitution contains express provisions for judicial review of legislation as to its conformity with the Constitution, unlike as in America where the Supreme Court has assumed extensive powers of reviewing legislative acts undercover of the widely interpreted “due process” clause in the Fifth and Fourteenth Amendments. If, then, the courts in this country face up to such important and none too easy task, it is not out of any desire to tilt at legislative authority in a crusader’s spirit, but in discharge of a duty plainly laid upon them by the Constitution. This is especially true as regards the “fundamental rights “, as to which this Court has been assigned the role of a sentinel on the qui vive. While the Court naturally attaches great weight to the legislative judgment, it cannot desert its own duty to determine finally the constitutionality of an impugned statute. We have ventured on these obvious remarks because it appears to have been suggested in some quarters that the courts in the new set up are out to seek clashes with the legislatures in the country.”
In Sankari Prasad Singh Deo v. Union of India and State of Bihar, AIR 1951 SC 455 wherein the First Amendment Act which sought to introduce Article 31A and 31B in the Constitution was challenged, the Court after scrutinizing the nature of amending power held that it is well within the power of the Parliament to amend the Constitution provided the procedural safeguards in Art 368 are duly fulfilled.
In Sajjan Singh v. State of Rajasthan, AIR 1965 SC 845, the Hon’ble Supreme Court, clearly expressed its concern as regards nature and scope of amending power as to whether this power to amend is plenary or is it to be governed in terms of the provisions of the Constitution which safeguards individual liberties of an individual.
The concern for individual liberties as expressed in Sajjan Singh’s Case found a place in Golaknath v. State of Punjab, AIR 1967 SC 1643, wherein the Court concluded that power to amend is not an absolute power and fundamental rights were unamendable. It seems the judgment was highly influenced by the instances of misuse of amending power in the seventeen years of working of the Indian Constitution.
In Kesavananda Bharati v. State of Kerala, AIR 1973 SC 1461 the Court though overruled Golaknath v. State of Punjab, AIR 1967 SC 1643 but held that the Parliament could not abrogate the basic features of the Constitution while amending it.
The interesting aspect of the above development, which needs mentioning is that the Supreme Court which was not ready to impose any limitation on amending power, except procedural comes down in handy to impose a substantive limitation on the power of the Parliament to amend the Constitution. What forced the Hon’ble Court to change its view so radically? Was it mere intention to usurp the power or they were forced to come to the rescue of the liberties of the individual.
This basic structure doctrine, which was introduced in Kesavananda Bharati Case, has been extended now to include rule of law, separation of powers, equality, democracy, the supremacy of the Constitution, judicial independence and judicial review, the relationship between Art 14, 19 and 21, harmony between fundamental rights and directive principles.
The sum and substance are that this doctrine is now at the discretion of the Courts.
In E.P. Royappa v. State of Tamil Nadu, AIR 1974 SC 555, the Hon’ble Supreme Court, explaining the scope of executive power and concept of equality stated:
“Equality is a dynamic concept with many aspects and dimensions and it cannot be “cribbed cabined and confined” within traditional and doctrinaire limits. From a positivistic point of view, equality is antithetic to arbitrariness. In fact equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch.”
In State of Rajasthan v. Union of India, AIR 1977 SC 1361, the Court held that
“The guiding principles…should be the welfare of the people at large and the intention to strengthen and preserve the Constitution….Clause (5) of Article 356 of the Constitution does not imply a free licence to the Central Government to give any advice to the President and get an order passed on reasons which are wholly irrelevant or extraneous or which have absolutely no nexus with the passing of the Order. To this extent the judicial review remains.”
In Kehar Singh’s case, (1989) 1 SCC 204, the Supreme Court maintained that the order of the President cannot be subjected to judicial review on its merits except within the strict limitations defined in Maru Ram’s case, AIR 1980 SC 2147 wherein it was cited that,
“It is the pride of our constitutional order that all power, whatever its source, must, in its exercise, anathematise arbitrariness and obey and guidelines intelligible and intelligent and integrated with the manifest purpose of the power. From this angle even the power to pardon, commute or remit is subject to the wholesome creed that guidelines should govern the exercise even of presidential power.”
However, in Swaran Singh v. State of U.P, (1998) 4 SCC 75, the Supreme Court invalidated the remission of sentence by the Governor because some material facts were not brought to the knowledge of the Governor.
Similarly, in Epuru Sudhakar v. Govt of A.P., AIR 2006 SC 3385 the Court, reaffirming Maru Ram’s case, AIR 1980 SC 2147, held that the considerations to be taken into account while granting pardons should be relevant and not arbitrary or capricious.
This highlights the extension of limited judicial review even in cases of pardoning power. These cases are illustrations of compulsive judicial intervention warranted by the fact that there were cases wherein pardon was granted based on mere political vendetta.
Such illustration where the situation forced the Court to take a stance against Legislature is not just confined to amending power or pardoning power.
The Court in S.R Bommai v. Union of India, AIR 1994 SC 1918 established judicial review in cases falling within the purview of Art 356, the Court held that
“…President cannot exercise this power under the Constitution on wish or whim. He has to have facts, circumstances which can lead a person of his status to form an intelligent opinion requiring exercise of discretion of such a grave nature…if there be no basis or justification for the order under the Constitution, the Courts will have to perform their duty cast on them under the Constitution. While doing so, they will not be entering in the political arena…”
In Raja Ram Pal v. The Hon’ble Speaker Lok Sabha & Ors., (2007) 3 SCC 184 the Court duly extended the power of judicial review to a matter relating to parliamentary privileges:
“it should be a matter of presumption, that Parliament would always perform its functions and exercise its powers in a reasonable manner. But, at the same time there is no scope for a general rule that the exercise of powers by the legislature is not amenable to judicial review. This is neither the letter nor the spirit of our Constitution. We find no reason not to accept that the scope for judicial review in matters concerning Parliamentary proceedings is limited and restricted…”
Furthermore, it was pointed out that “…in case of gross illegality or violation of constitutional provisions is shown, the judicial review will not be inhibited…”
In the case of delegated legislation, in which essential legislative function cannot be delegated, it is established that if such legislations are in contravention to the parent act, the resultant is ultra vires the parent act.
The Indian Supreme Court in Union of India v. Tarachand Gupta & Bros., AIR 1971 SC 1558 also affirmed the judgement passed by the House of Lords in Anisminic Corporation v. Foreign Compensation Commissioner, [1969] 2 A.C. 147 wherein it was held that in cases where there is an apparent error of exercise of jurisdiction by inferior tribunal the Court’s jurisdiction is never expelled out.
In B.R Kapur v. State of Tamil Nadu, [2001] 7 SCC 231 however the Court initially refrained from entering into the political thicket, still went further and added that if such question relates to a constitutional interpretation, the Court will decide the issue irrespective of the fact that answer to such question will have a political impact.
In Ashoka Kumar Thakur v. Union of India, (2008) 6 SCC 1 the Court expressed discontent to the contention of the respondent that the Courts cannot enter into policy question.
The more activist approach by the courts can be seen in cases relating to environmental matters, starting from Rural Litigation and Entitlement Kendra v. State of U.P AIR 1985 SC 652 down the line till Indian Council for Enviro-Legal Action v. Union of India AIR 1996 SC 1446, the Supreme Court has taken a stern approach as regards failure on the part of the State and lack of seriousness concerning the implementation of environmental laws. The decisions include suggestions as regards establishment of green benches, determination of the appropriate amount of compensation when it comes to environmental degradation, issuing suggestions as regards steps to be taken in pursuance of protection of the environment, being critical of the government for being negligent and being party to nuisance created by a corporation, creation of commissions to receive assistance and records at particular intervals as regards steps being taken for environmental reclamation, afforestation and soil conservation programme.
Though in A.K. Gopalan v. State of Madras, AIR 1950 SC 27 the phrase “procedure established by law” was interpreted to mean “procedure prescribed by the law of the state”, however, in Maneka Gandhi v. Union of India, AIR 1978 SC 597, the same phrase was interpreted to mean the due process of law which means a procedure which is right, just and fair.
Another phrase in Art 21 which attracts attention is an interpretation of the phrase “right to life and liberty”, the increasing ambit of Art 21 where is justified in terms of Court’s duty to take into account the socio-economic development in the society at the same time is criticized based on judiciary being unwarranted under the Constitution to bring in these kinds of interpretation and thereby increasing the limitation on the power of the State where none exists in the express terms.
The judgment of the Supreme Court in Vishaka v. State of Rajasthan, AIR 1997 SC 3011 wherein the Court laid down certain guidelines with regards to sexual harassment of women in workplaces in absence of legislation, however, invited a lot of criticism on the ground that the Court has assumed a legislative role, such instances, however, should not be looked into devoid the fact that should justice be left at the backdoor when the Legislature fails to act on the duty which has cast upon it.
In other words, even though it is the legislature which enjoys the representation of the people and they are the best judge to decide what interests are to be protected or what are the fields in which proper legislations are required, but in a case where the legislature fails to fulfil the duty cast upon it by the Constitution, an individual cannot be denied justice merely for this reason. It is in such a scenario, that the judges, who sit to adjudicate, are also required to do justice to an individual.
Justice, social, economic and political, is guaranteed by the Constitution, and where the other organs of the State have failed to deliver it, the judges cannot turn a blind eye, on the pretext that policymaking is not the job of the Courts. If they do so they would be violating their oath of office.
There are many more judgments by the Supreme Court but even those judgments will bring us to the conclusion that every case is unique in itself. Based on decisions above-mentioned, one can easily understand that a decision should not be analysed in isolation. There are instances whereby judiciary ought to have interfered and they did interfere to secure to all its citizens: Justice, social, economic and political.
The separation of powers is complemented and supplemented by checks and balances, and therefore the organs of the State, though separate, act as a brake on each other.
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Ajay Awasthi is a practising advocate at the Chambers of Shri Mahesh Jethmalani. He is is skilled in Constitutional Law, International Law, Legal Assistance, Criminal Law, and Arbitration. Before joining the Chambers of Shri Mahesh Jethmalani, Mr. Awasthi has worked with Late Shri Ram Jethmalani and has handled several high profile cases. Mr. Awasthi is an alumnus of KIIT Law School, Bhubaneswar.
The Construction and Redevelopment industry in India and Mumbai had been growing rapidly till 2017. Thereafter the real estate sector has has had to face a number of difficulties in view of economic recession and now, the situation due to COVID-19. This has also impacted contracts relating to redevelopments. In this Paper we look at the issues that have now arisen and the law applicable to today’s situation.
As the construction and redevelopment business was not properly regulated Parliament passed the Real Estate (Regulation and Development) Act, 2016 (“RERA Act”) which is applicable to development of buildings in the State of Maharashtra. An Authority (called MahaRERA) has been constituted for the State of Maharashtra, which governs all aspects of construction projects in the state. All such projects have to get registered as RERA projects. MahaRERA is also tasked with hearing grievances of flat purchasers who have complaints against developers. The Maharashtra Ownership Flats Act, 1963 and the Maharashtra Apartment Ownership Act, 1970, both statutes governing construction and sale of flats and apartments respectively, continue to be applicable.
The process of redevelopment and sale of new constructions is essentially governed by contractual terms (commonly called Development Agreement or Redevelopment Agreement) between the developer and the housing societies or owners. These Agreements include the commercial understanding of the parties and provide inter alia the timeline for completion of the project and delivery of the flats. All these contracts commonly contain a force majeure clause that suspends the performance of obligations on the occurrence of an event of force majeure. This is an event which is not in control of the parties but contemplated by the parties as one that would make the performance of the contract impossible for the duration of that event.
PROBLEMS IN REDEVELOPMENT DUE TO PANDEMIC & LOCKDOWN
Due to the COVID-19 pandemic that has swept the world including India and the lockdown following it, most businesses (barring certain notified essential services) are at a standstill. This has had a significant effect on all sectors of the economy be it the construction and real estate industry, financial markets, hospitality industry, entertainment industry, etc.
Some of the issues that have arisen in the redevelopment and construction industry due to the pandemic and lockdown are:
i. Under Section 13 of the RERA Act, developers are unable to sell any flat or accept more than ten percent cost thereof unless an agreement for sale is executed and registered. Registration offices are currently shut and failing payment of consideration by allottees, financing of the project becomes difficult. Banks also insist upon registration of documents before sanctioning amounts.
ii. Section 4(2)(l)(D) of the RERA Act provides that seventy per cent of the amounts realized from the allottees is to be deposited in a separate account to cover the cost of construction and the land cost. In view of the pandemic and the lockdown some allottees are not able to pay their instalments to the developer as per agreed terms. This impacts the successful and scheduled completion of the project.
iii. Obtaining statutory approvals for sanction of plans and construction is also currently not possible because offices of municipal and other authorities are shut or not operating with full workforce.
iv. Allottees are often contractually required to make some payment at the time of taking possession. If allottees have difficulties in making their contractual payments, does a developer’s obligation to hand over possession still stand?
v. In the case of a completed building where even the Occupation Certificate has been obtained by the developer, the developer’s obligations towards payment of transit rent stands extinguished. However in today’s scenario the allottees and housing society members may not be able to take possession during the lockdown. Is the developer still liable to pay the transit rent amounts to such allottees and members?
vi. Procurement of raw material is severely affected and this will continue even after lifting of the lockdown. This may arguably constitute an act of force majeure. The Procurement Policy Division of the Government of India has issued a circular dated 19th February 2020[1] that disruption in supply chains due to spread of coronavirus in China and other countries would be classified as a “natural calamity” and would be covered under the scope of the force majeure clause in the Manual for Procurement of Foods issued by the Government.
vii. Restrictions on construction continue till date in major metropolitan areas in Maharashtra. In Mumbai and Pune there are many construction and redevelopment projects which are at a standstill. While the lockdown and restrictions are not permanent, the lockdown has caused a cessation on all activities pertaining to construction and redevelopment.
FORCE MAJEURE RECONGNIZED BY RERA ACT
The concept of force majeure is recognized in Section 6 of the RERA Act. This provides that the registration granted under Section 5 of the RERA Act may be extended by the MahaRERA Authority on an application made by the promoter due to force majeure[2]. The MahaRERA Authority may then extend the registration of a real estate project if the case of force majeure is made out[3]. The Explanation to Section 6 states that force majeure shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project. The date for granting possession of flats to allottees under the RERA Act would then be the extended date of registration.
If an agreement between a developer and an allottee has a force majeure clause, delays due to the prevailing lockdown may be covered under that clause. In the event of there being no such clause, it is arguable that a purchaser may approach the MahaRERA Authority for compensation or for withdrawing from the project under Section 18 of RERA Act. The MahaRERA Appellate Tribunal[4] has delivered an interesting judgment. It was held that even if there is a force majeure event which delays the project, an allottee can exercise his option of withdrawing from the project under Section 18. The allotee would be entitled to a refund of the amount paid with interest. It was held that the extension of time granted by MahaRERA to the project could only save the developer from criminal liability under the RERA Act. Such extensions did not have the effect of modifying the date of handing over possession as stated in the contract. It was then held that if the allottee chooses to continue with the project and claims compensation for delayed possession under Section 18, then the force majeure period must be discounted while calculating the compensation.
The MahaRERA Authority has recognized the current crisis and has issued Order No. 13 of 2020 on 2nd April 2020[5]. This Order states that for all MahaRERA registered projects in which completion date (whether initial, revised or extended) expires on or after 15th March 2020, the period shall be extended by 3 months. The Order also extends the time limit for all statutory compliances that were to be done in accordance with the RERA Act from March, April and May 2020 to 30th June 2020. It remains to be seen whether the MahaRERA grants a further extension if the circumstances do not improve.
IS THE LOCKDOWN OR THE PANDEMIC AN EVENT OF FORCE MAJEURE?
An interesting issue that arises is whether the COVID-19 pandemic is to be considered an event of force majeure or is the lockdown ordered by the Government considered to be an event of force majeure. While considering issues of force majeure it is imperative to ascertain what is claimed to be the event of force majeure and what is contained in the contact regarding force majeure. There are distinct aspects relating to the pandemic and the lockdown :
i. The characteristics and immediate effects of the lockdown and the pandemic are both very different. By illustration, while the lockdown as an event of force majeure may render construction activities impossible during its continuation, the pandemic may render health emergencies but may not have an immediate and proximate consequence of stalling of construction activities.
ii. The lockdown as an event of force majeure would end on the date the lockdown ends and economic consequences thereafter may not necessarily be considered as events of force majeure. The pandemic is likely to last longer and it may be argued that economic consequences arising during such time are inextricably linked to it and should also be considered as an event of force majeure.
iii. While force majeure clauses as commonly drafted are likely to include governmental orders and prohibitions that may cover the prevailing lockdown, it is unlikely that the clauses specifically include the word “pandemic”. Acts of God are commonly included as events of force majeure in contracts but is the pandemic an act of God? An act of God has been considered and elaborated upon by the Supreme Court in Divisional Controller, KSRTC[6] which has stated inter alia: “The expression “act of God” signifies the operation of natural forces free from human intervention, such as lightning, storm etc. It may include such unexpected occurrences of nature as severe gale, snowstorms, hurricanes, cyclones, tidal waves and the like. But every unexpected wind and storm does not operate as an excuse from liability, if there is a reasonable possibility of anticipating their happening. An act of God provides no excuse unless it is so unexpected that no reasonable human foresight could be presumed to anticipate the occurrence…”
iv. The terms of the force majeure clause are consciously and expressly limited by the language and terms adopted by the parties. It is arguable that a pandemic could not be implied as a term of force majeure because that would be contrary to, or beyond, the expressed terms of force majeure. The Supreme Court in Naihati Jute Mills Ltd. V/s Khyaliram Jagannath[7] has refused to imply a term in the contract which was not expressly included in the contractual clause.
LONG TERM ECONOMIC (UN)VIABILITY & EFFICIENT BREACH THEORY
Besides the delays due to the lockdown, policy changes and resultant disruptions in the supply chain of raw materials and labour will undoubtedly make construction take longer and in turn, more costly. A question then arises as to whether contracts would still be liable to be performed if performance thereof has become significantly more onerous.
Our courts have dealt with cases when performance of a contract became onerous on account of other events of force majeure such as war and policy changes by the Government. Our Courts have held that if the question does not relate to frustration or impossibility of performance of contract but is simply a matter of performance becoming more onerous, the contract still has to be performed as per its terms. A party cannot seek amendment to agreed terms or claim escalation of price[8]. These cases refer to and follow the decision of the Supreme Court in Alopi Parshad’s case[9]. The doctrine in Alopi Parshad’s case is a departure from the English law, which states that a change of circumstances outside the contemplation of parties at the time when the contract was made would justify a Court in departing from the express terms of the contract.
The judgments rendered so far however are cases arising out of commercial contracts for supply of materials or products. The cases did not involve an event of force majeure (like the pandemic) which was continuous and which was essentially incapable of contemplation. Since the present circumstances affecting the redevelopment and construction industry are (i) beyond contemplation of parties (ii) likely to continue even after the lockdown is lifted and (iii) make performance much more onerous the Courts may reach a conclusion that the contract stands frustrated – has become impossible, or impractical[10] to perform.
There is another interesting view, known as the efficient breach theory of contract, which may be used to decide matters differently from what is set out in the judgments hereinabove. This theory has not been considered by Indian Courts so far. As per the efficient breach theory, a party should be allowed to voluntarily breach a contract and pay damages, if doing so would be more economically efficient than performing the contract. The efficient breach theory has been favourably considered by the Supreme Court of Canada.[11]
The efficient breach theory is particularly prevalent in the field of law and economics, which has been resorted to by the Indian judiciary on occassion. In several recent judgments our Supreme Court has propounded the rule of interpretation – the economic analysis of law.[12] The Supreme Court has interalia held that the economic impact of judicial decisions on the economy of the country must be kept in mind while rendering decisions. It is possible that in the near future economic considerations of the country as a whole are suitably weighed in to adopt a particular course of action in redevelopment and real estate matters too.
The efficient breach theory would have to be reconciled with provisions of the Specific Relief Act, 1963, as recently amended, which mandates specific performance of the contract if the non-breaching party is ready and willing to perform the contract. However a Court may exercise discretion and consider that specific performance of the contract is not the solution if (i) the performance of the contract has become significantly more onerous than what was contemplated by parties when making the contract and (ii) the termination of the contract can be allowed with payment of adequate compensatory damages to the other party and (iii) the result of termination and payment of damages brings about a more efficient solution than ordering specific performance of such an onerous contract.
SUSPENSION OF OBLIGATIONS DUE TO FORCE MAJEURE
Due to the difficulties faced as result of the lockdown as set out above, it is to be considered whether developers’ obligations such as payment of transit rent and delivery on possession date stand unaffected or get suspended. This would firstly depend on the terms of the force majeure clause of the contract itself, if any and on the invocation thereof. If the force majeure clause clearly includes the event and suspends obligations of the contract then the parties have to go by the contract.
In the event there is no force majeure clause and a dispute in regard to prevalence of force majeure and suspension of obligations is raised by either party, three aspects would be of utmost relevance:
All three aspects would necessarily differ from contract to contract and as according to the facts of each case.
The Supreme Court in Naihati Jute Mills Ltd.[13] has noted that the question of absolving a party from its obligations would depend upon whether the contract provides for best endeavors to be made or whether the contract provided for absolute performance of the obligation, failure of which would render a party liable for breach.
Obligations may be suspended if performance is hindered. The Supreme Court has considered an argument on hindrances as regards invocation of force majeure in the recent Energy Watchdog case[14] and held therein that the expression “hindered” must be construed with regards to the words which precede and follow it and also with regard to the nature and general terms of the contract. The Court ultimately held that there had been no hindrance in the facts of that case.
The observation by the Supreme Court in M.D., Army Welfare Housing Organization’s case[15]wherein the Court has discussed the concepts of frustration under Section 56 in the context of a construction agreement is relevant:
“114. In Emden and Gill: Building Contracts and Practice, 7th Edn., pp. 162-63, it is stated that liability to pay damages for non-performance for an impossibility only arises where the contract is absolute and unrestricted by any condition, expressed or implied. It is further stated that a difficulty may not in all circumstances amount to an impossibility. But even in that event the terms and conditions relating to performance of the contract may stand eclipsed.”
Some developers have already sought to discontinue payments towards transit rent citing the reasons of financial difficulties, bad market conditions, a standstill in construction, sales and collections and on the basis that remobilizing of contractors and workforce for the construction to recommence would take further time.[16] While the reasons appear to include some restrictions (which could be considered as force majeure events) they also include some conditions in the present market which merely make performance onerous. In this situation it remains to be seen whether such suspension is upheld by the Courts. The Courts would also be considering the exact contractual terms while deciding cases like this.
BANK GUARANTEES RELATING TO CONSTRUCTION PROJECTS
The governing statutes, rules and regulations place significant emphasis on developer’s obligations to allottees. In almost all cases allottees are secured to a certain extent by a bank guarantee issued by the developer. The issue of bank guarantees assumes some significance on account of the settled position in Indian law that a bank guarantee is a distinct contract and can be stayed only on very limited grounds. The Supreme Court[17] had held that a right conferred by a contract of guarantee is an independent right and is also recognized by the Indian Contract Act. Such a right cannot be diminished without a just cause.
In the context of guarantees/letters of credit issued pursuant to commercial contracts, the Bombay High Court[18] and the Delhi High Court[19] have had the opportunity to look at the issue in the times of COVID-19 and lockdown and have passed varying judgments. The Bombay High Court did not restrain encashment of Letters of Credit whereas the Delhi High Court stayed invocation of the Bank Guarantee due to the lockdown.
The difference in the stands taken by the two Courts can however be easily understood as there was one important difference in the matters. In the case before the Bombay High Court, the main contract provided for carrying on an activity which was declared an essential service and which was a permitted activity even during the lockdown. On the other hand the Delhi High Court noted that the contractual activity was an activity which had to be stopped due to the lockdown.
CAN THE CONTRACT BE TERMINATED OR DISCHARGED DURING CONTINUATION OF THE FORCE MAJEURE?
If the contract includes a force majeure clause, ipso facto termination or discharge of the contract would be unlikely because a force majeure clause is an agreement between parties to keep the contract suspended (and not have the contract discharged) on occurrence of an event of force majeure. The Supreme Court has also held in Satyabrata Ghose[20] that if the intervening circumstances are as contemplated by the parties then the contract would stand despite the occurrence of such circumstance. The very fact that the parties have considered and added such an event in the force majeure clause indicates that it was the parties’ intent that the contract be suspended for the duration of the events of force majeure and not frustrated as per Section 56 of the Indian Contract Act. Some contracts do however provide that if the force majeure event continues for more than a specified period then the contract stands frustrated or that the parties then get a right to terminate the contract.
It would also be relevant whether there are any restrictions post lifting of the lockdown and if so, whether those would constitute a partial restriction and continuous event of force majeure. As on date, we read of proposed policies such as reduction in number of workers working together, requirement to work in a measured manner in shifts and construction in the urban areas being contingent on special permission by the municipal authorities[21]. These would necessarily impact the construction timeline that was agreed between the parties. Would such partial restrictions then constitute continuous force majeure? In the event of an argument of continuous force majeure, how long can this be continued? At some point of time a party would state that the disability is such that the contract has stood frustrated under Section 56 of the Indian Contract Act. What exactly is the time at which a temporary disability (event of force majeure) turns into frustration of the contract is another interesting question and will vary with the facts of each case.
When there is no force majeure clause and the performance of the agreement is impossible, the agreement stands frustrated under Section 56 of the Indian Contract Act. The Supreme Court’s decision in DDA Vs. Kenneth Builders[22] is of relevance in this matter. Under the construction contract therein, the parties had proceeded on the basis that certain environment approvals were not required. The Supreme Court however held that the contract could not be performed without the environmental approvals. The Supreme Court held that the contract stood frustrated under Section 56 of the Indian Contract Act because the obtaining of those environmental approvals had not been considered a requirement in the contract and that both parties had been ad idem that the construction project did not require those approvals.
A construction contract would be frustrated if it is not capable of being performed as per its terms. The Supreme Court in K. Narendra vs. Riviera Apartments Pvt. Ltd. [23]came to a conclusion that the contract stood frustrated and refused to grant specific performance of the contract because:
FORCE MAJEURE OR BREACH?
The courts have also considered whether the consequence of alleged impracticality or impossibility is attributable to the event of force majeure or is otherwise a result of a party’s breach. The Bombay High Court has held that if a party to a Development Agreement has not performed its obligations under the contract, then it cannot be permitted to cite impossibility to allege frustration of the contract[24]. This also ties in with the longstanding principles that self-induced frustration cannot be a ground for frustration under Section 56 of the Indian Contract Act[25]. It stands to reason that a Development Agreement cannot be unilaterally avoided for the sole reason of it being unfeasible or economically not viable at the contractual agreed rates.
For all of these reasons, on invocation of the clause of force majeure in real estate contracts it is probable that developers and societies/flat purchasers will sit down and decide on amended terms, including revised consideration and delivery timelines. With the matters that do go into litigation though, there is bound to be an interesting expansion of the law and further elucidation of the nuances regarding the law relating to force majeure.
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Zubin Behramkamdin has been practicing as a Counsel since 1993, mainly in the Bombay High Court and Supreme Court of India as well as before statutory tribunals like the, National Company Law Tribunal and Debt Recovery Tribunals. He has a number of reported judgements to his credit covering a variety of subjects. He also undertakes Dispute Resolution through Arbitrations and has acted as both counsel and Arbitrator. These arbitrations cover contractual disputes and often involve large works contracts.
Vyom Shah was enrolled with the Bar Council of Maharashtra and Goa in August 2008 and holds a Masters in Law from the University of Chicago Law School, United States. He practices as a Counsel and regularly appears in the Bombay High Court, Statutory Tribunals such as the NCLT, the MahaRERA Authority and MahaRERA Appellate Tribunal, and also before Arbitral Tribunals.
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[1] Available at https://doe.gov.in/sites/default/files/Force Majeure Clause -FMC.pdf
[2] This is also considered in the judgment of the Bombay High Court in Neelkamal Realtors Suburban Pvt. Ltd. vs. Union of India, 2017 SCC Online Bom 9302
[3] As per Section 6 of the RERA Act, read with Rule 7 of the Maharashtra Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Websites), Rules 2017,
[4] Mantri Dwellings Pvt. Ltd. vs. Rajesh Saxena & Anr., Appeal No. 006000000010792 and Mantri Dwellings Pvt. Ltd. vs. Ravendra Saxena & Anr., Appeal No. 006000000010793 common Judgment dated 11th July 2019 available at https://maharera.mahaonline.gov.in/Upload/PDF/AT006-1079210793Mantri Dwellings Vs Rajesh Saxena Ors.pdf
[5] Available at https://maharera.mahaonline.gov.in/Site/Upload/PDF/Final Order for Revision of Duration v4.pdf
[6] Divisional Controller, KSRTC vs. Mahadeva Shetty & Anr., 2003 7 SCC 197
[7] Naihati Jute Mills Ltd. vs. Khyaliram Jagannath, 1968 1 SCR 821
[8] Travancore Devaswom Board vs. Thanath International, 2004 13 SCC 44 and Ram Abhoshan vs. PEC Ltd., 2018
[9] Alopi Parsad & Sons Ltd v UoI, AIR 1960 SC 588
[10] As interpreted by the Supreme Court in Satyabrata Ghose vs. Mugneerem Bangur & Co., 1954 SCR 310 for triggering Section 56 of the Indian Contract Act.
[11] Bank of America Canada v Clarica Trust Company, [2002] 2 SCR 601
[12] Most notably being Shiv Shakti Sugars Ltd v Shree Renuka Sugar Ltd and Ors, 2017 7 SCC 729
[13] Naihati Jute Mills Ltd. vs. Khyaliram Jagannath,1968 1 SCR 821
[14] Energy Watchdog vs. CERC & Ors. 2017 14 SCC 80
[15] M.D., Army Welfare Housing Organization vs. Sumangal Services Pvt. Ltd., 2004 9 SCC 619
[16] “Mumbai: Promoters of X BKC project invokes force majeure clause” dated 14th April 2020 available at https://content.magicbricks.com/property-news/mumbai-real-estate-news-industry-news/mumbai-promoters-of-x-bkc-project-invokes-force-majeure-clause/112675.html
[17] Industrial Finance Corporation of India Ltd. vs. Cannanore Spinning and Weaving Mills Ltd. & Ors, 2002 5 SCC 54
[18] Order of Bombay High Court in Standard Retail Pvt. Ltd. vs. G.S. Global Corp & Ors. Commercial Arbitration Petition (L) No. 404 of 2020 dated 8th April 2020
[19] Order of Delhi High Court in M/s Halliburton Offshore Services Inc v Vedanta Limited & Anr in OMP (I) (Comm) & IA 3697/2020 dated 20th April 2020
[20] Satyabrata Ghose vs. Mugneerem Bangur & Co., 1954 SCR 310
[21] The Supreme Court in MD Army Welfare Housing Organization vs. Sumangal Services Pvt. Ltd., 2004 9 SCC 619 has held that even a statutory injunction by an authority may lead to impossibility to fulfill contractual obligations
[22] DDA Vs. Kenneth Builders and Developers Pvt. Ltd. & Ors, 2016 13 SCC 561
[23] K. Narendra vs. Riviera Apartments Pvt. Ltd., 1999 5 SCC 77
[24] Nirmal Lifestyle Ltd. vs. Tulip Hospitality Services Ltd., 2013 SCC Online Bom 1505
[25] MD Army Welfare Housing Organization vs. Sumangal Services Pvt. Ltd., 2004 9 SCC 619 and Ganga Retreat and Towers Ltd. & Anr. vs. State of Rajasthan & Ors., 2003 12 SCC 91
COVID-19 Coronavirus Outbreak has presented challenges that nobody could have envisaged three months ago. The rapid and continuous spread of COVID 19 presents significant challenges to people and businesses across the globe. The most difficult problems that businesses need to consider are their legal liabilities and obligations namely contractual obligations, employer-employee relationships, government levies, pending disputes, regular compliance obligations, and international tax issues.
In the view of COVID-19 Coronavirus Outbreak in India, the Government of India has announced slew of measures on statutory and regulatory compliance in the areas of Limitation Period, Direct Tax, Indirect Tax, Corporate Affairs, and Bankruptcy Code. The Coronavirus Outbreak also forced the Indian government to take some strong measures such as mandatory lockdown, restrictions on domestic and international flights.
Due to such limitations, many cross-border workers are unable to physically perform their duties at their usual work sites which will impact on the right to tax between the countries. In long run, this may raise certain international tax disputes such as:
1. Many multinational companies are regularly providing technical or professional services to their customers across India which requires many foreign employees to frequently visit India. Due to COVID 19 Coronavirus Outbreak, such employees might have to stay for a longer period than actually required which may lead to the permanent establishment of such multinational company in India. The companies with permanent establishment will have to meet the compliances, obligations and taxability in India. Example – The multinational company registered in Germany whose foreign employees might have to stay for a period of more than 6 months in India. Therefore, such a multinational company will become a permanent establishment in India and will have to comply with more statutory and regulatory obligations in India.
2. Multinational companies which are providing technical or professional services to their customers across India may require their employees to provide the services from the employer’s country instead of travelling to India. The income earned from such project is directly attributable in India. Under this scenario, the question may arise whether income generated from such projects are taxable in India or the employer’s country. In recent rulings, the Indian courts have held that multinational companies may be considered to have a permanent establishment without the physical presence of their employees in India and they would be required to do compliances, obligations and taxability in India. Example – Employees of a multinational company registered in Germany may perform Indian project in Germany through digital or video capabilities. It will still be considered a permanent establishment in India.
3. In some cases where multinational companies are providing technical or professional services to their customers across India may require their employees to do work from home which might be in a country other than that of the employer or Indian customer. The home of such foreign employees is available for disposal to provide services to their customers located in India. Now the question will be whether the home of the foreign employee shall be considered as a permanent establishment of multinational company or will it become the permanent establishment in India. In addition, this may lead to more compliances, obligations and taxability in the third country apart from employer or customer country. Example – The multinational company is registered in Germany but their employee resides in Turkey and performs their job from Turkey for a customer in India through digital means. This makes for a complex tax structure that requires re-evaluation of obligations and compliances of the multinational company.
4. The foreign employees of a multinational company which provides technical or professional services to their customers across India may have to take decisions in order to conclude or lead the project on the behalf of the multinational company in India or their home country. Such foreign employees may be considered as the dependent agent of the multinational company and become a permanent establishment in India or home country of the foreign employee. In such case, the company will have to meet the compliances, obligations and taxability in the country of foreign employees. Example – The multinational company is registered in Germany but their employee may take decisions in India or Turkey in order to conclude the contract during crises then India or Turkey may become the permanent establishment for the multinational company.
5. Many multinational companies provide construction services to their customers across India. The activities such as installation, assembly project, supervisory activities, and construction sites are being temporarily interrupted due to COVID 19 Coronavirus Outbreak. The extension of the time period of construction site makes a multinational company have a permanent establishment in India which will require multinational companies to do more compliances, obligations and taxability in India. Example – The multinational company is registered in Germany but the construction site may extend for 6 months. The company will consequently become a permanent establishment in India.
6. Many multinational companies are regularly providing technical or professional services to their customers across India. Due to lockdown in many countries and restrictions on international flights might lead to a situation where place of effective management and country in which company is registered may be different. The senior executives or management of such multinational company may be required to take decisions in India which makes the place of effective management in India. In case any company having place of effective management in India shall be treated as a resident company in India. In such a situation, a multinational company will be required to do compliances in country of registration as well as in the country of place of effective management. Example – The management or senior executives of the multinational company staying in India due to travel restrictions might be required to take management decisions in India. The company will have to take the registration in both countries.
7. Due to COVID 19 Coronavirus Outbreak employees of multinational companies may have to stay in India for a period more than actually required. On the extension of the period, such employee will have to pay income tax and submit the income tax return in India instead of their home country. Example – The employee of the multinational company stayed in India for a period of more than 6 months will be taxable in India.
The relief measures announced by the government are a welcome move and would certainly help to address some of the issues faced by the organization. However, it is advisable for multinational companies to evaluate their tax structure and take relevant steps to avoid any international tax disputes in future. Considering the current scenario, it is also important that the Government of India announce the clarifications or notifications to avoid international tax issues on multinational companies.
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Gautam Khurana is the founder & Managing Partner of India Law Offices LLP. He has obtained his B.Com(H) from the prestigious Sri Ram College of Commerce, Delhi University and is a Law graduate from Campus Law Centre, Delhi University. He specializes in Foreign Inward Investments and Corporate Laws in India, with extensive experiences in acquisitions, corporate laws, cross-border litigation & arbitration, insolvency and bankruptcy, project & structured financing and direct & indirect taxes within both domestic & overseas jurisdictions. He is currently on the board of the reputed Indian as well as International companies and has advised clients across diverse sectors on projects including joint ventures, inbound investments, and acquisitions. He is a frequent speaker in many Domestic & International Conferences. He also wrote the Indian chapter in “Shareholder Agreements – a Comparative Handbook” by Warwick Legal Network covering 17 countries worldwide.
General Extension of Due Dates
1. Whether the Government has extended the due date for compliance under GST falling between 20th March 2020 to 29th June 2020?
Answer: Yes, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has extended the due date of various compliance under CGST Act, IGST Act and UTGST Act, falling between 20th March 2020 to 29th June 2020, to 30th June 2020.
The extended due date is applicable for filing of any appeal, reply or application or furnishing of any report, document, return, statement or such other record, by whatever name called, under the provisions of the CGST Act, IGST Act and UT GST Act.
Time of Supply
2. Whether the extension of compliance till 30th June 2020 will be applicable to provisions with respect to time of supply?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to the provisions of Chapter IV of the CGST Act, 2017 which includes provisions of time of supply.
Tax Invoice
3. Whether the due date of issuing tax invoice, falling due between 20th March 2020 to 29th June 2020, has been extended to 30th June 2020?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to Section 31 of the CGST Act, 2017 which provides time limit for issuance of tax invoice.
Composition Dealer
4. Whether any extension has been granted to opt for Composition Scheme for the Financial Year 2020-21?
Answer: Yes, the CBIC, vide Notification No. 30/2020-CT dated 03.04.2020, has provided that the person who wants to opt for Composition Scheme for the Financial Year 2020-21 can opt for the same till 30th June 2020 instead of 31st March 2020.
5. Whether the person registered under Composition Scheme, who has crossed the threshold limit of turnover between 20th March 2020 to 29th June 2020, can continue to be in Composition Scheme till 30th June 2020?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to Section 10(3) of the CGST Act, 2017 which provides that once the person registered under Composition Scheme crosses the threshold then registration of such person under Composition Scheme shall lapse.
Registration
6. Whether the time limit for getting registered under CGST Act, 2017, for the person who has become liable to get registered under CGST Act, 2017 between 20th March 2020 to 29th June 2020, has been extended till 30th June 2020?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to Section 25 of the CGST Act, 2017 which provides time limit to get registered under the CGST Act, 2017.
7. Whether the Causable Taxable Person or Non-resident Taxable Person, who have commenced business between 20th March 2020 to 29th June 2020, can apply for registration on 30th June 2020 or thereafter?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to Section 25 of the CGST Act, 2017 which provides time limit for Causable Taxable Person or Non-resident Taxable Person to get registered under the CGST Act, 2017.
8. Whether the validity of registration of Causable Taxable Person or Non-resident Taxable Person, expiring between 20th March 2020 to 29th June 2020, has been extended to 30th June 2020?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to Section 27 of the CGST Act, 2017 which provides time limit for Causable Taxable Person or Non-resident Taxable Person to get registered under the CGST Act, 2017. However, such persons can apply for extension of validity of registration in the prescribed manner.
Returns
9. Whether the due date of filing GSTR-1, falling due between 20th March 2020 to 29th June 2020, has been extended to 30th June 2020?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to Section 37 of the CGST Act, 2017 which provides time limit for furnish details of outward supply under Form GSTR-1.
However, the CBIC has waived the late fee for certain period which has been discussed under heading Later Fee Waiver.
10. Whether the due date of filing GSTR-3B, for the month of February 2020 to April 2020, has been extended to 30th June 2020?
Answer: No, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has provided that the extension of due date till 30th June 2020 will not be applicable to Section 39 of the CGST Act, 2017, except sub-section (3), (4) & (5), which provides time limit for furnish details of outward supply under Form GSTR-3B.
However, the CBIC has waived the interest and late fee for certain period which has been discussed under heading Interest & Later Fee Waiver.
11. Whether the due date of filing GSTR-3B, for the month May 2020, has been extended?
Answer: Yes, the CBIC, vide Notification No. 36/2020-CT dated 03.04.2020, has been extended the due date of filing of GSTR-3B for the month of May 2020 in staggered manner.
12. Whether the due date of filing Form GST CMP-08 by the composition dealer, for the quarter ending 31st March 2020, has been extended?
Answer: Yes, the CBIC, vide Notification No. 34/2020-CT dated 03.04.2020, has extended the due date of filing Form GST CMP-08, statement containing details of payment of self/-assessed tax, by the composition dealer for the quarter ending 31st March 2020 to 7th July 2020.
13. Whether the due date of filing Form GSTR-4 by the composition dealer for the Financial Year 2019-20 has been extended?
Answer: Yes, the CBIC, vide Notification No. 34/2020-CT dated 03.04.2020, has extended the due date of filing Form GSTR-4 by the composition dealer for the Financial Year 2019-20 to 15th July 2020.
14. Whether the due date of filing GSTR-6, falling due between 20th March 2020 to 29th June 2020, for the Input Service Distributor has been extended to 30th June 2020?
Answer: Yes, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has extended the due date of filing GSTR-6, falling due between 20th March 2020 to 29th June 2020, for the Input Service Distributor to 30th June 2020.
15. Whether the due date of filing GSTR-7, falling due between 20th March 2020 to 29th June 2020, for the person liable to deduct tax at source under Section 51 of the CGST Act, 2017, has been extended to 30th June 2020?
Answer: Yes, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has extended the due date of filing GSTR-7, falling due between 20th March 2020 to 29th June 2020, for the person liable to deduct tax at source under Section 51 of the CGST Act, 2017, to 30th June 2020.
Validity of E-Way Bill
16. Whether the validity of e-Way Bills, where period of validity between 20th March 2020 to 15th April 2020, has been extended?
Answer: Yes, the CBIC, vide Notification No. 35/2020-CT dated 03.04.2020, has extended the validity of e-Way Bills, where period of validity between 20th March 2020 to 15th April 2020, to 30th April 2020.
It is one of the major relief during this lockdown when the logistics is a big concern and industry is also struggling for manpower.
Interest Waiver
17. Whether the interest has been waived for delayed payment of tax, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover upto INR 1.5 Crore?
Answer: Yes, the CBIC, vide Notification No. 31/2020-CT dated 03.04.2020, has waived the interest on delayed payment of tax, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover upto INR 1.5 Crore subject to the condition that such taxpayer shall file the return in GSTR – 3B for the month of February 2020 by 30th June 2020, for the month of March 2020 by 3rd July 2020 and for the month of April 2020 by 6th July 2020.
Thus, if the return in GSTR-3B is not filed on or before the above mentioned dates then such taxpayer shall be liable to pay the interest @18% p.a. on the delayed payment of tax.
18. Whether the interest has been waived for delayed payment of tax, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of more than INR 1.5 Crore and upto INR 5 Crore?
Answer: Yes, the CBIC, vide Notification No. 31/2020-CT dated 03.04.2020, has waived the interest on delayed payment of tax, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of more than INR 1.5 Crore and upto INR 5 Crore subject to the condition that such taxpayer shall file the return in GSTR – 3B for the month of February 2020 and March 2020 by 20th June 2020 and for the month of April 2020 by 30th June 2020.
Thus, if the return in GSTR-3B is not filed on or before the above mentioned dates then such taxpayer shall be liable to pay the interest @18% p.a. on the delayed payment of tax.
19. Whether the interest has been waived for delayed payment of tax, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of INR 5 Crore and above?
Answer: Yes, the CBIC, vide Notification No. 31/2020-CT dated 03.04.2020, has waived the interest on delayed payment of tax, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of INR 5 Crore and above subject to the condition that such taxpayer shall file the return in GSTR – 3B, for the month of February 2020, March 2020 and April 2020, within 15 days of the actual due date.
However, after 15 days of due date, such taxpayer shall be liable to pay interest on delayed payment of tax at the reduced rate of 9% p.a. provided that the return in GSTR – 3B, for the month of February 2020, March 2020 and April 2020, shall be filed by 24th June 2020. Such interest will be calculated from the expiry of 15 days after the due date.
Thus, if the return in GSTR-3B is not filed on or before the above mentioned date then such taxpayer shall be liable to pay the interest @18% p.a. on the delayed payment of tax.
Late Fee Waiver
20. Whether the late fee has been waived for delayed filing of return in GSTR-3B, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover upto INR 1.5 Crore?
Answer: Yes, the CBIC, vide Notification No. 32/2020-CT dated 03.04.2020, has waived the late fee on delayed filing of return in GSTR-3B, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover upto INR 1.5 Crore subject to the condition that such taxpayer shall file the return in GSTR – 3B for the month of February 2020 by 30th June 2020, for the month of March 2020 by 3rd July 2020 and for the month of April 2020 by 6th July 2020.
Thus, if the return in GSTR-3B is not filed on or before the above mentioned dates then such taxpayer shall be liable to pay the late fee on delayed filing of return in GSTR-3B and such late fee shall be applicable from the actual due date of filing of return in GSTR-3B.
21. Whether the late fee has been waived for delayed filing of return in GSTR-3B, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of more than INR 1.5 Crore and upto INR 5 Crore?
Answer: Yes, the CBIC, vide Notification No. 32/2020-CT dated 03.04.2020, has waived the late fee on delayed filing of return in GSTR-3B, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of more than INR 1.5 Crore and upto INR 5 Crore subject to the condition that such taxpayer shall file the return in GSTR – 3B for the month of February 2020 and March 2020 by 20th June 2020 and for the month of April 2020 by 30th June 2020.
Thus, if the return in GSTR-3B is not filed on or before the above mentioned dates then such taxpayer shall be liable to pay the late fee on delayed filing of return in GSTR-3B and such late fee shall be applicable from the actual due date of filing of return in GSTR-3B.
22. Whether the late fee has been waived for delayed filing of return in GSTR-3B, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of INR 5 Crore and above?
Answer: Yes, the CBIC, vide Notification No. 32/2020-CT dated 03.04.2020, has waived the late fee on delayed filing of return in GSTR-3B, for the month of February 2020, March 2020 and April 2020, by the taxpayer having turnover of INR 5 Crore and above subject to the condition that such taxpayer shall file the return in GSTR – 3B, for the month of February 2020, March 2020 and April 2020, by 24th June 2020.
Thus, if the return in GSTR-3B is not filed on or before the above mentioned date then such taxpayer shall be liable to pay the late fee on delayed filing of return in GSTR-3B and such late fee shall be applicable from the actual due date of filing of return in GSTR-3B.
23. Whether the late fee has been waived for delayed filing of return in GSTR-1, for the month of February 2020, March 2020 and April 2020, by the registered person?
Answer: Yes, the CBIC, vide Notification No. 33/2020-CT dated 03.04.2020, has waived the late fee on delayed filing of return in GSTR-1, for the month of February 2020, March 2020 and April 2020, by the registered person subject to the condition that such taxpayer shall file the return in GSTR – 1, for the month of February 2020, March 2020 and April 2020, by 30th June 2020.
Thus, if the return in GSTR-1 is not filed on or before the above mentioned date then such taxpayer shall be liable to pay the late fee on delayed filing of return in GSTR-1 and such late fee shall be applicable from the actual due date of filing of return in GSTR-1.
Relief under Rule 36(4)
24. Whether any relief has been granted with respect to compliance of Rule 36(4) of the CGST Rules, 2017?
Answer: Rule 36(4) of the CGST Rules, 2017 provides that the Input Tax Credit on the basis of such invoices or debit notes which are not reflected in GSTR-2A of the taxpayer shall not exceed 10% of the eligible Input Tax Credit available in respect of invoices or debit notes the details of which have been reflected in GSTR-2A. The said restriction is applicable for each tax period/ month.
However, the CBIC, vide Notification No. 30/2020-CT dated 03.04.2020, has inserted a proviso to Rule 36(4) of the CGST Rules, 2017 to provide that the above condition shall apply cumulatively for the period February 2020 to August 2020 and the return in Form GSTR-3B for the tax period September 2020 shall be furnished with the cumulative adjustment of input tax credit for the said months.
In other words, the taxpayer can avail Input Tax Credit on the basis of such invoices or debit notes which are not reflected in GSTR-2A of the taxpayer for the period February 2020 to August 2020. However, at the time of filing of return in GSTR-3B for the month of September 2020 the taxpayer has to apply the restriction of 10% cumulatively for the period February 2020 to August 2020 and make adjustment in its electronic credit ledger.
For example, the total Input Tax Credit availed by the taxpayer for the period February 2020 to August 2020 is INR 1,50,00,00/-. The Input Tax Credit, on the basis of invoices or debit notes which are reflected in GSTR-2A for the period February 2020 to August 2020, is INR 1,00,00,00/-.
Thus, the registered person in GSTR-3B for the month of September 2020 shall be liable to reverse the Input Tax Credit which is in excess of the 10% of the eligible Input Tax Credit available in respect of invoices or debit notes the details of which have been reflected in GSTR-2A. Hence, the registered person shall be liable to reverse Input Tax Credit of INR 40,00,000/- in GSTR-3B for the month of September 2020.
25. Whether the taxpayer shall be liable to pay interest in the Input Tax Credit reversed in GSTR-3B for the month of September 2020 after cumulative adjustment in terms of proviso to Rule 36(4) of the CGST Rules, 2020?
Answer: The Notification No. 30/2020-CT dated 03.04.2020 is silent on this aspect. However, since the restriction on availment of Input Tax Credit on the basis of invoices or debit notes unmatched with GSTR-2A has been deferred for the period February 2020 to August 2020, the interest liability on reversal in the month of September should not arise.
In any case, a clarification from the CBIC to remove the ambiguity on the above issue will be most welcomed.
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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
The Department for Promotion of Industry and Internal Trade, the Ministry of Commerce and Industry, Government of India (DPIIT) vide Press Note No. 3 (2020 Series) dated April 17, 2020 (“Notification”) has amended para 3.1.1 of the current ‘Consolidated Foreign Direct Investment (FDI) Policy, 2017’ (FDI Policy) to curb opportunistic takeovers/acquisitions of Indian companies due to COVID-19 pandemic. The same appears to be a protectionist reaction by the Government in light of the recent event of China’s central bank buying 1.01 per cent stake in HDFC.
Current position with regard to FDI for bordering nations
The existing FDI Policy states that a non-resident entity can invest in India except in those sectors or activities which are prohibited. However, a citizen of Bangladesh or an entity incorporated in Bangladesh can invest only under the Government route. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors or activities other than defense, space, atomic energy and sectors/activities prohibited for foreign investment. The position was not the same for Chinese individuals or entities and they were allowed to freely invest in India and Indian companies provided the FDI Policy in the sector permitted so. However, being apprehensive about the state of other nations and seeing the first move in case it appears the DPIIT in a considered move brought the Notification.
Summary of the Notification
The Notification revises the extant FDI Policy and provides that a non-resident entity can invest in India, except in prohibited sectors or activities. However, the entities and/or citizens of the neighbouring countries i.e. Bangladesh, Pakistan, China, Nepal, Myanmar, Bhutan and Afghanistan sharing land borders with India, can make investment in India only after receiving the Government approval. It continues to debar the entities and/or citizens of Pakistan from making investment in defence, space, atomic energy and other prohibited sectors/activities. It further provides that any subsequent change (directly or indirectly) in the beneficial ownership of the entities and/or citizens of the aforesaid neighbouring countries would also require Government approval.
Accordingly, any fresh infusion of funds or exit from the existing investments, directly or indirectly, by the entities and/or citizens of the aforesaid neighbouring countries will be subject to Government clearance irrespective of the percentage of the FDI permitted via automatic route.
Other aspects
The Notification does not cover any aspects relating to the scene of investment and we assume that existing investments of any Chinese entities will not be affected. However, the same may not be the case with downstream investment and Chinese entities who have already invested in Indian companies may have to seek prior approval from the Government before investing in the capital instrument of another entity. It is important to note that the Government approval would also be required in multi-layered transactions irrespective of the level at which the investment is made by the entities and/or citizens of the aforesaid neighbouring countries.
The WTO angle and threat of Chinese retaliation
There is no doubt about the aspect that the Chinese will approach the dispute forum under the World Trade Organization (WTO) under the aspect of signatory parties to be ‘non-discriminatory’ with regard to like products and services. It may also affect several like businesses wherein Indian companies may be restricted from properly functioning in China. It is important to note that a lot of Indian companies may also be restricted from directly investing in Chinese entities which may severely hamper their production and services.
Conclusion
However, a non-functional WTO is least of Indian Government worries at the moment and in the near future systematic assets such as ports, electricity sector, infrastructure etc. may be prevented not only from Chinese investments but investments by other large countries. While, the measure may auger well for India currently, China which has the largest flow of FDI investment in India may also start pulling back some of its strategic investments thereby hampering essential items in the economy. Hence, the Government should shore up its domestic production so as to not be heavily reliant on any country including China for investment.
The Notification will only take effect after it has been notified as per the Foreign Exchange Management Act, 1999.
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Mr. Rohitaashv Sinha, is an Associate Partner with Agarwal Jetley & Co. (AJC), a law firm based in New Delhi. He has over 12 years of experience. His practice has been particularly focussed on corporate and commercial laws, foreign investment laws, mergers & acquisitions, joint ventures, labour and employment laws and regulatory issues. He is also actively involved in pro bono services on behalf of various NGOs. Mr. Sinha is an alumnus of ILS LAW COLLEGE, PUNE and received his BSLLB degree from Pune University in 2008. You can reach him at rohitaashv.sinha@agarwaljetley.com
Indian Evidence Act, 1872 (in short “IEA” hereinafter) as drafted by the British and came into effect on 1st September, 1872, is one of the oldest, precise and flawless piece of legislation in the world and holds the field till today with negligent lacuna in its drafting, as every possible inference is covered coupled with a residuary clause, in case, some situation is not covered expressly. This legislation is so commonsensical that sometimes it becomes technical in its application. The beauty of this legislation lies in its interpretation and there is no end to it. With my limited intellect and learning at the bar so far, the best way as I understand, is to read it (as seniors say) by correlation through examples and focus on its applicability. The more one dives deep into its interpretation, the deeper it takes you. Thus, reading a provision of this legislation is different from its application, as latter is the hard part in the facts of each case.
By way of this write up, the author endeavors to touch upon a very relevant topic of this Act namely, the ‘mode of proof’ to prove a document under this Act and at what stage it should be taken under law.
Every case has its make or break situation at the “evidence stage”, which more or less decides the outcome of a case, as a person may lie but not the evidence and document filed and proved on record by one of the modes of proof as envisaged under this Act. Even more importantly, Court gives its verdict based on evidence only. It is no gain-saying that marking of a document as an exhibit is different from proving the same.
Now the expression “evidence” is defined under Section 3 as ‘interpretation clause’ and is more of an inclusionary definition which says that the word evidence means and includes oral (Chapter IV of IEA) as well as documentary evidence (Chapter V of IEA), as stated therein. In other words, evidence includes all statements which Court permits or requires to be made before it, in relation to matters of fact under inquiry and in second leg, includes all documents including electronic record, produced for the inspection of the Court.
Expression ‘document’ finds mention also in Section 3, ibid, and means any matter expressed or described upon any substance by means of letter, figure or marks or by more than one of those means, intended to be used or which could be used, for the purpose of recording that matter. For instance, a document could be writing, a map or plan or an inscription on a metal plate or stone or a caricature.
Further, there is a clear distinction between a private document and a public document. Private documents deserve treatment mentioned in Sections 61 to 66 of IEA. The genuineness of the same is to be taken into consideration having regard to Sections 67-73 of IEA.
Now, a document may be proved under this Act either by primary evidence or by secondary evidence. As defined under Section 62 of this Act, Primary Evidence means by proving the original document itself, being the best evidence. Secondary Evidence as per Section 63 of IEA, means, document other than its original, as stated therein. A document may be proved by secondary evidence as per conditions and terms enumerated in Sections 64-65 of IEA.
Ordinarily, objection when directed towards mode of proof is different from objection to admissibility of document in evidence itself. In the first case, objection falls within procedural and based on policy of rule of fair play, is to be taken before the document is marked as an exhibit and admitted to the record. In the second case, merely because a document has been marked as “an exhibit”, an objection as to its admissibility is not excluded being a legal issue and is available to be raised even at a later stage or even in appeal or revision. In other words, mere putting of the exhibit mark on a document is not admission of the document into evidence if otherwise not admissible according to law. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the mode of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two reasons: firstly, it enables the Court to apply its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the Court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence. Such practice and procedure is fair to both the parties. [See: (2003) 8 SCC 752, (2004) 7 SCC 107 and followed up in Vivek Kochher and Ors V. KYK Corporation Ltd. and Ors]
‘Mode of proof’ is discussed in Chapter V of IEA, and means that by which mode either primary or secondary, a document may be proved. Mode of proof of a document can be proved by the co-existence of following factors:-
A ‘duly proved’ document can only be considered at the final hearing of a proceeding (See: Section 3, IEA- ‘proved’, ‘disproved’ & ‘not-proved’). ‘Onus to prove’ (See: Sections 101-114, IEA) a document is upon the party intending to rely on it. Genuineness or Truthfulness of contents of a document is to be proved by oral evidence, and contents thereof are to be proved either by adducing primary evidence or secondary evidence.
IEA distinguishes between ‘private document’ and ‘public document’ and below mentioned criteria of proving a document do not apply to the ‘public document’ due to the special rules and presumptions provided by law.
A document is said to be proved if following three criteria are satisfied:-
(a) Firstly, the execution (via Sections 67-73, IEA) of a document, i.e. the handwriting or signature on the document, if any, is proved. (Genuineness of a document)
(b) Secondly, contents/condition (via primary or secondary evidence/S.61-66, IEA) of a document, and
(c) Thirdly, truthfulness (via oral evidence/S.59-60, IEA) of the contents of a document.
Above three points expanded for better appreciation and read as follows:-
(A) Execution: – The process of proving the signature or handwriting in a document goes to the ‘genuineness’ of the document. The party who seeks to prove a particular document must get the handwriting or signature of the author, if any, identified by the author himself under Section 67 of IEA or any third person acquainted with the handwriting in question under Section 47 of IEA or by a person in whose presence the document was signed or executed under Sections 67 & 68 of IEA or by an expert witness under Section 45 of IEA. Also, the signatory may himself admit having signed or executed a document, which dispenses with proof there of vide Section 58 of IEA. Further, the Court itself is enabled under Section 73 of IEA to compare the handwriting or the signature in question with the one admitted or proved to the satisfaction of the Court. Under certain circumstances enumerated at Sections 79 to 90A of IEA, a Court is entitled to presume that the signature on a document and the document itself is genuine. Thus, under Section 79, Courts shall presume that certified copies are genuine (Note: Sections 79-85C deal with “shall presume”; and Sections 86-90A deal with “may presume”). Proof of a signature or handwriting on document is sometimes referred to as mere ‘formal proof of a document’ [See: Section 294(3) CrPC – means to dispense with formal proof/genuineness of document where it is not disputed, eg: FIR] as proof thereof does not automatically result in the proof of the contents of the document.
(B) Contents: – where the party is not able to produce the primary evidence itself due to the reasons enumerated under Section 65 of IEA, the party is at liberty to produce the secondary evidence to prove contents of the document. The ‘proof of contents’ is different from the ‘truth of the contents’. The distinction has been brought out in AIR 1983 Bom 1, ibid, wherein, it was held that expression ‘contents of a document’ under the IEA must mean only ‘what the document states and not the truth of what the document states’.
(C) Truthfulness of the Contents: – Section 67 prescribes that truthfulness of the contents has to be proved by the personal knowledge. In other words, a witness should be the author of the document. This is proof by way of oral evidence as stipulated in Section 59 of IEA.
However, in Bombay High Court judgment of Bima Tima Dhotre v. Pioneer Chemical Co.(1968 (70) Bom LR 683),observed that it is not necessary to call the writer of the document in order to prove the document as documentary evidence would become meaningless if the writer has to be called in every case. Hence, it can be said that truth of the contents of a document must be proved either by the author or by ‘the person who knows and understands the contents’, i.e. persons having personal knowledge of a document. This is rule against hearsay. But, following are some of the exceptions to the Rule against Hearsay:-
To address the controversy of stage of deciding objections as to mode of proof, Bombay High Court in a Full Bench (FB of 2008) Reference Case in ‘Hemendra Rasiklal Ghai vs. Subodh Mody’, [Reported in (2008 Mh. L.J. 886)] dealt with two conflicting views on this issue: One, admissibility of documents should be decided before they are exhibited in evidence or Other, question of admissibility and proof of document should be reserved until judgment in the case is given. Issue framed by Court to deal with above conflicting views read as: “At which stage, objection as to admissibility or proof of document which may be produced or tendered should be raised, considered and decided?” Full Bench answered the above reference by tracing out the law and dealt with conflicting judgments on this aspect by categorizing objections as to mode of proof and stage of their dealing by Court. Firstly, Objection of Deficiency of Stamp Duty is to be taken when document tendered in evidence and Court to decide on it before document is marked as exhibit. Secondly, Objection of Proof where admissibility is not disputed is to be taken when document is marked as exhibit, and Court to decide on it before it is marked as exhibit. Thirdly, Objection of Admissibility is to be taken at any stage of case until final judgment is reserved; and lastly, Objection as to admissibility/relevancy, is to be taken at any stage of case until final judgment is reserved.
Recently, Delhi High Court in the case of M/S Prakash Oil Corporation & Anr. V. Brij Kishan, [CM (M) No.1002/2018 & CM APPL. 34738/2018] was pleased to observe that ultimate test as guiding factor in deciding the objection as to mode of proof is that trial should be expedited and there should not be any unnecessary delay. Hence, on a case to case basis, objections qua admissibility or mode of proof should be addressed at stages, as the Court finds it necessary for the expedition of the trial.
To conclude, it is utmost essential for a lawyer to do two important things right in every case in the context of mode of proof, among other, and that is, firstly, to bring on record the documents favoring one’s own case at first instance, and secondly; to prevent opposite side from placing/bringing documents incorrectly on record contrary to mode of proof, by timely objections at first instance as per law, ibid.
(assisted by Kunal Bhardwaj, Final Year student of CLC, Law Faculty, DU).
Comments, if any, on this article/write up will be appreciated by the Author.
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Rajat Mathur is a practicing lawyer in Delhi [B.Com (H) SRCC, DU] [LLB, Law Faculty, DU]. Despite gaining experience in Civil and Tax Law, he has worked extensively on the criminal side and has represented bureaucrats and Government Servants in matters related to the ‘Coal Block Allocation Scam case’. At 33 years of age, Mr. Mathur got the controversial acquittal of former Coal Secretary, Mr. H. C. Gupta, a decorated IAS office (now retired) in the high-profile case.
The MoP, vide its letter dated 17.04.2020, has issued proposed amendments in the existing Electricity Act, 2003 (hereinafter “the Bill”), asking the interested stakeholders to provide their comments, if any, on the same to the Ministry, within 21 days of the letter. Such proposed amendments have been discussed in detail below:
Amendment at a glance:
Detailed Analysis of the proposed amendments:
The aforesaid proposed amendments have been discussed in detail herein below:
You are advised accordingly.
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Hemant Singh is founder of Charter Law Chambers, a full-service law firm. Before founding the firm, he was the Co-Founder and Managing Partner of Praxis Counsel since 2014. Mr. Singh started his career in Corporate and Regulatory Litigation under the mentorship of Mr. Sanjay Sen, who is now a designated Senior Counsel. Overall, Mr. Singh has over 12 years of experience in regulatory and corporate litigation with over 60 reported judgments.
There is a famous saying – “When the wind of change blows, some people build walls, others build windmills!”
In a time zone when working from home takes shape of the ordinary, when one fears to physically greet their own loved ones, when the Governments all over the world encourages staying at home rather than getting out of the house and when health and safety of all the individuals in a country takes utmost priority, it is evident that a tsunami has hit the human kind in the worst possible way.
The cause of this tsunami, Covid-19 or popularly referred to as the Corona virus has literally steered its way throughout the world and has been recognised as a pandemic by the World Health Organization, and is also visible all across the globe. The Virus has infected more than 2,397,216 people worldwide and caused 162,956 deaths[1]. India too, like most of the other nations has fallen prey to the virus and all systems have come to a standstill.
The initial hit of the pandemic has been taken by the Legislature which has been burdened with the medical and economic welfare of 1.3 billion population of the country. The Executive didn’t lag far behind in ensuring that the legislative decisions were being put in action and precious lives are being secured and saved. With the spread of the pandemic, harsh measures have had to be taken to control and circumvent as far as possible the spread of the Virus. Many lives at present, are in the middle of the pandemic war field surrendering their own self to ensure that not one single person is infected by the dreaded Virus and those who are, can be treated and sent back to the comfort of their loved ones.
However, it is well understood that in our Federal structure of scheme that arises out of the Constitution of India, the people of India, are governed and secured by three main pillars i.e., The Legislature, The Executive and The Judiciary, the functioning of these organs cannot take place in isolation, they are all inter dependent on each other for maintaining equilibrium and the socio economic fabric of our country.
What assumes importance in the given scenario is that how best the third organ, i.e., The Judiciary can function to bring about a synergy in the efforts of the Legislature and the Executive.
The Judiciary, at present, has been consigned to a position where the scales of justice are struggling to balance the discomfort that this Virus has caused in its functioning. As a measure to combat the inertia, the Hon’ble Supreme Court accepted the winds of change and choose to build windmills. With the introduction of e-functioning of courts, there has been a paradigm shift for the legal fraternity, from the active bustling corridors of courts to the quiet and solitude of the sitting in front of a machine and addressing our Hon’ble Judges. Video Conferencing seems to be the saviour of the Judiciary and the legal fraternity.
But the question that arises, is it enough?
If the temples, where justice is dispensed, are put under the scope of strictly measured boundaries, we may be leading to a phenomenon that may be christened as “Legal Emergency”,
And Is our Judicial system equipped to handle the present or future legal emergency that may arise as a consequence of the “Social Emergency” caused by the Virus, which our country is presently going through.
Is it possible to bring the vast realm of legal functioning into a restricted mode of the “digital new normal”?
The response has to be affirmative because there is no other choice but what would be of extreme importance is to comfort the class of litigants, independent lawyers, small/ mid-tier law firms and chamber practitioners, which constitute a major part of our legal community and are largely reliant on fee paid by individual clients, small and mid -size business owners.
But one can’t be oblivious to the struggles faced by lawyers and litigants today in adjusting to the “digital new normal”. While most lawyers may not have access to elaborate software systems which help in storing their entire legal data on a server online, the lockdown situation makes it worst as one doesn’t have physical access to files and papers either. With the unavailability of support staff, it is a challenge in gaining familiarity with e-filing, a system, which was not in place as yet for majority of the Courts prior to the Pandemic. With the gaps in e-filing rules and practical hindrances in getting access to documentation stored in files at their offices or chambers, the task of now e-filing urgent applications/petitions in matters which were previously filed in hard copy, is also getting tougher and more difficult with each passing day.
The answer thus lies in not only making available user-friendly technology with access to both lawyers and litigants but also laying out a strategic revival plan for staggered movement of lawyers. Further, instead of throwing the spotlight on digitalisation to meet universal standards, the focus should move to online systems which are easy to adapt to by all litigants.
The concept of digitalising Judiciary is not new and has its genesis as far back as in 2004, a project named the “National Policy and Action Plan for Implementation of Information and Communication Technology in the Indian Judiciary-2005” had been conceptualised by the e Committee of the Supreme Court of India. The plan came with a three phased strategy to digitalise the Judicial System in India. As per the “Objectives Accomplishment Report” filed by the e Committee of the Supreme Court of India in the year 2019, the aforementioned plan has successfully completed most part of Phase II with a special mention with regard to e-filing and videoconferencing with for all the Courts with the Jails. [2]
Prime Minister Narendra Modi while addressing the Golden Jubilee celebrations of Bar Council of India, at Mahatma Mandir in Gandhinagar in March’2014, stated that;
“Convergence of technology and the judicial system is the need-of-the-hour. We need to go digital and adopt online analysis of legal cases. Dissemination of legal knowledge to the common man will also go a long way in improving the law and order situation in the country.”
Optimistically speaking, the advent of technology in the Legal system while at a developing stage can provide an intermediate solution in the current backdrop, but to believe that there can be complete dependence and that phase III would bring in miraculous changes may not be advisable.
The cracks have evidently shown up in executing the same, where while on one hand the Supreme Court has directed and urged all the High Courts and District Courts to adopt video conferencing for robust functioning of the judicial system yet on the other hand the proceedings have been restricted to only “Urgent Matters”.[3]
This provokes the Lawyer and the Litigant to think if access to justice is fundamental to preserve the rule of law in the democracy envisaged by the Constitution of India, then why can an arrangement not be brought about which does not distinguish between urgent and non-urgent matters. This is particularly important to highlight since the category of ‘urgent’ matters can never be made exhaustive or streamlined and in the absence of any guidelines to this effect, there is huge discretionary burden on the Registry and the Hon’ble Judges for culling out matters that fall within the purview of “Urgent” which again leaves the legal fraternity fumbling for their economic survival and for the Litigants for their prayers to get justice from the Courts.
In light of the above, the author is hereby offering suggestions which may be considered to ensure the smooth flow of the pending cases and fresh cases by utilising the existing technologies or otherwise to maximum potential, during or after the effect of COVID 19;
For the sake of clarity, they are divided into two parts
I. SOS measures to be adopted during the Lockdown and;
II. Measures for revival of judicial system Post lockdown.
I. SOS MEASURES THAT MAY BE ADOPTED DURING THE LOCKDOWN
A. Partial working of the Law Offices
The Ministry of Home Affairs vide an order dated 15.04.2020[4] has allowed the partial upliftment of the lockdown in certain sectors, including private and commercial establishments of even non-essential items from the 20th of April 2020, subject to certain restrictions. It is suggested that lawyers should be allowed access to their offices or Chambers for collection of files and other related administrative work subject to the social distancing norms and whilst maintaining the required protocol.
Further, the State Governments may invoke the provisions of the Essential Service Maintenance Act (ESMA) whilst drawing from the central legislation, and thereafter coordinate with the Parliament or the Union to declare the working of the “Legal System” as an essential service by way of a Gazetted notification, in order to ensure that peace and harmony is maintained, especially during such turbulent times.
B. Video conferencing for fresh and pending matters
As has been stated above that the Hon’ble Supreme Court has permitted the use of video Conferencing for the Urgent Matters, however, the same system may also be utilised to hear fresh and pending matters to ensure that a backlog does not get created.
Further, client conferences and evidences can be held and recorded via video conferencing. Apart from hearing urgent matters, the courts could also hear matter which are just listed for final hearing and the pleadings stand completed. In fact, even in matters where the main counsel is located in a different state, video conferencing can be used as a medium to conduct the proceeding.
Leading by example, Delhi High Court Judges, Justice Hima Kohli and Justice Subramonium Prasad on 21.04.2020, held a virtual court with Hon’ble Justice Kohli in Delhi and Hon’ble Justice Prasad in Chennai, exemplifying that hearings across state borders can also take place with ease.
UK has enacted the Coronavirus Act 2020[5] which inter alia provides for expansion of availability of live links in criminal proceedings, use of live links in legal proceedings: Northern Ireland, Public participation in proceedings conducted by video or audio, etc.
C. The nucleus of the Justice system could be Written Pleadings
Focus should be placed on written pleadings. Brief summary of arguments, written submissions may be used to plead to the court instead of oral arguments. [ Similar system exists in UK, where the parties even make draft order which subsequently receive the consent of the Judge]
D. Timelines to be decided for the conduct of proceedings online
It is often the case that Advocates in certain matters argue indefinitely for long stretches, thereby taking away the time from the court to hear large number of cases. The consequence of the same takes shape of an adjournment in the regular course, wherein due to paucity of time, the matter gets adjourned. However, this practice can be regulated and depending on the nature of the matter/ role of the party/stage, certain specific time-limits could be allocated to each of the Advocates arguing through video conferencing. This would ensure more productivity during the course of a working day.
E. Free Access to Virtual libraries
More often than not, the budding lawyers need access to the libraries in the courts for research. Keeping in mind the norms of social distancing, virtual libraries could give free access to lawyers having maximum experience of 5 years to enable them to continue with their work without the pressure of having to pay in these turbulent times.
F. Permission to file Appeals:
Taking a cue from other Common Law jurisdictions, the lower courts including the High courts should be empowered to also decide upon issuing permission to appeal against its judgement or orders to higher Appellate courts without which no party can file an appeal as a matter of right. That would further reduce or at least limit the increasing burden of appellate courts.
II. MEASURES POST LOCKDOWN.
APART FROM VIDEO CONFERENCING THESE MEASURES CAN ALSO BE TAKEN BY COURT TO STOP OVER CROWDING IN THE COURT PREMISES AND TO MAINTAIN EFFECTIVE SOCIAL DISTANCE:
A. E- Service of notice by Registry
In order to mitigate any speculation from the opposite side and to avoid physical service, service to be done via the Registry through online portals.
B. Specialised Cause lists and E-Filing of matters
Cause lists to be prepared in accordance with utmost priority given to fresh urgent filings. Otherwise too, all filings to take place electronically. The cause list could entail only those matters for physical proceedings which cannot be taken up via video conferencing, eg., matters where evidence of accused needs to be recorded, unless the jail has provision for video conferencing.
C. Restriction on Advocates/offices of Law firms/Individual Chambers
As per current medical evidence, the virus has severe side-effects on those individuals who have an underlying disease, as well as those who are aged above a certain age limit. Keeping in mind these precautions, movement inside courts could be allowed in the following manner;
Further, for violations of any of the abovementioned directives, the courts may impose penalties and hold the respective parties in contempt of its orders. Special penalties for Advocates filing frivolous litigation.
D. Prevention of overcrowding of the Courts
In order to prevent overcrowding of the Court premises, it may not be out of place to suggest that as has been done on various occasions earlier, in times of emergency, proceedings have taken place even at the early hours of the morning from the residence of the Judges, this may be adopted in some situations keeping the current scenario. Further, functions of a Civil Judge, having a low pecuniary jurisdiction could remain suspended, rather, the matters pending before them could be referred to an ADJ.
The suggestions are not an exhaustive list but may be put to practical use so as to resurrect the legal system and get the legal fraternity in motion which currently is the need of the hour. It is no doubt that the aforesaid suggestions require smooth coordination between the respective bar councils of the States and the respective officers of the Court along with the Hon’ble Judges of various Courts all across the nation. On a positive note, the Judiciary and the legal fraternity can lead by example to ensure that the justice can be delivered at all times to come from any place at any given time and such pandemics cannot be a stumbling block in the dispensation of justice.
Richard Susskind, in his book titled “Online Courts and the Future of Justice” while addressing the importance of digitalisation and modernisation of the Court Structure stated;
“Online courts provide ‘online judging’ – the determination of cases by human judges but not in physical courtrooms. These ‘extended courts’ provide tools to help users understand relevant law and available options, and to formulate arguments and assemble evidence. They offer non-judicial settlements such as negotiation and early neutral evaluation, not as an alternative to the public court system but as part of it.”
On this note, let’s infuse a gradual positive shift towards digitalizing the legal system while providing a cushion so the windmills of change don’t blow us away.
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AUTHORS: Ms. Ridhima Verma (Associate), Ms. Ruchi Kohli (Partner), Mr. Yash Mishra (Partner) Mr. Sonam Sharma (Partner) and Team of Alliance Law Group, New Delhi.
[1] Globally, as of 2:00am CEST, 21 April 2020 reported to WHO.
[2] E-Courts Projects, Phase-II, Objectives Accomplishment Report as per Policy Action Plan, Supreme Court of India, (https://ecourts.gov.in/ecourts_home/static/manuals/Objective%20Accomplishment%20Report-2019.pdf), last visited on 22.04.2020 at 9:00 pm.
[3] Circular issued by Supreme Court of India, dated 23rd March, 2020, (https://main.sci.gov.in/pdf/cir/23032020_153213.pdf), last visited on 22.04.2020 at 9:00 pm.
[4] Order issued by Ministry of Home Affairs, dated 15th April, 2020, bearing no. 40-3/2020-DM-I(A), (https://www.mha.gov.in/sites/default/files/MHA%20order%20dt%2015.04.2020%2C%20with%20Revised%20Consolidated%20Guidelines_compressed%20%283%29.pdf);last visited on 22.04.2020 at 9:00 pm.
[5] Coronavirus Act, 2020 (http://www.legislation.gov.uk/ukpga/2020/7/contents/enacted); last visited on 22.04.2020 at 9:00 pm.
Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur
Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.
Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?
A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.
Q: So you have had the feeling that the establishment is trying to interfere in the matters?
A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.
Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?
A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.
Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?
A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.
Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?
A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.
Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?
A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.
Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?
A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.
Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?
A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.
Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?
I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.
Q: What kind of technology would you recommend that courts should have?
A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.
Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?
You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.
Q: Do you think law should permit this to death row convicts?
A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.
Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?
A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.
Q: What about capital punishment as a means of punishment itself?
A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.
Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?
A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.
Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?
A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?
Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?
A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).
Q: You think giving proper training to police to prepare a case will make a difference?
A: Yes, it will make a difference.
Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?
A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.
Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?
A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.
Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?
A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.
Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?
A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.
Q: What will happen if in a democracy these rights are controlled by hook or by crook?
A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.
Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?
A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.
Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?
A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.
Q: Is there any other thing you would like to say?
A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.
‘A major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013.’- Aakash Parihar
Aakash Parihar is Partner at Triumvir Law, a firm specializing in M&A, PE/VC, startup advisory, international commercial arbitration, and corporate disputes. He is an alumnus of the National Law School of India University, Bangalore.
How did you come across law as a career? Tell us about what made you decide law as an option.
Growing up in a small town in Madhya Pradesh, wedid not have many options.There you either study to become a doctor or an engineer. As the sheep follows the herd, I too jumped into 11th grade with PCM (Physics, Chemistry and Mathematics).However, shortly after, I came across the Common Law Admission Test (CLAT) and the prospect of law as a career. Being a law aspirant without any background of legal field, I hardly knew anything about the legal profession leave alone the niche areas of corporate lawor dispute resolution. Thereafter, I interacted with students from various law schools in India to understand law as a career and I opted to sit for CLAT. Fortunately, my hard work paid off and I made it to the hallowed National Law School of India University, Bangalore (NSLIU). Joining NLSIU and moving to Bangalorewas an overwhelming experience. However, after a few months, I settled in and became accustomed to the rigorous academic curriculum. Needless to mention that it was an absolute pleasure to study with and from someof the brightest minds in legal academia. NLSIU, Bangalore broadened my perspective about law and provided me with a new set of lenses to comprehend the world around me. Through this newly acquired perspective and a great amount of hard work (which is of course irreplaceable), I was able to procure a job in my fourth year at law school and thus began my journey.
As a lawyer carving a niche for himself, tell us about your professional journey so far. What are the challenges that new lawyers face while starting out in the legal field?
I started my professional journey as an Associate at Samvad Partners, Bangalore, where I primarily worked in the corporate team. Prior to Samvad Partners, through my internship, I had developed an interest towards corporate law,especially the PE/VC and M&A practice area. In the initial years as an associate at Samvad Partners and later at AZB & Partners, Mumbai, I had the opportunity to work on various aspects of corporate law, i.e., from PE/VC and M&A with respect to listed as well as unlisted companies. My work experience at these firms equipped and provided me the know-how to deal with cutting edge transactional lawyering. At this point, it is important to mention that I always had aspirations to join and develop a boutique firm. While I was working at AZB, sometime around March 2019, I got a call from Anubhab, Founder of Triumvir Law, who told me about the great work Triumvir Law was doing in the start-up and emerging companies’ ecosystem in Bangalore. The ambition of the firm aligned with mine,so I took a leap of faith to move to Bangalore to join Triumvir Law.
Anyone who is a first-generation lawyer in the legal industry will agree with my statement that it is never easy to build a firm, that too so early in your career. However, that is precisely the notion that Triumvir Law wanted to disrupt. To provide quality corporate and dispute resolution advisory to clients across India and abroad at an affordable price point.
Once you start your professional journey, you need to apply everything that you learnt in law schoolwith a practical perspective. Therefore, in my opinion, in addition to learning the practical aspects of law, a young lawyer needs to be accustomed with various practices of law before choosing one specific field to practice.
India has been doing reallywell in the field of M&A and PE/VC. Since you specialize in M&A and PE/VC dealmaking, what according to you has been working well for the country in this sphere? What does the future look like?
India is a developing economy, andM&A and PE/VC transactions form the backbone of the same. Since liberalization, there has been an influx of foreign investment in India, and we have seen an exponential rise in PC/VA and M&A deals. Indian investment market growth especially M&A and PE/VC aspects can be attributed to the advent of startup culture in India. The increase in M&A and PE/VC deals require corporate lawyersto handle the legal aspects of these deals.
As a corporate lawyer working in M&A and PE/VC space, my work ranges from drafting term-sheets to the transaction documents (SPA, SSA, SHA, BTA, etc.). TheM&A and PE/VC deal space experienced a slump during the first few months of the pandemic, but since June 2021, there has been a significant growth in M&A and PE/VC deal space in India. The growth and consistence of the M&A and PE/VC deal space in India can be attributed to several factors such as foreign investment, uncapped demands in the Indian market and exceptional performance of Indian startups.
During the pandemic many businesses were shut down but surprisingly many new businesses started, which adapted to the challenges imposed by the pandemic. Since we are in the recovery mode, I think the M&A and PE/VC deal space will reach bigger heights in the comingyears. We as a firm look forward to being part of this recovery mode by being part of the more M&A and PE/VC deals in future.
You also advice start-ups. What are the legal issues or challenges that the start-ups usually face specifically in India? Do these issues/challenges have long-term consequences?
We do a considerable amount of work with startupswhich range from day-to-day legal advisory to transaction documentation during a funding round. In India, we have noticed that a sizeable amount of clientele approach counsels only when there is a default or breach, more often than not in a state of panic. The same principle applies to startups in India, they normally approach us at a stage when they are about to receive investment or are undergoing due diligence. At that point of time, we need to understand their legal issues as well as manage the demands of the investor’s legal team. The majornon-compliances by startups usually involve not maintaining proper agreements, delaying regulatory filings and secretarial compliances, and not focusing on proper corporate governance.
Another major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013. Keeping up with these requirements can be time-consuming for even seasoned lawyers, and we can only imagine how difficult it would be for startups. Startups spend their initial years focusing on fund-raising, marketing, minimum viable products, and scaling their businesses. Legal advice does not usually factor in as a necessity. Our firm aims to help startups even before they get off the ground, and through their initial years of growth. We wanted to be the ones bringing in that change in the legal sector, and we hope to help many more such startups in the future.
In your opinion, are there any specific India-related problems that corporate/ commercial firms face as far as the company laws are concerned? Is there scope for improvement on this front?
The Indian legal system which corporate/commercial firms deal with is a living breathing organism, evolving each year. Due to this evolving nature, we lawyers are always on our toes.From a minor amendment to the Companies Act to the overhaul of the foreign exchange regime by the Reserve Bank of India, each of these changes affect the compliance and regulatory regime of corporates. For instance, when India changed the investment route for countries sharing land border with India,whereby any country sharing land border with India including Hong Kong cannot invest in India without approval of the RBI in consultation with the central government,it impacted a lot of ongoing transactions and we as lawyers had to be the first ones to inform our clients about such a change in the country’s foreign investment policy. In my opinion, there is huge scope of improvement in legal regime in India, I think a stable regulatory and tax regime is the need for the hour so far as the Indian system is concerned. The biggest example of such a market with stable regulatory and tax regime is Singapore, and we must work towards emulating the same.
Your boutique law firm has offices in three different cities — Delhi NCR, Mumbai and Bangalore. Have the Covid-induced restrictions such as WFH affected your firm’s operations? How has your firm adapted to the professional challenges imposed by the pandemic-related lifestyle changes?
We have offices in New Delhi NCR and Mumbai, and our main office is in Bangalore. Before the pandemic, our work schedule involved a fair bit of travelling across these cities. But post the lockdowns we shifted to a hybrid model, and unless absolutely necessary, we usually work from home.
In relation to the professional challenges during the pandemic, I think it was a difficult time for most young professionals. We do acknowledge the fact that our firm survived the pandemic. Our work as lawyers/ law firms also involves client outreach and getting new clients, which was difficult during the lockdowns. We expanded our client outreach through digital means and by conducting webinars, including one with King’s College London on International Treaty Arbitration. Further, we also focused on client outreach and knowledge management during the pandemic to educate and create legal awareness among our clients.
‘It’s a myth that good legal advice comes at prohibitive costs. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.’ – Archana Balasubramanian
Archana Balasubramanian is the founding partner of Agama Law Associates, a Mumbai-based corporate law firm which she started in 2014. She specialises in general corporate commercial transaction and advisory as well as deep sectoral expertise across manufacturing, logistics, media, pharmaceuticals, financial services, shipping, real estate, technology, engineering, infrastructure and health.
August 13, 2021:
Lawyers see companies ill-prepared for conflict, often, in India. When large corporates take a remedial instead of mitigative approach to legal issues – an approach utterly incoherent to both their size and the compliance ecosystem in their sector – it is there where the concept of costs on legal becomes problematic. Pre-dispute management strategy is much more rationalized on the business’ pocket than the costs of going in the red on conflict and compliances.
Corporates often focus on business and let go of backend maintenance of paperwork, raising issues as and when they arise and resolving conflicts / client queries in a manner that will promote dispute avoidance.
Corporate risk and compliance management is yet another elephant in India, which in addition to commercial disputes can be a drain on a company’s resources. It can be clubbed under four major heads – labour, industrial, financial and corporate laws. There are around 20 Central Acts and then specific state-laws by which corporates are governed under these four categories.
Risk and compliance management is also significantly dependent on the sector, size, scale and nature of the business and the activities being carried out.
The woes of a large number of promoters from the ecommerce ecosystem are to do with streamlining systems to navigate legal. India has certain heavily regulated sectors and, like I mentioned earlier, an intricate web of corporate risk and compliance legislation that can result in prohibitive costs in the remedial phase. To tackle the web in the preventive or mitigative phase, start-ups end up lacking the arsenal due to sheer intimidation from legal. Promoters face sectoral risks in sectors which are heavily regulated, risks of heavy penalties and fines under company law or foreign exchange laws, if fund raise is not done in a compliant manner.
It is a myth that good legal advice comes at prohibitive costs. Promoters are quick to sign on the dotted line and approach lawyers with a tick the box approach. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.
Investment contracts, large celebrity endorsement contracts and CXO contracts are some key areas where legal advice should be obtained. Online contracts is also emerging as an important area of concern.
When we talk of scope, arbitration is pretty much a default mechanism at this stage for adjudicating commercial disputes in India, especially given the fixation of timelines for closure of arbitration proceedings in India. The autonomy it allows the parties in dispute to pick a neutral and flexible forum for resolution is substantial. Lower courts being what they are in India, arbitration emerges as the only viable mode of dispute resolution in the Indian commercial context.
The arbitrability of disputes has evolved significantly in the last 10 years. The courts are essentially pro-arbitration when it comes to judging the arbitrability of subject matter and sending matters to arbitration quickly.
The Supreme Court’s ruling in the Vidya Drolia case has significantly clarified the position in respect of tenancy disputes, frauds and consumer disputes. It reflects upon the progressive approach of the court and aims to enable an efficient, autonomous and effective arbitration environment in India.
Law firms stand for ensuring that the law works for business and not against it. Whatever the scope of our mandate, the bottom line is to ensure a risk-free, conflict-free, compliant and prepared enterprise for our client, in a manner that does not intimidate the client or bog them down, regardless of the intricacy of the legal and regulatory web it takes to navigate to get to that end result. Lawyers need to dissect the business of law from the work.
This really involves meticulous, detail-oriented, sheer hard work on the facts, figures, dates and all other countless coordinates of each mandate, repetitively and even to a, so-called, “dull” routine rhythm – with consistent single-mindedness and unflinching resolve.
As a firm, multiply that effort into volumes, most of it against-the-clock given the compliance heavy ecosystem often riddled with uncertainties in a number of jurisdictions. So the same meticulous streamlining of mandate deliverables has to be extrapolated by the management of the firm to the junior most staff.
Further, the process of streamlining itself has to be more dynamic than ever now given the pace at which the new economy, tech-ecosystem, business climate as well as business development processes turn a new leaf.
Finally, but above all, we need to find a way to feel happy, positive and energized together as a team while chasing all of the aforesaid dreams. The competitive timelines and volumes at which a law firm works, this too is a real challenge. But we are happy to face it and evolve as we grow.
We always as a firm operated on the work from anywhere principle. We believed in it and inculcated this through document management processes to the last trainee. This helped us shut shop one day and continue from wherever we are operating.
The team has been regularly meeting online (at least once a day). We have been able to channel the time spent in travelling to and attending meetings in developing our internal knowledge banks further, streamline our processes, and work on integrating various tech to make the practice more cost-effective for our clients.
Right to Disclosure – Importance & Challenges in Criminal Justice System – By Manu Sharma
Personal liberty is the most cherished value of human life which thrives on the anvil of Articles 14 and 21 of the Constitution of India (“the Constitution”). Once a person is named an accused, he faces the spectre of deprivation of his personal liberty and criminal trial. This threat is balanced by Constitutional safeguards which mandate adherence to the rule of law by the investigating agencies as well as the Court. Thus, any procedure which seeks to impinge on personal liberty must also be fair and reasonable. The right to life and personal liberty enshrined under article 21 of the Constitution, expanded in scope post Maneka Gandhi[1], yields the right to a fair trial and fair investigation. Fairness demands disclosure of anything relevant that may be of benefit to an accused. Further, the all-pervading principles of natural justice envisage the right to a fair hearing, which entails the right to a full defence. The right to a fair defence stems from full disclosure. Therefore, the right of an accused to disclosure emanates from this Constitutional philosophy embellished by the principles of natural justice and is codified under the Code of Criminal Procedure, 1973 (“Code”).
Under English jurisprudence, the duty of disclosure is delineated in the Criminal Procedure and Investigations Act, 1996, which provides that the prosecutor must disclose to the accused any prosecution material which has not previously been disclosed to the accused and which might reasonably be considered capable of undermining the case for the prosecution against the accused or of assisting the case for the accused, except if such disclosure undermines public interest.[2] Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence.[3] The duty of disclosure under common law contemplates disclosure of anything which might assist the defence[4], even if such material was not to be used as evidence[5]. Under Indian criminal jurisprudence, which has borrowed liberally from common law, the duty of disclosure is embodied in sections 170(2), 173, 207 and 208 of the Code, which entail the forwarding of material to the Court and supply of copies thereof to the accused, subject to statutory exceptions.
II. Challenges in Enforcement
The right to disclosure is a salient feature of criminal justice, but its provenance and significance appear to be lost on the Indian criminal justice system. The woes of investigative bias and prosecutorial misconduct threaten to render this right otiose. That is not to say that the right of an accused to disclosure is indefeasible, as certain exceptions are cast in the Code itself, chief among them being public interest immunity under section 173(6). However, it is the mischief of the concept of ‘relied upon’ emerging from section 173(5) of the Code, which is wreaking havoc on the right to disclosure and is the central focus of this article. The rampant misuse of the words “on which the prosecution proposes to rely’ appearing in section 173(5) of the Code, to suppress material favourable to the accused or unfavourable to the prosecution in the garb of ‘un-relied documents’ has clogged criminal courts with avoidable litigation at the very nascent stage of supply of copies of documents under section 207 of the Code. The erosion of the right of an accused to disclosure through such subterfuge is exacerbated by the limited and restrictive validation of this right by criminal Courts. The dominant issues highlighted in the article, which stifle the right to disclosure are; tainted investigation, unscrupulous withholding of material beneficial to the accused by the prosecution, narrow interpretation by Courts of section 207 of the Code, and denial of the right to an accused to bring material on record in the pre-charge stage.
A. Tainted Investigation
Fair investigation is concomitant to the preservation of the right to fair disclosure and fair trial. It envisages collection of all material, irrespective of its inculpatory or exculpatory nature. However, investigation is often vitiated by the tendencies of overzealous investigating officers who detract from the ultimate objective of unearthing truth, with the aim of establishing guilt. Such proclivities result in collecting only incriminating material during investigation or ignoring the material favourable to the accused. This leads to suppression of material and scuttles the right of the accused to disclosure at the very inception. A tainted investigation leads to miscarriage of justice. Fortunately, the Courts are not bereft of power to supervise investigation and ensure that the right of an accused to fair disclosure remains protected. The Magistrate is conferred with wide amplitude of powers under section 156(3) of the Code to monitor investigation, and inheres all such powers which are incidental or implied to ensure proper investigation. This power can be exercised suo moto by the Magistrate at all stages of a criminal proceeding prior to the commencement of trial, so that an innocent person is not wrongly arraigned or a prima facie guilty person is not left out.[6]
B. Suppression of Material
Indian courts commonly witness that the prosecution is partisan while conducting the trial and is invariably driven by the lust for concluding in conviction. Such predisposition impels the prosecution to take advantage by selectively picking up words from the Code and excluding material favouring the accused or negating the prosecution case, with the aid of the concept of ‘relied upon’ within section 173(5) of the Code. However, the power of the prosecution to withhold material is not unbridled as the Constitutional mandate and statutory rights given to an accused place an implied obligation on the prosecution to make fair disclosure.[7] If the prosecution withholds vital evidence from the Court, it is liable to adverse inference flowing from section 114 of the Indian Evidence Act, 1872 (“Evidence Act). The prosecutor is expected to be guided by the Bar Council of India Rules which prescribe that an advocate appearing for the prosecution of a criminal trial shall so conduct the prosecution that it does not lead to conviction of the innocent. The suppression of material capable of establishment of the innocence of the accused shall be scrupulously avoided. [8]
C. Scope of S. 207
The scope of disclosure under section 207 has been the subject of fierce challenge in Indian Courts on account of the prosecution selectively supplying documents under the garb of ‘relied upon’ documents, to the prejudice of the defence of an accused. The earlier judicial trend had been to limit the supply of documents under section 207 of the Code to only those documents which were proposed to be relied upon by the prosecution. This view acquiesced the exclusion of documents which were seized during investigation, but not filed before the Court along with the charge sheet, rendering the right to disclosure a farce. This restrictive sweep fails to reconcile with the objective of a fair trial viz. discovery of truth. The scheme of the code discloses that Courts have been vested with extensive powers inter alia under sections 91, 156(3) and 311 to elicit the truth. Towards the same end, Courts are also empowered under Section 165 of the Evidence Act. Thus, the principle of harmonious construction warrants a more purposive interpretation of section 207 of the code. The Hon’ble Supreme Court expounded on the scope of Section 207 of the Code in the case of Manu Sharma[9] and held that documents submitted to the Magistrate under section 173(5) would deem to include the documents which have to be sent to the magistrate during the course of investigation under section 170(2). A document which has been obtained bona fide and has a bearing on the case of the prosecution should be disclosed to the accused and furnished to him to enable him to prepare a fair defence, particularly when non production or disclosure would affect administration of justice or prejudice the defence of the accused. It is not for the prosecution or the court to comprehend the prejudice that is likely to be caused to the accused. The perception of prejudice is for the accused to develop on reasonable basis.[10] Manu Sharma’s [supra] case has been relied upon in Sasikala [11] wherein it was held that the Court must concede a right to the accused to have access to the documents which were forwarded to the Court but not exhibited by the prosecution as they favoured the accused. These judgments seem more in consonance with the true spirit of fair disclosure and fair trial. However, despite such clear statements of law, courts are grappling with the judicial propensity of deviating from this expansive interpretation and regressing to the concept of relied upon. The same is evident from a recent pronouncement of the Delhi High Court where the ratios laid down in Manu Sharma & Sasikala [supra] were not followed by erroneously distinguishing from those cases.[12] Such “per incuriam” aberrations by High Court not only undermine the supremacy of the Apex Court, but also adversely impact the functioning of the district courts over which they exercise supervisory jurisdiction. Hopefully in future Judges shall be more circumspect and strictly follow the law declared by the Apex Court.
D. Pre-Charge Embargo
Another obstacle encountered in the enforcement of the right to disclosure is the earlier judicial approach to stave off production or consideration of any additional documents not filed alongwith the charge sheet at the pre-charge stage, as the right to file such material was available to the accused only upon the commencement of trial after framing of charge.[13] At the pre-charge stage, Court could not direct the prosecution to furnish copies of other documents[14] It was for the accused to do so during trial or at the time of entering his defence. However, the evolution of law has seen that at the stage of framing charge, Courts can rely upon the material which has been withheld by the prosecutor, even if such material is not part of the charge sheet, but is of such sterling quality demolishing the case of the prosecution.[15] Courts are not handicapped to consider relevant material at the stage of framing charge, which is not relied upon by the prosecution. It is no argument that the accused can ask for the documents withheld at the time of entering his defence.[16] The framing of charge is a serious matter in a criminal trial as it ordains an accused to face a long and arduous trial affecting his liberty. Therefore, the Court must have all relevant material before the stage of framing charge to ascertain if grave suspicion is made out or not. Full disclosure at the stage of section 207 of the code, which immediately precedes discharging or charging an accused, enables an accused to seek a discharge, if the documents, including those not relied upon by the prosecution, create an equally possible view in favour of the accused.[17] On the other hand, delaying the reception of documents postpones the vindication of the accused in an unworthy trial and causes injustice by subjecting him to the trauma of trial. There is no gainsaying that justice delayed is justice denied, therefore, such an approach ought not to receive judicial consent. A timely discharge also travels a long way in saving precious time of the judiciary, which is already overburdened by the burgeoning pendency of cases. Thus, delayed or piecemeal disclosure not only prejudices the defence of the accused, but also protracts the trial and occasions travesty of justice.
III. Duties of the stakeholders in criminal justice system
The foregoing analysis reveals that participation of the investigating agency, the prosecution and the Court is inextricably linked to the enforcement of the right to disclosure. The duties cast on these three stakeholders in the criminal justice system, are critical to the protection of this right. It is incumbent upon the investigating agencies to investigate cases fairly and to place on record all the material irrespective of its implication on the case of prosecution case. Investigation must be carried out with equal alacrity and fairness irrespective of status of accused or complainant.[18] An onerous duty is cast on the prosecution as an independent statutory officer, to conduct the trial with the objective of determination of truth and to ensure that material favourable to the defence is supplied to the accused. Ultimately, it is the overarching duty of the Court to ensure a fair trial towards the administration of justice for all parties. The principles of fair trial require the Court to strike a delicate balance between competing interests in a system of adversarial advocacy. Therefore, the court ought to exercise its power under section 156(3) of the Code to monitor investigation and ensure that all material, including that which enures to the benefit of the accused, is brought on record. Even at the stage of supply of copies of police report and documents under section 207 of the Code, it is the duty of the Court to give effect to the law laid down by the Hon’ble Supreme Court in Manu Sharma (supra) and Sasikala (supra), and ensure that all such material is supplied to the accused irrespective of whether it is “relied upon” by the prosecution or not.
IV. Alternate Remedy
The conundrum of supply of copies under section 207 of the code abounds criminal trials. Fairness is an evolving concept. There is no doubt that disclosure of all material which goes to establish the innocence of an accused is the sine qua non of a fair trial.[19] Effort is evidently underway to expand the concept in alignment with English jurisprudence. In the meanwhile, does the right of an accused to disclosure have another limb to stand on? Section 91 of the Code comes to the rescue of an accused, which confers wide discretionary powers on the Court, independent of section 173 of the Code, to summon the production of things or documents, relevant for the just adjudication of the case. In case the Court is of the opinion that the prosecution has withheld vital, relevant and admissible evidence from the Court, it can legitimately use its power under section 91 of the Code to discover the truth and to do complete justice to the accused.[20]
V. Conclusion
A society’s progress and advancement are judged on many parameters, an important one among them being the manner in which it administers criminal justice. Conversely, the ironic sacrilege of the core virtues of criminal jurisprudence in the temples of justice evinces social decadence. The Indian legislature of the twenty first century has given birth to several draconian statutes which place iron shackles on personal liberty, evoking widespread fear of police abuses and malicious prosecution. These statutes not only entail presumptions which reverse the burden of proof, but also include impediments to the grant of bail. Thus, a very heavy burden to dislodge the prosecution case is imposed on the accused, rendering the right to disclosure of paramount importance. It is the duty of the Court to keep vigil over this Constitutional and statutory right conferred on an accused by repudiating any procedure which prejudices his defence. Notable advancement has been made by the Apex Court in interpreting section 207 of the Code in conformity with the Constitutional mandate, including the right to disclosure. Strict adherence to the afore-noted principles will go a long way in ensuring real and substantial justice. Any departure will not only lead to judicial anarchy, but also further diminish the already dwindling faith of the public in the justice delivery system.
**
Advocate Manu Sharma has been practising at the bar for over sixteen years. He specialises in Criminal Defence. Some of the high profile cases he has represented are – the 2G scam case for former Union minister A Raja; the Religare/Fortis case for Malvinder Singh; Peter Mukerjee in the P Chidambaram/ INX Media case; Devas Multimedia in ISRO corruption act case; Om Prakash Chautala in PMLA case; Aditya Talwar in the aviation scam case; Dilip Ray, former Coal Minister in one of the coal scam cases; Suhaib Illyasi case.
**
Disclaimer: The views or opinions expressed are solely of the author.
[1] Maneka Gandhi and Another v. Union of India, (1978) 1 SCC 248
[2] S. 3 of the Criminal Procedure and Investigations Act, 1996
[3] R v. H and R v. C, 2004 (1) ALL ER 1269
[4] R v. Ward (Judith), (1993) 1 WLR 619 : (1993) 2 ALL ER 577 (CA)
[5] R v. Preston, (1994) 2 AC 130 : (1993) 3 WLR 891 : (1993) 4 ALL ER 638 (HL), R v. Stinchcome,
(1991), 68 C.C.C. (3d) 1 (S.C.C.)
[6] Vinubhai Haribhai Malaviya and Others v. State of Gujarat and Another, 2019 SCC Online SC 1346
[7] Sidhartha Vashishth alias Manu Sharma v. State (NCT of Delhi), (2010) 6 SCC 1
[8] R. 16, part II, Ch. VI of the Bar Council of India Rules
[9] Manu Sharma, (2010) 6 SCC 1
[10] V.K. Sasikala v. State, (2012) 9 SCC 771 : AIR 2013 SC 613
[11] Sasikala, (2012) 9 SCC 771 : AIR 2013 SC 613
[12] Sala Gupta and Another v. Directorate of Enforcement, (2019) 262 DLT 661
[13] State of Orissa v. Debendra Nath Padhi¸(2005) 1 SCC 568
[14] Dharambir v. Central Bureau of Investigation, ILR (2008) 2 Del 842 : (2008) 148 DLT 289
[15] Nitya Dharmananda alias K. Lenin and Another v. Gopal Sheelum Reddy, (2018) 2 SCC 93
[16] Neelesh Jain v. State of Rajasthan, 2006 Cri LJ 2151
[17] Dilwar Balu Kurane v. State of Maharashtra, (2002) 2 SCC 135, Yogesh alias Sachin Jagdish Joshi v. State of Maharashtra, (2008) 10 SCC 394
[18] Karan Singh v. State of Haryana, (2013) 12 SCC 529
[19] Kanwar Jagat Singh v. Directorate of Enforcement & Anr, (2007) 142 DLT 49
[20] Neelesh, 2006 Cri LJ 2151
Disclaimer: The views or opinions expressed are solely of the author.
Validity & Existence of an Arbitration Clause in an Unstamped Agreement
By Kunal Kumar
January 8, 2024
In a recent ruling, a seven-judge bench of the Supreme Court of India in its judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, overruled the constitutional bench decision of the Supreme Court of India in N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. and has settled the issue concerning the validity and existence of an arbitration clause in an unstamped agreement. (‘N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III’)
Background to N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
One of the first instances concerning the issue of the validity of an unstamped agreement arose in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. In this case, the Hon’ble Apex Court held that if an instrument/document lacks proper stamping, the exercising Court must preclude itself from acting upon it, including the arbitration clause. It further emphasized that it is imperative for the Court to impound such documents/instruments and must accordingly adhere to the prescribed procedure outlined in the Indian Stamp Act 1899.
With the introduction of the 2015 Amendment, Section 11(6A) was inserted in the Arbitration & Conciliation Act 1996 (A&C Act) which stated whilst appointing an arbitrator under the A&C Act, the Court must confine itself to the examination of the existence of an arbitration agreement.
In the case of M/s Duro Felguera S.A. v. M/s Gangavaram Port Limited, the Supreme Court of India made a noteworthy observation, affirming that the legislative intent behind the 2015 Amendment to the A&C Act was necessitated to minimise the Court's involvement during the stage of appointing an arbitrator and that the purpose embodied in Section 11(6A) of A&C Act, deserves due acknowledgement & respect.
In the case of Garware Wall Ropes Ltd. v. Cosatal Marine Constructions & Engineering Ltd., a divisional bench of the Apex Court reaffirmed its previous decision held in SMS Tea Estates (supra) and concluded that the inclusion of an arbitration clause in a contract assumes significance, emphasizing that the agreement transforms into a contract only when it holds legal enforceability. The Apex Court observed that an agreement fails to attain the status of a contract and would not be legally enforceable unless it bears the requisite stamp as mandated under the Indian Stamp Act 1899. Accordingly, the Court concluded that Section 11(6A) read in conjunction with Section 7(2) of the A&C Act and Section 2(h) of the Indian Contract Act 1872, clarified that the existence of an arbitration clause within an agreement is contingent on its legal enforceability and that the 2015 Amendment of the A&C Act to Section 11(6A) had not altered the principles laid out in SMS Tea Estates (supra).
Brief Factual Matrix – N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Indo Unique Flame Ltd. (‘Indo Unique’) was awarded a contract for a coal beneficiation/washing project with Karnataka Power Corporation Ltd. (‘KPCL’). In the course of the project, Indo Unique entered into a subcontract in the form of a Work Order with N.N. Global Mercantile Pvt. Ltd. (‘N.N. Global’) for coal transportation, coal handling and loading. Subsequently, certain disputes arose with KPCL, leading to KPCL invoking Bank Guarantees of Indo Unique under the main contract, after which Indo Unique invoked the Bank Guarantee of N. N. Global as supplied under the Work Order.
Top of FormS
Subsequently, N.N. Global initiated legal proceedings against the cashing of the Bank Guarantee in a Commercial Court. In response thereto, Indo Unique moved an application under Section 8 of the A&C Act, requesting that the Parties to the dispute be referred for arbitration. The Commercial Court dismissed the Section 8 application, citing the unstamped status of the Work Order as one of the grounds. Dissatisfied with the Commercial Court's decision on 18 January 2018, Indo Unique filed a Writ Petition before the High Court of Bombay seeking that the Order passed by the Commercial Court be quashed or set aside. The Hon’ble Bombay High Court on 30 September 2020 allowed the Writ Petition filed by Indo Unique, aggrieved by which, N.N. Global filed a Special Leave Petition before the Supreme Court of India.
N. N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. – I
The issue in the matter of M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unqiue Flame Ltd. & Ors. came up before a three-bench of the Supreme Court of India i.e. in a situation when an underlying contract is not stamped or is insufficiently stamped, as required under the Indian Stamp Act 1899, would that also render the arbitration clause as non-existent and/or unenforceable (‘N.N. Global Mercantile Pvt. Ltd. v. Indo Flame Ltd. – I’).
The Hon’ble Supreme Court of India whilst emphasizing the 'Doctrine of Separability' of an arbitration agreement held that the non-payment of stamp duty on the commercial contract would not invalidate, vitiate, or render the arbitration clause as unenforceable, because the arbitration agreement is considered an independent contract from the main contract, and the existence and/or validity of an arbitration clause is not conditional on the stamping of a contract. The Hon’ble Supreme Court further held that deficiency in stamp duty of a contract is a curable defect and that the deficiency in stamp duty on the work order, would not affect the validity and/or enforceability of the arbitration clause, thus applying the Doctrine of Separability. The arbitration agreement remains valid and enforceable even if the main contract, within which it is embedded, is not admissible in evidence owing to lack of stamping.
The Hon’ble Apex Court, however, considered it appropriate to refer the issue i.e. whether unstamped instrument/document, would also render an arbitration clause as non-existent, unenforceable, to a constitutional bench of five-bench of the Supreme Court.
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II
On 25 April 2023, a five-judge bench of the Hon’ble Supreme Court of India in the matter of N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. held that (1) An unstamped instrument containing an arbitration agreement cannot be said to be a contract which is enforceable in law within the meaning of Section 2(h) of the Indian Contract Act 1872 and would be void under Section 2(g) of the Indian Contract Act 1872, (2) an unstamped instrument which is not a contract nor enforceable cannot be acted upon unless it is duly stamped, and would not otherwise exist in the eyes of the law, (3) the certified copy of the arbitration agreement produced before a Court, must clearly indicate the stamp duty paid on the instrument, (4) the Court exercising its power in appointing an arbitration under Section 11 of the A&C Act, is required to act in terms of Section 33 and Section 35 of the Indian Stamp Act 1899 (N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II).
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
A seven-judge bench of the Supreme Court of India on 13 December 2023 in its recent judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, (1) Agreements lacking proper stamping or inadequately stamped are deemed inadmissible as evidence under Section 35 of the Stamp Act. However, such agreements are not automatically rendered void or unenforceable ab initio; (2) non-stamping or insufficient stamping of a contract is a curable defect, (2) the issue of stamping is not subject to determination under Sections 8 or 11 of the A&C Act by a Court. The concerned Court is only required to assess the prima facie existence of the arbitration agreement, separate from concerns related to stamping, and (3) any objections pertaining to the stamping of the agreement would fall within the jurisdiction of the arbitral tribunal. Accordingly, the decision in N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II and SMS Tea (supra) was overruled, by the seven-judge bench of the Supreme Court of India.
Kunal is a qualified lawyer with more than nine years of experience and has completed his LL.M. in Dispute Resolution (specialisation in International Commercial Arbitration) from Straus Institute for Dispute Resolution, Pepperdine University, California.
Kunal currently has his own independent practice and specializes in commercial/construction arbitration as well as civil litigation. He has handled several matters relating to Civil Law and arbitrations (both domestic and international) and has appeared before the Supreme Court of India, High Court of Delhi, District Courts of Delhi and various other tribunals.
No Safe Harbour For Google On Trademark Infringement
By Mayank Grover & Pratibha Vyas
October 9, 2023
Innovation, patience, dedication and uniqueness culminate in establishing a distinct identity. A trademark aids in identifying the source and quality, shaping perceptions about the identity's essence. When values accompany a product or service's trademark, safeguarding against misuse and infringement becomes crucial. A recent pronouncement of a Division Bench of the Delhi High Court dated August 10, 2023 in Google LLC v. DRS Logistics (P) Ltd. & Ors. and Google India Private Limited v. DRS Logistics (P) Ltd. & Ors. directed that Google’s use of trademarks as keywords for its Google Ads Programme does amount to ‘use’ in advertising under the Trademarks Act and the benefit of safe harbour would not be available to Google if such keywords infringe on the concerned trademark.
Factual Background
Google LLC manages and operates the Google Search Engine and Ads Programme, while, Google India Private Limited is a subsidiary of Google that has been appointed as a non-exclusive reseller of the Ads Programme in India. The Respondents, DRS Logistics and Agarwal Packers and Movers Pvt. Ltd. are leading packaging, moving and logistics service providers in India.
On 22.12.2011, DRS filed a suit against Google and Just Dial Ltd. under provisions of the Trademarks Act, 1999 (‘TM Act’) inter alia seeking a permanent injunction against Google from permitting third parties from infringing, passing off etc. the relevant trademarks of DRS. The core of the dispute revolved around Google’s Ads Programme. DRS claimed that its trade name 'AGARWAL PACKERS AND MOVERS' is widely recognized and a 'well-known' trademark. Use of DRS’s trademark as a keyword diverts internet traffic from its website to that of its competitors and they were entitled to seek restraint against Google for permitting third parties who are not authorized to use the said trademark. DRS further argued that Google benefits from these trademark infringements. This practice involved charging a higher amount for displaying these ads, constituting an infringement of their trademarks. Whereas, Google contended that the use of the keyword in the Ads Programme does not amount to ‘use’ under the TM Act notwithstanding that the keyword is/or similar to a trademark. Thus, the use of a term as a keyword cannot be construed as an infringement of a trademark under the TM Act, and being an intermediary, it claimed a safe harbour under Section 79 of the Information Technology Act, 2000. (‘IT Act’).
In essence, the dispute between the parties was rooted in DRS’s grievance concerning the Ads Programme. The Learned Single Judge vide judgment dated 30.10.2021interpreted relevant provisions of the TM Act and drew on multiple legal precedents to arrive at the decision that DRS can seek protection of its trademarks which were registered under Section 28 of the TM Act and issued directions to investigate complaints alleging the use of trademark and/or to ascertain whether a sponsored result has an effect of infringing a trademark or passing off.
Being aggrieved, Google LLC and Google Pvt. Ltd. filed appeals before the Division Bench. Google LLC argued that the Single Judge’s findings were erroneous and the directions issued were liable to be set aside. Google India claimed that it doesn’t control and operate the Search Engine and the Ads Programme making it unable to comply with the directions passed in the impugned judgment.
Analysis & Decision of Court
The Division Bench found Single Judge’s rationale for assessing trademark infringement through keywords and meta-tags valid. Meta-tags are a list of words/code in a website, not readily visible to the naked eye. It serves as a tool for indexing the website by a search engine. If a trademark of a third party is used as a meta-tag, the same would serve as identifying the website as relevant to the search query that includes the trademark as a search term. The use of keywords in the Ads Programme also serves similar purpose. The Division Bench was unable to accept that using a trademark as a keyword, even if not visible, would not be considered trademark use under the TM Act.
Google placed heavy reliance on the decisions rendered by Courts across jurisdictions of United Kingdom, United States of America, European Union, Australia, New Zealand, Russia, South Africa, Canada, Spain, Italy, Japan and China; in the cases of Google France SARL and Google Inc. v. Louis Vitton SA & Ors.[1], Interflora Inc. v. Marks & Spencer Plc.[2], and L’Oreal SA v. eBay International AG[3] in support of the contention that the use of trade marks is by the advertiser and not by Google. However, the Division Bench rejected Google’s passive role; highlighting its active involvement in recommending and promoting trademark keywords for higher clicks in its Ads Programme. Division Bench referred to a few judicial decisions rendered in the United States of America that captured the essence of the controversy for perspective, concluding that Google actively promotes and encourages trademarks associated with major goods and services, rather than having a passive role.
It was held that the contention that the use of trademarks as keywords, per se constitutes an infringement of the trademark is unmerited; the assumption that an internet user is merely searching the address of the proprietor of the trademark when he feeds in a search query that may contain a trademark, is erroneous.
The Doctrine of 'Initial Interest Confusion' addresses trademark infringement based on pre-purchase confusion. The doctrine is applied when meta-tags, keywords, or domain names cause initial confusion similar to a registered trademark. If users are misled to access unrelated websites, trademark use in internet advertising may be actionable and reliance was placed on US precedents. Referring to Section 29 of the TM Act, it was directed that Section 29 does not specify the duration for which the confusion lasts but, even if the confusion is for a short duration and an internet user is able to recover from the same, the trade mark would be infringed and would offend Section 29(2) of the TM Act.
It was held that the Ads Programme is a platform for displaying advertisements. Google, being an architect and operator of its own programme makes it an active participant in the use of trademarks and determining the advertisements displayed on search pages. Their use of proprietary software makes them utilize trademarks and control the distribution of information related to potentially infringing links, ultimately leading to revenue maximization. Hence, a substantial link exists between Google LLC and Google India, rendering it impossible for Google India to deny its role in operating the Ads Programme. It was further held that Google sells trademarks as keywords to advertisers and encourages users to use trademarks as keywords for ads. It is contradictory for Google to encourage trademark use while claiming data belongs to third parties for exemption. After 2004, Google changed policies to boost revenue and subsequently, introduced a tool that searches effective terms, including trademarks. Google's active involvement in its advertising business and online nature does not necessarily qualify it for benefits under Section 79 of the IT Act. The Division Bench agreed with the view of the Single Judge that Google would not be eligible for protection of safe harbour under Section 79(1) of the IT Act, if its alleged activities infringe trademarks.
Conclusion
This is a seminal decision governing (and rather, restricting) the operations of intermediaries and redefining the jurisprudence of safe harbour under the IT Act. The decision is well-reasoned and establishes a significant precedent for safeguarding trademarks by uniquely holding Google accountable under its Ads Programme. The same will prevent usage of tradenames as a third-party trademark in keyword search or metatags by advertisers on Google’s search engine. While keywords and meta-tags have different levels of visibility, their purpose is similar i.e. advertising and attracting internet traffic. The use of trademarks as meta-tags by a person who is neither a proprietor of the trademark nor permitted to use the same leads to confusion amongst public at large due to the automated processes of search engines and consequently, constitutes trademark infringement.
About the Authors: Mayank Grover is a Partner and Pratibha Vyas is an Associate at Seraphic Advisors, Advocates & Solicitors
[1] C-236/08 to C-238/08 (2010) [2011] All ER (EC) 41
[2] [2014] EWCA Civ 1403
[3] 2C- 324/09 (2010)
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