Read Judgment: PREMCHAND v. THE STATE OF MAHARASHTRA
Tulip Kanth
New Delhi, March 7, 2023: While referring to its judgments in State of U.P. vs Lakhmi, Sanatan Naskar vs. State of West Bengal, Reena Hazarika vs. State of Assam, M. Abbas vs. State of Kerala, the Supreme Court has culled out a few principles regarding section 313 CrPC and also opined that clause (b) of Section 313(1) is a valuable safeguard in the trial process for the accused to establish his innocence.
“Section 313, which is intended to ensure a direct dialogue between the court and the accused, casts a mandatory duty on the court to question the accused generally on the case for the purpose of enabling him to personally explain any circumstances appearing in the evidence against him”, the Division Bench of Justice S. Ravindra Bhat & Justice Dipankar Datta observed.
It was the case of the prosecution that the victim was murdered by the appellant and the other three victims-prosecution witnesses received stab injuries caused by a knife, also inflicted by the appellant. This led to registration of an F.I.R. under sections 302 and 307, IPC. The post-mortem report recorded stab injury to neck of the victim as the probable cause of death.
The appeal, by special leave, in question challenged the judgment of the Bombay High Court whereby Criminal Appeal carried by the appellant-accused assailing his conviction under Section 302 of the Indian Penal Code, 1860 (IPC) and sentence of life imprisonment was dismissed.
The Top Court was of the view that every Criminal Court proceeding under clause (b) of sub-section (1) of section 313 has to shoulder the onerous responsibility of scanning the evidence after the prosecution closes its case, to trace the incriminating circumstances in the evidence against the accused and to prepare relevant questions to extend opportunity to the accused to explain any such circumstance in the evidence that could be used against him.
“Once a written statement is filed by the accused under sub- section (5) of section 313, Cr. P.C. and the court marks it as an exhibit, such statement must be treated as part of the accuseds statement under sub-section (1) read with sub-section (4) thereof. In view of the latter sub-section, the written statement has to be considered in the light of the evidence led by the prosecution to appreciate the truthfulness or otherwise of such case and the contents of such statement weighed with the probabilities of the case either in favour of the accused or against him”, the Bench stated.
Declaring that this was a case where it did not appear from the records that the written statement engaged the attention of both the trial court as well as the High Court, the Bench opined that though there was no specific admission by the appellant that he had stabbed the victim or the other injured witnesses, reading of the contents of the appellant’s written statement did not evince an act of retaliation spurred by sudden provocation resulting in a quarrel as well as a scuffle which ultimately cost the victim his life and left some others injured.
The Bench also noticed that it was in a sudden quarrel, which could have been provoked by the victim and the witness that blows followed from each side. Most importantly, the circumstances in which the incident occurred did clearly negate any suggestion of premeditation in mind.
Noting that Exception 4 to section 300, IPC ordains that culpable homicide is not murder if it is committed without premeditation in a sudden fight in the heat of passion upon a sudden quarrel and without the offender having taken undue advantage or acted in a cruel or unusual manner, the Bench also observed that four requirements must be satisfied to invoke this Exception which include the facets that there must have been a sudden fight, there was no premeditation; the act was done in a heat of passion; and the assailant had not taken any undue advantage or acted in a cruel or unusual manner.
As per the Bench, it couldnot be overlooked that while the victim was middle-aged, the appellant was in his late fifties. It was indeed improbable that in the presence of the wintnesses, the appellant wielding a weapon like a knife would come to the spot with an intention to commit the offence of murder overpowering all of them without any sufficient reason or provocation.
The Top Court observed that the trial court lacked in objectivity by not examining the facts and circumstances as to whether the situation was such as is likely to reasonably cause an apprehension in the mind of the appellant that there was imminent danger to his body, of either death or grievous hurt being caused to him, if he did not act in private defence. To impute the intention to cause death or the intention to cause that particular injury, which proved fatal, in these circumstances seems to be unreasonable, the Bench added.
Noting that this was not a case where the appellant could be convicted for murder of the victim, the Bench held that it would be proper to convict the appellant under section 304, Part II, IPC.
However, considering the fact that the appellant had suffered imprisonment for more than nine years and he was presently in his late sixties, the Bench considered incarceration for such period as adequate punishment while ordering that the appellant shall be released from custody forthwith, unless required in connection with any other case.
Read Order: SARABJOT KAUR Vs PARDEEP SINGH
LE Correspondent
Chandigarh, March 7, 2023: While considering a case where the petitioner-wife was seeking modification of an order of the Family Court, the Punjab and Haryana High Court has observed that in view of the fact that petitioner was not awarded interim maintenance, the Family Court should thus determine the amount of final maintenance after considering change in facts and circumstances, as alleged by the petitioner.
The petitioner, through the instant petition was seeking modification of order dated May 11, 2022 whereby Principal Judge Family Court, Jalandhar had dismissed application of the petitioner seeking interim maintenance. Justice Jagmohan Bansal disposed of the instant petition by observing that this Court, at this stage, cannot grant interim maintenance considering the alleged changed status of the petitioner.
The petitioner, through the instant petition was seeking modification of order dated May 11, 2022 whereby Principal Judge Family Court, Jalandhar has dismissed application of the petitioner seeking interim maintenance.
It was the case of the petitioner that at the time of filing affidavit before the Family Court, the petitioner was having a job as a Billing Clerk and she was getting Rs. 7000 per month, however, she had lost her job and at present she had no source of income. The respondent was running a business of sale and purchase of garments in the heart of the city and was earning more than Rs. 30,000 per month. In view of the same, it was contended that the Family Court did not grant even single penny to the petitioner which would drive her to destitution and vagrancy.
After considering the submissions, the Court stated that from perusal of order passed by Family Court, it was quite evident that petitioner in her affidavit had stated that her monthly income is Rs. 7000. As per the petitioner, the situation changed because she lost her employment.
There was no documentary evidence of income of respondent though the petitioner was claiming that husband of the petitioner was earning more than Rs. 30,000 per month as he was running business of trading of garments in the heart of the city, the Court noted.
In furtherance of the same, the Court noted that the Family Court passed an interim order and this Court, at this stage, cannot grant interim maintenance considering alleged changed status of the petitioner.
“It is the Family Court which can look into the facts and circumstances or changed facts and circumstances before coming to a conclusion in one or another way”, the Court further remarked.
Thus, this Court observed that in view of the fact that petitioner was not awarded interim maintenance, the Family Court was thus requested to determine amount of final maintenance after considering change in facts and circumstances, as alleged by the petitioner.
The petition was accordingly disposed of.
Read Order: ZILE SINGH VS STATE OF HARYANA AND ANOTHER
Mansimran Kaur
Chandigarh, March 7, 2023: In a criminal case arising out of an FIR registered on the statement of petitioner Zile Singh under Section 279/304-A IPC where the accused was acquitted by the Court of the Additional Chief Judicial Magistrate, the Punjab and Haryana High Court has observed that an appeal filed by the ‘victim’ against order of acquittal in a State case, which is instituted in respect of cognizable offence, is maintainable before the court of Sessions.
A Single-Judge Bench of Justice Deepak Gupta allowed the present revision by observing that the issue as to where the jurisdiction will lie to entertain the appeal against acquittal in a State case, is not res integra.
In a criminal case arising out of a FIR dated August 4, 2009 registered on the statement of petitioner Zile Singh, under Section 279/304-A IPC, accused Subhash was acquitted by the Court of the Additional Chief Judicial Magistrate, through judgment dated September 13, 2011.
Aggrieved by the said acquittal, Zile Singh, the complainant of the FIR and the father of the deceased filed Criminal Appeal before the Court of Sessions.Through an order dated February 21, 2013, the said appeal was dismissed by the Additional Sessions Judge, on two grounds, firstly, that it was barred by limitation and secondly, that it was not maintainable before the Court of Sessions. Against the said order of the Additional Sessions Judge, this revision was filed.
After considering the submissions from both the sides, the Court stated that it found merit in the revision. “The issue as to where the jurisdiction will lie to entertain the appeal against acquittal in a State case, is not res integra”, the Court further stated.
Reliance was placed on the judgment in M/s Tata Steel Ltd. Vs. Atma Tube Limited.
In view of the same, the Court noted, “It is, thus, clear that an appeal filed by the ‘victim’ against order of acquittal in a State case, which is instituted in respect of cognizable offence, is maintainable before the court of Sessions; and in case, any such appeal is filed by the state against that very order, it shall also be entertained and/or transferred to the same Sessions Court”.
In view of this legal position, present revision was accepted.
Read Order: PARDEEP KUMAR VS. KAPOOR SINGH & ANOTHER
LE Correspondent
Chandigarh, March 7, 2023: The Punjab and Haryana High Court has confirmed the reasoning of the Motor Accident Claims Tribunal that liability under Section 163-A of the Motor Vehicles Act, 1988 is on the owner of the vehicle, so a claimant cannot be both, a claimant, as well as recipient of the claim.
Present appeal was preferred by the appellant-claimant seeking enhancement of compensation of Rs 1,00,000 awarded by Motor Accident Claims Tribunal, Rohtak. A Single-Judge Bench of Justice Nidhi Gupta dismissed the instant appeal by observing that it failed to find any error in the reasoning recorded by the Tribunal.
Accident in question took place as a stray animal came on the road and deceased lost control and offending vehicle ran into a dig on left side of the road and struck into adjoining electricity pole, as a result of which all the occupants of the car received injuries and when they were taken to PGIMS, Rohtak, Arun who was another occupant of the car, and Amit Sindhu, present deceased and driver of the car, were declared dead.
It was the case that the appellant deceased was 23 years of age at the time of death and earning Rs 39, 000 per annum and appellant was totally dependent on income of deceased and therefore, deduction of 1/3rd ought to have been made.
After considering the submissions from both the sides, the Court reiterated the finding of the Tribunal that in the present case admittedly, the deceased had borrowed the offending vehicle from his father who was the insured.
In view of the same, the Tribunal by relying on the judment of Ningamma Vs. United India Insurance Company Limited, stated “compensation is payable to a third party involved in the accident, as in the present case it is not a case of third party, rather, deceased was son of owner of the offending vehicle and therefore, a person cannot be both, a claimant as also recipient with respect to the claim, the Bench held.
The Court reaffirmed, “...liability under Section 163-A of the Act is on the owner of the vehicle, so a claimant cannot be both, a claimant, as well as recipient of the claim”.
Further, as per judgment of the Hon’ble Supreme Court in above said case of Ningamma (supra), compensation is payable to a third party. However, in the present case, since borrower of the vehicle was the son of the owner of the vehicle, and the borrower steps into the shoes of the insured therefore, he cannot be stated to be third party, the Bench added.
Hence, in view of such observations, the Court failed to find any error in the reasoning recorded by the Tribunal. The appeal was thus accordingly dismissed.
Read Order: M/S S K ENGINEERING GSTIN v. COMMISSIONER STATE GOODS AND SERVICES TAX AND ORS
Tulip Kanth
Dehradun, March 7, 2023: In a case where the assessee stated that due to lapse on the part of Tax Consultant, GST returns could not be filed in time, the Uttarakhand High Court has given the liberty to the assessee to move an application for revocation of cancellation order.
The petitioner, a civil Contractor,who is registered under Uttarakhand Goods and Services Tax Act, 2017 had approached the Bench of Justice Manoj Kumar Tiwari after his GST registration was cancelled by State Tax Officer, Haridwar, for non-submission of GST returns for six consecutive months.
It was the petitioner’s case that due to lapse on the part of Tax Consultant engaged by petitioner, GST returns could not be filed in time.
The Bench took into account the argument of the petitioner that identical controversy had been decided by this Court in WPMS No. 501 of 2023.
“ In view of consensus between the parties that matter is covered by the order passed in WPMS No. 501 of 2023, present writ petition is also decided in terms of the said order”, the Bench held while observing that the petitioner shall be at liberty to move an application for revocation of cancellation order, under Section 30 of Central GST Act, within two weeks.
The Bench also ordered that the petitioner shall also furnish all the GST returns which he failed to submit and he will also deposit the outstanding tax and dues of Goods and Service Tax with his application.
If he makes the application within stipulated time, the Competent Authority shall consider petitioner’s application and pass appropriate order as per law, within four weeks thereafter, the Bench further added.
Read Order: PRINCE SHARMA V. ASHWANI KUMAR KAUSHAL AND OTHERS
LE Correspondent
Chandigarh, March 7, 2023: While considering a claimant’s appeal challenging the award passed by the Rupnagar Motor Accident Claims Tribunal, the Punjab and Haryana High Court has directed the respondent-Insurance Company to award a compensation of Rs 7.64 lakh alongwith 6% interest.
A Single-Judge Bench of Justice Ritu Tagore allowed the present appeal and said, “The Tribunal while assessing loss of income to the claimant failed to account for future prospects, which the claimant would have gained with the passage of time.”
The present appeal was filed by the claimant-injured, challenging the award dated December 13, 2016 passed by the Motor Accident Claims Tribunal seeking enhancement of compensation.
Prince Sharma, claimant, sustained injuries in a motor vehicular accident caused by the first respondent - driver while driving the offending vehicle in a rash and negligent manner.
Claimant-injured filed a petition under Section 166 of the Motor Vehicles Act, 1988 claiming his age as 27 years and his occupation as a gardener in Municipal Council, Nangal Township at a salary of Rs 6,000 p.m. He claimed that he had also been working as a part time driver on a private basis, with a cumulative income of about Rs 20,000 per month from both his jobs at the time of the accident.
In pursuance of notice, respondents (driver, owner and insurer) filed their respective pleadings, denied their involvement in the accident and consequently their liability to pay compensation.
The Tribunal through the impugned award recorded a positive finding in favor of the claimant and against the first respondent -driver on the issue of rash and negligent driving of the offending vehicle and awarded a sum of Rs 3, 95,165 as compensation along with interest @ 9 % annum from the date of filing of the petition till realization and made all the respondents jointly and severally liable to pay compensation.
Aggrieved with the award of the Tribunal, the claimant preferred this appeal for enhancement of compensation.
After considering the submissions from both the sides, the Court noted that the Tribunal while assessing loss of income to the claimant failed to account for future prospects, which the claimant would have gained with the passage of time.
Reference was made to the case of Sidram vs. The Divisional Manager, United India Insurance Co. Ltd. and another, wherein the Top Court reaffirmed the well settled position of law that even in cases of permanent disablement incurred as a result of a motor-accident, the claimant can seek, apart from compensation for future loss of income, amounts for future prospects as well.
Further reference was also made to the judgment in National Insurance Company Limited vs. Pranay Sethi and others.
The High Court thus directed the respondent-company to pay the claimant- appellant total compensation (as enhanced) at Rs.7, 64,245 at the rate of 6% interest per annum from the date of filing of the claim petition till its realization, within a period of two months from the date of receipt of certified copy of this judgment, with the Tribunal.
Thus, the appeal was accordingly allowed.
Read Order: M/s. Ride A Cycle Foundation v. The ITO
LE Correspondent
New Delhi, March 6, 2023: The Bangalore Bench of the Income Tax Appellate Tribunal has set aside the order of the CIT(A) and remanded the issue of applicability of proviso to section 2(15) of the Income Tax Act to the CIT(A) for fresh consideration, after affording the assessee opportunity of being heard.
Keeping in mind the principle that substantive justice should prevail over technicalities, the Vice President-N. V. Vasudevan condoned the delay of 20 days in filing the appeal by the assessee.
The Assessee, a registered trust enjoying the benefit of registration under section 12A of the Income Tax Act, 1961by the CIT(A), Karnataka II, Bengaluru has been creating awareness for the society about the virtues of using cycle and to make cycle as a popular mode of transportation that would lessen global warming, air pollution. The assessee had the object of making people understand the need for an uncontaminated environment which in turn will lead to good quality of health.
The assessee filed a return of income declaring Nil income after claiming exemption under section 11 of the Act. The AO noticed that the assessee organizes trips and camps by way of “Cycle Rally” to tourist places such as Kalapetta, Ooty, Palakkad,, Valparai, Mysore, etc., and the participants pay for the cycle rides and for food and lodgings at designated places.
According to the AO, the assessee was doing an activity which was akin to trade or business and the receipts from the participants were taken as donation but in reality, they were fees for participation in rallies disguised as donations.
The AO therefore concluded that the assessee was hit by the proviso to section 2(15) and therefore the excess of receipts over expenditure was liable to be taxed and the assessee was not entitled to the benefit of exemption under section 11 of the Act.
Aggrieved by the order of the AO, assessee filed appeal before CIT(A). Assessee contended before CIT(A) that its receipts were in the nature of donation and voluntary and there was nothing brought on record by the AO to show that the donations were not in fact voluntary.
The CIT(A) decided to proceed the appeal ex-parte observing that the assessee failed to explain as to how the activity undertaken by the assessee was not commercial or charitable. Accordingly, the appeal of the assessee was dismissed by the CIT(A).
Aggrieved by the order of the CIT(A), the assessee preferred the present appeal before the Tribunal.
The Bench opined that the notices were issued to the assessee on several occasions. The assessee had requested for adjournment and when the case was adjourned, on that date also, the assessee did not appear before CIT(A) and the case was adjourned to a later date on which also neither the assessee nor his Authorized Representative appeared before CIT(A).
The Bench was of the view that the order of the CIT(A) had to be set aside and the issue remanded to CIT(A) for a decision on merits.
“The applicability of the proviso to 2(15) of the Act cannot be on the basis of the default of the parties but should be on the basis of facts and circumstances of each case”, the Bench held.
As per the High Court, the donations received by the assessee which was taken as receipts were prima facie donations and there was no material to show that the donations were not voluntary. Both the AO and the CIT(A) had called upon the assessee to demonstrate as to how the donations were voluntary and thereby the assessee was called upon to prove a negative fact.
In such circumstances, the bench was of the view that the assessee should have an opportunity of hearing before the CIT(A) who can appreciate as to how the proviso to section 2(15) of the Act will operate on the facts and circumstances of the given case.
Read Order: SMT. JYOTI AND OTHERS VS MUKESH KUMAR AND OTHERS
Mansimran Kaur
Chandigarh, March 6, 2023: While dismissing the appeals instituted by both the claimant and the insurance company against the impugned order passed by the Motor Accident Tribunal, the Punjab and Haryana High Court has stated that the claim awarded by the Tribunal was fair and reasonable and did not need any interference.
A Single-Judge Bench of Justice H.S Madaan dismissed the instant appeals on account of being meritless.
The factual matrix of the case was such that Smt. Jyoti, widow aged 29 years, Bhavishya, minor son aged about 01 year and Santosh Devi, aged 55 years mother of Suresh Kumar, an unfortunate victim of a road side accident had brought a claim petition under Section 166 of the Motor Vehicles Act, 1988 against respondents i.e. Mukesh Kumar-driver, Naveen Kumar owner and New India Assurance Company Ltd.
As per case of petitioners/claimants, on November 5, 2013, Suresh Kumar was returning on a motorcycle to his village and when he reached near Balvada hospital, Satnali in the meanwhile, the offending car being driven by the first respondent Mukesh Kumar in a rash and negligent manner came from opposite side and hit motorcycle of Suresh Kumar, as a result of which he fell down and suffered injuries.
The accident was witnessed by one Sukhbir and Anil Suresh Kumar was taken to General Hospital for treatment but after giving first aid, he was referred to RR Hospital, Delhi where he remained admitted, but on November 9, 2013 he expired on account of injuries suffered by him in the accident. The matter was reported to the police and an FIR was registered for offences under Sections 279, 337 and 304-A IPC.
The claimants thus brought the claim petition contending that the deceased was aged about 30 years at the time of accident. He was serving in the Indian Army, getting Rs.31, 000/- per month as salary.
After hearing arguments, the Motor Accidents Claims Tribunal, Narnaul awarded compensation of Rs.43,50,896/-; to the claimants along with interest @ 9% p.a from the date of filing of claim petition till actual realization.
Feeling aggrieved by such award passed by the Tribunal, the insurance company has approached this Court by way of filing an appeal.
The claimants on their part filed separate appeals.
After considering the submissions and going after the record, the Court noted that the main contention of the counsel for the appellant-insurance company was that on account of death of the deceased, the claimants had received monetary benefits which were required to be deducted from the compensation payable.
In view of the same, the Court reproduced the relevant paragraphs of the impugned award and in pursuance of the same, this Court was of the considered opinion that addition towards future prospects was also made and the deduction was also rightly made to the extent of 1/3rd. The compensation awarded was just fair and reasonable, the Court at the outset observed.
Hence, the Court stated that it failed to find any reason for enhancement or reduction of the compensation. Both the appeals were found to be without merit and were thus dismissed accordingly.
Read Order:CEMENT CORPORATION OF INDIA LTD Vs. ASSISTANT COMMISSIONER INCOME TAX CIRLE 5(2) ,NEW DELHI
LE Correspondent
New Delhi, March 6, 2023: The Delhi High Court has remitted a matter back to the Income Tax Appellate Tribunal after noting that Rule 24 of the ITAT Rules does not have the impediment of limitation, as is prescribed under Section 254 of the Income-Tax Act.
Referring to Rule 24 of the ITAT Rules, the Division Bench of Justice Rajiv Shakhdher and Justice Tara Vitastu Ganju asserted, “A perusal of the said Rule seems to plainly convey that if on the date fixed for hearing, or on any other date to which the hearing is adjourned, the appellant does not appear in person or through an authorized representative, when the appeal is called out for hearing, the Tribunal may dispose of the appeal on merits or otherwise, after hearing the respondent.”
This writ petition laid a challenge to the order passed by the Income Tax Appellate Tribunal. Via the said order, the Tribunal had dismissed the Miscellaneous Application whereby a prayer was made for recalling the order passed by the Tribunal.
The Tribunal dismissed the appeal preferred by the petitioner, on the ground of non-prosecution and noted that the petitioner had been served, and thus, no purpose would be served in issuing a fresh notice.
In the very same order, the Tribunal also observed that it would treat the appeal as not being admitted, and in this regard, the Tribunal had taken recourse to Rule 19 of the ITAT Rules. It was the petitioner's assertion the miscellaneous application was filed in 2018 which was dismissed in 2022.
The Tribunal had taken recourse to the provisions of Section 254 of the Act and had alluded to the fact that since rectification of mistake, apparent from the record, can be made within six months from the end of the month in which the concerned order was passed, the petitioner’s application for recall of the ordercould not have been entertained.
In this context, the Tribunal had fixed two points i.e., the date on which the petitioners miscellaneous application was filed i.e., September 24, 2018, and when the six-month period expired, commencing from the end of the month in which the order was passed i.e., July 31, 2018. Having noticed these dates, the Tribunal concluded that under Section 254 of the Act, it had no power to condone the delay qua the application for recall of its order, which was filed beyond six months.
As per the Bench, the application moved by the petitioner was not stricto sensu, moved with a view to rectify a mistake apparent from the record, or even to amend any order. The petitioner simply sought a recall of the order dated January 24, 2018, whereby the appeal was dismissed for non-prosecution.
“Therefore, in our opinion, the said provision was not the most apposite provision for adjudicating the petitioners application for recall of the order dated 24.01.2018, given the facts obtaining in the case”, the Bench held.
Referring to Rule 24, the Bench noted that the proviso appended to the Rule indicates that where an appeal has been disposed of on merits, and the appellant appears thereafter, the Tribunal shall set aside the ex parte order and restore the appeal, if it is satisfied that there was sufficient cause for his non-appearance.
“Although in the main part of Rule 24, the expression used is may, when read with the proviso appended thereto, it leads to the conclusion that if the Tribunal chooses to dispose of the appeal on merits or otherwise, after hearing the respondent in the absence of the appellant, and the appellant, thereafter, appears and shows sufficient cause for not appearing on the date when the appeal is disposed of, the Tribunal is obliged, in law, to set aside the order passed and restore the appeal”, the Bench added.
Besides this, the Tribunal is vested with incidental and ancillary powers which can be exercised in situations such as the one, the Bench noted.
While there was delay, the Bench noted that the appellant had furnished some reasons for explaining the delay. Broadly, the reasons given were that the notice of hearing issued by the Tribunal for the hearing on January 24, 2018 was misplaced, and did not reach the concerned officer of the petitioner, which according to the petitioner, was the primary cause for non-attendance on the said date.
Furthermore, as per the petitioner, it was unaware of the passing of the dismissal order dated January 24, 2018, and only came to know about the same only on February 5, 2018. The petitioner also contended that the inadvertent delay in filing the miscellaneous application was caused on account of the concerned persons in the Department being temporarily transferred to a plant outside Delhi, and some persons retiring during the relevant period.
Thus, on such grounds, the Bench remitted the matter to the Tribunal for disposal of the petitioner’s statutory appeal on merits.
Read Order: Anvil Cables Pvt. Ltd v. The State of Jharkhand and Ors
LE Correspondent
Chhattisgarh, March 6, 2023: The Jharkhand High Court has set aside an ex-parte revision order rejecting the TRAN-1 and directing the petitioner to refund excess ITC claimed amount along with penalty in a case where it was alleged that the Order was passed without considering the preliminary objection and without granting any opportunity of hearing.
The assessee had filed the petition before the Division Bench of Justice Aparesh Kumar Singh and Justice Deepak Roshan seeking a direction upon the concerned respondent authority to allow the petitioner to avail/utilize its excess Tax Deducted at Source (in short TDS) Credit amounting to Rs 1,19, 41, 937.36 available as on June 30, 2017 i.e. Pre Goods and Services Tax regime.
The petitioner, engaged in the manufacturing and selling of aluminum cable and conductor, has been one of the main dealers of the Jharkhand Bijli Vitran Nigam Limited (for short JBVNL). The JBVNL while releasing the payment of the petitioner used to deduct tax under section 45 of the JVAT Act by way of advance recovery.
Section 45 of JVAT Act deals with “Special Provision relating to Advance Recovery of Tax on Sales and Supplies to Governments and the other persons”, which include the Electricity Board. The said amount so deducted was liable for adjustment from the tax liability of the person from whose bills such deduction has been made.
Accordingly, the petitioner used to take credit of tax deducted and paid from his bills and remaining, if any, was being carried forward to next period as Tax Deducted at Source (TDS).
In September 2017, the petitioner filed its quarterly return for the period April 1, 2017 to
June 30,2017.
As per column 57 of the aforesaid return the total TDSfor the aforesaid period was Rs.2,59,26,991/-. After being adjusted from the VAT payable during the period and other adjustment the balance amounting to Rs.1,24,68,378.36 was auto populated in column 61 of the Return being “Excess Input Tax Credit to be C/F to next period”.
On July 1, 2017, the GST Law was implemented, wherein section 140(1) of the JGST Act, 2017 makes every person entitled to take in his electronic credit ledger credit of the amount of Value Added Tax and Entry Tax, if any, carried forward in the return relating to the period ending June 30,2017.
In order to take credit of the aforesaid amount, the petitioner filed statutory form i.e., GST TRAN-1 migrating Rs.1,19,41,397 from VAT regime to GST regime. The TRAN-1 filed by the petitioner was duly accepted by the respondent-Department and the petitioner was allowed to carry forward the amount deducted toward TDS under JVAT Act.
However, after lapse 2½ years the petitioner was in receipt of a notice granting opportunity of hearing to the petitioner in a revisional proceeding initiated under section 108 of the JGST Act suo-moto by the Commissioner.
Without considering the preliminary objection raised by the petitioner and ground mentioned therein and even without granting any opportunity of hearing, Joint Commissioner of State Tax (second Respondent)passed the Ex-Parte impugned order dated 30.07.2021 rejecting the TRAN-1 and directing the petitioner to refund excess ITC claimed amounting to Rs.1,19,41,937.86 along with penalty under section 73(9)@10% and interest @24%, total amounting Rs. 1,60,02,196.69.
The Bench referred to the judgment in W.P.(T) No. 2404 of 2020 wherein it was opined that proviso to section 140(1) of the JGST Act restricts the migration of credit, if the credit pertains to transactions which were prohibited under section 17(5) of the JGST Act in which no input tax credit is available.
As per the Bench, since the issue involved in this case was squarely covered by the judgment passed by this Court in M/s Subhash Singh Choudhry & other analogous matter, W.P.(T) No. 2404 of 2020, the impugned order passed in revision and Demand Notice had to be quashed and set aside.
Allowing the application, the Bench held that the amount, if any, recovered or paid should be refunded or adjusted for future liabilities.
Read Order: MANINDER DEEP SINGH MAHANT AND ANOTHER VS STATE OF PUNJAB AND OTHERS
Mansimran Kaur
Chandigarh, March 6, 2023: While dealing with a petition instituted by the petitioners on account of mismanagement of the Rawalpindi Self- supporting Cooperative Cinema Society Ltd., Ludhiana, the Punjab and Haryana High Court has passed an order of interim stay on any further sale or transaction of the assets of the Society.
A Single-Judge Bench of Justice Jaishree Thakur disposed of the instant petition by granting an interim stay in the present petition by restraining any further sale/ transfer in relation to the assets of the third respondent.
The Petitioner was the legal heir of Late Mahant Joginder Singh who was a member of Rawalpindi Self Supporting Cooperative Cinema Society Ltd. Late Mahant Joginder Singh executed Will dated November 8, 2011 by virtue of which the first petitioner was entitled to 1/5th of the share of Late Mahant Joginder Singh.
Petitioners were basically aggrieved by the inaction of Respondents(State Govt & Registrar of Co-operative Societies in Ludhiana) in looking into the capricious and unscrupulous activities of individuals who were running the third respondent-Society and constituted an Executive Committee of the third Respondent. The Executive Committee illegally converted the asset property to gain for themselves and caused wrongful loss to the members of the third respondent.
Subsequently, proceedings were initiated before the second respondent against the third respondent, however , the same were dismissed on the ground that the third respondent had re - registered itself under the Punjab Self- Supporting Co-operatives Society Act, 2006.
Thereafter, through order dated July 16, 2021,in civil suit, application for production of documents moved on behalf of the first petitioner was allowed. However, due to non- compliance with the said order, bailable warrants were issued against the President of the third respondent.
In pursuance of the same, revision petition was filed by the third respondent along with Smt Shabnam Chadha and Mr Rajinder Kaura. The said revision was disposed of.
Thereafter, on March 23, 2022, petitioner filed a criminal complaint against M/S Periwal Enterprises Pvt. Ltd. The third respondent was compelled to produce the documents before the Court of Civil Judge.
In the backdrop of these events, the petitioner was compelled to institute a petition under Article 226 and 227 of the Indian Constitution.
It was the case of the petitioner that Smt Shabnam Chadha & her husband Shri Harpreet Singh Chadha, who were members of executive committee of the third Respondent, never disclosed to members of the third respondent about their relationship with M/s Periwal Enterprises Pvt Ltd and thus violated the fiduciary trust placed in them in contravention of Section 43 of the Punjab Self Supporting Cooperative Societies Act, 2006.
It was further contended that the Sale Deed dated June 12, 2020 was executed by the third Respondent-a Self Supporting Society to a private juristic entity Ms Periwal Enterprises Pvt Ltd, which is in violation of section 10 of Punjab Self Supporting Cooperative Societies Act,2006. It was further submitted that there was a discrepancy of Rs 12 crores which were not reflected in any account of the Society, which itself would raise an issue of mismanagement.
It was argued that the property belonging to the respondent Society, which is a Self-Supporting Cooperative Society, is being sold to a Company which is not permissible.
After considering the submissions, the Court passed an order of interim stay on any further sale/transaction pertaining to the assets of the third respondent. Also time was granted to the respondents(State Govt & Registrar) to file their reply.
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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