Read Order: GLOBAL CREDIT CAPITAL LIMITED & ANR v. SACH MARKETING PVT. LTD. & ANR. [SC- CIVIL APPEAL NO. 1143 OF 2022]
Tulip Kanth
New Delhi, April 29, 2024: While confirming the view of the NCLAT that the amounts covered by security deposits under the agreements constituted a financial debt, the Supreme Court has asked the Resolution Professional to continue with the Insolvency process of the corporate debtor.
In this case, there were two agreements of April 1, 2014 and April 1, 2015 between the corporate debtor and the first respondent in the form of letters. By the agreement, the corporate debtor appointed the first respondent as a Sales Promoter to promote beer manufactured by the corporate debtor at Ranchi (Jharkhand) for twelve months. One of the conditions incorporated by the corporate debtor was that the first respondent should deposit a minimum security of Rs.53,15,000/- with the corporate debtor, which will carry interest. The terms of the 2015 agreement/letter were identical, however, under the second agreement/letter, the corporate debtor was to pay the interest on Rs.32,85,850/- @21% per annum.
The Oriental Bank of Commerce invoked the provisions of Section 7 of the IBC against the corporate debtor. The National Company Law Tribunal (NCLT) admitted the application. The second respondent was appointed as the Interim Resolution Professional. Initially, the first respondent filed a claim with the second respondent as an operational creditor but the same was rejected.
Therefore, an application was moved before the NCLT under sub-section (5) of Section 60 of the IBC by the first respondent seeking a direction to the second respondent to admit the first respondent's claim as a financial creditor but the same was rejected. Aggrieved by the said order, the first respondent preferred an appeal before the NCLAT whereby it was held that the first respondent was a financial creditor and not an operational creditor. The NCL approved the resolution plan of M/s. Kals Distilleries Pvt. Ltd. (Respondent no.6) in the CIRP of the corporate debtor.
In another Civil Appeal, the second respondent was the resolution professional. The corporate debtor was the same as in the other appeal. The fifth respondent had provided financial assistance to the corporate debtor of Rs.75,00,000. The fourth respondent provided financial assistance to the corporate debtor of Rs.1,62,00,00. The first respondent advanced a sum of Rs.25,00,000 to the corporate debtor and the third respondent advanced a sum of Rs.1,00,000.
The Resolution Professional rejected the claims of the four creditors as financial creditors. Therefore, they filed separate applications before the NCLT but those were rejected. In the appeals preferred by them before the NCLAT, the NCLAT allowed the appeals by relying upon its judgment, which was the subject matter of challenge.
The Bench made it clear that where one party owes a debt to another and when the creditor is claiming under a written agreement/arrangement providing for rendering service, the debt is an operational debt only if the claim subject matter of the debt has some connection or co-relation with the service subject matter of the transaction. The written document cannot be taken for its face value. Therefore, it is necessary to determine the real nature of the transaction on a plain reading of the agreements.
“Therefore, there is no manner of doubt that there is a debt in the form of a security deposit mentioned in the said two agreements”, it held.
As there was no clause regarding forfeiture of the security deposit or part thereof, the corporate debtor was liable to refund the security deposit after the period specified therein was over with interest @21% per annum. It was opined that since the security deposit payment had no correlation with any other clause under the agreements, as held by the NCLAT, the security deposit amounts represented debts covered by sub- section (11) of Section 3 of the IBC.
“The reason is that the right of the first respondent to seek a refund of the security deposit with interest is a claim within the meaning of sub- section (6) of Section 3 of the IBC as the first respondent is seeking a right to payment of the deposit amount with interest. Therefore, there is no manner of doubt that there is a debt in the form of a security deposit mentioned in the said two agreements”, it added.
It was further observed that a transaction has been defined in sub-section (33) of Section 3 of the IBC, which includes an agreement or arrangement in writing for the transfer of assets, funds, goods, etc., from or to the corporate debtor. In this case, there was an arrangement in writing for the transfer of funds to the corporate debtor, therefore, the first condition incorporated in clause (f) is fulfilled.
In light of such factual and legal aspects and considering the letter mentioned as well as the financial statements of the corporate debtor, the Bench held that the amount raised under the said two agreements had the commercial effect of borrowing as the corporate debtor treated the said amount as borrowed from the first respondent.
Concurring with NCLAT’s view that the amounts covered by security deposits under the agreements constituted financial debt, the Bench enumerated its conclusion as follows:
- There cannot be a debt within the meaning of sub- section (11) of section 5 of the IB Code unless there is a claim within the meaning of sub-section (6) of section 5 of thereof;
- The test to determine whether a debt is a financial debt within the meaning of sub-section (8) of section 5 is the existence of a debt along with interest, if any, which is disbursed against the consideration for the time value of money. The cases covered by categories (a) to (i) of sub-section (8) must satisfy the said test laid down by the earlier part of sub-section (8) of section 5;
- While deciding the issue of whether a debt is a financial debt or an operational debt arising out of a transaction covered by an agreement or arrangement in writing, it is necessary to ascertain what is the real nature of the transaction reflected in the writing; and
- Where one party owes a debt to another and when the creditor is claiming under a written agreement/ arrangement providing for rendering service, the debt is an operational debt only if the claim subject matter of the debt has some connection or co- relation with the service subject matter of the transaction.”
Consequently, the Bench upheld the NCLAT's view, dismissed the appeals and ordered the Resolution Professional to continue with the CIRP.
Read Order: SANJAY MARUTI JADHAV & ANR v. AMIT TATOBA SAWANT [SC- CIVIL APPEAL NO. 72 OF 2012]
Tulip Kanth
New Delhi, April 29, 2024: In a case of illegal dispossession of the respondent by the appellants from the property which was given to the respondent under a leave and licence agreement, the Supreme Court has dismissed the appeals challenging the judgments of the High Court and Trial Court ruling in favour of the respondent.
The appellants, in this case, are the owners of the property in question. Under the leave and licence agreement, the property in question was given to the respondent. However, the appellants were alleged to have illegally, unauthorizedly and by use of force, evicted the respondent. Within six months of dispossession, the respondent filed a suit under Section 6 of the Specific Relief Act, 1963.
The Trial Court decreed the suit after disbelieving the contentions raised by the appellants regarding voluntary handover of possession, relying upon a possession receipt. The appellant’s plea regarding the suit being not maintainable under Section 6 of the Act was also rejected.
The appellant preferred a revision before the High Court, which has since been dismissed by the impugned order. The High Court also found that the plea of maintainability of the suit raised by the appellant was without any merit and further concurred with the finding recorded by the Trial Court regarding the illegal dispossession of the respondent.
“Such concurrent findings, based upon the evidence on record and also being findings of fact, we do not find any merit in this appeal”, the Division Bench of Justice Vikram Nath & Justice Satish Chandra Sharma held.
Thus, the appeal was dismissed.
Read Order:THE STATE OF ODISHA v. NIRJHARINI PATNAIK @ MOHANTY & ANR [SC- CRIMINAL APPEAL NO. 2270 OF 2024]
Tulip Kanth
New Delhi, April 29, 2024: While observing that the intentional undervaluation of land and the strategic involvement of accused respondents in manipulation of the GPA highlighted a clear scheme to misappropriate government property, the Supreme Court has set aside the Orissa High Court’s judgment whereby the SDJM’s order for taking cognizance of offence against the respondents, was quashed.
The incident pertains to the year 2005, when an FIR was lodged by the then Special Secretary to the Government in the General Administration (G.A.) Department, alleging a widespread conspiracy involving the forgery of documents to facilitate the illegal transfer of valuable government land to private entities. Following the FIR, the Police initiated investigations that culminated in a chargesheet filed against ten individuals, including the present respondents, accusing them of engaging in a criminal conspiracy under sections 420, 467, 468, 471, 477A, 120B and 34 IPC.
The chargesheet detailed that the respondents, along with other co-conspirators, allegedly utilized forged documents such as Hata Patas, Ekpadia, and rent receipts to manipulate judicial processes and revenue records to illegally acquire government lands. These documents were purportedly produced in various revenue and civil courts to secure favorable orders, which were then used to substantiate false claims of ownership over the disputed properties.
Central to the allegations was a transaction involving the sale of land situated in the heart of Bhubaneshwar, initially leased to one Kamala Devi under dubious circumstances before the independence of India. After her demise, her legal heir, Kishore Chandra Patnaik, continued to assert rights over the property based on this lease, which had been previously declared non-genuine by the competent authorities.
In the year 2000, Kishore Chandra Patnaik, through a General Power of Attorney granted Anup Kumar Dhirsamant (accused no. 5), a real estate developer, the authority to manage and dispose of the property. It was alleged that this GPA was later found to be interpolated towards transactions favourable to the Respondents and the other accused persons. Following the interpolation, Dhirsamant executed sales of substantial portions of the land to the respondents at rates grossly undervalued, as per the market rates at the time and transactions that were finalized without proper scrutiny of the title's legitimacy or the GPA's authenticity.
In 2015, the SDJM, Bhubaneshwar passed an order of cognizance for offence u/s 420, 467, 468, 471, 477(A), 120(B) and 34 IPC and issue of process against the Respondents and the other accused persons which was challenged by the Respondents before the Orissa High Court. This appeal,by the State of Orissa, arose out of the judgment of the High Court quashing the order passed by the SDJM, Cuttack for taking cognizance of offences.
The Division Bench of Justice Vikram Nath & Justice Prashant Kumar Mishra opined that the impugned order of the High Court merited reconsideration. The investigation into Respondent No. 1 (accused no. 7) and Respondent No. 2 (accused no. 10) revealed their critical roles in the misuse of GPA and subsequent property transactions, presenting a strong prima facie case for further examination.
Initially, Kishore Chandra Patnaik granted a GPA to M/s Millan Developer and Builders Pvt. Ltd., represented by Anup Kumar Dhirsamanta. This GPA was registered outside the proper jurisdiction by including a small, unrelated parcel of land to falsely extend the Sub-Registrar of Khandagiri's authority. This setup was key to the subsequent illegal activities.
The manipulation of the GPA where specific terms were altered to misrepresent the authority granted, was carried out with the help of a junior clerk (accused no.3). This act of forgery was a deliberate attempt to circumvent the legal procedure for transferring property.
It was noted that following this forgery, extensive lands were sold at significantly lowered values. Specifically, lands in the heart of Bhubaneswar city were acquired for as little as Rs 9,000 per acre, whereas the prevailing market rates exceeded Rs. 50 lakhs per acre.
“Such drastic undervaluation raises substantial questions regarding the intent behind these transactions, indicative of a deliberate scheme to evade appropriate stamp duties and registration fees, causing considerable loss to the state”, it said while also adding that part of this land was bought under suspicious conditions by Respondent No. 1 and accused no.8 in transactions managed by accused no. 2, who was temporarily in charge of the Sub-Registrar's office.
“The intentional undervaluation of this land and the strategic involvement of Respondent No. 1, in conjunction with the revocation of the GPA due to its fraudulent tampering, highlight a clear scheme to misappropriate government property and incur losses upon the public exchequer”, the Bench held.
The Top Court stated that Respondent No. 1, who is the wife of Respondent No. 2, the Managing Director of M/s Z Engineer Construction Pvt. Ltd., was central to the planning and execution of these transactions. Both respondents, along with their connections in the Real Estates Developers Association and their familiarity with key figures in the real estate sector, played pivotal roles in this conspiracy. Their professional positions and industry influence were misused to facilitate and conceal these transactions.
“This Court believes that dismissing the case at the preliminary stage, especially when linked to a broader pattern of similar frauds involving government lands as part of a larger conspiracy, risks undermining the integrity of multiple ongoing investigations and judicial processes. Such a decision would be detrimental to the investigation of similar fraudulent schemes against public assets”, the Bench asserted.
Thus, allowing the appeal, the Bench ordered, “As the FIR is of the year 2005, the Trial Court is directed to decide the trial expeditiously.”
Read Order:ANIRUDDHA KHANWALKAR v. SHARMILA DAS & OTHERS [SC- CRIMINAL APPEAL NO. 2272 OF 2024]
LE Correspondent
New Delhi, April 29, 2024: In a case of cheating where the respondent-woman married the appellant by showing a fake decree of divorce, the Supreme Court has restored the Magistrate’s order directing issuance of process against her and two other women for the offence punishable under Section 420 read with Section 120-B, IPC.
The facts as available on record were that the marriage of the appellant was solemnized with the respondent no.1 in 2018 in the presence of the respondent nos. 2 and 3. Having come to know that on the date, the respondent no.1 had solemnized marriage with the appellant, she was already married and had not obtained divorce from her first husband, the appellant filed a petition under Section 11 of the Hindu Marriage Act, 1955 before the Principal Judge, Family Court, Shivpuri (M.P.) seeking annulment of marriage between the appellant and the respondent no.1.
Subsequently, the appellant preferred a complaint under Sections 495, 420, 468, 471 and 506 read with Section 34, IPC against the respondent nos.1, 2, and 3 in which the Magistrate directed issuance of process against the respondent no.1 for the offences punishable under Sections 494 and 420 read with Section 120-B, IPC, and against the respondent nos. 2 & 3 for the offence punishable under Section 420 read with Section 120-B, IPC.
The aforesaid order was impugned by the accused persons/respondent nos. 1 to 3 by filing Revision Petition which was partly allowed by the Sessions Court. The appellant challenged the order of Sessions Court before the High Court. The same was upheld. It was against the aforesaid two orders, the appellant approached the Top Court.
The appellant submitted that both the parties namely the appellant and the respondent no.1 came in contact through a matrimonial site and the fact that respondent no.1 was earlier married was even disclosed by her on the matrimonial site.
At the time of meeting the appellant was shown a smudged copy of the divorce order but the date could not be seen clearly and it was stated that the order was pending signatures of the Judge It was also submitted that the respondents dishonestly misrepresented that they were not financially well, and thereby induced the appellant to part with Rs 2 lakh and bear the entire expenses of the marriage.
The appellant had also submitted that when respondent no.1 visited the doctor for a checkup, she was found to be pregnant. She wanted to undergo an abortion, but when confronted by the appellant, the reason she gave was that she had not yet obtained divorce from her previous marriage and the document which was shown to him on mobile phone was forged. It was argued that this shows that the consent for marriage was obtained dishonestly.
The Division Bench of Justice C.T. Ravikumar & Justice Rajesh Bindal noted that the respondents had shown to the appellants an unclear photocopy of the decree of divorce which was believed to be true. On 11.03.2018, the appellant gave his consent for the marriage and the date was fixed.
The respondents pointed out that their financial condition was not good to come to Gwalior for the marriage along with their other relatives. As a result, the appellant booked tickets for the respondents and their relatives from Visakhapatnam to Gwalior and vice-versa, and also gave Rs 2 lakh cash to the respondents as expenditure for marriage.
It was observed that when the appellant was told that she is yet to get divorce from her previous husband, it was a shock of life for the appellant. It was nothing else but cheating by showing a fake decree of divorce. It was for this reason only that the respondent no.1 wanted to get the pregnancy aborted.
“The appellant felt cheated. When he was told that he would take action against the respondents, he was threatened with criminal cases of various matrimonial offences, which he claimed to have been filed”, the Bench said.
As per the Bench, the Sessions Judge failed to appreciate the fact that certain events had taken place thereafter, namely, apprising the appellant about the decree of divorce having been passed and showing the forged copy thereof to him on mobile. The Sessions Court had considered the revision against the summoning order as if after trial the findings of conviction or acquittal was to be recorded. It was a preliminary stage of summoning.
“For summoning of an accused, prima facie case is to be made out on the basis of allegations in the complaint and the pre-summoning evidence led by the complainant”, the Bench said while further adding, “...in our opinion the approach of the Learned Sessions Court and the High Court in setting aside the summoning order against the accused persons i.e. respondent nos.1,2 and 3 under Section 420 read with Section 120-B IPC is not legally sustainable.”
Noting that a prima facie case was made out for issuing process against the respondents to face trial for the offence punishable under Section 420 read with Section 120-B, IPC, for which they were summoned, the Bench allowed the appeal and restored the order of the Magistrate.
Read Order: Shri Mallikarjun Devasthan, Shelgi v. Subhash Mallikarjun Birajdar and others [SC- Civil Appeal Nos. 5323-5324 of 2024]
LE Correspondent
New Delhi, April 29, 2024: The Supreme Court has allowed the civil appeals filed against the judgment of the Bombay High Court invalidating the acceptance of Change Reports in relation to the Vahiwatdar (Administrator) and Trustees of the public Trust, Shri Mallikarjun Devasthan in Maharashtra’s Shelgi. The Top Court opined that when failure to file a Change Report would not be fatal in itself, the delay in filing a Report cannot automatically impact the assumption of office by a Vahiwatdar.
The Division Bench of Justice A.S. Bopanna and Justice Sanjay Kumar was considering the issue regarding the acceptance of Change Reports in relation to the Vahiwatdar (Administrator) and Trustees of Shri Mallikarjun Devasthan, Shelgi, a Public Trust, is in issue. The Bombay High Court had invalidated such acceptance and remanded the matters to the Deputy Charity Commissioner, Solapur Region, Solapur, for consideration afresh.
It was brought to the Court’s attention that the orders of remand had not been acted upon owing to the pendency of cases. Further, in terms of the High Court’s directions, the Vahiwatdar and the Trustees, whose names were already entered in the records, were continuing to administer the Trust as on date.
The factual background of the case was that by an application dated 26.05.1952, Mallikarjun Mahalingappa Patil applied for registration of Shri Mallikarjun Devasthan, Shelgi, as a Public Trust, under Section 18 of the Bombay Public Trusts Act, 1950, now known as Maharashtra Public Trusts Act, 1950. The object of this Trust was the upkeep and maintenance of Shri Mallikarjun Temple at Shelgi, North Solapur Taluka. Shri Mallikarjun Devasthan, Shelgi, was accordingly registered as a Public Trust. The mode of succession of managership and trusteeship, as provided in the application, was that Mallikarjun Mahalingappa Patil was to be the Vahiwatdar of the Trust and the eldest male member of his family was to succeed him. Further, the Vahiwatdar was also empowered to co-opt others, if and when necessary.
Mallikarjun Mahalingappa Patil passed away in the year 1992 and his eldest son, Ashok Mallikarjun Patil, became the Vahiwatdar of the Trust. Thereafter, Ashok Mallikarjun Patil died on 16.02.1997 and his brother, Jagdishchandra Mallikarjun Patil, took over. Jagdishchandra was the third son of Mallikarjun Mahalingappa Pati, but his elder brother, Satish Patil, the second son of Mallikarjun Mahalingappa Pati, had no interest in taking over as the Vahiwatdar of the Trust. Thus, Jagdishchandra assumed the role of Vahiwatdar though he was not the eldest male member in the family.
The Bench took note of the fact that the Act of 1950 was amended in the year 2017, whereby a proviso was added in Section 22(1). This proviso states that the Deputy or Assistant Charity Commissioner may extend the period of 90 days for reporting the change, on being satisfied that there was a sufficient cause for not reporting the change within the stipulated period, subject to payment of costs by the reporting Trustee to the Public Trust Administration Fund. However, no such proviso was in existence at the time Change Report was submitted by Jagdishchandra. Despite the same, he had filed a delay condonation application therewith praying for condonation of the delay on his part in filing the report.
The Top Court affirmed that the proviso added in Section 22(1) in the year 2017 is merely clarificatory in nature as is evident from the fact that it was added in Section 22(1) and it did not bring about any substantive change. It was made clear by the Bench that Section 5 of the Limitation Act, 1963, could be invoked for condonation of the delay in the submission of a Change Report.
The Joint Charity Commissioner, Pune, proceeded on the understanding that the delay had already been condoned. He passed an order to that effect and that order was never challenged by the applicants in Revision Application of the Birajdar family. Once that order attained finality, it was not open to them to ignore the same and reopen the issue of delay before the High Court. All the more so, when the issue of delay was never raised by them in Revision Application and was raised for the very first time only in the writ petition filed against the judgment passed therein.
“Therefore, when failure to file a Change Report would not be fatal in itself, the delay in filing a Change Report cannot automatically impact the assumption of office by a Vahiwatdar of a Trust. The very fact that a proviso was added in Section 22(1) of the Act of 1950, enabling the authority concerned to condone the delay in the filing of the Change Report, if sufficient cause is made out, clearly indicates that such delay is curable and the delay in filing a Change Report would not, by itself, entail non-acceptance or nullification of the changes in the Trust which are sought to be informed to the authorities with delay”, it added.
In this case, the devotees, all bearing the same family name Birajdar, who are raising objections seem to have a grievance with the very registration of the subject Trust, but their revision in that regard stood dismissed and appeared to have attained finality. The Bench observed that after such dismissal, in the capacity of being devotees of the Temple, they can have no legitimate grievance with regard to the succession to the post of Vahiwatdar of the subject Trust. More so, when the eldest male member in the founders family had no issue with it.
Though it had been contended on behalf of the devotees that the Trust was not taking proper care of the Temple, the Bench was of the view that such an issue cannot be a ground for them to challenge the Change Reports relating to the Vahiwatdar and the Trustees of the subject Trust.”Their repeated attempts to attack the Change Reports relating to assumption of office by the new administration of the Trust only indicates their inimical attitude thereto and to the family of the founder, Mallikarjun Mahalingappa Patil. All in all, much ado about nothing!”, the Bench said.
As per the Top Court, the High Court adopted a rather hyper technical approach by attaching so much importance to the delay in the submission of the first Change Report as it was a curable defect. Thus, setting aside the impugned judgment, the Top Court allowed the Civil appeals by accepting the change Reports.
Read Order: SHRIRAM MANOHAR BANDE v. UKTRANTI MANDAL & ORS [SC-CIVIL APPEAL NO. 5355 OF 2024]
Tulip Kanth
New Delhi, April 26, 2024: While reaffirming that non-communication of the acceptance does not make the resignation inoperative provided there is an acceptance before the withdrawal, the Supreme Court has upheld the decision of terminating the employment of an Assistant Teacher of a grant-in-aid school. The Top Court noted that the appellant tendered his resignation from the said post but withdrew it in a few days.
Respondent No.1, an educational society, runs Respondent No.2 i.e., Vasantrao Naik High School which runs on a grant-in-aid basis. The appellant came to be appointed as an Assistant Teacher and was discharging his duties accordingly. The appellant tendered his resignation from the said post on 10.10.2017. However, he withdrew his resignation by posting said letter on 3.11.2017. The appellant claimed that on 23.11.2017, he went to the school to resume his service, which is when he was denied signing on the muster roll by the Headmaster of Respondent No.2 and on 27.11.2017, the appellant received a letter stating that he was relieved from his service.
Against his termination, the appellant approached the Tribunal constituted under Section 8 of the Maharashtra Employees of Private Schools (Conditions of Service) Regulation Act, 1977, and MEPS Act and Rules by filing an appeal under Section 9 of the MEPS. It was contended that the communication issued by the respondents relieving him from service was illegal and all connected documents therewith were fabricated and merely an afterthought. It was also contended that he had withdrawn his resignation, and as such respondents could not have prevented him from joining his duties.
The Tribunal concluded that the appellant had indeed withdrawn his resignation lawfully and the respondents with a mala fide intent had fabricated the documents i.e., the resolutions of the Committee wherein the resignation was accepted. Accordingly, the Tribunal set aside the termination of the appellant, declaring it to be unlawfully done.
When the matter reached the Nagpur Bench of the Bombay High Court, it was observed that the MEPS Act and Rules do not stipulate the resignation would come into effect only after its acceptance is communicated to an employee. The High Court set aside the findings of the Tribunal. Being aggrieved by this Order, the appellant approached the Top Court.
The appellant’s case was there was non-compliance with the provisions of the MEPS Act and Rules made thereunder which provides for proper acceptance of a resignation. The appellant had strenuously contended that resolution dated 13.10.2017 passed by the management committee was a manufactured/fabricated document.
The Division Bench of Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar opined that a bare perusal of the pleadings in the written statement made it clear that the school committee upon receipt of the resignation letter had placed it before the executive committee, which in turn had resolved by resolution dated 13.10.2017 to accept the resignation and in the same resolution it was also resolved to be passed by the school committee, and accordingly the school committee had passed the resolution dated 14.10.2017. The document in question was placed before the Tribunal at the stage of evidence, which was an admitted fact. “Hence, it was wholly erroneous for the Tribunal to conclude that merely because the document and records were in possession of the management, they would have prepared or fabricated such record”, the Bench stated.
Noting that Section 7 of the MEPS Act provides for the three-fold requirements while tendering a resignation, the Bench also explained that Rule 40 of the Rules was introduced to safeguard the interests of the Management, i.e., to enable the management to make necessary arrangements to replace the existing employee.
In the present case, the employee had voluntarily tendered his resignation. Moreover, in the light of the intent and interpretation of the relevant Section 7 of MEPS and Rule 40 of the Rules, the Bench concluded that the High Court was right in holding that mere non- communication of acceptance of resignation to the employee would not render the termination invalid.
“At this juncture, it becomes necessary to point out that as per service jurisprudence, the employment is terminated from the date on which the letter of resignation is accepted by the appropriate authority. The appellant, in this case, tendered his resignation letter on 10.10.2017 and this resignation letter came be accepted on 14.10.2017, hence the date of termination of the services of the appellant for the purpose of adjudication would be 14.10.2017”, it added.
It was further observed that Section 7 of the MEPS Act and Rule 40 of the Rules do not impose any guidelines for acceptance of the resignation upon the management. As per the Bench, the contention raised by the appellant about withdrawal of resignation before communication of its acceptance did not hold water in view of the ruling in North Zone Cultural Centre and another vs. Vedpathi Dinesh Kumar [LQ/SC/2003/521] wherein it has been observed that it is not open to the public servant to withdraw his resignation after it is accepted by the appropriate authority. It was also held therein that non-communication of the acceptance does not make the resignation inoperative provided, there is, in fact, an acceptance before the withdrawal.
Thus, dismissing the appeal, the Bench affirmed the finding of the High Court.
Read Order: M/S MADURA COATS PRIVATE LIMITED v. THE COMMISSIONER OF CENTRAL EXCISE AND ANR [DEL HC-CIVIL APPEAL NOs. 5347-5348 of 2024]
LE Correspondent
New Delhi, April 26, 2024: In a case alleging a fabric company's involvement in clearance of stock without payment of duty, the Supreme Court has confirmed the order of the Madras High Court remanding the matter back to the CESTAT. The Top Court agreed with the High Court's view that the letter, which was claimed by the appellant as not having been furnished, was only a ruse for not replying to the show cause notices.
In this case the appellant Company has been engaged in the manufacture of cotton yarn, polyester yarn and other materials. Based on an information received that it had indulged in clearance of certain goods manufactured by it without payment of duty resulted in the preventive unit of the respondent visiting the unit and conducting a stock challenge of the finished fabrics stocked in the bonded warehouse.
Based on a prima facie and reasonable belief that excess quantities of stock were stored for illicit removal, the department seized the excess stock under mahazar and it was provisionally released on execution of general bond. It also resulted in the issuance of two show cause notices (SCNs) which resulted in two orders being passed by the respondent. Being aggrieved by the same, appeals came to be filed before CESTAT whereunder the tribunal set aside the orders in original with a direction to the respondent to provide a copy of the letter referred to in the SCNs to the appellant and to decide the matter afresh.
In the teeth of direction issued by the tribunal, first respondent adjudicated the show cause notices afresh and by separate orders raised the demand for payment of duty which resulted in both the orders being challenged by filing two appeals before CESTAT. The Tribunal allowed the appeals and directed the respondent to pass fresh orders. The respondent filed an application under section 35C (2) of the Central Excise Act, 1944 for rectification of the order contending that the letter which was ordered to be furnished by the department was not available and sought permission to adjudicate the SCNs afresh. The said application came to be dismissed.
The respondent herein filed two miscellaneous petitions before CESTAT for modification of the earlier orders resulting in modification of the order dated 05.05.2009 whereby the respondent was directed to adjudicate the show cause notices without relying upon the letter. Being aggrieved by the same, the appellant filed two appeals before the Madras High Court whereby the matter was remanded back. Hence, appeals were filed before the Top Court.
It was the case of the appellant that the High Court erred in not appreciating the fact that in the absence of document containing detailed explanation the adjudicating authority cannot appreciate and adjudicate the SCNs and the order of remand to the tribunal was erroneous.
The respondent contended that the appellant had been successfully dodging the adjudication process on one pretext or the other and the so-called letter dated 20.01.2001 which had been directed by the CESTAT by Order dated 06.09.2006 to be furnished to the appellant was the letter of the appellant itself, which undisputedly was an explanation offered by the appellant with reference to alleged shortfall and excess storage of fabrics.
The Division Bench of Justice Pamidighantam Sri Narasimha and Justice Aravind Kumar was of the opinion that the High Court had rightly opined that the said letter which was claimed by the appellant as not having been furnished was only a ruse for not replying to the show cause notices and it would in no way prejudice the appellants claim, particularly in the background of reliance not having been placed by the respondent- authority for adjudicating the SCNs.
It was observed that in the absence of prejudice having been caused to the appellant no fault could be laid at the doors of the respondent.
The Bench further observed that the High Court had also rightly not remitted the matter to the adjudicating authority for considering the matter afresh.
Though the Court agreed with the contention that order of review or modification which came to be passed on 08.03.2010 was without sanctity of law deserved to be accepted, yet for the reason that matter had been remanded back to the tribunal for adjudicating the SCNs afresh, it dissuaded the Court from setting aside the impugned order.
The Top Court reserved the liberty to the appellant to urge all contentions before the tribunal including the one urged before this Court namely to demonstrate as to how prejudice had been caused to the appellant by non- furnishing of the said letter dated 20.01.2001 (with enclosures). The order of remand made to the tribunal by the High Court under the impugned order also stood affirmed.
Read Order: ASSOCIATION FOR DEMOCRATIC REFORMS v. ELECTION COMMISSION OF INDIA AND ANOTHER [SC- WRIT PETITION (CIVIL) NO. 434 OF 2023]
Tulip Kanth
New Delhi, April 26, 2024: The Supreme Court has rejected the pleas to revert to paper ballot voting system and initiate 100% verification of Voter Verifiable Paper Audit Trail (VVPAT) against the EVM outcomes. The Top Court has also directed that on completion of the symbol loading process in the VVPATs undertaken on or after May 1, 2024, the symbol loading units shall be sealed and secured in a container. The Top Court has also directed that the burnt memory/microcontroller be verified post the announcement of the results.
The Division Bench of Justice Dipankar Datta and Justice Sanjiv Khanna penned down separate but concurring judgments.
Due to the possibility of manipulating the EVMs, the petitioners approached the Top Court to instil confidence in the voters. It was urged on behalf of the petitioner – Association for
Democratic Reforms, that the Court should direct return to the paper ballot system or the printed slip from the Voter Verifiable Paper Audit Trail machine be given to the voter to verify, and put in the ballot box, for counting. It was also urged before the Court that direction be issued mandating that there should be 100% counting of the VVPAT slips in addition to electronic counting by the control unit.
Justice Khanna noted that time and again use of EVMs has been objected to and questioned, not by one but by all political parties and others. There have been several litigations in this Court and the High Courts, albeit the challenge to the use of EVMs has been rejected recording good grounds and reasons.
Penning down the many advantages of the EVM-VVPAT mechanism, he said, “Thus, it is clear that till the symbol loading into the VVPAT is done by using the symbol loading unit, the EVM is blank and has no data/particulars of political parties or candidates. One cannot ascertain and know which button/key in the ballot unit will be allocated to a particular candidate or a political party.”
The Bench did point out that in the 2019 Lok Sabha Elections, 20,687 VVPAT slips were physically counted, and except in one case, no discrepancy or mismatch was noticed. On verification, it was found that the discrepancy had arisen on account of failure of the presiding officer to delete the mock poll data. “While it is not possible to rule out human errors, paragraph 14.5 of Chapter 14 of the Manual on EVM and VVPATs deals with such situations and lays down the protocol which is to be followed”, it added.
It was also highlighted that the EVMs have been subjected to test by technical experts committee from time to time. These committees have approved and did not find any fault with the EVMs. The ‘M3’ EVMs currently in use are designed by engineers of BHEL and ECIL. These designs are vetted by the technical experts committee.
Further, acknowledging the right of voters to question the working of EVMs, which are but an electronic device that has a direct impact on election results, Justice Khanna stated that it is also necessary to exercise care and caution when aspersions are raised on the integrity of the electoral process.
“While we acknowledge the fundamental right of voters to ensure their vote is accurately recorded and counted, the same cannot be equated with the right to 100% counting of VVPAT slips, or a right to physical access to the VVPAT slips, which the voter should be permitted to put in the drop box”, he said.
As per the Top Court, giving physical access to VVPAT slips to voters is problematic and impractical. It will lead to misuse, malpractices and disputes. The Court was also not inclined to modify the directions to increase the number of VVPAT undergoing slip count as it would increase the time for counting and delay declaration of results. The manpower required would have to be doubled. The data and the results do not indicate
any need to increase the number of VVPAT units subjected to manual counting.
Furthermore, EVMs reduce paper usage and alleviate logistical challenges. They also provide administrative convenience by
expediting the counting process and minimizing errors.
In view of the fact that Rule 49MA of Conduct of Election Rules, 1961, permits the elector to raise a complaint if she/he is of the view that the VVPAT paper slip did not depict the correct candidate/political party she/he voted, the Court rejected the argument that any elector should be liberally permitted as a routine to ask for verification of vote.
Thus, to only further strengthen the integrity of the election process, the Bench issued the following directions:
- On completion of the symbol loading process in the VVPATs undertaken on or after 01.05.2024, the symbol loading units shall be sealed and secured in a container. The candidates or their representatives shall sign the seal. The sealed containers, containing the symbol loading units, shall be kept in the strong room along with the EVMs at least for a period of 45 days post the declaration of results. They shall be opened, examined and dealt with as in the case of EVMs.
- The burnt memory/microcontroller in 5% of the EVMs, that is, the control unit, ballot unit and the VVPAT, per assembly constituency/assembly segment of a parliamentary constituency shall be checked and verified by the team of engineers from the manufacturers of the EVMs, post the announcement of the results, for any tampering or modification, on a written request made by candidates who are at SI.No.2 or Sl.No.3, behind the highest polled candidate. Such candidates or their representatives shall identify the EVMs by the polling station or serial number. All the candidates and their representatives shall have an option to remain present at the time of verification. Such a request should be made within a period of 7 days from the date of declaration of the result. The District Election Officer, in consultation with the team of engineers, shall certify the authenticity/intactness of the burnt memory/ microcontroller after the verification process is conducted. The actual cost or expenses for the said verification will be notified by the ECI, and the candidate making the said request will pay for such expenses. The expenses will be refunded, in case the EVM is found to be tampered.
In his concurring opinion, Justice Datta mentioned that the petitioners’ apprehensions were misplaced as reverting to the paper ballot system, rejecting the inevitable march of technological advancement, and burdening the ECI with the onerous task of 100% VVPAT slips tallying would be a folly when the challenges faced in conducting the elections are of such gargantuan scale.
He also emphasized on the fact that the mere suspicion that there may be a mismatch in votes cast through EVMs, thereby giving rise to a demand for a 100% VVPAT slips verification, is not a sufficient ground for the present set of writ petitions to be considered maintainable.
“I also wish to observe that while maintaining a balanced perspective is crucial in evaluating systems or institutions, blindly distrusting any aspect of the system can breed unwarranted scepticism and impede progress”, Justice Datta asserted while further adding,“ I conclude with the hope and trust that the system in vogue shall not fail the electorate and the mandate of the voting public shall be truly reflected in the votes cast and counted.”
Read Order: MOHD. AHSAN v. STATE OF HARYANA [SC- CRIMINAL APPEAL NO. 2265 OF 2024]
LE Correspondent
New Delhi, April 26, 2024: The Supreme Court has altered the conviction of the accused-Appellant under Section 302 of the IPC to one under Part I of Section 304 after noting that the incident leading to the death of a man occurred without premeditation, in a sudden fight, in the heat of passion and upon a sudden quarrel.
The facts of the case were that on August 18, 2005, the SHO of Jagadhri Police Station City, namely, Jai Singh (PW-13), received telephonic information about the death of one Vikrant @ Chintu (deceased) who had been admitted in Civil Hospital in an injured state. The medico-legal report of the deceased was obtained from the hospital and the statement of the de-facto complainant (PW-10) was recorded. FIR was registered under section 302 of the Indian Penal Code, 1860 against the present Appellant. Subsequently, the post mortem of the deceased was conducted wherein it was concluded that the cause of death was shock due to massive haemorrhage which was sufficient to cause death under normal circumstances.
The prosecution case was that on August 17, 2005 the de-facto complainant (PW-10) had been taking food at a Dhaba in the company of PW- 12 when another group of four men including PW11 and the deceased arrived at the same place. To attract the attention of the waiter, the deceased called the waiter by use of the word hello and this gesture irked another customer i.e. the present Appellant who was seated in a corner of the Dhaba, smoking a cigarette. The Appellant initially abused the deceased and a quarrel took place. The Appellant rushed to his car and pulled out a glass bottle which he broke on the bonnet of his car and thereafter proceeded to inflict five injuries on the body of the deceased, due to which the deceased fell to the ground bleeding, after which the Appellant fled from the scene.
Subsequently, PW-11 and the others rushed the deceased to the hospital where he eventually succumbed to his injuries. The appeal before the Top Court was filed by the appellant accused challenging the judgment of the Division Bench of the Punjab and Haryana High Court dismissing the Criminal Appeal preferred by the Appellant and upholding the order of conviction and sentence as recorded by the Sessions Judge.
It was the appellant's case that even if the prosecution case was taken at its face value, it would reveal that the incident occurred out of a sudden fight and thus, the conviction under Section 302 of the IPC would not be tenable and the offence would be required to be brought under Part I or Part II of Section 304 of the IPC.
After extensively going through the testimonies of the prosecution witnesses, the 3-Judge Bench of Justice B.R. Gavai, Justice Aravind Kumar & Justice Sandeep Mehta opined that there was no premeditation. The incident occurred since the appellant believed that the utterances by deceased Vikrant @ Chintu were aimed at him and, therefore, he retaliated by abusing the deceased. This was followed by a heated exchange between them. They grappled out of the building of the Dhaba. Though the witnesses were successful in separating them, the accused-Appellant rushed to his car, pulled out a bottle from the drivers seat side, broke it on the bumper of the car and attacked the deceased.
“It is thus clear that the incident occurred without premeditation, in a sudden fight, in the heat of passion and upon a sudden quarrel. The evidence would also not show that the accused-Appellant had either taken undue advantage or acted in a cruel or unusual manner. We therefore find that the present case would fall under Exception 4 to Section 300 of the IPC”, the Bench said.
Thus, partly allowing the appeal, the Bench altered the conviction of the accused-Appellant under Section 302 of the IPC to one under Part I of Section 304 of the IPC. The Top Court also sentenced him to rigorous imprisonment for a period 8 years and a fine of Rs 5,000.
Read Order: RAJAT KUMAR v. THE STATE (NCT OF DELHI) [DEL HC- CRL.M.C. 4608/2022]
LE Correspondent
New Delhi, April 26, 2024: The Delhi High Court has quashed an FIR registered against a police constable with the observation that dishonest intention or wilful conduct on part of the accused is a prerequisite to make out a charge of criminal breach of trust against a public servant under Section 409 read with Section 405 IPC.
The Single-Judge Bench of Justice Navin Chawla was considering a petition filed under Section 482 of the Code of Criminal Procedure, 1973 seeking quashing of FIR registered under Section 409 of the Indian Penal Code, 1860 and criminal proceedings emanating therefrom.
It was the case of the prosecution that on the night of 15.03.2014, a 9mm Pistol with 5 live cartridges, was issued to the petitioner, who is working as a constable with the Delhi Police. Later, he was contacted many times to deposit the weapon and ammunition in the Maalkhana but he failed to do so nor was he able to give a satisfactory reply in this regard. It was further stated that he tried to linger the matter by stating that he would be depositing the same after some time. Efforts for search of the weapon and cartridges were also made, however, it proved futile and no clue regarding the same came to light. As the petitioner failed to deposit the weapon and the cartridges, the present FIR was registered against him.
The petitioner, apart from being made an accused in the subject FIR and the consequent trial, also faced a Departmental Inquiry, which resulted in an order passed by the Disciplinary Authority. The Authority had ordered that two years approved service of the Constable be forfeited permanently entailing proportionate reduction in his pay with immediate effect. His suspension period from 21.03.2014 to 06.04.2015 was also decided as period not spent on duty for all intents and purposes.
Highlighting the interplay between the adjudication proceedings and criminal prosecution, the Bench referred to the judgements in Radheshyam Kejriwal v. State of West Bengal,[LQ/SC/2011/280] and Ashoo Surendranath Tewari v. The Deputy Superintendant of Police, EOW, CBI & Anr., [LQ/SC/2020/653].
“.... it is apparent that while there can be no dispute with the proposition that mere exoneration or finding to that effect of the Disciplinary Authority may not have a binding effect on the criminal prosecution, at the same time, in the peculiar facts of the present case, it is noticed that both the proceedings, that is, the criminal proceedings as also that of the Disciplinary Authority are premised on the loss of the weapon and the cartridges by the petitioner. The Disciplinary Authority, on appreciation of evidence, found that the same was accidental and there was no ill/mala fide intention on the part of the petitioner in the loss of the same”, the Bench said.
The High Court also clarified, “Dishonest intention or wilful conduct on part of the accused is, therefore, a prerequisite to make out a charge of criminal breach of trust against a public servant under Section 409 read with Section 405 IPC.”
Noting that the Disciplinary Authority had found that there was no dishonest intention on part of the petitioner and he was at best negligent or careless in the loss of the weapon and the cartridges, the Bench held, “In my view, therefore, continuation of the criminal proceedings against the petitioner would be against the interest of justice and should be liable to be quashed.”
Placing reliance upon State of Haryana & Ors. v. Bhajan Lal & Ors., the High Court exercised its inherent powers under Section 482 of the Cr.P.C. to quash the FIR and all the proceedings emanating therefrom.
Read Order: JAMSHEED ZAHOOR PAUL v. STATE OF NCT OF DELHI [DEL HC- CRL.A. 51/2024]
Tulip Kanth
New Delhi, April 26, 2024: While observing that the appellant was in touch with cadres of ISIS which was sufficient to give insight into his culpable mind, the Delhi High Court has dismissed an appeal filed by a man booked under provisions of the Unlawful Activities (Prevention) Act (UAPA) challenging the rejection of his bail plea.
The incident is of the year 2018 when the Special Cell (New Delhi Range) received information that two persons i.e. Parvaiz Rashid Lone and Jamsheed Zahoor Paul (appellant herein) were radicalized youths of Jammu & Kashmir, having allegiance to banned terrorist organization ISIS/SI/DAESH. As per intelligence inputs, they had procured arms and ammunition from UP for their cadres for executing some terrorist act in Jammu & Kashmir. The information that they would come to Netaji Subhash Park, near Lal Quila (Red Fort) on 07.09.2018 to proceed to Kashmir and if raided, they could be caught with illegal weapons, was found to be correct.
The raiding team found the aforesaid named suspects moving towards Lal Qila. They were immediately overpowered. Their names and addresses were ascertained and their search was conducted. Search of the appellant yielded recovery of one pistol, containing five live cartridges in its magazine. From the possession of Parvaiz Rashid Lone (A-1) also, one pistol was recovered. These were seized.
Both the accused disclosed that they had procured the recovered weapons, in lieu of money from four persons from UP. When the police tracked them down, they were found to be juveniles in conflict with law (JCL) and, therefore, a separate report was prepared against them, which was filed before the Juvenile Justice Board (JJB).During investigation, both the accused divulged that they were propagating the ideology of terrorist outfit ISIS in India and were in touch with another ISIS militant, namely, Abdullah Basith. Said militant had already been arrested by NIA. FIR had been registered for commission of offence under Section 25 of Arms Act as well as Sections 18 & 20 of Unlawful Activities (Prevention) Act (UAPA).
The accused approached the Delhi High Court by filing an appeal under Section 21(4) of the National Investigation Agency Act, 2008 (NIA) praying therein that impugned order whereby his bail plea had been rejected, be set aside and consequently, he may be released on regular bail.
The Division Bench of Justice Suresh Kumar Kait and Justice Manoj Jain firstly explained that Section 18 & 20 UAPA fall under Chapter IV of UAPA which deals with punishment for terrorist activities. The Bench also said, “Though in adversarial system, there is presumption of innocence in favour of accused and, therefore, bail is generally a rule, UAPA contains modified application of certain provisions of Criminal Code of Procedure and thus commands that no person accused of an offence punishable under Chapter IV and/or Chapter VI shall, if in custody, be released on bail if there are reasonable grounds of believing that the accusation against such person is prima facie true.”
The High Court was of the view that once charges are framed, it can be easily assumed that there is a very strong suspicion against the accused. “Be that as it may, there can never be any restriction or embargo on moving application seeking bail. Such unfettered right remains available as long as the proceedings are alive”, it added.
Noting that the factual situation was not a case of chance recovery, the Bench opined that after the appellant was apprehended, a pistol of 7.65 caliber with five live cartridges loaded in its magazine was recovered from him. When his personal search was conducted, he was found in possession of two mobile phones.
As per respondent, appellant admitted that he was in contact with ISIS- JK Umar Iban Nazir (no more alive now) and Adil Thokar (absconding and untraceable) over Black Berry Messenger (BBM), a safe chat application and at their directions, he along with his co-accused had collected weapons from UP for their outfit. He also admitted that he had met Abdullah Basith (cadre of ISIS-JK) at Jama Masjid in Delhi in connection with supply of arms and ammunition for Tanjeem. He revealed that he was following cadres of ISIS (JK Module) through social media, BBM and Facebook and that his BBM account was with the name of PEHRAAN CHUN. Forensic analysis had also verified the same.
The involvement of co-accused was held to be much deeper as BBM Chat retrieved from his mobile contained discussion about Army movement in Kashmir. Both the accused had procured weapons from UP. They both had come to Delhi together and were planning to go to Kashmir together. “Therefore, at this initial juncture, it cannot be said that there was no agreement or tacit understanding or meeting of minds between them. They seemed to know each other very well and despite being fully conversant about their respective antecedents, they chose to stick together”, the Bench said.
The appellant was in touch with militants as well and he met one of them in Delhi. As per prosecution, weapons were being arranged for perpetuating terror and, therefore it was opined that there was material to show that there was a prima facie true case against the appellant.
The Bench asserted, “Thus, appellant, being supporter of ideology of ISIS, arranged illegal weapons and was involved in providing other logistic support to its cadres. It is also quite obvious that appellant had not only personally met Abdullah Basith but was communicating with Umar Iban Nazir and Adil Thokar. Merely because some of the incriminating BBM chats were found on the mobile of his co-accused would not mean that at this point of time, the said fact cannot be taken as a circumstance against the appellant…Moreover, Section 10 of Evidence Act cannot be kept aside which visualizes such type of situation and makes the actions and the statements of co-conspirator to be relevant as against the others. Such action or statement can even be used for proving the existence of conspiracy.”
Noticing that there were clear-cut allegations indicating that accusation against the appellant was prima facie true, the Bench said, “The appellant was in touch with cadres of ISIS which is sufficient to give insight of his culpable mind.” Reliance was also placed upon Arup Bhuyan v. State of Assam [LQ/SC/2023/329] wherein it has been observed that mere membership of banned organization is also sufficient to incriminate, without there being any overt act.
It was further stated by the Bench that in the case in hand, the maximum sentence provided under Section 18 & 20 UAPA is imprisonment for life and there was nothing which might indicate that prosecution was acting in a manner which was detrimental to his fundamental rights as provided under Part-III of the Constitution of India. Therefore, it was held at this juncture, merely because of the incarceration period of more than 5 years, the accused would not become entitled to bail.
Thus, noting that the High was taking up the matter diligently by giving shortest possible dates, the Bench dismissed the appeal.
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.
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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.
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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.
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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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