Read Judgment: Narayan Deorao vs. Krishna & Ors.
Pankaj Bajpai
New Delhi, August 23, 2021: The Supreme Court has ruled that the decree of foreclosure passed in the suit filed by the mortgagee will not extinguish the right of the mortgagor to redeem land in view of the fact that he was not impleaded as a party in the suit, though he has purchased part of the mortgaged property by virtue of registered sale deed.
While setting aside the judgment of the High Court, a Division Bench of Justice Hemant Gupta and Justice A.S. Bopanna, gave three months’ time to the appellant to deposit the mortgage amount after which he shall be entitled to seek restoration of possession which was taken from him in execution of a decree of foreclosure.
The observation came pursuant to a classic case where the plaintiff (appellant in present case) stepped in the shoes of the mortgagor on account of the sale transaction of a mortgaged land.
Going by the background of the case, original mortgagee filed a Regular Civil Suit seeking recovery of mortgage amount along with the interest accrued against the original mortgagors. Later, a preliminary decree was drawn based on a compromise. However, since the defendant failed to pay the agreed mortgage amount, the preliminary decree was converted into a final decree which led to foreclosing the rights of the mortgagor to redeem the property. In execution of such decree, the mortgagee had taken possession from the appellant.
The matter travelled to the High Court, where the decree of foreclosure was set aside and the suit for redemption was held not maintainable.
After considering the arguments, the Division Bench found that the plaintiff has purchased property vide registered sale deed much before the filing of the suit for foreclosure.
“The possession of the plaintiff was recorded in the revenue record after the purchase of the property, but still, the mortgagee chose not to implead the subsequent purchaser. The original mortgagor who has mortgaged the property had no subsisting title, interest or right in the property conveyed, therefore, the factum of compromise between the mortgagor and the mortgagee is ineffective and not enforceable against the purchaser,” found the Bench.
Reiterating that the possession was delivered and the fact that the parties are residents of the same village, the Apex Court said that there is ‘constructive notice’ of purchase of land by the appellant.
Thus, the Top Court opined that decree passed in the suit for foreclosure as a result of collusion, so as to frustrate rights of a purchaser from the mortgagor, is non-est in law.
The Top Court observed that Section 60 of the Transfer of Property Act, 1882 provides that a person interested in a share of the mortgaged property will not entitle him to redeem his own share on payment of a proportionate part of the amount remaining due on mortgage.
Therefore, conversely, a purchaser from the mortgagor is entitled to redeem the share of the land purchased by him but on payment of the entire mortgage amount, added the Top Court.
The Top Court therefore concluded that equity of redemption is a right which is subsidiary to the right of ownership, and such right is not over and above the right of ownership purchased by the plaintiff.
“The expression equity of redemption is a convenient maxim but an owner, who has stepped into the shoes of the mortgagor, after the purchase from the mortgagor but before filing a suit for foreclosure is entitled to redeem the property in terms of Section 60 of the Act,” reiterated the Bench.
Read Judgment: Tulsi Developers India Pvt. Ltd vs. Dr. Appu Benny Thomas
LE Correspondent
Kolkata, August 23, 2021: While answering to an Arbitration Request, the Kerala High Court has ruled that subsequent to the amendments to the Arbitration & Conciliation Act in the year 2016, notwithstanding any agreement to the contrary, any person whose relationship with the parties falls under any of the categories in the seventh Schedule of the Act is rendered ineligible to be appointed as an Arbitrator.
Quoting the decision of Supreme Court in the case of TRF limited vs. Engineering projects Ltd. [(2017) 8 SCC 377], where it was unreservedly declared that neither a party to the disputes nor a person nominated by it can be appointed as an Arbitrator, the Single Bench of Justice Devan Ramchandran disregarded the stipulations of the agreement, to the extent to which it allows the lessor to nominate the Arbitrator when the parties fail to arrive at a consensus nominee.
The focus in this case is on the interplay of Sections 11(5) and 11(6) of the Arbitration & Conciliation Act, since both of them deal with appointment of a sole Arbitrator, albeit in two subtly distinct scenarios, and it is this distinction which is ingenuously grabbed by the respondent to resist this Arbitration Request, added Justice Ramachandran.
As per the background of the case, the petitioner company had approached the High Court praying for appointment of a sole Arbitrator in terms of the lease agreement entered into between them and the respondent, to resolve the disputes pertaining to the demand made to the respondent.
The counsel for respondent contested by submitting that the grounds raised by the petitioner ineluctably disclose that they have, in fact, approached the High Court u/s 11(5) of the Act, though styling it as being u/s 11(6) thereof; and therefore, that unless thirty days have expired after they made their demand for appointment of an Arbitrator, the subject Arbitration Request would be premature and hence not maintainable.
It was also argued that the agreement did not provide for arbitration of disputes relating to the lease arrangement, which could only be considered by a competent Rent Control Board.
On the other hand, the counsel for petitioner defended the maintainability of this Arbitration Request, contending that Section 11(5) of the Act was called in only when the agreement does not contain a procedure for appointing an Arbitrator, or when the parties have not agreed on such.
Defending another objection that the disputes were not capable of being resolved through Arbitration but only by a competent Rent Control Court, the counsel asserted that this aspect was one that the Arbitrator alone can answer as per the well accepted doctrine of “Kompetenz – Kompetenz”, and under the purlieus of Section 16 of the Act.
After considering the arguments, Justice Ramachandran examined the forensic perimeter of Section 11(5) of the Act, in the context of unambiguous averment of the petitioner that they had requested the respondent for referring the disputes between them to arbitration, in terms of the agreement; and that the latter had unequivocally refused to it.
The High Court opined that requirement of waiting thirty days after the notice seeking appointment of an Arbitrator is made by one party to the other, before approaching this Court, is stipulated only in Section 11(5) of the Act and not in Section 11(6); and that as per the latter, appointment is to be accomplished as per the procedure agreed upon by the parties.
“Clause 27 of Annexure-1 crystally provides for a specific procedure – which has been agreed between the parties – as regards appointment of an Arbitrator. Axiomatically, therefore, the mandate of Section 11(2) of the Act has been satisfied by the stipulations in this Clause; and resultantly, Section 11(5) cannot come into play because, as is evident from its phraseology, the procedure therein is attracted only “failing any agreement referred to in subsection (2),” observed the High Court.
Therefore, finding from the agreement that the parties had agreed on a procedure for appointing an Arbitrator, Justice Ramachandran refused to accept that this Arbitration Request urged u/s 11(6) of the Act would be vitiated for the reason of non-compliance of the rigour of Section 11(5) thereof.
Accordingly, the High Court deemed it appropriate to allow this Arbitration Request and to appoint a sole Arbitrator to consider and resolve the disputes between the parties.
Read Order: Simranjeet Kaur and another v. State of Haryana and others
LE Staff
Chandigarh, August 23, 2021: The Punjab and Haryana High Court has dismissed a petition filed by a woman and her live-in partner seeking protection as they apprehend a threat to their lives from family members, saying the duo had entered into an “unholy alliance” as the woman was already married to someone else and a child was born out of the wedlock.
A Bench of Justice Sant Prakash also noted that except for the “bald allegations” that the petitioner’s family members are giving threat to the couple because of their live-in relationship, no supportive material has been placed on record by the petitioners.
“… petitioner No.1 is already married with respondent No.7 and out of that wedlock a child was born. After some time of the marriage, petitioner No.1 fell in love with petitioner No.2 and now they are residing in live-in relationship. During the course of hearing, learned counsel for the petitioner could not convince this Court that petitioner No.1 has got the legal divorce from respondent No.7. Thus, this Court feels no hesitation to say that petitioner No.1 has entered into an unholy alliance with petitioner No.2,” the Bench said.
The petitioner couple approached the High Court for issuance of directions to the authorities/police to protect their life and liberty from the hands of their family members, who are opposing their live-in relationship.
The plea said the family of the woman — petitioner no. 1 Simranjeet Kaur — got her married against her wishes in 2018 and a child was born out of the wedlock. It alleged that she was not happy with the marriage as her husband harassed her mentally and physically, due to which she left her matrimonial home.
The petitioners’ counsel submitted that they have filed a representation dated 13.08.2021 to police seeking protection to their life and liberty from their family members but till date no action has been taken thereon.
The High Court, however, said that the representation submitted by the petitioners does not contain the allegations against the private respondents (family members) as averred in the writ petition, much less the manner and mode of alleged threat extended to the petitioners.
The High Court thus dismissed their plea.
Read Judgement: Gaurav Kirpal v. Central Bureau of Investigation
LE Staff
Chandigarh, August 23, 2021: The Punjab and Haryana High Court has rejected the petition, filed by an accused in a case of bank fraud to the tune of Rs 300 crore, challenging an order of a special CBI court that rejected his application seeking permission to travel to Dubai and USA.
The main reason for dismissing the petition by the High Court was the fact that the accused was involved in a serious fraud case amounting to a loss of Rs.300 crores to Indian Overseas Bank. The Court observed that the petitioner had moved this application just to escape facing the trial and he might have fled from the process of law.
The accused appellant is facing charges pertaining to section 120-B r/w section 420 of the IPC and 13(2) r/w section 13(1)(d) of the Prevention of Corruption Act, 1988.
The petitioner had vehemently contended that he was a frequent traveller to various countries in connection with his business of readymade garments and till 2016, he was visiting abroad. On August 10, 2016, when he was going to Dubai, he was stopped at the Immigration deck of IGI Airport, New Delhi on the basis of the restrictions imposed by the CBI.
It was further argued that the Special Court, PMLA, Chandigarh had granted permission to the petitioner to travel abroad i.e. to Dubai and USA, and prayed that the CBI, Special Court had wrongly declined the prayer to allow him to travel abroad.
The State explicated that all the immovable and movable assets of the petitioner were seized by the Indian Overseas Bank and total value of these properties is Rs.12.35 crores. According to the State as the business of the petitioner in India was not going well, there was every possibility that the petitioner might flee from the country and would never come back to India to face legal action.
A bench of Justice Arvind Singh Sangwan noted that the chargesheet had already been presented before the Trial Court and upon framing of the charges, the trial is likely to commence soon as it was already delayed for a period of about 5 years.
While refusing to allow the petition, the Bench observed that in the chargesheet there were serious allegations against the petitioner and it was the case of the prosecution that a fraud of Rs.300 crores had been committed by the accused in conspiracy with each other.
As per the charge-sheet, the petitioner , Gaurav Kirpal, has not only been the Director of M/s. Sai Bhakti Impex Private Limited but has also been holding various other positions such as authorized signatory or proprietor of M/s. Best Exports and also of M/s. Omkara Worldwide Traders Private Limited. It was clear from the accounts of these firms that payments were made for bearing the expenses of air travel tickets of main accused Ashu Mehra and his family members, noted the Court.
The Bench also added that the chargesheet stated that from the accounts of these firms maintained with Indian Overseas Bank, Chandigarh and IndusInd Bank, Ludhiana, funds had been credited in the accounts of M/s. Vision Procon and M/s. Heights International, which ultimately formed part of Outward Remittances and thus, the allegations against the petitioners were that he was an instrument in siphoning off the funds.
The Bench, thus, found no illegality in the impugned order that the petitioner was involved in serious fraud case amounting to a loss of Rs 300 crores to Indian Overseas Bank.
Justice Sangwan also made it clear that the petitioner had moved an application just to escape facing the trial and he might flee from the process of law.
Also, in view of the fact that the Trial Court had also observed that from the proceeds of the crime, the accused had already purchased property in UAE, which also stood attached, the present petition was dismissed.
Read Order- Court on its own Motion Vs. State of Punjab & ors.
Tulip Kanth
Chandigarh, August 23, 2021: The Punjab and Haryana High Court has recently granted an opportunity to the Additional Advocate General, Punjab, to seek instructions from the state’s Director General of Police and apprise the court about the number of cases pending against MLA Simarjeet Singh Bains and the stage of investigation after charges of rape, conspiracy and criminal intimidation along with others were registered against him.
The High Court passed this Order after admonishing the State for not providing it with any clear response as per the query pertaining to the complete list of cases pending against the MLA.
The Bench of Justice Rajan Gupta and Justice Karamjit Singh said, “No clear response is forthcoming as per the query raised by the Bench on the last date of hearing. We are not inclined to grant further time. Purely in the interests of justice, however, one opportunity is granted. He shall be at liberty to seek instructions from Director General of Police, Punjab and apprise the court about the number of cases pending against Simarjeet Singh Bains and stage of investigation after registration of case against him by virtue of order passed by the concerned Magistrate at Ludhiana under section 156(3) Cr.P.C.”
This order has been made pursuant to an application seeking impleadment on the ground that complete list of cases pending against sitting MLA from Atam Nagar Assembly constituency, Simarjeet Singh Bains, had not been furnished by the State.
The Applicant claiming to be a victim of rape at the hands of the accused MLA argued that the police had not proceeded further with the investigation and the police is sitting tight over the matter and not conducting any investigation because of influence of the MLA.
The Additional Advocate General, Punjab , submitted that he still does not have complete instructions in the matter and needs more time to file an affidavit.
Earlier, the Punjab and Haryana High Court had dismissed the MLA’s plea for quashing an order of a lower court which had directed the registration of the case against him.
The Bench also addressed another development in the resumed hearing of the case pertaining to the pending trials against MPs and MLAs.
The Amicus Curiae had pointed out that in all those cases where stay is operating, respective investigating/prosecuting agencies need to move an application for vacation of stay in view of Ashwani Kumar Upadhyay Vs. Union of India & Anr. [WP (Civil) No. 699 of 2016].
On this, the High Court clarified that the counsel representing various investigating agencies as well as prosecution have assured the court that this matter shall be looked into and all earnest efforts shall be made before the next date of hearing.
The Bench had no hesitation in making it clear that in case needful is not done, it will have no option but to seek personal appearance of all the senior Officers who are entrusted with supervising the stage of pending investigations/trials.
Listing the matter on September 3, 2021, the High Court has also held that by the next date of hearing, registry may supply a list of cases pending against MPs/MLAs in this court whether in the nature of civil or criminal proceedings.
Read Judgment: Adesh Tyagi vs. State of U.P & Another
LE Correspondent
Prayagraj, August 23, 2021: The Allahabad High Court has ruled that where the investigating agency for any reason does not array one of the real culprits as an accused, the court is not powerless in calling the said accused to face trial.
The power under section 319 of the Code of Criminal Procedure (CrPC) to summon even those persons who are not named in the chargesheet to appear and face trial, is unquestionable, added the High Court.
The Single Bench of Justice Yogendra Kumar Srivastav found it inappropriate to deny the existence of powers u/s 319 CrPC with the courts, observing that it is not uncommon that the real accused, at times, get away by manipulating the investigating and/or the prosecuting agency.
Reiterating that the object of the provision being not to allow a person who deserves to be tried to go scot-free by being not arraigned in the trial in-spite of possibility of his complicity which can be gathered from the evidence during the course of trial, Justice Srivastav said that the order passed u/s 319 of CrPC summoning the applicant does not contain any material error so as to warrant inference.
The observation came pursuant to lodging of an FIR u/s 489-B of IPC by the Branch Manager, SBI, alleging deposit of counterfeit currency notes at the cash counter of the Bank by the accused no.2 and acceptance of the same by the accused no.1 (cashier).
During the course of trial, an application was moved by the prosecution stating that despite the two prosecution witnesses having taken the name of the applicant in their examination in chief and also the name of the said accused having specifically been mentioned in the FIR, the police report did not mention his name.
The said application came to be allowed by the ASJ upon noticing the FIR version and also the statements of the two prosecution witnesses, and the applicant was summoned for trial.
The counsel for the applicant assailed the order passed by the trial judge summoning the applicant in exercise of powers u/s 319 of the CrPC, contending that the Investigating Officer did not find sufficient material against the applicant and no chargesheet was submitted against him.
On the other hand, the counsel for the State argued that applicant was named in the FIR and the testimony before the trial judge would be required to be given more weight than the statements recorded by the investigating officer during the course of investigation.
After considering the arguments, the Allahabad High Court found that the ambit and scope of the powers of the Magistrate u/s 319 of CrPC were considered in the Constitution Bench judgment of the Supreme Court in Hardeep Singh and others vs. State of Punjab [(2014) 3 SCC 92], wherein it was held that the object of the provision is that the real culprit should not get away unpunished and in a situation where the investigating agency for any reason does not array one of the real culprits as an accused, the court is not powerless in calling the said accused to face trial.
The High Court further found that the legislature thought of incorporating provisions of Section 319 Code of Criminal Procedure, so that the real perpetrator of an offence should not get away unpunished, on the presumption of innocence under general law of the land.
“Section 319 CrPC allows the court to proceed against any person who is not an accused in a case before it. Thus, the person against whom summons are issued in exercise of such powers, has to necessarily not be an accused already facing trial. He can either be a person named in Column 2 of the chargesheet filed u/s 173 Code of Criminal Procedure or a person whose name has been disclosed in any material before the court that is to be considered for the purpose of trying the offence, but not investigated,” observed the Bench.
The High Court further went on to observe that the evidence before the trial judge being indicative of the complicity of the applicant, though not arraigned as an accused in the chargesheet, it was open to the trial court to form a view that the applicant be tried together with the accused, and for the said purpose summon the applicant in exercise of powers u/s 319 of CrPC.
The contention which has been sought to be raised placing reliance upon the material collected by the investigating officer during the course of investigation, for the purpose of exercise of powers u/s 319 of CrPC, thus cannot be accepted, added the Court.
Read Judgment: Jamiat Ulama-e-hind Gujarat vs. State of Gujarat
Pankaj Bajpai
Ahmedabad, August 23, 2021: The Gujarat High Court has ruled that the rigors of Sections 3, 4, 4A to 4C, 5, 6 and 6A of the Gujarat Freedom of Religion Act, 2003 shall not operate merely because a marriage is solemnized by a person of one religion with a person of another religion without force or allurement or fraudulent means and such marriages cannot be termed as marriages for the purposes of unlawful conversion.
While granting interim protection to the parties who solemnized an inter-faith marriage from being unnecessarily harassed, the Division Bench of Chief Justice Vikram Nathan and Justice Biren Vaishnav observed that merely because a conversion occurs because of marriage, it per se cannot be held to be an unlawful conversion or a marriage done for the purpose of unlawful conversion.
The observation came in answer to a petition challenging the vires of the Gujarat Freedom of Religion Act, 2003 as amended by the Gujarat Freedom of Religion (Amendment) Act, 2021, contending that the amended Section 3 of the 2003 Act, per se, prohibits marriage after religious conversion on a presumption that such a marriage is for the purposes of conversion.
Accordingly, an interim relief was sought pleading that the concept of marriage has no bearing on conversion.
On the other hand, counsel for the State argued that marriage per se is not prohibited but a conversion actuated by fraud or allurement or a forcible marriage is prohibited.
After considering the arguments, the High Court found that in the case of Shafin Jahan vs. Ashokan [(2018) 16 SCC 368], the Supreme Court has observed that the right to marry a person of one’s choice is integral to Article 21 of the Constitution and such right cannot be taken away except through a law which is substantively and procedurally fair, just and reasonable.
The Division Bench noted that Section 6A of the 2003 Act places the burden of proof on the parties entering into an inter-faith marriage to prove that the marriage was not solemnized on account of any fraud, allurement or coercion, which again puts the parties validly entering into an inter-faith marriage in great jeopardy.
Prima-facie inter-faith marriages between two consenting adults by operation of the provisions of Section 3 of the 2003 Act interferes with the intricacies of marriage including the right to the choice of an individual, thereby infringing Article 21 of the Constitution Of India, added the Bench.
The High Court thus granted interim relief to the petitioners pending further hearing.
Read Judgment: VALO AUTOMOTIVE PVT LTD v. SPRINT CARS PVT LTD & ORS
Tulip Kanth
New Delhi, August 23, 2021: The Delhi High Court has affirmed that under Order XI Rule 5 of the Code of Civil Procedure, 1908, the Court can grant leave to the plaintiff to file documents not filed with the plaint.
The Court’s decision came while granting an opportunity to the petitioner, Valo Automotive Pvt. Ltd., to file the amended plaint along with the documents and statement of truth before the Commercial Court.
Herein, the plaintiff had filed a petition under Article 227 of the Constitution, being aggrieved by the order of the District Judge, Commercial Court, whereby, its applications under Order VI Rule 17 and under Order VII Rule 14 of CPC for amendment of the plaint and for placing on record the additional documents, were dismissed.
The petitioner had filed a suit against Sprint Cars Pvt. Ltd., for the recovery of Rs 31,65,271/- along with the interest and had also placed certain documents and statement of accounts on record.
Later, an application under Order VI Rule 17 CPC was filed for amending the plaint and application under Order VII Rule 14 CPC was filed for bringing on record documents, further invoices, to substantiate the amendment sought, which was for enhancing the suit claim from Rs.31,65,271/- to Rs.39,03,396/-.
Afterwards, the Trial Court rejected the application for amendment observing that since the amendment would be resulting in allowing the claim, which was relinquished by the plaintiff at the time of filing of the suit, it could not be allowed. The application under Order VII Rule 14 CPC was also dismissed by the Trial Court taking a view that since the amendment was not allowed, these documents could not be filed by the plaintiff in view of the amended Order XI Rule 5 CPC, as the dispute was a commercial dispute.
A Bench of Justice Asha Menon was of the view that while there did not appear to be any denial that the parties were transacting with one another, the respondents denied the existence of invoices as also any liability to pay.
It was observed that when the application under Order VI Rule 17 CPC was filed specifically recording that it was after laboriously and meticulously going through the record, to answer the claim of the respondents that they have never raised any bills or invoices, that the documents could be traced, a sound explanation came forth.
Once the documents were traced and connected to the Ledger Account for various years, the petitioner sought to bring on record all those documents in support of the claim, which now had to be modified to include a further sum of Rs 7,38,125, added the Bench.
The Bench opined that Order VI Rule 17 CPC permits the Court to consider and allow amendments to pleadings for the purpose of determining the real question in controversy between the parties. Where the application is moved after the trial has commenced, even then the court may allow amendments, on being satisfied that the averments sought to be introduced by way of amendments were not included in the pleadings at the initial stage despite due diligence.
The Court explained that in this matter, not only has the trial yet to commence, the suit is at a very preliminary stage. The Commercial Court had granted to the petitioner an opportunity to file the replication and that is when the liberty to file documents and amendments were sought. The Court specifically mentioned that the amendment was not seeking to change the nature of the suit, which remains one for recovery.
“The petitioner/plaintiff cannot be denied an opportunity to meet the claim of the respondents/defendants raised in the written statement that there were no invoices or bills raised. In order to allow the court to determine fully the dispute between the parties, it is the considered view of this Court that the amendments are necessary,” stated the Bench.
Moreover, it was also observed that Order II Rule 2 CPC has no application at the stage of deciding an application under Order VI Rule 17 CPC to amend the plaint, unless it is to incorporate claims that could have been raised in an earlier suit. It cannot be used to deny correction of claims at the initial stage of the case, when pleadings have not been completed.
The Court also clarified that the Trial Court had referred to the provisions of Order XI Rule 5 CPC, as applicable to the commercial disputes but overlooked the provisions of Order XI Rule 1(1)(c)(ii) CPC, which permits the plaintiff to file documents in answer to the case set up by the defendant subsequent to the filing of the plaint.
“The precise case of the petitioner/plaintiff is that when the respondents denied that invoices were ever raised, the application was moved to bring the invoices on record. Under Order XI Rule 5 CPC, the court can grant leave to the plaintiff to file documents, not filed with the plaint. The Commercial Court erred in over-looking these provisions of the CPC,” found the High Court.
Thus, the Court allowed the allowed the Petition and set aside the impugned orders in question as being erroneous.
Read Judgement: Abdul Ahad & Ors. vs. Union of India & Ors.
LE Staff
New Delhi, August 23, 2021: The Supreme Court has ruled that the admissions in MBBS course conducted by Glocal Medical College, a deemed university in Saharanpur district of Uttar Pradesh, through private counselling are illegal and contrary to the notification issued by the state government.
The three-Judge Bench of Justice L. Nageswara Rao, Justice B.R. Gavai, and Justice Krishna Murari observed that the Notification issued by the State of UP on the basis of the law laid down by the Apex Court clearly provided that the admissions were to be done only through the centralized admission process (CAP), which was not complied with by the Glocal Medical College.
“… no sympathies can be shown to such students who have entered through backdoor,” the bench said. The observations came pursuant to a challenge made against the Notification issued by the State of UP for conducting CAP as well as the discharge order by the Medical Council of India (MCI).
As per the background of the case, the review petitioners were admitted in 1st year Professional MBBS course in Glocal Medical College. In the meanwhile, the State of UP issued a direction for conducting centralized counselling for admission to MBBS/BDS course in all colleges/universities in the State of Uttar Pradesh. The State also directed that 50% of the sanctioned intake of private institutions shall be reserved for domiciled students.
This notification was challenged before the Allahabad High Court, without any relief. In the meantime, the MCI issued a discharge letter to the Glocal Medical College and directed to discharge 67 students admitted by it, whose names did not figure in the list supplied by the Director General of Medical Education & Training (DGME). The said order of MCI came to be challenged by Glocal Medical College in the Top Court, which was disposed of by directing that the students who were admitted shall be permitted to continue their studies.
It was therefore claimed by the review petitioners that even though they cleared MBBS examination for 1st year, the Glocal Medical College did not conduct the examination for the 2nd year MBBS. Later on, noticing the discharge order issued by the MCI, the review petitioners challenged the same before the High Court, which disposed of the said petition with liberty to approach the Apex Court. Since the SLP also came to be dismissed, the petitioners approached the SC by way of review.
The Top Court found that the Division Bench of the Allahabad High Court by way of elaborate judgment found no fault with the Notification issued by the State of Uttar Pradesh and elaborated that Minority institutions shall be allowed to admit the students of their community based on Centralized Counselling held by the State on the basis of NEET 2016, to the extent permissible, but without deviating from the merit of such students as reflected in the NEET list 2016, so as to sub-serve their minority status under Article 30(1) of the Constitution of India.
The Apex Court noted that it could thus clearly be seen that though minority institutions were allowed to admit the students of their community based on Centralized Counselling held by the State on the basis of NEET 2016, the same was to be done without deviating from the merit of the said students.
“MCI vide order dated 27.1.2017 had discharged the said students, who were not admitted through centralized admission process. It is pertinent to note that 25 students admitted in the same college, who were admitted through the centralized admission process, were very much absorbed by the DGME in other colleges. As such, the contention of the review petitioners that they came to know about the discharge order dated 27.1.2017 issued by MCI only when they had filed a petition in the High Court in 2019 does not stand to reason,” observed the Apex Court.
While reiterating that no sympathies can be shown to such students who have entered through the backdoor, the Top Court found it difficult to appreciate as to how the results of the students were declared for the 1st year MBBS examination, how they were admitted in the 2nd year MBBS course and how they cleared the 2nd year MBBS examination, despite the fact that MCI had discharged the students vide order dated Jan 27, 2017.
Accordingly, the Apex Court dismissed the Review Petition.
Pankaj Bajpai
Mumbai, August 23, 2021: A Special Court has directed for the release of properties of fugitive diamond trader Nirav Modi attached by the Enforcement Directorate under the Prevention of Money Laundering Act (PMLA) in favour of the Resolution Professional/Liquidator appointed by the NCLT.
The Mumbai bench of the National Company Law Tribunal (NCLT) had on August 10, 2021, as per Section 12(7) of the Fugitive Economic Offenders (FEO) Act, given its final order in favour of the claimant-Resolution Professional/Liquidator appointed with respect to Modi’s firm Firestar International Ltd (FIL).
Special Judge V.C Barde, by an order dated August 13 and made available on August 17, permitted the PNB and Consortium of Banks to confiscate the subject property of Nirav Modi & his affiliates attached by the ED, and declared the accused as fugitive economic offender under section 12(1) of F.E.O Act.
The observation came in reference to the application filed by PNB claiming release of mortgaged/hypothecated/guarantor properties, which have been attached by the ED and exempted from confiscation.
As per the background of the case, noticing the alarming acts of Nirav Modi’s firms and their partners and beneficiaries, PNB filed a complaint with the Central Bureau of Investigation (CBI) resulting into culmination of an FIR. Additionally, PNB also filed a complaint with ED for investigation of the offence of money laundering and pursuant thereto, the ED filed a prosecution complaint and attached several properties.
The prosecution complaint filed by the ED described a series of incidents by way of which accused no.1-Nirav Modi and certain firms/companies/entities controlled by him including the Solar Exports, FIL, Diamond R US and Stellar Diamonds have defrauded PNB to the tune of Rs.7029,06,87,950.65 by obtaining numerous Letters of Undertaking (LoUs) from PNB in an unauthorized manner, even though no credit facilities were sanctioned by PNB to Nirav Modi’s Firms for issuance of any LOUs.
It was alleged that the funds procured against the LOUs were not used for any genuine transactions and were instead siphoned away for the unjust enrichment of Nirav Modi and his affiliates, which came to light for the first time in January 2018, after the retirement of the delinquent PNB Officers.
The claimants’ quantifiable loss came to be recognized by the Debt Recovery Tribunal (DRT) that passed Judgments in their favour. Later, proceedings were commenced under the IBC against FIL, on account of its default to pay dues owed to its financial creditors. Pursuant to the same, the NCLT passed an order appointing a Resolution Professional qua FIL.
Due to the subsisting moratorium, PNB, PNB Consortium and UBI Consortium filed appropriate applications in proceedings before the DRT seeking a stay of the proceedings against FIL, which came to be accepted. Later on, the subject properties were attached by ED, which stood confirmed by the Adjudicating Authority.
In view of the observations in Criminal Miscellaneous Application No.998 of 2018, it is clear that the property which is excluded/ exempted from confiscation is left to be dealt with by the applicant/consortium of banks in the manner provided by law, found Judge Barde.
The Special Judge noted that Section 8(8) of PMLA deals with direction to the Central Government to restore any confiscated property to the legitimate Claimant.
The Special Court, therefore, in pursuance of provisions of Section 8(7) and 8(8) of PMLA, released the attachment made under PMLA, for dealing with the excluded property in the manner provided in the order dated June 08, 2020 in F.E.O. proceedings.
LE Desk
New Delhi, August 20, 2021: Physical hearings in the Delhi High Court will resume from August 31, 2021, an administrative order has said.
“… the Hon’ble Full Court has been pleased to order that physical hearings in this Court shall resume from 31.08.2021,” said the order dated August 19, 2021.
“Suitable number of Benches of this Court, for physical hearings, shall be constituted as per the directions of Hon’ble the Chief Justice while the remaining Benches shall continue to take up the matters through videoconferencing, as per the existing system of listing of matters,” it said.
The order further said that all other pending routine/ non-urgent matters listed before the High Court till September 3, 2021 shall stand adjourned all together, as already notified by the Court’s Office Order dated August 12, 2021.
“A roster shall also be prepared for the said courts in such a manner that every Registrar/ Joint Registrar (Judicial) holds physical court on alternate days w.e.f. 31.08.2021 while the others continue to hold courts through video-conferencing, as per the existing arrangement, on non-physical days,” it stated.
The order further said that on physical hearing days, the Courts shall permit hybrid/video conferencing hearing where a request to such effect is made by any of the parties and/ or their counsel.
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.
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)
Environment and Sustainable Development – A Balanced Approach - Nayan Chand Bihani
The debate between protection of the environment and sustainable development is an age old one and is growing in proportion with every passing day all over the world, in general and specifically with respect to developing countries like India, in particular.
The Stockholm Declaration on the Human Enviornment,1972 categorically stated that man is both the creator and the moulder of his environment, which gives him physical sustenance and affords him the opportunity of intellectual, moral, social and spiritual growth. In the long run and tortuous evolution of the human race on this planet a stage has been reached when through the rapid acceleration of science and technology man has acquired the power to transform his environment in countless ways and on an unprecedented scale. Both aspect of man’s environment, the natural and the man-made, are essential to his wellbeing and to the enjoyment of basic human rights-even the right to life itself. It also states that the protection and improvement of the human environment is a major issue which affects the wellbeing of peoples and economic development throughout the world, it is the urgent desire of the people of the whole world and the duty of all the Governments. The Declaration, in Principle 2, states that the natural resources of the earth, including the air, water, land, flora and fauna and especially representative samples of natural eco-systems, must be safeguarded for the benefit of present and future generations through careful planning or management, as appropriate. It further, in Principle 8, states that economic and social development is essential for ensuing a favourable living and working environment for man and for creating conditions on earth that are necessary for the improvement of the quality of life.
A milestone in this field is the Rio Declaration on Environment and Development, 1992. It, interalia, states that human beings are at the centre of concern for sustainable development and that they are entitled to a healthy and productive life in harmony with nature. It also states that the right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations. It states that in order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it and that to achieve sustainable development and a higher quality of life for their people, States should reduce and eliminate unsustainable patterns of production and consumption and promote appropriate demographic policies. It contemplates that the States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and developmental context to which they apply. The Declaration states that in order to protect the environment, the precautionary approach shall be widely applied by the states according to their capabilities and that environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority.
Initially, the trend was to use ‘Polluter Pays’ principle and punish the offending unit. Subsequently, vide judicial decisions, the principle of sustainable development was widely applied so as to balance the two principles.
The Polluter Pays principle talks about the liability of the polluter. With the increase in the industrial development what subsequently also increased is the waste emitted out of these industries and as a result of these wastes not only were the immediate surroundings adversely affected but also the environment at large. There is no specific definition of the Polluter Pays principle, rather it is a practice emphasising on the fact that one who pollutes the environment should be held accountable and responsible for the same with consequential steps to be taken. The principle not just focuses on punishing the polluter but its main criterion is to ensure that the polluted environment returns back to its original state. The reason behind it is to promote ‘Sustainable Development’. Thus it can be summed up that Polluter Pays principle is an essential element of sustainable development. Therefore, whosoever causes pollution to the environment will have to bear the cost of its management. The principle imposes a duty on every person to protect the natural environment from pollution or else he will be responsible for the cost of the damage caused to the environment. The main reason behind imposing a cost is two folds. Firstly, to refrain any person from polluting the environment and secondly, if in the case there is pollution then it is the polluter’s duty to undo the damage. Hence, both of the above ensures that there should be sustainable development. It is pertinent to mention that the Polluter Pays principle is not a new concept. It was first referred to in 1972 in a Council Recommendation on Guiding Principles Concerning the International Economic Aspects of Environmental Policies of the Organisation for Economic Co-operation and Development. The same is also enshrined in Principle 16 of the Rio Declaration, which states that ‘the polluter, in principle, bear the cost of pollution.’ The need of the hour is a demonstrable willingness to adhere to the essence of the principle in order to ensure that there is development, but not at the cost of causing environmental degradation.
The Hon’ble Supreme Court of India in the case of Indian Council for Enviro-legal Action vs Union of India reported in LQ/SC/1996/358, interalia, putthe absolute liability upon the polluter for the harm caused to the environment.
The Hon’ble Supreme Court of India in the case of Vellore Citizens Welfare Forum vs Union of India, reported in LQ/SC/1996/1368, interalia, accepted the Polluter Pays Principle as a part of the Article 21 of the Constitution of India and also emphasised Article 48A and Article 51A(g) of the Constitution of India.
The Hon’ble Supreme Court of India in the case of Amarnath Shrine reported in LQ/SC/2012/1121, has categorically stated the right to live with dignity, safety and in a clean environment.Article 21 of the Constitution of India, guaranteeing the right to life is ever widening and needs to maintain proper balance between socio-economic security and protection of the environment.
The Hon’ble Apex Court in the case of Bombay Dyeing and Manufacturing Co Ltd- vs – Bombay Environmental Action Group reported in LQ/SC/2006/206, interalia, states that the consideration of economic aspects by Courts cannot be one and it depends on the factors of each case. However, strict views ought to be taken in cases of town planning and user of urban land so as to balance the conflicting demands of economic development and a decent urban environment. Ecology is important but other factors are no less important and public interest will be a relevant factor.
The Hon’ble Supreme Court in the case of Dahanu Taluka Environment Protection Group –vs- Bombay Suburban Electricity Supply Company Ltd reported in LQ/SC/1991/157, has held that it is primary for the Government to consider importance of public projects for the betterment of the conditions of living of people on one hand and necessity for preservation of social and ecological balance, avoidance of deforestation and maintenance of purity of atmosphere and water from pollution and the role of the Courts is restricted to examine the whether the Government has taken into account all the relevant aspects and has not ignored any material condition.
The Hon’ble Supreme Court of India in the case of Narmada BachaoAndolan vs Union of India reported in LQ/SC/2000/1509, interalia, reiterated the Polluter Pay Principle.
A milestone case is that of M C Mehta vs Union of India reported in LQ/SC/2004/397, wherein the Hon’ble Supreme Court explained the Precautionary principle and the principle of Sustainable Development. It was, interalia, stated that the development needs have to be met but a balance has to be struck between such needs and the environment. The Hon’ble Supreme Court also reiterated similar views in a series of cases, some of which are stated hereinbelow;
LQ/SC/2007/1421
- M C Mehta vs Union of IndiaLQ/SC/2009/1231
- Tirpur Dyeing Factory Owners Association vs Noyyal River Ayacutdars Protection Association &Ors.LQ/SC/2009/1891
An interesting question came up before the Hon’ble Supreme Court with regard to the setting up of nuclear power plants with regard to the possibility of considerable economic development weighed against risk of feared radiological hazard. The Hon’ble Apex Court in the case of G.Sundarrajan –vs- Union of India reported in LQ/SC/2013/536, interalia, held that the Courts will be justified to look into the aspect as to the opinions of experts and the adequacy of safety measures and will be justified to look into the safety standards being followed by the Nuclear Power Plant.
The Hon’ble Supreme Court, in the case of Lal Bahadur vs State of UP reported in LQ/SC/2017/1384, interalia, emphasised the importance of striking a balance between the two principles.
An important development is the advent of the National Green Tribunal which has the jurisdiction over all civil cases where a substantial question relating to environment (including enforcement of any legal right relating to environment) is involved and relates to the Acts specified in Schedule I, namely the Water (Prevention and Control of Pollution) Act, 1974, the Water(Prevention and Control of Pollution) Cess Act, 1977, the Forest Conservation Act, 1980, the Air (Prevention and Control of Pollution) Act, 1981, the Environment (Protection) Act, 1986, the Public Liability Insurance Act, 1991 and the Biological Diversity Act, 2002. The National Green Tribunal, since its inception, has been looking into the aspects of environmental pollution and the mitigation thereof.
It can thus be said that both the environment and development are essential in the modern world for the betterment and living standards of the people. However, rampant and unplanned development at the cost of the environment is not to be entertained and the Courts will keep a close watch into the aspect of sustainable development, interalia, based on the criteria and guidelines, as specified.
Nayan Chand Bihani is a practising advocate at Calcutta High Court. Mr. Bihani pursued his LL.B from the Calcutta University College of Law, Hazra Campus and was enrolled as an Advocate in December,1998. Mr. Bihani deals mainly with Writ petitions, specially in Environmental laws, Election laws, Educational laws, Municipal laws, Service laws and Public Interest Litigations. He also represents several authorities like the West Bengal State Election Commission, the West Bengal Pollution Control Board, the State of West Bengal, several Educational Institutions and Universities and several Municipalities and Municipal Corporations and the Odisha Pollution Control Board. He can be contacted at nayanbihani@gmail.com.
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