Read Order: Jarnail Singh v. State of Punjab
LE Staff
Chandigarh, August 26, 2021: The Punjab and Haryana High Court has allowed the bail plea of a 76-year-old man, facing charges in the murder case of his daughter-in-law, after considering his old age and the fact that he has been behind bars for almost one year.
“That being so, without making any comment on the actual merits of the case, as the prime allegation is against the husband of the deceased, simply looking at this stage at the age of the petitioner, the stage of the trial and the period of his custody, the petition is allowed. He be released on bail to the satisfaction of the trial Court/CJM/Duty Magistrate concerned,” noted the Bench of Justice Amol Rattan Singh.
There were specific allegations against the petitioner and other co-accused for committing the murder of Swaranjit Kaur in collusion with each other, and therefore dismissal of this petition was sought by the State.
The Court opined that a perusal of an earlier order passed in the case of the wife of the present petitioner, i.e. the mother-in-law of the deceased woman, showed that it had been contended that the daughter-in-law of the petitioner was habitual of taking a particular tablet on account of epileptic fits, and that one of the side effects of long use of that medicine was a tendency to commit suicide.
It was also contended in that petition that it was actually the petitioner’s son who has been alleged to have strangulated her, though the case of the accused was that she had committed suicide by hanging herself with a ‘dupatta’.
Other than that, the wife of the petitioner was admitted to bail on the ground that she was a 74-year-old woman and this fact was taken into consideration along with the other contentions raised.
The counsel of the petitioner (father-in-law of the deceased) mainly argued that he is also 76 years old and has been in custody since September 11, 2020, and this period was slightly over 11 months. Also, only two prosecution witnesses had been examined out of 21.
The Bench, without making any comment on the actual merits of the case, and specifically looking at this stage at the age of the petitioner, the stage of the trial and the period of his custody, allowed the petition and granted him bail.
Read Order: BALJIT SINGH VS STATE OF PUNJAB
LE Staff
Chandigarh, August 26, 2021: The Punjab and Haryana High Court has dismissed an application for early hearing and imposed a cost of Rs 1,000 on a lawyer, as he abstained from work on August 11, 2021.
“Despite the fact that the Courts are working through virtual mode with great difficulties having lots of connectivity issues, the lawyers resorted to abstain from work on 11.08.2021,” said the single Bench of Justice Arvind Singh Sangwan.
The prayer in this application was made for preponing the date of the main case which has been fixed for October 28, 2021.
The case was last listed on August 11, 2021, when the lawyers had volunteered to abstain from work.
The Bench clarified that despite the fact that the Courts have been working through virtual mode with great difficulties as there are lots of connectivity issues, the lawyers still resorted to abstain from work on August 11,2021.
Hence, finding no ground for early hearing, the present application has been dismissed with cost of Rs. 1,000. The High Court has also held that the aforesaid cost will have to be deposited with the High Court Legal Services Authority within a period of 15 days.
However, the Bench also stated that after depositing the cost, it will be open for the petitioner to recover the same from the Punjab and Haryana High Court Bar Association, Chandigarh and in case the amount is not paid to him, he can claim/adjust the same against his subscription fee/membership fee.
Read Order: MANJIT KAUR V/S STATE OF PUNJAB AND OTHERS
LE Staff
Chandigarh, August 26, 2021: The Punjab and Haryana High Court has directed the Senior Superintendent of Police, Moga, to register an FIR against SI Karamjit Singh, ASI Jaswant Rai, Gunman Pawan Kumar and one lady police official, found to be guilty of having illegally detained a man and a woman, under appropriate provisions of law.
A Bench of Justice Arun Kumar Tyagi has also ordered to constitute a special investigation team (SIT) of police officers/officials from other police station/sub-division for the investigation of the case.
By an earlier order dated March 9 ,2021, the District and Sessions Judge, Moga was directed to conduct an inquiry into allegations of illegal detention of Shinda Singh and Paramjit Kaur and malafides made against the respondents after hearing the parties, giving them opportunity to file replies and taking such material evidence as may be produced by the parties before him.
The District and Sessions Judge was also directed to submit his report within one month from the date of appearance of the parties before him.
In the Report, it was submitted that the aforementioned officials were guilty of illegal detention of Shinda Singh and Paramjit Kaur.
Thus, in view of this report, the bench has directed a SIT probe and has also asked that the Compliance report regarding registration of the FIR be filed in the Registry before September 3, 2021. The case has also been ordered be listed on that date and be shown in the list of urgent cases.
Read order: SEBI Order in KARVY FINANCIAL SERVICES LTD
LE Correspondent
New Delhi, August 26, 2021: While imposing monetary penalty on Noticee under section 15H(ii) of the SEBI Act, the Securities & Exchange Board of India has held that even when there is delay in initiating proceedings, it can take action against a person who has violated securities laws.
Prasanta Mahapatra (Adjudicating officer), observed that neither SEBI Act nor Regulations framed thereunder prescribed any time limit for initiating proceedings against persons who had violated the securities laws.
The Board further stated that in the absence of any specific provision in the SEBI Act or Takeover Regulations, the fact that there was delay on part of SEBI in initiating proceedings for violation of any provision of the Act could not be a ground to quash the penalty imposed for such violation.
As per the background of the case, SEBI conducted examination in respect of Regaliaa Reality Ltd. (RRL) and observed that Noticee Karvy Financial Services Ltd., an NBFC registered with RBI, had extended a loan to RRL. Besides providing other securities, RRL’s promoters pledged Equity Shares, constituting 55.56% of RRL’s paid-up share capital in favour of KFSL (Acquirer).
As RRL defaulted in paying installments, KFSL invoked the pledge and thus, acquired equity shares and voting rights in respect of pledged shares. Thus, KFSL’s shareholding in Target Company RRL increased from 0% to 55.56%, thereby, breaching threshold of 25% as stipulated under SAST Regulation 3(1).
Eventually, KFSL made public announcement for making open offer with a delay of 81 days. Thus, it was alleged to have violated provisions of SAST Regulations 3(1) and 4 r.w. Regulations 13, 14, 15, 16, 17 and 18. Accordingly Show Cause Notice (SCN) was issued to Noticee and Adjudicating Officer (AO) was appointed.
It was submitted on behalf of Noticee that there was extraordinary inordinate delay in issuance of SCN, which had prejudiced them and on this ground, it was prayed that SCN should be dropped.
After considering the facts & contentions, the Board found that Noticee had been corresponding with SEBI since October 2014 on the subject of acquisition of shares. Thus, even if it was assumed that Noticee was not aware of making public announcement at the time of acquisition of shares in 2012, after being called upon by SEBI in 2014, Noticee was aware of the regulatory requirement of making open offer upon breaching 25% threshold stipulated u/ SAST Regulation 3(1). However, Noticee delayed in making the public announcement, citing litigations with RRL/Target Company.
The Board reiterated that SAST Regulations in the first place had put onus of public announcement on acquirer and not on Target Company, which is to be complied with regulatory requirements in a time-bound manner.
While making it clear that there was no delay attributable to SEBI in initiation of proceedings, the Board said that the open offer requirement triggered in the year 2012 had been concluded in 2020 by KFSL upon directions issued by SEBI in 2016 that were duly upheld by SAT in 2018. Therefore, instant proceedings were initiated on May 4, 2021 with appointment of AO and on May 24, 2021, SCN issued was served upon Noticee.
Delay in complying with regulatory requirements by Noticee was due to acts and deeds committed by itself but Noticee was held to have been trying to draw inference from the facts as delay on part of SEBI in initiating instant proceedings that was misconceived, added the Board.
Besides, SEBI opined that Noticee’s delay in making public announcement had resulted in denying statutory right of company’s shareholders to exit through open offer mechanism at respective point of time.
At the same time, the Board said that no period of limitation was prescribed in the Act or Regulations for issuance of a show cause notice or for completion of adjudication proceedings and in absence of any period of limitation, authority must exercise its powers within reasonable period that would depend on facts of each case.
The Adjudicating officer thus held that Noticee’s public announcement for open offer with a delay of 81 days was in violation of provisions of SAST Regulations 3(1) and 4 r.w. Regulations 13, 14, 15, 16, 17 and 18 and hence, Noticee was liable for monetary penalty u/s 15H(ii) of the SEBI Act.
Read order: Dravida Munnetra Kazhagam vs. Mr.Rajesh Bhushan, Secretary, Ministry of Health and Family Welfare & Ors
LE Correspondent
Chennai, August 26, 2021: Noticing that the All India Quota (AIQ) scheme has been introduced for entrance to under-graduate and post-graduate degrees and diploma courses in government-run or aided medical and dental colleges across the country pursuant to orders of the Supreme Court, the Madras High Court has ruled that horizontal reservation provided in Notification of July 29, 2021 issued by the Union for persons with disabilities, appears to be in accordance with law.
However, additional reservation provided for economically weaker sections (EWS) in the said notification cannot be permitted, except with the approval of the Supreme Court in such regard, added the High Court.
The Division Bench of Chief Justice Sanjib Banerjee and Justice P.D. Audikesavalu observed that the provision for additional reservation, over and above 50 per cent, permitted by the Constitution (One Hundred and Third Amendment) Act, 2019 appears to fall foul of the dictum in Indra Sawhney case, and further reservation in the AIQ seats for admission to the under-graduate, post-graduate and diploma medical and dental courses in the State should be only upon the approval of the Supreme Court.
“The entire concept of reservation that appears to have been addressed by the Constituent Assembly while framing the Constitution may have been turned on its head by repeated amendments and the veritable reinvigoration of the caste system – and even extending it to denominations where it does not exist – instead of empowering citizens so that merit may ultimately decide matters as to admission, appointment and promotion,” observed the Bench.
“Rather than the caste system being wiped away, the present trend seems to perpetuate it by endlessly extending a measure that was to remain only for a short duration to cover the infancy and, possibly, the adolescence of the Republic. Though the life of a nation state may not be relatable to the human process of aging, but at over-70, it ought, probably, to be more mature,” opined the High Court.
The observation came pursuant to a petition filed by political parties complaining of deliberate and willful violation of the order directing implementation of reservation for Other Backward Classes (OBC) in the AIQ of the seats surrendered by the State for admission to the under-graduate, post-graduate and diploma medical and dental courses in the State.
The petitioner asserted that whether or not certain seats in government medical colleges or government aided or approved medical colleges have been surrendered by the State to be included as part of the AIQ seats, since the admission was sought and was to be granted in institutions in this State, the relevant institutions would be governed by the Tamil Nadu Backward Classes, Scheduled Castes and Scheduled Tribes (Reservation of Seats in Educational Institutions and of Appointments or Posts in the Services under the State) Act, 1993.
Chief Justice Banerjee stated that the State reservation rules would not apply to AIQ seats for admission to the under-graduate, postgraduate and diploma medical and dental courses in the State since that would, ipso facto, take the seats away from the AIQ pool back to the State as only backward classes as notified by the State in its official gazette would be entitled to the reservation and not candidates not resident in the State.
Since the committee required to be constituted by the order dated July 27, 2020 was constituted and such committee gave its opinion and the Union, or its appropriate agencies, have acted on the basis thereof, albeit not exactly in terms of the recommendations, no case of willful or deliberate violation of the said order can be said to have been made out, added the Bench.
However, the Division Bench expressed its reservations regarding the validity of extending an additional ten percent reservation for Economically Weaker Sections (EWS) in AIQ seats and thus observed that the same is not permissible without the Supreme Court’s approval.
Read Judgement: Srikalahasti Pipes Limited vs. Andhra Pradesh State & Ors
Pankaj Bajpai
New Delhi, August 26, 2021: The Electricity Appellate Tribunal has ruled that the restriction imposed by the Electricity Commission on purchase of power through ‘open access’ only to Ferro Alloys industries and not to other Energy Intensive industries, definitely amounts to discrimination in the absence of any reasonable justification.
Manjula Chellur, the Chairperson, observed that there is no rationale why other energy intensive industries were allowed to have open access and why only Ferro Alloys industries are left out, when all Energy Intensive industries are to be treated at par with no additional benefit of any nature.
“The objective behind making a provision of open access, primarily was with a definite motive and intention to develop competition in the power sector by providing open access, so that the consumer of power gets an option to choose from which source he could procure power other than the distribution licensee within whose area the consumer is situated,” added the Tribunal.
The observation came pursuant to an order passed by the State Commission in respect of miscalculation of cross subsidy charge and blanket ban imposed upon Ferro Alloys industries being an Energy Intensive industry for procuring power from open access.
It was contended that the ban is limited only to Ferro Alloys industries from purchasing power through open access, which is nothing but creating unreasonable differentiation within a Class of industries like PV Ingots, Cell manufacturing units, Polly Silicon industry and Aluminum industries.
Challenging the ban imposed by the Regulatory Commission, the Appellant solicited the attention of this Tribunal towards the definition of ‘Open Access’ u/s 2(47) of the Electricity Act which defines open access as nondiscriminatory provision.
It was therefore pleaded that there was no rationale in imposing restriction to purchase power from open access only on Ferro Alloys industry and not on other similarly placed industries, which have the same tariff like the Appellant.
The Appellate Tribunal found that the controversy is with regard to different opinions expressed by the Members of the Bench with reference to Section 42, open access, whether it is an absolute right or whether it is a right which could be subjected to conditions/restrictions.
The Tribunal further found that the amendment to Electricity Act, 2003 had done away with the option of giving open access prior to elimination of cross subsidy. Therefore, it became mandatory to grant open access by the Commission only on payment of surcharge/wheeling charges.
A conjoint reading of Section 42 along with amended first and fifth provisos, shows that there should not be any further condition i.e., such open access should not be subjected to the process of approval by the Commission, so that the consumer would exercise its right of open access, added the Tribunal.
Observing that the Appellant is having the required connection of 17 MVA to enjoy open access, the Tribunal said that it falls within the required range indicated u/s 42.
Apparently, the Appellant is not claiming any exemption from paying cross subsidy. So also Respondent has not denied open access on account of operational constraints, noted the Tribunal.
The Appellate Tribunal is surprised to know that the Respondent Commission though opined that several other industries fell in the category of Energy Intensive industry as a whole, the so-called compulsion/restriction/ban concerned was imposed only on Ferro Alloy industries. By such imposition only to Ferro Alloy industry, it is carving out a separate category from Energy Intensive industry as a whole.
Unless there is rationale behind doing so, which is acceptable not only on facts but also in accordance with law, the said action of the Respondent Commission cannot be appreciated, added the Tribunal.
The Tribunal further highlighted that the Respondent Commission seems to have imposed the so-called ban/restriction on the ground of incentive or concessional tariff said to have been extended to the Ferro Alloy Industries, without any reasonable classification.
Accordingly, the Chairperson held that it is the right of the consumer to select the supplier of power, and interference in such right by the State Commission would mean that the consumer is forced to procure power only from the distribution licensee.
Hence, answering the reference in favour of the Appellant, the Electricity Appellate Tribunal opined that there cannot be a compulsion on the Appellant not to procure power through open access.
Read judgment: Sony India Pvt. Ltd. vs. Union of India
LE Staff
Hyderabad, August 26, 2021: The Telangana High Court has ruled that in refusing to amend the Bill of Entry (BoE) under section 149 of the Customs Act to enable the importer (petitioner) to claim refund of the excess duty paid, the Assessing Authority has caused great injustice to the petitioner.
A Division Bench of Justice M S Ramachandra Rao & Justice T Vinod Kumar observed that such refusal by the Customs Department amounts to violation of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India and also the Customs Act, 1962.
Going by the background of the case, at the time of import of mobile phones in the BoE, petitioner had not claimed any exemption. Instead he contended eligibility to avail the benefit of reduced rate of 1% CVD (Countervailing Duty) and sought to claim benefit of the Exemption Notification for import of Mobile handsets including cellular phones.
However, the EDI System used for filing the Bills of Entry was not updated (as confirmed by the information received under RTI Act, 2005) to make available the benefit of the said Notification. Accordingly, the benefit of the Notification was not extended to petitioner due to deficiency in the system, and it was rather forced to pay CVD at merit rate.
The Petitioner therefore requested the Department to amend 136 BoEs u/s 149 of the Customs Act to reassess the BoEs and grant subsequent refund, but in vain.
Section 128 provides a remedy of appeal against any order passed by the Dy. Commissioner of Customs, who is lower in rank than a Commissioner of Customs, to the Commissioner (Appeals), therefore, the petitioner has a remedy of an appeal against the assessment of the BoEs in question, said the High Court.
Similarly, section 149 is an additional remedy available to the petitioner to seek amendment of the BoEs subject to the condition that such amendment is sought on the basis of documentary evidence which was in existence at the time the goods were cleared, deposited or exported as the case may be, added the Court.
The Division Bench therefore said that the stand of the respondents in the counter affidavit that only reassessment u/s 128 is the remedy available to the petitioner, and Section 149 cannot be invoked, is not tenable.
Quoting the law declared by the Supreme Court in SRF Ltd. vs. Commissioner of Customs [Civil Appeal No.9440 of 2003 dated March 26, 2015], wherein the Apex Court granted entitlement to exemption from payment of CVD, the Bench said that such law unless made prospective in operation in its judgment, is always deemed to be the law of the land.
The Bench went on to reiterate that the Assessing Officer/Assistant Commissioner is duly responsible to correctly determine the duty leviable in accordance with law before clearing the goods for Home consumption.
The assessing officer instead, having failed in correctly determining the duty payable, has caused serious prejudice to the importer / petitioner at the first instance, added the Bench.
Accordingly, the High Court issued mandamus to the Department to amend the subject Bills of Entry to reflect the rate of tax as 1%, within four weeks to enable the petitioner to seek refund of excess duty paid u/s 27 of Customs Act, 1962.
Read Judgement: CAIRN INDIA LTD vs. DEPUTY DIRECTOR OF INCOME TAX
LE Correspondent
Chennai, August 26, 2021: While emphasizing on the scope of judicial review, the Madras High Court has ruled that the scope for reopening of assessment cannot be narrowed down by the Courts to cripple the powers of the Assessing Officer (AO) conferred under the Income Tax Act.
The Single Judge Bench of Justice S M Subramaniam observed that if reopenings are made within the scope of Section 147 of the Income Tax Act, then the AO is allowed to continue the reopening proceedings and conclude the same by providing opportunity to the assessee to defend their case.
The observation came pursuant to a petition questioning the legal validity of the reopening notice issued under section 148 and the consequential order passed by the AO, on the ground of ‘change of opinion’.
Going by the background of the case, the assessee company had filed its return which came to be processed u/s 143(1) accepting the returned income. Later, the case was selected for scrutiny and the assessment was set aside with the direction to re-compute the total income of assessee in as much as the assessment order in which deduction u/s 80-IB was granted was erroneous.
Also, opining that the payments made to non-residents were in the nature of royalty and the assessee had deducted lesser tax from the payment to the Non-Residents, the AO calculated proportional disallowance u/s 40(a)(i).
The Department being of the opinion that expenses so claimed and allowed led to excess deduction which resulted in escapement of income chargeable to tax within the corners of section 147. This led to initiation of reopening of assessment.
After considering the arguments, Justice Subramaniam found that the reasons for reopening reveals that assessee had deducted lesser tax from the payment made to the Non-Residents. Since the issue of TDS deduction at the lower rate was not adjudicated by the AO, he had ‘reason to believe’ for reopening of assessment.
Since the said issue was not considered by the Original Assessing authority and subsequently, noticed by the competent authority, the reopening of assessment is made in accordance with the requirements as contemplated u/s 147, added Justice Subramaniam.
The High Court further went on to reiterate that the circumstances as contemplated, providing wider scope for reopening of assessment, at no circumstances be narrowed down by the Court to cripple the powers of the AO conferred under the Act.
“Undoubtedly, the business and trading activities are being carried out in a calculated manner by the traders. The intricacies involved may be traced out even at later point of time. Such being the possible circumstances, the very purpose and object of Section 147 for reopening of assessment, if the income chargeable to tax escaped assessment cannot be narrowed down, so as to dilute the very object of the Act,” opined the Court.
The Single Judge found that in the present case, the assessee has submitted its objections elaborately and the said objections were rejected on the ground that for the A.Y 2003-04, ADIT, International Taxation, Chennai, issued a Notice u/s 148 on similar ground that claim of the assessee as regards payment made towards geological studies, seismic data acquiring and processing and chartered hire charges would not fall for consideration u/s 44BB to go for TDA at the rate of 4%. On the contrary, the services fell within the definition of “fee for technical services”.
When the AO could be able to trace out the material from and out of the materials submitted by the assessee, such new information or materials undoubtedly would provide the AO for ‘reason to believe’ to reopen the assessment. This being the factum established, adjudication on merits need not be entertained by the High Court in writ proceedings under Article 226 of the Constitution of India, added the Single Judge. Lastly, the High Court dismissed the petition opining that the scope of judicial review under Article 226 of the Constitution of India is to scrutinize the processes through which a decision is taken by the competent authority in consonance with the provisions of the law, but not the decision itself.
Read judgment: The Employees Provident Fund Organization & Etc vs. Sunil Kumar B. & Etc
Pankaj Bajpai
New Delhi, August 26, 2021: While deciding whether applicability of a cut-off date under paragraph 11(3) of the Employees Pension Scheme and the dictum laid down by the Top Court in the decision of R.C. Gupta [(2018) 14 SCC 809] would act as the governing principle in matters related to retiral pension benefits or not, the Supreme Court has referred the matter to a Larger Bench for appropriate decision.
A Division Bench of Justice Uday Umesh Lalit and Justice Ajay Rastogi observed that the judgment of the Kerala High Court which quashed the Employee’s Pension (Amendment) Scheme, 2014 holding it to be unreasonable, merits to be decided on the touchstone of the Krishena Kumar case [(1990) 4 SCC 207].
The dispute arose when some employees on the eve of their retirement in the year 2005 took the plea that the proviso brought in by the amendment of 1996 to the Employees Provident Fund Act, was not within their knowledge and, therefore, they may be given the benefit thereof, particularly, when the employers contribution under the Act has been on actual salary and not on the basis of ceiling limit.
This plea was negated by the Provident Fund Authority on the ground that the proviso visualized a cut-off date for exercise of option, namely, the date of commencement of the Scheme or from the date the salary exceeded the ceiling amount. As the request of the employees was subsequent to either of the said dates, the same was not acceded to.
The matter went before the High Court Division Bench which upheld the view of the Provident Fund Authority that under the proviso to Clause 11 (3) of the Pension Scheme there was a cut-off date.
Ultimately, the Apex Court in 2016 came to the aid of the retirees and held that a beneficial Scheme ought not be allowed to be defeated by reference to a cut-off date, particularly, in a situation where the employer had deposited 12% of the actual salary and not 12% of the ceiling limit of Rs.5,000/- or Rs.6,500/- per month, as the case may be.
Challenging the same, the counsel for the Petitioner submitted that the difference between the Provident Fund Scheme on the one hand and the Pension Scheme on the other was well recognized. Under the former scheme, the contributions made by the employer and the employees during the employment of the employee would be made over to the employee along with interest accrued thereon at the time of his retirement.
Thus, the obligation on the part of the operators of the Provident Fund Scheme would come to an end after the retirement of the employee, whereas the obligation under the Pension Scheme would begin when the employee retired, urged the counsel.
It was also pleaded that under the former scheme, the liability was only to pay interest on the amount deposited and to make over the entire amount at the time of his retirement. On the contrary, in the latter scheme, it would be for the operators of the Pension Scheme to invest amount deposited in such a way that after the retirement of the concerned employee the invested amount would keep on giving sufficient returns so that the pension would be paid to the concerned employee not only during his life time but even to his family members after his death.
The counsel highlighted that if the option under paragraph 11(3) of the Scheme, was to be afforded well after the cutoff date, it would create great imbalance and would amount to cross-subsidization by those who were regularly contributing to the Pension Scheme in favour of those who come at a later point in time and walk away with all the advantages.
It was further submitted that the emphasis on investment of the amount in both the funds would qualitatively be of different dimensions and it would not be a mere adjustment of amount to transfer from one fund to another as stated in the R.C. Gupta case (supra).
After considering the arguments, the Top Court found that the submissions touching upon the applicability of the principle laid down in the decision in R.C. Gupta (supra), goes to the very root of the matter.
“Sitting in a Bench of two Judges it would not be appropriate for us to deal with said submissions. The logical course would be to refer all these matters to a Bench of at least three Judges so that appropriate decision can be arrived at,” added the Top Court.
“The principal questions that arise for consideration are whether there would be a cut-off date under paragraph 11(3) of the Employees Pension Scheme and whether the decision in R.C. Gupta [(2018) 4 SCC 809] would be the governing principle on the basis of which all these matters must be disposed of,” opined the Division Bench.
The Apex Court therefore directed the Registry to place these matters before the Chief Justice for requisite directions so that these matters can be placed before a larger Bench.
Read Order: Gurdev Singh alias Debu v. State of Punjab
LE Staff
Chandigarh, August 25, 2021: While dismissing the bail application of a man accused in a narcotics case, the Punjab and Haryana High Court has directed the lower court to conclude the trial in the matter within the next four months saying the accused cannot be denied the right to a free and speedy trial.
The petitioner, Gurdev Singh alias Debu, had sought regular bail for the second time in a case pertaining to an FIR dated July 9, 2015 under Section 22 of the NDPS Act, 1985, Sections 25/54/59 of Arms Act and 399, 402, 382, 420, 467, 468, 471, 120-B of the IPC, registered at Police Station Dehlon, District Ludhiana, Punjab.
The State Counsel opposed the plea by submitting that there was an alleged recovery of one kilogram of contraband Heroin, which falls in commercial quantity, and also one pistol 0.32 bore and two live cartridges from the petitioner, and also that the petitioner has suffered nine other convictions.
“In view of the above, this Court is not inclined to extend the benefit of bail in favour of the petitioner,” said the Bench of Justice Tejinder Singh Dhindsa.
The Bench, however, noted that the petitioner was arrested on 09.07.2015, investigation in the case has been concluded, the chargesheet has been presented and the charges were framed on 08.04.2016.
“Trial is still going on. The right of every accused to a free and speedy trial cannot be denied,” the HC said.
“While dismissing the instant petition seeking regular bail, directions are issued to the trial Court to make an earnest endeavour to expedite the trial and in any case to conclude the same within a period of four months from today,” the Bench said.
Read Order: Jagseer Singh v. CBI And Anr
LE Staff
Chandigarh, August 25, 2021: The Punjab and Haryana High Court has restricted a Special CBI Court in Panchkula from pronouncing till further orders the judgement in a case pertaining to murder charges against self-proclaimed godman Baba Gurmeet Ram Rahim Singh.
The High Court’s decision came in response to a petition filed by Jagseer Singh, son of Ranjeet Singh who was allegedly murdered by Ram Rahim, seeking transfer of the case from the Court of Special Judge, CBI, Panchkula to any other CBI Court in the States of Haryana, Punjab or U.T., Chandigarh.
The transfer has been sought on several grounds including that the case is pending for arguments since December, 2019 and has been adjourned a number of times. Even the Public Prosecutor has been seeking time, the petitioner’s counsel contended.
The senior counsel appearing for the petitioner alleged that everything has been “manipulated” through the respondent No.2 — K.P. Singh, Public Prosecutor for the CBI — and that he has been interfering in the administration of justice and is influencing the entire proceedings.
“Though, some personal oral aspersions are also made against the Special Judge, however, the same are not recorded in this order as those are not stated on oath by the petitioner,” the Bench of Justice Arvind Singh Sangwan noted.
“Learned senior counsel for the petitioner has, thus, submitted that the petitioner has reasonable apprehension that he may not get justice from the Special Judge, CBI Court, Panchkula,” the Bench added.
The High Court thus issued notice to the Presiding Officer/Special Judge, CBI, Panchkula seeking his response and restraining him from pronouncing the judgement in the matter as scheduled on August 26, 2021. The HC listed the case for next hearing on August 27, 2021.
The High Court also directed that the CBI will also file a specific affidavit about the appointment of K.P. Singh, Public Prosecutor for CBI Court at Panchkula, along with his posting order with the reply, if any.
The case here pertains to an FIR dated 10.07.2002 registered under Sections 302, 34, 120-B IPC at Police Station Sadar Thanesar, District Kurukshetra (Haryana) and a case dated 03.12.2003 as per which Ranjeet Singh was murdered by Baba Gurmeet Ram Rahim in 2002.
Gurmeet Ram Rahim Singh already stands convicted for 20 years rigorous imprisonment regarding the allegation of rape of two women followers by a judgement dated 28.08.2017 and also stands convicted for life regarding murder of a Sirsa based journalist Ram Chander Chatterpati, who had published an article in his newspaper, regarding sexual exploitation of Sadhvis in Dera.
According to the petitioner’s counsel in the present case, the accused suspected that Ranjeet Singh was behind the circulation of the anonymous letter in this regard.
Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur
Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.
Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?
A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.
Q: So you have had the feeling that the establishment is trying to interfere in the matters?
A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.
Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?
A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.
Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?
A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.
Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?
A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.
Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?
A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.
Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?
A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.
Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?
A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.
Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?
I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.
Q: What kind of technology would you recommend that courts should have?
A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.
Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?
You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.
Q: Do you think law should permit this to death row convicts?
A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.
Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?
A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.
Q: What about capital punishment as a means of punishment itself?
A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.
Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?
A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.
Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?
A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?
Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?
A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).
Q: You think giving proper training to police to prepare a case will make a difference?
A: Yes, it will make a difference.
Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?
A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.
Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?
A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.
Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?
A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.
Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?
A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.
Q: What will happen if in a democracy these rights are controlled by hook or by crook?
A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.
Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?
A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.
Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?
A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.
Q: Is there any other thing you would like to say?
A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.
‘A major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013.’- Aakash Parihar
Aakash Parihar is Partner at Triumvir Law, a firm specializing in M&A, PE/VC, startup advisory, international commercial arbitration, and corporate disputes. He is an alumnus of the National Law School of India University, Bangalore.
How did you come across law as a career? Tell us about what made you decide law as an option.
Growing up in a small town in Madhya Pradesh, wedid not have many options.There you either study to become a doctor or an engineer. As the sheep follows the herd, I too jumped into 11th grade with PCM (Physics, Chemistry and Mathematics).However, shortly after, I came across the Common Law Admission Test (CLAT) and the prospect of law as a career. Being a law aspirant without any background of legal field, I hardly knew anything about the legal profession leave alone the niche areas of corporate lawor dispute resolution. Thereafter, I interacted with students from various law schools in India to understand law as a career and I opted to sit for CLAT. Fortunately, my hard work paid off and I made it to the hallowed National Law School of India University, Bangalore (NSLIU). Joining NLSIU and moving to Bangalorewas an overwhelming experience. However, after a few months, I settled in and became accustomed to the rigorous academic curriculum. Needless to mention that it was an absolute pleasure to study with and from someof the brightest minds in legal academia. NLSIU, Bangalore broadened my perspective about law and provided me with a new set of lenses to comprehend the world around me. Through this newly acquired perspective and a great amount of hard work (which is of course irreplaceable), I was able to procure a job in my fourth year at law school and thus began my journey.
As a lawyer carving a niche for himself, tell us about your professional journey so far. What are the challenges that new lawyers face while starting out in the legal field?
I started my professional journey as an Associate at Samvad Partners, Bangalore, where I primarily worked in the corporate team. Prior to Samvad Partners, through my internship, I had developed an interest towards corporate law,especially the PE/VC and M&A practice area. In the initial years as an associate at Samvad Partners and later at AZB & Partners, Mumbai, I had the opportunity to work on various aspects of corporate law, i.e., from PE/VC and M&A with respect to listed as well as unlisted companies. My work experience at these firms equipped and provided me the know-how to deal with cutting edge transactional lawyering. At this point, it is important to mention that I always had aspirations to join and develop a boutique firm. While I was working at AZB, sometime around March 2019, I got a call from Anubhab, Founder of Triumvir Law, who told me about the great work Triumvir Law was doing in the start-up and emerging companies’ ecosystem in Bangalore. The ambition of the firm aligned with mine,so I took a leap of faith to move to Bangalore to join Triumvir Law.
Anyone who is a first-generation lawyer in the legal industry will agree with my statement that it is never easy to build a firm, that too so early in your career. However, that is precisely the notion that Triumvir Law wanted to disrupt. To provide quality corporate and dispute resolution advisory to clients across India and abroad at an affordable price point.
Once you start your professional journey, you need to apply everything that you learnt in law schoolwith a practical perspective. Therefore, in my opinion, in addition to learning the practical aspects of law, a young lawyer needs to be accustomed with various practices of law before choosing one specific field to practice.
India has been doing reallywell in the field of M&A and PE/VC. Since you specialize in M&A and PE/VC dealmaking, what according to you has been working well for the country in this sphere? What does the future look like?
India is a developing economy, andM&A and PE/VC transactions form the backbone of the same. Since liberalization, there has been an influx of foreign investment in India, and we have seen an exponential rise in PC/VA and M&A deals. Indian investment market growth especially M&A and PE/VC aspects can be attributed to the advent of startup culture in India. The increase in M&A and PE/VC deals require corporate lawyersto handle the legal aspects of these deals.
As a corporate lawyer working in M&A and PE/VC space, my work ranges from drafting term-sheets to the transaction documents (SPA, SSA, SHA, BTA, etc.). TheM&A and PE/VC deal space experienced a slump during the first few months of the pandemic, but since June 2021, there has been a significant growth in M&A and PE/VC deal space in India. The growth and consistence of the M&A and PE/VC deal space in India can be attributed to several factors such as foreign investment, uncapped demands in the Indian market and exceptional performance of Indian startups.
During the pandemic many businesses were shut down but surprisingly many new businesses started, which adapted to the challenges imposed by the pandemic. Since we are in the recovery mode, I think the M&A and PE/VC deal space will reach bigger heights in the comingyears. We as a firm look forward to being part of this recovery mode by being part of the more M&A and PE/VC deals in future.
You also advice start-ups. What are the legal issues or challenges that the start-ups usually face specifically in India? Do these issues/challenges have long-term consequences?
We do a considerable amount of work with startupswhich range from day-to-day legal advisory to transaction documentation during a funding round. In India, we have noticed that a sizeable amount of clientele approach counsels only when there is a default or breach, more often than not in a state of panic. The same principle applies to startups in India, they normally approach us at a stage when they are about to receive investment or are undergoing due diligence. At that point of time, we need to understand their legal issues as well as manage the demands of the investor’s legal team. The majornon-compliances by startups usually involve not maintaining proper agreements, delaying regulatory filings and secretarial compliances, and not focusing on proper corporate governance.
Another major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013. Keeping up with these requirements can be time-consuming for even seasoned lawyers, and we can only imagine how difficult it would be for startups. Startups spend their initial years focusing on fund-raising, marketing, minimum viable products, and scaling their businesses. Legal advice does not usually factor in as a necessity. Our firm aims to help startups even before they get off the ground, and through their initial years of growth. We wanted to be the ones bringing in that change in the legal sector, and we hope to help many more such startups in the future.
In your opinion, are there any specific India-related problems that corporate/ commercial firms face as far as the company laws are concerned? Is there scope for improvement on this front?
The Indian legal system which corporate/commercial firms deal with is a living breathing organism, evolving each year. Due to this evolving nature, we lawyers are always on our toes.From a minor amendment to the Companies Act to the overhaul of the foreign exchange regime by the Reserve Bank of India, each of these changes affect the compliance and regulatory regime of corporates. For instance, when India changed the investment route for countries sharing land border with India,whereby any country sharing land border with India including Hong Kong cannot invest in India without approval of the RBI in consultation with the central government,it impacted a lot of ongoing transactions and we as lawyers had to be the first ones to inform our clients about such a change in the country’s foreign investment policy. In my opinion, there is huge scope of improvement in legal regime in India, I think a stable regulatory and tax regime is the need for the hour so far as the Indian system is concerned. The biggest example of such a market with stable regulatory and tax regime is Singapore, and we must work towards emulating the same.
Your boutique law firm has offices in three different cities — Delhi NCR, Mumbai and Bangalore. Have the Covid-induced restrictions such as WFH affected your firm’s operations? How has your firm adapted to the professional challenges imposed by the pandemic-related lifestyle changes?
We have offices in New Delhi NCR and Mumbai, and our main office is in Bangalore. Before the pandemic, our work schedule involved a fair bit of travelling across these cities. But post the lockdowns we shifted to a hybrid model, and unless absolutely necessary, we usually work from home.
In relation to the professional challenges during the pandemic, I think it was a difficult time for most young professionals. We do acknowledge the fact that our firm survived the pandemic. Our work as lawyers/ law firms also involves client outreach and getting new clients, which was difficult during the lockdowns. We expanded our client outreach through digital means and by conducting webinars, including one with King’s College London on International Treaty Arbitration. Further, we also focused on client outreach and knowledge management during the pandemic to educate and create legal awareness among our clients.
‘It’s a myth that good legal advice comes at prohibitive costs. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.’ – Archana Balasubramanian
Archana Balasubramanian is the founding partner of Agama Law Associates, a Mumbai-based corporate law firm which she started in 2014. She specialises in general corporate commercial transaction and advisory as well as deep sectoral expertise across manufacturing, logistics, media, pharmaceuticals, financial services, shipping, real estate, technology, engineering, infrastructure and health.
August 13, 2021:
Lawyers see companies ill-prepared for conflict, often, in India. When large corporates take a remedial instead of mitigative approach to legal issues – an approach utterly incoherent to both their size and the compliance ecosystem in their sector – it is there where the concept of costs on legal becomes problematic. Pre-dispute management strategy is much more rationalized on the business’ pocket than the costs of going in the red on conflict and compliances.
Corporates often focus on business and let go of backend maintenance of paperwork, raising issues as and when they arise and resolving conflicts / client queries in a manner that will promote dispute avoidance.
Corporate risk and compliance management is yet another elephant in India, which in addition to commercial disputes can be a drain on a company’s resources. It can be clubbed under four major heads – labour, industrial, financial and corporate laws. There are around 20 Central Acts and then specific state-laws by which corporates are governed under these four categories.
Risk and compliance management is also significantly dependent on the sector, size, scale and nature of the business and the activities being carried out.
The woes of a large number of promoters from the ecommerce ecosystem are to do with streamlining systems to navigate legal. India has certain heavily regulated sectors and, like I mentioned earlier, an intricate web of corporate risk and compliance legislation that can result in prohibitive costs in the remedial phase. To tackle the web in the preventive or mitigative phase, start-ups end up lacking the arsenal due to sheer intimidation from legal. Promoters face sectoral risks in sectors which are heavily regulated, risks of heavy penalties and fines under company law or foreign exchange laws, if fund raise is not done in a compliant manner.
It is a myth that good legal advice comes at prohibitive costs. Promoters are quick to sign on the dotted line and approach lawyers with a tick the box approach. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.
Investment contracts, large celebrity endorsement contracts and CXO contracts are some key areas where legal advice should be obtained. Online contracts is also emerging as an important area of concern.
When we talk of scope, arbitration is pretty much a default mechanism at this stage for adjudicating commercial disputes in India, especially given the fixation of timelines for closure of arbitration proceedings in India. The autonomy it allows the parties in dispute to pick a neutral and flexible forum for resolution is substantial. Lower courts being what they are in India, arbitration emerges as the only viable mode of dispute resolution in the Indian commercial context.
The arbitrability of disputes has evolved significantly in the last 10 years. The courts are essentially pro-arbitration when it comes to judging the arbitrability of subject matter and sending matters to arbitration quickly.
The Supreme Court’s ruling in the Vidya Drolia case has significantly clarified the position in respect of tenancy disputes, frauds and consumer disputes. It reflects upon the progressive approach of the court and aims to enable an efficient, autonomous and effective arbitration environment in India.
Law firms stand for ensuring that the law works for business and not against it. Whatever the scope of our mandate, the bottom line is to ensure a risk-free, conflict-free, compliant and prepared enterprise for our client, in a manner that does not intimidate the client or bog them down, regardless of the intricacy of the legal and regulatory web it takes to navigate to get to that end result. Lawyers need to dissect the business of law from the work.
This really involves meticulous, detail-oriented, sheer hard work on the facts, figures, dates and all other countless coordinates of each mandate, repetitively and even to a, so-called, “dull” routine rhythm – with consistent single-mindedness and unflinching resolve.
As a firm, multiply that effort into volumes, most of it against-the-clock given the compliance heavy ecosystem often riddled with uncertainties in a number of jurisdictions. So the same meticulous streamlining of mandate deliverables has to be extrapolated by the management of the firm to the junior most staff.
Further, the process of streamlining itself has to be more dynamic than ever now given the pace at which the new economy, tech-ecosystem, business climate as well as business development processes turn a new leaf.
Finally, but above all, we need to find a way to feel happy, positive and energized together as a team while chasing all of the aforesaid dreams. The competitive timelines and volumes at which a law firm works, this too is a real challenge. But we are happy to face it and evolve as we grow.
We always as a firm operated on the work from anywhere principle. We believed in it and inculcated this through document management processes to the last trainee. This helped us shut shop one day and continue from wherever we are operating.
The team has been regularly meeting online (at least once a day). We have been able to channel the time spent in travelling to and attending meetings in developing our internal knowledge banks further, streamline our processes, and work on integrating various tech to make the practice more cost-effective for our clients.
Right to Disclosure – Importance & Challenges in Criminal Justice System – By Manu Sharma
Personal liberty is the most cherished value of human life which thrives on the anvil of Articles 14 and 21 of the Constitution of India (“the Constitution”). Once a person is named an accused, he faces the spectre of deprivation of his personal liberty and criminal trial. This threat is balanced by Constitutional safeguards which mandate adherence to the rule of law by the investigating agencies as well as the Court. Thus, any procedure which seeks to impinge on personal liberty must also be fair and reasonable. The right to life and personal liberty enshrined under article 21 of the Constitution, expanded in scope post Maneka Gandhi[1], yields the right to a fair trial and fair investigation. Fairness demands disclosure of anything relevant that may be of benefit to an accused. Further, the all-pervading principles of natural justice envisage the right to a fair hearing, which entails the right to a full defence. The right to a fair defence stems from full disclosure. Therefore, the right of an accused to disclosure emanates from this Constitutional philosophy embellished by the principles of natural justice and is codified under the Code of Criminal Procedure, 1973 (“Code”).
Under English jurisprudence, the duty of disclosure is delineated in the Criminal Procedure and Investigations Act, 1996, which provides that the prosecutor must disclose to the accused any prosecution material which has not previously been disclosed to the accused and which might reasonably be considered capable of undermining the case for the prosecution against the accused or of assisting the case for the accused, except if such disclosure undermines public interest.[2] Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence.[3] The duty of disclosure under common law contemplates disclosure of anything which might assist the defence[4], even if such material was not to be used as evidence[5]. Under Indian criminal jurisprudence, which has borrowed liberally from common law, the duty of disclosure is embodied in sections 170(2), 173, 207 and 208 of the Code, which entail the forwarding of material to the Court and supply of copies thereof to the accused, subject to statutory exceptions.
II. Challenges in Enforcement
The right to disclosure is a salient feature of criminal justice, but its provenance and significance appear to be lost on the Indian criminal justice system. The woes of investigative bias and prosecutorial misconduct threaten to render this right otiose. That is not to say that the right of an accused to disclosure is indefeasible, as certain exceptions are cast in the Code itself, chief among them being public interest immunity under section 173(6). However, it is the mischief of the concept of ‘relied upon’ emerging from section 173(5) of the Code, which is wreaking havoc on the right to disclosure and is the central focus of this article. The rampant misuse of the words “on which the prosecution proposes to rely’ appearing in section 173(5) of the Code, to suppress material favourable to the accused or unfavourable to the prosecution in the garb of ‘un-relied documents’ has clogged criminal courts with avoidable litigation at the very nascent stage of supply of copies of documents under section 207 of the Code. The erosion of the right of an accused to disclosure through such subterfuge is exacerbated by the limited and restrictive validation of this right by criminal Courts. The dominant issues highlighted in the article, which stifle the right to disclosure are; tainted investigation, unscrupulous withholding of material beneficial to the accused by the prosecution, narrow interpretation by Courts of section 207 of the Code, and denial of the right to an accused to bring material on record in the pre-charge stage.
A. Tainted Investigation
Fair investigation is concomitant to the preservation of the right to fair disclosure and fair trial. It envisages collection of all material, irrespective of its inculpatory or exculpatory nature. However, investigation is often vitiated by the tendencies of overzealous investigating officers who detract from the ultimate objective of unearthing truth, with the aim of establishing guilt. Such proclivities result in collecting only incriminating material during investigation or ignoring the material favourable to the accused. This leads to suppression of material and scuttles the right of the accused to disclosure at the very inception. A tainted investigation leads to miscarriage of justice. Fortunately, the Courts are not bereft of power to supervise investigation and ensure that the right of an accused to fair disclosure remains protected. The Magistrate is conferred with wide amplitude of powers under section 156(3) of the Code to monitor investigation, and inheres all such powers which are incidental or implied to ensure proper investigation. This power can be exercised suo moto by the Magistrate at all stages of a criminal proceeding prior to the commencement of trial, so that an innocent person is not wrongly arraigned or a prima facie guilty person is not left out.[6]
B. Suppression of Material
Indian courts commonly witness that the prosecution is partisan while conducting the trial and is invariably driven by the lust for concluding in conviction. Such predisposition impels the prosecution to take advantage by selectively picking up words from the Code and excluding material favouring the accused or negating the prosecution case, with the aid of the concept of ‘relied upon’ within section 173(5) of the Code. However, the power of the prosecution to withhold material is not unbridled as the Constitutional mandate and statutory rights given to an accused place an implied obligation on the prosecution to make fair disclosure.[7] If the prosecution withholds vital evidence from the Court, it is liable to adverse inference flowing from section 114 of the Indian Evidence Act, 1872 (“Evidence Act). The prosecutor is expected to be guided by the Bar Council of India Rules which prescribe that an advocate appearing for the prosecution of a criminal trial shall so conduct the prosecution that it does not lead to conviction of the innocent. The suppression of material capable of establishment of the innocence of the accused shall be scrupulously avoided. [8]
C. Scope of S. 207
The scope of disclosure under section 207 has been the subject of fierce challenge in Indian Courts on account of the prosecution selectively supplying documents under the garb of ‘relied upon’ documents, to the prejudice of the defence of an accused. The earlier judicial trend had been to limit the supply of documents under section 207 of the Code to only those documents which were proposed to be relied upon by the prosecution. This view acquiesced the exclusion of documents which were seized during investigation, but not filed before the Court along with the charge sheet, rendering the right to disclosure a farce. This restrictive sweep fails to reconcile with the objective of a fair trial viz. discovery of truth. The scheme of the code discloses that Courts have been vested with extensive powers inter alia under sections 91, 156(3) and 311 to elicit the truth. Towards the same end, Courts are also empowered under Section 165 of the Evidence Act. Thus, the principle of harmonious construction warrants a more purposive interpretation of section 207 of the code. The Hon’ble Supreme Court expounded on the scope of Section 207 of the Code in the case of Manu Sharma[9] and held that documents submitted to the Magistrate under section 173(5) would deem to include the documents which have to be sent to the magistrate during the course of investigation under section 170(2). A document which has been obtained bona fide and has a bearing on the case of the prosecution should be disclosed to the accused and furnished to him to enable him to prepare a fair defence, particularly when non production or disclosure would affect administration of justice or prejudice the defence of the accused. It is not for the prosecution or the court to comprehend the prejudice that is likely to be caused to the accused. The perception of prejudice is for the accused to develop on reasonable basis.[10] Manu Sharma’s [supra] case has been relied upon in Sasikala [11] wherein it was held that the Court must concede a right to the accused to have access to the documents which were forwarded to the Court but not exhibited by the prosecution as they favoured the accused. These judgments seem more in consonance with the true spirit of fair disclosure and fair trial. However, despite such clear statements of law, courts are grappling with the judicial propensity of deviating from this expansive interpretation and regressing to the concept of relied upon. The same is evident from a recent pronouncement of the Delhi High Court where the ratios laid down in Manu Sharma & Sasikala [supra] were not followed by erroneously distinguishing from those cases.[12] Such “per incuriam” aberrations by High Court not only undermine the supremacy of the Apex Court, but also adversely impact the functioning of the district courts over which they exercise supervisory jurisdiction. Hopefully in future Judges shall be more circumspect and strictly follow the law declared by the Apex Court.
D. Pre-Charge Embargo
Another obstacle encountered in the enforcement of the right to disclosure is the earlier judicial approach to stave off production or consideration of any additional documents not filed alongwith the charge sheet at the pre-charge stage, as the right to file such material was available to the accused only upon the commencement of trial after framing of charge.[13] At the pre-charge stage, Court could not direct the prosecution to furnish copies of other documents[14] It was for the accused to do so during trial or at the time of entering his defence. However, the evolution of law has seen that at the stage of framing charge, Courts can rely upon the material which has been withheld by the prosecutor, even if such material is not part of the charge sheet, but is of such sterling quality demolishing the case of the prosecution.[15] Courts are not handicapped to consider relevant material at the stage of framing charge, which is not relied upon by the prosecution. It is no argument that the accused can ask for the documents withheld at the time of entering his defence.[16] The framing of charge is a serious matter in a criminal trial as it ordains an accused to face a long and arduous trial affecting his liberty. Therefore, the Court must have all relevant material before the stage of framing charge to ascertain if grave suspicion is made out or not. Full disclosure at the stage of section 207 of the code, which immediately precedes discharging or charging an accused, enables an accused to seek a discharge, if the documents, including those not relied upon by the prosecution, create an equally possible view in favour of the accused.[17] On the other hand, delaying the reception of documents postpones the vindication of the accused in an unworthy trial and causes injustice by subjecting him to the trauma of trial. There is no gainsaying that justice delayed is justice denied, therefore, such an approach ought not to receive judicial consent. A timely discharge also travels a long way in saving precious time of the judiciary, which is already overburdened by the burgeoning pendency of cases. Thus, delayed or piecemeal disclosure not only prejudices the defence of the accused, but also protracts the trial and occasions travesty of justice.
III. Duties of the stakeholders in criminal justice system
The foregoing analysis reveals that participation of the investigating agency, the prosecution and the Court is inextricably linked to the enforcement of the right to disclosure. The duties cast on these three stakeholders in the criminal justice system, are critical to the protection of this right. It is incumbent upon the investigating agencies to investigate cases fairly and to place on record all the material irrespective of its implication on the case of prosecution case. Investigation must be carried out with equal alacrity and fairness irrespective of status of accused or complainant.[18] An onerous duty is cast on the prosecution as an independent statutory officer, to conduct the trial with the objective of determination of truth and to ensure that material favourable to the defence is supplied to the accused. Ultimately, it is the overarching duty of the Court to ensure a fair trial towards the administration of justice for all parties. The principles of fair trial require the Court to strike a delicate balance between competing interests in a system of adversarial advocacy. Therefore, the court ought to exercise its power under section 156(3) of the Code to monitor investigation and ensure that all material, including that which enures to the benefit of the accused, is brought on record. Even at the stage of supply of copies of police report and documents under section 207 of the Code, it is the duty of the Court to give effect to the law laid down by the Hon’ble Supreme Court in Manu Sharma (supra) and Sasikala (supra), and ensure that all such material is supplied to the accused irrespective of whether it is “relied upon” by the prosecution or not.
IV. Alternate Remedy
The conundrum of supply of copies under section 207 of the code abounds criminal trials. Fairness is an evolving concept. There is no doubt that disclosure of all material which goes to establish the innocence of an accused is the sine qua non of a fair trial.[19] Effort is evidently underway to expand the concept in alignment with English jurisprudence. In the meanwhile, does the right of an accused to disclosure have another limb to stand on? Section 91 of the Code comes to the rescue of an accused, which confers wide discretionary powers on the Court, independent of section 173 of the Code, to summon the production of things or documents, relevant for the just adjudication of the case. In case the Court is of the opinion that the prosecution has withheld vital, relevant and admissible evidence from the Court, it can legitimately use its power under section 91 of the Code to discover the truth and to do complete justice to the accused.[20]
V. Conclusion
A society’s progress and advancement are judged on many parameters, an important one among them being the manner in which it administers criminal justice. Conversely, the ironic sacrilege of the core virtues of criminal jurisprudence in the temples of justice evinces social decadence. The Indian legislature of the twenty first century has given birth to several draconian statutes which place iron shackles on personal liberty, evoking widespread fear of police abuses and malicious prosecution. These statutes not only entail presumptions which reverse the burden of proof, but also include impediments to the grant of bail. Thus, a very heavy burden to dislodge the prosecution case is imposed on the accused, rendering the right to disclosure of paramount importance. It is the duty of the Court to keep vigil over this Constitutional and statutory right conferred on an accused by repudiating any procedure which prejudices his defence. Notable advancement has been made by the Apex Court in interpreting section 207 of the Code in conformity with the Constitutional mandate, including the right to disclosure. Strict adherence to the afore-noted principles will go a long way in ensuring real and substantial justice. Any departure will not only lead to judicial anarchy, but also further diminish the already dwindling faith of the public in the justice delivery system.
**
Advocate Manu Sharma has been practising at the bar for over sixteen years. He specialises in Criminal Defence. Some of the high profile cases he has represented are – the 2G scam case for former Union minister A Raja; the Religare/Fortis case for Malvinder Singh; Peter Mukerjee in the P Chidambaram/ INX Media case; Devas Multimedia in ISRO corruption act case; Om Prakash Chautala in PMLA case; Aditya Talwar in the aviation scam case; Dilip Ray, former Coal Minister in one of the coal scam cases; Suhaib Illyasi case.
**
Disclaimer: The views or opinions expressed are solely of the author.
[1] Maneka Gandhi and Another v. Union of India, (1978) 1 SCC 248
[2] S. 3 of the Criminal Procedure and Investigations Act, 1996
[3] R v. H and R v. C, 2004 (1) ALL ER 1269
[4] R v. Ward (Judith), (1993) 1 WLR 619 : (1993) 2 ALL ER 577 (CA)
[5] R v. Preston, (1994) 2 AC 130 : (1993) 3 WLR 891 : (1993) 4 ALL ER 638 (HL), R v. Stinchcome,
(1991), 68 C.C.C. (3d) 1 (S.C.C.)
[6] Vinubhai Haribhai Malaviya and Others v. State of Gujarat and Another, 2019 SCC Online SC 1346
[7] Sidhartha Vashishth alias Manu Sharma v. State (NCT of Delhi), (2010) 6 SCC 1
[8] R. 16, part II, Ch. VI of the Bar Council of India Rules
[9] Manu Sharma, (2010) 6 SCC 1
[10] V.K. Sasikala v. State, (2012) 9 SCC 771 : AIR 2013 SC 613
[11] Sasikala, (2012) 9 SCC 771 : AIR 2013 SC 613
[12] Sala Gupta and Another v. Directorate of Enforcement, (2019) 262 DLT 661
[13] State of Orissa v. Debendra Nath Padhi¸(2005) 1 SCC 568
[14] Dharambir v. Central Bureau of Investigation, ILR (2008) 2 Del 842 : (2008) 148 DLT 289
[15] Nitya Dharmananda alias K. Lenin and Another v. Gopal Sheelum Reddy, (2018) 2 SCC 93
[16] Neelesh Jain v. State of Rajasthan, 2006 Cri LJ 2151
[17] Dilwar Balu Kurane v. State of Maharashtra, (2002) 2 SCC 135, Yogesh alias Sachin Jagdish Joshi v. State of Maharashtra, (2008) 10 SCC 394
[18] Karan Singh v. State of Haryana, (2013) 12 SCC 529
[19] Kanwar Jagat Singh v. Directorate of Enforcement & Anr, (2007) 142 DLT 49
[20] Neelesh, 2006 Cri LJ 2151
Disclaimer: The views or opinions expressed are solely of the author.
Validity & Existence of an Arbitration Clause in an Unstamped Agreement
By Kunal Kumar
January 8, 2024
In a recent ruling, a seven-judge bench of the Supreme Court of India in its judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, overruled the constitutional bench decision of the Supreme Court of India in N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. and has settled the issue concerning the validity and existence of an arbitration clause in an unstamped agreement. (‘N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III’)
Background to N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
One of the first instances concerning the issue of the validity of an unstamped agreement arose in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. In this case, the Hon’ble Apex Court held that if an instrument/document lacks proper stamping, the exercising Court must preclude itself from acting upon it, including the arbitration clause. It further emphasized that it is imperative for the Court to impound such documents/instruments and must accordingly adhere to the prescribed procedure outlined in the Indian Stamp Act 1899.
With the introduction of the 2015 Amendment, Section 11(6A) was inserted in the Arbitration & Conciliation Act 1996 (A&C Act) which stated whilst appointing an arbitrator under the A&C Act, the Court must confine itself to the examination of the existence of an arbitration agreement.
In the case of M/s Duro Felguera S.A. v. M/s Gangavaram Port Limited, the Supreme Court of India made a noteworthy observation, affirming that the legislative intent behind the 2015 Amendment to the A&C Act was necessitated to minimise the Court's involvement during the stage of appointing an arbitrator and that the purpose embodied in Section 11(6A) of A&C Act, deserves due acknowledgement & respect.
In the case of Garware Wall Ropes Ltd. v. Cosatal Marine Constructions & Engineering Ltd., a divisional bench of the Apex Court reaffirmed its previous decision held in SMS Tea Estates (supra) and concluded that the inclusion of an arbitration clause in a contract assumes significance, emphasizing that the agreement transforms into a contract only when it holds legal enforceability. The Apex Court observed that an agreement fails to attain the status of a contract and would not be legally enforceable unless it bears the requisite stamp as mandated under the Indian Stamp Act 1899. Accordingly, the Court concluded that Section 11(6A) read in conjunction with Section 7(2) of the A&C Act and Section 2(h) of the Indian Contract Act 1872, clarified that the existence of an arbitration clause within an agreement is contingent on its legal enforceability and that the 2015 Amendment of the A&C Act to Section 11(6A) had not altered the principles laid out in SMS Tea Estates (supra).
Brief Factual Matrix – N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Indo Unique Flame Ltd. (‘Indo Unique’) was awarded a contract for a coal beneficiation/washing project with Karnataka Power Corporation Ltd. (‘KPCL’). In the course of the project, Indo Unique entered into a subcontract in the form of a Work Order with N.N. Global Mercantile Pvt. Ltd. (‘N.N. Global’) for coal transportation, coal handling and loading. Subsequently, certain disputes arose with KPCL, leading to KPCL invoking Bank Guarantees of Indo Unique under the main contract, after which Indo Unique invoked the Bank Guarantee of N. N. Global as supplied under the Work Order.
Top of FormS
Subsequently, N.N. Global initiated legal proceedings against the cashing of the Bank Guarantee in a Commercial Court. In response thereto, Indo Unique moved an application under Section 8 of the A&C Act, requesting that the Parties to the dispute be referred for arbitration. The Commercial Court dismissed the Section 8 application, citing the unstamped status of the Work Order as one of the grounds. Dissatisfied with the Commercial Court's decision on 18 January 2018, Indo Unique filed a Writ Petition before the High Court of Bombay seeking that the Order passed by the Commercial Court be quashed or set aside. The Hon’ble Bombay High Court on 30 September 2020 allowed the Writ Petition filed by Indo Unique, aggrieved by which, N.N. Global filed a Special Leave Petition before the Supreme Court of India.
N. N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. – I
The issue in the matter of M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unqiue Flame Ltd. & Ors. came up before a three-bench of the Supreme Court of India i.e. in a situation when an underlying contract is not stamped or is insufficiently stamped, as required under the Indian Stamp Act 1899, would that also render the arbitration clause as non-existent and/or unenforceable (‘N.N. Global Mercantile Pvt. Ltd. v. Indo Flame Ltd. – I’).
The Hon’ble Supreme Court of India whilst emphasizing the 'Doctrine of Separability' of an arbitration agreement held that the non-payment of stamp duty on the commercial contract would not invalidate, vitiate, or render the arbitration clause as unenforceable, because the arbitration agreement is considered an independent contract from the main contract, and the existence and/or validity of an arbitration clause is not conditional on the stamping of a contract. The Hon’ble Supreme Court further held that deficiency in stamp duty of a contract is a curable defect and that the deficiency in stamp duty on the work order, would not affect the validity and/or enforceability of the arbitration clause, thus applying the Doctrine of Separability. The arbitration agreement remains valid and enforceable even if the main contract, within which it is embedded, is not admissible in evidence owing to lack of stamping.
The Hon’ble Apex Court, however, considered it appropriate to refer the issue i.e. whether unstamped instrument/document, would also render an arbitration clause as non-existent, unenforceable, to a constitutional bench of five-bench of the Supreme Court.
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II
On 25 April 2023, a five-judge bench of the Hon’ble Supreme Court of India in the matter of N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. held that (1) An unstamped instrument containing an arbitration agreement cannot be said to be a contract which is enforceable in law within the meaning of Section 2(h) of the Indian Contract Act 1872 and would be void under Section 2(g) of the Indian Contract Act 1872, (2) an unstamped instrument which is not a contract nor enforceable cannot be acted upon unless it is duly stamped, and would not otherwise exist in the eyes of the law, (3) the certified copy of the arbitration agreement produced before a Court, must clearly indicate the stamp duty paid on the instrument, (4) the Court exercising its power in appointing an arbitration under Section 11 of the A&C Act, is required to act in terms of Section 33 and Section 35 of the Indian Stamp Act 1899 (N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II).
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
A seven-judge bench of the Supreme Court of India on 13 December 2023 in its recent judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, (1) Agreements lacking proper stamping or inadequately stamped are deemed inadmissible as evidence under Section 35 of the Stamp Act. However, such agreements are not automatically rendered void or unenforceable ab initio; (2) non-stamping or insufficient stamping of a contract is a curable defect, (2) the issue of stamping is not subject to determination under Sections 8 or 11 of the A&C Act by a Court. The concerned Court is only required to assess the prima facie existence of the arbitration agreement, separate from concerns related to stamping, and (3) any objections pertaining to the stamping of the agreement would fall within the jurisdiction of the arbitral tribunal. Accordingly, the decision in N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II and SMS Tea (supra) was overruled, by the seven-judge bench of the Supreme Court of India.
Kunal is a qualified lawyer with more than nine years of experience and has completed his LL.M. in Dispute Resolution (specialisation in International Commercial Arbitration) from Straus Institute for Dispute Resolution, Pepperdine University, California.
Kunal currently has his own independent practice and specializes in commercial/construction arbitration as well as civil litigation. He has handled several matters relating to Civil Law and arbitrations (both domestic and international) and has appeared before the Supreme Court of India, High Court of Delhi, District Courts of Delhi and various other tribunals.
No Safe Harbour For Google On Trademark Infringement
By Mayank Grover & Pratibha Vyas
October 9, 2023
Innovation, patience, dedication and uniqueness culminate in establishing a distinct identity. A trademark aids in identifying the source and quality, shaping perceptions about the identity's essence. When values accompany a product or service's trademark, safeguarding against misuse and infringement becomes crucial. A recent pronouncement of a Division Bench of the Delhi High Court dated August 10, 2023 in Google LLC v. DRS Logistics (P) Ltd. & Ors. and Google India Private Limited v. DRS Logistics (P) Ltd. & Ors. directed that Google’s use of trademarks as keywords for its Google Ads Programme does amount to ‘use’ in advertising under the Trademarks Act and the benefit of safe harbour would not be available to Google if such keywords infringe on the concerned trademark.
Factual Background
Google LLC manages and operates the Google Search Engine and Ads Programme, while, Google India Private Limited is a subsidiary of Google that has been appointed as a non-exclusive reseller of the Ads Programme in India. The Respondents, DRS Logistics and Agarwal Packers and Movers Pvt. Ltd. are leading packaging, moving and logistics service providers in India.
On 22.12.2011, DRS filed a suit against Google and Just Dial Ltd. under provisions of the Trademarks Act, 1999 (‘TM Act’) inter alia seeking a permanent injunction against Google from permitting third parties from infringing, passing off etc. the relevant trademarks of DRS. The core of the dispute revolved around Google’s Ads Programme. DRS claimed that its trade name 'AGARWAL PACKERS AND MOVERS' is widely recognized and a 'well-known' trademark. Use of DRS’s trademark as a keyword diverts internet traffic from its website to that of its competitors and they were entitled to seek restraint against Google for permitting third parties who are not authorized to use the said trademark. DRS further argued that Google benefits from these trademark infringements. This practice involved charging a higher amount for displaying these ads, constituting an infringement of their trademarks. Whereas, Google contended that the use of the keyword in the Ads Programme does not amount to ‘use’ under the TM Act notwithstanding that the keyword is/or similar to a trademark. Thus, the use of a term as a keyword cannot be construed as an infringement of a trademark under the TM Act, and being an intermediary, it claimed a safe harbour under Section 79 of the Information Technology Act, 2000. (‘IT Act’).
In essence, the dispute between the parties was rooted in DRS’s grievance concerning the Ads Programme. The Learned Single Judge vide judgment dated 30.10.2021interpreted relevant provisions of the TM Act and drew on multiple legal precedents to arrive at the decision that DRS can seek protection of its trademarks which were registered under Section 28 of the TM Act and issued directions to investigate complaints alleging the use of trademark and/or to ascertain whether a sponsored result has an effect of infringing a trademark or passing off.
Being aggrieved, Google LLC and Google Pvt. Ltd. filed appeals before the Division Bench. Google LLC argued that the Single Judge’s findings were erroneous and the directions issued were liable to be set aside. Google India claimed that it doesn’t control and operate the Search Engine and the Ads Programme making it unable to comply with the directions passed in the impugned judgment.
Analysis & Decision of Court
The Division Bench found Single Judge’s rationale for assessing trademark infringement through keywords and meta-tags valid. Meta-tags are a list of words/code in a website, not readily visible to the naked eye. It serves as a tool for indexing the website by a search engine. If a trademark of a third party is used as a meta-tag, the same would serve as identifying the website as relevant to the search query that includes the trademark as a search term. The use of keywords in the Ads Programme also serves similar purpose. The Division Bench was unable to accept that using a trademark as a keyword, even if not visible, would not be considered trademark use under the TM Act.
Google placed heavy reliance on the decisions rendered by Courts across jurisdictions of United Kingdom, United States of America, European Union, Australia, New Zealand, Russia, South Africa, Canada, Spain, Italy, Japan and China; in the cases of Google France SARL and Google Inc. v. Louis Vitton SA & Ors.[1], Interflora Inc. v. Marks & Spencer Plc.[2], and L’Oreal SA v. eBay International AG[3] in support of the contention that the use of trade marks is by the advertiser and not by Google. However, the Division Bench rejected Google’s passive role; highlighting its active involvement in recommending and promoting trademark keywords for higher clicks in its Ads Programme. Division Bench referred to a few judicial decisions rendered in the United States of America that captured the essence of the controversy for perspective, concluding that Google actively promotes and encourages trademarks associated with major goods and services, rather than having a passive role.
It was held that the contention that the use of trademarks as keywords, per se constitutes an infringement of the trademark is unmerited; the assumption that an internet user is merely searching the address of the proprietor of the trademark when he feeds in a search query that may contain a trademark, is erroneous.
The Doctrine of 'Initial Interest Confusion' addresses trademark infringement based on pre-purchase confusion. The doctrine is applied when meta-tags, keywords, or domain names cause initial confusion similar to a registered trademark. If users are misled to access unrelated websites, trademark use in internet advertising may be actionable and reliance was placed on US precedents. Referring to Section 29 of the TM Act, it was directed that Section 29 does not specify the duration for which the confusion lasts but, even if the confusion is for a short duration and an internet user is able to recover from the same, the trade mark would be infringed and would offend Section 29(2) of the TM Act.
It was held that the Ads Programme is a platform for displaying advertisements. Google, being an architect and operator of its own programme makes it an active participant in the use of trademarks and determining the advertisements displayed on search pages. Their use of proprietary software makes them utilize trademarks and control the distribution of information related to potentially infringing links, ultimately leading to revenue maximization. Hence, a substantial link exists between Google LLC and Google India, rendering it impossible for Google India to deny its role in operating the Ads Programme. It was further held that Google sells trademarks as keywords to advertisers and encourages users to use trademarks as keywords for ads. It is contradictory for Google to encourage trademark use while claiming data belongs to third parties for exemption. After 2004, Google changed policies to boost revenue and subsequently, introduced a tool that searches effective terms, including trademarks. Google's active involvement in its advertising business and online nature does not necessarily qualify it for benefits under Section 79 of the IT Act. The Division Bench agreed with the view of the Single Judge that Google would not be eligible for protection of safe harbour under Section 79(1) of the IT Act, if its alleged activities infringe trademarks.
Conclusion
This is a seminal decision governing (and rather, restricting) the operations of intermediaries and redefining the jurisprudence of safe harbour under the IT Act. The decision is well-reasoned and establishes a significant precedent for safeguarding trademarks by uniquely holding Google accountable under its Ads Programme. The same will prevent usage of tradenames as a third-party trademark in keyword search or metatags by advertisers on Google’s search engine. While keywords and meta-tags have different levels of visibility, their purpose is similar i.e. advertising and attracting internet traffic. The use of trademarks as meta-tags by a person who is neither a proprietor of the trademark nor permitted to use the same leads to confusion amongst public at large due to the automated processes of search engines and consequently, constitutes trademark infringement.
About the Authors: Mayank Grover is a Partner and Pratibha Vyas is an Associate at Seraphic Advisors, Advocates & Solicitors
[1] C-236/08 to C-238/08 (2010) [2011] All ER (EC) 41
[2] [2014] EWCA Civ 1403
[3] 2C- 324/09 (2010)
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