Monika Rahar
Chandigarh, March 23, 2022: Applying the ratio pronounced by this Court in Shalini Enterprises Vs. India Bulls Financial Service, 2013 (2) CCC 835, wherein it was held that even if a cheque is a security cheque, the same is an integral part of the commercial process and the same acts as a deterrent for the drawer against dishonouring his financial commitment and can also be used towards discharging the liability of the drawer, the Punjab and Haryana High Court has denied relief to accused who argued with regard to the dishonoured cheque that the same was issued as a security cheque to his cousin and not to the complainant.
Also, the Bench of Justice Vikas Bahl opined that even in case where the accused of the is that he issued a signed blank cheque which was subsequently filled by the complainant, the Supreme Court’s decision in Bir Singh vs. Mukesh Kumar, 2019(4) SCC 197, wherein it was held that the Court shall presume the liability of the drawer of the cheques for the amount for which the cheques are drawn, would be attracted.
Challenge in the present Criminal Revision was to the judgment of the Trial Court, in the complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (NI Act) by the private respondent, vide which the present petitioner was convicted under Section 138 of the NI Act and was sentenced to undergo rigorous imprisonment for a period of two years and he was also directed to pay compensation to the complainant (second respondent) in a time-bound manner. Challenge was also made to the judgment of the Additional Sessions Judge, Fazilka, vide which appeal preferred by the present petitioner, was also dismissed.
It was the complainant’s case that the complainant on being on friendly terms with the petitioner advanced a loan of Rs. 5,50,000 in favour of the complainant, and in order to discharge his liability, the petitioner issued a cheque of the said amount in favour of the complainant with the assurance of its encashment. However, the cheque was dishonoured and returned unpaid with a cheque return memo with the remarks “funds insufficient”. Eventually, a complaint was filed and the Trial Court found the petitioner guilty of Section 13 of the NIA Act. The petitioner was convicted and sentenced to undergo imprisonment and to pay a fine in a time-bound manner.
Thereafter, an appeal was filed by the petitioner before the Court of Additional Sessions Judge, Fazilka where it was noticed that the petitioner did not dispute his signatures on the cheque and did not even deny the issuance thereof by him. It was further observed that there was presumption in favour of the second respondent under Section 118(b) read with Section 139 of the Act of 1881 which was not rebutted by the accused/petitioner. It was further observed that the complainant prima facie proved that a sum of Rs.5,50,000 was advanced by him and a cheque was issued to the complainant by the petitioner, which became dishonoured.
The petitioner’s counsel argued that the petitioner took a loan from his cousin namely Parampaljeet Singh and a security cheque was given to the said Parampaljeet Singh who misused the same by giving the same to the complainant. It was further submitted that the documents which were produced by the petitioner were not taken into consideration by the Court below and the petitioner had a reasonable defence in the present case.
The Court opined at the outset that the fact that the petitioner signed the cheque and the cheque was issued by him, was not disputed before the Court. Further, the Court observed that even if was the plea of the accused that he issued a signed blank cheque which was subsequently filled by the complainant, the Supreme Court in Bir Singh’s Case (Supra). The Supreme Court in this case also held that the revisional Court should not interfere in the absence of jurisdictional error.
Further, the Court made reference to the judgment of the co-ordinate Bench of the Punjab and Haryana Court in Shalini Enterprises’s Case (Supra) wherein it was held that even if a cheque is a security cheque, the same is an integral part of the commercial process and the same acts as a deterrent for the drawer against dishonouring his financial commitment and can also be used towards discharging the liability of the drawer. It was further held that to state otherwise, would defeat the whole purpose of a security cheque.
Coming to the factual matrix of this case, the Court opined that the fact that the petitioner issued a cheque and the same was signed by him, was undisputed. The Court also noted that the Appellate Court noticed that the cheque bore the signature of the petitioner and no reasons were given by the accused/petitioner as to why he gave a cheque bearing his signatures to his cousin Parampaljeet Singh.
On the plea raised by the petitioner to the effect that the cheque in question was given to his cousin on account of his having taken a loan from his cousin, the Court held that it had no legs to stand as no document was produced on record to substantiate the same. Moreover, the Court added that nothing was shown to prove that the loan stated to have been taken from his cousin was repaid to the said cousin by the petitioner.
“The said plea raised, does not even remotely rebut the presumption which has been raised against the present petitioner”, adjudged the Court.
On the vires of the impugned judgment, the Court opined that both the Courts below considered the entire material on record and after due appreciation of the same, held the present petitioner guilty of the offence under Section 138 of the Act of 1881.
Thus, the Court held, “There is no jurisdictional error or misreading of any evidence so as to call for interference by this Court and accordingly, the present Criminal Revision is dismissed.”
Read Judgment: Vijay Kumar Ghai & Ors. V. The State of West Bengal & Ors.
Pankaj Bajpai
New Delhi, March 23, 2022: Finding that there was no material to indicate that the accused-appellants had any malafide intention against complainant (Respondent) which was clearly deductible from the MOU arrived between the parties, the Supreme Court has deduced that no offence u/s 420 IPC could have been made out in a case where allegations were made in regard to failure on the part of the accused to keep his promise, in the absence of a culpable intention at the time of making promise being absent.
Noticing that entire origin of the dispute emanates from an investment made by second respondent amounting to Rs.2.5 crores in lieu of which 2,50,000/- equity shares were issued, finally culminating into the MOU and based on this MOU the respondent filed three complaints, the Division Bench of Justice Krishna Murari and Justice S. Abdul Nazeer observed that two simultaneous proceedings, arising from the same cause of action i.e. MOU were initiated by Respondent amounting to an abuse of the process of the law which is barred.
Going by the background of the case, In January 2008, an authorized representative of SMC Global Securities Ltd, Delhi (second respondent) desired to make an investment on its behalf with Vijay Kumar (appellants) wherein it was mutually decided between the parties that second respondent will invest an amount of Rs. 2.5 crore with the company in lieu of which they will be issued 2,50,000 equity shares of Priknit Apparel Pvt. Ltd (Appellants – Proforma company). Subsequently, an allotment letter was issued in favour of second respondent whereby 2,50,000 shares were issued in lieu of the investment made by him.
Having failed to bring the I.P.O as per memorandum of understanding, the second respondent issued a legal notice to the Appellants, who duly replied to the legal notice denying all the allegations. Thereafter, the second respondent filed a police complaint with PS Rajender Nagar, New Delhi by the concerned officer apprised that the complaint does not pertain to their jurisdiction and therefore the same ought to be transferred. Accordingly, second respondent filed a complaint with the Economic Offences Wing (EOW) and the said complaint was transferred to PS Darya Ganj, New Delhi.
Later, the second respondent filed a complaint u/s 156(3) of CrPC before the Tiz Hazari Court, New Delhi for registration of FIR against the Appellants and their company. In addition, the respondent also filed another Complaint u/s 68 of the Companies Act r/w/s 200 of CrPC which is pending adjudication. The Metropolitan Magistrate (MM) observed that the entire dispute was civil in nature and there was no criminality involved, thereby turning down the prayer of second respondent for registration of an FIR and posted the case for pre-summoning evidence with regard to the application u/s 156(3) CrPC filed by respondent.
Thereafter, the respondent filed a second complaint u/s 406, 409, 420, 468, 120B and 34 IPC on the basis of the same cause of action with the PS Bowbazar at Kolkata, but the concerned Police Station recommended closure of the case since the entire dispute was found to be civil in nature. The respondent then filed a protest petition with the Chief Metropolitan Magistrate (CMM), Kolkata against closure report, which was allowed and further investigation was directed. In the meantime, the authorized representative of respondent made a statement before the MM, Tis Hazari, New Delhi for withdrawing the complaint case.
Later, the Appellants filed a quashing petition u/s 482 CrPC seeking quashing of FIR and the High Court issued notice to the Respondents and stayed further proceeding of criminal case. The respondent thereafter filed an application for vacation of the stay order granted by the High Court but the same was dismissed while observing that second respondent had also filed a complaint at Delhi on the same allegations, thus the proceedings at Calcutta were intended to harass the Appellants. However, the High Court dismissed the quashing as well as the revision petition filed by the Appellants and observed that in order to exercise the power u/s 482 CrPC, the only requirement is to see whether continuance of the criminal proceedings would be a total abuse of the process of the court and the continuance of the criminal proceedings against the appellants is in no way an abuse of the process of the court.
After considering the submissions, the Top Court observed that forum shopping has been termed as disreputable practice by the courts and has no sanction and paramountcy in law.
“In spite of this Court condemning the practice of forum shopping, Respondent No. 2 filed two complaints i.e., a complaint u/s 156(3) Cr.P.C before the Tis Hazari Court, New Delhi on 06.06.2012 and a complaint which was eventually registered as FIR No. 168 u/s 406, 420, 120B IPC before PS Bowbazar, Calcutta on 28.03.2013. ie., one in Delhi and one complaint in Kolkata. The Complaint filed in Kolkata was a reproduction of the complaint filed in Delhi except with the change of place occurrence in order to create a jurisdiction”, noted the Court.
Speaking for the Bench, Justice Murari observed that “Entrustment” of property u/s 405 of IPC is pivotal to constitute an offence under this, and hence, a person who dishonestly misappropriates property entrusted to them contrary to the terms of an obligation imposed is liable for a criminal breach of trust and is punished u/s 406 of IPC.
“There can be no doubt that a mere breach of contract is not in itself a criminal offence and gives rise to the civil liability of damages. However, as held by this court in Hridaya Ranjan Prasad Verma & Ors. Vs. State of Bihar & Anr. (2000) 4 SCC 168, the distinction between mere breach of contract and cheating, which is criminal offence, is a fine one. While breach of contract cannot give rise to criminal prosecution for cheating, fraudulent or dishonest intention is the basis of the offence of cheating. In the case at hand, complaint filed by the Respondent No. 2 does not disclose dishonest or fraudulent intention of the appellants”, added the Bench.
Justice Murari further found from timeline of filing complaints, the malafide intention of Respondent which was to simply harass the appellants so as to pressurise them into shelling out the investment made by Respondent.
In order to attract the ingredients of Section of 406 and 420 IPC it is imperative on the part of the complainant to prima facie establish that there was an intention on part of the petitioner and/or others to cheat and/or to defraud the complainant right from the inception, added the Bench.
Accordingly, the Apex Court allowed the appeal and quashed the FIR and proceedings in pursuance of charge sheet against the appellants for the offences u/s 406, 420, 120B IPC.
Read Judgment: State of Karnataka & Anr V. Umesh
Pankaj Bajpai
New Delhi, March 23, 2022: While considering a case where the Karnataka Administrative Tribunal, having exercised the power of judicial review, found no reason to interfere with the award of punishment of compulsory retirement and the Division Bench of the High Court exceeded its jurisdiction under Article 226 of the Constitution and trenched upon a domain which fell within the disciplinary jurisdiction of the employer, the Supreme Court has clarified that acquittal of the accused in a criminal case does not debar the employer from proceeding in the exercise of disciplinary jurisdiction.
A Division Bench of Justice Dr. D.Y Chandrachud and Justice Surya Kant observed that in the exercise of judicial review, the Court does not act as an appellate forum over the findings of the disciplinary authority, and hence, does not re-appreciate the evidence on the basis of which the finding of misconduct has been arrived at in the course of a disciplinary enquiry.
Going by the background of the case, Umesh (respondent) working as a Village Accountant, was charged for demanding a bribe for deleting the name of a person from Column No. 11 of the RTC with regard to land situated at Shirdona Village. Accordingly, a criminal complaint was registered with the Lokayukta police against the respondent for the commission of an offence punishable u/s 7 and 13(1)(d) r/w/s 13(2) of the Prevention of Corruption Act, 1988.
During the course of the trial, the Special Judge gave the benefit of doubt to the respondent and acquitted him of all charges. Later, a disciplinary enquiry was initiated u/s 7(2) of the Karnataka Lokayukta Act 1984. Taking note of the complaint, and the fact that the phenolphthalein powdered currency notes were seized from the respondent, the Karnataka Upa Lokayukta-1 held that a prima facie case was established. By an order exercising powers u/s 12(3) of the Karnataka Lokayukta Act 1984 and Rule 14-A of the Karnataka Civil Services (Classification, Control and Appeal) Rules 1957, the Upa-Lokayukta-1 recommended the initiation of disciplinary proceedings against the respondent.
Later, the Government of Karnataka entrusted the case to the Upa-Lokayukta for enquiry under Rule 14 (A) of 1957 Rules, and accordingly, the Upa-Lokayukta nominated the Additional Registrar of Enquiries in the Karnataka Lokayukta as the inquiry officer for framing the charge and conducting the inquiry. By an Order, the Lokayukta held that the charge against the respondent was proved and recommended the penalty of compulsory retirement from service under Rule 8(vi) of the 1957 Rules.
Thereafter, the disciplinary authority issued a show cause notice to the respondent, who contended in his reply that the money seized was not received as a bribe but was for repayment of a loan borrowed by the brother-in-law of the complainant. The respondent also contended that since the Special Judge acquitted him on the same set of facts and evidence, there was no ground for him to hold him guilty of misconduct in the disciplinary proceedings. The disciplinary authority however, held that the misconduct was proved and imposed a penalty of compulsory retirement.
Aggrieved by the penalty, the respondent moved the Karnataka Administrative Tribunal, which upheld the order of compulsory retirement. On appeal, the High Court set aside the judgment of the Karnataka Administrative Tribunal directing the compulsory retirement of the respondent from service following a disciplinary enquiry on charges of bribery.
After considering the submissions, the Apex Court found that principles which govern a disciplinary enquiry are distinct from those which apply to a criminal trial, as in a prosecution for an offence punishable under the criminal law, the burden lies on the prosecution to establish the ingredients of the offence beyond reasonable doubt and the accused is entitled to a presumption of innocence.
The purpose of a disciplinary proceeding by an employer is to enquire into an allegation of misconduct by an employee which results in a violation of the service rules governing the relationship of employment, and unlike a criminal prosecution where the charge has to be established beyond reasonable doubt, in a disciplinary proceeding, a charge of misconduct has to be established on a preponderance of probabilities, added the Court.
Speaking for the Bench, Justice Chandrachud reiterated that the Court in the exercise of judicial review must restrict its review to determine if the rules of natural justice have been complied with, the finding of misconduct is based on some evidence, the statutory rules governing the conduct of the disciplinary enquiry have been observed, the findings of the disciplinary authority suffer from perversity and the penalty is disproportionate to the proven misconduct.
The enquiry was conducted in accordance with the principles of natural justice and therefore, the acquittal of the respondent in the course of the criminal trial did not impinge upon the authority of the disciplinary authority or the finding of misconduct in the disciplinary proceeding, concluded the Bench.
Accordingly, the Apex Court set aside the judgment of the High Court and restored the finding of misconduct and the punishment of compulsory retirement.
Read Judgment: State of Uttar Pradesh And Ors. V. Rajit Singh
Pankaj Bajpai
New Delhi, March 23, 2022: Observing that the Doctrine of Equality ought not to have been applied when the Enquiry Officer and the Disciplinary Authority held that the charges were proved against the delinquent officer, the Supreme Court has opined that merely because some other officers involved in the incident were exonerated and/or no action was taken against other officers could not be a ground to set aside the order of punishment when the charges against the delinquent officer were held to be proved in a departmental enquiry.
However, as the enquiry was found to be vitiated and was found to be in violation of the principles of natural justice in as much as it was alleged that the relevant documents mentioned in the charge sheet were not supplied to the delinquent officer, a Division Bench of Justice M.R Shah and Justice B.V Nagarathna remanded the matter to the Disciplinary Authority to conduct a fresh enquiry from the stage it stood vitiated.
Going by the background of the case, Rajit Singh (respondent – employee) was serving as a Junior Engineer at Balia. An enquiry was conducted by a Departmental Task Force where it was found that he had committed financial irregularities causing loss to the Government and disciplinary proceedings were initiated against the respondent and others. Thereafter the Enquiry Officer held the charges alleged against the respondent employee as proved and consequently also held the misconduct proved. The Disciplinary Authority concurred with the findings recorded by the Enquiry Officer and passed an order of recovery of Government loss of Rs. 22,48,964.42 as per the rules from the salary; temporarily stopping two salary increments.
The Tribunal however, quashed the punishment mainly on the ground of Doctrine of Equality and also on the ground that the enquiry conducted was in breach of principles of natural justice in as much as the relevant documents mentioned in the charge sheet were not supplied to the delinquent officer. This order was upheld by the High Court as well. Hence, present appeal by the State.
After considering the submissions, so far as the quashing and setting aside the order of punishment imposed by the Disciplinary Authority applying the Doctrine of Equality on the ground that other officers involved in the incident have been exonerated and/or no action has been taken against them, is concerned, the Apex Court observed that on the said ground, the order of punishment could not have been set aside by the Tribunal and the High court.
Finding that role of the each individual officer even with respect to the same misconduct is required to be considered in light of their duties of office, the Apex Court opined that there cannot be any claim of negative equality in such cases and therefore, both the Tribunal as well as the High Court have committed a grave error in quashing and setting aside the order of punishment imposed by the Disciplinary Authority by applying the Doctrine of Equality.
Speaking for the Bench, Justice Shah found that in a case where it is found that the enquiry is not conducted properly and/or the same is in violation of the principles of natural justice, in that case, the Court cannot reinstate the employee as such and the matter is to be remanded to the Enquiry Officer/Disciplinary Authority to proceed further with the enquiry from the stage of violation of principles of natural justice is noticed and the enquiry has to be proceeded further after furnishing the necessary documents mentioned in the charge sheet, which are alleged to have not been given to the delinquent officer in the instant case.
Accordingly, the Tribunal as well as the High Court ought to have remanded the matter to the Disciplinary Authority to conduct the enquiry from the stage it stood vitiated, added the Bench.
The Apex Court therefore remanded the matter to the Disciplinary Authority to conduct a fresh enquiry from the stage after the issuance of the charge sheet and to proceed further with the enquiry after furnishing all the necessary documents mentioned in the charge sheet and after following due principles of natural justice.
Read Order: Parveen Kumar v. State Of Haryana
Monika Rahar
Chandigarh, March 23, 2022: Considering the fact that if the petitioner’s car, seized after being intercepted by the Police for carrying the narcotic substance, was retained and kept idle in the police station, then it would likely to be converted into junk, the Punjab and Haryana High Court has ordered the release of the said car on sapurdari under Section 451 of the Cr.P.C.
While granting the relief sought, the Bench of Justice Sant Parkash held, “[Car is] ordered to be released on sapurdari to the petitioner… on the conditions (i) that he will preserve the said car in the same condition during the pendency of the trial; (ii) that he will not dispose of the same during the pendency of the trial; (iii) that he will produce the same in the trial Court as and when so ordered by the trial Court (iv) that he will not use or allow any person to use the car in question for commission of any offence including offence under the NDPS Act and (v) that he will deposit the market price of the car in question at the time of its seizure as determinable under the Income Tax/Act Rules in case of passing of order for its confiscation under Section 60 of the NDPS Act.”
The petitioner filed the present petition under Section 397 read with Section 401 of the Code of Criminal Procedure, 1973 for quashing/setting aside the order of the Special Judge (NDPS Act), Kaithal in case FIR registered under Section 20 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (the NDPS Act) whereby the application for release of a car on Sapurdari was dismissed.
As per the prosecution version, the petitioner was driving a white Ford Eco Sports Car and one Aakash was sitting as co-passenger along with him. The police party on the basis of secret information intercepted them and on the search of the car, contraband in a polythene bag was recovered underneath the front passenger seat of the vehicle. The above-said FIR was registered and the contraband, as well as the aforesaid car, were taken into possession by the police.
The petitioner, being registered owner of the car, filed an application for its release on Sapurdari which was dismissed by learned Special Judge (NDPS Act) on the grounds that the petitioner himself was arrested while travelling in the said vehicle with contraband being recovered under the seat of his vehicle. Feeling aggrieved, the petitioner filed the present revision petition for quashing/setting aside the above-said order.
The petitioner’s counsel contended that the car can be confiscated only after affording an opportunity of being heard was granted to the petitioner and that there was no provision under the NDPS Act debarring the release of the vehicle on sapurdari. Lastly, the Counsel stated that the impugned order suffers from material illegality and therefore, it the petition be allowed.
On the other hand, the State Counsel argued that the vehicle, if released on sapurdari, may be used as conveyance for carrying narcotic substances. The said vehicle was also involved in another case registered under Sections 420, 465, 467, 468 IPC, added the Counsel.
The Bench made reference to the judgment this Court in Gurbinder Singh @ Shinder Vs. State of Punjab, 2016 (4) RCR (Crl.) 492, wherein it was held that the vehicle used for transporting the narcotic drugs and psychotropic substances can also be released on sapurdari by invoking the provision under Section 451 of the Cr.P.C.
Coming to the fact sheet of this case, the Court noted that if the car in question is retained on the ground of being case property liable to confiscation and kept idle in the police station, then the same is likely to be converted into junk. The Court also added that any public auction of the car in question is not only likely to take a long time but may also not fetch an amount higher than the reserved price and also, the Court added that passing of final order for confiscation of the car in question may also take such long time that the car in question may become wholly unserviceable, complete junk and of no use for being taken over by the state on such confiscation.
In these facts and circumstances, the Court found it appropriate that the car is released on sapurdari to the registered owner on additional conditions, besides usual terms and conditions that the registered owner will not use or allow any person to use the car in question for the commission of any offence including offence under the NDPS Act and that he will deposit the market price of the car in question as determinable under the Income Tax Act/Rules in case of passing of order for its confiscation under Section 60 of the NDPS Act.
In view of the above discussion, the present revision petition was allowed and the car in dispute was ordered to be released on sapurdari to the petitioner being its registered owner on furnishing sapurdginama to the satisfaction of Special Judge (NDPS Act), Kaithal on the aforementioned conditions.
Read Judgment: Gangadhar Narayan Nayak vs. State of Karnataka & Ors.
Pankaj Bajpai
New Delhi, March 23, 2022: Observing that a child against whom offence u/s 23 of POCSO Act has been committed, by disclosure of her identity, may require special protection, care and even shelter, necessitating expeditious investigation for compliance of Sections 19(5) & (6), the Supreme Court has delivered a split verdict on the need of prior permission of jurisdictional Magistrate to investigate into offence u/s 23 of such Act.
The Division Bench of Justice Indira Banerjee and Justice J.K Maheshwari had a difference of opinion on the issue of sustainability of investigation absent prior permission. Justice Banerjee emphasized that the entire object of provisions such as Section 228A of the IPC, Section 327(2) of the CrPC, Section 74 of the Juvenile Justice (Care and Protection of Children) Act, 2015 and Section 23 of POCSO Act is to prevent disclosure of the identity of the victim and that the identity of the victim should not be discernible from any matter published in the media.
Going by the background of the case, in the year 2017, a news report was published in the Karavali Munjavu Newspaper regarding the sexual harassment of a 16 year old girl naming the victim in the said report. Accordingly, the victim’s mother lodged a complaint against the Appellant, an Editor of Newspaper, u/s 23 of POCSO, pursuant to which a criminal case was registered against the Appellant.
After investigation, the Police filed a report u/s 173 of CrPC and the Court of the Principal District Judge, Uttar Kannada, took cognizance of the offence alleged and directed that summons be issued to the Appellant. Thereafter, the Appellant filed an application for discharge u/s 227 of CrPC contending that an offence u/s 23 of POCSO being non-cognizable, the police could not have investigated the offence without obtaining an order of the Magistrate u/s 155(2) of CrPC.
The matter reached High Court, which held that the non obstante provision of Section 19 of POCSO overrides the provisions of CrPC including Section 155 thereof, and therefore, refused to quash the proceedings initiated against the Appellant u/s 23 of POCSO.
After considering the submissions, Justice Indira Banerjee found that Section 5 of the CrPC categorically states that nothing in the Code shall, in the absence of a specific provision to the contrary, affect any special law for the time being in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed by any other law for the time being in force.
“The language and tenor of Section 19 of POCSO and subsections thereof makes it absolutely clear that the said Section does not exclude offence under Section 23 of POCSO. This is patently clear from the language and tenor of Section 19(1), which reads “…. Any person who has apprehension that an offence under this Act is likely to be committed or has knowledge that such an offence has been committed……”. The expression “offence” in Section 19 of POCSO would include all offences under POCSO including offence under Section 23 of POCSO of publication of a news report, disclosing the identity of a child victim of sexual assault”, added the Bench.
Justice Banerjee clarified that legislative intent is to be construed from the words used in the statute, as per their plain meaning, and had Legislature intended that the Cr.P.C. should apply to investigation of an offence u/s 23 of POCSO, would specifically have provided so.
The expression “investigation” would, as in Section 4(1) or (2) of CrPC have expressly been incorporated in Section 31 or Section 33(9) or elsewhere in POCSO, added the Bench.
Justice Banerjee was unable to accept the appellant’s argument that the proceedings were vitiated and liable to be quashed or the appellant was liable to be discharged without trial, only because of want of prior permission of the jurisdictional Magistrate to investigate into the alleged offence.
However, in his dissenting opinion, Justice Maheshwari noted that the ‘trial flows cognizance and cognizance is preceded by investigation’, which is the basic scheme for the Court to cognizable cases.
It does not necessarily follow that an invalid investigation nullifies the cognizance or trial based thereon, added the Bench.
Therefore, Justice Maheshwari clarified that the procedure of Section 155(2) is required to be followed in an offence of POCSO Act u/s 23 which is non-cognizable and the Special Court is required to look into the procedure followed in the investigation.
Justice Maheshwari therefore concluded that the order taking cognizance and to pass consequential order rejecting the application for discharge is not in accordance with law.
Read Order: Puran Chand Sharma v. State of Haryana
Monika Rahar
Chandigarh, March 23, 2022: The Punjab and Haryana High Court has proposed departmental action against the Chief Judicial Magistrate, Yamuna Nagar for blatant violation of the order passed by the High Court. The High Court had directed the Magistrate to release the bail amount so deposited by the accused but the CJM declined to do so, thus inviting the wrath of the High Court.
Expressing its displeasure with the judicial indiscipline shown by the Chief Judicial Magistrate, Yamuna Nagar, Justice Manoj Bajaj held, “Thus, in view of the above discussion this Court has no hesitation in holding that Chief Judicial Magistrate, Yamuna Nagar has passed the impugned order by giving irrational reasons, which not only show his dearth of understanding criminal jurisprudence & fundamental principles of law, but also reflect judicial indiscipline on his part, which amounts to grave misconduct and warrants departmental action against him.”
The petitioner, apprehending arrest in an FIR registered under Sections 148, 149, 323, 427, 447, 452, 506 and 380 of the IPC, approached the High Court under Section 438 Cr.P.C. to seek pre-arrest bail, wherein the Court extended him interim concession. The Court directed the petitioner to deposit a sum of Rs.1,10,000 which, as per the Additional Advocate General Haryana was stolen but was not mentioned in the FIR. The said amount was deposited and the interim bail order was finally confirmed.
The trial in the subject FIR ended in the acquittal of all the accused including the petitioner, therefore, he moved an application for issuance of directions to Chief Judicial Magistrate, Yamuna Nagar for release of the amount of Rs.1,10,000 , and the same was accepted as the State counsel did not oppose the petitioner’s claim. However, despite the direction passed by the High Court, Chief Judicial Magistrate, Yamuna Nagar proceeded to decline the prayer through impugned order and dismissed his application for release of the amount. Hence, the present petition under Section 482 of Cr.P.C. was filed seeking quashing of the impugned order.
The petitioner’s counsel submitted that once the trial of the case is over, the condition imposed at the time of granting the bail to the accused cannot be made binding upon him, merely because the complainant preferred an appeal, wherein admittedly even no notice was served. He further argued that the impugned order was passed by the Chief Judicial Magistrate in blatant violation of the order of the High Court.
While terming the impugned order as one passed in flagrant violation of clear and unambiguous direction issued by the High Court, the High Court called for an explanation from the CJM, Yamuna Nagar.
The State counsel pointed out that though the direction given by the High Court was specific, the trial Court declined the petitioner’s request on considering the fact that the complainant challenged the judgment of acquittal by filing an appeal, and also noticed that in appeal the accused persons was no served.
After hearing the parties concerned, the Court observed that while granting the concession of interim pre-arrest bail to the petitioner on the deposit of an amount of Rs.1,10,000 , the Court directed the petitioner not to claim the same till the case was finally decided. In this regard, the Court noted that till the conclusion of the trial, the petitioner never claimed a refund of the amount and after his acquittal, the accused was very much within his rights to claim a refund, which was not opposed by state counsel at all.
Thus, in the opinion of the Court, the direction issued by the High Court was crystal clear and did not require any interpretation, much less by the Chief Judicial Magistrate. Also, after perusing the impugned order, the Court opined that the Chief Judicial Magistrate, Yamuna Nagar needlessly proceeded to interpret the High Court order without any jurisdiction, and further observed that filing of appeal against the judgment of acquittal by the complainant was not brought to the notice of this Court, therefore, the amount should not be disbursed to the applicant/accused till further clarification from the High Court. This reasoning, the Court held was patently absurd and illogical as the order of deposit of amount was considered by the High Court while issuing the directions for the refund of the amount.
“Besides, the order passed in the bail application and the condition imposed therein could not have been stretched beyond the conclusion of trial, therefore, the impugned order dated 13.01.2021 is not sustainable”, adjudged the Court.
Also, the Court came down heavily on the explanation given by the CJM, by stating “apart from this, the explanation dated 22.02.2021 sent by Mr. Arvind Kumar, Chief Judicial Magistrate, Yamuna Nagar shows that the officer felt honour in receiving the show cause notice for violation of the order passed by the High Court and attempted to explain that he mistakenly refused to refund the amount as directed by this Court, and regretted inconvenience caused to this Court, as if, the officer failed to comply with the order of this Court on administrative side, e.g.- failure to send requisitioned record of a case, in time.”
Against this backdrop, the Court opined that the expression and reasoning contained in the impugned Order did not show that the disobedience of the direction by this Court was erroneous as claimed in the explanation, therefore, the same was not worth acceptance
Read Order: Shiv Kumar And Others v. State Of Haryana And Others
Monika Rahar
Chandigarh, March 23, 2022: While dealing with an appeal against the ejectment of the petitioners from the common land of the panchayat and imposition of penalty for illegal cultivation on the said land, the Punjab and Haryana High Court has held that in case an application is moved for waiver of deposit of the penalty amount, as mandated by proviso to Section 13-B of the Punjab Village Common Lands (Regulation) Act, 1961, the appellate authority while deciding the same, may grant some time for deposit of the amount and on deposit thereof, the appellate authority may proceed to decide the appeal.
However, the Bench of Justice Augustine George Masih and Justice Sandeep Moudgil also added that in case of non-deposit of the said amount by the appellant, the appeal can be dismissed because of non-compliance with the provisions of the Statute, as laid down in Section 13-B of the 1961 Act, but where no such prayer was even made along with the reasons as to why such waiver is sought, the appellate authority can insist upon deposit of the penalty amount as a pre-condition for entertaining the appeal.
The Court was dealing with an application under Section 7 (2) of the Punjab Village Common Lands (Regulation) Act, 1961 for ejectment from the land in dispute of the respondents (petitioners in the present writ petition), preferred by the Gram Panchayat of the village concerned.
The said application was allowed by the Assistant Collector, First Grade-cum-District Development and Panchayat Officer, Yamuna Nagar while holding that the land in dispute was covered under the definition of ‘Shamlat Deh‘ and thus was for the common purpose meant for the use of all villagers and hence, the Gram Panchayat was vested with the power of ordering ejectment of the petitioners. Since the petitioners were found to be in illegal cultivating possession of the said land, the penalty was imposed upon them.
Aggrieved, the petitioners preferred an appeal, which was dismissed on the ground that the amount of penalty was not deposited and the appeal was not maintainable, especially in the light of Section 13-B of the 1961 Act, which clearly states that no appeal shall lie unless the amount of penalty, if any, imposed under sub-section (2) of Section 7 is deposited with the Collector.
The petitioners, thereafter, preferred a revision petition which was also dismissed on the ground that there was no illegality in the impugned order. Thus, the instant Writ Petitions were filed before the High Court challenging the orders of the revenue authorities.
The petitioner’s counsel argued that the power of waiver can be exercised by the appellate authority. The counsel also argued that because of the non-deposit of the amount, the appeal itself cannot be dismissed and it is not the mandatory requirement while entertaining an appeal, to deposit the amount. The counsel insisted on to project as if no amount is required to be deposited at all at the time of filing the appeal or during the pendency of the appeal and the appellate authority is bound to entertain the appeal on merits.
The question before the Court was whether there was any requirement of deposit of penalty amount prior to the entertainment of the appeal and in case of failure to deposit the amount, whether the appeal could be dismissed for such non-deposit of the said amount.
From the proviso appended to Sub-section (1) of Section 13-B of the Act, the Court opined that the said proviso would lead to an undisputed conclusion that there would be no appeal maintainable without deposit of the amount of penalty as imposed by the Assistant Collector, 1st Grade by an order under Section 7 (2) which is the subject matter of the said appeal.
Relying upon the judgment of the Supreme Court in Sunil Batra vs. Delhi Administration and others, AIR 1978 Supreme Court 1675, the Court observed that therein it was recognised that the principle of reading down the provision so as to render it constitutional by putting certain riders thereto. The Court also observed that the discretion was left to the appellate authority to exercise the power of waiver or a part waiver in the deposit of penalty at the stage of entertaining an appeal dependent upon the facts and circumstances of the case mandating upon the appellate authority to give reasons why it proposes to dispense with the normal procedure of insistence of pre-deposit.
“Meaning thereby, where an appellant, in a particular case, seeks interim relief of stay on deposit of the amount of penalty or waiver thereof by giving therein the reasons and the extra-ordinary circumstances which would include the inability to deposit the said amount pleading therein his financial condition, the appellate authority could exercise its powers for grant of such interim stay/waiver”, asserted the Bench.
Additionally, the Bench opined that in case such a prayer is made along with the reasons, it is mandated upon the appellate authority to consider the same and pass appropriate orders. The Court held that in case an application is moved for waiver of deposit of the amount assigning reasons for such a prayer, the appellate authority while deciding the same, may grant some time for deposit of the amount and on deposit thereof, the appellate authority may proceed to decide the appeal.
However, it was also added by the Court that in case of non-deposit of the said amount by the appellant, the appeal can be dismissed because of non-compliance of the provisions of the Statute, as laid down in Section 13-B of the 1961 Act, but where no such prayer was even made, what to say of along with the reasons as to why such waiver is sought, the appellate authority can insist upon deposit of the penalty amount as a pre-condition for entertaining the appeal.
Coming to the present Writ Petitions, the Court opined that there was nothing on the record to indicate that an application before the appellate authority was moved by the petitioners mentioning the reasons and/or their inability to deposit the amount of penalty, nor the petitioners highlighted in their pleadings before the High Court the said aspect leading to a conclusion that the petitioners proceeded to not depositing the amount of penalty and insisted upon the hearing of the appeal without deposit of the said amount.
Thus, the Court concluded that the appellate authority was fully justified, in such circumstances, to dismiss the appeal for non-deposit of the amount of penalty. Therefore, finding no illegality in the impugned orders, the Court dismissed the Writ Petitions.
Read Order: Harsh v. State Of Punjab
Monika Rahar
Chandigarh, March 22, 2022: While dealing with a bail plea of an accused who was juvenile at the time of commission of the alleged offence, the Punjab and Haryana High Court has held that the nature of the offence is not one of the factors on which bail may be granted or refused to the juvenile in conflict with law and, therefore, bail cannot be denied to a juvenile in conflict with law on the ground of gravity of the offence involved.
The Bench of Justice Sant Parkash also asserted, “Bail can be denied to a juvenile in conflict with law only where there appear reasonable grounds for believing that the release of the juvenile in conflict with law on bail is likely to bring him in association with any known criminal or expose him to moral, physical or psychological danger or his release would defeat the ends of justice.”
Further, the Court added that Section 12 (grant of bail to a person who is apparently a child alleged to be in conflict with law) of the Juvenile Justice Act requires bail to be mandatorily granted to the juvenile in conflict with law and grant of bail to the juvenile in conflict with law is the rule and denial an exception.
The allegation against the petitioner was that he along with his co-accused persons constituted a gang; commit robbery by inflicting injuries and murdered of one Jasvir Singh. Consequently, an FIR was registered under Sections 304-A and 279 of IPC while the charge-sheet was presented under Section 302/397/201 of the IPC. Thus, in order to seek bail, a petition under Section 439 of the Cr.P.C. was filed for grant of regular bail to the petitioner on the ground of him being juvenile at the time of alleged occurrence. He also sought parity with his co-accused, who was already granted bail by Co-ordinate Bench of the High Court itself in 2021.
Earlier, the petitioner applied for bail in the instant FIR before Additional District and Sessions Judge, SBS Nagar but the same was dismissed as the charge-sheet was presented against the applicant/accused and the case has been committed to the Court of Sessions. The petitioner approached the High Court, as a result of which the trial Court was directed to consider the plea of the present petitioner on merit with regard to his being a juvenile under the provisions of Juvenile Justice (Care and Protection of Children) Act, 2015. The accused/petitioner filed second bail application which was also dismissed.
After considering the factual situation of the case, the Court observed that the petitioner was less than 18 years of age at the time of commission of the offence, thus his bail application is to be decided in view of the provisions of JJ Act.
On the JJ Act, the Court opined that the same was enacted to consolidate and amend the law relating to children alleged and found to be in conflict with law and children in need of care and protection by catering to their basic needs through proper care, protection, development, treatment, social reintegration, by adopting a child-friendly approach in the adjudication and disposal of matters in the best interest of children and for their rehabilitation through processes provided, and institutions and bodies established.
After perusing the order of the Additional Sessions Judge, SBS Nagar whereby petitioner’s bail was denied, the Court opined that the nature of the offence is not one of the factors on which bail may be granted or refused to the juvenile in conflict with law and, therefore, bail cannot be denied to a juvenile in conflict with law on the ground of gravity of the offence involved.
Further, the Court added that Section 12 (grant of bail to a person who is apparently a child alleged to be in conflict with law) of the JJ Act requires bail to be mandatorily granted to the juvenile in conflict with law and grant of bail to the juvenile in conflict with law is the rule and denial an exception.
Also, the Court added that bail can be denied to a juvenile in conflict with law only where there appear reasonable grounds for believing that the release of the juvenile in conflict with law on bail is likely to bring him in association with any known criminal or expose him to moral, physical or psychological danger or his release would defeat the ends of justice.
In the present case, the Court opined that the Additional Sessions Judge, SBS Nagar dismissed the petitioner’s bail application on the ground that his release on bail would expose him to moral, physical or psychological danger and that his release would defeat the ends of justice but the learned Court below did not refer to any material in support of his decision. However, the High Court was of the view that no such material was placed before the High Court by the respondent-State.
In view of the facts and circumstances of the case particularly in the absence of any material furnishing reasonable grounds for belief as to existence of any of the grounds specified in Section 12 of the JJ Act for denial of bail, the period of custody of the petitioner, parity with his co-accused who was already granted bail, the petitioner was held to be entitled to grant of bail and the impugned orders of the Courts below were set aside by the High Court.
Read Order: Mr. Monishankar Hazra and Another v. State of Haryana and others
Monika Rahar
Chandigarh, March 22, 2022: Exercising its powers under Section 482 CrPC, the Punjab and Haryana High Court has quashed an FIR while reiterating the law as laid down by the Supreme Court as well as by the various High Court, that the registration of the second FIR with respect to the same cause of action is illegal and deserves to be quashed and further, filing of successive applications without disclosing the final report in the earlier applications and instituting criminal proceedings with a malafide motive to wreak vengeance, would be valid grounds for seeking quashing of the criminal proceedings.
In this case, before Justice Vikas Bahl, the complainant (former employee of the first accused/ company), filed a complaint against ten accused persons (including 9 petitioners in both petitions that the High Court was dealing with) praying for the issuance of directions as envisaged under Section 156(3) of the Cr.P.C. to the concerned Police Station for registration of an FIR under Sections 406, 409, 420, 465, 467, 468, 471 and 120-B IPC, on the allegations that the accused persons committed illegalities in order to procure a tender, floated by Haryana State Health Resource Centre (HSHRC) for implementation of Hospital Information System (HIS) in favour of M/s United Health Group.
The Chief Judicial Magistrate, Panchkula, vide impugned order allowed the said application and directed the SHO, Sector 5 Panchkula to lodge the FIR. It was further observed by the Magistrate that since the complainant (second respondent) was also involved in the bidding process on behalf of the accused- company, the Court made the Assistant General Manager and the Senior Consultant, HARTRON as the complainants. Consequently, an FIR was registered and hence, the nine accused persons approached the High Court with two separate petitions under Section 482 of Cr.P.C. seeking quashing of the impugned order.
Before the Court, it was highlighted by the Court that the second respondent/ complainant in order to extract the said money from the petitioner-company and its employees, filed several complaints before the various police officials and other authorities. It was alleged that the first Complaint (2016) was filed before the Cyber Crime Cell, Mandir Marg, New Delhi wherein, allegations were levelled with respect to the hacking of the personal e-mail account of the complainant and qua the criminal conspiracy of the petitioner company and its officers.
While the second complaint was filed in 2017 before the Additional Deputy Commissioner of Police, Rohini, New Delhi, wherein it was alleged that in the year 2014 the company had participated in a bid to secure the tender floated by the Haryana Government for implementation of hospital information system and even though the company did not fulfil the essential qualifications yet, the company/their officers participated in the tender process by creating false and fabricated documents such as experience certificates etc. Along with this other allegations were also levelled.
By the third complaint, a prayer was made to issue directions to the SHO/IO concerned to register an FIR and to investigate the matter. Pursuant to this complaint, the Chief Metropolitan Magistrate, Rohini Court directed registration of an FIR only under Sections 66 and 66-C of the Information Technology Act, 2000. Four other complaints were also made by the complainant. Thus, as many as seven complaints in total were filed.
After undertaking a rigorous analysis of the factual and the legal situation, the Court concluded that the filing of the present application under Section 156(3) Cr.P.C. by the second respondent was with a malafide intent and with an ulterior motive to settle scores.
On the successive filing of complaints before various authorities, the Court opined that successive filing and the non-disclosure of the same in the present application under Section 156(3) Cr.P.C. showed that the complaint/ second respondent indulged in forum shopping and he suppressed facts and thus, the maxim “suppressio veri, expression faisi” i.e., suppression of the truth is equivalent to the expression of falsehood, gets attracted to the facts of the present case.
Further, the Court was of the opinion that in the present complaint under Section 156(3) Cr.P.C., there was no reference to the earlier application filed under Section 156(3) Cr.P.C. before the Rohini Courts, New Delhi, nor it was stated that similar allegations with respect to forgery, cheating and corruption was already made in the said application and it was deceivingly only mentioned in para 28 of the present complaint/application under Section 156(3) Cr.P.C. that an FIR was registered under Sections 66, 66-C of the I.T. Act.
At this juncture, the Court made reference to the Supreme Court in Krishna Lal Chawla and other v. State of Uttar Pradesh and another, (2021) 5 Supreme Court Cases 435, wherein it was observed that permitting multiple complaints by the same party with respect to the same incident whether it involves a cognizable or non-cognizable offence, will lead the accused to be entangled in numerous criminal proceedings which would also waste the precious time of the courts and the police.
Against this backdrop, the Court opined that on account of the malicious conduct and active concealment, the complainant has managed to get two FIRs registered against the petitioners on the same cause of action. The due course in law available to the complainant was to challenge the orders passed in the proceedings under Section 156(3) Cr.P.C. in the Delhi Court in case, he was dissatisfied with the non-registration of the FIR under certain offences or the complainant should have filed objections/protest petition in the cancellation proceeding with respect to the first FIR registered in Delhi but the same having not been done, the complainant now cannot be permitted to institute a subsequent application under Section 156(3) Cr.P.C. with respect to the same incident and on a similar set of allegations, added the Court.
Further, reference was made by the Court to the Apex Court in T.T. Antony vs. State of Kerela, 2001(6) SCC 181 a wherein it was held that with respect to one incident an FIR has already been registered, then a second FIR with respect to the same incident cannot be registered and in case, the same is registered then the High Court while exercising its powers under Section 482 Cr.P.C. would be well within its power to quash the second FIR.
Thus, keeping in view the eight grounds and the facts and circumstances of the present case and the ratio of law laid down in the plethora of judgments, both the petitions were allowed and the impugned order was set aside. However, the Court clarified that the setting aside of the impugned order would not affect the proceedings/complaint which was pending before the Lokayukta, Haryana and also the proceedings pending before the Rohini Courts in New Delhi arising out of the FIR registered in pursuance of the application of 2017 filed under Section 156(3) Cr.P.C. by the complainant in the Court of Chief Metropolitan Magistrate, Rohini Courts, New Delhi.
Read Order: Forum Against Oppression of Women In the matter between P Versus A & Ors.
Pankaj Bajpai
Mumbai March 22, 2022: While considering an interim application filed by the Forum Against Oppression of Women under Order 1 Rule 8-A r/w/s 151 of CPC seeking impleadment in the Suit dealing with POSH matters, the Bombay High Court has clarified that the directions issued by this Court on September 24, 2021 were not general directions and hence does not govern all matters under the POSH Act and Rules.
The Single Judge G.S. Patel highlighted that a Single Judge hearing a particular matter within his rostered assignment has no authority or jurisdiction to issue any rules binding the entire Court.
The Interim Application was filed by a group, The Forum Against Oppression of Women, under Order 1 Rule 8-A r/w/s 151 of CPC seeking impleadment in the Suit, which was between private parties wherein this Court by an order passed on September 24, 2021, had issued certain directions regarding the further progress in the matter, covering aspects of confidentiality. The Interim Application proceeded on the basis that the directions on that day in the Suit were general directions governing all matters under the POSH Act and Rules.
Justice Patel found that it remained to be specifically noted in that order of September 24, that the order was indeed not only restricted to this particular Suit, but was by consent of both sides and was based on signed written submissions presented by the Advocate for the Plaintiff and Defendants.
The directions had to be confined to this particular case, and they could not possibly have had any larger or wider applicability for the simple reason that any such Rules of general applicability would have to be approved by the Full Court, added the Single Judge.
Justice Patel observed that a delegation of the authority of the Full Court would have to be in a manner known to law, and a Single Judge hearing a particular matter within his rostered assignment has no authority or jurisdiction to issue any rules binding the entire Court, and it is only the Full Court or the Chief Justice which or who can do that.
Very possibly, such Rules might even have been required to be notified in the official gazette, but, none of this was in contemplation at any time on September 24,added the Single Judge.
Justice Patel further said that he addressed some of these inadvertent lapses in the subsequent order of October 11, 2021.
Ms Indira Jaising, counsel for the applicant, agreed that this sufficiently addressed her clients’ concerns in the Interim Application, and she therefore did not press the Application, added the Single Judge.
Lastly, the High Court clarified that this order was required to be uploaded, although with the names of the parties anonymized.
Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur
Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.
Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?
A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.
Q: So you have had the feeling that the establishment is trying to interfere in the matters?
A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.
Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?
A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.
Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?
A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.
Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?
A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.
Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?
A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.
Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?
A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.
Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?
A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.
Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?
I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.
Q: What kind of technology would you recommend that courts should have?
A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.
Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?
You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.
Q: Do you think law should permit this to death row convicts?
A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.
Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?
A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.
Q: What about capital punishment as a means of punishment itself?
A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.
Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?
A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.
Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?
A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?
Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?
A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).
Q: You think giving proper training to police to prepare a case will make a difference?
A: Yes, it will make a difference.
Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?
A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.
Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?
A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.
Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?
A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.
Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?
A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.
Q: What will happen if in a democracy these rights are controlled by hook or by crook?
A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.
Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?
A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.
Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?
A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.
Q: Is there any other thing you would like to say?
A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.
‘A major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013.’- Aakash Parihar
Aakash Parihar is Partner at Triumvir Law, a firm specializing in M&A, PE/VC, startup advisory, international commercial arbitration, and corporate disputes. He is an alumnus of the National Law School of India University, Bangalore.
How did you come across law as a career? Tell us about what made you decide law as an option.
Growing up in a small town in Madhya Pradesh, wedid not have many options.There you either study to become a doctor or an engineer. As the sheep follows the herd, I too jumped into 11th grade with PCM (Physics, Chemistry and Mathematics).However, shortly after, I came across the Common Law Admission Test (CLAT) and the prospect of law as a career. Being a law aspirant without any background of legal field, I hardly knew anything about the legal profession leave alone the niche areas of corporate lawor dispute resolution. Thereafter, I interacted with students from various law schools in India to understand law as a career and I opted to sit for CLAT. Fortunately, my hard work paid off and I made it to the hallowed National Law School of India University, Bangalore (NSLIU). Joining NLSIU and moving to Bangalorewas an overwhelming experience. However, after a few months, I settled in and became accustomed to the rigorous academic curriculum. Needless to mention that it was an absolute pleasure to study with and from someof the brightest minds in legal academia. NLSIU, Bangalore broadened my perspective about law and provided me with a new set of lenses to comprehend the world around me. Through this newly acquired perspective and a great amount of hard work (which is of course irreplaceable), I was able to procure a job in my fourth year at law school and thus began my journey.
As a lawyer carving a niche for himself, tell us about your professional journey so far. What are the challenges that new lawyers face while starting out in the legal field?
I started my professional journey as an Associate at Samvad Partners, Bangalore, where I primarily worked in the corporate team. Prior to Samvad Partners, through my internship, I had developed an interest towards corporate law,especially the PE/VC and M&A practice area. In the initial years as an associate at Samvad Partners and later at AZB & Partners, Mumbai, I had the opportunity to work on various aspects of corporate law, i.e., from PE/VC and M&A with respect to listed as well as unlisted companies. My work experience at these firms equipped and provided me the know-how to deal with cutting edge transactional lawyering. At this point, it is important to mention that I always had aspirations to join and develop a boutique firm. While I was working at AZB, sometime around March 2019, I got a call from Anubhab, Founder of Triumvir Law, who told me about the great work Triumvir Law was doing in the start-up and emerging companies’ ecosystem in Bangalore. The ambition of the firm aligned with mine,so I took a leap of faith to move to Bangalore to join Triumvir Law.
Anyone who is a first-generation lawyer in the legal industry will agree with my statement that it is never easy to build a firm, that too so early in your career. However, that is precisely the notion that Triumvir Law wanted to disrupt. To provide quality corporate and dispute resolution advisory to clients across India and abroad at an affordable price point.
Once you start your professional journey, you need to apply everything that you learnt in law schoolwith a practical perspective. Therefore, in my opinion, in addition to learning the practical aspects of law, a young lawyer needs to be accustomed with various practices of law before choosing one specific field to practice.
India has been doing reallywell in the field of M&A and PE/VC. Since you specialize in M&A and PE/VC dealmaking, what according to you has been working well for the country in this sphere? What does the future look like?
India is a developing economy, andM&A and PE/VC transactions form the backbone of the same. Since liberalization, there has been an influx of foreign investment in India, and we have seen an exponential rise in PC/VA and M&A deals. Indian investment market growth especially M&A and PE/VC aspects can be attributed to the advent of startup culture in India. The increase in M&A and PE/VC deals require corporate lawyersto handle the legal aspects of these deals.
As a corporate lawyer working in M&A and PE/VC space, my work ranges from drafting term-sheets to the transaction documents (SPA, SSA, SHA, BTA, etc.). TheM&A and PE/VC deal space experienced a slump during the first few months of the pandemic, but since June 2021, there has been a significant growth in M&A and PE/VC deal space in India. The growth and consistence of the M&A and PE/VC deal space in India can be attributed to several factors such as foreign investment, uncapped demands in the Indian market and exceptional performance of Indian startups.
During the pandemic many businesses were shut down but surprisingly many new businesses started, which adapted to the challenges imposed by the pandemic. Since we are in the recovery mode, I think the M&A and PE/VC deal space will reach bigger heights in the comingyears. We as a firm look forward to being part of this recovery mode by being part of the more M&A and PE/VC deals in future.
You also advice start-ups. What are the legal issues or challenges that the start-ups usually face specifically in India? Do these issues/challenges have long-term consequences?
We do a considerable amount of work with startupswhich range from day-to-day legal advisory to transaction documentation during a funding round. In India, we have noticed that a sizeable amount of clientele approach counsels only when there is a default or breach, more often than not in a state of panic. The same principle applies to startups in India, they normally approach us at a stage when they are about to receive investment or are undergoing due diligence. At that point of time, we need to understand their legal issues as well as manage the demands of the investor’s legal team. The majornon-compliances by startups usually involve not maintaining proper agreements, delaying regulatory filings and secretarial compliances, and not focusing on proper corporate governance.
Another major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013. Keeping up with these requirements can be time-consuming for even seasoned lawyers, and we can only imagine how difficult it would be for startups. Startups spend their initial years focusing on fund-raising, marketing, minimum viable products, and scaling their businesses. Legal advice does not usually factor in as a necessity. Our firm aims to help startups even before they get off the ground, and through their initial years of growth. We wanted to be the ones bringing in that change in the legal sector, and we hope to help many more such startups in the future.
In your opinion, are there any specific India-related problems that corporate/ commercial firms face as far as the company laws are concerned? Is there scope for improvement on this front?
The Indian legal system which corporate/commercial firms deal with is a living breathing organism, evolving each year. Due to this evolving nature, we lawyers are always on our toes.From a minor amendment to the Companies Act to the overhaul of the foreign exchange regime by the Reserve Bank of India, each of these changes affect the compliance and regulatory regime of corporates. For instance, when India changed the investment route for countries sharing land border with India,whereby any country sharing land border with India including Hong Kong cannot invest in India without approval of the RBI in consultation with the central government,it impacted a lot of ongoing transactions and we as lawyers had to be the first ones to inform our clients about such a change in the country’s foreign investment policy. In my opinion, there is huge scope of improvement in legal regime in India, I think a stable regulatory and tax regime is the need for the hour so far as the Indian system is concerned. The biggest example of such a market with stable regulatory and tax regime is Singapore, and we must work towards emulating the same.
Your boutique law firm has offices in three different cities — Delhi NCR, Mumbai and Bangalore. Have the Covid-induced restrictions such as WFH affected your firm’s operations? How has your firm adapted to the professional challenges imposed by the pandemic-related lifestyle changes?
We have offices in New Delhi NCR and Mumbai, and our main office is in Bangalore. Before the pandemic, our work schedule involved a fair bit of travelling across these cities. But post the lockdowns we shifted to a hybrid model, and unless absolutely necessary, we usually work from home.
In relation to the professional challenges during the pandemic, I think it was a difficult time for most young professionals. We do acknowledge the fact that our firm survived the pandemic. Our work as lawyers/ law firms also involves client outreach and getting new clients, which was difficult during the lockdowns. We expanded our client outreach through digital means and by conducting webinars, including one with King’s College London on International Treaty Arbitration. Further, we also focused on client outreach and knowledge management during the pandemic to educate and create legal awareness among our clients.
‘It’s a myth that good legal advice comes at prohibitive costs. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.’ – Archana Balasubramanian
Archana Balasubramanian is the founding partner of Agama Law Associates, a Mumbai-based corporate law firm which she started in 2014. She specialises in general corporate commercial transaction and advisory as well as deep sectoral expertise across manufacturing, logistics, media, pharmaceuticals, financial services, shipping, real estate, technology, engineering, infrastructure and health.
August 13, 2021:
Lawyers see companies ill-prepared for conflict, often, in India. When large corporates take a remedial instead of mitigative approach to legal issues – an approach utterly incoherent to both their size and the compliance ecosystem in their sector – it is there where the concept of costs on legal becomes problematic. Pre-dispute management strategy is much more rationalized on the business’ pocket than the costs of going in the red on conflict and compliances.
Corporates often focus on business and let go of backend maintenance of paperwork, raising issues as and when they arise and resolving conflicts / client queries in a manner that will promote dispute avoidance.
Corporate risk and compliance management is yet another elephant in India, which in addition to commercial disputes can be a drain on a company’s resources. It can be clubbed under four major heads – labour, industrial, financial and corporate laws. There are around 20 Central Acts and then specific state-laws by which corporates are governed under these four categories.
Risk and compliance management is also significantly dependent on the sector, size, scale and nature of the business and the activities being carried out.
The woes of a large number of promoters from the ecommerce ecosystem are to do with streamlining systems to navigate legal. India has certain heavily regulated sectors and, like I mentioned earlier, an intricate web of corporate risk and compliance legislation that can result in prohibitive costs in the remedial phase. To tackle the web in the preventive or mitigative phase, start-ups end up lacking the arsenal due to sheer intimidation from legal. Promoters face sectoral risks in sectors which are heavily regulated, risks of heavy penalties and fines under company law or foreign exchange laws, if fund raise is not done in a compliant manner.
It is a myth that good legal advice comes at prohibitive costs. Promoters are quick to sign on the dotted line and approach lawyers with a tick the box approach. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.
Investment contracts, large celebrity endorsement contracts and CXO contracts are some key areas where legal advice should be obtained. Online contracts is also emerging as an important area of concern.
When we talk of scope, arbitration is pretty much a default mechanism at this stage for adjudicating commercial disputes in India, especially given the fixation of timelines for closure of arbitration proceedings in India. The autonomy it allows the parties in dispute to pick a neutral and flexible forum for resolution is substantial. Lower courts being what they are in India, arbitration emerges as the only viable mode of dispute resolution in the Indian commercial context.
The arbitrability of disputes has evolved significantly in the last 10 years. The courts are essentially pro-arbitration when it comes to judging the arbitrability of subject matter and sending matters to arbitration quickly.
The Supreme Court’s ruling in the Vidya Drolia case has significantly clarified the position in respect of tenancy disputes, frauds and consumer disputes. It reflects upon the progressive approach of the court and aims to enable an efficient, autonomous and effective arbitration environment in India.
Law firms stand for ensuring that the law works for business and not against it. Whatever the scope of our mandate, the bottom line is to ensure a risk-free, conflict-free, compliant and prepared enterprise for our client, in a manner that does not intimidate the client or bog them down, regardless of the intricacy of the legal and regulatory web it takes to navigate to get to that end result. Lawyers need to dissect the business of law from the work.
This really involves meticulous, detail-oriented, sheer hard work on the facts, figures, dates and all other countless coordinates of each mandate, repetitively and even to a, so-called, “dull” routine rhythm – with consistent single-mindedness and unflinching resolve.
As a firm, multiply that effort into volumes, most of it against-the-clock given the compliance heavy ecosystem often riddled with uncertainties in a number of jurisdictions. So the same meticulous streamlining of mandate deliverables has to be extrapolated by the management of the firm to the junior most staff.
Further, the process of streamlining itself has to be more dynamic than ever now given the pace at which the new economy, tech-ecosystem, business climate as well as business development processes turn a new leaf.
Finally, but above all, we need to find a way to feel happy, positive and energized together as a team while chasing all of the aforesaid dreams. The competitive timelines and volumes at which a law firm works, this too is a real challenge. But we are happy to face it and evolve as we grow.
We always as a firm operated on the work from anywhere principle. We believed in it and inculcated this through document management processes to the last trainee. This helped us shut shop one day and continue from wherever we are operating.
The team has been regularly meeting online (at least once a day). We have been able to channel the time spent in travelling to and attending meetings in developing our internal knowledge banks further, streamline our processes, and work on integrating various tech to make the practice more cost-effective for our clients.
Validity & Existence of an Arbitration Clause in an Unstamped Agreement
By Kunal Kumar
January 8, 2024
In a recent ruling, a seven-judge bench of the Supreme Court of India in its judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, overruled the constitutional bench decision of the Supreme Court of India in N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. and has settled the issue concerning the validity and existence of an arbitration clause in an unstamped agreement. (‘N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III’)
Background to N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
One of the first instances concerning the issue of the validity of an unstamped agreement arose in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. In this case, the Hon’ble Apex Court held that if an instrument/document lacks proper stamping, the exercising Court must preclude itself from acting upon it, including the arbitration clause. It further emphasized that it is imperative for the Court to impound such documents/instruments and must accordingly adhere to the prescribed procedure outlined in the Indian Stamp Act 1899.
With the introduction of the 2015 Amendment, Section 11(6A) was inserted in the Arbitration & Conciliation Act 1996 (A&C Act) which stated whilst appointing an arbitrator under the A&C Act, the Court must confine itself to the examination of the existence of an arbitration agreement.
In the case of M/s Duro Felguera S.A. v. M/s Gangavaram Port Limited, the Supreme Court of India made a noteworthy observation, affirming that the legislative intent behind the 2015 Amendment to the A&C Act was necessitated to minimise the Court's involvement during the stage of appointing an arbitrator and that the purpose embodied in Section 11(6A) of A&C Act, deserves due acknowledgement & respect.
In the case of Garware Wall Ropes Ltd. v. Cosatal Marine Constructions & Engineering Ltd., a divisional bench of the Apex Court reaffirmed its previous decision held in SMS Tea Estates (supra) and concluded that the inclusion of an arbitration clause in a contract assumes significance, emphasizing that the agreement transforms into a contract only when it holds legal enforceability. The Apex Court observed that an agreement fails to attain the status of a contract and would not be legally enforceable unless it bears the requisite stamp as mandated under the Indian Stamp Act 1899. Accordingly, the Court concluded that Section 11(6A) read in conjunction with Section 7(2) of the A&C Act and Section 2(h) of the Indian Contract Act 1872, clarified that the existence of an arbitration clause within an agreement is contingent on its legal enforceability and that the 2015 Amendment of the A&C Act to Section 11(6A) had not altered the principles laid out in SMS Tea Estates (supra).
Brief Factual Matrix – N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Indo Unique Flame Ltd. (‘Indo Unique’) was awarded a contract for a coal beneficiation/washing project with Karnataka Power Corporation Ltd. (‘KPCL’). In the course of the project, Indo Unique entered into a subcontract in the form of a Work Order with N.N. Global Mercantile Pvt. Ltd. (‘N.N. Global’) for coal transportation, coal handling and loading. Subsequently, certain disputes arose with KPCL, leading to KPCL invoking Bank Guarantees of Indo Unique under the main contract, after which Indo Unique invoked the Bank Guarantee of N. N. Global as supplied under the Work Order.
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)
Environment and Sustainable Development – A Balanced Approach - Nayan Chand Bihani
The debate between protection of the environment and sustainable development is an age old one and is growing in proportion with every passing day all over the world, in general and specifically with respect to developing countries like India, in particular.
The Stockholm Declaration on the Human Enviornment,1972 categorically stated that man is both the creator and the moulder of his environment, which gives him physical sustenance and affords him the opportunity of intellectual, moral, social and spiritual growth. In the long run and tortuous evolution of the human race on this planet a stage has been reached when through the rapid acceleration of science and technology man has acquired the power to transform his environment in countless ways and on an unprecedented scale. Both aspect of man’s environment, the natural and the man-made, are essential to his wellbeing and to the enjoyment of basic human rights-even the right to life itself. It also states that the protection and improvement of the human environment is a major issue which affects the wellbeing of peoples and economic development throughout the world, it is the urgent desire of the people of the whole world and the duty of all the Governments. The Declaration, in Principle 2, states that the natural resources of the earth, including the air, water, land, flora and fauna and especially representative samples of natural eco-systems, must be safeguarded for the benefit of present and future generations through careful planning or management, as appropriate. It further, in Principle 8, states that economic and social development is essential for ensuing a favourable living and working environment for man and for creating conditions on earth that are necessary for the improvement of the quality of life.
A milestone in this field is the Rio Declaration on Environment and Development, 1992. It, interalia, states that human beings are at the centre of concern for sustainable development and that they are entitled to a healthy and productive life in harmony with nature. It also states that the right to development must be fulfilled so as to equitably meet developmental and environmental needs of present and future generations. It states that in order to achieve sustainable development, environmental protection shall constitute an integral part of the development process and cannot be considered in isolation from it and that to achieve sustainable development and a higher quality of life for their people, States should reduce and eliminate unsustainable patterns of production and consumption and promote appropriate demographic policies. It contemplates that the States shall enact effective environmental legislation. Environmental standards, management objectives and priorities should reflect the environmental and developmental context to which they apply. The Declaration states that in order to protect the environment, the precautionary approach shall be widely applied by the states according to their capabilities and that environmental impact assessment, as a national instrument, shall be undertaken for proposed activities that are likely to have a significant adverse impact on the environment and are subject to a decision of a competent national authority.
Initially, the trend was to use ‘Polluter Pays’ principle and punish the offending unit. Subsequently, vide judicial decisions, the principle of sustainable development was widely applied so as to balance the two principles.
The Polluter Pays principle talks about the liability of the polluter. With the increase in the industrial development what subsequently also increased is the waste emitted out of these industries and as a result of these wastes not only were the immediate surroundings adversely affected but also the environment at large. There is no specific definition of the Polluter Pays principle, rather it is a practice emphasising on the fact that one who pollutes the environment should be held accountable and responsible for the same with consequential steps to be taken. The principle not just focuses on punishing the polluter but its main criterion is to ensure that the polluted environment returns back to its original state. The reason behind it is to promote ‘Sustainable Development’. Thus it can be summed up that Polluter Pays principle is an essential element of sustainable development. Therefore, whosoever causes pollution to the environment will have to bear the cost of its management. The principle imposes a duty on every person to protect the natural environment from pollution or else he will be responsible for the cost of the damage caused to the environment. The main reason behind imposing a cost is two folds. Firstly, to refrain any person from polluting the environment and secondly, if in the case there is pollution then it is the polluter’s duty to undo the damage. Hence, both of the above ensures that there should be sustainable development. It is pertinent to mention that the Polluter Pays principle is not a new concept. It was first referred to in 1972 in a Council Recommendation on Guiding Principles Concerning the International Economic Aspects of Environmental Policies of the Organisation for Economic Co-operation and Development. The same is also enshrined in Principle 16 of the Rio Declaration, which states that ‘the polluter, in principle, bear the cost of pollution.’ The need of the hour is a demonstrable willingness to adhere to the essence of the principle in order to ensure that there is development, but not at the cost of causing environmental degradation.
The Hon’ble Supreme Court of India in the case of Indian Council for Enviro-legal Action vs Union of India reported in LQ/SC/1996/358, interalia, putthe absolute liability upon the polluter for the harm caused to the environment.
The Hon’ble Supreme Court of India in the case of Vellore Citizens Welfare Forum vs Union of India, reported in LQ/SC/1996/1368, interalia, accepted the Polluter Pays Principle as a part of the Article 21 of the Constitution of India and also emphasised Article 48A and Article 51A(g) of the Constitution of India.
The Hon’ble Supreme Court of India in the case of Amarnath Shrine reported in LQ/SC/2012/1121, has categorically stated the right to live with dignity, safety and in a clean environment.Article 21 of the Constitution of India, guaranteeing the right to life is ever widening and needs to maintain proper balance between socio-economic security and protection of the environment.
The Hon’ble Apex Court in the case of Bombay Dyeing and Manufacturing Co Ltd- vs – Bombay Environmental Action Group reported in LQ/SC/2006/206, interalia, states that the consideration of economic aspects by Courts cannot be one and it depends on the factors of each case. However, strict views ought to be taken in cases of town planning and user of urban land so as to balance the conflicting demands of economic development and a decent urban environment. Ecology is important but other factors are no less important and public interest will be a relevant factor.
The Hon’ble Supreme Court in the case of Dahanu Taluka Environment Protection Group –vs- Bombay Suburban Electricity Supply Company Ltd reported in LQ/SC/1991/157, has held that it is primary for the Government to consider importance of public projects for the betterment of the conditions of living of people on one hand and necessity for preservation of social and ecological balance, avoidance of deforestation and maintenance of purity of atmosphere and water from pollution and the role of the Courts is restricted to examine the whether the Government has taken into account all the relevant aspects and has not ignored any material condition.
The Hon’ble Supreme Court of India in the case of Narmada BachaoAndolan vs Union of India reported in LQ/SC/2000/1509, interalia, reiterated the Polluter Pay Principle.
A milestone case is that of M C Mehta vs Union of India reported in LQ/SC/2004/397, wherein the Hon’ble Supreme Court explained the Precautionary principle and the principle of Sustainable Development. It was, interalia, stated that the development needs have to be met but a balance has to be struck between such needs and the environment. The Hon’ble Supreme Court also reiterated similar views in a series of cases, some of which are stated hereinbelow;
LQ/SC/2007/1421
- M C Mehta vs Union of IndiaLQ/SC/2009/1231
- Tirpur Dyeing Factory Owners Association vs Noyyal River Ayacutdars Protection Association &Ors.LQ/SC/2009/1891
An interesting question came up before the Hon’ble Supreme Court with regard to the setting up of nuclear power plants with regard to the possibility of considerable economic development weighed against risk of feared radiological hazard. The Hon’ble Apex Court in the case of G.Sundarrajan –vs- Union of India reported in LQ/SC/2013/536, interalia, held that the Courts will be justified to look into the aspect as to the opinions of experts and the adequacy of safety measures and will be justified to look into the safety standards being followed by the Nuclear Power Plant.
The Hon’ble Supreme Court, in the case of Lal Bahadur vs State of UP reported in LQ/SC/2017/1384, interalia, emphasised the importance of striking a balance between the two principles.
An important development is the advent of the National Green Tribunal which has the jurisdiction over all civil cases where a substantial question relating to environment (including enforcement of any legal right relating to environment) is involved and relates to the Acts specified in Schedule I, namely the Water (Prevention and Control of Pollution) Act, 1974, the Water(Prevention and Control of Pollution) Cess Act, 1977, the Forest Conservation Act, 1980, the Air (Prevention and Control of Pollution) Act, 1981, the Environment (Protection) Act, 1986, the Public Liability Insurance Act, 1991 and the Biological Diversity Act, 2002. The National Green Tribunal, since its inception, has been looking into the aspects of environmental pollution and the mitigation thereof.
It can thus be said that both the environment and development are essential in the modern world for the betterment and living standards of the people. However, rampant and unplanned development at the cost of the environment is not to be entertained and the Courts will keep a close watch into the aspect of sustainable development, interalia, based on the criteria and guidelines, as specified.
Nayan Chand Bihani is a practising advocate at Calcutta High Court. Mr. Bihani pursued his LL.B from the Calcutta University College of Law, Hazra Campus and was enrolled as an Advocate in December,1998. Mr. Bihani deals mainly with Writ petitions, specially in Environmental laws, Election laws, Educational laws, Municipal laws, Service laws and Public Interest Litigations. He also represents several authorities like the West Bengal State Election Commission, the West Bengal Pollution Control Board, the State of West Bengal, several Educational Institutions and Universities and several Municipalities and Municipal Corporations and the Odisha Pollution Control Board. He can be contacted at nayanbihani@gmail.com.
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