Read Order: Sarbjit Singh v. State of Punjab
Monika Rahar
Chandigarh, January 24, 2022: The Punjab and Haryana High Court has exercised its inherent power under Section 482 of Cr.P.C. to allow the petitioner to include Section 201 of IPC (added subsequently to the FIR) to the headnote and prayer clause of his petition, the filing of which resulted in an order of the High Court earlier this month, granting the petitioner bail.
While observing that the non- mentioning of Section 201 IPC in the headnote as well as in the prayer clause of the petition was an inadvertent error, the Bench of Justice Vikas Bahl allowed the amendment of the headnote, as well as the prayer clause of the petition, by allowing to add Section 201 IPC.
In the case at hand, the High Court granted bail to the petitioner by its earlier Order dated January 17, 2022, but in the said Order, Section 201 of the IPC was not reflected owing to the fact that it was subsequently added in the FIR and thus, the petitioner neither mentioned it in the head of the petition nor in the prayer clause. Hence, the present application under Section 482 of the Cr.P.C. was made for the inclusion of Section 201 IPC in the said order and petition.
The petitioner’s counsel appearing before the Court submitted that since the applicant-petitioner was not aware of the addition of Section 201 IPC in the case, thus, inadvertently the said Section was neither mentioned in the head of the petition nor in the prayer clause and therefore, the same was not reflected in Court’s earlier order. Thus, the counsel prayed for the amendment of the headnote, as well as the prayer clause of the petition for adding Section 201 IPC to it.
Keeping in view the above said facts and circumstances, the Court allowed the aforesaid amendment and the order granting bail to the applicant-petitioner was directed to be read as including Section 201 IPC also, in addition to the other Sections as mentioned in the order.
Thus, the petition was allowed.
Read Judgment: State Of Gujarat V. Arcelor Mittal Nippon Steel India Limited
Pankaj Bajpai
New Delhi, January 24, 2022: The Supreme Court has held that Essar Steel (ESL, now Arcelor Mittal Nippon Steel) (eligible unit under ‘The Scheme for Special Incentives to Prestigious Units 1990-95’) is disentitled to exemption from payment of purchase-tax as per original Entry No.255(2) by F.D.’s Notification dated March 5, 1992, issued u/s 49(2) of Gujarat Sales Tax Act, 1969.
A Division Bench of Justice M.R. Shah and Justice Sanjiv Khanna observing that by transfer of Naphtha and Natural Gas (raw-materials) by eligible unit (ESL) to another unit Essar Power Limited (EPL), after availing exemption from payment of purchase-tax and not using raw materials for own use for manufacture of goods, held that there was non-compliance of original Entry No.255(2) issued by Notification dated March 5,1992.
The two main grounds for such non compliance were the facets that firstly,it did not fulfill the eligibility criteria/conditions mentioned in original Entry No.255(2) and, secondly, there was a breach of declaration in Form No.26 furnished by the assessee.
The observation came pursuant to an appeal preferred by State of Gujarat (Appellant) challenging the judgment, whereby the High Court had upheld the common order passed by the Gujarat Value Added Tax Tribunal, Ahmedabad holding that Arcelor Mittal Nippon Steel India (Respondent) is entitled to the exemption from payment of amount of sales tax as per the original Entry No.255(2) vide F.D.’s Notification dated Mar 5, 1992, which was issued u/s 49(2) of the Gujarat Sales Tax Act, 1969.
The Division Bench sternly rejected the applicability of ‘principle of promissory estoppel’ stating the said doctrine is an equitable remedy and has to be moulded depending on the facts of each case and not straitjacketed into pigeonholes.
Further, speaking for the Bench, Justice Shah observed that, the Joint Commissioner, the Tribunal as well as High Court committed “a grave error in quashing and setting aside the penalty imposed by the Assessing Officer” as modus operandi adopted by assessee “warrants a penalty”.
As such, Justice Shah lamented that, by such transfer and sale of raw materials by ESL to EPL, EPL got the benefit of exemption, which otherwise being a power producing company was not eligible for such an exemption.
There was justification in State’s plea that accepting such an interpretation put forward by assessee, “would completely defeat the purpose of the exemption” and it would permit eligible industries to simply transmit raw-materials to other units, even though such units are not eligible for exemption under the notification, added the Bench.
Interpreting the exemption entry, the Top Court clarified that “only in a case where the raw materials, processing materials or consumable stores are used by the eligible unit and the eligible unit actually uses the goods purchased within the State of Gujarat as raw materials, processing materials or consumable stores in the manufacture of goods, there shall be exemption from payment of purchase tax/sales tax to the extent provided in the said Entry”.
The Top Court concluded that even the reasoning given by the Tribunal and the High Court that the demand of purchase tax is hit by the principle of promissory estoppel cannot be accepted.
Accordingly, the Apex Court restored the order passed by the Assessing Officer levying the demand of purchase tax and imposing the penalty and allowed Revenue’s appeal.
Read Order: Court on its own motion v. Union of India and Others
Monika Rahar
Chandigarh, January 24, 2022: Owing to a sudden and alarming surge in the number of COVID cases because of which the situation has turned grim and unsafe, the Punjab and Haryana High Court has re-imposed its interim directions issued on April 28, 2021, with immediate effect and these directions have been directed to remain operative until February 28, 2022.
In the suo motu proceeding, the Division Bench of Chief Justice Ravi Shanker Jha and Justice Arun Palli heard the Amicus Curiae, the Additional Solicitor General of India, the Advocate General, Haryana and other parties and observed that several Judges of the High Court a huge number of High Court staff and a large number of Advocates got infected with the virus. Thus, the representatives of the High Court Bar Association stressed the need to restore the directions issued by this Court on previous occasions.
The interim orders which have been ordered to be re-imposed and are to remain operative till February 28, 2022, are as follows-
Along with these specifications, the High Court has also clarified that the time for filing of a written statement or return in any Suit or proceeding pending before any Civil Court or any other forum, unless specifically directed, were extended until February 28, 2022. However, it was stated that the parties would not be precluded from filing such written statement or return before February 28, 2022.
The Government or any other local body or instrumentality of the State has been directed to not take any action for eviction and demolition in respect of any property, over which any citizen or person or party or any Body Corporate, has physical or symbolic possession till February 28, 2022.
It has also been directed that any Bank or Financial Institution should not take action for auction in respect of any property of any citizen or party or any Body corporate till February 28, 2022 subject to the clarification issued by this Court vide orders dated August 20,2021 and September 23,2021 restricting its applicability.
If Government or any other entity is required by the order of High Court or any Court subordinate to it or the Tribunals, to do a particular thing or carry out a certain direction in a particular manner, which is going to expire, the time for compliance of such order has now been extended up to February 28, 2022, unless specifically directed otherwise by the Court concerned; subject to the fact that the aforesaid prohibition shall not apply to the orders/ directions, which were required to be complied with and are meant for the benefit of the litigant or public at large.
Further, to clear ambiguity, the Court also passed certain directions that those interim orders / directions, which are not for a limited duration and are to operate until further orders, shall by this order remain unaffected.
In case extension of interim order as per the present order passed by this Court, causes any undue hardship and prejudice of any extreme nature, to any of the parties to such proceeding(s), such parties would be at liberty to seek appropriate relief by moving appropriate application before the Competent Court, Tribunal, Judicial or Quasi-Judicial Forum, and these directions shall not be taken as a bar for such Courts/Forums to consider such application filed by the aggrieved party, on its own merit, after due notice and providing opportunity of hearing to the other side, added the Court.
These directions will not preclude the States or Union Territory, Chandigarh or CentralGovernment from moving appropriate application for vacation/modification of such order in any particular case for reason of overriding public interest and all Courts, Tribunals, Judicial and Quasi-judicial authorities have been directed to abide by these directions, and the parties seeking relief covered by these directions can file hard copy or soft copy of this order before the competent court/forum, which shall be given due weightage.
The matter is further listed for February 24, 2022.
Read Order: Saryam v. State of Haryana and Others
Monika Rahar
Chandigarh, January 24, 2022: While dealing with a criminal writ petition against the non-disposal of the petitioner’s representation made to police authorities for seeking protection, the Punjab and Haryana High Court has observed that the Supreme Court has repeatedly held that a petition u/s 482 of Cr.P.C. should not be entertained for registration of an FIR as several alternative remedies like approaching the Superintendent of Police, the magistrate u/s 156(3) of Cr.P.C., and filing a criminal complaint u/s 200 of Cr.P.C. are available to the petitioner.
The petitioner was seeking to get settled in her house from which she was expelled. Representations were made before the Police, but the same was not decided and hence, the High Court was approached with a criminal writ petition under Article 226 of the Constitution of India seeking direction to the respondent authorities to provide adequate protection to the petitioner and to restrain private respondents from harassing her.
The Bench of Justice Vikas Bahl observed at the outset that in case the petitioner was not in possession of the property in question, then the appropriate remedy available to her was to file a civil suit for possession and not to file a representation before the Superintendent of Police and subsequently, to file a petition under Section 482 Cr.P.C. The Court noted from the said representation that the petitioner’s husband and son were involved in a criminal case. The allegations levelled with respect to some persons committing theft were mentioned. The Court observed that in case the petitioner sought to get an FIR registered on the basis of the alleged acts, then also petition under Section 482 Cr.P.C. would not be maintainable.
The Court made a reference to the judgment of the Supreme Court in Sakiri Vasu Vs. State of U.P. and others, 2008(2) SCC 409, wherein it was held that if a person has a grievance that his FIR was registered by a Police Station, then, he is first required to approach the SP. If his grievance still persists, then he should approach the Magistrate under Section 156(3) of Cr.P.C. instead of rushing to the High Court with a writ petition or a petition under Section 482 of Cr.P.C. It was further observed therein that the said person also has the remedy of filing a criminal complaint under Section 200 of Cr.P.C. Further, it was stated that High Courts should discourage the practice of filing a writ petition or petition under Section 482 of Cr.P.C. for the said cause of action.
Further reference was made to another judgment of the Apex Court in M. Subramaniam and another Vs. S. Janaki and another(Criminal Appeal No.102 of 2011), in which the concerned High Court while entertaining a petition filed under Section 482 of Cr.P.C., directed the registration of an FIR. The Supreme Court, citing the case of Sakiri Vasu case(Supra), set aside the order of the High Court observing that if such petitions were entertained then the High Courts will be flooded with such petitions and will not be able to do any other work and it was further observed that the complainant must avail his alternative remedy to approach the Magistrate concerned under Section 156(3) of Cr.P.C.
The State counsel stated that the petitioner’s husband and son were involved in a case of murder and it was on the said account that she left the village concerned with all her belongings.
“Be that as it may, the present petition either for seeking possession of property or for getting an FIR registered against private persons is not maintainable”, said the Bench.
Accordingly, the petition was dismissed.
Read Order: Sukhchain Singh @ Chaini v. State of Punjab
Monika Rahar
Chandigarh, January 24, 2022: The Punjab and Haryana High Court has expressed its concern over a bail matter in which the petitioner’s application for grant regular bail under Section 439 Cr.P.C. was treated as an application for anticipatory bail under Section 438 Cr.P.C. by the Addl. Sessions Judge, Faridkot who dismissed the said application by his July 2021 order. This dismissal was recorded despite the petitioner making specific pleading in his application about him being in judicial custody.
The Bench of Justice Jasgurpreet Singh Puri stated that the said order raised serious concern and thus the Court sent the case file to the concerned Administrative Judge of Faridkot for information and for taking further necessary action if so required, in accordance with law.
This matter came to light when the High Court was dealing with a petition for grant of regular bail to the petitioner in a case emanating from an FIR under Sections 420, 120-B of the IPC. The petitioner and his co-accused allegedly took money for conducting a committee and did return the same to the complainant. Initially, the petitioner approached the Sessions Court for regular bail, but his application was dismissed (while it was being considered to be one for grant of anticipatory bail) by the Addl. Sessions Judge, Faridkot.
The petitioner’s counsel submitted that the petitioner was in custody for more than nine months, the challan was presented under Section 173 Cr.P.C. and the charges were also framed. Moreover, he contended that at most the case involved a dispute of civil liability if any and since the investigation was already complete and no recovery was to be effected from the petitioner, the petitioner made a case for grant of regular bail.
In one of its earlier hearings, it came to the Court’s notice that the petitioner was in custody since March 2021 while the lower Court decided his application for grant of anticipatory bail on merits in July 2021, and thus the Court sought a report from the District & Sessions Judge, Faridkot on how anticipatory bail was decided on merits when the petitioner was already in custody much prior to the same.
From the report submitted it was gathered that the petitioner in fact filed a regular bail application with a specific pleading that he was already in judicial custody in the case. The Addl. Sessions Judge, Faridkot dismissed the bail application while considering the same as having been filed under Section 438 Cr.P.C. Further, the report stated that without giving any legally justifiable reason in passing the order, the Addl. Sessions Judge stated that this mistake happened due to a rush of work and he assured not to repeat the same.
Terming it a matter of ‘serious concern’ the court referred it to the Administration Judge of Faridkot.
Regarding the regular bail application before it, the Court observed that undoubtedly the investigation was complete, the chargesheet was already presented, and charges were framed. Further, it was noted that it was not the case of the State that some recovery was to be effected from the petitioner and that the petitioner would influence any witness or tamper with the evidence or flee from justice if released on bail.
Therefore, observing that the petitioner was facing incarceration since March, 2021 , the Court allowed the petition for grant of bail to the petitioner.
Read Order: Parveen v. State of Haryana
Monika Rahar
Chandigarh, January 24, 2022: In a case of rash and negligent driving, the Punjab and Haryana High Court has refused to interfere with the sentence awarded to the accused-petitioner by the lower Appellate Court on the ground that the said Court already reduced the sentence awarded by the Trial Court from imprisonment for two years to one year term. The sentence was found by the Court to be proportional to the degree of negligence attributed to the petitioner which resulted in the loss of life of an innocent youngster.
The Bench of Justice Harsimran Singh Sethi further said that once the petitioner was held to be rash and negligent and he did not challenge the order of conviction and the lower Appellate Court, keeping in view the degree of negligence attributed to the petitioner, already exercised its jurisdiction in reducing the sentence, no relief can be given to the petitioner in the present petition.
In this case, the Court was dealing with a revision petition filed against the order of conviction of the trial Court convicting the petitioner under Section 304-A IPC as well as the judgement of the lower Appellate Court by which the petitioner’s conviction was upheld but the sentence awarded to him was reduced from simple imprisonment for two years to simple imprisonment for one year.
The petitioner’s counsel submitted that the petitioner did not challenge the conviction but the quantum of sentence, which was awarded. The counsel further submitted that it was not a case where the petitioner should be sentenced to undergo imprisonment for a period of one year.
On the contrary, the State Counsel advanced a case for non-interference with the impugned order and judgement by submitting that the accident which was caused by the petitioner due to his rash and negligent driving took a life and that sufficient evidence was produced on record to prove the petitioner’s guilt. Further, he submitted that the petitioner’s plea for reduction of sentence was already accepted by the lower Appellate Court which reduced his sentence from two years to one-year imprisonment.
After considering revival submissions, the Court observed that the maximum sentence prescribed under Section 304-A IPC was up to two years and that the lower appellate Court already considered the petitioner’s prayer by reducing the sentence of imprisonment of two years to one year term. Further, the Court observed that no ground was put forth by the petitioner’s counsel to interfere with the sentence of the lower Appellate Court.
Thus, keeping in view the finding of rash and negligent driving by the petitioner and the resultant loss of innocent young life, the sentence imposed upon the petitioner by the lower Appellate Court was held valid and legal. The revision was dismissed.
Read Order: Virender v. State of Haryana
Tulip Kanth
Chandigarh, January 21, 2022: The Punjab and Haryana High Court has observed that it is obligatory on the part of the accused while being examined under Section 313 of Cr.P.C. to furnish some explanation with respect to incriminating circumstances associated with him and the Court must take note of such explanation even in a case of circumstantial evidence to decide as to whether or not the chain of circumstances is complete.
The Division Bench of Justice Ritu Bahri and Justice Ashok Kumar Verma opined that while dealing with a case of circumstantial evidence, the court must take utmost precaution whilst finding an accused guilty, solely on the basis of the circumstances proved before it.
The appeal in question had been preferred against the judgment of conviction passed by Sessions Judge, Narnaul.
In this case, it was alleged that the appellant-accused tried to commit rape upon a woman named Geeta, and when she resisted the accused inflicted blows on her.She tried to rescue herself but was badly injured and she died on the spot.
Later, when the police officials were informed, they seized the sample of blood-stained earth from the spot besides taking into possession the other articles found lying there. The recovered articles included blood-stained clothes of the appellant-accused and a broken piece of handle of kulhari used by him. The appellant was arrested on the same day and on interrogation, appellant-accused made a disclosure statement and got recovered kulhari used by him.
The Magistrate, in whose Court chargesheet was filed, supplied copies of chargesheet and other documents to the appellant-accused.Then the case was committed to the Sessions Judge as it involved the offences which were exclusively triable by the Court of Sessions.
The Sessions Judge, Narnaul, held the appellant-accused guilty for the offences punishable under Sections 302, 323, 325 IPC and sentenced the appellant-accused to undergo imprisonment .The appellant-accused was acquitted of the charge under Section 376/511 IPC as his complicity regarding the offences punishable under these Sections was not established.
After considering the submissions and evidence, the Division Bench stated that it was not possible to accept the submission that in the absence of a report regarding the origin of the blood found on the kulhari , the accused cannot be convicted, for it was only because of the lapse of time, that the blood could not be classified successfully. Therefore, no advantage could be conferred upon the accused to enable him to claim any benefit, and the report of dis-integration of blood etc. could not be termed as a missing link, on the basis of which the chain of circumstances may be presumed to be broken.
According to the Bench, the most important circumstance for the prosecution was the disclosure statement of the accused and the recovery of weapon of offence consequent upon such disclosure statement.
“In the instant case when examined under Section 313 Cr.P.C., the accused pleaded innocence and further stated that he was not present in his house on the date of alleged occurrence. Some unknown person had caused murder of his daughter Geeta and ran away from the spot leaving kulhari in the street. However, no evidence in his defence was produced by the accused. In other words, the accused has not given any explanation whatsoever as regards the incriminating circumstances put to him under Section 313 Cr.P.C”, said the Division Bench.
The Bench also affirmed that in a case of circumstantial evidence, the prosecution must establish each instance of incriminating circumstance, by way of reliable and clinching evidence, and the circumstances so proved must form a complete chain of events, on the basis of which, no conclusion other than one of guilt of the accused can be reached.
The Court did not have any any doubt that the appellant had made voluntary disclosure statement, which led to the recovery of the weapon of offence i.e. blood-stained kulhari with broken handle which was concealed by him underneath the bushes, which was compared with the broken handle stained with human blood and upon analysis it was found that the broken handle was of the same kulhari, which was got recovered by the appellant-accused.
These aforesaid circumstances, as per the Bench,were sufficient to come to a conclusion that the appellant had committed the murder of the deceased woman and had rightly been convicted and sentenced by the Trial Court.
Read Order: Kuwarpal Singh Vs. State Of Punjab
Tulip Kanth
Chandigarh, January 21, 2022: Referring to the judgment of the Apex Court in Social Action Forum for Manav Adhikar Vs. Union of India, Ministry of Law and Justice, the Punjab & Haryana High Court has reiterated that mere non-recovery of some disputed dowry items cannot by itself be a ground for denial of bail u/s 498-A of IPC.
The Bench of Justice Manjari Nehru Kaul was hearing a petition filed u/s 438 of Cr.P.C. for grant of anticipatory bail to the husband, in the case pertaining to Sections 498-A, 406 and 506 of IPC and Section 4 of the Dowry Prohibition Act, 1967 registered at Police Station City-1, Abohar.
The counsel for the petitioner contended that the complainant-wife was unable to adjust in her matrimonial home with her husband i.e., the petitioner due to temperamental differences and only after 18 days of the marriage between the parties, she left her matrimonial home. It was submitted that it was in this above background, a false and fabricated case had been foisted upon the petitioner and his parents.
It was further put forth by the counsel that the parents of the petitioner had since been extended the concession of anticipatory bail. It was also submitted that in compliance of an interim order dated September 23, 2021 , the petitioner had joined the investigation and cooperated with the investigating agency.
Without disputing the factum of the petitioner having joined the investigation, the State counsel, however, submitted that few dowry articles had not yet been recovered.
But, petitioner’s counsel vehemently opposed the submissions made by the counsel opposite by urging that all dowry articles stood duly returned and he was no longer in possession of any of the complainant’s jewellery.
“Mere non-recovery of some disputed dowry items cannot by itself be a ground for denial of bail as has also been observed by the Hon’ble Supreme Court in case Writ Petition (Civil) No. 73 of 2015, titled as ‘Social Action Forum for Manav Adhikar Vs. Union of India, Ministry of Law and Justice’ decided on 14.09.2018”, said the Bench.
Thus, allowing the instant petition, the High Court made the interim order absolute subject to the conditions laid down in Section 438(2) of Cr.P.C.
Read Order: Nirmla v. State of Haryana and another
Tulip Kanth
Chandigarh, January 21, 2022: In a case pertaining to the Pre-Conception and Pre-Natal Diagnostic Techniques Act, 1994, the Punjab and Haryana High Court has observed that the government has been making attempts to put an end to the illegal practice of determination of sex of fetus.
The Bench of Justice Anil Kshetarpal stated that determination of sex of fetus is a social evil and certain unscrupulous persons are still continuing this misdeed in order to earn money.
Herein, the petitioner prayed for pre-arrest bail in a criminal case arising from the FIR dated December 14, 2021, registered under sections 4(4)/5(2)/4(5) of the Pre-Conception and Pre-Natal Diagnostic Techniques Act, 1994 and Section 120-B/420 of IPC, at Police Station Sector 8, District Faridabad.
According to the prosecution, the petitioner, along with her son and other co-accused, indulged in determining the sex of a fetus of a decoy customer. As per the provisions of the Pre-Conception and Pre-Natal Diagnostic Techniques Act, 1994, the Government has prohibited the sex determination test, so as to rule out the possibility of abortion in order to eliminate the female fetus.
As per the allegations, the petitioner, along with her son, had charged Rs.45,000 from a decoy customer and took her to an ultrasound clinic. After the test was conducted, on the information given by a decoy customer, the case was registered and certain accused persons were apprehended.
The petitioner contended that the petitioner did not enter the room where the ultrasound was being conducted and only an amount of Rs.200/- has been recovered from her. It was further submitted that another accused was not arrested, although, she was allegedly present there and the concerned doctor had not been made an accused in the present case.
Observing that the allegations against the petitioner are serious, the Bench opined that determination of sex of fetus is a social evil and the government has been making attempts to put an end to this illegal practice. However, certain unscrupulous persons are still continuing this misdeed in order to earn money. In the present case, the petitioner, along with her son, is stated to be the main accused, added the Court.
The Court, thus held that the custodial interrogation of the petitioner shall be necessary to unearth the entire racket.
Read Judgment: Bangalore Development Authority & Anr. V. The State Of Karnataka & Ors.
Pankaj Bajpai
New Delhi, January 21, 2022: While overruling the judgment of the Karnataka High Court in Sri Sudhakar Hegde and others vs. the State of Karnataka and others and other connected matters, the Supreme Court has opined that Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (2013 Act), repeals only the Land Acquisition Act, 1894 (LA Act) and not any other Central or State enactment dealing with acquisition.
Hence, 2013 Act would not regulate the acquisition proceedings made under the Bangalore Development Authority Act (BDA Act), added the Court.
A Division Bench of Justice S. Abdul Nazeer and Justice Sanjiv Khanna therefore observed that the provisions of the LA Act continue to apply for acquisitions made in the BDA Act so far as they are applicable as it is a legislation by incorporation having regard to Section 36 of the BDA Act.
Going by the background of the case, a peripheral ring road (PRR) encircling Bangalore City for the length of 116 Kms. was proposed by the Bangalore Development Authority (BDA), which scheme was sanctioned by the Government of Karnataka. This PRR is to provide connectivity to various destinations in all the directions for onward traffic without entering the city of Bangalore and thus minimizing the congestion on the outer ring road as well as on the internal roads of the city. Accordingly, BDA issued notifications for acquisition of the lands for the PRR.
This led to filing of several petitions before the High Court of Karnataka challenging these notifications. One such petition was Sri Sudhakar Hegde and others vs. the State of Karnataka and others, wherein similar matters were clubbed, and the Single Judge of the High Court decided these matters on July 22, 2014. The Single Judge held that the provisions of LA Act that are made applicable to the BDA, are in the nature of legislation by reference. It was further held that in view of the repeal of the LA Act by coming into force of 2013 Act during the pendency of the writ petitions, it would be the corresponding provisions under the 2013 Act in so far as they are applicable which would regulate the acquisition proceedings.
The Single Judge further held that the repeal of LA Act and coming into force of 2013 Act would not frustrate further proceedings under the BDA Act. However, the Court observed that the procedure that would regulate the proceedings would be as per the provisions of 2013 Act in so far as they are applicable, which would include the determination of compensation in accordance with the 2013 Act as no award had been passed in the present proceedings.
After considering the submissions, the Apex Court observed that the primary object of the BDA Act is to carry out a planned development and acquisition, is merely incident of such planned development.
It is also clear that the provisions of the LA Act would be attracted only insofar as they are applicable to the BDA Act, and where there are specific provisions under the BDA Act, the provisions of the LA Act will not be attracted, added the Court.
Speaking for the Bench, Justice Nazeer noted that the BDA Act has provided a complete process for determination of rights, and for the purpose of the claims in regard to the matters which are not specifically dealt with in the BDA Act, reference to the LA Act in terms of Section 36 has been made.
The intention of the Legislature is to take recourse for the provisions of the LA Act to a limited extent and subject to the supremacy of the provisions of the BDA Act, which is evident from the expression “so far as they are applicable” employed in sub-section (1) of Section 36, added the Bench.
The Top Court went on to observe that incorporation of an earlier Act into the later Act is a legislative device for the sake of convenience in order to avoid verbatim reproduction of the provisions of the earlier Act into the later Act.
The Apex Court therefore opined that the High Court has erred in holding that in view of the repeal of LA Act by coming into force of 2013 Act, the corresponding provisions of 2013 Act would regulate acquisition proceedings under the BDA Act and that this would include determination of compensation in accordance with 2013 Act.
At the same time, the Apex Court clarified that since LA Act has been incorporated into the BDA Act so far as they are applicable, the provisions of 2013 Act are not applicable for the acquisitions made under the BDA Act.
Read Judgment: Shenbagam & Ors. V. Kk Rathinavel
Pankaj Bajpai
New Delhi, January 21, 2022: Opining that time is not of the essence in an agreement for the sale of immoveable Property, the Supreme Court has held that in deciding whether to grant the remedy of specific performance, specifically in suits relating to sale of immovable property, the courts must be cognizant of the conduct of the parties, the escalation of the price of the suit property, and whether one party will unfairly benefit from the decree.
A Division Bench of Justice Dr. D.Y Chandrachud and Justice A.S Bopanna observed that in evaluating whether Kk Rathinavel (Respondent) was ready and willing to perform his obligations under the contract, it is not only necessary to view whether he had the financial capacity to pay the balance consideration, but also assess his conduct throughout the transaction.
The observation came pursuant to an appeal challenging the judgment, whereby the Madras High Court confirmed the decree for specific performance.
The background of the case was that, Shenbagam & Ors (Appellants) and her spouse entered into an agreement in the year 1990 with Respondent by which they agreed to sell the suit property for a consideration of Rs. 1,25,000/-. The respondent paid a sum of Rs. 25,000 as an advance and agreed to pay the balance within six months, with the stamp duty. In the event the respondent was ready and willing to complete the sale but the appellants delayed or refused, the respondent could proceed before the court to get the sale completed and seek possession of the suit property under the Specific Relief Act 1963.
The suit property was also subject to a mortgage of Rs.6,000 in favour of one Janaki Amma. The respondent alleged that the appellants had received the advance sum to discharge the mortgage over the suit property. On the contrary, the appellants alleged that the respondent was aware of the mortgage over the suit property and had agreed to discharge the mortgage from the sale consideration. The appellants sent a legal notice to the respondent calling upon him to pay the balance consideration and rescinded the contract on the ground that the respondent was not willing to perform his obligations. In response, the respondent sent a reply calling upon the appellants to execute the sale free from encumbrance.
In 1991, the respondent instituted a suit before the Principal District Munsif, Coimbatore seeking a permanent injunction restraining the appellants from alienating or creating any encumbrance on the suit property, however was obtained an ad interim injunction. In the meantime, the appellants discharged the mortgage debt. Later, in 1993, the respondent instituted a suit for specific performance or in the alternative, a refund of the advance of Rs. 35,000 with interest at 24% per annum from the date of the suit till realization.
Later, the trial court decreed the suit in favour of the respondent and directed the respondent to deposit the balance consideration of Rs. 90,000 within a month. The appellants on the other hand were directed to execute the sale deed in favour of the respondent. When the appeal was pending before High Court, the respondent moved an application to withdraw the balance consideration of Rs. 90,000 which was deposited before the trial court, which was allowed. Later, the Single Judge of the High Court upheld the judgment of the trial court.
After considering the submissions, the Apex Court noted that Section 16 of the Specific Relief Act provides certain bars to the relief of specific performance, which include, inter alia, a person who fails to aver and prove that he has performed or has always been ‘ready and willing’ to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented and waived by the defendant.
All the three courts grossly erred in the manner in which they have adjudicated upon this dispute in a suit for specific performance, as in the first instance, the trial court failed to frame an issue on whether the respondent-plaintiff was ready and willing to perform his obligations under the contract and instead assessed whether he is entitled to the relief of specific performance, added the Court.
Speaking for the Bench, Justice Chandrachud noted that Respondent was required to pay the remaining consideration (or indicate his willingness to pay) and only then could have sought specific performance of the contract, and therefore merely averring that he was waiting with the balance consideration and believed that the appellants would clear the encumbrance is insufficient to prove that the respondent-plaintiff was willing to perform his obligations under the contract.
However, noticing that three decades have passed since the agreement to sell was entered into between the parties, Justice Chandrachud directed appellants to refund the advance amount of Rs. 35,000/- received from the respondent with interest at the rate of 6% per annum from the date of the filing of the suit for specific performance by the respondent, till the payment of the refund.
Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur
Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.
Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?
A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.
Q: So you have had the feeling that the establishment is trying to interfere in the matters?
A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.
Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?
A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.
Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?
A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.
Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?
A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.
Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?
A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.
Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?
A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.
Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?
A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.
Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?
I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.
Q: What kind of technology would you recommend that courts should have?
A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.
Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?
You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.
Q: Do you think law should permit this to death row convicts?
A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.
Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?
A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.
Q: What about capital punishment as a means of punishment itself?
A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.
Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?
A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.
Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?
A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?
Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?
A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).
Q: You think giving proper training to police to prepare a case will make a difference?
A: Yes, it will make a difference.
Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?
A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.
Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?
A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.
Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?
A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.
Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?
A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.
Q: What will happen if in a democracy these rights are controlled by hook or by crook?
A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.
Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?
A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.
Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?
A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.
Q: Is there any other thing you would like to say?
A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.
‘A major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013.’- Aakash Parihar
Aakash Parihar is Partner at Triumvir Law, a firm specializing in M&A, PE/VC, startup advisory, international commercial arbitration, and corporate disputes. He is an alumnus of the National Law School of India University, Bangalore.
How did you come across law as a career? Tell us about what made you decide law as an option.
Growing up in a small town in Madhya Pradesh, wedid not have many options.There you either study to become a doctor or an engineer. As the sheep follows the herd, I too jumped into 11th grade with PCM (Physics, Chemistry and Mathematics).However, shortly after, I came across the Common Law Admission Test (CLAT) and the prospect of law as a career. Being a law aspirant without any background of legal field, I hardly knew anything about the legal profession leave alone the niche areas of corporate lawor dispute resolution. Thereafter, I interacted with students from various law schools in India to understand law as a career and I opted to sit for CLAT. Fortunately, my hard work paid off and I made it to the hallowed National Law School of India University, Bangalore (NSLIU). Joining NLSIU and moving to Bangalorewas an overwhelming experience. However, after a few months, I settled in and became accustomed to the rigorous academic curriculum. Needless to mention that it was an absolute pleasure to study with and from someof the brightest minds in legal academia. NLSIU, Bangalore broadened my perspective about law and provided me with a new set of lenses to comprehend the world around me. Through this newly acquired perspective and a great amount of hard work (which is of course irreplaceable), I was able to procure a job in my fourth year at law school and thus began my journey.
As a lawyer carving a niche for himself, tell us about your professional journey so far. What are the challenges that new lawyers face while starting out in the legal field?
I started my professional journey as an Associate at Samvad Partners, Bangalore, where I primarily worked in the corporate team. Prior to Samvad Partners, through my internship, I had developed an interest towards corporate law,especially the PE/VC and M&A practice area. In the initial years as an associate at Samvad Partners and later at AZB & Partners, Mumbai, I had the opportunity to work on various aspects of corporate law, i.e., from PE/VC and M&A with respect to listed as well as unlisted companies. My work experience at these firms equipped and provided me the know-how to deal with cutting edge transactional lawyering. At this point, it is important to mention that I always had aspirations to join and develop a boutique firm. While I was working at AZB, sometime around March 2019, I got a call from Anubhab, Founder of Triumvir Law, who told me about the great work Triumvir Law was doing in the start-up and emerging companies’ ecosystem in Bangalore. The ambition of the firm aligned with mine,so I took a leap of faith to move to Bangalore to join Triumvir Law.
Anyone who is a first-generation lawyer in the legal industry will agree with my statement that it is never easy to build a firm, that too so early in your career. However, that is precisely the notion that Triumvir Law wanted to disrupt. To provide quality corporate and dispute resolution advisory to clients across India and abroad at an affordable price point.
Once you start your professional journey, you need to apply everything that you learnt in law schoolwith a practical perspective. Therefore, in my opinion, in addition to learning the practical aspects of law, a young lawyer needs to be accustomed with various practices of law before choosing one specific field to practice.
India has been doing reallywell in the field of M&A and PE/VC. Since you specialize in M&A and PE/VC dealmaking, what according to you has been working well for the country in this sphere? What does the future look like?
India is a developing economy, andM&A and PE/VC transactions form the backbone of the same. Since liberalization, there has been an influx of foreign investment in India, and we have seen an exponential rise in PC/VA and M&A deals. Indian investment market growth especially M&A and PE/VC aspects can be attributed to the advent of startup culture in India. The increase in M&A and PE/VC deals require corporate lawyersto handle the legal aspects of these deals.
As a corporate lawyer working in M&A and PE/VC space, my work ranges from drafting term-sheets to the transaction documents (SPA, SSA, SHA, BTA, etc.). TheM&A and PE/VC deal space experienced a slump during the first few months of the pandemic, but since June 2021, there has been a significant growth in M&A and PE/VC deal space in India. The growth and consistence of the M&A and PE/VC deal space in India can be attributed to several factors such as foreign investment, uncapped demands in the Indian market and exceptional performance of Indian startups.
During the pandemic many businesses were shut down but surprisingly many new businesses started, which adapted to the challenges imposed by the pandemic. Since we are in the recovery mode, I think the M&A and PE/VC deal space will reach bigger heights in the comingyears. We as a firm look forward to being part of this recovery mode by being part of the more M&A and PE/VC deals in future.
You also advice start-ups. What are the legal issues or challenges that the start-ups usually face specifically in India? Do these issues/challenges have long-term consequences?
We do a considerable amount of work with startupswhich range from day-to-day legal advisory to transaction documentation during a funding round. In India, we have noticed that a sizeable amount of clientele approach counsels only when there is a default or breach, more often than not in a state of panic. The same principle applies to startups in India, they normally approach us at a stage when they are about to receive investment or are undergoing due diligence. At that point of time, we need to understand their legal issues as well as manage the demands of the investor’s legal team. The majornon-compliances by startups usually involve not maintaining proper agreements, delaying regulatory filings and secretarial compliances, and not focusing on proper corporate governance.
Another major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013. Keeping up with these requirements can be time-consuming for even seasoned lawyers, and we can only imagine how difficult it would be for startups. Startups spend their initial years focusing on fund-raising, marketing, minimum viable products, and scaling their businesses. Legal advice does not usually factor in as a necessity. Our firm aims to help startups even before they get off the ground, and through their initial years of growth. We wanted to be the ones bringing in that change in the legal sector, and we hope to help many more such startups in the future.
In your opinion, are there any specific India-related problems that corporate/ commercial firms face as far as the company laws are concerned? Is there scope for improvement on this front?
The Indian legal system which corporate/commercial firms deal with is a living breathing organism, evolving each year. Due to this evolving nature, we lawyers are always on our toes.From a minor amendment to the Companies Act to the overhaul of the foreign exchange regime by the Reserve Bank of India, each of these changes affect the compliance and regulatory regime of corporates. For instance, when India changed the investment route for countries sharing land border with India,whereby any country sharing land border with India including Hong Kong cannot invest in India without approval of the RBI in consultation with the central government,it impacted a lot of ongoing transactions and we as lawyers had to be the first ones to inform our clients about such a change in the country’s foreign investment policy. In my opinion, there is huge scope of improvement in legal regime in India, I think a stable regulatory and tax regime is the need for the hour so far as the Indian system is concerned. The biggest example of such a market with stable regulatory and tax regime is Singapore, and we must work towards emulating the same.
Your boutique law firm has offices in three different cities — Delhi NCR, Mumbai and Bangalore. Have the Covid-induced restrictions such as WFH affected your firm’s operations? How has your firm adapted to the professional challenges imposed by the pandemic-related lifestyle changes?
We have offices in New Delhi NCR and Mumbai, and our main office is in Bangalore. Before the pandemic, our work schedule involved a fair bit of travelling across these cities. But post the lockdowns we shifted to a hybrid model, and unless absolutely necessary, we usually work from home.
In relation to the professional challenges during the pandemic, I think it was a difficult time for most young professionals. We do acknowledge the fact that our firm survived the pandemic. Our work as lawyers/ law firms also involves client outreach and getting new clients, which was difficult during the lockdowns. We expanded our client outreach through digital means and by conducting webinars, including one with King’s College London on International Treaty Arbitration. Further, we also focused on client outreach and knowledge management during the pandemic to educate and create legal awareness among our clients.
‘It’s a myth that good legal advice comes at prohibitive costs. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.’ – Archana Balasubramanian
Archana Balasubramanian is the founding partner of Agama Law Associates, a Mumbai-based corporate law firm which she started in 2014. She specialises in general corporate commercial transaction and advisory as well as deep sectoral expertise across manufacturing, logistics, media, pharmaceuticals, financial services, shipping, real estate, technology, engineering, infrastructure and health.
August 13, 2021:
Lawyers see companies ill-prepared for conflict, often, in India. When large corporates take a remedial instead of mitigative approach to legal issues – an approach utterly incoherent to both their size and the compliance ecosystem in their sector – it is there where the concept of costs on legal becomes problematic. Pre-dispute management strategy is much more rationalized on the business’ pocket than the costs of going in the red on conflict and compliances.
Corporates often focus on business and let go of backend maintenance of paperwork, raising issues as and when they arise and resolving conflicts / client queries in a manner that will promote dispute avoidance.
Corporate risk and compliance management is yet another elephant in India, which in addition to commercial disputes can be a drain on a company’s resources. It can be clubbed under four major heads – labour, industrial, financial and corporate laws. There are around 20 Central Acts and then specific state-laws by which corporates are governed under these four categories.
Risk and compliance management is also significantly dependent on the sector, size, scale and nature of the business and the activities being carried out.
The woes of a large number of promoters from the ecommerce ecosystem are to do with streamlining systems to navigate legal. India has certain heavily regulated sectors and, like I mentioned earlier, an intricate web of corporate risk and compliance legislation that can result in prohibitive costs in the remedial phase. To tackle the web in the preventive or mitigative phase, start-ups end up lacking the arsenal due to sheer intimidation from legal. Promoters face sectoral risks in sectors which are heavily regulated, risks of heavy penalties and fines under company law or foreign exchange laws, if fund raise is not done in a compliant manner.
It is a myth that good legal advice comes at prohibitive costs. Promoters are quick to sign on the dotted line and approach lawyers with a tick the box approach. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.
Investment contracts, large celebrity endorsement contracts and CXO contracts are some key areas where legal advice should be obtained. Online contracts is also emerging as an important area of concern.
When we talk of scope, arbitration is pretty much a default mechanism at this stage for adjudicating commercial disputes in India, especially given the fixation of timelines for closure of arbitration proceedings in India. The autonomy it allows the parties in dispute to pick a neutral and flexible forum for resolution is substantial. Lower courts being what they are in India, arbitration emerges as the only viable mode of dispute resolution in the Indian commercial context.
The arbitrability of disputes has evolved significantly in the last 10 years. The courts are essentially pro-arbitration when it comes to judging the arbitrability of subject matter and sending matters to arbitration quickly.
The Supreme Court’s ruling in the Vidya Drolia case has significantly clarified the position in respect of tenancy disputes, frauds and consumer disputes. It reflects upon the progressive approach of the court and aims to enable an efficient, autonomous and effective arbitration environment in India.
Law firms stand for ensuring that the law works for business and not against it. Whatever the scope of our mandate, the bottom line is to ensure a risk-free, conflict-free, compliant and prepared enterprise for our client, in a manner that does not intimidate the client or bog them down, regardless of the intricacy of the legal and regulatory web it takes to navigate to get to that end result. Lawyers need to dissect the business of law from the work.
This really involves meticulous, detail-oriented, sheer hard work on the facts, figures, dates and all other countless coordinates of each mandate, repetitively and even to a, so-called, “dull” routine rhythm – with consistent single-mindedness and unflinching resolve.
As a firm, multiply that effort into volumes, most of it against-the-clock given the compliance heavy ecosystem often riddled with uncertainties in a number of jurisdictions. So the same meticulous streamlining of mandate deliverables has to be extrapolated by the management of the firm to the junior most staff.
Further, the process of streamlining itself has to be more dynamic than ever now given the pace at which the new economy, tech-ecosystem, business climate as well as business development processes turn a new leaf.
Finally, but above all, we need to find a way to feel happy, positive and energized together as a team while chasing all of the aforesaid dreams. The competitive timelines and volumes at which a law firm works, this too is a real challenge. But we are happy to face it and evolve as we grow.
We always as a firm operated on the work from anywhere principle. We believed in it and inculcated this through document management processes to the last trainee. This helped us shut shop one day and continue from wherever we are operating.
The team has been regularly meeting online (at least once a day). We have been able to channel the time spent in travelling to and attending meetings in developing our internal knowledge banks further, streamline our processes, and work on integrating various tech to make the practice more cost-effective for our clients.
Right to Disclosure – Importance & Challenges in Criminal Justice System – By Manu Sharma
Personal liberty is the most cherished value of human life which thrives on the anvil of Articles 14 and 21 of the Constitution of India (“the Constitution”). Once a person is named an accused, he faces the spectre of deprivation of his personal liberty and criminal trial. This threat is balanced by Constitutional safeguards which mandate adherence to the rule of law by the investigating agencies as well as the Court. Thus, any procedure which seeks to impinge on personal liberty must also be fair and reasonable. The right to life and personal liberty enshrined under article 21 of the Constitution, expanded in scope post Maneka Gandhi[1], yields the right to a fair trial and fair investigation. Fairness demands disclosure of anything relevant that may be of benefit to an accused. Further, the all-pervading principles of natural justice envisage the right to a fair hearing, which entails the right to a full defence. The right to a fair defence stems from full disclosure. Therefore, the right of an accused to disclosure emanates from this Constitutional philosophy embellished by the principles of natural justice and is codified under the Code of Criminal Procedure, 1973 (“Code”).
Under English jurisprudence, the duty of disclosure is delineated in the Criminal Procedure and Investigations Act, 1996, which provides that the prosecutor must disclose to the accused any prosecution material which has not previously been disclosed to the accused and which might reasonably be considered capable of undermining the case for the prosecution against the accused or of assisting the case for the accused, except if such disclosure undermines public interest.[2] Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence.[3] The duty of disclosure under common law contemplates disclosure of anything which might assist the defence[4], even if such material was not to be used as evidence[5]. Under Indian criminal jurisprudence, which has borrowed liberally from common law, the duty of disclosure is embodied in sections 170(2), 173, 207 and 208 of the Code, which entail the forwarding of material to the Court and supply of copies thereof to the accused, subject to statutory exceptions.
II. Challenges in Enforcement
The right to disclosure is a salient feature of criminal justice, but its provenance and significance appear to be lost on the Indian criminal justice system. The woes of investigative bias and prosecutorial misconduct threaten to render this right otiose. That is not to say that the right of an accused to disclosure is indefeasible, as certain exceptions are cast in the Code itself, chief among them being public interest immunity under section 173(6). However, it is the mischief of the concept of ‘relied upon’ emerging from section 173(5) of the Code, which is wreaking havoc on the right to disclosure and is the central focus of this article. The rampant misuse of the words “on which the prosecution proposes to rely’ appearing in section 173(5) of the Code, to suppress material favourable to the accused or unfavourable to the prosecution in the garb of ‘un-relied documents’ has clogged criminal courts with avoidable litigation at the very nascent stage of supply of copies of documents under section 207 of the Code. The erosion of the right of an accused to disclosure through such subterfuge is exacerbated by the limited and restrictive validation of this right by criminal Courts. The dominant issues highlighted in the article, which stifle the right to disclosure are; tainted investigation, unscrupulous withholding of material beneficial to the accused by the prosecution, narrow interpretation by Courts of section 207 of the Code, and denial of the right to an accused to bring material on record in the pre-charge stage.
A. Tainted Investigation
Fair investigation is concomitant to the preservation of the right to fair disclosure and fair trial. It envisages collection of all material, irrespective of its inculpatory or exculpatory nature. However, investigation is often vitiated by the tendencies of overzealous investigating officers who detract from the ultimate objective of unearthing truth, with the aim of establishing guilt. Such proclivities result in collecting only incriminating material during investigation or ignoring the material favourable to the accused. This leads to suppression of material and scuttles the right of the accused to disclosure at the very inception. A tainted investigation leads to miscarriage of justice. Fortunately, the Courts are not bereft of power to supervise investigation and ensure that the right of an accused to fair disclosure remains protected. The Magistrate is conferred with wide amplitude of powers under section 156(3) of the Code to monitor investigation, and inheres all such powers which are incidental or implied to ensure proper investigation. This power can be exercised suo moto by the Magistrate at all stages of a criminal proceeding prior to the commencement of trial, so that an innocent person is not wrongly arraigned or a prima facie guilty person is not left out.[6]
B. Suppression of Material
Indian courts commonly witness that the prosecution is partisan while conducting the trial and is invariably driven by the lust for concluding in conviction. Such predisposition impels the prosecution to take advantage by selectively picking up words from the Code and excluding material favouring the accused or negating the prosecution case, with the aid of the concept of ‘relied upon’ within section 173(5) of the Code. However, the power of the prosecution to withhold material is not unbridled as the Constitutional mandate and statutory rights given to an accused place an implied obligation on the prosecution to make fair disclosure.[7] If the prosecution withholds vital evidence from the Court, it is liable to adverse inference flowing from section 114 of the Indian Evidence Act, 1872 (“Evidence Act). The prosecutor is expected to be guided by the Bar Council of India Rules which prescribe that an advocate appearing for the prosecution of a criminal trial shall so conduct the prosecution that it does not lead to conviction of the innocent. The suppression of material capable of establishment of the innocence of the accused shall be scrupulously avoided. [8]
C. Scope of S. 207
The scope of disclosure under section 207 has been the subject of fierce challenge in Indian Courts on account of the prosecution selectively supplying documents under the garb of ‘relied upon’ documents, to the prejudice of the defence of an accused. The earlier judicial trend had been to limit the supply of documents under section 207 of the Code to only those documents which were proposed to be relied upon by the prosecution. This view acquiesced the exclusion of documents which were seized during investigation, but not filed before the Court along with the charge sheet, rendering the right to disclosure a farce. This restrictive sweep fails to reconcile with the objective of a fair trial viz. discovery of truth. The scheme of the code discloses that Courts have been vested with extensive powers inter alia under sections 91, 156(3) and 311 to elicit the truth. Towards the same end, Courts are also empowered under Section 165 of the Evidence Act. Thus, the principle of harmonious construction warrants a more purposive interpretation of section 207 of the code. The Hon’ble Supreme Court expounded on the scope of Section 207 of the Code in the case of Manu Sharma[9] and held that documents submitted to the Magistrate under section 173(5) would deem to include the documents which have to be sent to the magistrate during the course of investigation under section 170(2). A document which has been obtained bona fide and has a bearing on the case of the prosecution should be disclosed to the accused and furnished to him to enable him to prepare a fair defence, particularly when non production or disclosure would affect administration of justice or prejudice the defence of the accused. It is not for the prosecution or the court to comprehend the prejudice that is likely to be caused to the accused. The perception of prejudice is for the accused to develop on reasonable basis.[10] Manu Sharma’s [supra] case has been relied upon in Sasikala [11] wherein it was held that the Court must concede a right to the accused to have access to the documents which were forwarded to the Court but not exhibited by the prosecution as they favoured the accused. These judgments seem more in consonance with the true spirit of fair disclosure and fair trial. However, despite such clear statements of law, courts are grappling with the judicial propensity of deviating from this expansive interpretation and regressing to the concept of relied upon. The same is evident from a recent pronouncement of the Delhi High Court where the ratios laid down in Manu Sharma & Sasikala [supra] were not followed by erroneously distinguishing from those cases.[12] Such “per incuriam” aberrations by High Court not only undermine the supremacy of the Apex Court, but also adversely impact the functioning of the district courts over which they exercise supervisory jurisdiction. Hopefully in future Judges shall be more circumspect and strictly follow the law declared by the Apex Court.
D. Pre-Charge Embargo
Another obstacle encountered in the enforcement of the right to disclosure is the earlier judicial approach to stave off production or consideration of any additional documents not filed alongwith the charge sheet at the pre-charge stage, as the right to file such material was available to the accused only upon the commencement of trial after framing of charge.[13] At the pre-charge stage, Court could not direct the prosecution to furnish copies of other documents[14] It was for the accused to do so during trial or at the time of entering his defence. However, the evolution of law has seen that at the stage of framing charge, Courts can rely upon the material which has been withheld by the prosecutor, even if such material is not part of the charge sheet, but is of such sterling quality demolishing the case of the prosecution.[15] Courts are not handicapped to consider relevant material at the stage of framing charge, which is not relied upon by the prosecution. It is no argument that the accused can ask for the documents withheld at the time of entering his defence.[16] The framing of charge is a serious matter in a criminal trial as it ordains an accused to face a long and arduous trial affecting his liberty. Therefore, the Court must have all relevant material before the stage of framing charge to ascertain if grave suspicion is made out or not. Full disclosure at the stage of section 207 of the code, which immediately precedes discharging or charging an accused, enables an accused to seek a discharge, if the documents, including those not relied upon by the prosecution, create an equally possible view in favour of the accused.[17] On the other hand, delaying the reception of documents postpones the vindication of the accused in an unworthy trial and causes injustice by subjecting him to the trauma of trial. There is no gainsaying that justice delayed is justice denied, therefore, such an approach ought not to receive judicial consent. A timely discharge also travels a long way in saving precious time of the judiciary, which is already overburdened by the burgeoning pendency of cases. Thus, delayed or piecemeal disclosure not only prejudices the defence of the accused, but also protracts the trial and occasions travesty of justice.
III. Duties of the stakeholders in criminal justice system
The foregoing analysis reveals that participation of the investigating agency, the prosecution and the Court is inextricably linked to the enforcement of the right to disclosure. The duties cast on these three stakeholders in the criminal justice system, are critical to the protection of this right. It is incumbent upon the investigating agencies to investigate cases fairly and to place on record all the material irrespective of its implication on the case of prosecution case. Investigation must be carried out with equal alacrity and fairness irrespective of status of accused or complainant.[18] An onerous duty is cast on the prosecution as an independent statutory officer, to conduct the trial with the objective of determination of truth and to ensure that material favourable to the defence is supplied to the accused. Ultimately, it is the overarching duty of the Court to ensure a fair trial towards the administration of justice for all parties. The principles of fair trial require the Court to strike a delicate balance between competing interests in a system of adversarial advocacy. Therefore, the court ought to exercise its power under section 156(3) of the Code to monitor investigation and ensure that all material, including that which enures to the benefit of the accused, is brought on record. Even at the stage of supply of copies of police report and documents under section 207 of the Code, it is the duty of the Court to give effect to the law laid down by the Hon’ble Supreme Court in Manu Sharma (supra) and Sasikala (supra), and ensure that all such material is supplied to the accused irrespective of whether it is “relied upon” by the prosecution or not.
IV. Alternate Remedy
The conundrum of supply of copies under section 207 of the code abounds criminal trials. Fairness is an evolving concept. There is no doubt that disclosure of all material which goes to establish the innocence of an accused is the sine qua non of a fair trial.[19] Effort is evidently underway to expand the concept in alignment with English jurisprudence. In the meanwhile, does the right of an accused to disclosure have another limb to stand on? Section 91 of the Code comes to the rescue of an accused, which confers wide discretionary powers on the Court, independent of section 173 of the Code, to summon the production of things or documents, relevant for the just adjudication of the case. In case the Court is of the opinion that the prosecution has withheld vital, relevant and admissible evidence from the Court, it can legitimately use its power under section 91 of the Code to discover the truth and to do complete justice to the accused.[20]
V. Conclusion
A society’s progress and advancement are judged on many parameters, an important one among them being the manner in which it administers criminal justice. Conversely, the ironic sacrilege of the core virtues of criminal jurisprudence in the temples of justice evinces social decadence. The Indian legislature of the twenty first century has given birth to several draconian statutes which place iron shackles on personal liberty, evoking widespread fear of police abuses and malicious prosecution. These statutes not only entail presumptions which reverse the burden of proof, but also include impediments to the grant of bail. Thus, a very heavy burden to dislodge the prosecution case is imposed on the accused, rendering the right to disclosure of paramount importance. It is the duty of the Court to keep vigil over this Constitutional and statutory right conferred on an accused by repudiating any procedure which prejudices his defence. Notable advancement has been made by the Apex Court in interpreting section 207 of the Code in conformity with the Constitutional mandate, including the right to disclosure. Strict adherence to the afore-noted principles will go a long way in ensuring real and substantial justice. Any departure will not only lead to judicial anarchy, but also further diminish the already dwindling faith of the public in the justice delivery system.
**
Advocate Manu Sharma has been practising at the bar for over sixteen years. He specialises in Criminal Defence. Some of the high profile cases he has represented are – the 2G scam case for former Union minister A Raja; the Religare/Fortis case for Malvinder Singh; Peter Mukerjee in the P Chidambaram/ INX Media case; Devas Multimedia in ISRO corruption act case; Om Prakash Chautala in PMLA case; Aditya Talwar in the aviation scam case; Dilip Ray, former Coal Minister in one of the coal scam cases; Suhaib Illyasi case.
**
Disclaimer: The views or opinions expressed are solely of the author.
[1] Maneka Gandhi and Another v. Union of India, (1978) 1 SCC 248
[2] S. 3 of the Criminal Procedure and Investigations Act, 1996
[3] R v. H and R v. C, 2004 (1) ALL ER 1269
[4] R v. Ward (Judith), (1993) 1 WLR 619 : (1993) 2 ALL ER 577 (CA)
[5] R v. Preston, (1994) 2 AC 130 : (1993) 3 WLR 891 : (1993) 4 ALL ER 638 (HL), R v. Stinchcome,
(1991), 68 C.C.C. (3d) 1 (S.C.C.)
[6] Vinubhai Haribhai Malaviya and Others v. State of Gujarat and Another, 2019 SCC Online SC 1346
[7] Sidhartha Vashishth alias Manu Sharma v. State (NCT of Delhi), (2010) 6 SCC 1
[8] R. 16, part II, Ch. VI of the Bar Council of India Rules
[9] Manu Sharma, (2010) 6 SCC 1
[10] V.K. Sasikala v. State, (2012) 9 SCC 771 : AIR 2013 SC 613
[11] Sasikala, (2012) 9 SCC 771 : AIR 2013 SC 613
[12] Sala Gupta and Another v. Directorate of Enforcement, (2019) 262 DLT 661
[13] State of Orissa v. Debendra Nath Padhi¸(2005) 1 SCC 568
[14] Dharambir v. Central Bureau of Investigation, ILR (2008) 2 Del 842 : (2008) 148 DLT 289
[15] Nitya Dharmananda alias K. Lenin and Another v. Gopal Sheelum Reddy, (2018) 2 SCC 93
[16] Neelesh Jain v. State of Rajasthan, 2006 Cri LJ 2151
[17] Dilwar Balu Kurane v. State of Maharashtra, (2002) 2 SCC 135, Yogesh alias Sachin Jagdish Joshi v. State of Maharashtra, (2008) 10 SCC 394
[18] Karan Singh v. State of Haryana, (2013) 12 SCC 529
[19] Kanwar Jagat Singh v. Directorate of Enforcement & Anr, (2007) 142 DLT 49
[20] Neelesh, 2006 Cri LJ 2151
Disclaimer: The views or opinions expressed are solely of the author.
Validity & Existence of an Arbitration Clause in an Unstamped Agreement
By Kunal Kumar
January 8, 2024
In a recent ruling, a seven-judge bench of the Supreme Court of India in its judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, overruled the constitutional bench decision of the Supreme Court of India in N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. and has settled the issue concerning the validity and existence of an arbitration clause in an unstamped agreement. (‘N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III’)
Background to N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
One of the first instances concerning the issue of the validity of an unstamped agreement arose in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. In this case, the Hon’ble Apex Court held that if an instrument/document lacks proper stamping, the exercising Court must preclude itself from acting upon it, including the arbitration clause. It further emphasized that it is imperative for the Court to impound such documents/instruments and must accordingly adhere to the prescribed procedure outlined in the Indian Stamp Act 1899.
With the introduction of the 2015 Amendment, Section 11(6A) was inserted in the Arbitration & Conciliation Act 1996 (A&C Act) which stated whilst appointing an arbitrator under the A&C Act, the Court must confine itself to the examination of the existence of an arbitration agreement.
In the case of M/s Duro Felguera S.A. v. M/s Gangavaram Port Limited, the Supreme Court of India made a noteworthy observation, affirming that the legislative intent behind the 2015 Amendment to the A&C Act was necessitated to minimise the Court's involvement during the stage of appointing an arbitrator and that the purpose embodied in Section 11(6A) of A&C Act, deserves due acknowledgement & respect.
In the case of Garware Wall Ropes Ltd. v. Cosatal Marine Constructions & Engineering Ltd., a divisional bench of the Apex Court reaffirmed its previous decision held in SMS Tea Estates (supra) and concluded that the inclusion of an arbitration clause in a contract assumes significance, emphasizing that the agreement transforms into a contract only when it holds legal enforceability. The Apex Court observed that an agreement fails to attain the status of a contract and would not be legally enforceable unless it bears the requisite stamp as mandated under the Indian Stamp Act 1899. Accordingly, the Court concluded that Section 11(6A) read in conjunction with Section 7(2) of the A&C Act and Section 2(h) of the Indian Contract Act 1872, clarified that the existence of an arbitration clause within an agreement is contingent on its legal enforceability and that the 2015 Amendment of the A&C Act to Section 11(6A) had not altered the principles laid out in SMS Tea Estates (supra).
Brief Factual Matrix – N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Indo Unique Flame Ltd. (‘Indo Unique’) was awarded a contract for a coal beneficiation/washing project with Karnataka Power Corporation Ltd. (‘KPCL’). In the course of the project, Indo Unique entered into a subcontract in the form of a Work Order with N.N. Global Mercantile Pvt. Ltd. (‘N.N. Global’) for coal transportation, coal handling and loading. Subsequently, certain disputes arose with KPCL, leading to KPCL invoking Bank Guarantees of Indo Unique under the main contract, after which Indo Unique invoked the Bank Guarantee of N. N. Global as supplied under the Work Order.
Top of FormS
Subsequently, N.N. Global initiated legal proceedings against the cashing of the Bank Guarantee in a Commercial Court. In response thereto, Indo Unique moved an application under Section 8 of the A&C Act, requesting that the Parties to the dispute be referred for arbitration. The Commercial Court dismissed the Section 8 application, citing the unstamped status of the Work Order as one of the grounds. Dissatisfied with the Commercial Court's decision on 18 January 2018, Indo Unique filed a Writ Petition before the High Court of Bombay seeking that the Order passed by the Commercial Court be quashed or set aside. The Hon’ble Bombay High Court on 30 September 2020 allowed the Writ Petition filed by Indo Unique, aggrieved by which, N.N. Global filed a Special Leave Petition before the Supreme Court of India.
N. N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. – I
The issue in the matter of M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unqiue Flame Ltd. & Ors. came up before a three-bench of the Supreme Court of India i.e. in a situation when an underlying contract is not stamped or is insufficiently stamped, as required under the Indian Stamp Act 1899, would that also render the arbitration clause as non-existent and/or unenforceable (‘N.N. Global Mercantile Pvt. Ltd. v. Indo Flame Ltd. – I’).
The Hon’ble Supreme Court of India whilst emphasizing the 'Doctrine of Separability' of an arbitration agreement held that the non-payment of stamp duty on the commercial contract would not invalidate, vitiate, or render the arbitration clause as unenforceable, because the arbitration agreement is considered an independent contract from the main contract, and the existence and/or validity of an arbitration clause is not conditional on the stamping of a contract. The Hon’ble Supreme Court further held that deficiency in stamp duty of a contract is a curable defect and that the deficiency in stamp duty on the work order, would not affect the validity and/or enforceability of the arbitration clause, thus applying the Doctrine of Separability. The arbitration agreement remains valid and enforceable even if the main contract, within which it is embedded, is not admissible in evidence owing to lack of stamping.
The Hon’ble Apex Court, however, considered it appropriate to refer the issue i.e. whether unstamped instrument/document, would also render an arbitration clause as non-existent, unenforceable, to a constitutional bench of five-bench of the Supreme Court.
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II
On 25 April 2023, a five-judge bench of the Hon’ble Supreme Court of India in the matter of N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. held that (1) An unstamped instrument containing an arbitration agreement cannot be said to be a contract which is enforceable in law within the meaning of Section 2(h) of the Indian Contract Act 1872 and would be void under Section 2(g) of the Indian Contract Act 1872, (2) an unstamped instrument which is not a contract nor enforceable cannot be acted upon unless it is duly stamped, and would not otherwise exist in the eyes of the law, (3) the certified copy of the arbitration agreement produced before a Court, must clearly indicate the stamp duty paid on the instrument, (4) the Court exercising its power in appointing an arbitration under Section 11 of the A&C Act, is required to act in terms of Section 33 and Section 35 of the Indian Stamp Act 1899 (N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II).
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
A seven-judge bench of the Supreme Court of India on 13 December 2023 in its recent judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, (1) Agreements lacking proper stamping or inadequately stamped are deemed inadmissible as evidence under Section 35 of the Stamp Act. However, such agreements are not automatically rendered void or unenforceable ab initio; (2) non-stamping or insufficient stamping of a contract is a curable defect, (2) the issue of stamping is not subject to determination under Sections 8 or 11 of the A&C Act by a Court. The concerned Court is only required to assess the prima facie existence of the arbitration agreement, separate from concerns related to stamping, and (3) any objections pertaining to the stamping of the agreement would fall within the jurisdiction of the arbitral tribunal. Accordingly, the decision in N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II and SMS Tea (supra) was overruled, by the seven-judge bench of the Supreme Court of India.
Kunal is a qualified lawyer with more than nine years of experience and has completed his LL.M. in Dispute Resolution (specialisation in International Commercial Arbitration) from Straus Institute for Dispute Resolution, Pepperdine University, California.
Kunal currently has his own independent practice and specializes in commercial/construction arbitration as well as civil litigation. He has handled several matters relating to Civil Law and arbitrations (both domestic and international) and has appeared before the Supreme Court of India, High Court of Delhi, District Courts of Delhi and various other tribunals.
No Safe Harbour For Google On Trademark Infringement
By Mayank Grover & Pratibha Vyas
October 9, 2023
Innovation, patience, dedication and uniqueness culminate in establishing a distinct identity. A trademark aids in identifying the source and quality, shaping perceptions about the identity's essence. When values accompany a product or service's trademark, safeguarding against misuse and infringement becomes crucial. A recent pronouncement of a Division Bench of the Delhi High Court dated August 10, 2023 in Google LLC v. DRS Logistics (P) Ltd. & Ors. and Google India Private Limited v. DRS Logistics (P) Ltd. & Ors. directed that Google’s use of trademarks as keywords for its Google Ads Programme does amount to ‘use’ in advertising under the Trademarks Act and the benefit of safe harbour would not be available to Google if such keywords infringe on the concerned trademark.
Factual Background
Google LLC manages and operates the Google Search Engine and Ads Programme, while, Google India Private Limited is a subsidiary of Google that has been appointed as a non-exclusive reseller of the Ads Programme in India. The Respondents, DRS Logistics and Agarwal Packers and Movers Pvt. Ltd. are leading packaging, moving and logistics service providers in India.
On 22.12.2011, DRS filed a suit against Google and Just Dial Ltd. under provisions of the Trademarks Act, 1999 (‘TM Act’) inter alia seeking a permanent injunction against Google from permitting third parties from infringing, passing off etc. the relevant trademarks of DRS. The core of the dispute revolved around Google’s Ads Programme. DRS claimed that its trade name 'AGARWAL PACKERS AND MOVERS' is widely recognized and a 'well-known' trademark. Use of DRS’s trademark as a keyword diverts internet traffic from its website to that of its competitors and they were entitled to seek restraint against Google for permitting third parties who are not authorized to use the said trademark. DRS further argued that Google benefits from these trademark infringements. This practice involved charging a higher amount for displaying these ads, constituting an infringement of their trademarks. Whereas, Google contended that the use of the keyword in the Ads Programme does not amount to ‘use’ under the TM Act notwithstanding that the keyword is/or similar to a trademark. Thus, the use of a term as a keyword cannot be construed as an infringement of a trademark under the TM Act, and being an intermediary, it claimed a safe harbour under Section 79 of the Information Technology Act, 2000. (‘IT Act’).
In essence, the dispute between the parties was rooted in DRS’s grievance concerning the Ads Programme. The Learned Single Judge vide judgment dated 30.10.2021interpreted relevant provisions of the TM Act and drew on multiple legal precedents to arrive at the decision that DRS can seek protection of its trademarks which were registered under Section 28 of the TM Act and issued directions to investigate complaints alleging the use of trademark and/or to ascertain whether a sponsored result has an effect of infringing a trademark or passing off.
Being aggrieved, Google LLC and Google Pvt. Ltd. filed appeals before the Division Bench. Google LLC argued that the Single Judge’s findings were erroneous and the directions issued were liable to be set aside. Google India claimed that it doesn’t control and operate the Search Engine and the Ads Programme making it unable to comply with the directions passed in the impugned judgment.
Analysis & Decision of Court
The Division Bench found Single Judge’s rationale for assessing trademark infringement through keywords and meta-tags valid. Meta-tags are a list of words/code in a website, not readily visible to the naked eye. It serves as a tool for indexing the website by a search engine. If a trademark of a third party is used as a meta-tag, the same would serve as identifying the website as relevant to the search query that includes the trademark as a search term. The use of keywords in the Ads Programme also serves similar purpose. The Division Bench was unable to accept that using a trademark as a keyword, even if not visible, would not be considered trademark use under the TM Act.
Google placed heavy reliance on the decisions rendered by Courts across jurisdictions of United Kingdom, United States of America, European Union, Australia, New Zealand, Russia, South Africa, Canada, Spain, Italy, Japan and China; in the cases of Google France SARL and Google Inc. v. Louis Vitton SA & Ors.[1], Interflora Inc. v. Marks & Spencer Plc.[2], and L’Oreal SA v. eBay International AG[3] in support of the contention that the use of trade marks is by the advertiser and not by Google. However, the Division Bench rejected Google’s passive role; highlighting its active involvement in recommending and promoting trademark keywords for higher clicks in its Ads Programme. Division Bench referred to a few judicial decisions rendered in the United States of America that captured the essence of the controversy for perspective, concluding that Google actively promotes and encourages trademarks associated with major goods and services, rather than having a passive role.
It was held that the contention that the use of trademarks as keywords, per se constitutes an infringement of the trademark is unmerited; the assumption that an internet user is merely searching the address of the proprietor of the trademark when he feeds in a search query that may contain a trademark, is erroneous.
The Doctrine of 'Initial Interest Confusion' addresses trademark infringement based on pre-purchase confusion. The doctrine is applied when meta-tags, keywords, or domain names cause initial confusion similar to a registered trademark. If users are misled to access unrelated websites, trademark use in internet advertising may be actionable and reliance was placed on US precedents. Referring to Section 29 of the TM Act, it was directed that Section 29 does not specify the duration for which the confusion lasts but, even if the confusion is for a short duration and an internet user is able to recover from the same, the trade mark would be infringed and would offend Section 29(2) of the TM Act.
It was held that the Ads Programme is a platform for displaying advertisements. Google, being an architect and operator of its own programme makes it an active participant in the use of trademarks and determining the advertisements displayed on search pages. Their use of proprietary software makes them utilize trademarks and control the distribution of information related to potentially infringing links, ultimately leading to revenue maximization. Hence, a substantial link exists between Google LLC and Google India, rendering it impossible for Google India to deny its role in operating the Ads Programme. It was further held that Google sells trademarks as keywords to advertisers and encourages users to use trademarks as keywords for ads. It is contradictory for Google to encourage trademark use while claiming data belongs to third parties for exemption. After 2004, Google changed policies to boost revenue and subsequently, introduced a tool that searches effective terms, including trademarks. Google's active involvement in its advertising business and online nature does not necessarily qualify it for benefits under Section 79 of the IT Act. The Division Bench agreed with the view of the Single Judge that Google would not be eligible for protection of safe harbour under Section 79(1) of the IT Act, if its alleged activities infringe trademarks.
Conclusion
This is a seminal decision governing (and rather, restricting) the operations of intermediaries and redefining the jurisprudence of safe harbour under the IT Act. The decision is well-reasoned and establishes a significant precedent for safeguarding trademarks by uniquely holding Google accountable under its Ads Programme. The same will prevent usage of tradenames as a third-party trademark in keyword search or metatags by advertisers on Google’s search engine. While keywords and meta-tags have different levels of visibility, their purpose is similar i.e. advertising and attracting internet traffic. The use of trademarks as meta-tags by a person who is neither a proprietor of the trademark nor permitted to use the same leads to confusion amongst public at large due to the automated processes of search engines and consequently, constitutes trademark infringement.
About the Authors: Mayank Grover is a Partner and Pratibha Vyas is an Associate at Seraphic Advisors, Advocates & Solicitors
[1] C-236/08 to C-238/08 (2010) [2011] All ER (EC) 41
[2] [2014] EWCA Civ 1403
[3] 2C- 324/09 (2010)
Sign up for our weekly newsletter to stay up to date on our product, events featured blog, special offer and all of the exciting things that take place here at Legitquest.