Read Order: Kishan Dalal and others v. State of Haryana and another
Tulip Kanth
Chandigarh, September 24, 2021: The Punjab and Haryana High Court has dismissed a petition which sought quashing of an FIR registered under Sections 148, 149, 323, 379-B, 506 of the IPC and Section 3 of the SC and ST Act.
The Bench of Justice Harnaresh Singh Gill opined that a perusal of the file showed that the true typed copy of the compromise was not complete, inasmuch as, some of the contents of last page of the said document, were missing.
Not only this, the true typed copy of the compromise as also its Vernacular did not bear any date. Thus, the said incomplete document cannot be taken and/or made the basis for quashing the FIR, noted the Bench.
Keeping in view of these facts, the Court was not inclined to entertain the present petition and hence, the same was dismissed.
Read Judgment: Sri Marthanda Varma (d) Th. Lrs. &Ors vs. State of Kerala & Ors
Pankaj Bajpai
New Delhi, September 23, 2021 :The Supreme Court has directed that the special audit with respect to Sree Padmanabhaswamy Temple and Sree Padmanabha Swamy Temple Trust (SPSTT) be completed as early as possible and preferably within three months from the date of this order.
While rejecting the prayer for exclusion from special audit, a Three Judge Bench of Justice U.U. Lalit, Justice S.Ravindra Bhat and Justice Bela M. Trivedi observed that the audit contemplated by the direction under the judgment of this Court dated July 13, 2020, was not intended to be confined to the Temple but was also with respect to SPSTT.
The observation came pursuant to applications filed seeking appropriate directions to exclude Sree Padmanabha Swamy Temple Trust from the audit of its accounts, as the said Trust remains separate and distinct from Sree Padmanabha Swamy Temple.
The application was also sought for an appropriate order holding that the Applicant Sree Padmanabha Swamy Temple Trust is an independent entity distinct form Sree Padmanabha Swamy Temple and does not come under the administrative control of the Administrative Committee and/ or Advisory Committee under the Travancore Cochin Hindu Religious Endowments Act, 1950.
The background of the case was that the Supreme Court last year had handed over the administration of the Padmanabh Swamy Temple from the erstwhile Travancore Royal Family to an Administrative Committee headed by the District Judge of Thiruvananthapuram.
The Court also directed the Administrative Committee to order an audit of the temple’s income and expenses for the past 25 years, as suggested by amicus curiae Gopal Subramanium.
However, when the CA firm assigned for the audit asked the Trust to submit the income and expenditure records, the Trust again approached the Supreme Court, arguing that they were an independent institution formed in 1965 to conduct the religious rituals of the temple and that they had no role in the day-to-day administration of the temple.
The Supreme Court though recognized the rights of the ex-royal family but then handed over the administration to the Administrative Committee,which was to be headed by the District Judge of Thiruvananthapuram. The Court also directed the temple to repay to the State Government amounts spent by the State for the security and maintenance of the Temple.
Arvind P. Datar, the counsel appearing for the Trust submitted that although the special audit for the concerned period had already been conducted and a report submitted to this Court, the trust would have no difficulty in co-operating with Mr. ArvindRai (CA) in undertaking scrutiny of the said audit report and in conducting a fresh audit, if in his opinion doing so is necessary.
When the audit report was submitted, it does not record any finding that:(a) the properties of SPSTT are part of the properties of the Temple;(b) funds have been transferred from the Temple to SPSTT; (c) the Trust is entrusted with the administration of the Temple; (d) there exists any agreement between the Trust and the Temple on any matters relating to the rituals and rites or any other functions in the Temple;(e) the working of SPSTT is accountable to the Temple administration; or that (f) there exists a legally auditable relationship between SPSTT and the Temple, noted the Supreme Court.
“The Trust was created only for the benefit of the Temple and the Temple is its sole beneficiary. The founder of the Trust Sri.Rama Varma Maharaja of Travancore had transferred to this Trust various items of landed properties which are surrounding the Temple, and the transfer was made solely for the benefit of the Temple. As per the Trust deed, the income from the Trust has to be used only for the said objects viz., the benefit of the Temple. The present trustees of the said Trust are members of the erstwhile Travancore royal family and persons connected to them”, noted the Apex Court.
Read Judgment: Punjab State Power Corporation Limited & Another V. Emta Coal Limited & Others
Pankaj Bajpai
New Delhi, September 23, 2021 : The Supreme Court has held that policy decision to get the best operator at the best price, cannot be said to be a decision which no reasonable person would take in his affairs, and hence Section 11 of the Coal Mines (Special Provisions) Act, 2015, does not mandate successful allottee to continue with existing contract.
The background of the case was that Punjab State Power Corporation Limited was allotted Captive Coal Mines by the Union of India. Later, it issued tender inviting bids for the purpose of development of Captive Coal Mines, wherein EMTA Coal Ltd. (respondent), emerged successful.
After almost fifteen years, a decision of the Supreme Court came which held that the entire allocation of Coal Blocks made between 1993 and 2011, except those which were made through competitive bidding, were invalid, unfair, arbitrary and violative of Article 14 of the Constitution of India.
Accordingly, the Central Government again allocated Pachhwara Captive Coal Block in favour of Punjab State Power Corporation Limited (PSPCL – appellant), which issued a Request for Proposal (RFP), to invite Global Bids for the selection of Mine Developer cum Operator for Pachhwara Coal Block through competitive reverse bidding process.
This was challenged by EMTA before the Punjab and Haryana High Court, which came to be allowed by holding that the respondent will have the first right of refusal in the matter of lending of Mining Lease.
The Three Judge Bench of Justice L. Nageswara Rao, Justice Sanjiv Khanna and Justice B.R.Gavai said that while exercising powers of judicial review, the Court is not concerned with the ultimate decision but the decision making process. The limited areas in which the court can enquire are as to whether a decision making authority has exceeded its powers, committed an error of law or committed breach of principle of natural justice.
Observing that it is not for the court to determine whether a particular policy or a particular decision taken in the fulfillment of that policy is fair or not, the Bench noted that the court will examine as to whether the decision of an authority is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it.
“The decision of PSPCL dated 6th April,2018,cannot be questioned on the ground of illegality or procedural impropriety. The decision is taken in accordance with Section 11 of the Act and after following the principle of Natural Justice. The limited area that would be available for attack is as to whether the decision is hit by the Wednesbury principle”, observed the Bench.
The Top Court further found that representation of EMTA is not rejected by solely relying on the Allotment Agreement, rather, PSPCL has referred to Clause 12.4.1 of the Allotment Agreement which requires the coal mines to be developed through contractors who were selected through a competitive bidding process.
The Apex Court observed that the PSPCL has decided to go in for competitive bidding process for the purpose of eliciting the best operator and the composition with respect to capital/revenue investment was altogether different.
Therefore, the Top Court quashed the judgment of Punjab & Haryana High Court and allowed the appeals elucidating that the Coal Mines Act itself provides remedy for seeking compensation apart from the other remedies that are available in law.
Read Judgment: Medini. C & Ors vs. Bharat Sanchar Nigam Limited & Ors
Pankaj Bajpai
New Delhi, September 23, 2021 : While clearly distinguishing the facts from the decision in the case of BSNL vs. Mishri Lal & Ors, the Supreme Court has opined that ratio of any case should not be applied in a straight-jacket manner without being mindful of the crucial aspects and hence, regular appointees have vested right for promotion as compared to non-regular appointees.
The Three Judge Bench of Justice L. Nageswara Rao, Justice B.R. Gavai and Justice B.V. Nagarthana observed that the present appellants were provisionally promoted while in the Telecom Department as Assistant Director (OL) as early as on May 15, 1994 but they were not regularized.
The background of the case was that the appellants were promoted as Assistant Director (Official Language) on ad hoc basis and officiating basis during the year 2000. Later, Assistant Director (Official Language) Recruitment Rules, 2002 came to be notified, which provided that as a “one- time measure”, all vacancies in the grade of Assistant Director (OL) on officiating basis were to be filled up by Senior Hindi Translators/Junior Hindi Translators and Group C officials who were to be given ad hoc promotions to the grade of Assistant Director (OL) on officiating basis.
The same was by promotion on seniority-cum-fitness basis as was the procedure followed for the officials who had been officiating as Assistant Director (OL). Later, a Corrigendum was issued revising eligibility criteria and for removing restriction of pay under FR-35 as per the 2002 Rules.
Subsequently, Rajabhasha Adhikari Recruitment Rules, 2005, were notified wherein it was stated that the local officiating arrangements/promotions on ad hoc basis which had already been made may not be disturbed till regular incumbents to such posts become available.
Aggrieved by the inaction of the respondent-BSNL in promoting the appellants on regular basis, the appellants approached Kerala High Court, which transferred the same to the Central Administrative Tribunal, which directed the appellants to be promoted in accordance with the 2002 Rules.
This came to be challenged before the High Court contending that the 2002 Rules were never in operation at any point of time. But the High Court found that there was no plea raised that the 2002 Rules had never come into force before the Tribunal and it was taken up first time before the High Court.
After considering the arguments, the Bench found that it was not the case of the respondent-BSNL that the appellants were not eligible to be promoted on ad hoc basis or they were lacking in requisite qualification and merit when they were so promoted even prior to the 2002 Rules were enforced.
Accordingly, the Tribunal by its order observed that the 2002 Rules remained in force and were implemented for more than three years till the “Rajbhasha Adhikari Recruitment Rules, 2005” was issued in supersession of all the relevant Recruitment Rules in force, noted the Bench.
Therefore, the Bench held that the order of the Tribunal that appointment/promotion of the employees are to be based on the existing rules and hence the directions for promotions were given under the 2002 Rules and consequently, direction to the respondent – BSNL to promote the eligible candidates as Assistant Director (OL) against the vacancies which had arisen prior to the promulgation of the 2005 Rules, was justified.
“Rule 10(3) of 2002 Rules categorically stated that as a “one time measure” all the vacancies in the grade of Assistant Director (OL) in the first year of promotional quota or direct vacancies had to be filled by direct quota by following due procedure from amongst the officials who had been officiating as Assistant Director (OL) in the respondent-BSNL subject to their filling the basic qualifications and experience as prescribed. Despite promulgation of the 2002 Rules, no order for regularization of promotion was issued”, observed the Bench.
The Top Court found that during the said period, the 2005 Rules were issued but by then the appellants had already enforced their vested rights regarding their regularization in their respective posts as per the 2002 Rules on the basis of one time measure that was envisaged under the said Rules, which relief was granted by the Tribunal.
The three Judge Bench further found that subsequent to the orders of promotions on ad hoc or officiating basis, the clause regarding ‘restriction of pay under FR-35’ was deleted by issuance of corrigendum and on the basis of the said factual developments, the High Court had rightly sustained the order of the Tribunal.
Accordingly, the Apex Court allowed the appeals and directed for extending monetary benefits to the appellants and thereafter, to consider their cases under the Voluntary Retirement Scheme (VRS) if they have so applied.
Read Judgment: Dlf Home Developers Limited vs. Rajapura Homes Private Limited &Anr
Pankaj Bajpai
New Delhi, September 23, 2021: The Supreme Court has opined that in order to determine the nature of arbitral proceedings, the two groups of agreements in question will have to be read in harmony and reconciled so as to avoid any head on collision, and thereafter a conclusion as to which of the clauses would be applicable in the present case, needs to be drawn.
The Division Bench of Chief Justice N.V. Ramana and Justice Surya Kant opined that the dispute sought to be referred to arbitration by the petitioner-DHDL pertains to non-deposit of agreed amount by the second Respondent(Resimmo PCC) and resultant payment thereof as `Fee’ which the Petitioner claims in terms of clause 4 of RCMA(DLF-Rajapura Homes Construction Management Services Agreement)/SCMA(DLF-Southern Homes Construction Management Services Agreement).
Therefore, whether or not the petitioner has complied with the ‘condition precedent’ under Rajapura SPA(Share Purchase Agreement) and thus has become entitled to `fee’ as per clause, is purely a question of fact to be determined by the Arbitral Tribunal, added the Bench.
The observation came in light of the Arbitration Petition filed by DLF Home Developers Limited u/s 11(6) r/w/s 11(12) of the Arbitration and Conciliation Act, 1996 for appointment of sole arbitrator to adjudicate the differences between the parties that had arisen out of the two Construction Management Agreements.
The Division Bench observed that the court, u/s 8 and 11, has to refer a matter to arbitration or to appoint an arbitrator, as the case may be, unless a party has established a prima facie case of non-existence of valid arbitration agreement, by summarily portraying a strong case that he is entitled to such a finding.
Since two valid arbitration clauses existed and the parties were relying upon the different arbitration clauses, the Division Bench harmonized both the clauses and viewed that the arbitration clause in the main agreement was worded in wide terms and specifically contemplated issues that were in “any way connected with, arising out of or in relation to the subject matter of the arbitration agreement”.
It is difficult for us to accept it outrightly that the respective Share Purchase Agreements are the ‘principal agreements governing the transaction’ between the parties or that the present disputes can be resolved solely under the arbitration clause contained therein, added the Bench.
The Top Court elaborated that the consideration of the Services to be provided by DHDL and performance of the terms of this Agreement, DHDL shall be entitled subject to the terms and conditions contained in this Agreement, to the Fees and the Company shall pay to DHDL the Fees, after deduction of any withholding tax required to be withheld in accordance with applicable Law.
The Apex Court therefore appointed Justice R.V. Raveendran (Former Judge, Supreme Court of India) as the sole arbitrator to resolve all disputes/differences between the parties.
Read Judgment: Union of India through Narcotics Control Bureau, Lucknow vs. Md. Nawaz Khan
Pankaj Bajpai
New Delhi, September 23, 2021: The Supreme Court has observed that mere finding of the absence of possession of contraband is no basis to accord bail to the accused from the offence punishable under NDPS Act.
While referring to its earlier decisions, a Division Bench of Justice Dr. Dhananjaya Y. Chandrachud & Justice B.V. Nagarathna observed that the knowledge of possession of contraband has to be gleaned from the facts and circumstances of a case and the standard of conscious possession would be different in case of a public transport vehicle with several persons as opposed to a private vehicle with a few persons known to one another.
The appeal by the UOI arose from the judgment of a Single Judge, whereby the Lucknow Bench of the High Court of Judicature at Allahabad while granting bail to the respondent- accused, adverted to two circumstances, namely (i) absence of recovery of the contraband from the possession of the respondent and (ii) the wrong name in the endorsement of translation of the statement u/s 67 of the NDPS Act.
After considering various precedents and relevant circumstances, the Division Bench opined that the test which the High Court and this Court are required to apply while granting bail is whether there are reasonable grounds to believe that the accused has not committed an offence and whether he is likely to commit any offence while on bail.
Stating that section 37 of the NDPS Act regulates the grant of bail in cases involving offences under the NDPS, the Division Bench observed that this Court in the case of Union of India v. Rattan Mallik has held that merely making a finding on the possession of the contraband did not fulfill the parameters of Section 37(1)(b).
Therefore, in line with the decision of this Court in Rattan Mallik case (supra), the Bench was of the view that a finding of the absence of possession of the contraband on the person of the respondent by the High Court does not absolve it of the level of scrutiny required u/s 37(1)(b)(ii) of the NDPS Act.
Further, the contention that Section 42 of the NDPS Act was not complied with, was prima facie misplaced and the High Court had overlooked crucial requirements and glossed over the circumstances which were material to the issue as to whether a case for the grant of bail was established, added the Bench.
Moreover, the Top Court also noted during the course of the hearing that after the respondent was enlarged on bail, he has consistently remained away from the criminal trial resulting in the issuance of a non-bailable warrant against him.
Thus, the Apex Court said that the High Court ought to have given due weight to the seriousness and gravity of the crime which it has failed to do.
Accordingly, the appeal has been allowed by setting aside the judgment and order of the High Court and application for bail filed by the respondent stood dismissed, added the Bench.
The Top Court therefore directed that the respondent shall surrender forthwith.
Read Order- Pawan Kumar vs. State of Haryana and another
Tulip Kanth
Chandigarh, September 23, 2021: Referring to Section 438 of the Cr.P.C., the Punjab and Haryana High Court has observed that it is only upon an apprehension of arrest consequent upon initiation of some criminal proceedings that the said provisions can be invoked.
The Bench of Justice Gurvinder Singh Gill was hearing a petition seeking grant of anticipatory bail in respect of a criminal complaint under Section 138 of Negotiable Instruments Act, wherein the petitioner’s bail had been cancelled on account of his absence before the Trial Court on July 6,2019 and also on subsequent dates.
According to the Bench , the petitioner remained absent for a period of almost 2 years w.e.f. July 6,2019. Although the petitioner asserted that it was on account of the fact that his son went missing and that it was only in the first week of June, 2021 that he could be traced, but the said contention was not accepted by the Court in view of the fact that there was nothing to support the said contention.
While opining that no DDR in respect of the alleged absence/missing of his son had been placed on record,the Bench mentioned that the said contention had been cooked-up by the petitioner. Further, the contention that he was prevented on account of pandemic Covid-19, could also not be accepted as the said virus had not spread in July, 2019 and it was only later somewhere around the beginning of 2020 that the spread of said virus was noticed or identified.
The Court expounded that the words “reason to believe that he may be arrested on accusation of having committed a non-bailable offence”, as existing in section 438 Cr.P.C are very significant and show that it is only when a person apprehends his arrest pursuant to an accusation having been made regarding commission of non-bailable offence that provisions of section 438 Cr.P.C. may be availed of. In the instant case the accusation against the accused was made when the complaint came to be instituted and not when the petitioner jumped bail or when the arrest warrants were issued on account of his absence.
It is only when there is an apprehension of arrest of an accused upon an accusation having been made i.e. upon institution of FIR or lodging of complaint or otherwise having been summoned by the Court for the first time to face trial that a person may approach the Courts under provisions of section 438, Cr.P.C. seeking grant of anticipatory bail. The scope of section 438 of the Cr.P.C. can not be extended to cases where such apprehension of arrest is on account of jumping bail, noted the Bench.
Stating that the reasons assigned by the petitioner to justify his absence did not inspire confidence, the Court also made it clear that although the petitioner claimed that he remained under mental tension as his son went missing for two years but the fact that no complaint seemed to have been made to any authority in respect of his son showed hollowness of such claim.
Dismissing the Petition, the Bench added that this Court cannot lose sight of the fact that there would be certain cases where an accused is unable to appear before the trial Court on account of genuine reasons, say on account of having noted the date incorrectly or on account of certain reasons which are beyond his control. In such cases, the accused can surrender before the trial Court and it is expected that the trial Courts would take a lenient view in genuine cases and decide the regular bail application expeditiously.
In a given set of circumstances where the Trial Court is satisfied that there were valid reasons for the absence of an accused and that he has surrendered at the shortest possible time, the Trial Court can in fact dispose of the regular bail application on the very day the same is presented by accused upon his surrender. The trial Court, in its discretion, may also chose to grant interim bail, in fit cases, but only after surrender of accused. Thus, the Court ordered that the Petition stood disposed off accordingly.
Read Order: Pawan Kumar vs. State of Haryana
Chandigarh, September 23, 2021: Keeping in view the enormity of the scam, wherein huge sum of money had been siphoned off by misusing various mobile applications, the Punjab and Haryana High Court has dismissed the petition filed by the petitioner seeking grant of anticipatory bail in a case registered under various sections of the Indian Penal Code and I.T. Act, 2008.
In the FIR it was alleged that on November 19,2020, police officials received a secret information to the effect that Sanjay alongwith his accomplices Ajay Kumar, Govind Singh, Vikas, Sanjay, Darshan and Harsh used to purchase activated SIMs of different companies against forged documents in large numbers in an illegal manner and after inserting the same in various mobile phones and laptops used to commit financial losses by way of frauds to various companies and thus made huge money in an illegal manner.
The information was further to the effect that the said persons at the given moment were present at Sherpura Bus Stand. Pursuant to receipt of said information, a raid was conducted at the nominated place and few of the accused persons were apprehended, who were found in possession of huge number of SIMs.
It was further alleged in the FIR that the aforesaid persons upon being asked could not produce any detail regarding ownership of the recovered mobile phones and the SIMs and did not give any satisfactory reply. Upon interrogation, they disclosed that they had been cheating various companies with the help of SIMs and mobile phones and had been earning huge money.
From the petitioner’s side it was submitted that the petitioner had nowhere been named in the FIR and was nominated subsequently on the basis of a disclosure statement allegedly made by co-accused Sanjay, wherein while admitting his guilt of having defrauded several companies with the help of large number of SIMs illegally procured, he stated that when he needed more SIMs he had contacted his friends Pawan Sihag (petitioner) and Azad Singh, who was also into this kind of work and who introduced him to Rajan and Rajat, who has a mobile shop at Jalalabad, and had purchased 2700 SIMs from Rajan.
It was also submitted that it was thus clearly evident that the petitioner had himself not indulged in any kind of fraud and had not cheated any company or any person and at best could be said to have sold some SIMs to the other accused in an illegal manner by taking some profit.
The Bench of Justice Gurvinder Singh Gill was of the opinion that the petitioner was not named in the FIR and came to be nominated as an accused subsequently on the basis of the disclosure statement.
However, keeping in view the enormity of scam, wherein crores of rupees had been siphoned off by misusing various mobile applications through SIM cards illegally procured, the Bench held that custodial interrogation of the petitioner would certainly be required so as to unearth the entire modus operandi and to find out as to how many other persons are involved in this scam.
Thus, it was clarified that no special case was made out for grant of anticipatory bail.
Read Judgment: Chandan Banerjee &Ors. vs. Krishna Prosad Ghosh & Ors
Pankaj Bajpai
New Delhi, September 22, 2021:The Supreme Court has opined that persons drawn from a common source who have been integrated into a cadre can be differentiated on the basis of educational qualifications for the purpose of promotion to supernumerary posts.
The Three Judge Bench of Justice Dr. D.Y. Chandrachud, Justice Vikram Nath and Justice Hima Kohli observed that classification between persons must not produce artificial inequalities, and rather must bear nexus to the object and purpose sought to be achieved to pass the muster of Articles 14 and 16 of the Constitution.
Judicial review in matters of classification is limited to a determination of whether the classification is reasonable and bears a nexus to the object sought to be achieved, and therefore, Courts cannot indulge in a mathematical evaluation of the basis of classification or replace the wisdom of the legislature or its delegate with their own, added the Bench.
The observation came to be passed in reference to a judgment of the Division Bench of Calcutta High Court upholding a circular of the Kolkata Municipal Corporation (KMC) which prescribed separate conditions for diploma and degree holder Sub-Assistant Engineers (SAE) for supernumerary appointments as Assistant Engineers (AE).
The background of the case was that the appellants, who are SAEs possessing a diploma in engineering, instituted a writ challenging the circular and gradation list on the ground that classification within the same cadre of SAE for the purpose of appointment to supernumerary posts violates Articles 14 and 16 of the Constitution of India.
Although the Single Judge held the circular to be arbitrary and unconstitutional, the Division Bench reversed such decision and held the classification made on the basis of educational qualifications for supernumerary appointments to the higher post of Assistant Engineer, valid.
After considering the arguments and relevant circular, the Top Court noted that the locus classicus on the question whether educational qualifications can be used as a criteria for classification between persons integrated into one class for the purpose of promotion, came to be answered in the decision of a Constitution Bench of this Court in State of Jammu & Kashmir v. Trilokinath Khosa, wherein it was observed that a judicial scrutiny can extend only to the consideration whether the classification rests on a reasonable basis and whether it bears nexus with the object in view.
The Top Court therefore found it impossible to accept the respondents’ submission that the classification of Assistant Engineers into degree-holders and diploma-holders rests on any unreal or unreasonable basis.
The classification on the basis of educational qualifications made with a view to achieving administrative efficiency cannot be said to rest on any fortuitous circumstance and one has always to bear in mind the facts and circumstances of the case in order to judge the validity of a classification, added the Court.
“It cannot be denied that SAEs once promoted to the post of an AE in these supernumerary posts would be performing the task and functions of an AE. Thus, it is not merely a change in the designation of an SAE to an AE, but involves an increase in workload, supervisory functions, and performance of the regular functions of an AE. Since that is the case, we do not find any reason why the rationale underlying the need for higher degree-holders in the AE cadre through regular promotion would not be applicable in the case of supernumerary posts”, observed the Bench.
The Apex Court therefore opined that it is not for them to decide whether a higher educational qualification would fulfill the objectives of the management, as long as the nexus between the educational qualification and the need for higher efficiency is not absurd, irrational or arbitrary.
Thus, the Apex Court found that the separate eligibility conditions for promotion to supernumerary AE posts on the basis of educational qualification was in line with the past promotion practices of KMC and was not an unreasonable classification.
Accordingly, the Bench held that the circular and the subsequent gradation list do not suffer from the vice of arbitrariness and discrimination, and therefore, in matters of public policy and public employment, the legislature or its delegate must be given sufficient room to decide the quality of individuals it seeks to employ as against different positions.
Read Judgment: Union Of India & Ors. vs. Dalbir Singh
Pankaj Bajpai
New Delhi, September 22, 2021 : While affirming the punishment of dismissal from service of a CRPF constable, the Supreme Court has observed that the burden of proof in departmental proceedings is not of beyond reasonable doubt as is the principle in the criminal trial but probabilities of the misconduct.
The observation came to be passed by a Division Bench of Justice Hemant Gupta and Justice V. Ramasubramanian in reference to a petition filed by the Union of India challenging the order of Delhi High Court, whereby the respondent was directed to be reinstated and also was found entitled to arrears of pay from the date of dismissal of service till the date he actually joins the duty.
Going by the background of the case, an FIR came to be registered against the respondent Constable in the Central Reserve Police Force (CRPF), for an offence u/s 302 & 307 of IPC and Section 27 of the Arms Act, 1959 on the accusation of having fired from his service revolver on Head Constable resulting in the death of one and injury to another.
Accordingly, the respondent was convicted by the Trial court and sentenced to life imprisonment. However, in appeal, the High Court acquitted him of the charges framed against him by giving benefit of doubt for the reason that 20 cartridges were fired but only 7 empties were recovered whereas none of the bullets had been recovered.
The respondent was earlier dismissed from service on account of his conviction in the criminal trial. However, since he was granted benefit of doubt in appeal by the High Court and was subsequently acquitted, he was reinstated by the Deputy Inspector General of Police, CRPF, Patna.
After considering the arguments and evidence, the Top Court quoted the decision in case of Noida Entrepreneurs Association v. NOIDA & Ors., to observe that the inquiry in a departmental proceeding relates to conduct or breach of duty of the delinquent officer to punish him for his misconduct defined under the relevant statutory rules or law, where the strict standard of proof or applicability of the Evidence Act stands excluded.
“The allegations in the chargesheet dated 25.2.2013 that the writ petitioner has fired from the official weapon is a reliable finding returned by the Departmental Authorities on the basis of evidence placed before them. It is not a case of no evidence, which alone would warrant interference by the High Court in exercise of power of judicial review. It is not the case of the writ petitioner that there was any infraction of any rule or regulations or the violation of the principles of natural justice”, observed the Top Court.
Hence, while setting aside the order passed by the High Court for reinstatement along with arrears, the Apex Court upheld the dismissal of the constable from service.
Read Judgment: RAJENDRA BAJORIA AND OTHERS vs. HEMANT KUMAR JALAN AND OTHERS
Pankaj Bajpai
New Delhi, September 22, 2021: While quoting the law declared in the case of T. Arivandandam vs. T.V. Satyapal and Another, the Supreme Court has recently held that reading of the averments made in the plaint should not only be formal but also meaningful, and if clever drafting has created the illusion of a cause of action, and a meaningful reading thereof would show that the pleadings are manifestly vexatious and meritless, in the sense of not disclosing a clear right to sue, then the court should exercise its power under Order VII Rule 11 of the CPC.
Stating that such a suit has to be nipped in the bud at the first hearing itself, a Division Bench of Justice B.R Gavai and Justice L. Nageswara Rao relied on the decision of Dahiben vs. Arvindbhai Kalyanji Bhanusali (Gajra) Dead Through Legal Representatives and Others, to observe that power conferred on the court to terminate a civil action is a drastic one, and the conditions enumerated under Order VII Rule 11 of CPC are required to be strictly adhered to.
However, under Order VII Rule 11 of CPC, the duty is cast upon the court to determine whether the plaint discloses a cause of action, by scrutinizing the averments in the plaint, read in conjunction with the documents relied upon, or whether the suit is barred by any law, added the Bench.
Going by the background of the case, a civil suit was filed before the Calcutta High Court seeking decree of declaration that the plaintiffs along with the defendants are entitled to the assets and properties of the Partnership Firm being the legal heirs of the original partners who were dead now, in the share of the said original partners.
In addition, the plaintiffs also sought decree for perpetual injunction restraining the defendants from holding themselves out to be the authorized representative of the firm or the repository of all its authority, moneys assets and properties or from seeking to represent the firm in its dealings and transactions in respect of any of its assets and properties.
Opposing the same, defendants sought dismissal of the suit, or in the alternative, rejection of the plaint on the ground that the plaint does not disclose any cause of action, and that the suit was filed beyond the period of limitation.
The High Court held that the reliefs, as claimed in the plaint, could not be granted, and therefore, while allowing the appeals, rejected the plaint. It, however, observed that, as provided under Order VII Rule 13 of the CPC, the order of rejection of the plaint shall not of its own force preclude the plaintiffs from presenting a fresh plaint in respect of the same cause of action.
After considering the averments, the Top Court found that the case of the plaintiffs was that in spite of demise of the three original partners of the partnership firm, through whom the plaintiffs were claiming, the defendants had been carrying on the business of the partnership firm.
The Court further found from the averments of the plaintiff that the accounts of the partnership firm had not been finalized and that the share of the profits of the partnership firm had not been paid to them.
It was also the case of the plaintiffs that the defendants were seeking to represent the partnership firm to the exclusion of the plaintiffs and that the defendants had been siphoning off funds of the partnership firm, noted Justice Gavai.
The Top Court noted that the Division Bench of the High Court while rejecting the plaint had clearly elaborated that the partners of a firm are entitled only to the profits of the firm and upon dissolution of the firm they are entitled to the surplus of the sale proceeds of the assets and properties of the firm, if any, after meeting the liabilities of the firm, in the share agreed upon in the partnership deed.
Thus, the High Court had held that the plaintiffs as legal heirs of some of the original partners cannot maintain any claim in respect of the assets and properties of the said firm, noted Justice Gavai.
Justice Gavai also noted that the High Court had made it clear that it is only a partner of a firm who can seek dissolution of the firm and hence dissolution of a firm cannot be ordered by the court at the instance of the plaintiff being a non-partner.
Therefore, in confirmation with the decision of the Calcutta High Court, the Apex Court concluded that that the reliefs as sought in the plaint, cannot be granted.
Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur
Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.
Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?
A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.
Q: So you have had the feeling that the establishment is trying to interfere in the matters?
A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.
Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?
A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.
Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?
A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.
Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?
A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.
Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?
A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.
Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?
A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.
Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?
A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.
Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?
I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.
Q: What kind of technology would you recommend that courts should have?
A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.
Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?
You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.
Q: Do you think law should permit this to death row convicts?
A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.
Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?
A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.
Q: What about capital punishment as a means of punishment itself?
A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.
Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?
A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.
Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?
A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?
Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?
A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).
Q: You think giving proper training to police to prepare a case will make a difference?
A: Yes, it will make a difference.
Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?
A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.
Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?
A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.
Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?
A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.
Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?
A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.
Q: What will happen if in a democracy these rights are controlled by hook or by crook?
A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.
Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?
A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.
Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?
A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.
Q: Is there any other thing you would like to say?
A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.
‘A major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013.’- Aakash Parihar
Aakash Parihar is Partner at Triumvir Law, a firm specializing in M&A, PE/VC, startup advisory, international commercial arbitration, and corporate disputes. He is an alumnus of the National Law School of India University, Bangalore.
How did you come across law as a career? Tell us about what made you decide law as an option.
Growing up in a small town in Madhya Pradesh, wedid not have many options.There you either study to become a doctor or an engineer. As the sheep follows the herd, I too jumped into 11th grade with PCM (Physics, Chemistry and Mathematics).However, shortly after, I came across the Common Law Admission Test (CLAT) and the prospect of law as a career. Being a law aspirant without any background of legal field, I hardly knew anything about the legal profession leave alone the niche areas of corporate lawor dispute resolution. Thereafter, I interacted with students from various law schools in India to understand law as a career and I opted to sit for CLAT. Fortunately, my hard work paid off and I made it to the hallowed National Law School of India University, Bangalore (NSLIU). Joining NLSIU and moving to Bangalorewas an overwhelming experience. However, after a few months, I settled in and became accustomed to the rigorous academic curriculum. Needless to mention that it was an absolute pleasure to study with and from someof the brightest minds in legal academia. NLSIU, Bangalore broadened my perspective about law and provided me with a new set of lenses to comprehend the world around me. Through this newly acquired perspective and a great amount of hard work (which is of course irreplaceable), I was able to procure a job in my fourth year at law school and thus began my journey.
As a lawyer carving a niche for himself, tell us about your professional journey so far. What are the challenges that new lawyers face while starting out in the legal field?
I started my professional journey as an Associate at Samvad Partners, Bangalore, where I primarily worked in the corporate team. Prior to Samvad Partners, through my internship, I had developed an interest towards corporate law,especially the PE/VC and M&A practice area. In the initial years as an associate at Samvad Partners and later at AZB & Partners, Mumbai, I had the opportunity to work on various aspects of corporate law, i.e., from PE/VC and M&A with respect to listed as well as unlisted companies. My work experience at these firms equipped and provided me the know-how to deal with cutting edge transactional lawyering. At this point, it is important to mention that I always had aspirations to join and develop a boutique firm. While I was working at AZB, sometime around March 2019, I got a call from Anubhab, Founder of Triumvir Law, who told me about the great work Triumvir Law was doing in the start-up and emerging companies’ ecosystem in Bangalore. The ambition of the firm aligned with mine,so I took a leap of faith to move to Bangalore to join Triumvir Law.
Anyone who is a first-generation lawyer in the legal industry will agree with my statement that it is never easy to build a firm, that too so early in your career. However, that is precisely the notion that Triumvir Law wanted to disrupt. To provide quality corporate and dispute resolution advisory to clients across India and abroad at an affordable price point.
Once you start your professional journey, you need to apply everything that you learnt in law schoolwith a practical perspective. Therefore, in my opinion, in addition to learning the practical aspects of law, a young lawyer needs to be accustomed with various practices of law before choosing one specific field to practice.
India has been doing reallywell in the field of M&A and PE/VC. Since you specialize in M&A and PE/VC dealmaking, what according to you has been working well for the country in this sphere? What does the future look like?
India is a developing economy, andM&A and PE/VC transactions form the backbone of the same. Since liberalization, there has been an influx of foreign investment in India, and we have seen an exponential rise in PC/VA and M&A deals. Indian investment market growth especially M&A and PE/VC aspects can be attributed to the advent of startup culture in India. The increase in M&A and PE/VC deals require corporate lawyersto handle the legal aspects of these deals.
As a corporate lawyer working in M&A and PE/VC space, my work ranges from drafting term-sheets to the transaction documents (SPA, SSA, SHA, BTA, etc.). TheM&A and PE/VC deal space experienced a slump during the first few months of the pandemic, but since June 2021, there has been a significant growth in M&A and PE/VC deal space in India. The growth and consistence of the M&A and PE/VC deal space in India can be attributed to several factors such as foreign investment, uncapped demands in the Indian market and exceptional performance of Indian startups.
During the pandemic many businesses were shut down but surprisingly many new businesses started, which adapted to the challenges imposed by the pandemic. Since we are in the recovery mode, I think the M&A and PE/VC deal space will reach bigger heights in the comingyears. We as a firm look forward to being part of this recovery mode by being part of the more M&A and PE/VC deals in future.
You also advice start-ups. What are the legal issues or challenges that the start-ups usually face specifically in India? Do these issues/challenges have long-term consequences?
We do a considerable amount of work with startupswhich range from day-to-day legal advisory to transaction documentation during a funding round. In India, we have noticed that a sizeable amount of clientele approach counsels only when there is a default or breach, more often than not in a state of panic. The same principle applies to startups in India, they normally approach us at a stage when they are about to receive investment or are undergoing due diligence. At that point of time, we need to understand their legal issues as well as manage the demands of the investor’s legal team. The majornon-compliances by startups usually involve not maintaining proper agreements, delaying regulatory filings and secretarial compliances, and not focusing on proper corporate governance.
Another major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013. Keeping up with these requirements can be time-consuming for even seasoned lawyers, and we can only imagine how difficult it would be for startups. Startups spend their initial years focusing on fund-raising, marketing, minimum viable products, and scaling their businesses. Legal advice does not usually factor in as a necessity. Our firm aims to help startups even before they get off the ground, and through their initial years of growth. We wanted to be the ones bringing in that change in the legal sector, and we hope to help many more such startups in the future.
In your opinion, are there any specific India-related problems that corporate/ commercial firms face as far as the company laws are concerned? Is there scope for improvement on this front?
The Indian legal system which corporate/commercial firms deal with is a living breathing organism, evolving each year. Due to this evolving nature, we lawyers are always on our toes.From a minor amendment to the Companies Act to the overhaul of the foreign exchange regime by the Reserve Bank of India, each of these changes affect the compliance and regulatory regime of corporates. For instance, when India changed the investment route for countries sharing land border with India,whereby any country sharing land border with India including Hong Kong cannot invest in India without approval of the RBI in consultation with the central government,it impacted a lot of ongoing transactions and we as lawyers had to be the first ones to inform our clients about such a change in the country’s foreign investment policy. In my opinion, there is huge scope of improvement in legal regime in India, I think a stable regulatory and tax regime is the need for the hour so far as the Indian system is concerned. The biggest example of such a market with stable regulatory and tax regime is Singapore, and we must work towards emulating the same.
Your boutique law firm has offices in three different cities — Delhi NCR, Mumbai and Bangalore. Have the Covid-induced restrictions such as WFH affected your firm’s operations? How has your firm adapted to the professional challenges imposed by the pandemic-related lifestyle changes?
We have offices in New Delhi NCR and Mumbai, and our main office is in Bangalore. Before the pandemic, our work schedule involved a fair bit of travelling across these cities. But post the lockdowns we shifted to a hybrid model, and unless absolutely necessary, we usually work from home.
In relation to the professional challenges during the pandemic, I think it was a difficult time for most young professionals. We do acknowledge the fact that our firm survived the pandemic. Our work as lawyers/ law firms also involves client outreach and getting new clients, which was difficult during the lockdowns. We expanded our client outreach through digital means and by conducting webinars, including one with King’s College London on International Treaty Arbitration. Further, we also focused on client outreach and knowledge management during the pandemic to educate and create legal awareness among our clients.
‘It’s a myth that good legal advice comes at prohibitive costs. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.’ – Archana Balasubramanian
Archana Balasubramanian is the founding partner of Agama Law Associates, a Mumbai-based corporate law firm which she started in 2014. She specialises in general corporate commercial transaction and advisory as well as deep sectoral expertise across manufacturing, logistics, media, pharmaceuticals, financial services, shipping, real estate, technology, engineering, infrastructure and health.
August 13, 2021:
Lawyers see companies ill-prepared for conflict, often, in India. When large corporates take a remedial instead of mitigative approach to legal issues – an approach utterly incoherent to both their size and the compliance ecosystem in their sector – it is there where the concept of costs on legal becomes problematic. Pre-dispute management strategy is much more rationalized on the business’ pocket than the costs of going in the red on conflict and compliances.
Corporates often focus on business and let go of backend maintenance of paperwork, raising issues as and when they arise and resolving conflicts / client queries in a manner that will promote dispute avoidance.
Corporate risk and compliance management is yet another elephant in India, which in addition to commercial disputes can be a drain on a company’s resources. It can be clubbed under four major heads – labour, industrial, financial and corporate laws. There are around 20 Central Acts and then specific state-laws by which corporates are governed under these four categories.
Risk and compliance management is also significantly dependent on the sector, size, scale and nature of the business and the activities being carried out.
The woes of a large number of promoters from the ecommerce ecosystem are to do with streamlining systems to navigate legal. India has certain heavily regulated sectors and, like I mentioned earlier, an intricate web of corporate risk and compliance legislation that can result in prohibitive costs in the remedial phase. To tackle the web in the preventive or mitigative phase, start-ups end up lacking the arsenal due to sheer intimidation from legal. Promoters face sectoral risks in sectors which are heavily regulated, risks of heavy penalties and fines under company law or foreign exchange laws, if fund raise is not done in a compliant manner.
It is a myth that good legal advice comes at prohibitive costs. Promoters are quick to sign on the dotted line and approach lawyers with a tick the box approach. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.
Investment contracts, large celebrity endorsement contracts and CXO contracts are some key areas where legal advice should be obtained. Online contracts is also emerging as an important area of concern.
When we talk of scope, arbitration is pretty much a default mechanism at this stage for adjudicating commercial disputes in India, especially given the fixation of timelines for closure of arbitration proceedings in India. The autonomy it allows the parties in dispute to pick a neutral and flexible forum for resolution is substantial. Lower courts being what they are in India, arbitration emerges as the only viable mode of dispute resolution in the Indian commercial context.
The arbitrability of disputes has evolved significantly in the last 10 years. The courts are essentially pro-arbitration when it comes to judging the arbitrability of subject matter and sending matters to arbitration quickly.
The Supreme Court’s ruling in the Vidya Drolia case has significantly clarified the position in respect of tenancy disputes, frauds and consumer disputes. It reflects upon the progressive approach of the court and aims to enable an efficient, autonomous and effective arbitration environment in India.
Law firms stand for ensuring that the law works for business and not against it. Whatever the scope of our mandate, the bottom line is to ensure a risk-free, conflict-free, compliant and prepared enterprise for our client, in a manner that does not intimidate the client or bog them down, regardless of the intricacy of the legal and regulatory web it takes to navigate to get to that end result. Lawyers need to dissect the business of law from the work.
This really involves meticulous, detail-oriented, sheer hard work on the facts, figures, dates and all other countless coordinates of each mandate, repetitively and even to a, so-called, “dull” routine rhythm – with consistent single-mindedness and unflinching resolve.
As a firm, multiply that effort into volumes, most of it against-the-clock given the compliance heavy ecosystem often riddled with uncertainties in a number of jurisdictions. So the same meticulous streamlining of mandate deliverables has to be extrapolated by the management of the firm to the junior most staff.
Further, the process of streamlining itself has to be more dynamic than ever now given the pace at which the new economy, tech-ecosystem, business climate as well as business development processes turn a new leaf.
Finally, but above all, we need to find a way to feel happy, positive and energized together as a team while chasing all of the aforesaid dreams. The competitive timelines and volumes at which a law firm works, this too is a real challenge. But we are happy to face it and evolve as we grow.
We always as a firm operated on the work from anywhere principle. We believed in it and inculcated this through document management processes to the last trainee. This helped us shut shop one day and continue from wherever we are operating.
The team has been regularly meeting online (at least once a day). We have been able to channel the time spent in travelling to and attending meetings in developing our internal knowledge banks further, streamline our processes, and work on integrating various tech to make the practice more cost-effective for our clients.
Right to Disclosure – Importance & Challenges in Criminal Justice System – By Manu Sharma
Personal liberty is the most cherished value of human life which thrives on the anvil of Articles 14 and 21 of the Constitution of India (“the Constitution”). Once a person is named an accused, he faces the spectre of deprivation of his personal liberty and criminal trial. This threat is balanced by Constitutional safeguards which mandate adherence to the rule of law by the investigating agencies as well as the Court. Thus, any procedure which seeks to impinge on personal liberty must also be fair and reasonable. The right to life and personal liberty enshrined under article 21 of the Constitution, expanded in scope post Maneka Gandhi[1], yields the right to a fair trial and fair investigation. Fairness demands disclosure of anything relevant that may be of benefit to an accused. Further, the all-pervading principles of natural justice envisage the right to a fair hearing, which entails the right to a full defence. The right to a fair defence stems from full disclosure. Therefore, the right of an accused to disclosure emanates from this Constitutional philosophy embellished by the principles of natural justice and is codified under the Code of Criminal Procedure, 1973 (“Code”).
Under English jurisprudence, the duty of disclosure is delineated in the Criminal Procedure and Investigations Act, 1996, which provides that the prosecutor must disclose to the accused any prosecution material which has not previously been disclosed to the accused and which might reasonably be considered capable of undermining the case for the prosecution against the accused or of assisting the case for the accused, except if such disclosure undermines public interest.[2] Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence.[3] The duty of disclosure under common law contemplates disclosure of anything which might assist the defence[4], even if such material was not to be used as evidence[5]. Under Indian criminal jurisprudence, which has borrowed liberally from common law, the duty of disclosure is embodied in sections 170(2), 173, 207 and 208 of the Code, which entail the forwarding of material to the Court and supply of copies thereof to the accused, subject to statutory exceptions.
II. Challenges in Enforcement
The right to disclosure is a salient feature of criminal justice, but its provenance and significance appear to be lost on the Indian criminal justice system. The woes of investigative bias and prosecutorial misconduct threaten to render this right otiose. That is not to say that the right of an accused to disclosure is indefeasible, as certain exceptions are cast in the Code itself, chief among them being public interest immunity under section 173(6). However, it is the mischief of the concept of ‘relied upon’ emerging from section 173(5) of the Code, which is wreaking havoc on the right to disclosure and is the central focus of this article. The rampant misuse of the words “on which the prosecution proposes to rely’ appearing in section 173(5) of the Code, to suppress material favourable to the accused or unfavourable to the prosecution in the garb of ‘un-relied documents’ has clogged criminal courts with avoidable litigation at the very nascent stage of supply of copies of documents under section 207 of the Code. The erosion of the right of an accused to disclosure through such subterfuge is exacerbated by the limited and restrictive validation of this right by criminal Courts. The dominant issues highlighted in the article, which stifle the right to disclosure are; tainted investigation, unscrupulous withholding of material beneficial to the accused by the prosecution, narrow interpretation by Courts of section 207 of the Code, and denial of the right to an accused to bring material on record in the pre-charge stage.
A. Tainted Investigation
Fair investigation is concomitant to the preservation of the right to fair disclosure and fair trial. It envisages collection of all material, irrespective of its inculpatory or exculpatory nature. However, investigation is often vitiated by the tendencies of overzealous investigating officers who detract from the ultimate objective of unearthing truth, with the aim of establishing guilt. Such proclivities result in collecting only incriminating material during investigation or ignoring the material favourable to the accused. This leads to suppression of material and scuttles the right of the accused to disclosure at the very inception. A tainted investigation leads to miscarriage of justice. Fortunately, the Courts are not bereft of power to supervise investigation and ensure that the right of an accused to fair disclosure remains protected. The Magistrate is conferred with wide amplitude of powers under section 156(3) of the Code to monitor investigation, and inheres all such powers which are incidental or implied to ensure proper investigation. This power can be exercised suo moto by the Magistrate at all stages of a criminal proceeding prior to the commencement of trial, so that an innocent person is not wrongly arraigned or a prima facie guilty person is not left out.[6]
B. Suppression of Material
Indian courts commonly witness that the prosecution is partisan while conducting the trial and is invariably driven by the lust for concluding in conviction. Such predisposition impels the prosecution to take advantage by selectively picking up words from the Code and excluding material favouring the accused or negating the prosecution case, with the aid of the concept of ‘relied upon’ within section 173(5) of the Code. However, the power of the prosecution to withhold material is not unbridled as the Constitutional mandate and statutory rights given to an accused place an implied obligation on the prosecution to make fair disclosure.[7] If the prosecution withholds vital evidence from the Court, it is liable to adverse inference flowing from section 114 of the Indian Evidence Act, 1872 (“Evidence Act). The prosecutor is expected to be guided by the Bar Council of India Rules which prescribe that an advocate appearing for the prosecution of a criminal trial shall so conduct the prosecution that it does not lead to conviction of the innocent. The suppression of material capable of establishment of the innocence of the accused shall be scrupulously avoided. [8]
C. Scope of S. 207
The scope of disclosure under section 207 has been the subject of fierce challenge in Indian Courts on account of the prosecution selectively supplying documents under the garb of ‘relied upon’ documents, to the prejudice of the defence of an accused. The earlier judicial trend had been to limit the supply of documents under section 207 of the Code to only those documents which were proposed to be relied upon by the prosecution. This view acquiesced the exclusion of documents which were seized during investigation, but not filed before the Court along with the charge sheet, rendering the right to disclosure a farce. This restrictive sweep fails to reconcile with the objective of a fair trial viz. discovery of truth. The scheme of the code discloses that Courts have been vested with extensive powers inter alia under sections 91, 156(3) and 311 to elicit the truth. Towards the same end, Courts are also empowered under Section 165 of the Evidence Act. Thus, the principle of harmonious construction warrants a more purposive interpretation of section 207 of the code. The Hon’ble Supreme Court expounded on the scope of Section 207 of the Code in the case of Manu Sharma[9] and held that documents submitted to the Magistrate under section 173(5) would deem to include the documents which have to be sent to the magistrate during the course of investigation under section 170(2). A document which has been obtained bona fide and has a bearing on the case of the prosecution should be disclosed to the accused and furnished to him to enable him to prepare a fair defence, particularly when non production or disclosure would affect administration of justice or prejudice the defence of the accused. It is not for the prosecution or the court to comprehend the prejudice that is likely to be caused to the accused. The perception of prejudice is for the accused to develop on reasonable basis.[10] Manu Sharma’s [supra] case has been relied upon in Sasikala [11] wherein it was held that the Court must concede a right to the accused to have access to the documents which were forwarded to the Court but not exhibited by the prosecution as they favoured the accused. These judgments seem more in consonance with the true spirit of fair disclosure and fair trial. However, despite such clear statements of law, courts are grappling with the judicial propensity of deviating from this expansive interpretation and regressing to the concept of relied upon. The same is evident from a recent pronouncement of the Delhi High Court where the ratios laid down in Manu Sharma & Sasikala [supra] were not followed by erroneously distinguishing from those cases.[12] Such “per incuriam” aberrations by High Court not only undermine the supremacy of the Apex Court, but also adversely impact the functioning of the district courts over which they exercise supervisory jurisdiction. Hopefully in future Judges shall be more circumspect and strictly follow the law declared by the Apex Court.
D. Pre-Charge Embargo
Another obstacle encountered in the enforcement of the right to disclosure is the earlier judicial approach to stave off production or consideration of any additional documents not filed alongwith the charge sheet at the pre-charge stage, as the right to file such material was available to the accused only upon the commencement of trial after framing of charge.[13] At the pre-charge stage, Court could not direct the prosecution to furnish copies of other documents[14] It was for the accused to do so during trial or at the time of entering his defence. However, the evolution of law has seen that at the stage of framing charge, Courts can rely upon the material which has been withheld by the prosecutor, even if such material is not part of the charge sheet, but is of such sterling quality demolishing the case of the prosecution.[15] Courts are not handicapped to consider relevant material at the stage of framing charge, which is not relied upon by the prosecution. It is no argument that the accused can ask for the documents withheld at the time of entering his defence.[16] The framing of charge is a serious matter in a criminal trial as it ordains an accused to face a long and arduous trial affecting his liberty. Therefore, the Court must have all relevant material before the stage of framing charge to ascertain if grave suspicion is made out or not. Full disclosure at the stage of section 207 of the code, which immediately precedes discharging or charging an accused, enables an accused to seek a discharge, if the documents, including those not relied upon by the prosecution, create an equally possible view in favour of the accused.[17] On the other hand, delaying the reception of documents postpones the vindication of the accused in an unworthy trial and causes injustice by subjecting him to the trauma of trial. There is no gainsaying that justice delayed is justice denied, therefore, such an approach ought not to receive judicial consent. A timely discharge also travels a long way in saving precious time of the judiciary, which is already overburdened by the burgeoning pendency of cases. Thus, delayed or piecemeal disclosure not only prejudices the defence of the accused, but also protracts the trial and occasions travesty of justice.
III. Duties of the stakeholders in criminal justice system
The foregoing analysis reveals that participation of the investigating agency, the prosecution and the Court is inextricably linked to the enforcement of the right to disclosure. The duties cast on these three stakeholders in the criminal justice system, are critical to the protection of this right. It is incumbent upon the investigating agencies to investigate cases fairly and to place on record all the material irrespective of its implication on the case of prosecution case. Investigation must be carried out with equal alacrity and fairness irrespective of status of accused or complainant.[18] An onerous duty is cast on the prosecution as an independent statutory officer, to conduct the trial with the objective of determination of truth and to ensure that material favourable to the defence is supplied to the accused. Ultimately, it is the overarching duty of the Court to ensure a fair trial towards the administration of justice for all parties. The principles of fair trial require the Court to strike a delicate balance between competing interests in a system of adversarial advocacy. Therefore, the court ought to exercise its power under section 156(3) of the Code to monitor investigation and ensure that all material, including that which enures to the benefit of the accused, is brought on record. Even at the stage of supply of copies of police report and documents under section 207 of the Code, it is the duty of the Court to give effect to the law laid down by the Hon’ble Supreme Court in Manu Sharma (supra) and Sasikala (supra), and ensure that all such material is supplied to the accused irrespective of whether it is “relied upon” by the prosecution or not.
IV. Alternate Remedy
The conundrum of supply of copies under section 207 of the code abounds criminal trials. Fairness is an evolving concept. There is no doubt that disclosure of all material which goes to establish the innocence of an accused is the sine qua non of a fair trial.[19] Effort is evidently underway to expand the concept in alignment with English jurisprudence. In the meanwhile, does the right of an accused to disclosure have another limb to stand on? Section 91 of the Code comes to the rescue of an accused, which confers wide discretionary powers on the Court, independent of section 173 of the Code, to summon the production of things or documents, relevant for the just adjudication of the case. In case the Court is of the opinion that the prosecution has withheld vital, relevant and admissible evidence from the Court, it can legitimately use its power under section 91 of the Code to discover the truth and to do complete justice to the accused.[20]
V. Conclusion
A society’s progress and advancement are judged on many parameters, an important one among them being the manner in which it administers criminal justice. Conversely, the ironic sacrilege of the core virtues of criminal jurisprudence in the temples of justice evinces social decadence. The Indian legislature of the twenty first century has given birth to several draconian statutes which place iron shackles on personal liberty, evoking widespread fear of police abuses and malicious prosecution. These statutes not only entail presumptions which reverse the burden of proof, but also include impediments to the grant of bail. Thus, a very heavy burden to dislodge the prosecution case is imposed on the accused, rendering the right to disclosure of paramount importance. It is the duty of the Court to keep vigil over this Constitutional and statutory right conferred on an accused by repudiating any procedure which prejudices his defence. Notable advancement has been made by the Apex Court in interpreting section 207 of the Code in conformity with the Constitutional mandate, including the right to disclosure. Strict adherence to the afore-noted principles will go a long way in ensuring real and substantial justice. Any departure will not only lead to judicial anarchy, but also further diminish the already dwindling faith of the public in the justice delivery system.
**
Advocate Manu Sharma has been practising at the bar for over sixteen years. He specialises in Criminal Defence. Some of the high profile cases he has represented are – the 2G scam case for former Union minister A Raja; the Religare/Fortis case for Malvinder Singh; Peter Mukerjee in the P Chidambaram/ INX Media case; Devas Multimedia in ISRO corruption act case; Om Prakash Chautala in PMLA case; Aditya Talwar in the aviation scam case; Dilip Ray, former Coal Minister in one of the coal scam cases; Suhaib Illyasi case.
**
Disclaimer: The views or opinions expressed are solely of the author.
[1] Maneka Gandhi and Another v. Union of India, (1978) 1 SCC 248
[2] S. 3 of the Criminal Procedure and Investigations Act, 1996
[3] R v. H and R v. C, 2004 (1) ALL ER 1269
[4] R v. Ward (Judith), (1993) 1 WLR 619 : (1993) 2 ALL ER 577 (CA)
[5] R v. Preston, (1994) 2 AC 130 : (1993) 3 WLR 891 : (1993) 4 ALL ER 638 (HL), R v. Stinchcome,
(1991), 68 C.C.C. (3d) 1 (S.C.C.)
[6] Vinubhai Haribhai Malaviya and Others v. State of Gujarat and Another, 2019 SCC Online SC 1346
[7] Sidhartha Vashishth alias Manu Sharma v. State (NCT of Delhi), (2010) 6 SCC 1
[8] R. 16, part II, Ch. VI of the Bar Council of India Rules
[9] Manu Sharma, (2010) 6 SCC 1
[10] V.K. Sasikala v. State, (2012) 9 SCC 771 : AIR 2013 SC 613
[11] Sasikala, (2012) 9 SCC 771 : AIR 2013 SC 613
[12] Sala Gupta and Another v. Directorate of Enforcement, (2019) 262 DLT 661
[13] State of Orissa v. Debendra Nath Padhi¸(2005) 1 SCC 568
[14] Dharambir v. Central Bureau of Investigation, ILR (2008) 2 Del 842 : (2008) 148 DLT 289
[15] Nitya Dharmananda alias K. Lenin and Another v. Gopal Sheelum Reddy, (2018) 2 SCC 93
[16] Neelesh Jain v. State of Rajasthan, 2006 Cri LJ 2151
[17] Dilwar Balu Kurane v. State of Maharashtra, (2002) 2 SCC 135, Yogesh alias Sachin Jagdish Joshi v. State of Maharashtra, (2008) 10 SCC 394
[18] Karan Singh v. State of Haryana, (2013) 12 SCC 529
[19] Kanwar Jagat Singh v. Directorate of Enforcement & Anr, (2007) 142 DLT 49
[20] Neelesh, 2006 Cri LJ 2151
Disclaimer: The views or opinions expressed are solely of the author.
Validity & Existence of an Arbitration Clause in an Unstamped Agreement
By Kunal Kumar
January 8, 2024
In a recent ruling, a seven-judge bench of the Supreme Court of India in its judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, overruled the constitutional bench decision of the Supreme Court of India in N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. and has settled the issue concerning the validity and existence of an arbitration clause in an unstamped agreement. (‘N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III’)
Background to N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
One of the first instances concerning the issue of the validity of an unstamped agreement arose in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. In this case, the Hon’ble Apex Court held that if an instrument/document lacks proper stamping, the exercising Court must preclude itself from acting upon it, including the arbitration clause. It further emphasized that it is imperative for the Court to impound such documents/instruments and must accordingly adhere to the prescribed procedure outlined in the Indian Stamp Act 1899.
With the introduction of the 2015 Amendment, Section 11(6A) was inserted in the Arbitration & Conciliation Act 1996 (A&C Act) which stated whilst appointing an arbitrator under the A&C Act, the Court must confine itself to the examination of the existence of an arbitration agreement.
In the case of M/s Duro Felguera S.A. v. M/s Gangavaram Port Limited, the Supreme Court of India made a noteworthy observation, affirming that the legislative intent behind the 2015 Amendment to the A&C Act was necessitated to minimise the Court's involvement during the stage of appointing an arbitrator and that the purpose embodied in Section 11(6A) of A&C Act, deserves due acknowledgement & respect.
In the case of Garware Wall Ropes Ltd. v. Cosatal Marine Constructions & Engineering Ltd., a divisional bench of the Apex Court reaffirmed its previous decision held in SMS Tea Estates (supra) and concluded that the inclusion of an arbitration clause in a contract assumes significance, emphasizing that the agreement transforms into a contract only when it holds legal enforceability. The Apex Court observed that an agreement fails to attain the status of a contract and would not be legally enforceable unless it bears the requisite stamp as mandated under the Indian Stamp Act 1899. Accordingly, the Court concluded that Section 11(6A) read in conjunction with Section 7(2) of the A&C Act and Section 2(h) of the Indian Contract Act 1872, clarified that the existence of an arbitration clause within an agreement is contingent on its legal enforceability and that the 2015 Amendment of the A&C Act to Section 11(6A) had not altered the principles laid out in SMS Tea Estates (supra).
Brief Factual Matrix – N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Indo Unique Flame Ltd. (‘Indo Unique’) was awarded a contract for a coal beneficiation/washing project with Karnataka Power Corporation Ltd. (‘KPCL’). In the course of the project, Indo Unique entered into a subcontract in the form of a Work Order with N.N. Global Mercantile Pvt. Ltd. (‘N.N. Global’) for coal transportation, coal handling and loading. Subsequently, certain disputes arose with KPCL, leading to KPCL invoking Bank Guarantees of Indo Unique under the main contract, after which Indo Unique invoked the Bank Guarantee of N. N. Global as supplied under the Work Order.
Top of FormS
Subsequently, N.N. Global initiated legal proceedings against the cashing of the Bank Guarantee in a Commercial Court. In response thereto, Indo Unique moved an application under Section 8 of the A&C Act, requesting that the Parties to the dispute be referred for arbitration. The Commercial Court dismissed the Section 8 application, citing the unstamped status of the Work Order as one of the grounds. Dissatisfied with the Commercial Court's decision on 18 January 2018, Indo Unique filed a Writ Petition before the High Court of Bombay seeking that the Order passed by the Commercial Court be quashed or set aside. The Hon’ble Bombay High Court on 30 September 2020 allowed the Writ Petition filed by Indo Unique, aggrieved by which, N.N. Global filed a Special Leave Petition before the Supreme Court of India.
N. N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. – I
The issue in the matter of M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unqiue Flame Ltd. & Ors. came up before a three-bench of the Supreme Court of India i.e. in a situation when an underlying contract is not stamped or is insufficiently stamped, as required under the Indian Stamp Act 1899, would that also render the arbitration clause as non-existent and/or unenforceable (‘N.N. Global Mercantile Pvt. Ltd. v. Indo Flame Ltd. – I’).
The Hon’ble Supreme Court of India whilst emphasizing the 'Doctrine of Separability' of an arbitration agreement held that the non-payment of stamp duty on the commercial contract would not invalidate, vitiate, or render the arbitration clause as unenforceable, because the arbitration agreement is considered an independent contract from the main contract, and the existence and/or validity of an arbitration clause is not conditional on the stamping of a contract. The Hon’ble Supreme Court further held that deficiency in stamp duty of a contract is a curable defect and that the deficiency in stamp duty on the work order, would not affect the validity and/or enforceability of the arbitration clause, thus applying the Doctrine of Separability. The arbitration agreement remains valid and enforceable even if the main contract, within which it is embedded, is not admissible in evidence owing to lack of stamping.
The Hon’ble Apex Court, however, considered it appropriate to refer the issue i.e. whether unstamped instrument/document, would also render an arbitration clause as non-existent, unenforceable, to a constitutional bench of five-bench of the Supreme Court.
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II
On 25 April 2023, a five-judge bench of the Hon’ble Supreme Court of India in the matter of N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. held that (1) An unstamped instrument containing an arbitration agreement cannot be said to be a contract which is enforceable in law within the meaning of Section 2(h) of the Indian Contract Act 1872 and would be void under Section 2(g) of the Indian Contract Act 1872, (2) an unstamped instrument which is not a contract nor enforceable cannot be acted upon unless it is duly stamped, and would not otherwise exist in the eyes of the law, (3) the certified copy of the arbitration agreement produced before a Court, must clearly indicate the stamp duty paid on the instrument, (4) the Court exercising its power in appointing an arbitration under Section 11 of the A&C Act, is required to act in terms of Section 33 and Section 35 of the Indian Stamp Act 1899 (N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II).
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
A seven-judge bench of the Supreme Court of India on 13 December 2023 in its recent judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, (1) Agreements lacking proper stamping or inadequately stamped are deemed inadmissible as evidence under Section 35 of the Stamp Act. However, such agreements are not automatically rendered void or unenforceable ab initio; (2) non-stamping or insufficient stamping of a contract is a curable defect, (2) the issue of stamping is not subject to determination under Sections 8 or 11 of the A&C Act by a Court. The concerned Court is only required to assess the prima facie existence of the arbitration agreement, separate from concerns related to stamping, and (3) any objections pertaining to the stamping of the agreement would fall within the jurisdiction of the arbitral tribunal. Accordingly, the decision in N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II and SMS Tea (supra) was overruled, by the seven-judge bench of the Supreme Court of India.
Kunal is a qualified lawyer with more than nine years of experience and has completed his LL.M. in Dispute Resolution (specialisation in International Commercial Arbitration) from Straus Institute for Dispute Resolution, Pepperdine University, California.
Kunal currently has his own independent practice and specializes in commercial/construction arbitration as well as civil litigation. He has handled several matters relating to Civil Law and arbitrations (both domestic and international) and has appeared before the Supreme Court of India, High Court of Delhi, District Courts of Delhi and various other tribunals.
No Safe Harbour For Google On Trademark Infringement
By Mayank Grover & Pratibha Vyas
October 9, 2023
Innovation, patience, dedication and uniqueness culminate in establishing a distinct identity. A trademark aids in identifying the source and quality, shaping perceptions about the identity's essence. When values accompany a product or service's trademark, safeguarding against misuse and infringement becomes crucial. A recent pronouncement of a Division Bench of the Delhi High Court dated August 10, 2023 in Google LLC v. DRS Logistics (P) Ltd. & Ors. and Google India Private Limited v. DRS Logistics (P) Ltd. & Ors. directed that Google’s use of trademarks as keywords for its Google Ads Programme does amount to ‘use’ in advertising under the Trademarks Act and the benefit of safe harbour would not be available to Google if such keywords infringe on the concerned trademark.
Factual Background
Google LLC manages and operates the Google Search Engine and Ads Programme, while, Google India Private Limited is a subsidiary of Google that has been appointed as a non-exclusive reseller of the Ads Programme in India. The Respondents, DRS Logistics and Agarwal Packers and Movers Pvt. Ltd. are leading packaging, moving and logistics service providers in India.
On 22.12.2011, DRS filed a suit against Google and Just Dial Ltd. under provisions of the Trademarks Act, 1999 (‘TM Act’) inter alia seeking a permanent injunction against Google from permitting third parties from infringing, passing off etc. the relevant trademarks of DRS. The core of the dispute revolved around Google’s Ads Programme. DRS claimed that its trade name 'AGARWAL PACKERS AND MOVERS' is widely recognized and a 'well-known' trademark. Use of DRS’s trademark as a keyword diverts internet traffic from its website to that of its competitors and they were entitled to seek restraint against Google for permitting third parties who are not authorized to use the said trademark. DRS further argued that Google benefits from these trademark infringements. This practice involved charging a higher amount for displaying these ads, constituting an infringement of their trademarks. Whereas, Google contended that the use of the keyword in the Ads Programme does not amount to ‘use’ under the TM Act notwithstanding that the keyword is/or similar to a trademark. Thus, the use of a term as a keyword cannot be construed as an infringement of a trademark under the TM Act, and being an intermediary, it claimed a safe harbour under Section 79 of the Information Technology Act, 2000. (‘IT Act’).
In essence, the dispute between the parties was rooted in DRS’s grievance concerning the Ads Programme. The Learned Single Judge vide judgment dated 30.10.2021interpreted relevant provisions of the TM Act and drew on multiple legal precedents to arrive at the decision that DRS can seek protection of its trademarks which were registered under Section 28 of the TM Act and issued directions to investigate complaints alleging the use of trademark and/or to ascertain whether a sponsored result has an effect of infringing a trademark or passing off.
Being aggrieved, Google LLC and Google Pvt. Ltd. filed appeals before the Division Bench. Google LLC argued that the Single Judge’s findings were erroneous and the directions issued were liable to be set aside. Google India claimed that it doesn’t control and operate the Search Engine and the Ads Programme making it unable to comply with the directions passed in the impugned judgment.
Analysis & Decision of Court
The Division Bench found Single Judge’s rationale for assessing trademark infringement through keywords and meta-tags valid. Meta-tags are a list of words/code in a website, not readily visible to the naked eye. It serves as a tool for indexing the website by a search engine. If a trademark of a third party is used as a meta-tag, the same would serve as identifying the website as relevant to the search query that includes the trademark as a search term. The use of keywords in the Ads Programme also serves similar purpose. The Division Bench was unable to accept that using a trademark as a keyword, even if not visible, would not be considered trademark use under the TM Act.
Google placed heavy reliance on the decisions rendered by Courts across jurisdictions of United Kingdom, United States of America, European Union, Australia, New Zealand, Russia, South Africa, Canada, Spain, Italy, Japan and China; in the cases of Google France SARL and Google Inc. v. Louis Vitton SA & Ors.[1], Interflora Inc. v. Marks & Spencer Plc.[2], and L’Oreal SA v. eBay International AG[3] in support of the contention that the use of trade marks is by the advertiser and not by Google. However, the Division Bench rejected Google’s passive role; highlighting its active involvement in recommending and promoting trademark keywords for higher clicks in its Ads Programme. Division Bench referred to a few judicial decisions rendered in the United States of America that captured the essence of the controversy for perspective, concluding that Google actively promotes and encourages trademarks associated with major goods and services, rather than having a passive role.
It was held that the contention that the use of trademarks as keywords, per se constitutes an infringement of the trademark is unmerited; the assumption that an internet user is merely searching the address of the proprietor of the trademark when he feeds in a search query that may contain a trademark, is erroneous.
The Doctrine of 'Initial Interest Confusion' addresses trademark infringement based on pre-purchase confusion. The doctrine is applied when meta-tags, keywords, or domain names cause initial confusion similar to a registered trademark. If users are misled to access unrelated websites, trademark use in internet advertising may be actionable and reliance was placed on US precedents. Referring to Section 29 of the TM Act, it was directed that Section 29 does not specify the duration for which the confusion lasts but, even if the confusion is for a short duration and an internet user is able to recover from the same, the trade mark would be infringed and would offend Section 29(2) of the TM Act.
It was held that the Ads Programme is a platform for displaying advertisements. Google, being an architect and operator of its own programme makes it an active participant in the use of trademarks and determining the advertisements displayed on search pages. Their use of proprietary software makes them utilize trademarks and control the distribution of information related to potentially infringing links, ultimately leading to revenue maximization. Hence, a substantial link exists between Google LLC and Google India, rendering it impossible for Google India to deny its role in operating the Ads Programme. It was further held that Google sells trademarks as keywords to advertisers and encourages users to use trademarks as keywords for ads. It is contradictory for Google to encourage trademark use while claiming data belongs to third parties for exemption. After 2004, Google changed policies to boost revenue and subsequently, introduced a tool that searches effective terms, including trademarks. Google's active involvement in its advertising business and online nature does not necessarily qualify it for benefits under Section 79 of the IT Act. The Division Bench agreed with the view of the Single Judge that Google would not be eligible for protection of safe harbour under Section 79(1) of the IT Act, if its alleged activities infringe trademarks.
Conclusion
This is a seminal decision governing (and rather, restricting) the operations of intermediaries and redefining the jurisprudence of safe harbour under the IT Act. The decision is well-reasoned and establishes a significant precedent for safeguarding trademarks by uniquely holding Google accountable under its Ads Programme. The same will prevent usage of tradenames as a third-party trademark in keyword search or metatags by advertisers on Google’s search engine. While keywords and meta-tags have different levels of visibility, their purpose is similar i.e. advertising and attracting internet traffic. The use of trademarks as meta-tags by a person who is neither a proprietor of the trademark nor permitted to use the same leads to confusion amongst public at large due to the automated processes of search engines and consequently, constitutes trademark infringement.
About the Authors: Mayank Grover is a Partner and Pratibha Vyas is an Associate at Seraphic Advisors, Advocates & Solicitors
[1] C-236/08 to C-238/08 (2010) [2011] All ER (EC) 41
[2] [2014] EWCA Civ 1403
[3] 2C- 324/09 (2010)
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