Read Order:Vikram Kathuria & Anr V. State & Anr
Chahat Varma
New Delhi, September 27, 2023: In a recent decision, the Delhi High Court has set aside an order directing the preservation of records in a criminal case, holding that the revision petition against the interlocutory order was not maintainable and that the application under Section 91 of the Criminal Procedure Code (Cr.P.C.) should not have been entertained at a premature stage.
Brief issue involved in the present case was that the petitioners had approached the court with the claim that the FIR filed against them was entirely false and contained fabricated accounts from the complainant and other witnesses who, in collaboration with the local police, deliberately concealed the true facts to deceive the courts. Therefore, the petitioners resorted to filing an application under Section 91 of the Cr.P.C. before the Additional Chief Metropolitan Magistrate (ACMM) to ensure that the accurate facts were presented before the trial court for the establishment of the truth. On 10.04.2023, the ACMM allowed the petitioners' application, directing the preservation of specific records. Challenging this order, respondent no. 2 approached the court of the Additional Sessions Judge (ASJ) through a revision petition and in the impugned order dated 09.06.2023, the ASJ overturned the ACMM's order.
The genesis of the matter was that respondent no. 2 and her associates, including one ACP 'SD', attempted to extort money from the petitioners.
The single-judge bench of Justice Swarana Kanta Sharma observed that the directions issued by the ACMM in his order dated 10.04.2023 did not determine any significant rights or liabilities of the parties involved.
The bench also cited the Supreme Court's decision in the case of Sethuraman v. Rajamanickam [LQ/SC/2009/597], where it was held that the orders dismissing applications under Section 311 and Section 91 of the Cr.P.C. were considered interlocutory in nature as they did not make a final determination.
Consequently, the bench concluded that the revision petition filed before the ASJ was not maintainable as it pertained to an interlocutory order. Therefore, the order dated 09.06.2023 passed by the ASJ was set aside on this ground.
Further, the bench observed that in a criminal case, the victim possesses participatory rights from the stage of investigation to the conclusion of proceedings in an appeal or revision. In light of this, the bench concluded that the ACMM had erred by not issuing notice and granting an opportunity for a hearing to the complainant before issuing directions regarding the investigation.
The bench also noted that if the Court is convinced that there is material of ‘sterling quality’ that has been withheld by the investigator or prosecutor, it is not precluded from summoning or relying upon that material, even if it is not included in the chargesheet, at the stage of framing charges.
However, the bench observed that the investigation in the present case was still ongoing, and it had not been completed by the investigating agency. Additionally, the Court had not taken cognizance of the offense, and the accused persons had not been summoned. In such a situation, the bench held that the application filed by the accused/petitioners under Section 91 of the Cr.P.C. should not have been entertained by the ACMM.
The bench also remarked that one of the directions issued by the ACMM was that the Joint Commissioner of Police should personally oversee the investigation regarding the role of an ACP in the case. The accused had alleged that the ACP had been involved in threatening and extorting money from them in relation to the case. The bench found that issuing such a direction in an application filed by the accused under Section 91 of the Cr.P.C., before the Court had even taken cognizance of the matter lacked legal foundation.
Therefore, the court concluded that the ACMM had made a legal error by granting the petitioners' application under Section 91 of the Cr.P.C. at a stage where the investigation in the case had not been completed, and the court had not taken cognizance of the matter. Consequently, the court found no grounds to restore the order dated 10.04.2023 passed by the ACMM, and it was accordingly set aside.
Read Order:Disha A. Ravi V. State (NCT of Delhi)
Chahat Varma
New Delhi, September 27, 2023: The Delhi High Court has rejected the plea of environmental activist Disha A. Ravi to waive the condition of prior permission to travel abroad, which was imposed as a bail condition in the case related to the sharing of a ‘toolkit’ related to the 2021 farmers' protest.
The case revolved around allegations of a concerted campaign by banned terror organizations to disrupt the Republic Day national ceremony through unlawful acts under the guise of protests. During social media monitoring, agencies discovered that a Google Document ('toolkit') had been accidentally shared on Twitter. This toolkit allegedly contained a detailed plan for a larger conspiracy aimed at waging an economic, social, cultural, and regional war against the country. It was further alleged that this conspiracy led to incidents of vandalism by anti-social elements outside the Indian Embassy in Rome, Italy, and violence on the streets of Delhi. These incidents resulted in significant damage to public property and over 500 police personnel were reported as injured. Subsequently, various social media accounts were said to have been employed to spread rumours, fake news, and videos to incite hostility between different groups and provoke riots. In light of these allegations, the police registered the FIR and conducted an investigation. The accused/petitioner was later arrested from her residence and was subsequently granted bail by an order dated 23.02.2021, issued by the Additional Sessions Judge.
The central issue before the court was whether the condition imposed in the bail order dated 23.02.2021, which required the accused/petitioner to seek prior permission from the concerned Trial Court before traveling abroad, violated her fundamental right to life and personal liberty as guaranteed under Article 21 of the Constitution of India.
The single-judge bench of Justice Swarana Kanta Sharma emphasized that in criminal cases, when granting bail, the courts have the authority to impose conditions to ensure that the accused cooperates with the investigating agencies and does not evade justice. One such condition, occasionally imposed, is the requirement for the accused to obtain prior permission from the Court before traveling abroad, as authorized under Section 437(2) and 439(1)(a) of the Code of Criminal Procedure (Cr.P.C.).
“While the freedom to travel abroad is a cherished right, it is not absolute, and the criminal courts are duty-bound to prevent misuse of liberty of bail by individuals,” remarked the bench.
The bench further stated that simply because the condition imposed by the Court, in accordance with the law, was causing inconvenience to the petitioner, it could not serve as a valid reason for the deletion of the condition.
The bench took into consideration that the investigation in the present case was ongoing, with the investigating agency still in the process of collecting crucial evidence from foreign intermediaries. The bench also noted that the accused/petitioner had previously been granted permission to travel abroad by the Trial Court on three occasions, and the permission had been granted.
The bench said, “This Court does not undermine the fundamental right of petitioner to have freedom to travel abroad as per Article 21 of Indian Constitution, but at the same time, it also cannot undermine the right of the prosecuting agency to ensure that the investigation is carried out and completed without any hindrance.”
The bench concluded that since the investigating agency had not yet filed a chargesheet and might require the presence or information from the accused/petitioner, traveling abroad without permission and without submitting the itinerary and the purpose of such visit could have an adverse impact on the investigation and trial of the case.
Hence, the plea for the deletion of the bail condition imposed through the order dated 23.02.2021 was denied by the court.
Nevertheless, considering the petitioner's concerns, the court directed that if the petitioner submits an application for permission to travel abroad at least one month before her planned visit, the State should promptly file an appropriate response. This would provide ample time for the Trial Court to pass an appropriate order.
Read Order:Sulav Adhikari &Anr V. State of Govt of NCT Delhi &Anr
Chahat Varma
New Delhi, September 27, 2023: In a recent development, the Delhi High Court has denied anticipatory bail to accused individuals, in a case involving an online scam.
The present applications were filed on behalf of the accused/applicants seeking anticipatory bail in a case arising out of an FIR registered for an offense punishable under Section 420 of the Indian Penal Code, 1860.
Briefly stated, in the present case, an FIR was registered based on a complaint, alleging that the accused/applicants had engaged in cheating by advertising and selling a banned product called Pink Flamingo Neimo 2.0 through Facebook. On 03.03.2023, while the complainant was not in Delhi, a courier was received in his name, even though he had not placed any such order. One of his office staff members accepted the courier and paid Rs. 4,000 for it. The complainant reported this incident to the Blue Dart office, where he was informed that the order had been delivered by Nimbus India and the refund for the delivery had been made to the complainant through a Paytm mobile number registered in the name of one of the accused, Sulav Adhikari. The following day, the complainant's office staff received another call asking for an OTP, and they were told that the complainant would receive his money back within 24 hours. Subsequently, the complainant did receive his money, but a few hours later, Rs. 4,100 was deducted from his account.
The Assistant Public Prosecutor representing the State argued that this was a cybercrime case involving multiple victims who were cheated by the applicants. It was further stated that the employees of the applicants, in their statements, claimed that the company was not selling any product named Pink Flamingo Wireless. However, upon conducting a more extensive investigation, it was revealed that a total of 6,267 orders had been placed for the Pink Flamingo out of 20,590 orders. The APP argued that since the investigation was still in its initial stages and custodial interrogation of the applicants was deemed necessary to uncover the larger conspiracy, bail should be denied.
The single-judge bench of Justice Swarana Kanta Sharma noted that the accused individuals were allegedly operating a large-scale fake parcel delivery scam through online portals. The bench observed that scams like the one in question have a widespread impact on society. Such scams should therefore be considered serious offenses, as they have the potential to significantly deter public trust in online financial transactions, which are a crucial part of the modern economy.
The bench said, “In an era where digital transactions have evolved to become fundamental component of our economic infrastructure, any threat to the security and trustworthiness of online financial interactions poses a direct challenge to the economic stability and progress of our society.”
Therefore, taking into account the gravity of the allegations against the accused individuals and the nature of their alleged involvement in a financial scam, the court decided not to grant anticipatory bail to them.
Accordingly, the present anticipatory bail applications were dismissed.
Read Order:Nikhil Kant Syal V. State of NCT of Delhi
Chahat Varma
New Delhi, September 27, 2023: The Delhi High Court has rejected man’s plea to waive the condition of seeking prior permission from the Trial Court to travel abroad, which was imposed as a condition of his anticipatory bail. The Court emphasized that the fundamental right to travel abroad, especially in cases where an individual is facing criminal charges, is not an absolute right and is subject to reasonable restrictions.
In the matter at hand, the applicant/accused was granted anticipatory bail in a case arising out of an FIR registered under Sections 406/409/467/468/471/120B of the Indian Penal Code. However, as a condition of his bail, he was required to deposit his passport with the Trial Court and seek the court's approval before leaving the country.
The applicantargued that despite more than 15 years having passed since the registration of the FIR, the Investigating Officer has not filed a charge-sheet against the applicant. It was further stated that the applicant's wife and two children are British Nationals residing in London, United Kingdom. The condition imposed by the court, requiring the applicant to seek permission each time he wants to visit his family, poses a significant hardship on him. Additionally, he was involved in the real estate business and was exploring business opportunities abroad, which required his presence overseas.
The single-judge bench of Justice Swarana Kanta Sharma considered the seriousness of the allegations against the applicant, which involved multiple victims and a criminal conspiracy related to misappropriating funds.
The bench also noted that there had been no complaints from the applicant regarding the denial of permission to travel abroad on previous occasions.
Thus, given the entirety of the facts and circumstances surrounding the case, the court decided that, at this point, it was not inclined to waive the condition that had been imposed on the applicant.
Read Order:Balwinder Singh (Binda) and Ors V. The Narcotics Control Bureau
Chahat Varma
New Delhi, September 26, 2023: In a recent ruling, the Supreme Court has held that confessional statements made to officers of the Narcotics Control Bureau (NCB) are inadmissible in court.
The present appeals arose from the common judgment dated 08th July, 2013 passed by the Division Bench of the Punjab and Haryana High Court, which decided the murder reference for the confirmation of the death sentence. These appeals were preferred by Balwinder Singh and Satnam Singh (appellants) in relation to the mentioned judgment.
A three-judge bench of Justice B.R. Gavai, Justice Hima Kohli and Justice Prashant Kumar Mishra observed that any confessional statement made by an accused to an officer invested with the powers under Section 53 of the Narcotic Drugs and Psychotropic Substances Act (NDPS Act) was barred because such officers were considered police officers within the meaning of Section 25 of the Evidence Act. Consequently, a statement made by an accused and recorded under Section 67 of the NDPS Act could not be used as a confessional statement in the trial of an offense under the NDPS Act.
The bench observed that in the said case, once the confessional statement of the co-accused, recorded by the NCB officers under Section 67 of the NDPS Act, and which had attributed a role to the appellant- Balwinder Singh, were rejected in light of the law, there was no other independent incriminating evidence presented by the prosecution to convict the appellant under the NDPS Act.
As a result, the bench concluded that the appellant-Balwinder Singh deserved to be acquitted of the charge of being in conscious possession of a commercial quantity of heroin under the NDPS Act.
Regarding the other appellant-Satnam Singh, the bench further observed that because the provisions of the NDPS Act and the punishments prescribed therein are stringent, the burden to prove the foundational facts cast on the prosecution would have to be more onerous.
The bench stated that the prosecution had successfully discharged the burden placed on it to prove the foundational facts. Consequently, the initial burden of establishing that the appellant-Satnam Singh, had knowledge that the car owned and driven by him at the relevant time was being used for transporting narcotics was fulfilled. Once it was established that the prosecution had presented sufficient evidence to prove beyond a reasonable doubt that appellant-Satnam Singh had this knowledge, the presumption outlined in Section 35 of the NDPS Act had to be invoked against him. This presumption indicated that he had a culpable mental state, thus justifying his indictment for the offense with which he had been charged.
Thus, the bench held that the appellant-Satnam Singh, had failed to establish a case for acquittal. Therefore, the order of conviction and the sentence imposed on appellant-Satnam Singh were upheld. However, the appellant-Balwinder Singh, was acquitted.
Read Order:Joseph V. The State of Kerala &Ors
Chahat Varma
New Delhi, September 26, 2023: The Supreme Court has recently ordered the immediate release of a man who had been serving a life imprisonment sentence for rape and murder committed in 1996.
During the hearing, it was brought to the court’s attention that the petitioner's case had been reviewed by the Advisory Committee/Jail Advisory Board under the Kerala Prison Rules, 1958 and the Kerala Prisons and Correctional Services (Management) Rules, 2014. These reviews had taken place on nine separate occasions, and notably, the Board had recommended the petitioner's premature release three times. However, the state government had declined his request for premature release on all three occasions.
In the said case, the petitioner had approached the court seeking to enforce his right under Article 32 of the Constitution of India. He sought an appropriate direction to the state government to prematurely release him, having been in custody for over 26 years and having served a sentence of over 35 years, which included more than 8 years of remission earned.
It was alleged that the petitioner had visited his sister-in-law's (the deceased victim) workplace and, under false pretences that her mother was seriously ill and hospitalized, convinced her to leave with him. According to the prosecution, he made her walk along the railway line and, at a secluded location, allegedly raped her, stole the jewellery she was wearing, and then left her on the tracks to be runover by a passing train.
The division bench of Justice S. Ravindra Bhat and Justice Dipankar Datta noted that the prison laws in India, when read with Articles 72 and 161 of the Constitution, are rooted in a profound rehabilitative objective. It was emphasized that implementing a guideline that automatically denies the consideration of a premature release request from a convict who has served more than 20 or 25 years, solely based on the nature of the crime committed in the distant past, would effectively extinguish any hope of reformation and a fresh start for such an individual.
“Excluding the relief of premature release to prisoners who have served extremely long periods of incarceration, not only crushes their spirit, and instils despair, but signifies society’s resolve to be harsh and unforgiving,” said the division bench.
The bench also took note of Rule 376 of the 2014 Rules, which stipulates that prisoners can earn remission for displaying peace and good behaviour while incarcerated. It was noted that according to the state's records, the petitioner had earned over 8 years of remission, indicating his exemplary conduct while serving his sentence. Additionally, the minutes of the meetings of the Jail Advisory Board provided positive assessments of the petitioner, describing him as hardworking, disciplined, and a reformed inmate.
Therefore, in the interest of justice, the court deemed it appropriate to order the immediate release of the petitioner.
Read Order:Suhail Ahmad Thokar V. National Investigation Agency
Chahat Varma
New Delhi, September 26, 2023: The Delhi High Court has dismissed the bail appeal of an accused booked under the Unlawful Activities (Prevention) Act (UAPA) for allegedly providing shelter to members of terrorist organizations.
The present appeal had challenged the order dated January 7, 2023, passed by the Special Judge (NIA), related to a case registered by the National Investigation Agency (NIA) under Sections 120B, 121A, 122, and 123 of the Indian Penal Code (IPC), as well as under Sections 18, 18A, 18B, 20, 38, and 39 of the UAPA. The order in question pertained to the dismissal of the bail application filed on behalf of the appellant.
The prosecution's case revolved around the registration of an FIR, following an intelligence received, regarding a larger conspiracy taking shape in the Kashmir valley. According to the prosecution, this conspiracy had dual dimensions, both in the physical realm and the digital domain, and was allegedly orchestrated by proscribed terrorist groups, including Lashkar-e-Taiba (LeT), Jaish-E-Mohammed (JeM), Hizb-ul-Mujahideen (HM), Al-Badr, and others. It was further claimed that these terrorist groups, in collaboration with their facilitators and leaders based in Pakistan, as well as their Over-Ground Workers within India, were actively involved in influencing and radicalizing vulnerable local youth. The prosecution alleged that this conspiracy was hatched following the revocation of Article 370, with the primary objective of reigniting acts of terrorism in Jammu and Kashmir and other parts of India. According to their case, the appellant played an active role in providing shelter to members of the aforementioned terrorist organizations and their associates within his residence, with the assistance of his acquaintances. Consequently, the appellant was arrested on October 20, 2021, and a chargesheet was filed against him and co-accused individuals.
The division bench of Justice Siddharth Mridul and Justice Anish Dayal observed that at the stage of bail under the UAPA it is a well-established practice that a comprehensive or in-depth examination of the evidence is not required. Instead, the court's role is to establish findings based on general probabilities regarding the accused's potential involvement in the alleged offense.
The bench noted that upon the appellant's arrest, two mobile phones were confiscated from his possession. An analysis report of the digital data extracted from these seized mobile phones, conducted by Cert-In, revealed the presence of images associated with deceased militants and terrorist organizations.
The bench further took note of the appellant's disclosure statement, wherein the appellant affirmed that he had a previous association with the militant Rouf Dar. Additionally, he disclosed that he had provided assistance to militants Rouf Dar and Walid by arranging accommodation for them in his hometown.
The bench emphasized that the UAPA mandates proactive measures against organizations that present a threat to national security. Once an organization is designated as unlawful under the UAPA, any individual associated with it can be prosecuted for offenses outlined within the Act, in addition to any relevant criminal statutes.
The bench placed reliance on Arup Bhuyan versus State of Assam and Anr. [LQ/SC/2023/329], where the Supreme Court had expressed the view that mere membership in a banned organization constitutes an offense under the UAPA.
Thus, the court concluded that, after carefully considering the provisions of the UAPA and evaluating the material included in the charge-sheet, along with a collective assessment of the evidence and a preliminary analysis of its probative value, there were prima facie reasonable grounds to believe in the truth of the allegations against the appellant.
Accordingly, the present appeal was dismissed.
Read Order:D S Cargo Agency V. Commissioner of Customs
Chahat Varma
New Delhi, September 26, 2023: In a favourable ruling for D S Cargo Agency (appellant), the Delhi High Court has clarified that a Customs Broker is not required to report an offense committed by an importer once the goods have been cleared and the Customs Broker's role in the clearance process has ended.
In summary, the appellant was a proprietorship firm owned by Mr. Diva Kant Jha, a Customs Broker. The appellant claimed to have interacted with an individual named Mr. Lalit Dongra on behalf of M/s Accturists Overseas (OPC) Pvt. Ltd., and all inquiries related to filing B/Es were directed by Mr. Sanjeev Maggu, who represented himself as the Chief Manager of the three importer firms. On July 14, 2017, the Directorate of Revenue Intelligence (DRI) received information suggesting that the importer firms were evading customs duties by diverting imported goods stored in the customs bonded warehouse into the domestic market without paying the applicable customs duty. It was also alleged that forged documents were used to indicate the re-export of the warehoused goods. Consequently, the Commissioner issued an order-in-original on February 4, 2019, revoking the appellant's CB license, forfeiting the security deposit, and imposing a penalty. This action was taken as the appellant had allegedly failed to fulfil its obligations under the Customs Brokers Licensing Regulations, 2018 (CBLR, 2018)along with Customs Brokers Licensing Regulations, 2013 (CBLR, 2013)and had acted in contravention of these regulations. Subsequently, the appellant filed a Customs Appeal before the Customs, Excise and Service Tax Appellate Tribunal (Tribunal). However, the Tribunal, in its order dated March 26, 2021, upheld the Commissioner's order-in-original.
The key question at hand was whether the appellant, under the CBLR, 2018 read with the CBLR, 2013, held a responsibility to report an offense related to goods stored in a bonded warehouse after the goods had been imported and the Customs Broker's professional involvement in clearing the goods had concluded.
The division bench of Justice Yashwant Varma and Justice Manmeet Pritam Singh Arora recognized that the appellant's obligation in the given circumstances was limited to facilitating the clearance of goods for warehousing at the Customs Station, and no further. Therefore, the appellant's role as a Customs Broker concluded once the imported goods, after being cleared at the Customs Station, arrived at the public bonded warehouse. The imported goods intended for re-export were stored at these public bonded warehouses, and the illegality committed by the importer firms occurred when they diverted these goods into the domestic market without paying the required customs duty. The bench acknowledged that the appellant had no role to play at this subsequent stage when the importer firms submitted false documents for re-export to the Customs authorities.
The bench further observed that the evidence showed that the individuals in control of the importer firms had acted independently when they conspired to defraud the revenue. There was no indication that they were acting under the guidance or advice of the appellant.
The bench also noted that the Supreme Court, in the case of Collector of Customs, Cochin v. Trivandrum Rubber Works Ltd., Chacki [LQ/SC/1998/1083], held that a Customs Broker serves as an agent for the specific purpose of arranging the release of goods. Once the goods are cleared, the Customs Broker has no further role, and they are not liable for any duty, liability, or actions that should be taken exclusively against the importer.
Thus, the bench ruled that the appellant was not obligated to report an offense committed by the importer firms concerning goods stored in the public bonded warehouse after the Customs Broker's professional duties in clearing the goods had concluded. Regulation 10(d) of CBLR, 2018 does not impose any such responsibility on the Customs Broker to report such offenses. The appellant's duty to bring issues of non-compliance to the attention of the Customs authorities was limited to the documents submitted by the Customs Broker during the clearance of goods from the Customs Station at the time of entry or departure. In this case, there was no finding that there was any error or discrepancy in the warehousing bill of entry submitted by the appellant at the Customs Station.
However, the bench did take note that the appellant failed to provide the KYC records of the importer firms to the DRI and Customs authorities, despite committing to do so. In the bench’s opinion, this inaction on the appellant's part did not warrant the imposition of the maximum punishment, which was the revocation of the license.
Therefore, in consideration of the principle of proportionality, the court determined that the orders of the Tribunal and the order-in-original, to the extent that they revoked the appellant's license and forfeited the security deposit, should be set aside. However, the penalty of Rs. 50,000 imposed by the orders was upheld.
Read Order:Ram Kishor Arora V. Director, Directorate of Enforcement &Anr
Chahat Varma
New Delhi, September 26, 2023: In a significant development, the Delhi High Court has rejected Supertech promoter Ram Kishor Arora's plea for immediate release in a money laundering case. The Court affirmed that his arrest by theEnforcement Directorate (ED)under the Prevention of Money Laundering Act (PMLA) was legal and justified.
In the matter at hand, the present petition was filed, seeking a writ, order, or directive to declare petitioner’s arrest as illegal and a violation of his fundamental rights guaranteed under Articles 14, 20, and 21 of the Constitution. The petitioner contended that the ED violated his fundamental rights by arresting him without informing him of the grounds for arrest and by denying him the right to consult and be defended by a legal practitioner of his choice. The petitioner argued that Section 19 of the PMLA was not followed in this case and sought his immediate release.
On the other hand, the ED argued that the statute mandates the grounds of arrest to be conveyed to the arrestee as soon as possible, and it is not a requirement for a copy of these grounds to be provided to the arrestee at the time of the arrest itself.
The single-judge bench of Justice Dinesh Kumar Sharma referred to the legal interpretation provided in the case of V. Senthil Balaji v. The State Represented by Deputy Director and Ors [LQ/SC/2023/803], particularly concerning Section 19 of the PMLA. It was established in this case that an authorized officer had to carefully assess and evaluate the material evidence in their possession. Through this assessment, they were required to form a reasonable belief that a person had committed an offense under the PMLA. Once this belief was formed, the authorized officer was empowered to carry out their mandatory duty, which included recording the reasons for the arrest. Furthermore, it was emphasized that this process had to be followed by informing the arrestee about the grounds for their arrest. The Supreme Court, in its judgment, made it clear that any failure to comply with the provisions of Section 19(1) of the PMLA would vitiate the arrest itself. The Apex Court explicitly stated that all the requisite mandates of Section 19(1) had to be followed in letter and spirit.
The bench also noted that in the PMLA, the legislature had chosen to use the term ‘informed’ without specifying any particular method for such notification in the statute or rules. In the absence of a prescribed mode of informing in the statute, the court determined that it should rely on common law principles. Consequently, the bench concluded that in the case at hand, the grounds for arrest were properly provided to the petitioner, and he acknowledged them in writing by signing them.
The bench also took note of the fact that there was no infringement of the petitioner's fundamental rights. There was no evidence to suggest that the petitioner had been denied the right to consult and be defended by a legal practitioner. Additionally, based on the discussion, there was no indication in the records that the ‘reason to believe’, as mandated under Section 19(1) of the PMLA, had not been properly recorded in writing.
Therefore, the courtconcluded that it cannot be held that petitioner was arrested illegally.
Read Order:Ashok Singh Bhadauria and Ors V. Central Bureau of Investigation
Chahat Varma
New Delhi, September 26, 2023: The Delhi High Court has granted bail to two former police officials, Ashok Singh Bhadauria and Kamta Prasad Singh, who were convicted for the custodial death of the father of the Unnao rape victim.
In the case at hand, appellant Ashok Singh Bhadauria (appellant no. 1) was found guilty of various offenses, including Sections 120B, 166, 167, 193, 201, 203, 211, 218, 323, 341, and 304 of the Indian Penal Code, 1860 (IPC), along with a violation of Section 3 of the Arms Act, 1959. Appellant Kamta Prasad Singh (appellant no. 2) was convicted under Sections 120B, 166, 167, 193, 201, 203, 211, 218, 323, 341, and Section 304 of the IPC, as well as Section 3 of the Arms Act. The present applications were filed, seeking suspension of the appellants' convictions, while the ongoing appeals were pending.
The single-judge bench of Justice Dinesh Kumar Sharma noted that it is an established legal principle that during the stage of suspending a sentence, the court's role is to primarily assess whether there are any glaring errors or flaws in the conviction order. However, this process does not entail reevaluating or reanalysing the evidence presented in the case.
The bench noted that, in cases of conviction and custody, especially those that do not involve life sentences, the broad parameter of 50% of the actual sentence undergone can be the basis for the grant of bail.
The bench further observed that considering the fact that there were pending appeals regarding the sentences already served by the accused individuals, it was on record that an appeal in the case was admitted on July 31, 2020. However, the court has been unable to conduct the hearing for these appeals thus far.
The bench also took note of the fact that the appellants had not misused the interim bail that had been periodically granted to them. According to the Nominal Roll, appellant no. 1 had served a sentence of approximately four years, eight months, and seven days, while appellant no. 2 had served a sentence of approximately four years, five months, and 28 days.
In the facts and circumstances of the case, as well as the duration of their incarceration, the court decided to grant bail to both appellants.
Read Order:Muhammad Salmanul Faris K V. The Superintendent
Chahat Varma
New Delhi, September 26, 2023: The Kerala High Court has set aside an order cancelling the GST registration of a petitioner, holding that the competent authority had taken an independent decision without following the due process of law.
The petitioner had filed the present writ petition, challenging an order, that cancelled their GST registration. The cancellation was primarily based on allegations that the petitioner had issued invoices and bills to other dealers without actually supplying goods or providing services, which was deemed a violation of the Goods and Services Tax Act (GST Act) and Rules.
In the said case, a communication was sent to the petitioner, referring to the investigation initiated by DGGI, Kochi Zonal Unit into a fake invoicing cartel. This communication indicated that the petitioner was allegedly involved in fraudulently availing fake input tax credit from multiple firms. Consequently, the Deputy Director of DGGI, Kochi Zonal Unit had requested the Range Officer in Ottapalam to cancel the petitioner's GST registration. After the notices and opportunities for personal hearings, the GST registration was ultimately cancelled.
The petitioner's counsel argued that the cancellation order was issued without following the due process of law and was against the provisions of the GST Act and Rules.
On the other hand, the department's counsel argued that the cancellation was based on evidence of a large cartel engaged in fraudulent input tax credit claims. They claimed that the petitioner had the opportunity to present evidence and dispute the allegations during the personal hearing but failed to do so.
The bench of Justice Dinesh Kumar Singh found that there was no dispute over the fact that the DGGI, Kochi Zonal Unit had already made a decision to cancel the petitioner's GST registration. Therefore, the bench was of the opinion that the competent authority was only expected to follow the formal procedures, and they should not have made an independent decision.
With the above observations, the Court decided to set aside the impugned cancellation order and directed the petitioner to appear before the Superintendent of Central Tax & Central Excise, on September 18, 2023. The petitioner was required to bring relevant records to dispute the allegations contained in the show cause notice. The court held if the show cause is cancelled, the petitioner would be entitled for restoration of the GST registration certificate. However, if the authority takes a decision to cancel the GST registration of the petitioner, he may take recourse to appropriate proceedings as available under law.
The court provided a clarification that the Superintendent of Central Tax should make an independent decision without being influenced by the direction of the DGGI, Kochi Zonal Unit.
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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