Read Order:Mohd Raj V. State of NCT of Delhi
Chahat Varma
New Delhi, September 15, 2023: The Delhi High Court has granted regular bail to a man who was under judicial custody since October 9, 2020 in connection with an assault case.The court observed significant inconsistencies in witness testimonies and considered the extended trial duration as key factors.
Briefly stated, the prosecution's case revolved around the death of an individual named Rahul, who was admitted to BJRM Hospital in Jahangirpuri, Delhi in an unconscious state and later had passed away due to his injuries. An eyewitness named Mr. Dharampal, who claimed to be Rahul's uncle, provided critical information regarding the incident. According to Dharampal's testimony, it had become known to their family that Rahul was involved in a romantic relationship, which was not approved of by the girl's family. On October 7, 2020, Dharampal received information from a friend that a group of 4 or 5 individuals were assaulting Rahul. Upon arriving at the scene, Dharampal witnessed 5 or 6 boys from the girl's family physically assaulting Rahul with kicks and punches. When Dharampal inquired about the reason for the attack, the girl's relatives explained that they had tried to reason with Rahul regarding his interactions with their sister, but he had not heeded their warnings. As a result of Dharampal's eyewitness account and identification, the accused, including Mohammad Raj (the petitioner), who was the younger brother of the girl involved, were apprehended during the investigation.
The petitioner's counsel argued that the investigation in the case had been completed, with a chargesheet already filed. Therefore, it was contended that the petitioner's continued custody was unnecessary. Additionally, the counsel asserted that since the key witnesses had already been examined, there was no likelihood of the petitioner influencing them or posing any threats to them. Therefore, the counsel requested that the petitioner be granted regular bail.
The single-judge bench of Justice Vikas Mahajan observed that the testimony of PW1, the girl involved in the case, did not align with the prosecution's case. She had not provided evidence to support the claim that the petitioner was responsible for beating deceased Rahul. Additionally, PW3, who was the cousin of the deceased and had been presented as an eyewitness by the prosecution, stated that the quarrel had already ceased by the time he arrived at the scene. The bench also noted inconsistencies in the testimony of PW2, Dharampal. It appeared that there were contradictions in his statements.
The bench acknowledged that these factors, had the potential to undermine the credibility of the prosecution's case. Nevertheless, the bench emphasized that it was the responsibility of the Trial Court to carefully examine and assess the evidence in detail to form an opinion on the case at the appropriate stage.
The bench further noted that the petitioner had been in judicial custody since October 9, 2020, and that there was a total of 36 witnesses in the case, but only 4 of them had been examined so far. This suggested that the trial process was likely to be lengthy. Additionally, there was no information presented by the prosecution to indicate that the petitioner had a criminal record. Regarding the prosecution's concern about the petitioner potentially influencing or threatening witnesses if released on bail, the bench pointed out that the key eyewitnesses had already been examined. Therefore, there was no immediate risk of the petitioner interfering with them. Moreover, the bench suggested that any concerns about potential witness interference can be addressed by imposing strict conditions on the petitioner as part of their bail release.
The bench emphasized that the object of judicial custody was not punitive but to secure the presence of the accused during the trial.
Considering all the circumstances surrounding the case, the bench concluded that the petitioner had presented a valid case for the grant of regular bail.
Read Order:Raj Kumar @Bheema V. State NCT of Delhi &Anr.
Chahat Varma
New Delhi, September 15, 2023: The High Court of Delhi has granted parole to a convict to enable him to file a Special Leave Petition in the Supreme Court against his conviction.
The petitioner had filed the present writ petition with the aim of seeking a two-month parole period. The purpose of this parole was to enable the petitioner to secure the services of a skilled and experienced lawyer and gather the necessary resources for filing a SLP before the Supreme Court. The petitioner's legal counsel argued that the petitioner had been in custody for the past 14 years and that the denial of his request for parole to file the SLP had been unjustly rejected by the relevant authority.
The State contended that the denial of the parole request was in compliance with the established Parole Rules. Additionally, the State pointed out that the accused was implicated in several other criminal cases.
The single-judge bench of Justice Dinesh Kumar Sharma stated that the petitioner possessed a constitutional right to approach the Supreme Court to challenge the order of conviction issued against him. This right should not be denied solely on the basis of other pending cases against the petitioner.
The bench cited the case of Rahul Gupta v. State (NCT of Delhi) [LQ/DelHC/2023/5287], wherein it was established that the bar contained in Rule 1211 of the Delhi Prison Rules, 2018 was not an absolute bar and the act of filing a SLP constitutes a special circumstance within the purview of the said Rule.
The bench further emphasized that it is a fundamental right of a citizen to actively pursue legal remedies, especially in the highest court of justice in the country, by filing a SLP through a counsel of their own choice. This right is of significant value and should not be denied based solely on the individual's past conduct or on the premise that free legal aid is accessible or that SLP can be filed from within the confines of the jail.
Therefore, the petitioner was ordered to be granted parole for a duration of four weeks, commencing from the day of his release.
Read Order:Manu Khosla V. Directorate of Revenue Intelligence
Chahat Varma
New Delhi, September 15, 2023: The Delhi High Court has granted bail to an accused in a Narcotic Drugs and Psychotropic Substances case, emphasizing that in situations where prolonged incarceration of the accused would result in a violation of their fundamental rights, the statutory embargo outlined in Section 37(1)(b)(ii) of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act) must be set aside.
The present application had been filed on behalf of the applicant, who was seeking regular bail in a case, that had arisen out of a complaint filed by the Directorate of Revenue Intelligence. The case pertained to offenses under sections 22(c), 29, and 30 of the NDPS Act.
The senior counsel, who had appeared on behalf of the applicant, had submitted that the prosecution's case was full with material contradictions. It had been argued that, aside from the confessional statements recorded under Section 67 of the NDPS Act, which were inadmissible, the other evidence relied upon by the prosecution was inconclusive. Therefore, it was contended that, the applicant should be granted bail, with the benefit of doubt being extended to them.
The single-judge bench of Justice Amit Sharma had observed that, admittedly, the public witnesses cited by the prosecution had turned hostile in terms of identifying the vehicle from which a substantial recovery of contraband had been made. These witnesses, in their testimonies recorded before the Special Court, had presented a completely different narrative that was in stark contrast to the prosecution's case. The bench emphasized that the ultimate determination of the veracity of these witnesses' testimony would be made by the Special Judge. However, for the purpose of the present bail application, the contradictions in the prosecution's case could not be disregarded.
The bench referred to Union of India v. Shiv Shankar Kesari [LQ/SC/2007/1115] and observed that the court while considering the application for bail with reference to Section 37 of the Act, it is not called upon to record a finding of not guilty. It is for the limited purpose essentially confined to the question of releasing the accused on bail that the court is called upon to see if there are reasonable grounds for believing that the accused is not guilty and records its satisfaction about the existence of such grounds.
The bench additionally noted that when a timely trial is not feasible, courts are generally obligated to release undertrial individuals on bail. Statutory restrictions do not preclude the discretion of constitutional courts to grant bail based on violations of fundamental rights as enshrined in Part III of the Constitution.
The bench also referred to Rabi Prakash v. The State of Orissa [LQ/SC/2023/982], where the Supreme Court had held that the prolonged incarceration of a person overrides the statutory restriction contained in Section 37(1)(b)(ii) of the NDPS Act.
Thus, the bench noted that the applicant in the present case had been in custody for a period of 3 years and 10 months. Furthermore, out of the forty-two witnesses presented by the prosecution, only twenty had been examined thus far. Notably, PW-6, the seizing officer responsible for the recovery from the applicant's office premises, had been untraceable for the past five years. The bench had also observed that the applicant had been granted interim bail by the court on multiple occasions and had not abused the liberty granted to him, consistently surrendering within the stipulated timeframes.
Based on the above observations, the applicant was granted bail.
Read Order:Sarvothaman Guhan @Sarvo V. Narcotics Control Bureau
Chahat Varma
New Delhi, September 14, 2023: The High Court of Delhi has granted bail to a man accused of drug trafficking due to concerns over the credibility of the recovery proceedings.
According to the prosecution, the applicant was intercepted at IGI Airport based on information provided by the NCB, Kolkata. During the inquiry, the applicant disclosed the presence of narcotic drugs in his bag. A search was conducted, resulting in the recovery of 30 grams of Ganja and 0.45 grams of tablets of Ecstasy (MDMA). The applicant voluntarily provided a statement under Section 67 of the Narcotic Drugs and Psychotropic Substances Act (NDPS Act), revealing his involvement in the narcotic drug business. Subsequently, the applicant and co-accused persons, Rahul Mishra (accused no. 2) and Aashray Pandey (accused no. 3), were arrested. Later, accused No. 4, Jasbir Singh, also appeared and voluntarily provided a statement under Section 67 of the NDPS Act. Jasbir Singh's disclosure pertained to a drug syndicate operating through Darknet and the Orient Express Group on the Telegram App. The syndicate allegedly procured narcotic drugs from different countries and supplied them within India.
The single-judge bench of Justice Jasmeet Singh noted that, even assuming the best-case scenario presented by the NCB, no commercial quantity of contraband was recovered from the applicant, either in person or from his residence. Additionally, the recovery from accused no. 2, Rahul Mishra, could not be attributed to the applicant, as there was no material or communication between the applicant and accused no. 2, on the date of the recovery. Similarly, the recovery from accused no. 3 was also not attributable to the applicant.
The bench also took note of an undue delay of 10 days in filing the application under Section 52-A of the NDPS Act. The bench remarked that even assuming non-working days due to the weekend and Independence Day as causing a hindrance in submitting the application under Section 52-A of the NDPS Act, the NCB took more than a week to file the said application, which was essentially a clerical formality and should not have taken so much time. The delay caused was seen as a procedural lapse on the part of the NCB agency, which raised doubts about the integrity of the sample.
“As valuable rights of the applicant are at stake, the prosecution must show alacrity,” said the bench.
Furthermore, the bench observed that the discrepancy in the weight of the samples seized under Section 52-A of the NDPS Act and the report of the FSL, erodes the credibility of the recovery proceedings. The bench noted that the NCB had not provided any explanation regarding the discrepancy, and thus, such discrepancies must be construed in favour of the applicant in this case. Such a significant discrepancy in the quantity of recovered contraband at the time of seizure and during sampling casts doubt on the legitimacy of the recovery proceedings and makes the recovery questionable.
The bench also remarked that the NCB had not provided any explanation as to why the applicant's bag was not searched at the airport in the presence of an independent witness but was instead searched at the NCB office. It was stated that in cases where an accused is apprehended in a public place and suspected of carrying contraband, the prosecuting agency should ideally conduct the search for contraband at the public place itself, where a large number of independent witnesses are available. This approach adds considerable credibility to the search and seizure proceedings and inspires confidence in the transparency of the process.
The bench also observed that there was no evidence on record to establish that the applicant was a member of the Telegram group 'Orient Express' or any other group involved in the buying and selling of narcotic substances. Furthermore, no connection between the applicant and the other co-accused had been alleged, except for accused no. 2, 3, and 4. Notably, these co-accused persons (accused no. 2, 3, and 4) had already been granted bail. The NCB claimed that the trafficking of narcotic substances in the syndicate occurred through bitcoins and other digital currencies. However, there was no evidence presented before the court to demonstrate that the applicant sent or received any bitcoins or had a bitcoin wallet. Therefore, the bench held that it cannot be asserted that the applicant was involved in a general conspiracy of a drug syndicate with the other co-accused persons, as there was no common design or integrated effort by the applicant in conspiracy with them.
The bench concluded that the case had reached the stage of arguments on charges, and the evidence was likely to take a considerably long time. Consequently, the application was allowed, and the applicant was granted bail.
Read Order:Deepak Nagiya V. State (NCT of Delhi)
Chahat Varma
New Delhi, September 14, 2023: In a recent ruling, the Delhi High Court has granted anticipatory bail to a man who was accused of offenses under Sections 21/25/29 of the Narcotic Drugs and Psychotropic Substances Act (NDPS Act). The court emphasized that in the absence of any other incriminating evidence, the Call Detail Records (CDRs) alone could not be grounds to deny bail.
The prosecution's case rested on allegationsthat the accused, Surender @ Bhalu, was intercepted by a raiding team based on secret information, and during the search, 350 gm. of heroin was found in his pant pocket. During interrogation, Surender @ Bhalu had revealed that he sold heroin in retail from his niece Neha's house. Following this disclosure, Neha was arrested, and 45 gm. of heroin and 521 gm. of a substance believed to be a cutting agent were recovered from her possession. Subsequently, Neha had disclosed that she procured heroin from Nisha Malik, who was then arrested. Nisha Malik, in turn, had disclosed that she obtained heroin from Deepak Nagiya, the petitioner in this case. The petitioner's counsel had argued that no contraband was recovered from the petitioner and that his name only came up in the disclosure statement of accused Nisha, who also had no contraband in her possession.
On the other hand, the ASC representing the State argued that the petitioner had been granted interim protection until May 12, 2023, by the Special Judge, with a directive to participate in the investigation. However, during the interrogation, the petitioner did not cooperate and attempted to mislead the investigation. Therefore, the ASC contended that the petitioner's anticipatory bail should be denied.
The single-judge bench of Justice Vikas Mahajan observed that upon reviewing the order dated 27.04.2023, through which accused Nisha Malik was granted regular bail, it was evident that Nisha Malik had been granted bail based on the fact that no recovery of contraband was made from her. Additionally, the recovery from accused Neha, who had named Nisha Malik, was of an intermediate quantity. Also, there was also nothing on record to establish a connection between Nisha Malik and the main accused, Surender @ Bhalu.
The bench also noted that according to the prosecution's case, the recovery of contraband was made from Surender @ Bhalu and Neha. Neither of these accused individuals mentioned the petitioner's name. Furthermore, there was no evidence on record to establish any connection between the petitioner and these accused persons.
The bench further noted that apart from the absence of any recovery from the petitioner and Nisha Malik, the court couldn't ignore the fact that ASI Rupesh and a middleman named Anurag were arrested by the CBI while accepting a bribe of Rs.10 lakhs from Nisha Malik and her husband Ravi Malik in connection with the present case. This raised the possibility of false implication of some of the accused, including the petitioner, at this stage.
The bench observed that the only incriminating material against the petitioner was the disclosure statement of accused Nisha Malik and CDRs showing the petitioner's family being in touch with Nisha Malik. Relying on State (by NCB) Bengaluru vs. Pallulabid Ahmad Arimutta&Anr. [LQ/SC/2022/84], the bench observed that in the absence of any other incriminating material, the CAF/CDR details cannot be a ground to deny bail.
Considering the circumstances in totality, the court was of the view that the petitioner had made out a case for the grant of anticipatory bail.
Read Order:Varsha @ Rahul Singh V. State NCT of Delhi
Chahat Varma
New Delhi, September 14, 2023: The Delhi High Court has granted bail to a woman accused of murder, citing lack of evidence. The court noted that the statements of the witnesses did not specifically implicate the applicant in the crime, and that the confessional statement made by the applicant to the police was to be proved during trial with cogent and corroborative evidence.
The present application was filed for seeking regular bail, in a case involving charges under Section 302/34 of the IPC and Section 25/27 of the Arms Act, 1959.
The present case involved an incident on 05.09.2020, in which the victim was shot by two unidentified assailants. The State's APP argued that the applicant's involvement in the alleged offenses can be clearly established. The APP presented a disclosure statement made by the applicant under Section 161 of the Cr.P.C., which allegedly contained information about the shooter, who was hired by the applicant to commit the offense.
The single-judge bench of Justice Tushar Rao Gedela examined the statements of various public witnesses recorded under Section 161 of the Cr.P.C., including that of PW-3, who was the mother of the deceased. Upon closer scrutiny, it was noted that PW-3's statement primarily emphasized allegations against the co-accused Simran, and regarding the present applicant, her statements contained only general and vague allegations. The bench further reviewed the statements of other witnesses and concluded that, when read as a whole, these statements also revealed only general allegations of the applicant being in the company of co-accused Simran, with no specific or active role attributed to the applicant by any of the witnesses.
The bench also acknowledged the emphasis placed by the APP on the confessional statement of the applicant, which was intended to establish a conspiracy to eliminate the deceased by hiring a sharpshooter who was allegedly paid money for carrying out the shooting. However, the bench pointed out that confessional statements made before police officials cannot be considered at this stage.
The bench also addressed the argument made by the APP regarding the post-incident conduct of the applicant, specifically the destruction of her mobile phone. The bench noted that this act alone, without any other corroborative or electronic evidence, may not necessarily implicate the applicant. It was considered that such actions could be the result of a person anticipating a false implication and possible arrest, which might prompt them to take such measures.
Thus, the bench stated that at the present stage, neither the statements of witnesses nor any corroborative evidence implicating the applicant had been presented.
In light of the factors and observations made above, the applicant was granted bail.
Read Order:Shashank Jadon V. Central Bureau of Investigation
Chahat Varma
New Delhi, September 14, 2023: The Delhi High Court has rejected the bail application of a murder accused, considering the accused's behaviour while in judicial custody particularly his phone calls to witnesses who later turned hostile during the trial.
The present application had been filed by the applicant/accused, seeking regular bail in an FIR, registered under Section 302 of the IPC, which was subsequently transferred to CBI.
According to the prosecution's case, the incident began with the registration of an FIR by one Mr. Dharam Veer Singh. He reported the murder of his son, against unknown individuals. Subsequently, the father of the deceased filed a writ petition before the Allahabad High Court, requesting that the investigation be transferred to the CBI. After nearly a year of investigation, the CBI concluded that a conspiracy had been formed among the applicant, Shashank Jadaun, Pankaj Kumar alias Pankaj Raghav (now deceased), and Manoj Kumar to rob vehicle in order to obtain quick money. This alleged conspiracy led to an attempted robbery of the deceased's new Fortuner car, during which gunshots were fired, resulting in the untimely death of the deceased. The CBI claimed to have located a car believed to have been used in the crime, and subsequently, the applicant, Shashank Jadaun, was arrested along with co-accused Manoj.Top of Form
The single-judge bench of Justice Tushar Rao took into account the applicant's conduct while in judicial custody, considering its significance in the bail application. It was noted that the fact that the applicant had made calls to PW-7 and PW-14 had not been denied. Moreover, it was considered significant that out of the three calls made to PW-14, the last call from Dasna Jail was made on 21.10.2022, and PW-14 was examined on the very next day, during which he suddenly turned hostile. This was regarded as significant at the present stage of the proceedings.
The bench further noted that, according to the prosecution, four calls were made to PW-7 during the period when he was being examined, and he also turned hostile after some time. This sequence of events was deemed significant and raised questions that could not be dismissed as mere coincidences.
The bench remarked, “Tampering with evidence or threatening witnesses can definitely not be taken lightly by Courts as the same tend to interfere with the administration and delivery of justice.”
Considering the factors and observations mentioned above, the present bail application was dismissed.
Read Order: Javed Shaukat Ali Qureshi v. State of Gujarat
Chahat Varma
New Delhi, September 14, 2023: In a recent landmark ruling, the Supreme Court has acquitted accused individuals in the Ahmedabad mob violence case dating back to 2003. The topcourt emphasized that criminal court should decide like cases alike, and the court cannot draw distinctions between two accused individuals in such a way that it would amount to discrimination.
In the present case, an incident had occurred on November 7, 2003, in Ahmedabad's Shah Alam area, where a large crowd had gathered and had engaged in criminal activities. Theaccused individuals, were convicted for the offences punishable under Section 396 read with Section 149, Section 395 read with Section 149, Section 307 read with Section 149, Section 435 read with Section 149 and Section 201 read with Section 149 of the Indian Penal Code, 1860.
The division bench of Justice Abhay S. Oka and Justice Sanjay Karol made a significant observation regarding the appellant's case, highlighting that PW-2 was the sole witness implicating the appellant. They noted that the testimony of PW-2, considering its nature, couldn't be deemed wholly reliable. Several reasons contributed to this doubt. Firstly, PW-2 did not have prior knowledge of the appellant. Secondly, the appellant was part of a large and aggressive mob comprising 50 to 100 people surrounding the auto-rickshaw. Thirdly, there had been no identification parade conducted, and fourthly, PW-2 had insufficient time to observe and note the distinctive features of the appellant. Consequently, the bench deemed it unsafe to conclude, based solely on the testimony of this solitary witness, that the appellant's guilt had been proven beyond a reasonable doubt.
The bench further stated that when there are similar or identical evidence from eyewitnesses implicating two accused individuals with the same or similar roles in an incident, the court cannot convict one accused while acquitting the other. In such instances, the principle of parity applies.
The bench also emphasized that the jurisdiction under Article 136 of the Constitution can be invoked in favour of a party, even suo moto, when the court is convinced that compelling grounds for its exercise are present.
Therefore, the bench held that accused numbers 1, 5, and 13 had been convicted solely based on the testimony of PW-25 and PW-26, but they were acquitted because the court found the testimony of these witnesses to be unreliable. To ensure parity and avoid a violation of the fundamental rights guaranteed to accused numbers 3 and 4 under Article 21 of the Constitution, the same relief should be extended to them. The bench stressed that the suo motu exercise of powers under Article 136 was warranted in this case, as it pertained to the liberty of the two accused individuals, a matter protected by Article 21 of the Constitution.
The bench further asserted that the case of accused number 2 was in a similar position to that of accused numbers 1, 5, and 13, who had been acquitted by the court. Accordingly, the bench held that accused number 2 should also receive the benefit of parity.
Read Order:Rupesh Manger (Thapa) V. State of Sikkim
Chahat Varma
New Delhi, September 14, 2023: The Supreme Court has upheld the acquittal of a man accused of murdering his grandfather. The Top Court noted that the Trial Court had considered all the evidence and had come to a reasoned conclusion that the man was insane at the time of the crime and the Sikkim High Court had made an error in overturning the judgment of acquittal rendered by the Trial Court.
The present appeals had challenged the Sikkim High Court’s judgment, which had reversed the appellant's acquittal by the Trial Court and had convicted the appellant for the offense under Section 302 of the Indian Penal Code, 1860.
Briefly stated, the prosecution had alleged that the appellant had committed the murder of his grandfather. Before the trial could begin, the appellant raised a plea of insanity, claiming that he was not mentally sound at the time of the offense. The Trial Court, after considering the evidence and within the scope of Section 84 of the Indian Penal Code, concluded that the appellant was incapable of understanding the nature of his actions due to unsoundness of mind and acquitted him. However, the State appealed this decision, and the High Court reversed the acquittal.
The division bench comprising of Justice J.B. Pardiwala and Justice Prashant Kumar Mishra took note of several pieces of evidence, including the testimony of PW-1, who mentioned that the appellant had a strong affection for the deceased and loved him deeply. Additionally, PW-13's evidence indicated that the appellant approached her as she was leaving the scene and inquired about what he had done to his grandfather. Moreover, villagers who arrived at the scene shortly after the incident testified that the appellant was present and did not attempt to flee, which was an unusual behaviour for a person in such circumstances.
The bench further observed that when the appellant was arrested, a medical examination conducted by PW-14 indicated that he appeared to be clinically under the influence of some psychotropic substance. Additionally, the appellant's behaviour after attacking the deceased with a sharp-edged weapon, including attempting to remove the windpipe from the neck of the deceased, was described as strange and abnormal. These actions strongly suggested that the appellant was suffering from insanity at the time of the incident.
The bench stated also that it was settled that the judgment of acquittal can be reversed by the Appellate Court only when there was perversity and not by taking a different view on reappreciation of evidence.
Thus, the bench, considering the evidence presented, including the medical evidence indicating the mental illness of the appellant and his abnormal behaviour at the time of the incident, concluded that the view taken by the Trial Court was not perverse.
Read Order: M/s T.R. Sawhney Motors Pvt.Ltd V. Union of India & Anr
Chahat Varma
New Delhi, September 14, 2023: The Delhi High Court has affirmed that Rule 5A of the Service Tax Rules, 1994, is invalid as it goes against the provisions of the Finance Act, 1994.
In the case at hand, the petitioners had requested the Court to issue a declaration stating that Rule 5A of the Service Tax Rules was in violation of the provisions of the Finance Act. Additionally, they sought a declaration that Rule 5A was no longer in effect and would not survive following the enactment of the Central Goods and Services Tax Act (CGST Act).
The division bench of Justice Yashwant Varma and Justice Dharmesh Sharma observed that the validity of Rule 5A(2) of the Rules had been declared ultra vires the Finance Act by a Division Bench of the this court in the case of Travelite (India) v. Union of India [LQ/DelHC/2014/2308].
The bench also observed that subsequent to the striking down of Rule 5A(2), it appeared that the department introduced clause (k) in Section 94 of the Act in order to validate the action initiated under Rule 5A(2). However, the bench noted that the power to conduct a special audit, guided by Section 72A of the Finance Act, remained unaffected.
The bench noted that considering the statutory changes, a Division Bench of this court in the case of Mega Cabs Private Limited v. Union of India & Ors. [LQ/DelHC/2016/1191], had held that despite the introduced amendments, the legal position remained consistent with the decision in Travelite. As a result, the amended Rule 5A(2) was declared as ultra vires the Act.
As it stands, the bench was informed that the decisions in Travelite and Mega Cabs were presently under appeal and pending before the Supreme Court. It was noted that these judgments had been stayed by the Supreme Court.
The bench clarified that proceedings that had already been initiated or were related to a period before the repeal of the Act would be unaffected.
The bench also noted that it seemed the decisions in Travelite and Mega Cabs were not brought to the attention of the Division Benches during the proceedings, and the cases were argued as if Rule 5A was still in force. This was considered a factual inaccuracy.
The bench opined that notwithstanding the judgments in Travelite and Mega Cabs having been placed in abeyance, the declaration of invalidity would not stand effaced.
With the aforementioned observations, the bench decided to schedule this batch of cases to be called again on 05.10.2023, under the category of 'End of Board' matters.
Read Order: Muskan Event Management and Caterers Pvt. Ltd v. The Union of India and Ors
Chahat Varma
New Delhi, September 14, 2023: The Patna High Court has stayed the recovery of tax for Muskan Event Management and Caterers Pvt. Ltd. (petitioner), subject to the petitioner depositing 20% of the remaining amount of tax in dispute.
In the case at hand, the petitioner was desirous of availing statutory remedy of appeal against the impugned order before the Appellate Tribunal, under Section 112 of the Bihar Goods and Services Tax Act. However, due to non-constitution of the Appellate Tribunal, the petitioner was deprived of their statutory remedy.
The division bench of Justice K. Vinodchandran and Justice Partha Sarthy agreed with the petitioner and held that it was entitled to the statutory benefit of stay under Section 112(9) of the Bihar GST Act, even though the Tribunal had not been constituted yet.
However, the bench also noted that the stay cannot be open-ended and that the petitioner would be required to file an appeal once the Tribunal was constituted.
With the above liberty, observation and directions, the writ petition was disposed of.
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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