Read More: Raju Rangnath Kolte v. The State of Maharashtra
Simran Singh
New Delhi, July 10, 2023: The Bombay High Court has acquitted a man convicted on the charge of murder of his wife on the ground that the story of the prosecution was not free from doubt.
The Division Bench of Justice Vibha Kankanwadi and Justice Abhay S. Waghwase stated that “To sum up, here, dying declarations are failing to inspire confidence not being consistent. Though parents alleged ill-treatment, its nature and manner, so also when such instances took place has not been stated by either of the parents. Accused also had suffered burns and he was also admitted in hospital. His such conduct cannot be overlooked. In the totality of circumstances which have emerged on record, in our opinion, story of prosecution is not free from doubt."
This appeal was filed against the conviction under Section 302 of Indian Penal Code,1860 for the murder of his wife Manisha. The prosecution case was that Raju used to ill-treat and beat Manisha after consuming liquor. On 14-04-2014, she suffered burns and succumbed to her injuries in hospital. However, the convict had stated that the wife had poured kerosene on herself and set herself on fire.
The prosecution relied on two dying declarations given by Manisha wherein she blamed Raju for setting her on fire. Postmortem report showed that she suffered 86% burns. Under such circumstances, the doctor who gave certification of fitness was expected to be examined, but he was not examined for the reasons best known to the prosecution. Even her thumb impression over the dying declaration was not identified.
It was noted that in her second dying declaration she surprisingly answered that “she has no complaint against anyone”. The Court found discrepancies and inconsistencies in the two dying declarations and noted that material witnesses like the doctor who examined Manisha and neighbours who extinguished the fire were not examined. Moreover, Raju also suffered burns which indicated that the circumstances were not clear.
The Bench stated that“In the light of above critical analysis of both dying declarations, there are reasons to hold that genesis of the occurrence is not forthcoming as different versions are stated in two dying declarations. Apart form discrepancies and shortfalls of non-examination of medical expert and failure to append identifying signature, what was the reason for recording dying declaration on 15.04.2014 after being surrounded by relatives also has not been clarified by prosecution”
The Court was of the view that the “Learned trial Judge seems to have readily accepted the dying declarations by losing sight of the discrepancies and inconsistencies noted by us and reproduced by us in aforesaid paragraphs. There is no satisfactory and incriminating material to hold accused/appellant solely responsible for the alleged burns suffered by deceased. Resultantly, finding it a fit case to interfere, we proceed to allow the appeal”
Taking all factors into account, the court concluded that the story of the prosecution was not free from doubt and acquitted Raju of all charges.
Read More: Raffles Education Investment ( India) Pvt. Ltd v. Educomp Professional Education Limited
Simran Singh
New Delhi, July 10, 2023: The Delhi High Court has dismissed contentions challenging enforceability of an Arbitral Award passed by the Singapore International Arbitration Centre (SIAC), saying the Award could not be said to fall within the mischief of Section 48(2)(b)(ii) of the Arbitration and Conciliation Act, 1996 and was thus held to be enforceable in law.
The Single Judge Bench of Justice Yashwant Varma noted that to violate 'public policy', an award must contravene the fundamental policy of Indian law, interests of India or basic notions of justice and mere violation of a law was not sufficient. The High Court found Educomp's arguments of illegality and monetisation to be misconceived and held that the award did not contravene Indian public policy and allowed its enforcement.
The matter pertained to the legal dispute between Raffles Education Investment (Raffles Education) and Educomp Professional Education over the enforcement of an arbitration award granted by the Singapore International Arbitration Center in favour of Raffles Education and against Educomp who resisted the enforcement arguing that the award violated Indian public policy. The dispute originated from a Share Purchase Agreement (SPA) signed by the parties in 2015 where Raffles sought to buy Educomp's shares in their joint venture and gain control of Jai Radha Raman Education Society (JRRES), a not-for-profit society registered under the Indian law.
Educomp argued this would allow Raffles Education, a for-profit entity, to gain control of the society in violation of Indian law. The challenge to the Award was essentially based on the assertion of Educomp that the Award in essence resulted in the recognition and enforcement of SPA which fundamentally amounted to a for-profit entity taking over control of a charitable society as well as the educational institution established and administered by it.
Educomp further asserted that the Award if implemented would not just result in the monetisation of the assets of JRRES but also result in commercialisation of the activities of the educational institution which was prohibited in law. It was further asserted by Educomp that in terms of the various prescriptions forming part of the SPA, Raffles would take over control of JRRES and which too was proscribed by law especially since Raffles was a foreign entity.
The Arbitral Tribunal had ultimately and in terms of the Award rendered, refused the relief of Specific Performance and found that while companies could not be members of JRRES, for-profit entities could be involved in educational institutions under All India Council for Technical Education regulations (AICTE). It had held that SPA did not involve monetisation of JRRES assets and the award's damages were not based on JRRES land valuation. It awarded damages to Raffles for Educomp's breach of SPA.
The Bench was of the view that “All that need be additionally observed with respect to ―public policy and ―fundamental policy of Indian law is that an objection based on the aforesaid must travel beyond a mere violation of a statutory enactment or a piece of subordinate legislation. That objection must establish a patent violation of a foundational precept, an inviolable principle adopted by our courts and one which can neither be ignored nor condoned. Fundamental policy of Indian law must be a rule or a principle which forms part of the core values of our jurisprudence itself and a violation of which would be considered abhorrent and shocking to the conscience of the court. A challenge to an Award on the grounds of violation of “public policy” or “fundamental policy of Indian law” would be liable to be countenanced provided it is established that its enforcement would run contrary to well established legal tenets which brook of no exception. Public policy would thus be liable to be recognised as referring to that broad set of overarching principles which are considered inviolable and form the very soul of the legal principles which courts in India enforce and uphold. These would be the threads which hold together the fabric constituting our legal philosophy.”
On a more fundamental level and upon a reading of the various provisions of the Societies Registration Act,1860 (SRA), the Court found no provision which may be construed as either restricting or hindering the right of a for-profit entity being involved or engaged in the affairs of a society or nominating or inducting its affiliates on that not-for-profit body. “Indian law does not prohibit a for profit entity setting up a society or trust which may be entrusted with implementation of charitable or philanthropic measures. It could always be open for a for profit entity to incorporate a trust or a society for pursuing charitable objectives. In fact, the for-profit entity may well be justified in incorporating such an entity and thus ensure effective administration and implementation of philanthropic schemes by an independent entity. In any case, such a course if adopted would not fall foul of any fundamental principle of laws prevalent in India. This Court is thus of the firm view that the incorporation of such a society or trust cannot be recognised to be violative of any basic or foundational legal principle.”
The Court stated that it was not shown any provision existing in any other statute which may have tended to frown upon the involvement of foreign nationals in societies or trusts. “Quite apart from there being no statutory bar, Educomp has woefully failed to establish how the involvement of a foreign national in the affairs of a charitable society would be contrary to public policy. The Tribunal also appears to be justified in refusing to place any credence on the Expert Group Report which had suggested certain amendments to be introduced in the SRA. This, as the Arbitral Tribunal correctly observed, remained merely a recommendation and, in any case, could not have been accepted as an iteration of the fundamental policy of Indian law. The recommendations of the Expert Group were in any case in favour of representation of foreign nationals in societies and thus yet another indicator of the involvement of such individuals not being abhorrent to public policy.”
The Court was of the view that the argument of a foreign entity obtaining membership of JRRES was equally meritless since no corporate entity came to become a member of that society. The induction of a corporate entity in any case would have been contrary to the Articles of Association of JRRES itself. In fact, this Court was of the opinion that in light of the above, the question of whether the SRA sanctioned incorporated entities becoming members of a society did not even arise. In any case and in the absence of any statutory injunct embodied in the SRA and which may have disqualified foreign nationals from being members of a society, the Court found itself unable to sustain the submissions addressed on this score.
It was observed that the exclusion of foreign nationals from membership of a society also could not possibly be recognised as being part of the core or fundamental legal principles prevalent in India and was unable to accept the resistance to the enforcement action which rested on the ―players in the shadows doctrine. “Regard must be had to the fact that the management and administration of a charitable society is regulated by the various provisions of the SRA. Notwithstanding the members thereof being nominees or affiliates of a corporate entity, they remain bound to administer the affairs of the society strictly in accordance with the SRA. This is evident from the SRA clearly requiring societies which are registered thereunder to be those which are engaged in literary, scientific or charitable purposes. The members of JRRES notwithstanding them being nominees or affiliates of Raffles and Educomp are thus bound to conduct the affairs of the society in accordance with the principles underlying the SRA and would be obliged in law to administer the affairs of the society in accordance with its avowed charitable objectives. What needs to be emphasised is that while members may have owed their initial nomination in the society to their affiliation with either Raffles or Educomp, they as well as JRRES would still be bound by the MoA and the charitable objectives enshrined therein.”
The Court reiterated that the field of education had itself undergone a paradigm shift in the past few decades. While it was true that an educational institution could not indulge in commercialisation or profiteering, its efforts to generate a reasonable surplus and the utilisation thereof for augmenting the quality of education and the institution itself was one which was no longer frowned upon.
The Court stated that it would be wholly incorrect for this Court to accept the submission that the involvement of a foreign entity or a foreign national in the education sector was contrary to the fundamental policy of Indian law.
While closing the discussion on this aspect the Court additionally noted that the Tribunal had also taken note of the conceded stand of the respondents who had accepted the existence of an educational institution set up by various participants in the oil and gas industrial sector of the country. “As is evident from the provisions made in that Appendix for a for-profit entity is entitled to establish an educational institution through a not-for profit entity. Appendix 3.4 thus clearly indicates that as long as the for-profit entity is interspaced by a not-for profit body which manages and administer the educational institution, the same would clearly be permissible. This too clearly indicates that the involvement of a for-profit entity is not abhorrent to public policy.”
The Bench further stated that “It was Educomp which invited Raffles to enter into a joint venture and develop educational institutions in the country. The appointment of Raffle‘s affiliates in JRRES was in accordance with amendments made in its Articles to which they were a party. Educomp cannot disavow those steps taken by the joint venturers merely to avoid enforcement. The Court is thus constrained to observe that the stand taken in these proceedings by Educomp clearly answers the dishonest defence aspect which was alluded to in Cruz City. On balance and bearing in mind the discretion that Section 48 confers with respect to enforcement, the Court would be inclined to recognise the Award and ensure its execution in accordance with law. ”
The matter was directed to be placed before the appropriate Roster Bench on 13-07-2023 for taking further steps upon the enforcement petition.
Read Order: M/s Ohmi Industries Asia Private Limited V. Assistant Commissioner, CGST
Chahat Varma
New Delhi, July 10, 2023: The Delhi High Court has ruled in favour of M/s Ohmi Industries Asia Private Limited (petitioner), stating that the petitioner cannot be considered an intermediary in relation to the provision of Market Research Services to OHMI Industries Ltd., Japan (OHMI, Japan). Consequently, the court has directed the Assistant Commissioner, CGST to process the petitioner's claim for refund of integrated tax, for Market Research Services, along with interest.
Briefly stated, the petitioner, a company incorporated in India, provided services to its affiliated entity, OHMI, Japan. The petitioner had two separate agreements with OHMI Japan, one for Business Support Services and another for Market Research Services. The petitioner filed a refund application for integrated tax on zero-rated supply. However, the Adjudicating Authority determined that the petitioner was rendering intermediary services by directly supporting OHMI Japan's customers. Consequently, the place of supply was deemed to be at the petitioner's place of business, leading to the rejection of the petitioner's refund application. Also, the Appellate Authority upheld the Adjudicating Authority's decision.
The division bench of Justice Vibhu Bakhru and Justice Amit Mahajan examined Section 2(13) of the Integrated Goods and Services Tax Act (IGST Act), which defines an intermediary as someone who arranges or facilitates the supply of goods and services. In this case, the bench found that the petitioner did not meet the criteria for being classified as an intermediary since they directly provided Market Research Services to OHMI Japan without involving any third party.
The bench also referred to a circular dated 20.09.2021 (Circular No.159/15/2021-GST) issued by the Central Board of Indirect Taxes, which clarified that the concept of intermediary services required a minimum of three parties. As the petitioner provided Market Research Services directly to OHMI Japan, the bench held that they could not be considered an intermediary.
Read Order: Mindlogicx Infratec Limited V. Office of The Deputy Commissioner of Commercial Taxes
Chahat Varma
New Delhi, July 10, 2023: The Karnataka High Court has directed that the order of attachment of Sant Gadge Baba Amravati University will remain in effect for 90 days, during which the petitioner, Mindlogicx Infratec Limited, is required to pay a sum of Rs. 1,59,43,360 to the Deputy Commissioner of Commercial Taxes. This direction was given in light of the affidavit filed by the petitioner, wherein they undertook to make the payment within the specified time frame.
Brief issue involved in the present case was that the Deputy Commissioner of Commercial Taxes had issued an order assessing a total sum of Rs. 2,09,43,366, including GST, interest, and penalty, to be paid by the petitioner. Due to non-payment, the Deputy Commissioner of Commercial Taxes issued a notice seeking attachment of the petitioner's receivables from its clients. The petitioner filed the present writ petition against the said attachment.
During the proceedings, the petitioner submitted an affidavit stating that they had already paid Rs. 50,00,000 and undertook to pay the remaining sum of Rs. 1,59,43,360 to the respondent within 90 days from the date of the affidavit, which was on or before 03.10.2023.
The bench of Justice S Sunil Dutt Yadav noted the contents of the affidavit and vacated the orders of attachment at Annexures-H to L. However, the bench upheld the attachment of Sant Gadge Baba Amravati University.
The bench emphasized that there would be no further extension of time, and any default in payment would expose the petitioner to contempt of court proceedings. The tax authorities were also given the liberty to initiate recovery proceedings in the event of default. It was also clarified that the order of attachment at Annexure-M would be lifted if the payment, as undertaken in the affidavit, is made within the 90-day period.
Read Order: Goodluck Empire and Ors v. C.C.E. & S.T.-Ahmedabad-III
Chahat Varma
New Delhi, July 10, 2023: In a recent case, the Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal has ruled that the penal provision, Rule 26(2) of the Central Excise Rules, 2002 cannot be applied retrospectively for transactions prior to 01.04.2007.
The case involved M/s. Goodluck Empire and M/s Jenil Empire (appellants), who were charged with issuing Cenvat Credit invoices without supplying the goods to M/s. Nakoda Alloys Pvt. Ltd. The main party in the case was M/s. Nakoda Alloys Pvt. Ltd., who settled their case under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
The single-member bench of Ramesh Nair (Judicial) noted that both the appellants had given inculpatory statements, and the cross-examination did not reveal anything contrary to their statements. This indicated their direct involvement in the fraudulent passing of Cenvat credit to M/s. Nakoda Alloys Pvt. Ltd.
The bench, however, held that Rule 26(2) of the Central Excise Rules, 2002 could only be applied to transactions made after 01.04.2007. Therefore, no penalty could be imposed under this rule for transactions prior to that date.
Thus, the bench held that in the case of M/s. Jenil Empire, where all transactions were conducted before 01.04.2007, no penalty can be imposed. However, in the case of M/s. Goodluck Empire, where some transactions were made after 01.04.2007, the penalty was reduced from Rs. 8,20,000 to Rs. 2,00,000.
Read More: Lydia Monica John v The Government of NCT of Delhi
Simran Singh
New Delhi, July 10, 2023: The Delhi High Court has dismissed a petition filed by a woman who had challenged the summon order passed by the Court of Additional Chief Judicial Magistrate at Muzaffarnagar, Uttar Pradesh, in a suit instituted by her husband alleging forceful conversion of himself and their two minor daughters to Christianity, on the ground that the High Court at Delhi lacked jurisdiction. The Court, however, stated that the petitioner was at liberty to raise all the grounds and contentions raised before the Allahabad High Court as the Courts at Uttar Pradesh have necessary jurisdiction to deal with the present case.
The Single Judge Bench of Justice Swarana Kanta Sharma stated that “The contentions raised on behalf of petitioners that the parties were married in Delhi, the children were born in Delhi, the acts of atrocities were committed upon petitioner no. 1 in Delhi, multiple litigations are pending in Delhi between the parties and that the contentions and grounds raised by the respondent no. 6 himself in the guardianship petition do not disclose any such allegations, cannot be gone into by this Court in context of the alleged offence qua which complaint has been filed before the ACJM, Muzaffarnagar. The appropriate forums for the petitioner to raise such arguments will be the concerned Court where the revision petition may lie against the impugned order or the same may be challenged before the Hon’ble High Court of Allahabad, as per law. Thus, the Courts at Uttar Pradesh will have necessary jurisdiction to deal with the present case.”
The Court observed that the place of residence of the complainant was Muzaffarnagar, and the complainant had even arrived with his daughters to reside at this place in September, 2022 and during this period also, the petitioners had allegedly pressurized the complainant to convert his religion as well as the religion of his daughters to Christianity.
In the matter at hand, the petitioner 1 and responded 6 solemnized their marriage in Delhi in Catholic ceremony under the Christian Marriage Act, 1872. At the time of marriage, the petitioner 1 was a Christian and respondent 6 was a Hindu and it was stated that they continued to profess the same faith till date. However, after a few years of marriage, respondent 6 allegedly started to subject petitioner 1 to domestic violence which led to multiple pending legal proceedings in various legal forums.
The respondent 6 vide an application under Section Section 156(3) Criminal Procedure Code, 1973 (Cr.P.C.), registered an FIR on the basis of false allegations of conspiracy of religious conversion had been allowed which was covered under the Uttar Pradesh Prohibition of Unlawful Conversion of Religion Act, 2021. However, the same had no application in NCT of Delhi where petitioner 1 and respondent 6 had lived for the duration of marriage. It was alleged that the petitioner 1 had forced respondent 6 and his daughters to convert into her religion. The ACJM, UP had passed the impugned order in favour of respondent 6.
This judgment covered the disposal of two writ petitions filed under Article 226 of the Constitution of India seeking quashing of such proceedings initiated against the petitioners who alleged that the those proceedings were initiated based on false allegations by the husband of petitioner 1.
The Court stated that respondent 6 had misguided the Court at Muzaffarnagar about his place of residence and the birth place of minor daughters. It was further noted that the minors were not even baptised which was mandatory for becoming a Christian.
However, the Court observes that as per the complaint filed by the husband, the cause of action had partly arisen in Muzaffarnagar, Uttar Pradesh where he resided. Further, the allegations related to commission of offences under the Uttar Pradesh Prohibition of Unlawful Conversion of Religion Act, 2021 which was a specific UP legislation. Thus, the Court found that the Court in Muzaffarnagar had territorial jurisdiction to entertain the complaint. The Court also noted that an order under Section 156(3) Criminal Procedure Code, 1973 was amenable to revisional jurisdiction and the petitioners had the remedy to file an appropriate petition before the Court concerned in UP.
Hence, the Court found that the present petitions were not maintainable due to lack of jurisdiction. Accordingly, the petitions were dismissed while giving the petitioners the liberty to raise all grounds before the Courts in UP.
Read More: Pratibha Manchanda v. State Of Haryana
Simran Singh
New Delhi, July 10, 2023: The Supreme Court has set aside an order of the Punjab and Haryana High Court granting anticipatory bail to a man accused of fraudulently taking possession of a piece of land belonging to an elderly NRI couple in Gurugram by faking documents such as GPA and sale deed, and directed the Commissioner of Police, Gurugram, to form an SIT to investigate the role of the accused in collusion with others including officials at the Sub-Registrar office through custodial interrogation.
The Division Bench comprising of Justice Surya Kant and Justice C.T. Ravikumar also directed authorities to verify the genuineness of the 1996 General Power of Attorney (GPA) registered in New Delhi which was alleged to be forged by the appellants.
The Bench whoever clarified that “In case the vendees, the officers/officials of the Registering Authority have secured anticipatory bail from Sessions Court/High Court, the SIT shall be at liberty to seek suitable modifications to such orders so that no impediment is caused in carrying out a fair and free investigation.”
The appellants who claimed that they had been in possession of the subject land for over 30 years had neither sold it to anyone nor had they ever executed any GPA in favour of a third party. The area had, in their version of events, always been unequivocally under their possession and had never been ceded in any form or fashion to people outside the family. However, in 2022 they discovered that a person named Bhim Singh had applied for mutation of the land based on a forged sale deed dated 24.02.2022 executed by respondent 2. And FIR was thus registered for offences under Sections 406, 420, 467, 468, 471 and 120B of the Indian Penal Code, 1860.
The Bench had noted that the original 1996 GPA was still missing and respondent 2 had applied for its copy only in 2022 after 26 years. The Court also found the sale consideration of Rs. 6.6 crores to be significantly lower than the market value of around Rs. 50 crores. Moreover, the appellants claimed to not receive even a minuscule amount even if the 2022 Sale Deed was hypothetically considered to be valid.
The appellants alleged that respondent 2 had forged the GPA dated 1996 and used it to execute the fraudulent sale deed in 2022 which also lacked details like PAN number and TDS deduction which was a mandatory requirement, indicating it was fraudulent.
The Bench stated that the alleged offences of forging documents for transferring ownership of land worth crores of rupees were grave in nature. Hence, while it was extremely important to protect the personal liberty of a person, it was equally incumbent to analyse the seriousness of the offence and determine if there was a need for custodial interrogation.
The Court stated that the relief of Anticipatory Bail was aimed at safeguarding individual rights. “While it serves as a crucial tool to prevent the misuse of the power of arrest and protects innocent individuals from harassment, it also presents challenges in maintaining a delicate balance between individual rights and the interests of justice. The tight rope we must walk lies in striking a balance between safeguarding individual rights and protecting public interest. While the right to liberty and presumption of innocence are vital, the court must also consider the gravity of the offence, the impact on society, and the need for a fair and free investigation. The court's discretion in weighing these interests in the facts and circumstances of each individual case becomes crucial to ensure a just outcome.”
The Court stated that respondent 2 did not even inform he Revenue/local authorities that he had purportedly ‘purchased’ the Subject Land through a GPA. The ownership of the land always remained in the name of the appellants in the revenue record and no application for change of mutation, etc. was moved by him. After the execution of the alleged 1996 GPA, a portion of the Subject Land was acquired by the Government and compensation in this regard was paid to the Appellants. “Respondent No. 2 neither objected to the payment of such compensation nor asserted his title over the land, which he normally would have done had he possessed any rights over it. It would be incongrous to accept transfer of ownership rights in an immovable property merely on execution of a power of attorney”
The Bench further stated that “We fail to understand or comprehend as to how a bona fide purchaser could pay crores of rupees as sale consideration to a person who neither possesses documents showing ownership and title nor has original GPA of the true owner(s) of the property being sold. The fact that the sale deed was allegedly executed without mentioning the PAN Number or without deducting TDS, underlines the dubious nature of this transaction. We are equally intrigued at the behaviour of the Registering Authorities and their acceptance of the conveyance deed in the absence of these formalities being completed. The SubRegistrar and his officials were obligated to verify the ownership rights before registration of the sale deed. As per the Appellants’ claim, the prior original sale deeds of the land are still in their possession. The fact that the vendee agreed to pay such massive sums of money to Respondent No. 2 without obtaining the original records as of now casts a shadow over the legitimacy of the transaction.”
The Bench sated that there was overwhelming and clear cut prima facie evidence to indicate that the version of events provided by Respondent 2, the buyers of the property, and the Sub Registrar, should be viewed with scepticism. “These parties, prima facie, appear to be acting in concert with each other and might be hands in glove, with the ulterior motive of duping the absentee landowners. This angle requires thorough consideration by the investigating authorities. The Appellants have seemingly fallen prey to a well orchestrated conspiracy hatched to rob them of their highly valuable property. In such cases where the victims of a crime, on account of their old age and geographical distance, are unable to secure justice on their own, it falls upon Courts and the State to carry out their solemn duty to ward off injustice and restore the faith of one and all in the rule of law.”
The Supreme Court observed that all the material facts which go to the root of the matter were unfortunately not brought to the notice of the High Court. “Had there been proper assistance, the High Court also would have given a free hand to the investigating agency to investigate the role of Respondent No. 2, the vendees, the Sub Registrar and other officials of the Registering Authority, so as to uncover the collusion, connivance and conspiracy, if any, engineered to commit fraud at the expense of the Appellants.”
The Bench expressed its worry over the land scams in India that have been a persistent issue, involving fraudulent practices and illegal activities related to land acquisition, ownership, and transactions. “Scammers often create fake land titles, forge sale deeds, or manipulate land records to show false ownership or an encumbrance free status. Organised criminal networks often plan and execute these intricate scams, exploiting vulnerable individuals and communities, and resorting to intimidation or threats to force them to vacate their properties. These land scams not only result in financial losses for individuals and investors but also disrupt development projects, erode public trust, and hinder socioeconomic progress.”
The Court observed that the case indicated possible collusion between respondent 2, buyers, and registration officials to defraud the elderly appellants. “Whether or not the alleged offences were committed by Respondent No. 2 and his co-accused in active collusion with each other can be effectively determined by a free, fair, unhampered and dispassionate investigation…Joining the investigation with a protective umbrella provided by pre-arrest bail will render the exercise of eliciting the truth ineffective in such like case.”
The Bench expressed its scepticism and suspicion about the verification process of the 1996 GPA carried out by the SubRegistrar, Kalkaji, New Delhi. Hence, stated that the conduct of the officials of SubRegistrar Office, Kalkaji, New Delhi was also required to be examined to take the investigation to its logical conclusion.
Read Order: Prabhakar Amruta Shillak v. Income Tax Officer
Chahat Varma
New Delhi, July 10, 2023: The Pune bench of the Income Tax Appellate Tribunal has recently nullified an assessment order, as it was not issued with the Document Identification Number (DIN) mentioned in the body. The Tribunal ruled that the assessment order should be considered as if it was never issued, making it ineffective in the eyes of the law. As a result, further examination of the case's merits was deemed unnecessary.
During the physical hearing, the counsel representing the assessee had raised an oral legal ground challenging the validity of the assessment. The challenge was based on Circular No. 19/2019 issued by the Central Board of Direct Taxes (CBDT). On the other hand, the counsel for the revenue objected to the admission of the oral legal ground and argued that the assessment order did have a Document Control Register (DCR) number, indicating that a corresponding Document Identification Number (DIN) shave been generated in compliance with the CBDT Circular. However, the DIN was not quoted in the body of the assessment order when it was communicated to the assessee.
The bench held that that the legal ground raised by the assessee during the appeal was fundamental to the case and did not require any new investigation or verification of facts. Therefore, the bench determined that the legal ground should be admitted based on the ratio laid down by the Supreme Court in the case of National Thermal Power Company Limited v. Commissioner of Income Tax [LQ/SC/1996/2109].
The bench observed that the Delhi High Court had addressed a similar issue in the case of The Commissioner of Income Tax (International Taxation)-1, New Delhi v. Brandix Mauritius Holdings Ltd [LQ/DelHC/2023/2729], where it held that any communication related to assessments, appeals, orders, etc., mentioned in paragraph 2 of the 2019 circular, but without the DIN, would not hold any legal standing.
The bench noted that the assessment order in question did not contain a DIN in its body, which amounted to a violation of Para-2 of the CBDT Circular. Additionally, the Revenue could not provide any evidence to show that the case of the assessee fell within any of the five exceptional circumstances mentioned in Para-3 of the Circular. Furthermore, there were no accompanying documents to establish the regularisation of the earlier manual issuance of communication in terms of Para-5 of the Circular. Consequently, the bench ruled that the communication of the assessment order was invalid and as if it had never been issued to the assessee.
Read Order: Mayel Steels Pvt. Ltd v. Union of India
Chahat Varma
New Delhi, July 10, 2023: The Bombay High Court has set aside the cancellation of GST registration of Mayel Steels Pvt. Ltd. (petitioner), stating that the Superintendent, CGST & C.EX., had acted arbitrarily and in violation of the principles of natural justice.
The dispute arose when a show cause notice was issued to the petitioner on August 1, 2022, with a peculiar requirement for the petitioner to appear the next day at 2:01 p.m. The notice was uploaded on the WebPortal without any additional communication. The petitioner, upon becoming aware of the notice, submitted a reply on August 8, 2022, which was received by the authority on August 9, 2022. Meanwhile, the Joint Commissioner of State Tax (GST) had ordered the provisional attachment of the petitioner's bank account/property under Section 83 of the Central Goods and Services Tax Act (CGST Act).
Thereafter, the petitioner had approached the Bombay High Court, challenging the arbitrary actions of the Superintendent, CGST & C.EX., but despite being notified of the court petition, the Superintendent proceeded to cancel the petitioner's GST registration.
The division bench found it perplexing that such a short notice was issued to the petitioner, requiring their presence at an unusual time of 2:01 p.m. The bench also noted that the order of cancellation included issues that were not part of the show cause notice.
“In these circumstances, there can be no alternative but to set aside not only the show cause notice but the impugned order dated 2nd January 2023 cancelling the Petitioner's registration,” said the division bench.
In conclusion, the bench emphasized that when taking actions related to the registration of dealers, proper communication channels must be followed. Simply uploading the show cause notice on the Web-portal was not sufficient. The bench ruled that notices should be sent to dealers through email and/or hand delivery to ensure effective communication.
Read Order: M/s. M.B.M. Steels v. The Assistant Commissioner (ST) Tuticorin I Assessment Circle
Chahat Varma
New Delhi, July 10, 2023: The High Court of Madras has ruled in favour of M/s. M.B.M. Steels (petitioner) in a writ petition challenging the order passed by the Assistant Commissioner (ST). The court noted that the petitioner was not given an opportunity for a personal hearing to present their documents, which could disprove the claim made by the respondent authority.
In the matter at hand, the petitioner was found to have availed input tax credit from a non-existent taxpayer. The Assistant Commissioner (ST) issued an order confirming the proposal to recover a sum of Rs. 71,604/- along with a penalty of the same amount under Section 74 of the Tamil Nadu Goods and Services Tax Act, 2017. The petitioner argued that while they had received a notice and a show cause notice, no notice of a personal hearing had been issued thereafter, either through the portal or by post.
During the hearing, the petitioner’s counsel pointed out that the show cause notice issued against the petitioner was based on the claim that the supplier, Sun Steels, was non-existent. However, the counsel provided evidence to disprove this claim, showing that Sun Steels was a registered entity under GST and had duly paid taxes for the supply made to the petitioner. The petitioner's counsel stated that if the petitioner had been granted a personal hearing, he could have clarified these facts to the respondent authority. This fact was not refuted by the respondent.
The single-judge bench of Justice P.T. Asha acknowledged that the petitioner was not given an opportunity for a personal hearing to present their documents. Consequently, the court set aside the challenged order and remitted the matter back to the respondent for fresh consideration.
Read Order: In Re: Devendra Kumar Rambhai Patel
Chahat Varma
New Delhi, July 10, 2023: The Gujarat bench of the Authority for Advance Rulings has classified the supply of 'Kandi Ravo' by the applicant under code 24013000 and has ruled that the applicant is liable to pay GST at 28%, subject to the condition that goods are cleared without any brand name.
The applicant, involved in the wholesale/retail trading of unprocessed tobacco, had sought clarification on the classification of 'Kandi Ravo', which is a type of tobacco waste.
The bench of Milind Kavatkar (SGST) and Amit Kumar Mishra examined the process undertaken by the applicant, which involved the procurement of unprocessed tobacco from farmers, followed by crushing the tobacco waste. The crushed tobacco waste was then mixed with natural clay and water, dried, and packed in 30-35 kg packs for supply to tobacco manufacturers.
According to Section 2(72) of the Central Goods and Services Tax Act, which defines the term ‘manufacture’, the bench concluded that no new product emerged from the process of crushing tobacco waste and mixing it with natural clay and water. Therefore, the product was classified as 'unmanufactured tobacco; tobacco refuse' under code 2401. The bench further confirmed that the supply of 'Kandi Ravo' by the applicant was classifiable under 24013000.
The bench further took note of the photographs presented by the applicant, which indicated that the goods were being sold without any brand name or labelling. Considering this, the applicant's proposal to supply 'Kandi Ravo' in 30-35 kg bags without any branding or labelling led to the determination that the applicant would be liable to pay GST at a rate of 28%, as per Notification No. 1/2017-CT (Rate), Sr. No. 13, Schedule IV.
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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