Read more: Poulami Mukherjee v. Duckbill Drugs Private Limited
Simran Singh
New Delhi, June 26, 2023: The Calcutta High Court while dismissing an appeal and vacating the interim order dated 24-01-2023 expressed its greatest displeasure observing that a deliberate attempt was made by the appellant to divest Duckbill Drugs Pvt. Ltd. of its principal assets, i.e., the trademarks by misappropriating them and backdating a deed of assignment to 2017 and eventually filing it with the trademark registry five years later.
The Division Bench comprising of Justice I.P. Mukerji and Justice Biswaroop Chowdhury stated that the Trademark Registry had no power under Section 42 of the Trade Marks Act, 1999 to register the assignment which was presented after 5 years. The Trade Marks Act required notification of the deed of assignment of the 2017 by the assignee within the stipulated period of 6 months which might be extended by the Registrar by 3 months only, and if no such notification was made, the said deed of assignment would not have any effect. Thus, the Bench held that the Trademark Registry could not have registered the purported assignment on 14-06-2022.
The Bench further stated that the involvement of the Trademark Registry in this fraud also needed to be investigated. “Therefore, in my considered opinion, prima facie, the purported assignment appears to be non-est and a nullity.”
The Bench went on to state that “We are extremely suspicious about the authenticity of the deed of assignment for several reasons. Being allegedly executed in 2017 it did not come to light when the corporate insolvency resolution process was started on 17th December, 2019, or on 13th April, 2021 when the liquidation proceedings were commenced. On 12th February, 2022 the father-in-law of Poulami, Swapan Kumar Mukherjee quietly handed over the possession and assets of the company to the Liquidator without informing him that on 18th January, 2022 he had filed the application with the Registrar to record the assignment of the seven trademarks of the company purportedly made on 3rd April, 2017.”
In the matter at hand, an interim judgement was passed by the Court below, in an interlocutory application in a suit filed by Poulami Mukherjee against Duckbill alleging infringement of 7 trademarks over which she had proprietary rights acquired through a deed of assignment executed in her favour by Duckbill, the registered owner of those marks.
The order of liquidation of Duckbill was passed by the National Company Law Tribunal dated 13-04-2021 and the liquidator had proposed to sell the assets of the company. The most valuable assets of the company were 7 out of its 14 trademarks i.e.
- Laxit
- Laxit Laxative Oral Emulsion (label)
- Healzyme
- Catalyd
- Laxit plus label
- Brofentol plus label
- Cyaptin with calcium (label).
On 29-06-2021 the Liquidator had asked the Trademarks Registry to maintain status quo of the 7 trademarks. The assets which were handed over to the Liquidator on 12-02-2022 were to be sold by e-auction as stated in the Liquidator’s notice of sale dated 23-04-2022 on the reserve price of rupees 5 crores. On 09-05-2022, the Liquidator held an auction for this purpose under Section 35 (1)(f) of the Insolvency and Bankruptcy Code (IBC). It was averred that under Section 45 of IBC, any transaction before 2 years of commencement of the Insolvency could not be normally considered by the Court or Adjudicating Authority as a fraudulent preference.
An extraordinary situation had been created by the production of a deed of assignment dated 03-04-2017 under which 7 trademarks were purportedly assigned by Duckbill to Poulami for a consideration of Rs.7,000/-, a letter dated 04-042017, by Poulami to Duckbill that she had became the owner of 7 trademarks; a form dated 18-01-2022 by Poulami to the Registrar of Trademarks for recording this assignment in his records and a document issued by the Trademarks Registry showing that the assignment was registered on 14-06-2022 was presented. On 09-11-2022 the Liquidator had asked the Registrar of Trade Marks to reverse the said transfer.
The case of Duckbill was that a colossal fraud had been practised on them by Poulami as those 7 Trademarks were all along the assets of the company and were included in its assets proposed to be sold by e-auction by the Liquidator. The deed of assignment dated 03-04-2017, was a fabricated document, so backdated that the assignment would appear to have been effected prior to 2 years of commencement of Insolvency on 17-12-2019.
On 14-11-2022, Paul brothers filed a writ application in the Court asking inter alia for a writ of mandamus for cancellation of deed of assignment of the 7 trademarks in favour of Poulami and for its restoration in favour of Duckbill. At the ad-interim stage on 06-04-2023, a single judge hearing the writ took note of the order dated 24-01-2023, restraining Duckbill from using the marks. She ruled, on appreciation of the prima facie case that Poulami be also restrained from using the marks. An appeal was preferred by Poulami from this order before a Division Bench, which while admitting the appeal on 20-04-2023 ruled that the ad-interim order passed by the Single Judge without inviting affidavits had the effect of finally allowing the writ application. The said order of the Single Judge dated 06-04-2023 was stayed and directions were made for hearing of the appeal. The net result of this was that the writ application and the appeal were pending before the respective courts.
On 28-11-2022 Paul Brothers filed an application on the Section 60(5) of IBC before the NCLT claiming that the assignment and transfer of the 7 trademarks by the deed of assignment dated 03-04-2017 was preferential, fraudulent and undervalued and that Duckbill was entitled to commercially exploit the trademarks.
The Bench was of the view that the application had been made by Duckbill to set aside the said order wherein the Court had recorded the filing of an affidavit of service and non-appearance of Duckbill. The Court disagreed with the contention that the representation made by appellant had been duly served to Duckbill. “Records were placed before the court to show that Duckbill received service of the papers in the evening of the day when the order was passed. We have also checked all the records. The contention of Duckbill appears to be true.” While hearing the application to vacate the judgment dated 24-01-2023, the Court was of the view that there was sufficient cause which had prevented Duckbill from attending Court when the appeal was heard on 24-01-2023. Thus the order dated 24-01-2023 was set aside.
The Bench further went on to navigate through the dispute between the parties and sated that the same was primarily concerned with the proprietorship of 7 trademarks than their infringement. The Court was of the view that the prima facie finding of the judge in the impugned judgment was palpably erroneous to the point of being perverse. “No learned judge on the basis of the deed of assignment of 3rd April, 2017 lodged some five years later on 18th January, 2022 and purportedly registered on 14th June, 2022 would have come to the prima facie conclusion that it was valid, under Section 42 of the Trade Marks Act, 1999. However, the learned Judge came to this finding.
The Bench was of the view that there was every reason to believe that, as a statutory functionary the Liquidator had acted regularly in the usual course of his duties and found 14 registered trademarks in the name of the company. “He found nothing in the records to suggest that out of those trademarks, seven had been transferred in 2017.”
“As rightly pointed out by Mr. Mitra all fourteen marks were valid on the alleged date of execution of the deed of assignment whereas in 2022 only seven trademarks were valid. Furthermore, two of the marks were registered only in 2018. Then why only seven trademarks were allegedly assigned in 2017? Why would the application for recording of the assignment of the seven trademarks be made on 18th January, 2022 about 5 years after it was purportedly assigned on 3rd April, 2017?” the Court pondered upon such questions.
The Bench stated that what was most significant was that these marks were assigned by the father-in-law on behalf of the company to his daughter-in-law for only Rs.7,000/- whereas about rupees 5 crores had been paid by Duckbill to purchase these marks. The Court navigated through Chapter V of the Trade Mark Act which dealt with the assignment or transmission of the trademarks. Section 42 provided that if an assignment of trademark was made otherwise that in connection with the goodwill of the business in which the mark had been used, the assignment would only take effect if within 6 months or an extended time of 3 months as the Registrar allowed such assignment was notified to the Registrar for the purpose of advertising it.
The Bench stated that the purported deed of assignment dated 03-04- 2017 was sought to be lodged with the Registrar on 18-01-2022 for registering the assignment. This application to record this assignment was made by filling up a form RM-P issued by the Trademark registry. This form provided for an application for post registration changes in a trademark. “In the garb of making this application Poulami Mukherjee tried to record with the registry that Duckbill had assigned the seven trademarks to her (see page 168 of the application CAN 2 of 2023) and managed to get the assignment registered on 14th June, 2022.”
The Bench was of the view that Section 28 of the Trade Mark Act was only prima facie proof of validity. “It is absolutely plain that prima facie there was gross irregularity involved in the alleged assignment and in the registration thereof. From the prima facie findings arrived at by me there is every reason to believe that the deed of assignment was backdated.”
The Court was of the view that it was stated that under Chapter V of the Trade Marks Act that the right of assignment and transmission was vested in the registered proprietor. In case of these 7 marks, the registered proprietor was Duckbill, the custodian of whose assets was the liquidator, thus, the real proprietor was the liquidator.
“First of all, on 18th January, 2022 the earlier management of the company could not act by presenting the purported 2017 deed of assignment for recording the assignment with the Registrar without the concurrence of the liquidator. The earlier management could not have in January, 2022 brought to life an assignment which was a dead letter. Furthermore, it could not do any act which would deprive the company of its valuable assets.”
The Bench observed that “The dating of the alleged deed of assignment that is 3rd April, 2017 raises eyebrows for another reason. It was more than two years before the commencement of insolvency proceeding on 17th December, 2019 so as to take it out of scanner and scrutiny under the 2005 Insolvency and Bankruptcy Code, 2016, as a fraudulent preference. In those circumstances, the ultimate order passed by the learned trial Judge at the ad interim stage that he was not minded to pass an interim order of injunction was justified, though it should have been for the reasons given above. Whether our interim order in appeal was obtained by suppression of material facts is redundant because we are ultimately setting aside our interim order on substantive grounds. It is true that if this suppression was not made the interim order may not have been passed at all.”
Read more: State of Gujarat v Basirbhai Sulemanbhai Safiya
Simran Singh
New Delhi, June 26, 2023: The Gujarat High Court dismissed an appeal preferred by the State questioning the judgement passed by the Additional Sessions Judge, Jamnagar for offences under Section 135 of the Electricity Act, 2003 and the order of acquittal in favour of the respondent-accused who allegedly owned a house with mala fide intention and without permission, had illegally taken direct electric connection in electric motor of an 10 horsepower appliance by hooking a wire with L.T. Line pole.
The Single-Judge Bench of Justice J.C. Doshi was of the view that the impugned judgment and order being fairly reasoned did not require any interference and the Additional Public Prosecutor (APP) had failed to point out any other point or evidence, which favoured the case of the prosecution.
“It can be noticed that cardinal principles of criminal jurisprudence behold that in an acquittal appeal, even if two view is possible, the view taken by the learned trial Court cannot be substituted by reversing the acquittal into the conviction unless finding of the learned trial Court found to be perverse, or could to have been said contrary to the material on record or demonstrably wrong or unsustainable and manifestly erroneous” reiterated the Bench.
The Bench stated that the APP was not able to point out that how the finding recorded by the Special Court was patently illegal, perverse or contrary to the material on record or against the settled principles of law or his palpably wrong or manifestly erroneous. “Worth to note that the presumption of innocence in a criminal trial operates in favour of the accused till he found guilty. The presumption would be doubled in a case where accused is acquitted after full-fledge trial from the charges levelled against him.”
In view thereof, it was held that no case was made out by the appellant-State warranting interference with the impugned judgement and order of acquittal. Thus, the Court had accordingly dismissed the appeal.
It was the case of the prosecution that the respondent-accused was caught red handed after committing theft of electricity. Thereafter, the complainant lodged the complaint with regard to the incident before Rajkot GEB Police Station. In pursuance of same, the investigating agency recorded statements of the witnesses, collected relevant evidence and drew various Panchnamas and other relevant evidence for the purpose of proving the offence. After having found material against the respondent-accused, charge-sheet came to be filed in the Court of learned JMFC, Jamjodhpur. As jurisdiction to try the offence was exclusively lying with the Special Court, the offence was committed to the Special Electricity Court, Jamnagar as provided under Section 209 of the Criminal Procedure Code,1973 (CrPC).
Upon committal of the case to the Special Electricity Court, Jamnagar, the Sessions Judge framed charge against the respondent-accused under section 135 of the Electricity Act for the aforesaid offence. The respondent-accused pleaded not guilty and claimed to be tried. In order to bring home charge, the prosecution had examined as many as 08 witnesses and also produced various documentary evidence before the Special Court.
On conclusion of evidence on the part of the prosecution, the Trial Court put various incriminating circumstances appearing in the evidence to the respondent-accused so as to obtain his explanation/answer as provided under Section 313 of CrPC. The respondent-accused denied all incriminating circumstances appearing against him as false and further stated that he was innocent and false case had been filed against him. After hearing both the sides and after analysi of evidence adduced by the prosecution, the Trial Judge acquitted the respondent accused of the offences, for which he was tried, as the prosecution had failed to prove the case beyond reasonable doubt.
The Court while examining the scope of interference in the acquittal appeal relied upon the Supreme Court decision in the case of Ram Kumar v State of Haryana which had observed that the powers of High Court in an appeal from order of acquittal to reassess the evidence and reach its own conclusions under Sections 378 and 379, Cr.P.C were as extensive as in any appeal against the order of conviction. But as a rule of prudence, it was desirable that the High Court should give proper weight and consideration to the view of the Trial Court with regard to the credibility of the witness, the presumption of innocence in favour of the accused, the right of the accused to the benefit of any doubt and the slowness of appellate Court in justifying a finding of fact arrived at by a Judge who had the advantage of seeing the witness. It was settled law that if the main grounds on which the lower Court had based its order acquitting the accused were reasonable and plausible, and the same could not be entirely and effectively be dislodged or demolished, the High Court should not disturb the order of acquittal.
The Bench reiterated the settled position of law that unless the reasoning by the Special Court was found to be perverse, the acquittal could not be upset. It was further observed that High Court's interference in such appeal in somewhat circumscribed and if the view taken by the Special Court was possible on the evidence, the High Court should stay its hands and not interfere in the matter in the belief that if it had been the trial Court, it might have taken a different view.
The Bench noted that as per the case of the prosecution, after surprise checking took place, the FIR/complaint was not lodged within 24 hours of checking or disconnection, which was otherwise mandatory as per provisions of Section 135 of the Electricity Act. Thus, the complaint was registered belatedly and no explanation had been offered by the prosecution during the trial.
Moreover, the Court was of the view that it was not established that the person, who had lodged the FIR/complaint, had been authorised by the Electricity Board/Company to lodge the FIR/complaint on behalf of the Electricity Board. “It also appears that no panchnama is prepared to recover the muddamal, no videography or photographs of the surprise checking is done. Even, the prosecution has failed to establish that the spot where the alleged theft of the electricity was found during surprise checking, belonged to and owned by the accused.Close look at the evidence indicates that at the alleged surprise checking to the spot/premises said to have been belonged to the accused was not done in presence of any independent person. The checking report itself indicates no involvement of any independent person. The checking report bears signature of the officer from the Electricity Board/ Company. No explanation is coming out from the deposition of the complainant or the employees part of the checking squad that why independent person has not been made part of the surprise checking or drawing the spot report.”
The Bench stated that the Special Court having taken note of the aforementioned anomaly in the prosecution evidence after referring various authorities under the pronouncement of this Court as well as the Supreme Court, reached to the conclusion that the prosecution had failed to make out a case and to establish the charge levelled against the accused.
Read more: Sidharth Chauhan v State Government of NCT of Delhi
Simran Singh
New Delhi, June 26, 2023: The Delhi High Court has granted anticipatory bail to Siddharth Chauhan, Managing Director of M/s Sidhartha Buildhome Pvt. Ltd, in the two FIRs registered over misappropriation and siphoning off of funds collected from homebuyers upon the approval of revival plan by National Company Law Tribunal (NCLT) which had 92.85% votes of the Committee of Creditors (CoC) in its favour.
The Bench was of the view that the applicant had shown his bona fide by submitting a reasonable revival plan which found favour with the CoC and was eventually approved by NCLT, and in terms thereof, the applicant had infused an amount of Rs.20 crores, of which Rs.15 crores were infused after the revival plan was sanctioned by the NCLT. “Undoubtedly, recent deposit of Rs. 15 crores prima facie shows some amount of seriousness on part of the petitioner to complete the two projects.” stated the Court
The Single Bench of Justice Vikas Mahajan agreed with the submission of the applicant that the approved revival proposal could turn into a reality only when he was not confined to custody.
The Bench further stated that the applicant had cooperated with the investigation, inasmuch as, he had joined the investigation on more than 25 occasions and had also furnished all requisite documents which had been demanded by the Investigating Officer (IO).
In view thereof, the Bench held that the applicant had made out a case for grant of interim protection till the next date of hearing. Accordingly, it was directed that no coercive action would be taken against the applicant, till the next date, subject to his joining the investigation as and when directed by the I.O concerned.
In the matter at hand, the first application had been filed under Section 482 Criminal Procedure Code,1973 seeking interim anticipatory bail in the FIR which was registered under Section 406, 420, 409 and 120B of Indian Penal Code, 1860 under the instance of home buyers of the applicant company’s project namely M/s Sidhartha Build Home Private Limited. It was alleged that the home buyers had booked their respective flats in the aforesaid project and had paid 95 % of the total sale consideration. The builder had promised that the possession of the units in the said project would be handed over within a period of 36 months plus grace period of 6 months. However, more than 3 to 3.5 years have passed besides the promised period of 36 months but the flats had not been delivered to the home buyers. It was also alleged that the accused had diverted the funds collected from home buyers.
The second application was concerned with the FIR which had been registered in respect of another project by the name of ‘Estella’, the construction of which was jointly undertaken by M/s Sidhartha Build Home Pvt. Ltd. and Ansal Housing and Construction Limited. In this FIR, similar allegations of inordinate delay in handing over possession of the flats and diversion of funds collected from home buyers, had been made.
In the year 2021, the Court vide order dated 13-12-2021 had rejected the applicant’s plea seeking anticipatory bail against which the applicant had preferred a Special Leave Petition (SLP) in which he was granted interim protection from arrest by the Supreme Court from 17-12-2021 till 02-05-2023 which stood absolved upon the withdrawal of the said petition.
The Bench noted that after the withdrawal of the SLP before the Supreme Court, the revival plan was approved by NCLT which itself was a change in circumstance to maintain a fresh anticipatory bail application and the said factum had not been disputed by the prosecution.
The Bench noting that the revival plan was approved by the CoC with 92.85% votes in its favour stated that “Notably, it is the Committee of Creditors (CoC) which approved the revival plan/withdrawal proposal. Needless to say, that the decision of the CoC has to be given due weightage having regard to the fact that the CoC includes the home buyers as a class and it would not approve a plan which would be contrary to the interest of home buyers.”
Read more: Reeta Kumari Singh v. Ravindra Singh
Simran Singh
New Delhi, June 26, 2023: The Jharkhand High Court reprimanded the Trial Court for the manner in which it dealt with a Probate Case without stating any reason as to why the Court arrived to such a conclusion nor did the Court answer the issues framed by it during the course of proceedings.
The Single Judge Bench of Justice Ananda Sen was of the view that the District Judge-II, Giridih had disposed of the impugned judgment “in a most mechanical manner and without any application of mind”.
In the matter at hand, the appellant questioned the impugned judgment for being cryptic and lacking reason stating that even the issues which had been framed by the Trial Court had not been answered in a Probate Case. The impugned judgement had held that the Will was not validly executed as required under Section 68 of the Evidence Act, 1872 and the application was not signed and verified by the attesting witness under Section 281 of Indian Succession Act, 1925, thus the application was dismissed, a finding which was challenged by the appellant.
The Bench noted that the subject Will was executed by Shanti Devi, who was the mother of the appellant and the respondents. The Will was executed in favour of the appellant, thus the appellant filed an application for grant of probate. The contesting respondent who was the brother of the appellant who had opposed the said probate case
The Court took note of the issues framed by the Trial Court namely,
- “Whether the Will dated 14.12.1999 in question was valid, genuine and last testament of the late Shanti Devi in favour of her daughter, the appellant?
- Whether the appellant was entitled to grant of the Will?”
The Court noted that the impugned judgment only mentioned the name of prosecution witness 1,2 and 3 and the exhibited documents which had been filed by the plaintiffs. However, paragraph 7 of the impugned judgment mentioned all the documents filed by the plaintiff which were not exhibited. Further the impugned judgement mentioned only the name of the defendant witnesses and none of the documents or the gist of evidences were discussed by the Trial Court.
“In Paragraph No. 12 the trial court noted down the argument which was advanced by the plaintiff, similarly in paragraph no. 13 the argument on behalf of the opposite party has been extracted. In paragraph nos. 14, 15, 16 & 17 the trial court noted and quoted the provision of law i.e Section 276 of the Indian Succession Act, 1925, Section 281 of Indian Succession Act, 1925 & Section 68 of the Indian Evidence Act, 1872. In Paragraph Nos. 18, 19 & 20 the trial court only noted down three citations relied upon by the defendants. Thereafter an heading "conclusion" was typed in the judgment and under the said heading in paragraph no. 21 the issues which the trial court had framed earlier was quoted again and thereafter in paragraph no. 22 the following was held and the case was dismissed.”
The Bench took note of paragraph 22 of the impugned judgement which had stated that “22. As stated earlier since the Will has not been validly executed by deceased Shanti Devi as required under the law Section 68 of Evidence Act and the so called Probate petition has also been not signed and verified by the attesting witness, which has also been required u/s. 281 of Indian Succession Act, 1925. These are the mandating provision for grant of Probate.”
The Bench observed that “This is the manner in which the case was dealt with by the trial court. There is no reasoning given as to why the court arrived to such conclusion nor the issues which the court had framed was answered.”
The Court stated that the Trial Court had relied upon Section 68 of the Evidence Act and held that the Will was not validly executed as required under the said provision which deals with proof of execution of the document required by law to be attested.
“In the said Will there is a signature of Ranjit Kumar Verma who is also a witness before the trial court (shown as P.W. 5 but there are only three witness). Whether the signature is genuine and whether there is proper attestation or not, is a subject matter before the trial court which the court should have decided but he failed to do so.”
Further the Court found that the Trial Court had held that the petition was not verified in terms of Section 281 of the Indian Succession Act. “Whether the provision of Section 281 of Indian Succession Act is mandatory or not has also not been gone into by the court, as learned counsel appearing on behalf of the appellant submits that in view of the judgment passed by the Hon'ble High court of Madhya Pradesh in case of M.A No. 504 of 2009 if an attesting witness does not sign the application, the same cannot be said to be fatal for a probate case.”
The Bench thus found that neither the issues were properly framed and answered nor the Trial Court had given findings on the issues which made the entire judgment perverse and unlawful, thus set aside the impugned judgment dated 27.7.2016 passed by the District Judge-II, Giridih and remanded the matter back for proper adjudication as per law. “It is expected that the trial court will pass reasoned judgment considering the evidence on record within a period of three months from the date of receipt of coy of this order.”
Read Order: M/s Tejas Arecanut Traders V. Joint Commissioner of Commercial Taxes and Others
Chahat Varma
New Delhi, June 26, 2023: The Karnataka High Court's Dharwad bench has quashed the endorsement issued by the Appellate Authority (first respondent), which denied admission to M/s Tejas Arecanut Traders’ (petitioner) appeal. The court disposed of the writ petition by providing the petitioner with an opportunity to comply with the requirements of the endorsement within a specified timeframe. The court also clarified that until the first respondent complies with the conditions specified in the order, no action should be taken by the respondents to dispose of the confiscated goods.
In the present case, the counsel representing the petitioner requested the court to provide an opportunity for compliance with the endorsement issued on 28.03.2023. The counsel explained that the endorsement was sent via email, which led to it going unnoticed and the petitioner only became aware of the endorsement after the auction notice was published. On the other hand, the Additional Advocate General, argued that despite the petitioner filing an appeal under Section 107 of the Central Goods and Services Act (CGST Act), they failed to make the mandatory pre-deposit or provide any explanation for the non-payment. As a result, their appeal was rejected, and the authorities proceeded with the auction of the perishable goods.
The court ordered that if the petitioner chooses to pay the required pre-deposit as per the endorsement, the first respondent Appellate Authority must consider the petitioner's statutory appeal filed under Section 107 of the CGST Act and dispose of it on its merits in accordance with the law as expeditiously as possible.
Read Order: Penuel Nexus Pvt. Ltd V. The Additional Commissioner Headquarters and Ors
Chahat Varma
New Delhi, June 26, 2023: The Kerala High Court has dismissed the writ petition filed by Penuel Nexus Pvt. Ltd. (petitioner) and has held that Section 107 of the Central Goods and Services Tax Act (CGST Act) is an inbuilt mechanism that implicitly excludes the application of the Limitation Act.
Factual background of the case was that the petitioner was a firm engaged in direct marketing. The petitioner's business was adversely affected by the Covid-19 pandemic, leading to delays in filing GST returns. The respondents cancelled the petitioner's GST registration. The petitioner filed an appeal before the 1st respondent, seeking to challenge the cancellation, but it was rejected on the grounds of delay. The petitioner contended that the said orders were arbitrary and unjustifiable.
The court observed that the petitioner's GST registration was cancelled on 10.08.2022. However, the petitioner filed an appeal on 07.03.2023, which was 209 days later, exceeding the statutory period specified under Section 107(4) of the Act.
The court remarked that the CGST Act was a special statute and a self-contained code in itself. It emphasized that the Limitation Act would only apply if it was specifically extended to the special statute. Furthermore, the court stated that the provisions of a fiscal statute must be strictly construed and interpreted.
“On an appreciation of the language of Section 107(4) and the above analysed factual and legal background, this Court is of the view that there is no illegality in the action of the 1st respondent in rejecting the appeal as time-barred,” held the court.
Chahat Varma
New Delhi, June 26, 2023: In a recent case, the Madras High Court has set aside an assessment order passed under the Tamil Nadu Goods and Services Tax Act, 2017 (TNGST Act). The court found that the Assessing Officer (AO) had determined the amount to be reversed based on a comparison of the Input Tax Credit (ITC) claimed under GSTR 3B and GSTR 2B. However, the court held that this determination should have been included in the show cause notice itself, giving M/s. Hatsun Agro Product Ltd. (petitioner) sufficient opportunity to respond and provide necessary details in support of the claim of ITC.
The present case involved the reversal of ITC claimed by the petitioner. The AO deemed the ITC to be ineligible and not rightfully claimed by the petitioner.
The single-judge bench of Justice Anita Sumanth noted that a communication dated 09.09.2022 had outlined the specific manner in which the respondent sought information and supporting particulars, including invoices, from the petitioner. However, the court found it unclear whether the petitioner had provided the requested particulars in the specified manner and whether all the supporting documents had been submitted to the AO.
The court remarked, “Prior to the impugned order of assessment, what was exchanged was only general notices calling for particulars to which the petitioner is seen to have responded, albeit, insufficiently.”
In light of the above observation, the court set aside the impugned order of assessment and instructed that the order should be treated as a show cause notice. The petitioner was instructed to appear on 13th of July, 2023, along with all the required details and supporting documents related to the reversal under the impugned order.
Read Order: Autotex Private Limited v. The Commissioner of GST & Central Excise
Chahat Varma
New Delhi, June 26, 2023: The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal has ruled that the products manufactured by Autotex Private Limited (appellant), namely Chick Drinker, Auto Feeder, and Poultry Cage, should be considered as ‘poultry keeping machinery’. The Tribunal determined that these products were classifiable under CETH 84361000, which attracted a 'nil' rate of duty.
The appellant in this case was involved in the manufacturing of excisable goods such as Auto feeder, Chick Drinker, and Poultry made of plastics. The department raised concerns regarding the classification of these products, asserting that they did not have any mechanical function and should be classified under different headings. Specifically, they argued that the goods should be classified under 3926 (Auto feeder, Chick drinker) and 3923 (Poultry cage) instead of 8436. After due process of law, the original authority reclassified the goods under 3926 and imposed duties, interest, and penalties accordingly. The appellant appealed against this decision, but the Commissioner (Appeals) upheld the order of the original authority.
The bench observed that the adjudicating authority, in determining whether the items in question should be classified as ‘machines’, relied on the dictionary meaning of the term. However, the bench noted that the Commissioner should not have resorted to the dictionary meaning and external sources when the HSN Explanatory Notes provide a specific meaning for the term ‘machine’. It was observed that in para-B of Section Note XVI-(General), it was mentioned that goods even if made of plastics would fall into the meaning of machines.
The bench further observed that the HSN Explanatory Notes to Chapter 84 clearly categorize heading 8436 as industry-specific. This particular heading encompasses various types of machinery related to agriculture, horticulture, forestry, poultry keeping, and bee-keeping. It includes machinery such as germination plants fitted with mechanical or thermal equipment, poultry incubators, brooders, and other similar equipment. The specific sub-heading 8436.10 pertains to poultry-keeping machinery. Additionally, heading 8436 also includes the parts and components of such machinery.
Thus, the bench concluded that the duty demand, interest, and penalty imposed on the appellant could not be sustained.
Read Order: M/s. Siddha Real Estate Development Private Limited & Anr v. National Anti-Profiteering Authority & Ors.
Chahat Varma
New Delhi, June 26, 2023: The Calcutta High Court, taking into account that M/s. Siddha Real Estate Development Private Limited and others (appellants) had no other alternative remedy and had challenged the validity of the anti-profiteering provisions in Section 171 of the Goods and Services Tax (GST Act) and Rules, has granted an interim stay on the order passed by the National Anti-profiteering Authority (first respondent). The stay applies to the amount of profiteering determined by the first respondent in their order dated September 30, 2022. However, this stay was subject to the condition that the appellants deposit a sum of Rs.6 crores with the Registrar General of the Court.
Briefly stated, the appellants had filed a writ petition seeking an issuance of writ of declaration that anti-profiteering provisions contained in Section 171 of the GST Act and Rules were unconstitutional and ultra vires the provisions of the Act. The appellants had also prayed for issue of writ of mandamus to recall the adjudication order passed by the first respondent.
This intra-Court appeal by the appellants was directed against the order passed by the Single Bench, by which the Writ Court had accepted the submission made by the Additional Solicitor General that if the interim relief sought for by the appellants was granted, it would amount to granting the final relief in the writ petition.
The division bench of Chief Justice T.S. Sivagnanam & Justice Uday Kumar agreed with the decision of the Writ Court that granting a stay on the impugned provisions would essentially amount to granting the main relief sought in the writ petition. It also emphasized the legal principle that a statutory provision is considered valid unless it is declared otherwise.
However, the court observed that the appellants in this case specifically limited their prayer to the amount of profiteering determined by the first respondent in the order dated September 30, 2022. The court acknowledged that the appellants have raised various issues related to the merits of the case, which can only be decided once the respondents file their affidavit in opposition to the writ petition.
With the above observations, the appeal was disposed of.
Read more: T. Retnapandian v. Tamil Nadu Cements Corporation Limited
Simran Singh
New Delhi, June 23, 2023: The Madras High Court has allowed an appeal against the order of the Single Judge which had upheld the disciplinary proceedings against the appellant considering the lapse of time of more than 10 years after retirement when the appellant was left without even payment of subsistence allowance lawfully due to him.
The Division Bench comprising of Justice J. Nisha Banu and Justice D. Bharatha Chakravarthy stated that the continuation of the disciplinary proceedings against him, especially when no charge was made out as per the Tamil Nadu Cements Corporation Limited Service Rules, the Single Judge, even though was right in rejecting the ground relating to the 6 months period, ought to have considered the grounds and facts and allowed the writ Petition.
In the matter at hand, the appellant challenged the direction to appear for the inquiry, on the ground of illegality and prayed for closing the disciplinary proceedings against him in respect of charge memorandum dated 14.7.2004. It was submitted that all the articles of the charge, and the imputations related to his wife indulging in private construction business pertaining to the income amounting to bribe and disproportionate wealth of known sources of income. Thus a criminal case was initiated, in violation of 5.2(v) of the said Rules which came into existence by amendment dated 15.07.1994. It was thus submitted that the charges were alleged to be in the year 1991-1992 which were consequently not covered under the said Rules.
The appellant relied upon Rule 2.22(b) of the said Rules which postulated that the retention of service for continuation of the disciplinary proceedings was only for a period of 6 months and continuation of inquiry beyond the period of 6 months was illegal. However the Single Judge Bench had held that the said period of 6 months was only directory.
It was further averred that the income from business could not be treated as an income which was known to the sources of income, and the criminal case had ended in the acquittal and the appeal filed by the respondents was also dismissed. It was submitted that when the appellant had superannuated as early as in the year 2011, no purpose would be served by continuing the disciplinary proceedings against him which was illegal in any event and therefore, he prayed for allowing the Writ Appeal.
The Bench agreed with the findings of the Single Judge that the said period of 6 months was only directory in nature and not mandatory. The purport of Rule 2.22(b) of the said Rule was to continue the disciplinary proceedings in extraordinary cases like that of the present case, where the delinquent employee attained the age of superannuation, pending the departmental proceedings.
The Bench noted that only in that view of the matter, since the employee had to be retained in the service by placing him in suspension, the period of 6 months was being mentioned. And only because, the department should not be financially burdened with the payment of subsistence allowance for a long period, with a view to complete the inquiry expeditiously, the period of 6 months was mentioned in the said Rule.
For the reason stated above, the Bench stated that the said Rule was only directory in nature. It was also made clear that if the employee was continued beyond a period of 6 months under suspension, then he would be entitled for subsistence allowance, notwithstanding the same period of 6 months mentioned in the said Rule for payment of subsistence allowance. “This position has been already clarified by several judgments of this Court in respect of the identical Rule in several other public sector undertakings in the State of Tamil Nadu…Therefore, when the appellant retired in the year 2011 itself, keeping him in suspension eternally for all these years, and not paying subsistence allowance is incorrect in law. We have rendered our finding with regard to the continuation of the disciplinary proceedings and since no specific claim was made by the appellant in this regard, he will not be entitled to the arrears of subsistence allowance.”
The Bench noted that the “ Rule itself has come into force only in the year 1994, and the instances mentioned in the statement of imputations of misconduct in Annexure-II, in I to X, all relate to the period 1991 to 1993, and therefore, the Rule itself is not applicable. The statement of imputations mentioned in XI to XII relates to the period 1995, and therefore, the Rule is applicable.”
The Bench was of the view that the appellant’s wife undertook to construct a house, and in one case the construction was completed, and in the other case, the construction was not even completed. In this regard, a careful reading of Rule 5.2(v) of the said Rule made it clear that it prohibited taking stockistships and forwarding agencies in the names of the family members or benami name was prohibited, and the employee could not carry out money lending or private business or trade or occupation. The private business or trade or occupation by the family member could not be said to be prohibited by the said Rule.
Consequently, the order of the Single Judge was set aside and the disciplinary proceedings were declared to be illegal. Further the respondents were directed to permit the appellate to retire from service and pay all the retiral benefits, within two months from the date of receipt of the copy of the order.
Read more: Khalil Ahmed v Ansar Ahmed
Simran Singh
New Delhi, June 23, 2023: The Calcutta High Court has allowed an appeal against the order passed by a Single Judge wherein certain findings were recorded on issues which were not the subject matter of the proceedings. A Division Bench held that if such findings adversely affected or were likely to affect the future rights of the party in whose favour the order was passed, that party would be entitled to assail the order, although in its favour, for deletion of the remarks which were adverse to that party’s interest.
The matter pertained to a dispute regarding the heritage property that belonged to Bengali poet Michel Madhusudhan Dutta.
The Division Bench comprising Justice Arijit Banerjee and Justice Apurba Sinha Ray, while navigating the question whether or not the order impugned or any portion thereof warranted interference by the appellate Court, held that naturally the entire order of the Single Judge was not required to be interfered with since it had dismissed the contempt applications which were instituted against the present appellants. However, the Division Bench stated that the portions of the order pertaining to the merits of the dispute between the parties that was the subject matter of the two writ petitions -- i.e., whether or not Kolkata Municipal Corporation (KMC) was justified in assigning heritage tag to the property in question -- needed to be expunged.
“The finding of the learned Judge that KMC/HCC wrongly classified the concerned property as heritage, was beyond the scope of the two contempt petitions resulting in these two appeals. The only issue before the learned Judge was whether or not the alleged contemnors were guilty of wilful violation of the relevant order passed in the two writ petitions. His Lordship’s conclusion was that there was violation, but not wilful. In my view, the learned Judge should have stopped there. The observations pertaining to the merits of the case were not called for and strictly speaking, was beyond the jurisdiction that the learned Judge was exercising under the Contempt of Courts Act read with Article 215 of the Constitution of India.” Observed the Bench
In view thereof, it was held that the observations/findings of the Single Judge in the impugned judgment and order, pertaining to the correctness of KMC’s decision to declare the property in question as heritage property stood expunged.
The Bench was quick to clarify that “The impugned judgment and order shall not be construed as having made any observation/finding on the justifiability of KMC declaring the concerned property as heritage property, in any future proceedings, before any legal forum or otherwise. I hasten to clarify, as I think I ought to, that this judgment of ours shall not be construed as having put a stamp of approval on the decision of KMC/HCC to classify the property in question as a heritage one. I have not gone into that aspect of the matter, nor we were required to or competent to do so. This judgment only decides that the learned Single Judge should not have made any pronouncement in the impugned judgment and order, passed in contempt proceedings, on the correctness or otherwise of the decision of KMC/HCC to declare the building in question as a heritage property. Accordingly we have directed expunction of the observations/findings of the learned Single Judge which pertain to the merits of the decision of KMC/HCC to declare/retain the heritage status of the concerned property.”
In the matter at hand, the premise located in Karl Marx Sarani, Calcutta was declared to be a heritage building by KMC. The petitioners who had acquired the said property in 1990 after coming to know of the declaration of the property as a heritage building approached the Court wherein it was observed that the West Bengal Heritage Commission (Commission) was to review and reassess the view taken by the said Expert Committee and the Heritage Conservation Committee (HCC) endorsed by KMC, following the guidelines given in the judgment and after serving notice to the appellants, providing them with the opportunity of being heard within a period of 3 months. Further, it was directed that KMC would not interfere with the decision of the Commission unless supported by a detailed reason.
The appellants alleging violation of the aforesaid order, filed two contempt petitions wherein a compliance report was filed by KMC in one of the said contempt proceedings which contained the decision of the Commission which was communicated to KMC by a letter dated 05-09-2017 stating that it did not find any documentary evidence to uphold the decision of KMC. However, the HCC did not agree with the decision of the Commission and was of the opinion that the Grade of the building as Grade IIB was to be retained. Subsequent to which Mayor-in-Council duly approved the resolution of HCC dated 11.08.2018 under Sections 425B and 425D of the KMC Act, 1980.
The judgment in contempt petitions observed that KMC proceeded to consider the decision of the Commission only after the contempt proceedings were initiated and observed that “It is amazing to see the evidence that the historian member of the heritage Conservation Committee of the Corporation relied upon and which was apparently accepted by it; (i) memoir written by Sibnath Shastri (ii) wikipidea and other biographies; (iii) the subject area being known as KABITIRTHA.”
The contempt judgment emphasised that part of the order of the Court wherein it was stated that KMC would not ordinarily interfere with the decision of the Commission unless supported by a detailed order and opined that the the contemnors were bound to follow this order strictly and there was no scope of going the way they desired. “Even, if the decision of the State Heritage Commission was unacceptable to the Corporation, ordinarily they had to accept that decision. That is why it was provided in the said order that they would not “ordinarily interfere with the decision of the Commission.” Held the contempt judgement. Thus it was held that there was non-compliance of the order of the Court to the extent that there was refusal on the part of KMC to accept the decision of the Commission without the support of intelligible reasons. It was held that the disobedience was wilful on part of KMC and the alleged contemnors were in contempt of the said order of this Court and was accordingly liable to be punished.
However, the Single Judge in the impugned order held that there was non-compliance on part of KMC but such non-compliance was not wilful. Accordingly the two contempt petitions were disposed of without issuance of Rule. In the process, observation in regards to the merits of the decision of the HCC of KMC were made to retain the heritage status of the aforesaid property.
The grievance of the appellants was that the Single Judge in the impugned order had for all practical purposes held that the HCC ought not to have differed from the opinion of Commission and that the said opinion was not reliable or credible. The Single Judge had in effect decided that the property in question could not be declared as a heritage property although no such declaration had been made by the Judge considering the contempt application. It was argued that “However, the learned Judge should not have made such observations while deciding the contempt applications. The learned Judge ought to have restricted himself to decide whether or not the alleged contemnors are guilty of contempt of Court. The observations of the learned Judge pertaining to the merits of the decision of the HCC are beyond the scope of the contempt proceedings and ought to be expunged from the judgment and order under appeal. Otherwise, such observations may be relied upon by the writ petitioners in any future litigation pertaining to the heritage status of the building in question before any competent forum.”
Issue for consideration before the Bench was:
- Whether the Single Judge completely fell in error in going into the merits of the matter and had assumed the role of expertise while dealing with the contempt matter.
- Whether the Judge, while dealing with the contempt matter was only concerned as to whether the alleged violation of the order of the Court was deliberate and wilful or not and once it came to the conclusion that the violation was not deliberate or wilful, the contempt proceeding came to the end and there could be no occasion to make any observation and/or express any opinion, which would affect the decision taken by the authority and the same would act as an impediment in the future proceedings.
Court Analysis
The Bench while dealing with the preliminary objection raised by the respondents as regards maintainability of the appeal, stated that it was not in dispute that these appeals had not been filed under Section 19 of the Contempt of Courts Act, 1971 (Contempt of Court Act). The order assailed in the appeals was not an order passed in exercise of jurisdiction to punish for Contempt of Court. “In fact, the learned Single Judge having held that although there was violation of the order in question, such violation was not wilful. Hence the Contempt proceedings were closed.”
The Bench was of the view that this appeal would be maintainable under clause 15 of the Letters Patent and the impugned judgment in the appeal qualified as a judgment within the meaning of Clause 15 of the Letters Patent.
The Bench after pursuing decisions of Supreme Court judgements stated that “If an order decides the rights of any of the parties to a lis and such decision has the trappings of finality i.e., the order may adversely affect a valuable right of the party or decide an important aspect of the matter in an ancillary proceeding, the same would be a judgment within the meaning of Clause 15.”
The Bench observed that the Single judge while dealing with the issue whether or not there was wilful violation of the judgment and order dated 18-07-2016, whereby two writ petitions were disposed of, so as to amount to contempt of Court, had held that technically there was violation of the order but the same was not intentional. In the course of so holding, the Single Judge dilated on the merits of the decision of KMC to declare the property in question as a Heritage property. The Single Judge for all practical purposes held that the decision of KMC was based on insufficient evidence the authenticity whereof was highly doubtful. In other words, the Single Judge came to a finding that the declaration of the concerned property as heritage was erroneous. “Learned Judge therefore finally decided a collateral issue which is not the subject matter of the contempt petition. Such decision may well adversely affect KMC’s rights in any future legal action that the property owners may initiate before a competent forum assailing the heritage status of the property in question.”
Therefore, the Bench opined that the order assailed in this appeal to the extent it holds that the concerned property could not be assigned heritage status, was a judgment within the meaning of Clause 15 of the Letters Patent and was open to challenge in an intra-court appeal.
Further the Bench was of the view that it was true that if an order was wholly in favour of a party to a lis, that party could not maintain an appeal against such order. However, if in the course of passing such order, a Single Judge of the High Court recorded certain findings on issues which were not subject matter of the proceedings, and if such findings adversely affected or were likely to affect in future rights of the party in whose favour the order was passed, that party would be entitled to assail the order, although in its favour, for deletion of the remarks which were adverse to that party’s interest. Otherwise, in any future proceedings, that party may suffer prejudice and would have to face the argument that not having challenged the adverse observations in the earlier order, that party was bound by the same.
“In our view, the appellants rightly claim to be aggrieved parties – aggrieved by the observations of the learned Single Judge leading to the finding that the property in question is not liable to be declared as a heritage property. For the reasons aforestated, I decide the issue of maintainability of the appeal in favour of the appellants. In my view, the appeal is maintainable under Clause 15 of the Letters Patent.” Observed the Bench.
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.
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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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