Read Order: Dr. V. Selvendran v. The Government of Tamil Nadu
Simran Singh
New Delhi, June 7, 2023: The Madras High Court stated that it would be appropriate for the petitioners to approach the Supreme Court to direct the respondent to allow them to continue in the post of Veterinary Assistant Surgeon with pay protection (regular time scale of pay) till the date of their retirement on attaining the age of superannuation, without retirement and terminal benefits. The High Court further opined that the present 20 writ petitioners, and any persons above the age of 45, ought to be considered for continuing in service until their retirement with only time scale of pay without any retirement and terminal benefits. Until the outcome of the results before the Supreme Court, the present petitioners may be allowed to continue in service, the Court held.
The Single-Judge Benchof Justice S. Srimath stated that “Losing a job, that too after serving for more than 10 years would be stressful in many ways and can impact several aspects of life. It not only leads to uncertainty, financial loss, job search stress but also impacts self-esteem negatively and in many cases trigger identity crisis. Such can be the impact that a person may feel uncomfortable mingling with other people, attending social events or even talking to their family members fearing judgment from them. Prolonged unemployment can even be more devastating as after remaining jobless for a considerable period of time, a person becomes hopeless, pessimistic and demotivated which over a period of time can affect their personality.”
In the matter at hand, the petitioners had acquired B.V.Sc., degree and registered their names in the Professional Executive Employment Exchange. During the year 2011, the Government appointed 843 Veterinary Assistant Surgeons through the same Employment Exchange in accordance with Rule 10 (a) (i) of the State Subordinate Service Rules. The petitioners were under the impression that they would be regularised upon clearing the Special Qualifying Examinations that would be conducted by Tamil Nadu Public Service Commission.
Unfortunately, a common notification was issued calling candidates from open market to participate in the competitive examination which was the subject matter of the present writ. The petitioners had preferred an interim application before the Supreme Court for suitable relief enabling regularisation of service after obtaining concurrence from the Tamil Nadu Public Service Commission. However, the Supreme Court declined to accept the said proposal of the petitioners and other 573 similarly placed persons.
It was case of the petitioners that they had demonstrated and established the eligibility and suitability for regular appointment by their actual and physical services put in for more than a decade. It was contended that they were at a more disadvantageous position, where they had to compete with youngsters, that too after the change in curriculum for more than two times and lack of time for theoretical preparation, in view of continuous services in the said post resulting in depriving them from a ‘Level Playing Field’.
It was further submitted that in view of the fact that the notification was issued beyond the time limit prescribed by the Supreme Court, there were other infirmities as well such as the sudden introduction of Tamil eligibility test etc., which would cause serious prejudice to the in-service candidates. The petitioners came up with a new proposal that they ought to have been permitted to continue in the said post till their retirement and be eligible only for time scale of pay without any terminal benefits and pensionary benefits.
The respondents represented by the Additional Advocate General submitted that the notification of the Government was to regularise the petitioners’ services. Hence, the claim of the petitioners was considered and the Government had filed a miscellaneous petition before the Supreme Court to regularise their services. However, the Supreme Court declined the proposal of the Government as well as declined the prayer of the writ petitioners and had taken into consideration the fact that since the petitioners were in service for more than 10 years the Government was directed to give weightage to the writ petitioners. Hence, a policy decision was executed as per the said direction to grant 50 marks to the in-service candidates and also granted age relaxations.
In response to the aforementioned, the petitioners submitted that even though 50 marks were granted to the inservice candidates, the syllabus had changed for two times. Therefore, the petitioners would not be in a position to compete with the youngsters. Moreover, there was a lack of time to prepare from the new syllabus due to their continuous service in the post and therefore not granted sufficient time to prepare for theory as well as practical and hence, there was difficulty in passing such examination.
The respondents relied upon the judgment rendered by the Supreme Court, wherein it was stated that
“…(ii) As far as 573 appointees under Rule 10A (many of whom are appellants before this Court) are concerned, we are of the view that they should not be permitted to be regularized in the manner proposed by the State. However, we grant the relief in the following manner:
- the appellant-State in Civil Appeal Nos. 4353-54/2016 will proceed to notify vacancies including the vacancies held by the appellants before us as also all the Rule 10A appointees.
- the appointees under Rule 10A will be granted the benefit of upper age relaxation so that they are entitled to apply and be considered with anybody else who is eligible to apply and applies.
- the appointees under Rule 10A including the appellants before us will be afforded weightage of marks towards weightage of experience in the selection process. The weightage will consist of marks at the rate of 5 marks for every year, which is subject to a maximum of 50 marks……”
The Court stated that when the Supreme Court had issued a direction after considering the plight of the 573 candidates, there was no question of modifying the said direction issued by the Supreme Court on this issue. “When the respondents have come out with a policy decision to grant 50 marks for the in-service candidates, now the petitioners would be in a better position compared to the youngsters from open market.” Therefore, the Court was of the considered opinion that the petitioners would compete in the examination since granting the weightage of 50 marks, if the in-service candidates were passed, would enable them continue in the service.
However the petitioners submitted that the Government may consider to retain the 20 writ petitioners alone, if they failed in the examination and that they may pay the salary alone (time scale of pay) who would give up the retirement and terminal benefits. "Since some of the petitioners were more than 50 years, at this age they cannot seek any public employment. They are having family to support, they have to support the elders, some of the writ petitioners’ children are studying. Moreover, if at this age they lose their job, it would have social stigma to the entire family…this concession would be beneficial to the Government also, since the Government would be benefited financially, since the said 20 writ petitioners are given up their terminal and retirement benefits.”
The Court stated that the said concession was attractive and any Court would grant such relief, provided if the litigation arose for the first time. Unfortunately, the earlier round of litigation went upto the Supreme Court and the petitioners had lost. However, the writ petitioners had an option to go before the Government who may consider to continue such candidates till their retirement. At this juncture the Additional Advocate General submitted that now the Government also was not in a position to consider the claim of the petitioners, since the Government’s proposal was also declined by the Supreme Court. Therefore, this Court was of the considered opinion that it would be appropriate to approach the Supreme Court for such direction.
Read Order: Avery Dennison (India) Pvt. Ltd v. DCIT, Circle 3 (2), New Delhi
Chahat Varma
New Delhi, June 7, 2023: The Delhi bench of the Income Tax Appellate Tribunal has ruled that where there is an agreement for services and certain services within that agreement are undisputedly rendered, the entire agreement should be considered as a whole and whether the services have actually resulted in a benefit to the assessee or not is immaterial.
Brief facts of the case were that Avery Dennison (P) Pvt. Ltd. (assessee), was a subsidiary of Avery Dennison Corporation, USA. The Transfer Pricing Officer (TPO), referring to the order passed by the DRP, applied the Comparable Uncontrolled Price (CUP) method to benchmark the international transactions related to intra-group services and thereby proposed an adjustment of Rs. 23,02,71,861/-. The assessee contended that the AO / DRP / TPO erred in making an adjustment to the appellant's international transaction of receipt of intragroup services with its Associated Enterprises (AEs) alleging that it did not satisfy the arm's length principle envisaged under the Act.
The bench of Shamim Yahya (Accountant) and Challa Nagendra Prasad (Judicial) noted that the assessee had furnished enormous evidences which pointed out that intra group services had in fact been received by the assessee. Moreover, the agreement was a composite one and authorities below had allowed part of the same and treated part of the same not allowable. The bench further noted that on similar facts, in assessee’s own case in ACIT, Circle-3(2), New Delhi v. Avery Dennison (I) P. Ltd [LQ/ITAT/2021/3382], the ITAT had deleted the adjustment for several years and the Revenue’s appeal against them had been dismissed by the Delhi High Court.
“Here also from the composite agreement, some have been accepted at arm’s length price and some have been treated as not acceptable at arm’s length price. Huge details of intra-group services have been furnished by the assessee. Respectfully following the precedent from the ITAT and Hon’ble High Court, we uphold the contention of the assessee and delete the TP adjustment,” observed the bench.
Chahat Varma
New Delhi, June 7, 2023: In a relief to National Building Construction Corporation Limited (NBCC) and M/s. Raitani Engineering Works Pvt. Ltd. (appellants), the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal has set aside the demand for service tax under the category of ‘Commercial or Industrial Construction’ for the construction of various buildings and structures for meeting the social needs of the state of Manipur and for upliftment of needy people in the state. The Tribunal ruled that the construction falls under the category of 'works contract service' rather than 'commercial or industrial construction service'.
The facts of the case in brief were that M/s. Raitani Engineering Works Pvt. Ltd. was awarded a contract by NBCC on behalf of the Ministry of Urban Employment and Poverty Alleviation, for the construction of Jiribam Municipal Corporation building, Staff quarter building, Guest house building, overhead tank, etc. The funds for the project were released to NBCC by the government from the non-lapsable central pool of resources for the development of North-Eastern states. The Commissioner observed that the construction projects undertaken for the local government bodies were considered commercial activities. The Commissioner rejected the submissions put forth by the appellants that subject services, if at all taxable, would be liable to be taxed under the category of ‘works contract service’ which had not been proposed in the show cause notice.
The bench noted that the contract in question included the supply of goods, and therefore it could not be classified under the category of Commercial or Industrial Construction. The bench also observed that the Commissioner had considered the fact that the construction service included the supply of goods and had applied the benefits of abatement to exclude the value of goods in order to determine the assessable value for the service tax demand.
The bench also referred to the case of URC Construction (P) Ltd v. Commissioner of Central Excise, Salem [LQ/CESTAT/2016/91], wherein it has been held that when no proposal is made in the SCN to classify the service under the category of ‘works contract service’, the demand of service tax cannot be sustained for the period subsequent to 01.06.2007.
Read Order:C. Prakash Vs. M/s S. N. Media And Ors
Tulip Kanth
Chandigarh, June 7, 2023:While observing that the plaintiff failed to prove due execution of the assignment deeds by leading acceptable evidence, the Madras High Court has dismissed a suit seeking a declaration that the petitioner was the sole and absolute owner of all the intellectual property rights in respect of dubbed cinematograph film 'Chingari' and 'Shrikanta' in Tamil and Malayalam.
“Ofcourse, assignment deed concerning rights in a cinematograph film is not a document which requires compulsory attestation. Notwithstanding the same, when there is a cloud over the due execution of the document, attestors evidence assumes significance”, Justice S. Sounthar said.
The plaintiff had filed a suit seeking declaration that he is the sole and absolute owner of all the intellectual property rights in respect of dubbed cinematograph film 'Chingari' and 'Shrikanta'. He also sought for a direction to the defendants to remove the infringing content of the copyrights protected film in Tamil and Malayalam while also seeking damages of Rs 1,20,000 from the defendants.
According to the plaintiff, the second defendant is the producer of the Kannada cinematograph film 'Chingari' and he acquired dubbing rights in Tamil and Malayalam languages along with internet and non-theatrical rights of the said film and another film not connected with the suit 'Shishira' vide an Assignment Deed. The plaintiff also acquired dubbing rights in Tamil and Malayalam languages along with internet and non-theatrical rights of the Kannada film 'Shrikanta' vide an Assignment Deed.
The plaintiff claimed that the consideration of Rs 30,000 and Rs 25,000 had been paid to the defendants respectively through one Rajendra Kumar, who brokered the deal. According to the plaintiff, he paid Rs 55,000 vide NEFT transaction to said Rajendra Kumar and he inturn paid Rs.50,000 to the defendants after deducting Rs.5,000 which was payable to him by them.
The second defendant is the producer of the Kannada film 'Chingari' and 'Shishira'. The third defendant is the producer of the Kannada film 'Shrikanta'. Both of them issued receipts acknowledging receipt of consideration in respect of the above said Assignment Deeds from Rajendra Kumar. It was alleged by the plaintiff that later on, it came to his knowledge that the third defendant had assigned exclusive dubbing rights of the films 'Chingari' and 'Shrikanta' in other South Indian Languages in favour of the first defendant.
It was further averred that a legal notice was issued by the plaintiff to the defendants. The defendants had issued a reply stating that they had not received any consideration from the plaintiff in respect of the Assignment Deed in his favour and consequently, they assigned rights in respect of the above said films in favour of the first defendant. The plaintiff, claiming that consideration already paid to defendants through Rajendra Kumar, had come up with the suit before the High Court.
The Bench observed that assignment deed concerning rights in a cinematograph film is not a document which requires compulsory attestation. Notwithstanding the same, when there is a cloud over the due execution of the document, attestors evidence assumes significance. In the case on hand, the contesting first defendant pleaded collusion between the plaintiff and the defendants and in view of the stand taken by the first defendant, a cloud was created over due execution of assignment deed. Therefore, it was incumbent on the plaintiff to cure the cloud by proving due execution of the assignment deed.
It was opined that the witness column in the assignment deeds were blank and therefore, there was no attestor to examine. It was noticed that there was a material contradiction with regard to the presence of plaintiff at the time of execution of assignment deeds. The plaintiff sought declaration of its dubbing rights over the films in question under Assignment Deeds, however, he failed to produce the original assignment deeds but produced only the photocopies.
The witness column in the assignment deed was blank and in the clause relating to the payment of consideration, payment reference number and payee name were all left blank. The Court was unable to accept the contention of the learned counsel for the plaintiff that plaintiff proved due execution of the deeds. It was also observed that when the very execution of assignment deeds were not proved, the plaintiff couldn't take advantage of the precedent that mere non-payment of consideration would not vitiate the assignment because even a promise to pay consideration can be treated as a sufficient consideration.
The Bench came to the conclusion that the plaintiff failed to prove due execution of deeds by leading acceptable evidence. “The conduct of defendants 2 and 3 in their failure to appear before this Court and participate in the proceedings creates a suspicion that there is a collusion between the plaintiff and defendants 2 and 3”, the Bench said while dismissing the suit.
Read Order:Abid Ali Vs. State Of Haryana And Others
Tulip Kanth
Chandigarh, June 7, 2023:While observing that the petitioner, being a Muslim, is not entitled to get a Scheduled Caste Certificate, the Punjab and Haryana High Court has dismissed a petition seeking quashing of order vide which the petitioner, who was working as Assistant Professor under the Self Financing Scheme was removed from service of the University.
“...this Court is of the opinion that petitioner was not entitled to be issued an SC certificate, being a person belonged to Muslim Community”, Justice Jaishree Thakur asserted.
The facts of this case were such that in the year 2006, the petitioner namely Abid Ali started working as contractual Teaching Associate in the respondent -University. In the same year i.e. 2006, the University issued an advertisement for filling up 5 posts of Lecturers in the Department of Journalism & Mass Communication under SFS. Out of said 5 posts under SFS, one post was reserved for SC category and remaining four were unreserved.
The petitioner applied for appointment under both categories of posts i.e. budgeted and SFS.The petitioner was selected and appointed as Lecturer under both the schemes i.e. budgeted as well as SFS. In the appointment letter issued for budgeted post of Lecturer, the subject was mentioned as appointment to the post of Lecturer (SC) on temporary basis, whereas in the appointment letter issued under SFS, it was mentioned as appointment to the post of Lecturer (under SFS). The petitioner joined as Lecturer under SFS under Department of Journalism and Mass Communication.
Thereafter, a complaint was made against the petitioner alleging therein that the petitioner obtained a job while claiming himself to be an SC candidate, as belonged to Julaha community, whereas he couldn’t be selected under SC category, being a Muslim. The Deputy Commissioner, Karnal stated that there was no entry in the name of Abid Ali regarding issuance of SC Certificate and the Registrar Issued a memorandum of charges and it was proposed by the competent authority to take action against him as per Agreement. The petitioner submitted his reply stating that he had verified the caste certificate from the office of City Magistrate, Karnal and the caste certificate issued to the petitioner was issued vide Sr. No.2299 instead of 2348.
Thereafter, a decision was taken in the meeting of the Executive Council for removal of the petitioner from service, which shall not be disqualification for future employment. Aggrieved against this order whereby the petitioner had been removed from service, he approached the High Court.The issues before the Bench was whether the SC certificate was forged or obtained by misrepresentation and whether the petitioner had benefitted from the certificate and if he could be allowed to continue in service.
The Bench reaffirmed that a person to have the status of Scheduled Caste must profess Hinduism or any other religion as specified in para 3 of the Constitution (Scheduled Castes) Order, 1950 (hereinafter referred to as Presidential Order), as issued by the President in exercise of the power conferred upon him under Article 341 of the Constitution of India.
“In the absence of any material available before this Court that petitioner herein is professing Hinduism or any other religion as specified in para 3 of the Presidential Order, this Court is of the opinion that petitioner was not entitled to be issued an SC certificate, being a person belonged to Muslim Community”, the Bench held.
The Court further made it clear that the petitioner had a case if he could prove that he had obtained more marks than the last selected candidate of General Category and therefore, applying the principle of horizontal reservation, he was to be given appointment against the post of General Category to grant benefit of reservation to next Scheduled Caste candidate. The Bench rejected the argument saying that he was given appointment against 4th post of General category as according to the recommendation of the interview committee, the petitioner was recommended for appointment under SC category.
It was also noticed that the petitioner was appointed in the year 2007 and till today, he had rendered 16 years of service. “This Court is of the opinion that since the appointment of the petitioner based on the Scheduled Caste certificate to which he was not entitled to, is void ab initio, he cannot get the benefit of length of service for which he was not eligible at the first instance”, the Bench said.
The Court was of the view that even though the petitioner might not have misrepresented at the time of obtaining an SC certificate or obtained the same fraudulently, but since he claimed and was given benefit under the said certificate to which he was definitely not entitled to, he couldn’t be allowed to continue in service.
However, the Bench held that the salary and other emoluments paid to the petitioner shall not be recovered. The government accommodation, if retained by the petitioner has to be vacated by him within a period of two months, the Bench ordered while dismissing the petition.
Read Order: Metro Fashions v. Commissioner of Customs, Mumbai (Air Cargo Export)
Chahat Varma
New Delhi, June 7, 2023: The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled that merely by sending a copy of the Order-in-Original by speed post, the department cannot be said to have discharged their liability. The Tribunal emphasized that communication of the order means that it must be served on the assessee, as the wording used in Section 128 of the Customs Act is ‘date of communication of order’.
The issue involved herein was whether the Commissioner was justified in dismissing the appeal as time barred under Section 128 of the Customs Act.
According to the appellant although the date of the adjudicating order was 28.3.2018 but the same was not received by the appellant and the certified copy of the same was received by them on 13.9.2019, that too when they approached the authorities concerned and therefore the period of limitation had to be calculated from 13.9.2019 and not from 28.3.2018.
The Tribunal held that in the instant case the appellant received copy of the Order-in Original on 13.9.2019 and the appeal before the Commissioner (A) was filed on 24.10.2019 which was well within a period of three months from the date of receipt/communication of the Order-in-Original. Therefore, the Commissioner (Appeals) had erred in rejecting the appeal on the ground of time bar.
Read Order: In Re: EMS COCOS
Chahat Varma
New Delhi, June 7, 2023: The Tamil Nadu bench of the Authority for Advance Rulings has ruled that dried coconuts (shelled or peeled), supplied by M/s EMS COCOS (applicant) attracted GST rate of 5%.
The applicant, engaged in the activities of manufacturing and trading of Coconut, Copra and Coconut shells, had sought advance ruling on whether the dried coconuts (shelled or peeled) used for human consumption shall be classified under Chapter 8, HSN 0801, on which rate of tax was ‘nil’.
The short point that arose in the instant case was whether the goods in question viz., dried coconuts (copra in trade parlance) meant for human consumption merit classification in Chapter Heading 0801 thereby attracting ‘Nil’ rate or in Chapter Heading 1203 thereby attracting 5% GST (CGST 2.5%+ SGST 2.5%).
The Authority examined Circular 163/19/2021-GST dated 6th October 2021, which clarified that the whole unbroken kernel could only be extracted from the shell when it converts to copra. The Authority observed that the applicant processes the copra by cutting it in half, sun drying it, and manually segregating it based on its round shape and cleanliness. The round and clean copra was sent for human consumption, while the irregularly shaped and dusty copra was sent to oil milling units. The Circular clearly stated that copra was classified under Heading 1203, regardless of its use. Therefore, the Authority held that the goods in question, being copra, shall be classified under Heading 1203.
Read Order: M/s. United Spirits Limited v. State of U.P. And 3 Others
Chahat Varma
New Delhi, June 7, 2023: The High Court of Allahabad has granted relief to M/s. United Spirits Limited (petitioner) by ruling that no coercive action should be taken against them until the next scheduled date of listing. The court took into consideration the fact that the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007, no longer includes Indian made foreign liquor in its schedule of items.
In the matter at hand, the learned counsel for the petitioner had submitted that under the Entry Tax Act, 2000, in the Schedule, Indian made foreign liquor, was mentioned. However, the Act was reintroduced by the Uttar Pradesh Tax on Entry of Goods into Local Areas Act, 2007, where the schedule of items no longer included Indian made foreign liquor. Therefore, the petitioner asserted that the proceedings against them are without jurisdiction.
On perusal of records, the court opined that the counsel for the petitioner had substance and the matter required consideration.
Matter is now listed on 20th of July, 2023.
Read Order:Randeep Tanwar Vs. State Of Haryana & Others
Tulip Kanth
Chandigarh, June 7, 2023: While considering an application filed under Section 151 CPC r/w Article 226 of the Constitution for issuance of directions to stop a mob of people from gathering at National Highway-44, at the behest of the respondent-Bhartiya Kisan Union, the Punjab and Haryana High Court has ordered that NH-44 be kept open for free flow and movement of the traffic.
“However, at the same time, it is made clear that the administration shall exercise utmost restraint and would use force to disperse the mob collected at the spot, only as a last resort”, the Division Bench of Justice Manjari Nehru Kaul & Justice Manisha Batra added.
It was the petitioner’s case that an affidavit of the Chief Secretary, Government of Haryana was filed pursuant to directions given by this Court, as a result of which talks were resumed with the leaders of the Union. It was agreed upon that the Union would remove the blockade, if the agricultural produce lying in the mandis was protected from the rains.
Thereafter, on an assurance given by the Deputy Commissioner, the Union had called off the road blockade on NH-44, at Shahabad, leading to normal flow and movement of traffic. However, the Union had once again threatened the administration that in case the purchase of produce of Surajmukhi crop is not initiated at the earliest they would once again resort to blockade of NH-44 and in fact a large mob had been gathering since then.
It was shown in a video recording of some News Channels that some leaders of the Union, were asking the administration to divert traffic from NH-44, as they would soon start blocking traffic.
It was submitted that the Union was not adhering to the interim directions issued by this Court on September 23, 2022.
“In view of the averments made in the application and material on record, this Court deems it appropriate to issue directions to the official respondents to ensure that NH-44, which is the life-line of the country and connects the length and breadth of India, be kept open for free flow and movement of the traffic, without any hindrance, so that the public at large, is not put to any kind of inconvenience”, the Bench held.
Ordering that this direction be given effect to forthwith, without any further delay, the Bench adjourned the matter to June 13, 2023 and also asked the Chief Secretary to submit a report qua the steps taken in pursuance of such directions alongwith the status report.
Read Order: Mandeep @ Monty v. The State of Punjab
Chahat Varma
New Delhi, June 7, 2023: The Punjab and Haryana High Court has dismissed the petition for anticipatory bail filed by Mandeep alias Monty, stating that there was prima facie evidence of his involvement in setting up fictitious firms/companies and cheating the government of crores of rupees under the pretext of GST.
The petitioner had filed a petition under Section 438 Cr.P.C. for the grant of anticipatory bail in FIR registered under Sections 420, 465, 468, 471 IPC and Section 66D of Information Technology (Amendment) Act, 2008. The instant FIR came to be registered on the basis of letter sent by State Excise Officer stating that using the fake and false documents by some persons, the bogus GST registrations were being applied.
The counsel for the petitioner contented that the petitioner had been falsely implicated in the present case. There was absolutely no evidence to suggest that the petitioner had committed any offence in question. In fact, no specific role had been assigned to him. He had been named in the disclosure statement of his co-accused which was inadmissible. As he was ready and willing to join investigation and the case was based on documentary evidence, no case for custodial interrogation was made out and the petitioner was entitled to the concession of anticipatory bail.
The counsel for the State argued that the petitioner, was one of the main accused in the case. According to the statement given by Arfaan Khan, the petitioner and his co-accused were involved in collecting identity proofs from various individuals. These proofs were then provided to Sunny Kumar, who created forged rent deeds and agreements. Another co-accused, Surinder Singh alias Raju, used these fake documents to create fake firms. During the investigation, GST records of a firm named M/s Anand Enterprises, operated by the petitioner, were collected. Two other firms, Ganesh Steel and B.D. Enterprises, were found to be involved in trade with Anand Enterprises. However, upon visiting the premises of these firms, they were found to be non-existent.
Denying the anticipatory bail, the court noted that custodial interrogation of the petitioner was necessary for recoveries of various documents and revealing the names of the real beneficiaries.
Read Order: Devyani International Limited and Ors v. The Additional Commissioner and Ors
Chahat Varma
New Delhi, June 7, 2023: The Rajasthan High Court has ruled that 'pizza' and 'sandwiches' are 'cooked foods' and are entitled to an exemption from paying Value Added Tax (VAT) in excess of 5%.
In the present case, the question pertained to classification of ‘pizza’ and ‘sandwich’ under the Rajasthan Value Added Tax Act, 2003 (RVAT Act). The common issue for consideration of the court was whether ‘pizza’ and ‘sandwich’ fall within the ambit of ‘cooked food’ to claim benefit of exemption notification dated 09.03.2010.
The single-judge bench of Justice Sameer Jain noted that in the instant case, the revenue utterly failed to adduce any evidence, technical or otherwise, to substantiate its claim that ‘pizza’ and ‘sandwich’ are not ‘cooked food’. The revenue had not brought on record any expert opinion, any scientific study or survey to prove that ‘pizza’ and ‘sandwich’ were in-fact not ‘cooked food’.
The court criticized the Additional Commissioner's conclusion that 'pizza' or 'sandwich' are not considered 'cooked food' based on factors such as preparation on gas burner, with aid of oil/ghee and spices, using exclusively fresh ingredients and then served with traditional cutlery. The court stated that it was the duty of the revenue to provide evidence to prove that these factors are essential for determining what constitutes 'cooked food.' Since the revenue failed to do so, the Assistant Commissioner wrongly relied on these factors and wrongly accepted them on their face value.
The court noted that societal eating norms have changed over time, and the reasoning that 'pizza' or 'sandwich' cannot be considered 'meals' does not hold true. The court also stated that the finding of the Tax Board was not based on sufficient evidence, and therefore, it cannot be sustained.
The court further noted that since the State Government has included ‘pizza’ and ‘sandwich’ in the broad category of ‘cooked food’ in subsequent notifications dated 14.07.2014 and 09.03.2015, therefore the sale of ‘pizza’ and ‘sandwich’ would qualify as sale of ‘cooked food’ under the notification dated 09.03.2010 as well.
Time for judiciary to introspect and see what can be done to restore people’s faith – Justice Lokur
Justice Madan B Lokur, was a Supreme Court judge from June 2012 to December 2018. He is now a judge of the non-resident panel of the Supreme Court of Fiji. He spoke to LegitQuest on January 25, 2020.
Q: You were a Supreme Court judge for more than 6 years. Do SC judges have their own ups and downs, in the sense that do you have any frustrations about cases, things not working out, the kind of issues that come to you?
A: There are no ups and downs in that sense but sometimes you do get a little upset at the pace of justice delivery. I felt that there were occasions when justice could have been delivered much faster, a case could have been decided much faster than it actually was. (When there is) resistance in that regard normally from the state, from the establishment, then you kind of feel what’s happening, what can I do about it.
Q: So you have had the feeling that the establishment is trying to interfere in the matters?
A: No, not interfering in matters but not giving the necessary importance to some cases. So if something has to be done in four weeks, for example if reply has to be filed within four weeks and they don’t file it in four weeks just because they feel that it doesn’t matter, and it’s ok if we file it within six weeks how does it make a difference. But it does make a difference.
Q: Do you think this attitude is merely a lax attitude or is it an infrastructure related problem?
A: I don’t know. Sometimes on some issues the government or the establishment takes it easy. They don’t realise the urgency. So that’s one. Sometimes there are systemic issues, for example, you may have a case that takes much longer than anticipated and therefore you can’t take up some other case. Then that necessarily has to be adjourned. So these things have to be planned very carefully.
Q: Are there any cases that you have special memories of in terms of your personal experiences while dealing with the case? It might have moved you or it may have made you feel that this case is really important though it may not be considered important by the government or may have escaped the media glare?
A: All the cases that I did with regard to social justice, cases which concern social justice and which concern the environment, I think all of them were important. They gave me some satisfaction, some frustration also, in the sense of time, but I would certainly remember all these cases.
Q: Even though you were at the Supreme Court as a jurist, were there any learning experiences for you that may have surprised you?
A: There were learning experiences, yes. And plenty of them. Every case is a learning experience because you tend to look at the same case with two different perspectives. So every case is a great learning experience. You know how society functions, how the state functions, what is going on in the minds of the people, what is it that has prompted them to come the court. There is a great learning, not only in terms of people and institutions but also in terms of law.
Q: You are a Judge of the Supreme Court of Fiji, though a Non-Resident Judge. How different is it in comparison to being a Judge in India?
A: There are some procedural distinctions. For example, there is a great reliance in Fiji on written submissions and for the oral submissions they give 45 minutes to a side. So the case is over within 1 1/2 hours maximum. That’s not the situation here in India. The number of cases in Fiji are very few. Yes, it’s a small country, with a small number of cases. Cases are very few so it’s only when they have an adequate number of cases that they will have a session and as far as I am aware they do not have more than two or three sessions in a year and the session lasts for maybe about three weeks. So it’s not that the court sits every day or that I have to shift to Fiji. When it is necessary and there are a good number of cases then they will have a session, unlike here. It is then that I am required to go to Fiji for three weeks. The other difference is that in every case that comes to the (Fiji) Supreme Court, even if special leave is not granted, you have to give a detailed judgement which is not the practice here.
Q: There is a lot of backlog in the lower courts in India which creates a problem for the justice delivery system. One reason is definitely shortage of judges. What are the other reasons as to why there is so much backlog of cases in the trial courts?
A: I think case management is absolutely necessary and unless we introduce case management and alternative methods of dispute resolution, we will not be able to solve the problem. I will give you a very recent example about the Muzaffarpur children’s home case (in Bihar) where about 34 girls were systematically raped. There were about 17 or 18 accused persons but the entire trial finished within six months. Now that was only because of the management and the efforts of the trial judge and I think that needs to be studied how he could do it. If he could do such a complex case with so many eyewitnesses and so many accused persons in a short frame of time, I don’t see why other cases cannot be decided within a specified time frame. That’s case management. The second thing is so far as other methods of disposal of cases are concerned, we have had a very good experience in trial courts in Delhi where more than one lakh cases have been disposed of through mediation. So, mediation must be encouraged at the trial level because if you can dispose so many cases you can reduce the workload. For criminal cases, you have Plea Bargaining that has been introduced in 2009 but not put into practice. We did make an attempt in the Tis Hazari Courts. It worked to some extent but after that it fell into disuse. So, plea bargaining can take care of a lot of cases. And there will be certain categories of cases which we need to look at carefully. For example, you have cases of compoundable offences, you have cases where fine is the punishment and not necessarily imprisonment, or maybe it’s imprisonment say one month or two month’s imprisonment. Do we need to actually go through a regular trial for these kind of cases? Can they not be resolved or adjudicated through Plea Bargaining? This will help the system, it will help in Prison Reforms, (prevent) overcrowding in prisons. So there are a lot of avenues available for reducing the backlog. But I think an effort has to be made to resolve all that.
Q: Do you think there are any systemic flaws in the country’s justice system, or the way trial courts work?
A: I don’t think there are any major systemic flaws. It’s just that case management has not been given importance. If case management is given importance, then whatever systematic flaws are existing, they will certainly come down.
Q; And what about technology. Do you think technology can play a role in improving the functioning of the justice delivery system?
I think technology is very important. You are aware of the e-courts project. Now I have been told by many judges and many judicial academies that the e-courts project has brought about sort of a revolution in the trial courts. There is a lot of information that is available for the litigants, judges, lawyers and researchers and if it is put to optimum use or even semi optimum use, it can make a huge difference. Today there are many judges who are using technology and particularly the benefits of the e-courts project is an adjunct to their work. Some studies on how technology can be used or the e-courts project can be used to improve the system will make a huge difference.
Q: What kind of technology would you recommend that courts should have?
A: The work that was assigned to the e-committee I think has been taken care of, if not fully, then largely to the maximum possible extent. Now having done the work you have to try and take advantage of the work that’s been done, find out all the flaws and see how you can rectify it or remove those flaws. For example, we came across a case where 94 adjournments were given in a criminal case. Now why were 94 adjournments given? Somebody needs to study that, so that information is available. And unless you process that information, things will just continue, you will just be collecting information. So as far as I am concerned, the task of collecting information is over. We now need to improve information collection and process available information and that is something I think should be done.
Q: There is a debate going on about the rights of death row convicts. CJI Justice Bobde recently objected to death row convicts filing lot of petitions, making use of every legal remedy available to them. He said the rights of the victim should be given more importance over the rights of the accused. But a lot of legal experts have said that these remedies are available to correct the anomalies, if any, in the justice delivery. Even the Centre has urged the court to adopt a more victim-centric approach. What is your opinion on that?
You see so far as procedures are concerned, when a person knows that s/he is going to die in a few days or a few months, s/he will do everything possible to live. Now you can’t tell a person who has got terminal cancer that there is no point in undergoing chemotherapy because you are going to die anyway. A person is going to fight for her/his life to the maximum extent. So if a person is on death row s/he will do everything possible to survive. You have very exceptional people like Bhagat Singh who are ready to face (the gallows) but that’s why they are exceptional. So an ordinary person will do everything possible (to survive). So if the law permits them to do all this, they will do it.
Q: Do you think law should permit this to death row convicts?
A: That is for the Parliament to decide. The law is there, the Constitution is there. Now if the Parliament chooses not to enact a law which takes into consideration the rights of the victims and the people who are on death row, what can anyone do? You can’t tell a person on death row that listen, if you don’t file a review petition within one week, I will hang you. If you do not file a curative petition within three days, then I will hang you. You also have to look at the frame of mind of a person facing death. Victims certainly, but also the convict.
Q: From the point of jurisprudence, do you think death row convicts’ rights are essential? Or can their rights be done away with?
A: I don’t know you can take away the right of a person fighting for his life but you have to strike a balance somewhere. To say that you must file a review or curative or mercy petition in one week, it’s very difficult. You tell somebody else who is not on a death row that you can file a review petition within 30 days but a person who is on death row you tell him that I will give you only one week, it doesn’t make any sense to me. In fact it should probably be the other way round.
Q: What about capital punishment as a means of punishment itself?
A: There has been a lot of debate and discussion about capital punishment but I think that world over it has now been accepted, more or less, that death penalty has not served the purpose for which it was intended. So, there are very few countries that are executing people. The United States, Saudi Arabia, China, Pakistan also, but it hasn’t brought down the crime rate. And India has been very conservative in imposing the death penalty. I think the last 3-4 executions have happened for the persons who were terrorists. And apart from that there was one from Calcutta who was hanged for rape and murder. But the fact that he was hanged for rape and murder has not deterred people (from committing rape and murder). So the accepted view is that death penalty has not served the purpose. We certainly need to rethink the continuance of capital punishment. On the other hand, if capital punishment is abolished, there might be fake encounter killings or extra judicial killings.
Q: These days there is the psyche among people of ‘instant justice’, like we saw in the case of the Hyderabad vet who was raped and murdered. The four accused in the case were killed in an encounter and the public at large and even politicians hailed it as justice being delivery. Do you think this ‘lynch mob mentality’ reflects people’s lack of faith in the justice system?
A: I think in this particular case about what happened in Telangana, investigation was still going on. About what actually happened there, an enquiry is going on. So no definite conclusions have come out. According to the police these people tried to snatch weapons so they had to be shot. Now it is very difficult to believe, as far as I am concerned, that 10 armed policeman could not overpower four unarmed accused persons. This is very difficult to believe. And assuming one of them happened to have snatched a (cop’s) weapon, maybe he could have been incapacitated but why the other three? So there are a lot of questions that are unanswered. So far as the celebrations are concerned, the people who are celebrating, do they know for certain that they (those killed in the encounter) were the ones who did the crime? How can they be so sure about it? They were not eye witnesses. Even witnesses sometimes make mistakes. This is really not a cause for celebration. Certainly not.
Q: It seems some people are losing their faith in the country’s justice delivery system. How to repose people’s faith in the legal process?
A: You see we again come back to case management and speedy justice. Suppose the Nirbhaya case would have been decided within two or three years, would this (Telangana) incident have happened? One can’t say. The attack on Parliament case was decided in two or three years but that has not wiped out terrorism. There are a lot of factors that go into all this, so there is a need to find ways of improving justice delivery so that you don’t have any extremes – where a case takes 10 years or another extreme where there is instant justice. There has to be something in between, some balance has to be drawn. Now you have that case where Phoolan Devi was gangraped followed by the Behmai massacre. Now this is a case of 1981, it has been 40 years and the trial court has still not delivered a judgement. It’s due any day now, (but) whose fault is that. You have another case in Maharashtra that has been transferred to National Investigating Agency two years after the incident, the Bhima-Koregaon case. Investigation is supposedly not complete after two years also. Whose fault is that? So you have to look at the entire system in a holistic manner. There are many players – the investigation agency is one player, the prosecution is one player, the defence is one player, the justice delivery system is one player. So unless all of them are in a position to coordinate… you cannot blame only the justice delivery system. If the Telangana police was so sure that the persons they have caught are guilty, why did they not file the charge sheet immediately? If they were so sure the charge sheet should have been filed within one day. Why didn’t they do it?
Q: At the trial level, there are many instances of flaws in evidence collection. Do you think the police or whoever the investigators are, do they lack training?
A: Yes they do! The police lacks training. I think there is a recent report that has come out last week which says very few people (in the police) have been trained (to collect evidence).
Q: You think giving proper training to police to prepare a case will make a difference?
A: Yes, it will make a difference.
Q: You have a keen interest in juvenile justice. Unfortunately, a lot of heinous crimes are committed by juveniles. How can we correct that?
A: You see it depends upon what perspective we are looking at. Now these heinous crimes are committed by juveniles. Heinous crimes are committed by adults also, so why pick upon juveniles alone and say something should be done because juveniles are committing heinous crimes. Why is it that people are not saying that something should be done when adults are committing heinous crimes? That’s one perspective. There are a lot of heinous crimes that are committed against juveniles. The number of crimes committed against juveniles or children are much more than the crimes committed by juveniles. How come nobody is talking about that? And the people committing heinous crimes against children are adults. So is it okay to say that the State has imposed death penalty for an offence against the child? So that’s good enough, nothing more needs to be done? I don’t think that’s a valid answer. The establishment must keep in mind the fact that the number of heinous crimes against children are much more than those committed by juveniles. We must shift focus.
Q: Coming to NRC and CAA. Protests have been happening since December last year, the SC is waiting for the Centre’s reply, the Delhi HC has refused to directly intervene. Neither the protesters nor the government is budging. How do we achieve a breakthrough?
A: It is for the government to decide what they want to do. If the government says it is not going to budge, and the people say they are not going to budge, the stalemate could continue forever.
Q: Do you think the CAA and the NRC will have an impact on civil liberties, personal liberties and people’s rights?
A: Yes, and that is one of the reasons why there is protest all over the country. And people have realised that it is going to happen, it is going to have an impact on their lives, on their rights and that’s why they are protesting. So the answer to your question is yes.
Q: Across the world and in India, we are seeing an erosion of the value system upholding rights and liberties. How important is it for the healthy functioning of a country that social justice, people’s liberties, people’s rights are maintained?
A: I think social justice issues, fundamental rights are of prime importance in our country, in any democracy, and the preamble to our Constitution makes it absolutely clear and the judgement of the Supreme Court in Kesavananda Bharati and many other subsequent judgments also make it clear that you cannot change the basic structure of the Constitution. If you cannot do that then obviously you cannot take away some basic democratic rights like freedom of assembly, freedom of movement, you cannot take them away. So if you have to live in a democracy, we have to accept the fact that these rights cannot be taken away. Otherwise there are many countries where there is no democracy. I don’t know whether those people are happy or not happy.
Q: What will happen if in a democracy these rights are controlled by hook or by crook?
A: It depends upon how much they are controlled. If the control is excessive then that is wrong. The Constitution says there must be a reasonable restriction. So reasonable restriction by law is very important.
Q: The way in which the sexual harassment case against Justice Gogoi was handled was pretty controversial. The woman has now been reinstated in the Supreme Court as a staffer. Does this action of the Supreme Court sort of vindicate her?
A: I find this very confusing you know. There is an old joke among lawyers: Lawyer for the petitioner argued before the judge and the judge said you are right; then the lawyer for the respondent argued before the judge and the judge said you’re right; then a third person sitting over there says how can both of them be right and the judge says you’re also right. So this is what has happened in this case. It was found (by the SC committee) that what she said had no substance. And therefore, she was wrong and the accused was right. Now she has been reinstated with back wages and all. I don’t know, I find it very confusing.
Q: Do you think the retirement age of Supreme Court Judges should be raised to 70 years and there should be a fixed tenure?
A: I haven’t thought about it as yet. There are some advantages, there are some disadvantages. (When) You have extended age or life tenure as in the United States, and the Supreme Court has a particular point of view, it will continue for a long time. So in the United States you have liberal judges and conservative judges, so if the number of conservative judges is high then the court will always be conservative. If the number of liberal judges is high, the court will always be liberal. There is this disadvantage but there is also an advantage that if it’s a liberal court and if it is a liberal democracy then it will work for the benefit of the people. But I have not given any serious thought onthis.
Q: Is there any other thing you would like to say?
A: I think the time has come for the judiciary to sit down, introspect and see what can be done, because people have faith in the judiciary. A lot of that faith has been eroded in the last couple of years. So one has to restore that faith and then increase that faith. I think the judiciary definitely needs to introspect.
‘A major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013.’- Aakash Parihar
Aakash Parihar is Partner at Triumvir Law, a firm specializing in M&A, PE/VC, startup advisory, international commercial arbitration, and corporate disputes. He is an alumnus of the National Law School of India University, Bangalore.
How did you come across law as a career? Tell us about what made you decide law as an option.
Growing up in a small town in Madhya Pradesh, wedid not have many options.There you either study to become a doctor or an engineer. As the sheep follows the herd, I too jumped into 11th grade with PCM (Physics, Chemistry and Mathematics).However, shortly after, I came across the Common Law Admission Test (CLAT) and the prospect of law as a career. Being a law aspirant without any background of legal field, I hardly knew anything about the legal profession leave alone the niche areas of corporate lawor dispute resolution. Thereafter, I interacted with students from various law schools in India to understand law as a career and I opted to sit for CLAT. Fortunately, my hard work paid off and I made it to the hallowed National Law School of India University, Bangalore (NSLIU). Joining NLSIU and moving to Bangalorewas an overwhelming experience. However, after a few months, I settled in and became accustomed to the rigorous academic curriculum. Needless to mention that it was an absolute pleasure to study with and from someof the brightest minds in legal academia. NLSIU, Bangalore broadened my perspective about law and provided me with a new set of lenses to comprehend the world around me. Through this newly acquired perspective and a great amount of hard work (which is of course irreplaceable), I was able to procure a job in my fourth year at law school and thus began my journey.
As a lawyer carving a niche for himself, tell us about your professional journey so far. What are the challenges that new lawyers face while starting out in the legal field?
I started my professional journey as an Associate at Samvad Partners, Bangalore, where I primarily worked in the corporate team. Prior to Samvad Partners, through my internship, I had developed an interest towards corporate law,especially the PE/VC and M&A practice area. In the initial years as an associate at Samvad Partners and later at AZB & Partners, Mumbai, I had the opportunity to work on various aspects of corporate law, i.e., from PE/VC and M&A with respect to listed as well as unlisted companies. My work experience at these firms equipped and provided me the know-how to deal with cutting edge transactional lawyering. At this point, it is important to mention that I always had aspirations to join and develop a boutique firm. While I was working at AZB, sometime around March 2019, I got a call from Anubhab, Founder of Triumvir Law, who told me about the great work Triumvir Law was doing in the start-up and emerging companies’ ecosystem in Bangalore. The ambition of the firm aligned with mine,so I took a leap of faith to move to Bangalore to join Triumvir Law.
Anyone who is a first-generation lawyer in the legal industry will agree with my statement that it is never easy to build a firm, that too so early in your career. However, that is precisely the notion that Triumvir Law wanted to disrupt. To provide quality corporate and dispute resolution advisory to clients across India and abroad at an affordable price point.
Once you start your professional journey, you need to apply everything that you learnt in law schoolwith a practical perspective. Therefore, in my opinion, in addition to learning the practical aspects of law, a young lawyer needs to be accustomed with various practices of law before choosing one specific field to practice.
India has been doing reallywell in the field of M&A and PE/VC. Since you specialize in M&A and PE/VC dealmaking, what according to you has been working well for the country in this sphere? What does the future look like?
India is a developing economy, andM&A and PE/VC transactions form the backbone of the same. Since liberalization, there has been an influx of foreign investment in India, and we have seen an exponential rise in PC/VA and M&A deals. Indian investment market growth especially M&A and PE/VC aspects can be attributed to the advent of startup culture in India. The increase in M&A and PE/VC deals require corporate lawyersto handle the legal aspects of these deals.
As a corporate lawyer working in M&A and PE/VC space, my work ranges from drafting term-sheets to the transaction documents (SPA, SSA, SHA, BTA, etc.). TheM&A and PE/VC deal space experienced a slump during the first few months of the pandemic, but since June 2021, there has been a significant growth in M&A and PE/VC deal space in India. The growth and consistence of the M&A and PE/VC deal space in India can be attributed to several factors such as foreign investment, uncapped demands in the Indian market and exceptional performance of Indian startups.
During the pandemic many businesses were shut down but surprisingly many new businesses started, which adapted to the challenges imposed by the pandemic. Since we are in the recovery mode, I think the M&A and PE/VC deal space will reach bigger heights in the comingyears. We as a firm look forward to being part of this recovery mode by being part of the more M&A and PE/VC deals in future.
You also advice start-ups. What are the legal issues or challenges that the start-ups usually face specifically in India? Do these issues/challenges have long-term consequences?
We do a considerable amount of work with startupswhich range from day-to-day legal advisory to transaction documentation during a funding round. In India, we have noticed that a sizeable amount of clientele approach counsels only when there is a default or breach, more often than not in a state of panic. The same principle applies to startups in India, they normally approach us at a stage when they are about to receive investment or are undergoing due diligence. At that point of time, we need to understand their legal issues as well as manage the demands of the investor’s legal team. The majornon-compliances by startups usually involve not maintaining proper agreements, delaying regulatory filings and secretarial compliances, and not focusing on proper corporate governance.
Another major issue for startups, especially during fund raising, is their compliance with extant RBI foreign exchange regulations, pricing guidelines, and the Companies Act 2013. Keeping up with these requirements can be time-consuming for even seasoned lawyers, and we can only imagine how difficult it would be for startups. Startups spend their initial years focusing on fund-raising, marketing, minimum viable products, and scaling their businesses. Legal advice does not usually factor in as a necessity. Our firm aims to help startups even before they get off the ground, and through their initial years of growth. We wanted to be the ones bringing in that change in the legal sector, and we hope to help many more such startups in the future.
In your opinion, are there any specific India-related problems that corporate/ commercial firms face as far as the company laws are concerned? Is there scope for improvement on this front?
The Indian legal system which corporate/commercial firms deal with is a living breathing organism, evolving each year. Due to this evolving nature, we lawyers are always on our toes.From a minor amendment to the Companies Act to the overhaul of the foreign exchange regime by the Reserve Bank of India, each of these changes affect the compliance and regulatory regime of corporates. For instance, when India changed the investment route for countries sharing land border with India,whereby any country sharing land border with India including Hong Kong cannot invest in India without approval of the RBI in consultation with the central government,it impacted a lot of ongoing transactions and we as lawyers had to be the first ones to inform our clients about such a change in the country’s foreign investment policy. In my opinion, there is huge scope of improvement in legal regime in India, I think a stable regulatory and tax regime is the need for the hour so far as the Indian system is concerned. The biggest example of such a market with stable regulatory and tax regime is Singapore, and we must work towards emulating the same.
Your boutique law firm has offices in three different cities — Delhi NCR, Mumbai and Bangalore. Have the Covid-induced restrictions such as WFH affected your firm’s operations? How has your firm adapted to the professional challenges imposed by the pandemic-related lifestyle changes?
We have offices in New Delhi NCR and Mumbai, and our main office is in Bangalore. Before the pandemic, our work schedule involved a fair bit of travelling across these cities. But post the lockdowns we shifted to a hybrid model, and unless absolutely necessary, we usually work from home.
In relation to the professional challenges during the pandemic, I think it was a difficult time for most young professionals. We do acknowledge the fact that our firm survived the pandemic. Our work as lawyers/ law firms also involves client outreach and getting new clients, which was difficult during the lockdowns. We expanded our client outreach through digital means and by conducting webinars, including one with King’s College London on International Treaty Arbitration. Further, we also focused on client outreach and knowledge management during the pandemic to educate and create legal awareness among our clients.
‘It’s a myth that good legal advice comes at prohibitive costs. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.’ – Archana Balasubramanian
Archana Balasubramanian is the founding partner of Agama Law Associates, a Mumbai-based corporate law firm which she started in 2014. She specialises in general corporate commercial transaction and advisory as well as deep sectoral expertise across manufacturing, logistics, media, pharmaceuticals, financial services, shipping, real estate, technology, engineering, infrastructure and health.
August 13, 2021:
Lawyers see companies ill-prepared for conflict, often, in India. When large corporates take a remedial instead of mitigative approach to legal issues – an approach utterly incoherent to both their size and the compliance ecosystem in their sector – it is there where the concept of costs on legal becomes problematic. Pre-dispute management strategy is much more rationalized on the business’ pocket than the costs of going in the red on conflict and compliances.
Corporates often focus on business and let go of backend maintenance of paperwork, raising issues as and when they arise and resolving conflicts / client queries in a manner that will promote dispute avoidance.
Corporate risk and compliance management is yet another elephant in India, which in addition to commercial disputes can be a drain on a company’s resources. It can be clubbed under four major heads – labour, industrial, financial and corporate laws. There are around 20 Central Acts and then specific state-laws by which corporates are governed under these four categories.
Risk and compliance management is also significantly dependent on the sector, size, scale and nature of the business and the activities being carried out.
The woes of a large number of promoters from the ecommerce ecosystem are to do with streamlining systems to navigate legal. India has certain heavily regulated sectors and, like I mentioned earlier, an intricate web of corporate risk and compliance legislation that can result in prohibitive costs in the remedial phase. To tackle the web in the preventive or mitigative phase, start-ups end up lacking the arsenal due to sheer intimidation from legal. Promoters face sectoral risks in sectors which are heavily regulated, risks of heavy penalties and fines under company law or foreign exchange laws, if fund raise is not done in a compliant manner.
It is a myth that good legal advice comes at prohibitive costs. Promoters are quick to sign on the dotted line and approach lawyers with a tick the box approach. A lot of heartburn can be avoided if documents are entered into with proper legal advice and with due negotiations.
Investment contracts, large celebrity endorsement contracts and CXO contracts are some key areas where legal advice should be obtained. Online contracts is also emerging as an important area of concern.
When we talk of scope, arbitration is pretty much a default mechanism at this stage for adjudicating commercial disputes in India, especially given the fixation of timelines for closure of arbitration proceedings in India. The autonomy it allows the parties in dispute to pick a neutral and flexible forum for resolution is substantial. Lower courts being what they are in India, arbitration emerges as the only viable mode of dispute resolution in the Indian commercial context.
The arbitrability of disputes has evolved significantly in the last 10 years. The courts are essentially pro-arbitration when it comes to judging the arbitrability of subject matter and sending matters to arbitration quickly.
The Supreme Court’s ruling in the Vidya Drolia case has significantly clarified the position in respect of tenancy disputes, frauds and consumer disputes. It reflects upon the progressive approach of the court and aims to enable an efficient, autonomous and effective arbitration environment in India.
Law firms stand for ensuring that the law works for business and not against it. Whatever the scope of our mandate, the bottom line is to ensure a risk-free, conflict-free, compliant and prepared enterprise for our client, in a manner that does not intimidate the client or bog them down, regardless of the intricacy of the legal and regulatory web it takes to navigate to get to that end result. Lawyers need to dissect the business of law from the work.
This really involves meticulous, detail-oriented, sheer hard work on the facts, figures, dates and all other countless coordinates of each mandate, repetitively and even to a, so-called, “dull” routine rhythm – with consistent single-mindedness and unflinching resolve.
As a firm, multiply that effort into volumes, most of it against-the-clock given the compliance heavy ecosystem often riddled with uncertainties in a number of jurisdictions. So the same meticulous streamlining of mandate deliverables has to be extrapolated by the management of the firm to the junior most staff.
Further, the process of streamlining itself has to be more dynamic than ever now given the pace at which the new economy, tech-ecosystem, business climate as well as business development processes turn a new leaf.
Finally, but above all, we need to find a way to feel happy, positive and energized together as a team while chasing all of the aforesaid dreams. The competitive timelines and volumes at which a law firm works, this too is a real challenge. But we are happy to face it and evolve as we grow.
We always as a firm operated on the work from anywhere principle. We believed in it and inculcated this through document management processes to the last trainee. This helped us shut shop one day and continue from wherever we are operating.
The team has been regularly meeting online (at least once a day). We have been able to channel the time spent in travelling to and attending meetings in developing our internal knowledge banks further, streamline our processes, and work on integrating various tech to make the practice more cost-effective for our clients.
Right to Disclosure – Importance & Challenges in Criminal Justice System – By Manu Sharma
Personal liberty is the most cherished value of human life which thrives on the anvil of Articles 14 and 21 of the Constitution of India (“the Constitution”). Once a person is named an accused, he faces the spectre of deprivation of his personal liberty and criminal trial. This threat is balanced by Constitutional safeguards which mandate adherence to the rule of law by the investigating agencies as well as the Court. Thus, any procedure which seeks to impinge on personal liberty must also be fair and reasonable. The right to life and personal liberty enshrined under article 21 of the Constitution, expanded in scope post Maneka Gandhi[1], yields the right to a fair trial and fair investigation. Fairness demands disclosure of anything relevant that may be of benefit to an accused. Further, the all-pervading principles of natural justice envisage the right to a fair hearing, which entails the right to a full defence. The right to a fair defence stems from full disclosure. Therefore, the right of an accused to disclosure emanates from this Constitutional philosophy embellished by the principles of natural justice and is codified under the Code of Criminal Procedure, 1973 (“Code”).
Under English jurisprudence, the duty of disclosure is delineated in the Criminal Procedure and Investigations Act, 1996, which provides that the prosecutor must disclose to the accused any prosecution material which has not previously been disclosed to the accused and which might reasonably be considered capable of undermining the case for the prosecution against the accused or of assisting the case for the accused, except if such disclosure undermines public interest.[2] Fairness ordinarily requires that any material held by the prosecution which weakens its case or strengthens that of the defendant, if not relied on as part of its formal case against the defendant, should be disclosed to the defence.[3] The duty of disclosure under common law contemplates disclosure of anything which might assist the defence[4], even if such material was not to be used as evidence[5]. Under Indian criminal jurisprudence, which has borrowed liberally from common law, the duty of disclosure is embodied in sections 170(2), 173, 207 and 208 of the Code, which entail the forwarding of material to the Court and supply of copies thereof to the accused, subject to statutory exceptions.
II. Challenges in Enforcement
The right to disclosure is a salient feature of criminal justice, but its provenance and significance appear to be lost on the Indian criminal justice system. The woes of investigative bias and prosecutorial misconduct threaten to render this right otiose. That is not to say that the right of an accused to disclosure is indefeasible, as certain exceptions are cast in the Code itself, chief among them being public interest immunity under section 173(6). However, it is the mischief of the concept of ‘relied upon’ emerging from section 173(5) of the Code, which is wreaking havoc on the right to disclosure and is the central focus of this article. The rampant misuse of the words “on which the prosecution proposes to rely’ appearing in section 173(5) of the Code, to suppress material favourable to the accused or unfavourable to the prosecution in the garb of ‘un-relied documents’ has clogged criminal courts with avoidable litigation at the very nascent stage of supply of copies of documents under section 207 of the Code. The erosion of the right of an accused to disclosure through such subterfuge is exacerbated by the limited and restrictive validation of this right by criminal Courts. The dominant issues highlighted in the article, which stifle the right to disclosure are; tainted investigation, unscrupulous withholding of material beneficial to the accused by the prosecution, narrow interpretation by Courts of section 207 of the Code, and denial of the right to an accused to bring material on record in the pre-charge stage.
A. Tainted Investigation
Fair investigation is concomitant to the preservation of the right to fair disclosure and fair trial. It envisages collection of all material, irrespective of its inculpatory or exculpatory nature. However, investigation is often vitiated by the tendencies of overzealous investigating officers who detract from the ultimate objective of unearthing truth, with the aim of establishing guilt. Such proclivities result in collecting only incriminating material during investigation or ignoring the material favourable to the accused. This leads to suppression of material and scuttles the right of the accused to disclosure at the very inception. A tainted investigation leads to miscarriage of justice. Fortunately, the Courts are not bereft of power to supervise investigation and ensure that the right of an accused to fair disclosure remains protected. The Magistrate is conferred with wide amplitude of powers under section 156(3) of the Code to monitor investigation, and inheres all such powers which are incidental or implied to ensure proper investigation. This power can be exercised suo moto by the Magistrate at all stages of a criminal proceeding prior to the commencement of trial, so that an innocent person is not wrongly arraigned or a prima facie guilty person is not left out.[6]
B. Suppression of Material
Indian courts commonly witness that the prosecution is partisan while conducting the trial and is invariably driven by the lust for concluding in conviction. Such predisposition impels the prosecution to take advantage by selectively picking up words from the Code and excluding material favouring the accused or negating the prosecution case, with the aid of the concept of ‘relied upon’ within section 173(5) of the Code. However, the power of the prosecution to withhold material is not unbridled as the Constitutional mandate and statutory rights given to an accused place an implied obligation on the prosecution to make fair disclosure.[7] If the prosecution withholds vital evidence from the Court, it is liable to adverse inference flowing from section 114 of the Indian Evidence Act, 1872 (“Evidence Act). The prosecutor is expected to be guided by the Bar Council of India Rules which prescribe that an advocate appearing for the prosecution of a criminal trial shall so conduct the prosecution that it does not lead to conviction of the innocent. The suppression of material capable of establishment of the innocence of the accused shall be scrupulously avoided. [8]
C. Scope of S. 207
The scope of disclosure under section 207 has been the subject of fierce challenge in Indian Courts on account of the prosecution selectively supplying documents under the garb of ‘relied upon’ documents, to the prejudice of the defence of an accused. The earlier judicial trend had been to limit the supply of documents under section 207 of the Code to only those documents which were proposed to be relied upon by the prosecution. This view acquiesced the exclusion of documents which were seized during investigation, but not filed before the Court along with the charge sheet, rendering the right to disclosure a farce. This restrictive sweep fails to reconcile with the objective of a fair trial viz. discovery of truth. The scheme of the code discloses that Courts have been vested with extensive powers inter alia under sections 91, 156(3) and 311 to elicit the truth. Towards the same end, Courts are also empowered under Section 165 of the Evidence Act. Thus, the principle of harmonious construction warrants a more purposive interpretation of section 207 of the code. The Hon’ble Supreme Court expounded on the scope of Section 207 of the Code in the case of Manu Sharma[9] and held that documents submitted to the Magistrate under section 173(5) would deem to include the documents which have to be sent to the magistrate during the course of investigation under section 170(2). A document which has been obtained bona fide and has a bearing on the case of the prosecution should be disclosed to the accused and furnished to him to enable him to prepare a fair defence, particularly when non production or disclosure would affect administration of justice or prejudice the defence of the accused. It is not for the prosecution or the court to comprehend the prejudice that is likely to be caused to the accused. The perception of prejudice is for the accused to develop on reasonable basis.[10] Manu Sharma’s [supra] case has been relied upon in Sasikala [11] wherein it was held that the Court must concede a right to the accused to have access to the documents which were forwarded to the Court but not exhibited by the prosecution as they favoured the accused. These judgments seem more in consonance with the true spirit of fair disclosure and fair trial. However, despite such clear statements of law, courts are grappling with the judicial propensity of deviating from this expansive interpretation and regressing to the concept of relied upon. The same is evident from a recent pronouncement of the Delhi High Court where the ratios laid down in Manu Sharma & Sasikala [supra] were not followed by erroneously distinguishing from those cases.[12] Such “per incuriam” aberrations by High Court not only undermine the supremacy of the Apex Court, but also adversely impact the functioning of the district courts over which they exercise supervisory jurisdiction. Hopefully in future Judges shall be more circumspect and strictly follow the law declared by the Apex Court.
D. Pre-Charge Embargo
Another obstacle encountered in the enforcement of the right to disclosure is the earlier judicial approach to stave off production or consideration of any additional documents not filed alongwith the charge sheet at the pre-charge stage, as the right to file such material was available to the accused only upon the commencement of trial after framing of charge.[13] At the pre-charge stage, Court could not direct the prosecution to furnish copies of other documents[14] It was for the accused to do so during trial or at the time of entering his defence. However, the evolution of law has seen that at the stage of framing charge, Courts can rely upon the material which has been withheld by the prosecutor, even if such material is not part of the charge sheet, but is of such sterling quality demolishing the case of the prosecution.[15] Courts are not handicapped to consider relevant material at the stage of framing charge, which is not relied upon by the prosecution. It is no argument that the accused can ask for the documents withheld at the time of entering his defence.[16] The framing of charge is a serious matter in a criminal trial as it ordains an accused to face a long and arduous trial affecting his liberty. Therefore, the Court must have all relevant material before the stage of framing charge to ascertain if grave suspicion is made out or not. Full disclosure at the stage of section 207 of the code, which immediately precedes discharging or charging an accused, enables an accused to seek a discharge, if the documents, including those not relied upon by the prosecution, create an equally possible view in favour of the accused.[17] On the other hand, delaying the reception of documents postpones the vindication of the accused in an unworthy trial and causes injustice by subjecting him to the trauma of trial. There is no gainsaying that justice delayed is justice denied, therefore, such an approach ought not to receive judicial consent. A timely discharge also travels a long way in saving precious time of the judiciary, which is already overburdened by the burgeoning pendency of cases. Thus, delayed or piecemeal disclosure not only prejudices the defence of the accused, but also protracts the trial and occasions travesty of justice.
III. Duties of the stakeholders in criminal justice system
The foregoing analysis reveals that participation of the investigating agency, the prosecution and the Court is inextricably linked to the enforcement of the right to disclosure. The duties cast on these three stakeholders in the criminal justice system, are critical to the protection of this right. It is incumbent upon the investigating agencies to investigate cases fairly and to place on record all the material irrespective of its implication on the case of prosecution case. Investigation must be carried out with equal alacrity and fairness irrespective of status of accused or complainant.[18] An onerous duty is cast on the prosecution as an independent statutory officer, to conduct the trial with the objective of determination of truth and to ensure that material favourable to the defence is supplied to the accused. Ultimately, it is the overarching duty of the Court to ensure a fair trial towards the administration of justice for all parties. The principles of fair trial require the Court to strike a delicate balance between competing interests in a system of adversarial advocacy. Therefore, the court ought to exercise its power under section 156(3) of the Code to monitor investigation and ensure that all material, including that which enures to the benefit of the accused, is brought on record. Even at the stage of supply of copies of police report and documents under section 207 of the Code, it is the duty of the Court to give effect to the law laid down by the Hon’ble Supreme Court in Manu Sharma (supra) and Sasikala (supra), and ensure that all such material is supplied to the accused irrespective of whether it is “relied upon” by the prosecution or not.
IV. Alternate Remedy
The conundrum of supply of copies under section 207 of the code abounds criminal trials. Fairness is an evolving concept. There is no doubt that disclosure of all material which goes to establish the innocence of an accused is the sine qua non of a fair trial.[19] Effort is evidently underway to expand the concept in alignment with English jurisprudence. In the meanwhile, does the right of an accused to disclosure have another limb to stand on? Section 91 of the Code comes to the rescue of an accused, which confers wide discretionary powers on the Court, independent of section 173 of the Code, to summon the production of things or documents, relevant for the just adjudication of the case. In case the Court is of the opinion that the prosecution has withheld vital, relevant and admissible evidence from the Court, it can legitimately use its power under section 91 of the Code to discover the truth and to do complete justice to the accused.[20]
V. Conclusion
A society’s progress and advancement are judged on many parameters, an important one among them being the manner in which it administers criminal justice. Conversely, the ironic sacrilege of the core virtues of criminal jurisprudence in the temples of justice evinces social decadence. The Indian legislature of the twenty first century has given birth to several draconian statutes which place iron shackles on personal liberty, evoking widespread fear of police abuses and malicious prosecution. These statutes not only entail presumptions which reverse the burden of proof, but also include impediments to the grant of bail. Thus, a very heavy burden to dislodge the prosecution case is imposed on the accused, rendering the right to disclosure of paramount importance. It is the duty of the Court to keep vigil over this Constitutional and statutory right conferred on an accused by repudiating any procedure which prejudices his defence. Notable advancement has been made by the Apex Court in interpreting section 207 of the Code in conformity with the Constitutional mandate, including the right to disclosure. Strict adherence to the afore-noted principles will go a long way in ensuring real and substantial justice. Any departure will not only lead to judicial anarchy, but also further diminish the already dwindling faith of the public in the justice delivery system.
**
Advocate Manu Sharma has been practising at the bar for over sixteen years. He specialises in Criminal Defence. Some of the high profile cases he has represented are – the 2G scam case for former Union minister A Raja; the Religare/Fortis case for Malvinder Singh; Peter Mukerjee in the P Chidambaram/ INX Media case; Devas Multimedia in ISRO corruption act case; Om Prakash Chautala in PMLA case; Aditya Talwar in the aviation scam case; Dilip Ray, former Coal Minister in one of the coal scam cases; Suhaib Illyasi case.
**
Disclaimer: The views or opinions expressed are solely of the author.
[1] Maneka Gandhi and Another v. Union of India, (1978) 1 SCC 248
[2] S. 3 of the Criminal Procedure and Investigations Act, 1996
[3] R v. H and R v. C, 2004 (1) ALL ER 1269
[4] R v. Ward (Judith), (1993) 1 WLR 619 : (1993) 2 ALL ER 577 (CA)
[5] R v. Preston, (1994) 2 AC 130 : (1993) 3 WLR 891 : (1993) 4 ALL ER 638 (HL), R v. Stinchcome,
(1991), 68 C.C.C. (3d) 1 (S.C.C.)
[6] Vinubhai Haribhai Malaviya and Others v. State of Gujarat and Another, 2019 SCC Online SC 1346
[7] Sidhartha Vashishth alias Manu Sharma v. State (NCT of Delhi), (2010) 6 SCC 1
[8] R. 16, part II, Ch. VI of the Bar Council of India Rules
[9] Manu Sharma, (2010) 6 SCC 1
[10] V.K. Sasikala v. State, (2012) 9 SCC 771 : AIR 2013 SC 613
[11] Sasikala, (2012) 9 SCC 771 : AIR 2013 SC 613
[12] Sala Gupta and Another v. Directorate of Enforcement, (2019) 262 DLT 661
[13] State of Orissa v. Debendra Nath Padhi¸(2005) 1 SCC 568
[14] Dharambir v. Central Bureau of Investigation, ILR (2008) 2 Del 842 : (2008) 148 DLT 289
[15] Nitya Dharmananda alias K. Lenin and Another v. Gopal Sheelum Reddy, (2018) 2 SCC 93
[16] Neelesh Jain v. State of Rajasthan, 2006 Cri LJ 2151
[17] Dilwar Balu Kurane v. State of Maharashtra, (2002) 2 SCC 135, Yogesh alias Sachin Jagdish Joshi v. State of Maharashtra, (2008) 10 SCC 394
[18] Karan Singh v. State of Haryana, (2013) 12 SCC 529
[19] Kanwar Jagat Singh v. Directorate of Enforcement & Anr, (2007) 142 DLT 49
[20] Neelesh, 2006 Cri LJ 2151
Disclaimer: The views or opinions expressed are solely of the author.
Validity & Existence of an Arbitration Clause in an Unstamped Agreement
By Kunal Kumar
January 8, 2024
In a recent ruling, a seven-judge bench of the Supreme Court of India in its judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, overruled the constitutional bench decision of the Supreme Court of India in N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. and has settled the issue concerning the validity and existence of an arbitration clause in an unstamped agreement. (‘N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III’)
Background to N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
One of the first instances concerning the issue of the validity of an unstamped agreement arose in the case of SMS Tea Estate Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. In this case, the Hon’ble Apex Court held that if an instrument/document lacks proper stamping, the exercising Court must preclude itself from acting upon it, including the arbitration clause. It further emphasized that it is imperative for the Court to impound such documents/instruments and must accordingly adhere to the prescribed procedure outlined in the Indian Stamp Act 1899.
With the introduction of the 2015 Amendment, Section 11(6A) was inserted in the Arbitration & Conciliation Act 1996 (A&C Act) which stated whilst appointing an arbitrator under the A&C Act, the Court must confine itself to the examination of the existence of an arbitration agreement.
In the case of M/s Duro Felguera S.A. v. M/s Gangavaram Port Limited, the Supreme Court of India made a noteworthy observation, affirming that the legislative intent behind the 2015 Amendment to the A&C Act was necessitated to minimise the Court's involvement during the stage of appointing an arbitrator and that the purpose embodied in Section 11(6A) of A&C Act, deserves due acknowledgement & respect.
In the case of Garware Wall Ropes Ltd. v. Cosatal Marine Constructions & Engineering Ltd., a divisional bench of the Apex Court reaffirmed its previous decision held in SMS Tea Estates (supra) and concluded that the inclusion of an arbitration clause in a contract assumes significance, emphasizing that the agreement transforms into a contract only when it holds legal enforceability. The Apex Court observed that an agreement fails to attain the status of a contract and would not be legally enforceable unless it bears the requisite stamp as mandated under the Indian Stamp Act 1899. Accordingly, the Court concluded that Section 11(6A) read in conjunction with Section 7(2) of the A&C Act and Section 2(h) of the Indian Contract Act 1872, clarified that the existence of an arbitration clause within an agreement is contingent on its legal enforceability and that the 2015 Amendment of the A&C Act to Section 11(6A) had not altered the principles laid out in SMS Tea Estates (supra).
Brief Factual Matrix – N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd.
Indo Unique Flame Ltd. (‘Indo Unique’) was awarded a contract for a coal beneficiation/washing project with Karnataka Power Corporation Ltd. (‘KPCL’). In the course of the project, Indo Unique entered into a subcontract in the form of a Work Order with N.N. Global Mercantile Pvt. Ltd. (‘N.N. Global’) for coal transportation, coal handling and loading. Subsequently, certain disputes arose with KPCL, leading to KPCL invoking Bank Guarantees of Indo Unique under the main contract, after which Indo Unique invoked the Bank Guarantee of N. N. Global as supplied under the Work Order.
Top of FormS
Subsequently, N.N. Global initiated legal proceedings against the cashing of the Bank Guarantee in a Commercial Court. In response thereto, Indo Unique moved an application under Section 8 of the A&C Act, requesting that the Parties to the dispute be referred for arbitration. The Commercial Court dismissed the Section 8 application, citing the unstamped status of the Work Order as one of the grounds. Dissatisfied with the Commercial Court's decision on 18 January 2018, Indo Unique filed a Writ Petition before the High Court of Bombay seeking that the Order passed by the Commercial Court be quashed or set aside. The Hon’ble Bombay High Court on 30 September 2020 allowed the Writ Petition filed by Indo Unique, aggrieved by which, N.N. Global filed a Special Leave Petition before the Supreme Court of India.
N. N. Global Mercantile Pvt. Ltd. v. Indo Unique Flame Ltd. – I
The issue in the matter of M/s N.N. Global Mercantile Pvt. Ltd. v. M/s Indo Unqiue Flame Ltd. & Ors. came up before a three-bench of the Supreme Court of India i.e. in a situation when an underlying contract is not stamped or is insufficiently stamped, as required under the Indian Stamp Act 1899, would that also render the arbitration clause as non-existent and/or unenforceable (‘N.N. Global Mercantile Pvt. Ltd. v. Indo Flame Ltd. – I’).
The Hon’ble Supreme Court of India whilst emphasizing the 'Doctrine of Separability' of an arbitration agreement held that the non-payment of stamp duty on the commercial contract would not invalidate, vitiate, or render the arbitration clause as unenforceable, because the arbitration agreement is considered an independent contract from the main contract, and the existence and/or validity of an arbitration clause is not conditional on the stamping of a contract. The Hon’ble Supreme Court further held that deficiency in stamp duty of a contract is a curable defect and that the deficiency in stamp duty on the work order, would not affect the validity and/or enforceability of the arbitration clause, thus applying the Doctrine of Separability. The arbitration agreement remains valid and enforceable even if the main contract, within which it is embedded, is not admissible in evidence owing to lack of stamping.
The Hon’ble Apex Court, however, considered it appropriate to refer the issue i.e. whether unstamped instrument/document, would also render an arbitration clause as non-existent, unenforceable, to a constitutional bench of five-bench of the Supreme Court.
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II
On 25 April 2023, a five-judge bench of the Hon’ble Supreme Court of India in the matter of N. N. Mercantile Private Limited v. Indo Unique Flame Ltd. & Ors. held that (1) An unstamped instrument containing an arbitration agreement cannot be said to be a contract which is enforceable in law within the meaning of Section 2(h) of the Indian Contract Act 1872 and would be void under Section 2(g) of the Indian Contract Act 1872, (2) an unstamped instrument which is not a contract nor enforceable cannot be acted upon unless it is duly stamped, and would not otherwise exist in the eyes of the law, (3) the certified copy of the arbitration agreement produced before a Court, must clearly indicate the stamp duty paid on the instrument, (4) the Court exercising its power in appointing an arbitration under Section 11 of the A&C Act, is required to act in terms of Section 33 and Section 35 of the Indian Stamp Act 1899 (N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II).
N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – III
A seven-judge bench of the Supreme Court of India on 13 December 2023 in its recent judgment in re: Interplay between arbitration agreements under the Arbitration & Conciliation Act 1996 and the Indian Stamp Act 1899, (1) Agreements lacking proper stamping or inadequately stamped are deemed inadmissible as evidence under Section 35 of the Stamp Act. However, such agreements are not automatically rendered void or unenforceable ab initio; (2) non-stamping or insufficient stamping of a contract is a curable defect, (2) the issue of stamping is not subject to determination under Sections 8 or 11 of the A&C Act by a Court. The concerned Court is only required to assess the prima facie existence of the arbitration agreement, separate from concerns related to stamping, and (3) any objections pertaining to the stamping of the agreement would fall within the jurisdiction of the arbitral tribunal. Accordingly, the decision in N. N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. – II and SMS Tea (supra) was overruled, by the seven-judge bench of the Supreme Court of India.
Kunal is a qualified lawyer with more than nine years of experience and has completed his LL.M. in Dispute Resolution (specialisation in International Commercial Arbitration) from Straus Institute for Dispute Resolution, Pepperdine University, California.
Kunal currently has his own independent practice and specializes in commercial/construction arbitration as well as civil litigation. He has handled several matters relating to Civil Law and arbitrations (both domestic and international) and has appeared before the Supreme Court of India, High Court of Delhi, District Courts of Delhi and various other tribunals.
No Safe Harbour For Google On Trademark Infringement
By Mayank Grover & Pratibha Vyas
October 9, 2023
Innovation, patience, dedication and uniqueness culminate in establishing a distinct identity. A trademark aids in identifying the source and quality, shaping perceptions about the identity's essence. When values accompany a product or service's trademark, safeguarding against misuse and infringement becomes crucial. A recent pronouncement of a Division Bench of the Delhi High Court dated August 10, 2023 in Google LLC v. DRS Logistics (P) Ltd. & Ors. and Google India Private Limited v. DRS Logistics (P) Ltd. & Ors. directed that Google’s use of trademarks as keywords for its Google Ads Programme does amount to ‘use’ in advertising under the Trademarks Act and the benefit of safe harbour would not be available to Google if such keywords infringe on the concerned trademark.
Factual Background
Google LLC manages and operates the Google Search Engine and Ads Programme, while, Google India Private Limited is a subsidiary of Google that has been appointed as a non-exclusive reseller of the Ads Programme in India. The Respondents, DRS Logistics and Agarwal Packers and Movers Pvt. Ltd. are leading packaging, moving and logistics service providers in India.
On 22.12.2011, DRS filed a suit against Google and Just Dial Ltd. under provisions of the Trademarks Act, 1999 (‘TM Act’) inter alia seeking a permanent injunction against Google from permitting third parties from infringing, passing off etc. the relevant trademarks of DRS. The core of the dispute revolved around Google’s Ads Programme. DRS claimed that its trade name 'AGARWAL PACKERS AND MOVERS' is widely recognized and a 'well-known' trademark. Use of DRS’s trademark as a keyword diverts internet traffic from its website to that of its competitors and they were entitled to seek restraint against Google for permitting third parties who are not authorized to use the said trademark. DRS further argued that Google benefits from these trademark infringements. This practice involved charging a higher amount for displaying these ads, constituting an infringement of their trademarks. Whereas, Google contended that the use of the keyword in the Ads Programme does not amount to ‘use’ under the TM Act notwithstanding that the keyword is/or similar to a trademark. Thus, the use of a term as a keyword cannot be construed as an infringement of a trademark under the TM Act, and being an intermediary, it claimed a safe harbour under Section 79 of the Information Technology Act, 2000. (‘IT Act’).
In essence, the dispute between the parties was rooted in DRS’s grievance concerning the Ads Programme. The Learned Single Judge vide judgment dated 30.10.2021interpreted relevant provisions of the TM Act and drew on multiple legal precedents to arrive at the decision that DRS can seek protection of its trademarks which were registered under Section 28 of the TM Act and issued directions to investigate complaints alleging the use of trademark and/or to ascertain whether a sponsored result has an effect of infringing a trademark or passing off.
Being aggrieved, Google LLC and Google Pvt. Ltd. filed appeals before the Division Bench. Google LLC argued that the Single Judge’s findings were erroneous and the directions issued were liable to be set aside. Google India claimed that it doesn’t control and operate the Search Engine and the Ads Programme making it unable to comply with the directions passed in the impugned judgment.
Analysis & Decision of Court
The Division Bench found Single Judge’s rationale for assessing trademark infringement through keywords and meta-tags valid. Meta-tags are a list of words/code in a website, not readily visible to the naked eye. It serves as a tool for indexing the website by a search engine. If a trademark of a third party is used as a meta-tag, the same would serve as identifying the website as relevant to the search query that includes the trademark as a search term. The use of keywords in the Ads Programme also serves similar purpose. The Division Bench was unable to accept that using a trademark as a keyword, even if not visible, would not be considered trademark use under the TM Act.
Google placed heavy reliance on the decisions rendered by Courts across jurisdictions of United Kingdom, United States of America, European Union, Australia, New Zealand, Russia, South Africa, Canada, Spain, Italy, Japan and China; in the cases of Google France SARL and Google Inc. v. Louis Vitton SA & Ors.[1], Interflora Inc. v. Marks & Spencer Plc.[2], and L’Oreal SA v. eBay International AG[3] in support of the contention that the use of trade marks is by the advertiser and not by Google. However, the Division Bench rejected Google’s passive role; highlighting its active involvement in recommending and promoting trademark keywords for higher clicks in its Ads Programme. Division Bench referred to a few judicial decisions rendered in the United States of America that captured the essence of the controversy for perspective, concluding that Google actively promotes and encourages trademarks associated with major goods and services, rather than having a passive role.
It was held that the contention that the use of trademarks as keywords, per se constitutes an infringement of the trademark is unmerited; the assumption that an internet user is merely searching the address of the proprietor of the trademark when he feeds in a search query that may contain a trademark, is erroneous.
The Doctrine of 'Initial Interest Confusion' addresses trademark infringement based on pre-purchase confusion. The doctrine is applied when meta-tags, keywords, or domain names cause initial confusion similar to a registered trademark. If users are misled to access unrelated websites, trademark use in internet advertising may be actionable and reliance was placed on US precedents. Referring to Section 29 of the TM Act, it was directed that Section 29 does not specify the duration for which the confusion lasts but, even if the confusion is for a short duration and an internet user is able to recover from the same, the trade mark would be infringed and would offend Section 29(2) of the TM Act.
It was held that the Ads Programme is a platform for displaying advertisements. Google, being an architect and operator of its own programme makes it an active participant in the use of trademarks and determining the advertisements displayed on search pages. Their use of proprietary software makes them utilize trademarks and control the distribution of information related to potentially infringing links, ultimately leading to revenue maximization. Hence, a substantial link exists between Google LLC and Google India, rendering it impossible for Google India to deny its role in operating the Ads Programme. It was further held that Google sells trademarks as keywords to advertisers and encourages users to use trademarks as keywords for ads. It is contradictory for Google to encourage trademark use while claiming data belongs to third parties for exemption. After 2004, Google changed policies to boost revenue and subsequently, introduced a tool that searches effective terms, including trademarks. Google's active involvement in its advertising business and online nature does not necessarily qualify it for benefits under Section 79 of the IT Act. The Division Bench agreed with the view of the Single Judge that Google would not be eligible for protection of safe harbour under Section 79(1) of the IT Act, if its alleged activities infringe trademarks.
Conclusion
This is a seminal decision governing (and rather, restricting) the operations of intermediaries and redefining the jurisprudence of safe harbour under the IT Act. The decision is well-reasoned and establishes a significant precedent for safeguarding trademarks by uniquely holding Google accountable under its Ads Programme. The same will prevent usage of tradenames as a third-party trademark in keyword search or metatags by advertisers on Google’s search engine. While keywords and meta-tags have different levels of visibility, their purpose is similar i.e. advertising and attracting internet traffic. The use of trademarks as meta-tags by a person who is neither a proprietor of the trademark nor permitted to use the same leads to confusion amongst public at large due to the automated processes of search engines and consequently, constitutes trademark infringement.
About the Authors: Mayank Grover is a Partner and Pratibha Vyas is an Associate at Seraphic Advisors, Advocates & Solicitors
[1] C-236/08 to C-238/08 (2010) [2011] All ER (EC) 41
[2] [2014] EWCA Civ 1403
[3] 2C- 324/09 (2010)
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