Read Order: JOYIL MASIH @ PRINCE vs STATE OF PUNJAB AND ANOTHER
Mansimran Kaur
Chandigarh, January 25, 2023: The High Court, keeping in view the peculiar facts and circumstances of a case and for justifiable reasons can press Section 482Cr.P.C. in aid to prevent abuse of the process of any Court and/or to secure the ends of justice, the Punjab and Haryana High Court has reiterated.
While allowing the instant criminal petition instituted under Section 482 Cr.P.C. for quashing of the FIR under Sections 420 and 376 of IPC, and all other consequential proceedings arising there from, on the basis of compromise/ affidavit,Justice Jagmohan Bansal observed that the continuance of the proceedings in the present case would just waste valuable judicial time.
After considering the submissions from both the sides, the Court placed reliance on the cases namely, Gian Singh Vs. State of Punjab and others,and The State of Madhya Pradesh Vs. Laxmi Narayan and others. It was further stated that a two Judge Bench of the Supreme Court in Ramgopal and another Vs. State of Madhya Pradesh 2021 SCC had held that the High Court, keeping in view the peculiar facts and circumstances of a case and for justifiable reasons can press Section 482Cr.P.C. in aid to prevent abuse of the process of any Court and/or to secure the ends of justice.
From the perusal of the enclosed FIR, report of the Trial Court and compromise arrived between the parties, the Bench opined that the contesting parties have amicably resolved their issue, thus, no useful purpose would be served by continuing the proceedings. There appears to be no chance of conviction, the continuance of the proceedings would just waste valuable judicial time and it is a well-known fact that courts are already overburdened.
In view of above facts and circumstances, the present petition was accordingly allowed.
Read Order: SUBHASH @ MAKKAR AND OTHERS V. STATE OF HARYANA
LE Correspondent
Chandigarh, January 25, 2023:The Punjab and Haryana High Court has observed that the effect of minimal digressions or contradictions inter-se the previously made statements in writing by the ocular witness to the occurrence with his echoings in his testification recorded before the Court, are insignificant, especially when the echoing made by the ocular witness about the presence of accused at the crime site, remains unrebutted and uncontroverted through adduction of cogent evidence.
While dismissing the criminal appeals instituted by the convicts-appellants, against the verdict of conviction for offences punishable under Section 120-B IPC and under Section 302 of the IPC read with Section 149 IPC, the Division bench of Justice Sureshwar Thakur and Justice Kuldeep Tiwari observed, “ In case there is any contradiction inter-se the medical account and the eyewitness account, thereupon, the credible eye witness account is to be assigned preponderance and precedence over the medical account”.
The present FIR was lodged at the instance of the father of the deceased Satyawan. The informant-complainant Dharampal, made narrations thereins that he was a resident of village Pabra. After about three years. Santro, wife of Subhash and his sons filed a civil case in civil Courts against him regarding this land on the ground that he had purchased the said land after administering liquor to Subhash and the said case was decided in his favour.
During the pendency of trial of that case, Subhash and his family members convened a panchayat, so that the said land be returned back to them by him. Upon this, he agreed that he would return back the said land on payment of sale amount of the land, however Subhash and his family members did not pay the said amount. It was further alleged that Subhash and his brother Ram Kumar, his wife Santro, his brother in law Baru and Rakesh used to threaten him and his family to return their land otherwise he and his family would be finished.
About 8-10 days prior to the occurrence, Vicky @ Vikas came on leave from Jail and threatened him with dire consequences if the land was not returned.
Thereafter, he along with his nephew were going towards their fields, his son Satyawan was going at a distance of about half killa from them to answer the call of nature and when he reached near Dasuwala Johar, a Tata Sumo crossed them at a very fast speed and hit Satyawan with force on his back in their presence. His son Satyawan then tried to save himself, the Tata Sumo again tried to hit his son and his son again tried to save himself.
It was also alleged that the complainant and his companion raised alarm and upon hearing the alarm, the accused ran away from the spot after leaving the vehicle and while fleeing they also declared that they have taught them a lesson for not handing over the land and the complainant party will be finished one by one in the same manner. Subsequently, a case under sections 147, 120-B and under Section 302 of IPC got registered. The Trial Court convicted the accused persons.
After considering the submissions, the Court noted, “in case there is any contradiction inter-se the medical account and the eyewitness account, thereupon, the credible eye witness account is to be assigned preponderance and precedence over the medical account”.
The Bench opined that even if there is a mere reference in the inquest report about the demise of Satyawan, happening in a road side accident, but even the said echoing is inconsequential, for assigning thereto any exculpatory effect, as credence had already been assigned to the deposition of Dharampal, who is the informant complainant, and, who apart therefrom is also an ocular witness to the occurrence.
It was also observed that sanctity is to be assigned to the unfoldings as become carried in the site plan. If so, when there are unfoldings therein, that the crime event occurred at a distance of 3 karams from the metal road, therefore, with the above factum becoming not falsified, resultantly, the exculpatory plea, as raised by the convicts, that deceased Satyawan had appeared on the metaled portion of the road, and for obviating the Tata Sumo vehicle hence striking his person, the accused concerned, had made application of brakes thereons, resulting in injuries, as pronounced by defence witness occurring on his person, was but, a completely false plea, the Bench held.
Noting that the firm inference couldnot be reached that the accused carried the penally inculpable mens rea, the Bench also held that the prosecution had unflinchingly proven the charge drawn against the convicts.
Also,the Bench found that the presence of the Accused Vikas at the relevant site of occurrence never became cogently proven by the prosecution nor in the statement made by complainant he had been alleged to participate in the crime event. Merely by giving threats to the complainant party, he cannot be concluded to be conspiring/participating with the other accused in the crime event, the Bench added.
In light of such observations, the appeal was dismissed.
Read Order: OM SHREE THAKURJI EDUCATIONAL SOCIETY VS CAREER INSTITUTE EDUCATIONAL SOCIETY
Mansimran Kaur
Chandigarh, January 25, 2023: The scope of judicial review and jurisdiction of the court under Section 11 of the Arbitration and Conciliation Act, 1996 is extremely limited, the Punjab and Haryana High Court has observed.
While dealing with the two petitions filed under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator, Justice Avneesh Jhingan disposed of the same by observing that there existed a valid arbitration agreement between the parties.
The brief facts were that the petitioner by two lease agreements leased out the premises to the respondent. As per the petitioner, the respondent breached the terms and conditions of lease deed and due rent was not paid. A termination notice was issued and the petitioner issued a notice for invoking arbitration and proposing the name of arbitrator.
The respondent filed a suit for permanent injunction in which application under Section 8 was filed by the petitioner. The application was allowed but on appeal, the order was reversed.
Subsequently, FIR under Sections 120-B, 201, 323, 379, 406, 420, 447, 504 and 506 IPC and FIR under Section 57 of the Disaster Management Act and 188 IPC were registered against the respondent.
After considering the rival contentions, the Court stated that the contentions raised by the senior counsel for the respondent lacks merit. The allegations in FIR were with regard to illegal running of boys and girls hostels, non-payment of rent and that the cheque issued by the respondent bounced due to insufficient funds.
Further that the cheque was issued in spite of knowing that sufficient amount was not in the account, hence fraud was committed. The FIR was registered for violating the Standard Operating Procedure of COVID-19 and keeping the students in the institution, the Court noted.
Reference at this stage was placed on the judmgent in Vidya Drolia and others v. Durga Trading Corporation. In view of the same, the Court noted that in the case at hand, the allegations in the FIR are of simple fraud and for issuing a cheque having knowledge that there were not sufficient funds in the account.
The second argument that the dispute between the landlord and the tenant is not arbitrable as the provisions of Transfer of Property Act, 1882 apply was noted to be rejected, the Court stated.
Noting that the judicial review and jurisdiction of the court under Section 11 of the Act is extremely limited, the Bench said, “The court has to rarely interfere when it is certain that the agreement of arbitration is non-existent, invalid or the dispute is non arbitrable.” Reference at this stage was placed on the judgment in Secunderabad Cantonment Board v. B. Ramachandraiah and sons.
The third contention raised had two limbs. Firstly, the consequences of non-registration of compulsorily registrable documents and secondly the effect of unstamped or under-stamped documents relied upon for appointment of arbitrator. In view of the same, the Court placed a reference to the judgments in SMS Tea Estates Pvt. Ltd. v. M/s Chandmari Tea Co.Pvt. Ltd., and M/s. N.N. Global Mercantile Pvt. Ltd Vs. M/s. Indo Unique Flame Ltd..
In view of the same, the Court noted that both the parties had admitted the existence of arbitration agreement, the petitions were accordingly disposed of by appointing Mr. Vimal Bakshi, District & Sessions Judge (Retd.), BDPO Residence near Kali Mata Mandir, Naraingarh, Ambala as an arbitrator.
Read Judgment: MUNNA LAL VS. THE STATE OF UTTAR PRADESH
Mansimran Kaur
New Delhi, January 25, 2023: The Apex Court has allowed an appeal of a murder accused by observing that there was a fair degree of uncertainty in the prosecution story and the courts below appeared to have somewhat been influenced by the oral testimony of the prosecution witnesses without taking into consideration the effect of the other attending circumstances.
The Division Bench of Justice S. Ravindra Bhat and Justice Dipankar Datta allowed the instant criminal appeals by observing that the charge that the appellants had murdered Narayan, cannot be said to have been proved beyond reasonable doubt.
The present two criminal appeals, stemmed out of the same occurrence, calling in question the judgment and order of the High Court of Judicature at Allahabad dismissing the Criminal Appeal instituted under section 374(2) of the Code of Criminal Procedure carried by the appellants from the judgment and order dated January 29, 1986 of the Court of IInd Additional Sessions Judge.
Narayan, father of Ram Vilas, was murdered in the morning of September 5, 1985. A written complaint was lodged soon thereafter, by Ram Vilas leading to registration of an F.I.R. under section 302 of the Indian Penal Code.
Upon completion of investigation, a charge-sheet under section 302 was filed before the concerned court against each of the(four) accused persons. Upon consideration of the evidence on record, the Sessions Judge held that the consistent and unimpeachable direct evidence proved the case, which was supported by dependable probabilities, existence of motive, medical evidence and all other circumstances and hence sentenced them to life imprisonment.
The above stated judgment was assailed by way of appeal before the High Court. However, the said appeal was dismissed by the High Court. Aggrieved by the same, special leave to appeal was preferred before this Court.
The question that was posed for consideration before this Court was whether the trial court, on the basis of the materials before it, was justified in recording conviction and consequently, sentencing the appellants to spend the rest of their lives in prison.
To adjudicate upon the same, the Court took into consideration Section 134 of the Indian Evidence Act, 1872. In pursuance of the same, the Court stated, “It enshrines the well-recognized maxim that evidence has to be weighed and not counted”. In other words, it is the quality of evidence that matters and not the quantity.”
“As a sequitur, even in a case of murder, it is not necessary to insist upon a plurality of witnesses and the oral evidence of a single witness, if found to be reliable and trustworthy, could lead to a conviction”,the Court further remarked.
It was further noted that what was of prime importance was that the circumstances as appearing from the record did not justify the presence of the third prosecution witness at the place of occurrence.
This Court was therefore, of the firm view that the oral testimony of the said witnesses was not free from doubt and their evidence not being of unimpeachable quality, the rule of prudence would demand a corroboration of their versions from other witnesses.
In furtherance of the same, the Court also noted that the statement of the third prosecution witness under section 161, Cr. P.C. was recorded nearly 24 days after the incident. Since the Investigating Officer did not enter the witness box, the appellants did not have the occasion to cross-examine him and thereby elicit the reason for such delay. Consequently, the delay in recording the statement of the third prosecution witness in the course of investigation is not referred to and, therefore, remains unjustified, the Court noted.
As per the Bench, neither the trial court nor the High Court considered the issue of non-examination of the Investigating Officer. In the facts of the present case, particularly conspicuous gaps in the prosecution case and the evidence of the witnesses not being wholly reliable, the Court held that the charge that the appellants had murdered Narayan, couldnot be said to have been proved beyond reasonable doubt.
In light of such observations, the appeals were allowed
Read Order: Fiitjee Edusoft Ltd v. ACIT, Central Circle 6, New Delhi
LE Correspondent
New Delhi, January 25, 2023: While remitting the matter to the AO where the assessee wanted to adopt two system of accounting in the the same year, the Income Tax Appellate Tribunal has reaffirmed that any party cannot be allowed to approbate and reprobate i.e. accept and reject part of the same nature.
The Judicial Member- Astha Chandra and Accountant Member- Shamim Yahya was considering the cross appeals by the assessee and Revenue arising out of the CIT (Appeals)-XXV, New Delhi pertaining to the Assessment Year 2013-14.
In the assessment order, the AO noted that the assessee company is engaged in the business of conducting coaching classes, test preparation classes, mock tests and providing course material for engineering examination and during the year, assessee company incurred various expenses but no income was earned from the business activities.
Further, AO considered that the balance sheet revealed that the assessee had written off the entire component/expenditure incurred in the earlier years from capital work-in-progress which is forming part of fixed assets during the year under consideration.
It was held by the AO that the assessee company had not done any business and there was no nexus between earning of the income and expenditure. Hence expenditure relating to audit fees, insurance and other administrative & office expenses totaling Rs 4,68,907 was allowed by the AO and rest of the expenditure of Rs 2,61,76,161 was disallowed.
Against this order, assessee appeal before CIT (A) whereby the action of AO not disallowing the same as revenue expenditure was upheld and it was opined that the project abandoned by the assessee had provided intellectual property right as know-how and held that the earlier expenditure written off should be allowed as capital expenditure and depreciation should be allowed.
As per the facts and assessee’s own admission, the assessee was capitalizing the expenditure in the assessee’s line of business and put in the balance sheet as capital work-in-progress. The management found that the project was not commercially viable and had to be abandoned.
In this view of the matter, the opening balance was written off as prior period expenses and not claimed as expenses in the computation of income. However, the part of the same expenses incurred during the year had been treated by the assessee as relating to the same business and the assessee wanted this expenditure to be allowed as revenue expenditure.
The Bench observed that the assessee had taken a contradictory stand. As per assessee’s own admission, similar expenses incurred in earlier year were written off as abandoned project and similar expenditure in the current year assessee wanted to be treated as revenue expenditure.
“In our considered opinion, those part of the expenditure incurred during the year which are identical to the earlier year, which have been written off by the assessee as abandoned cannot be allowed as revenue expenditure during the year. Hence, we deem it appropriate to remit the issue to the file of AO”, the Bench held.
The Bench ordered the AO to examine the nature of expenditure during the year and those of the expenditure which are of similar nature which have been written off as abandoned for earlier period cannot be allowed as revenue expenditure.
Hence, the appeal filed by the assessee was partly allowed for statistical purposes and the Revenue’s appeal was dismissed as infructuous.
Read Order:SUBHASH CHOUHAN Vs. UNION OF INDIA & ANR
Tulip Kanth
New Delhi, January 25, 2023: The Supreme Court has recently termed the bail condition directing appellant to deposit Rs 70 lakh as unsustainable where it was argued that the appellant was not under a legal liability to pay the said amount as FIR was in respect of wrongfully availing Input Tax Credit & no final assessment was done under GST Act.
The Division Bench of Justice Krishna Murari and Justice B.V.Nagarathna was considering a challenge to the Order passed by the Chhattisgarh High Court granting bail to the appellant subject to certain conditions.
One of the conditions was that the appellant shall deposit a sum of Rs 70 lakh under protest, in favour of the Principal Commissioner, CGST, Raipur within a period of 45 days from the date of his release. It was this condition, which was under challenge.
It was the appellant’s case that the condition to deposit Rs 70 lakh within 45 days from the date of the release as a pre-requisite condition for the bail was not sustainable inasmuch as the First Information Report was in respect of wrongfully availing the Input Tax Credit of Rs 6,95,32,472.
Moreover, there was no final assessment in this regard under the GST Act. Hence, it was argued that it couldnot be presumed that the appellant was under a legal liability to pay the said amount.
“As an officer of this Court, Mr. K.M. Nataraj, learned ASG appearing for the Union of India/State has fairly stated that such a condition cannot be imposed while granting bail”, the Bench said.
Thus, the condition directing the appellant to deposit a sum of Rs.70 Lakhs is not liable to be sustained and is hereby set aside.
Read Order: Kumar Agro Products Pvt. Ltd Vs. Deputy Commissioner Of Income Tax And Ors
Tulip Kanth
Mumbai, January 25, 2023: The Bombay High Court has come to the aid of an assessee company which couldnot submit its response to a Notice on time due to the portal’s technical issue by setting aside the order of assessment and granting the Petitioner an opportunity to upload its response to the show cause notice.
The petitioner had approached the Division Bench of Justice Dhiraj Singh Thakur and Justice Kamal Khata challenging the order of assessment dated September 29, 2022 passed under Section 143(3) r/w Section 144B of the Income Tax Act, 1961 relevant to the assessment year 2020-21, primarily on the ground of violation of principles of natural justice.
The facts of the case suggested that the return of income was filed by the Petitioner on January 7, 2021. The return of income was selected for scrutiny assessment by the Respondents. Notice under Section 142(1) of the Act, was issued requiring the Petitioner to submit certain details, which the Petitioner claimed were submitted.
The Respondents then issued a SCN whereby additions were sought to be made in the return of income. The Petitioner’s request for extension of time was allowed and time was extended till 11:00 am on 26th September, 2022.
It was the petitioner’s case that even when it was ready to upload its response to the show cause, the Respondents failed to update their portal to reflect the extended time up to September 26, 2022. The portal continued to reflect September 24, 2022 as the date by which the response had to be uploaded because of which the system did not permit the Petitioner to upload its response.
Referring to the screenshot of the portal which reflected the response date as September, 24, 2022, which in fact ought to have been reflected as September 26, 2022 and considering the fact that order of assessment was passed without the response of the Petitioner, the Bench said, “The Petitioner was thus denied an opportunity of submitting its response as also was denied an opportunity of being heard, which was otherwise to be granted even as per the show cause notice dated 22nd September, 2022.”
“The failure on the part of the Respondents to update their official portal, cannot be permitted to result in any sort of prejudice to the Petitioner, Notwithstanding the fact that an order of assessment has been passed in gross violation of principles of natural justice”, the Bench further remarked.
Thus, allowing the petition, the Bench set aside the order of assessment.
The Bench also directed that a fresh order be passed, after the Petitioner is granted an opportunity to upload its response to the show cause notice for which the requisite portal may be made available to the Petitioner and an opportunity of being heard may also be provided to the Petitioner.
Read Judgment: K.L. Swamy v. The Commissioner of Income Tax & Anr
Tulip Kanth
New Delhi, January 25, 2023: While observing that there shall be liability to pay interest leviable under Section 158BFA(1) of Income Tax Act on delay in filing return, the Supreme Court has observed that the interest under such provision is leviable on standalone basis for late or non-filing of return, which ceases on the day return is filed.
“Therefore, in case of the person other than searched person the notice under Section 158BD would be required/sufficient and in case of late filing of the return under Section 158BC, the interest will be leviable under Section 158BFA, the Division Bench of Justice M.R.Shah and Justice C.T. Ravikumar clarified.
The appellant was a Director Partner in Khoday Group of Company concerns. A search under Section 132 was conducted in the residential premises of the family members of Khoday Group and the warrant was issued in the name of M/s. Khoday India Limited. The appellant was served with the notice under Section 158BD to file the return of income for the block period of April 1, 1986 to February 13, 1997.
The appellant filed a return for the block period in response to notice under Section 158BD by including the undisclosed income of Rs 45,00,000 for the block period. The Assessing Officer levied interest u/s 158BFA(1) for the period from January 18,1998 to January 19,1999 at the rate of 2% per month for 13 months and levied interest of Rs.7,12,296 on the tax amount of Rs 27,49,600.
The appellant being aggrieved by the order of the Assessing Officer filed an appeal before the CIT (A) where it was opined that Section 158BFA provides for levy of interest for late filing of return of block assessment in response to the notice under Section 158BC similar to the provisions of Section 234A.
The appellant – assessee being aggrieved by the order of CIT(A) filed an appeal before the ITAT, Bangalore whereby it was observed that the return was filed on January 19, 1999 and at the relevant point of time there was no provision to pay self- assessment tax along with the return of income and therefore no interest was leviable under Section 158BFA(1). Thereafter, the Revenue’s appeal was before the High Court was allowed and the decision of the ITAT was reversed. Thus, the appellant approached the Apex Court.
On the issue of levy of the surcharge under proviso to Section 113 of the Income Tax Act, the Bench referred to the Top Court’s judgment in Commissioner of Income Tax (Central)-I, New Delhi Vs. Vatika Township Private Limited whereby it was opined that the Finance Act, 2003, made it clear that surcharge in respect of block assessment of undisclosed income was made prospective.
Hence, the Bench held the question with respect to levy of the surcharge under proviso to Section 113 in favour of the assessee and against the revenue. It was asserted that in the present case the assessee was not liable to pay the surcharge under proviso to Section 113.
The Bench dealt with the next issue of levy of the interest under Section 158BFA(1) of the Income Tax Act in absence of any notice served upon the assessee under Section 158BC and the liability to pay the interest under said provision for the period prior to June 1,1999.
Highlighting the concept of block assessment, the Top Court again referred to the judgment in Vatika Township Private Limited (supra) wherein it was observed that a separate return covering the years of the block period is a pre-requisite for making block assessment.
Noting that the assessment of undisclosed income for the block period including the filing of the return etc., the normal assessment proceedings including under Section 140 shall not be applicable , the Bench refused to accept the assessee's submission that interest u/s 158BFA for the period prior to June 1,1999 shall not be chargeable.
“Liability to deposit the tax along with return arises only under Section 140A. However, at the relevant point of time Section 140A did not apply to Section 158BC and hence there was no liability to deposit tax along with the return”,the Bench said while also adding that the said lacunae was noticed by the Parliament and by the Finance Act, 1999, the words Section 158BC had been inserted in Section 140A w.e.f. June 1, 1999.
“The return under Section 158BC was required to be filed as per Chapter XIV-B and on the delay in filing the return, there shall be liability to pay interest leviable under Section 158BFA(1)”, the Bench further clarified.
Considering the fact that prior to amendment in Section 158BD vide Finance Act, 2002 and even thereafter, the provisions of Section 158BC would be applicable in case of searched persons, the Bench held that in case of a person other than searched person, no notice under Section 158BC which is required to be issued in case of searched persons was required to be issued. For a person other than the searched person, notice under Section 158BD is sufficient, the Bench added.
The Bench held that the respective assessees were not liable to pay the surcharge under proviso to Section 113 and also opined, “The impugned judgment and order passed by the High Court is hereby confirmed and it is observed and held that the assessee – persons other than searched persons shall be liable to pay the interest on late filing of the return under Section 158BC even in absence of a notice under Section 158BC of the Income Tax Act and even for the period prior to 01.06.1999.”
Read Order: Dalbir Singh and Others v. Smt. Beero (deceased) through her LRs and Other
Monika Rahar
Chandigarh, January 24, 2023: While dealing with a revision petition challenging the lower Court’s order dismissing the application filed by the defendant under Order VI Rule 17 CPC for amendment of his written statement to aver that he was a beneficiary of a Will transferring suit property in his favour, the High Court of Punjab and Haryana has dismissed the petition on the ground that having taken the stand that the defendant was owner of the suit property 40 years prior to the filing of the suit, there was no reason not to have pleaded the Will, if any, in detail in the written statement.
The bench of Justice Alka Sarin held,
“There was no reason for the defendant (Gurdit Singh) or his legal heirs for not having placed the relevant evidence on the record or raising detailed pleas regarding the Will. The application which has now been filed at the appellate stage would lead to a de novo trial which cannot be permitted.”
The plaintiff filed a suit for declaration to the effect that she was the owner in possession of half share of the suit land, being legal heir of S. Bhan Singh, with a consequential relief of permanent injunction restraining the defendant (Gurdit Singh) from alienating the suit property in any manner.
It was stated in the plaint that the defendant got some false, frivolous and wrong entries in the revenue record and thereby got mutation regarding the estate left by his father sanctioned in his name.
In the written statement, the defendant claimed the suit property had vested in him some 40 years ago as per the jamabandi pertaining to the year 1970- 71. It was further the stand that the defendant (Gurdit Singh) was owner in possession on the basis of a valid Will executed by S. Bhan Singh in his favour.
The suit was decreed by the Trial Court. Aggrieved by the said judgment and decree, an appeal was preferred by the legal heirs of the defendant (Gurdit Singh) i.e. the present petitioners and the present second respondent.
During the pendency of the appeal, an application under Order VI Rule 17 CPC was filed for amendment of the written statement to introduce the plea that the defendants were owners in possession of the suit property on the basis of a registered Will of 1969 executed by S. Bhan Singh in favour of the defendant (Gurdit Singh).
The said application was contested by the plaintiff and vide impugned, the lower Appellate Court dismissed the said application. Aggrieved by the said order, the present revision petition was filed. Though originally the present revision petition was filed by all the legal heirs of the defendant (Gurdit Singh), however, subsequently the original petitioner no.2 (Hira Singh) was ordered to be transposed as respondent no.2 as he did not want to file the present revision petition.
After hearing the parties, the Court observed that it was only at the appellate stage that the application for amendment of the written statement was filed on the ground that they became parties to the suit in 2011 and that the omission to mention that the defendant (Gurdit Singh) was the beneficiary of the Will was not willful or intentional.
The Bench added that what could not be lost sight of was that from the very beginning, the claim of the plaintiff was that some false, frivolous and wrong entries had been made in the revenue record qua the estate left by his father in favour of the defendant who had no right, title or interest in the suit property. It was also noted that the defendant claimed himself to be the owner in possession of the suit property taking the stand that the suit property vested in him some 40 years ago.
“The factum of a Will in his favour was also mentioned in the written statement. There was no reason for the defendant (Gurdit Singh) or his legal heirs for not having placed the relevant evidence on the record or raising detailed pleas regarding the Will”, the Bench observed while also adding,
“The application which has now been filed at the appellate stage would lead to a de novo trial which cannot be permitted”.
Further, the Court held,
“Having taken the stand that the defendant (Gurdit Singh) was owner of the suit property 40 years prior to the filing of the suit, there was no reason not to have pleaded the Will, if any, in detail in the written statement.”
The petition was dismissed.
Read Order: Sh. Siri Bhagwan v. Smt. Murti Devi (dead) through LRs and Others
Monika Rahar
Chandigarh, January 24, 2023: The High Court of Punjab and Haryana has recently held that the suit property being immovable valuing more than Rs 100, an oral gift could not be effected without registration in view of Section 17 of the Registration Act.
“Whenever a decree or any other document creates or extinguishes a right for the first time, it requires registration”, the Bench of Justice Deepak Gupta reiterated.
While claiming herself to be the owner of the suit land, the plaintiff filed the suit in question with the averment that she was a simpleton, illiterate and pardanashin lady and that the impugned decree was obtained by the first defendant and his father by playing fraud and misrepresentation. It was alleged, while taking her to the concerned court on the pretext of preparing a will in favour of her two daughters, the defendant’s father filed an admitted written statement and recorded her statement on the basis of some alleged family settlement, which never took place between her and the contesting defendant. Besides, she added that the first defendant was minor at that time, so there could be no question of family settlement and so, the impugned decree was the result of fraud and misrepresentation.
The Trial Court dismissed the suit. While allowing the appeal, the First Appellate Court held that neither any family settlement took place nor it could have taken place and that transfer in fact amounted to gift, which in this case was nullity in the absence of registration. Thus, the present Regular Second Appeal was filed.
During pendency of this appeal, the suit property was purchased from the plaintiff and the subsequent purchaser’s application under Order 1 Rule 10 read with Order 22 Rule 10 of the Code of Civil Procedure praying to become a respondent- party along with original plaintiff, was allowed.
A coordinate Bench of the High Court allowed the second appeal and set aside the judgment/ decree of the First Appellate Court and restored that of the trial Court, which resulted in dismissal of the suit filed by Smt. Murti Devi and her daughter. The subsequent purchaser approached the Supreme Court which noticed that no substantial question of law was framed by the High Court at the outset, rather, the same was framed in the concluding part of the judgment. So, the case was remanded to this Court for deciding the second appeal afresh on merits, after framing a proper substantial question of law.
After hearing the parties, the Bench observed, on the question of family settlement, that when the alleged family settlement took place 2-3 years prior to the filing of the suit, the first defendant was either yet to be born or was newly born, thus, in such circumstances, it was just not possible that there could be any family settlement between him and the plaintiff.
Proceeding further, the Bench observed that based on the evidence available on record, both the Courts below gave a concurrent finding that the impugned decree was not the result of fraud or misrepresentation, rather, it was voluntarily suffered by Smt. Murti Devi in favour of Siri Bhagwan. In light of this, the question that arose was that there was no family settlement between plaintiff and first defendant but plaintiff suffered the decree in his favour based on alleged family settlement, then what will be the legal effect of the decree.
The court observed in this regard that once it was found by the Court that no family settlement in fact took place nor could have taken place and consent decree was suffered by Murti Devi voluntarily, the Court was bound to see the legal effect of such a decree and it cannot be stated that if the decree amounted to oral gift, the Court was making out a fresh case without pleading.
While observing that there was no family settlement between the parties and in fact, the plaintiff gave the land to the defendant on account of an oral gift, the Court held,
“The suit property being immovable valuing more than ₹100/-, so oral gift could not be effected without registration in view of Section 17 of the Registration Act. Whenever a decree or any other document creates or extinguish right for the first time, it requires registration…”.
In light of this, the Court dismissed the appeal while holding,
“In the present case, as it has been found that no family settlement had taken place and rather giving of the property by Smt. Murti Devi to the defendant Siri Bhagwan amounted to an oral gift, which could not be effected without registration, therefore, the decree dated 11.11.1980 has been rightly held by the First Appellate Court to be null and void and not binding on the rights of the plaintiff - Smt. Murti Devi.”
Read Order: Sandeep v. State of U.T. Chandigarh and another
Monika Rahar
Chandigarh, January 24, 2023: Dismissing an anticipatory bail petition filed by a person for forging a Will transferring entire property of an old couple in his favour, allegedly, as a token of appreciation for attending to their needs in their old age, the High Court of Punjab and Haryana held that no person possessing a sound disposing mind and ordinary prudence would ever leave his widow to the mercy of someone who was not closely related.
“Whatever be the relationship of the petitioner with the deceased and his widow, it cannot supplant that with the son. Despite differences in opinion, a son does not lose his place in the heart of his father. Grandchildren are even more dear”, the Bench of Justice Sudhir Mittal held.
“If, the deceased did execute the Will dated 2.12.2020, in view of his health condition, he could not have understood the true impact of his actions having the petitioner open to a charge of misrepresentation which also portrays the petitioner as cunning and manipulative”, the bench added.
In this case, the petitioner alleged that he was introduced to late Air Commodore Satinder Singh and his wife in 2010 by his grand-father and since then he was taking care of the old couple, whose only son was in the US and did not attend to his parents’ needs. In view of the close relationship of the petitioner with the old couple, they allegedly wanted to gift their house to him. This fructified in execution of a 2020 Will in his favour.
The petitioner sought transfer of the house in dispute in his favour on the basis of the aforestated Will. Mr. Singh’s wife allegedly executed an affidavit certifying the validity of Will and that she had no objection to the transfer of the house in favour of the petitioner. The application was rejected as the property already stood transferred in favour of Mr. Singh’s wife on the strength of a 2012 Will executed by him during his lifetime, bequeathing his entire property in her favour.
As soon as she realized that an attempt was made to transfer the property on the basis of Will of 2020, she filed a police complaint. Since, no action was taken thereupon, she approached a Magistrate resulting in registration of the present FIR wherein it was alleged that the petitioner took undue advantage of his close relationship with the old couple and forged the 20202 Will apart from illegally withdrawing a sum of Rs.21 lacs from their accounts using ATM Card and cheques after forging signatures.
After hearing the parties, the Bench noted that late Air Commodore Satinder Singh was very weak and infirm for some years prior to his death and that his wife was also of advanced age and possesses all the infirmities associated therewith. It was also observed that the petitioner used to visit the old couple very frequently and used to look after them and provide assistance as required by them. The bench also considered the fact that execution of the 2012 Will was not in dispute nor was it disputed that by virtue thereof, the property was bequeathed in favour of the widow and in the event of her predeceasing, the testator, in favour of the son and in the event of both of them predeceased him in favour of the grand-children, from first marriage.
Further, the fact that in the disputed Will, the entire property of the deceased was bequeathed in favour of the petitioner inclusive of bank accounts, investments, lockers, FDs and he was tasked to look after the widow and to perform her last rites after her death. Thus, the bench noted that the widow who lives alone in this country was left without means and at the mercy of the petitioner.
“The only son has also been dis-inherited as have the grand-children from both the marriages”, the Bench added.
Thus, in light of the above, the Court noted that it was to be seen, “whether, a person of prudent mind would have executed the Will in dispute? It is also to be seen whether the deceased was in a fit state of mind to understand the result/consequence of his actions on 2.12.2020?”
Regarding this, the Bench opined that the petitioner did not produce the Will in dispute at the time of application by wife of Mr. Singh for transfer of the house nor did he do so while the son was in India. His conduct was thus found by the Bench to be suspicious. Also, the Court held that the execution of Will was more than doubtful.
Elaborating upon the above observation, the Bench added,
“No person possessing a sound disposing mind and ordinary prudence would ever leave his widow to the mercy of someone who was not closely related”.
Further, it was also held,
“Whatever be the relationship of the petitioner with the deceased and his widow, it cannot supplant that with the son. Despite differences in opinion, a son does not lose his place in the heart of his father. Grandchildren are even more dear. All the facts aforestated create serious doubt regarding the genuineness of the Will in dispute.”
The bench also held that if the deceased did execute the Will of 2020, in view of his health condition, he could not have understood the true impact of his actions having the petitioner open to a charge of misrepresentation which also portrays the petitioner as cunning and manipulative.
Dismissing the bail petition, the Court held,
“The allegations against the petitioner are serious in nature. The investigating agency is required to unravel the conspiracy and to find out the co-conspirators. Recovery of huge sum of money has also to be effected and thus, the petitioner does not deserve the concession of anticipatory bail.”
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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