Read Order: PALANI v. THE TAMIL NADU STATE [SC-CRIMINAL APPEAL NO. 887 OF 2024]
LE Correspondent
New Delhi, February 15, 2024:While observing that 29 kinds of medicines recovered from the clinic run by the Appellant-Doctor were of small quantity and his intent to sell/distribute under Section 18(c) of the Drugs and Cosmetics Act, 1940 had been held unproven, the Supreme Court has set aside his conviction and imposed a fine of Rs 1 lakh upon him.
The factual background of this case was that one Palani (Appellant) ran a clinic which was inspected by the officials of the State, viz. Pallippattu Range Drug Inspector; Joint Director, Tiruvallur District Health Department; Zone Drug Inspector Poonamallee.The inspection found 29 types of allopathic medicines meant for distribution without the proper paperwork (license) for sale. Moreover, upon being questioned as to the source of procurement of these medicines, details remained unfurnished.
The Drug Inspectorfiled a complaint under Section 200 of the Code of Criminal Procedure, 1973 under section 18 (c) read with Section 27 (b)(ii) of the Drugs and Cosmetics Act, 1940. Prosecution was initiated on the basis of 6 witnesses; 12 Exhibits and with the 29 types of medicines (small quantity) recovered, being marked as material objects. The Trial Court sentenced the Appellant to two years rigorous imprisonment along with a fine of Rs 1,00,000. In default whereof, he was to undergo three months simple imprisonment. For the offence under Section 18A read with 28 of the Act, the sentence was six months simple imprisonment with a fine of Rs 20,000 with one-month simple imprisonment in default. Sentences awarded were concurrent in nature. Further, a cost of Rs.2500stood imposed for newspaper publication under Section 35.
On appeal, theAdditional District & Sessions Judge, i.e., the lower Appellate Court noted that no patients or any other persons were examined to establish that the drugs so confiscated were actually sold. No bills/receipts were produced.The conviction and sentence u/s 18(c) was set aside while others were confirmed. Accordingly, it was held that the Appellant was entitled to a refund of Rs1,00,000.
A criminal revision case stood filed but the same was dismissed. A further prayer was made to set aside the conviction and sentence under Section 18(A) of the Act and vice it, a fine could be imposed. The same was rejected. Hence, the appellant approached the Top Court.
In support of the appeal, it was submitted that the appellant, being a doctor, had no ill intention (mens rea) to contravene the law and undertake any action which may be scuttling the statutory provisions. It was prayed that the sentence of imprisonment be modified to that of a fine.
Referring to the judgment in Mohammad Giassudin v. State of Andhra Pradesh [LQ/SC/1977/210], the Division Bench of Justice B.R. Gavai & Justice Sanjay Karol reaffirmed that proper sentence is an amalgam of many factors pertaining to the offence itself as also others such as prior record if any, age, record of employment, education, home life, social adjustment and emotional and mental conditions of the offender etc.
Placing reliance upon Sections 18A & 28, the Bench opined that both these provisions concern the disclosure or non-disclosure respectively of the name of the manufacturer. The former stipulates a requirement for every person who is not a manufacturer or agent of distribution to disclose the name of the person from whom he has acquired such drug or cosmetic. The latter imposes a punishment for violation of the aforesaid requirement to the tune of imprisonment up to a year or with a fine not less than Rs.20,000or with both.
Further, the Bench took note of the fact that in S. Athilakshmi v. State Rep. by The Drug Inspector, the Top Court had acquitted a doctor of stocking a small amount of drug as the same was not slated to be equal to selling medicines across the counter in a shop. This offencewas found not proved by the lower Appellate Court.
“We find that the quantities of the 29 kinds of medicines recovered from the clinic run by the Appellant, were of small quantity. In such a situation, non-disclosure of the name of the manufacturer/person from whom the said medicines were acquired, cannot be said to be endangering public interest (which obviously, is the primary object of the prohibition in law) by allowing the circulation of such substances unauthorizedly”, the Bench said.
Considering that the Appellant is a doctor and also keeping in view the observations in Mohammad Giassudin (supra),the Bench was of the view that imposing a sentence of imprisonment would be unjustified, particularly when the intent to sell/distribute under Section 18(c) had been held unproven.
“Therefore, we find it fit to modify the impugned judgment, set aside the sentence of imprisonment as awarded, and instead thereof, impose a fine of Rs.1,00,000/- on the Appellant”, the Bench ordered.
Read Order: Association for Democratic Reforms & Anr v. Union of India & Ors [SC- Writ Petition (C) No. 880 of 2017]
Tulip Kanth
New Delhi, February 15, 2024: Declaring the Electoral Bond Scheme, which introduced anonymous financial contributions to political parties, as unconstitutional, the Supreme Court has prohibited the issuance of fresh Bonds.
The petitioners had instituted proceedings under Article 32 of the Constitution challenging the constitutional validity of the Electoral Bond Scheme s. The petitioners also challenged the provisions of the Finance Act, 2017, which, among other things, amended the provisions of the Reserve Bank of India Act, 1934, the Representation of the People Act, 1951, the Income Tax Act, 1961 and the Companies Act, 2013.It was clarified in the judgment that the law relating to financial contributions to political parties focusses on contributions by corporate entities, disclosure of information on contributions and income tax exemptions for donations.
The issues before the Bench was whether unlimited corporate funding to political parties, as envisaged by the amendment to Section 182(1) of the Companies Act infringes the principle of free and fair elections and violates Article 14 of the Constitution.
Another issue was whether the non-disclosure of information on voluntary contributions to political parties under the Electoral Bond Scheme and the amendments to Section 29C of the RPA, Section 182(3) of the Companies Act and Section 13A(b) of the IT Act are violative of the right to information of citizens under Article 19(1)(a) of the Constitution.
The Constitution Bench of Chief Justice D.Y. Chandrachud, Justice B.R. Gavai, Justice J.B. Pardiwala, Justice Manoj Misra and Justice Sanjiv Khanna was of the view that the Electoral Bond Scheme is violative of Article 19(1)(a) and unconstitutional. Justice Khanna penned down a separate opinion giving a different reasoning to arrive at the same conclusion.
The Bench was of the opinion that the information about funding to a political party is essential for a voter to exercise their freedom to vote in an effective manner. The Electoral Bond Scheme and the impugned provisions to the extent that they infringe upon the right to information of the voter by anonymizing contributions through electoral bonds are violative of Article 19(1)(a).
Section 182 enables a company to contribute any amount directly or indirectly to any political party. The Finance Act 2017 made three changes to Section 182. The first proviso to Section 182(1) which prescribed a cap on corporate funding was omitted. Section 182(3) was amended to only require a disclosure of the total amount contributed to political parties by a company in a financial year and excluded the requirement to disclose the particulars of the amount contributed to each political party; and Sub-section 3A was introduced, by which a company could contribute to a political party only by a cheque, bank draft, or electronic clearing system.
As per the Bench, the right to information of the voter includes the right to information of financial contributions to a political party because of the influence of money in electoral politics (through electoral outcomes) and governmental decisions (through a seat at the table and quid pro quo arrangements between the contributor and the political party). Similarly, the right to privacy of political affiliations does not extend to contributions which may be made to influence policies. It only extends to contributions made as a genuine form of political support that the disclosure of such information would indicate their political affiliation and curb various forms of political expression and association.
“…the anonymity of the contributor is intrinsic to the Electoral Bond Scheme. The Electoral Bond is not distinguishable from other modes of contributions through the banking channels such as cheque transfer, transfer through the Electronic Clearing System or direct debit if the anonymity component of the Scheme is struck down. Thus, the Electoral Bond Scheme 2018 will also consequentially have to be struck down as unconstitutional”, the Bench opined.
The Bech asserted that the amendment to Section 182 is manifestly arbitrary for treating political contributions by companies and individuals alike, permitting the unregulated influence of companies in the governance and political process violating the principle of free and fair elections and treating contributions made by profit-making and loss-making companies to political parties alike. Further observing that the companies and individuals cannot be equated for the purpose of political contributions, the Supreme Court stated that the amendment to Section 182 is also manifestly arbitrary for not making a distinction between profit-making and loss-making companies for the purposes of political contributions.
“The exposition is that the law must not treat companies and individual contributors alike because of the variance in the degree of harm on free and fair elections”, the Bench observed.
The Top Court concluded that the Electoral Bond Scheme, the proviso to Section 29C(1) of the Representation of the People Act 1951 (as amended by Section 137 of Finance Act 2017), Section 182(3) of the Companies Act (as amended by Section 154 of the Finance Act 2017), and Section 13A(b) (as amended by Section 11 of Finance Act 2017) are violative of Article 19(1)(a) and unconstitutional. The deletion of the proviso to Section 182(1) of the Companies Act permitting unlimited corporate contributions to political parties was also held to be arbitrary and violative of Article 14.
“We direct the disclosure of information on contributions received by political parties under the Electoral Bond Scheme to give logical and complete effect to our ruling”, the Bench ordered while also enumerating following directions:
- The issuing bank shall herewith stop the issuance of Electoral Bonds.
- SBI shall submit details of the Electoral Bonds purchased since the interim order of this Court dated 12 April 2019 till date to the ECI. The details shall include the date of purchase of each Electoral Bond, the name of the purchaser of the bond and the denomination of the Electoral Bond purchased.
- SBI shall submit the details of political parties which have received contributions through Electoral Bonds since the interim order of this Court dated 12 April 2019 till date to the ECI. SBI must disclose details of each Electoral Bond encashed by political parties which shall include the date of encashment and the denomination of the Electoral Bond; d. SBI shall submit the above information to the ECI within three weeks from the date of this judgment, that is, by 6 March 2024.
- The ECI shall publish the information shared by the SBI on its official website within one week of the receipt of the information, that is, by 13 March 2024.
- Electoral Bonds which are within the validity period of fifteen days but that which have not been encashed by the political party yet shall be returned by the political party or the purchaser depending on who is in possession of the bond to the issuing bank. The issuing bank, upon the return of the valid bond, shall refund the amount to the purchaser’s account.
Justice Khanna respectfully agreed with the reasoning recorded by the Chief Justice, holding that the amendment to Section 182 of the Companies Act, deleting the first proviso thereunder should be struck down. He opined that the principle of proportionality would subsume the test of manifest arbitrariness. In addition, the claim of privacy by a corporate or a company, especially a public limited company would be on very limited grounds, restricted possibly to protect the privacy of the individuals and persons responsible for conducting the business and commerce of the company.
He concluded that the Scheme is unconstitutional and struck down the same. Further ordering that issuance of fresh Bonds would be prohibited, he also clarified that if the Bonds issued (within the validity period) are with the donor/purchaser, the donor/purchaser may return them to the authorised bank for refund of the amount. In case the Bonds (within the validity period) are with the donee/political party, the donee/political party will return the Bonds to the issuing bank, which will then refund the amount to the donor/purchaser. On failure, the amount will be credited to the Prime Ministers Relief Fund.
Read Order: RAJESH VIREN SHAH v. REDINGTON (INDIA) LIMITED [SC-CRIMINAL APPEAL NO. 888 2024]
LE Correspondent
New Delhi, February 15, 2024: The Supreme Court has allowed the appeals of the Directors of a Company in a cheque bounce case as they were in no way responsible for the conduct of business at the time when cheques were issued.
The appellants in both the appeals were Directors in the Respondent-Company and had resigned from such Directorship respectively. Form 32 in accordance with Sections 303(2), 264(2), 266(1)(a), and 266(1)(b)(iii) of the Companies Act, 1956, in respect thereof stood accepted respectively.
The appellants, namely, Rajesh Viren Shah and Sanjay Babulal Bhutada were arrayed as accused in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (N.I.Act) in relation to three cheques for Rs 10,00,000, by the Company respondent herein against M/s MIEL e-Security Private Limited and its Directors, with one Mr. Narayanan Kutty Nair, Managing Director, being arrayed as A-2, and A-3 to A-7 being its Directors, including the appellants who were arrayed as A-4 and A-6 respectively.
With the dishonouring of the cheque on presentation on account of insufficient funds the complainant-respondent after serving statutory notice preferred a complaint under Sections 200 and 191A Code of Criminal Procedure, 1973 read with Section 144 of the N.I. Act, seeking quashing of such an action initiated by the respondent herein, the appellants preferred a petition under Section 482 of the CrPC which stands dismissed by the impugned order.
The Division Bench of Justice B.R. Gavai & Justice Sanjay Karol observed that the position of law as to the liability that can be fastened upon a Director for non-realisation of a cheque is no longer res integra. Reliance was placed upon Section 141 of the N.I. Act, which states that every person who at the time of the offence was responsible for the affairs/conduct of the business of the company, shall be held liable and proceeded against under Section 138 of the N.I. Act, with exception thereto being that such an act, if done without his knowledge or after him having taken all necessary precautions, would not be held liable. However, if it is proved that any act of a company is proved to have been done with the connivance or consent or may be attributable to (i) a director; (ii) a manager; (iii) a secretary; or (iv) any other officer – they shall be deemed to be guilty of that offence and shall be proceeded against accordingly.
The Bench also referred to Monaben Ketanbhai Shah v. State of Gujarat [LQ/SC/2004/843] and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. [LQ/SC/2005/943]. It has been observed in S.M.S. Pharmaceuticals Ltd. (Supra) that in regards to the exercise of the inherent powers under Section 482 CrPC, in cases involving negotiable instruments that interference would not be called for, in the absence of “some unimpeachable, incontrovertible evidence which is beyond suspicion or doubt or totally acceptable circumstances which may clearly indicate that the Director could not have been concerned with the issuance of cheques and asking him to stand the trial would be abuse of process of Court.
The Bench found that the High Court, in the impugned order to have elaborately discussed the principles of law in regard to the quashing of such proceedings but, however, not dealt with the factual matrix. The Top Court was also of the opinion that the complainant had not placed any materials on record indicating complicity of the present appellants in the alleged crime. “Particularly, when the appellant(s) had no role in the issuance of the instrument, which is evident from Form 32 (Exh.P.59) issued much prior to the date on which the cheque was drawn and presented for realisation”, it said.
Moreover, the basis on which liability was sought to be fastened upon the instant appellants was rendered questionable as the veracity of Form-32 had neither been disputed by the Respondent nor had the act of resignation simpliciter been questioned.
“The record reveals the resignations to have taken place on 9 th December 2013 and 12th March 2014. Equally, we find the cheques regarding which the dispute has travelled up the courts to have been issued on 22nd March 2014. The latter is clearly, after the appellant(s) have severed their ties with the Respondent Company and, therefore, can in no way be responsible for the conduct of business at the relevant time. Therefore, we have no hesitation in holding that they ought to be then entitled to be discharged from prosecution”, the Bench clarified.
Accordingly, the Bench quashed all criminal proceedings pertaining to the instant appellants arising out of the complaints filed by the respondent herein are quashed.
Read Order: SH. GAURAV SARDANA v. THE STATE GOVT. OF NCT OF DELHI & ANR [DEL HC-CRL.M.C. 2069/2022 & CRL.M.A. 8761/2022]
Tulip Kanth
New Delhi, February 14, 2024: The Delhi High Court has accepted the plea of a petitioner seeking recall of the prosecutrix and Investigating Officer for further cross-examination in a case where the prosecutrix appeared for the first time before the Trial Court after a lapse of four years and the petitioner’s counsel could not appear on that day due to his occupation before the High Court.
The Single-Judge Bench of Justice Navin Chawla was considering a petition filed by the petitioner under Section 482 of the Code of Criminal Procedure, 1973 challenging the Order of the Trial Courtdismissing his application filed under Section 311 of the Cr.P.C. seeking recall of the prosecutrix/PW1 and the IO/PW4 for further cross-examination.
It was clear from the impugned order that PW1/prosecutrix was allowed to be recalled for further cross-examination vide an Order dated 01.03.2017 of the Trial Court. She appeared before the Trial Court, however, as the learned counsel for the petitioner did not appear in spite of repeated passovers granted, she was discharged. The Trial Court has also observed that no useful purpose would be served in recalling her as the examination of PW3 had been recorded and nothing substantial had been obtained from his statement.
It was the petitioner’s case that for a period of almost 4 years, the prosecutrix, however, did not appear before the Trial Court. She appeared for the first time only on 07.12.2021. It was submitted that, on that date, unfortunately, he was held up in another matter in the High Court of Delhi and therefore, could not appear before the Trial Court on time. However, the application seeking recall of the PW1 was filed on the very same day before the Trial Court. The Counsel submitted that the petitioner should not be prejudiced in his defence for non-appearance on part of the lawyer.
On the contrary, the Respondent submitted that the intent of the petitioner was only to delay the trial and it was for this reason that the PW1 was not cross-examined on 7.12.2021, in spite of repeated opportunities being granted to the petitioner for the said purpose. It was the respondent’s case that merely because the counsel does not appear, is no ground to recall the witness.
The Bench opined, “Though, it is correct that only because of non-appearance of the learned counsel for the petitioner, the clock should not be put back by recalling the witness who has been examined in his absence, at the same time, in the present case, the PW1 had been allowed to be recalled by the learned Trial Court vide its Order dated 01.03.2017.”
It was undisputed that the for a period of almost four years PW1 did not appear before the Trial Court and she appeared for the first time post the Order of 01.03.2017, only on 07.12.2021. The counsel for the petitioner, however, could not appear before the Trial Court on that day due to his occupation before the High Court.
“The application seeking her recall was filed by the petitioner on the very same day. This reflects bona fide on part of the petitioner. In any case, the petitioner should not be made to suffer for the fact that his counsel could not appear before the learned Trial Court for some reasons”, the High Court affirmed.
Considering the fact that at the present stage the only issue before the Court was whether the petitioner had made out a case for recalling the witness, the Nehc held, “PW1 is directed to be recalled for further cross-examination, subject to availability, before the learned Trial Court in terms of the Order dated 01.03.2017. The learned Trial Court shall fix a date for her appearance and for the recording of her further cross-examination.”
The High Court also allowed the petitioner’s plea to recall the Investigating Officer. However, noting that considerable delay had been caused by the petitioner in the trial, the Bench ordered the petitioner to pay costs of Rs15,000 to be paid to the prosecutrix on her appearance before the Trial Court.
Read Order: DAVESH KUMAR v. GAURI @ SUPRIYA & ORS [DEL HC- CRL.A. 963/2023]
Tulip Kanth
New Delhi, February 14, 2024:In a case of paternal filicide where the appellant-father was accused of murdering his disabled 6-yr-old son,the Delhi High Court has rejected his appeal challenging the order passed by the Special Judge whereby his application u/s 195 r/w Section 340 Cr.P.C. for initiating proceedings against the respondents(wife and other relatives) was dismissed.
The appellant had approached the Delhi High Court with an appeal filed under Section 341 of the Code of Criminal Procedure, 1973 (Cr.P.C).
The factual background of this case was that the appellant faced trial for commission of offences under Section 302/201 IPC on the allegations of murder of his disabled son ‘D’ aged about six years at his residence, who was suffering from ‘Down Syndrome’. The child was alleged to have been throttled by the appellant and cremated the dead body, thereby causing the evidence of commission of offence to disappear. Appellant also allegedly criminally intimidated his wife (respondent No.1).
It was the appellant’s case that he had faced trial and incarceration on the basis of false accusations and deposition made by the respondents with regard to commission of murder of his son ‘D’. It was vehemently submitted that after investigation, the police did not find any case against the appellant but the proceedings were continued by way of complaint case by respondent No.1.
“It is well settled that merely because a witness may make contradictory statements in two different stages in judicial proceedings, it may not by itself be sufficient to justify their prosecution for perjury, unless and until it is established that the witness intentionally made a false statement or fabricated the evidence for the purpose of use in judicial proceedings. Further, the Court is still required to form an opinion that it is ‘expedient in the interest of justice’ to initiate an inquiry into the ‘offences of false evidence’ and ‘offence against public justice’, having regard to overall factual matrix”, the Single-Judge Bench of Justice Anoop Kumar Mendirattasaid.
Noting that the imperative for initiating action under Section 340 Cr.P.C. is the concern for sustaining the purity of process of administration of justice, the Bench referred to K.T.M.S. Mohd. and Another v. Union of India [LQ/SC/1992/363] and AmarsangNathaji v. Hardik Harshadbhai Patel and Others, [LQ/SC/2016/1479] .
As per the Bench, the parameter in an inquiry under Section 340(1) Cr.P.C. is whether a prima facie case is made out, which if unrebutted, may have a reasonable likelihood to establish the specified offence and whether it is also ‘expedient in the interest of justice’ to take such action. The Court is required to keep overall factual matrix in consideration, and only in case the Court is of the opinion that it is ‘expedient in the interest of justice’, such permission needs to be granted.
“The tragedy in the instant case is awful to comprehend, since allegations of paternal filicide have been leveled by respondent No.1 (wife of appellant) against her own husband/appellant. The disability of child itself was motive, as the appellant found it difficult to cope with the profound stress faced in upbringing the disabled child”, the Bench asserted.
The complaint was lodged after a considerable delay and the testimony of the complainant had been disbelieved by the Trial Court to be insufficient to convict the appellant, since despite being witness to the alleged incident of murder she failed to report the same to the police. Further, there was no other evidence after cremation of body of deceased, to corroborate that deceased was throttled to death.
The Bench noticed that the appellant had been extended the benefit of doubt by the Trial Court in absence of incriminating evidence and contradictions in the testimony of witnesses.
The Bench made it clear that it may not be unnatural for the complainant wife to be in a shock and unable to take the expected course of action pitted against her husband. The complainantwith passage of time, gathered the courage to report the incident, being pinched by her conscience. Even the maid employed by the appellant appeard to be an independent witness to the event which unfolded after the incident.
“In the facts and circumstances, merely because benefit of doubt has been extended to the appellant in view of inconsistencies which crept in evidence of witnesses during different stages of trial, cannot be a ground to allow the application under Section 340 Cr.P.C”, the Bench held while dismissing the appeal.
Read Order: PRIYANKA ARORA AND ORS v. STATE GOVT. OF NCT OF DELHI [DEL HC- CRL.A. 132/2024]
LE Correspondent
New Delhi, February 14, 2024: In a civil dispute matter relating to the sale of property where the custodial investigation of the accused-appellants was not required, the Delhi High Court has granted the relief of bail to 2 accused booked under the SC/ST Act on a condition that they furnish a personal bond in the sum of Rs 25,000 each with one surety.
It was the case of the prosecution that a complaint was received from Ms.’C’ alleging that Priyanka Arora and Kapil Dev (appellants) along with Harish Chander Pahwa followed her and drove the car towards her. Further, a complaint lodged by her earlier against Priyanka Arora, Kapil Dev Arora and Harish Chander Pahwa had culminated in registration of FIR under various Sections of Indian Penal Code, 1860 and Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989. She further stated that in her earlier two complaints, it was also pointed out that aforesaid accused/appellants followed her regularly and tried to hit her by a car. As such, she apprehended danger to her life from the aforesaid accused/appellants who threatened her and used vulgar language earlier.
As per the status report filed by the prosecution, complainant, during investigation stated that earlier an FIR was registered under Section 420 IPC wherein both the parties were engaged in mediation. The said case pertained to dispute of sale of property wherein the appellants allegedly refused the execution of sale deed in favour of the complainant. Complainant during investigation also alleged that she was verbally abused by the appellants and they also showed her middle finger and attempted to hit her by the vehicle.
The Criminal Appeals had been preferred on behalf of the appellants under Section 14A(2) of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 read with Section 482 of Code of Criminal Procedure, 1973 (Cr.P.C.) challenging the order remanding the appellants to judicial custody along with order whereby the bail applications under Section 439 Cr.P.C. was withdrawn with liberty to move the appropriate forum against order declining the first bail application preferred on behalf of the appellants. Section 3(2)(va) of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989 was invoked by the prosecution subsequent to registration of FIR.
The appellants challenged the order declining the bail to both the appellants and submitted that appellant Priyanka Arora aged about 43 years is running an NGO and staying with her parents. The present case was stated to have been lodged on the next day of the alleged incident in order to pressurize the appellants to settle the civil dispute relating to sale of property.
It was the case of the respondents that the allegations levelled by the complainant were corroborated by the CCTV footage and the appellants had been stalking and harassing the complainant. It as contended that since an attempt had been made to hit the complainant even in the past, they did not deserve the benefit of bail.
The Single-Judge Bench of Justice Anoop Kumar Mendiratta was of the view that the relations between both the parties went sour after the dispute arose with regard to sale of property. An FIR was registered earlier under Section 420/34 IPC without arresting the appellants, considering that the genesis of the complaint related to dispute regarding sale of property. Appellants were stated to have been placed in Column No.12 in the final report but also stand summoned under Section 3(1)(r)(s), Section 3(1)(w)(ii) & Section 3(2)(va) of the SC/ST Act.
The Bench further opined that on the alleged date and time of the incident i.e. 25.10.2023, appellants could not have contemplated that the complainant would also be passing the street while approaching from opposite direction. Further, nothing substantive could be concluded on the basis of CCTV footage, relied upon by the prosecution. Even the ASJ observed that as per CCTV footage, only the brakes appeared to have been applied in the Baleno car belonging to the appellants but nothing further was visible.
“The observations made by the learned ASJ that the appellants after first FIR, again committed the similar offence on 25.10.2023, can be determined only after the evidence is led by the prosecution and the same cannot be prima facie concluded by the CCTV footage. The genesis of the dispute is on account of civil dispute relating to sale of property. The appellants are no more required for any custodial investigation”, the Bench held.
Thus, observing that the order passed by the ASJ declining the bail to the appellants did not appear to be on cogent grounds, the Bench set aside the same.
The High Court granted conditional bail to both the appellants on furnishing a personal bond in the sum of Rs 25,000 each with one surety in the like amount to the satisfaction of the Special Court/Trial Court/Duty MM.
Read Order: DIRECTORATE OF ENFORCEMENT & ANR v. BABLU SONKAR & ANR [SC-CRIMINAL APPEAL NO(S). 774 OF 2024]
LE Correspondent
New Delhi, February 14, 2024: While permitting Seva Vikas Co-operative Bank fraud case accused Bablu Sonkar to move the roster Bench by filing an application for interim relief/grant of bail, the Supreme Court has observed that on 26.06.2023, when the Bench directed that the case was released and it should be heard afresh, the propriety required that the Bench should not have passed any order on merits, as the roster of the writ petition was with another Bench on that day.
The first respondent-writ petitioner had filed the writ petition in the Bombay High Court for quashing a complaint filed by the Enforcement Directorate under Prevention of Money Laundering Act, 2002 (PMLA). However, there was no interim relief granted pending the hearing of the petition.
The report submitted by the Registrar General of the Bombay High Court record that a roster Bench finally heard the writ petition and the judgment was reserved. The roster of the Bench which heard the case of criminal writ petitions for quashing was only upto 04.06.2023 and the same roster was entrusted to another Bench with effect from 05.06.2023 till 20.08.2023.
The writ petition filed by the first respondent was listed for further hearing. The impugned order was passed in the Chamber on that day. In paragraph ‘2’ of the impugned order, the Bench recorded that there were similar matters involving the same issue and its judgment will have impact on other cases which were pending.
At the outset, the Division Bench of Justice Abhay S. Oka & Justice Ujjal Bhuyan observed, “The moment the Bench directed that the case was released and it should be heard afresh, the propriety required that the Bench should not have passed any order on merits, as the roster of the writ petition was with another Bench on that day.”
The Bench was completely surprised with the fact that that after releasing the case, when admittedly there was no prayer made by the first respondent for grant of bail, the Bench granted bail for releasing the first respondent. Even during the pendency of writ petition, bail was not granted to the first respondent though a prayer for interim relief of grant of bail was made in the petition.
“Even if such a prayer would have been made on 26.06.2023, the Bench could not have heard the prayer for bail. Only the roster Bench could have heard the same. On that day, the advocate for the first respondent admittedly did apply for bail. Therefore, the appellants were not heard on the prayer for bail. Moreover, bail was granted in an offence under the PMLA without recording any reasons. Bail cannot be granted in such a case only to “strike a balance”, the Bench said.
The Bench was of the firm opinion that the impugned order to the extent to which bail was granted to the first respondent would have to be quashed and set aside. “These are all matters of propriety. Roster notified by the Chief Justice is not an empty formality. All Judges are bound by the same. On 26.06.2023, after releasing the case which was heard two months back, the Bench has proceeded to grant bail without anyone praying for grant of bail. No Bench can hear a case, unless as per the prevailing roster, the particular case is assigned to the Bench or that the case is specially assigned to the Bench by the Chief Justice. Therefore, we set aside that part of the impugned order by which bail was granted”, the Top Court held.
The Bench permitted the first respondent to move the roster Bench by filing an application for interim relief/grant of bail. “Such application shall be entertained by the High Court, only after the first respondent surrenders. We grant time of two weeks to the first respondent to surrender”, it stated while also clarifying that the Bench was not setting aside the order granting bail on merits. The said aspect shall be considered by the High Court while dealing with the application, which may be filed by the first respondent, the Apex Court added.
Read Order: DIRECTORATE OF ENFORCEMENT & ORS v. NIRAJ TYAGI & ORS [SC- CRIMINAL APPEAL NO. 843 OF 2024)
Tulip Kanth
New Delhi, February 14, 2024: The Supreme Court has allowed a plea of the Enforcement Directorate (ED) challenging Allahabad High Court orders in money laundering case registered against Niraj Tyagi- President (Legal), and authorized officer of IHFL- Reena Bagga. The Apex Court opined that the High Court could not have stayed the investigations and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and the ECIR, particularly when the investigations were at a very nascent stage.
The respondent India Bulls Housing Finance Limited (IHFL) is a non- banking financial institution dealing with the public money. The major source of funds for the loans to be advanced by IHFL, is either the loans from the other banks or from the public in the form of non-convertible debentures. The respondents Niraj Tyagi is the President (Legal) and Reena Bagga is the authorized officer of the IHFL. M/s Kadam Developers Pvt. Ltd. was one of the Shipra Group entities which had a sub- lease of a parcel of land in Noida. The 100% equity shares of M/s Kadam were held by Shipra Estate Limited (98%); Mohit Singh (1%) and Bindu Singh (1%).
Between 2017-2020, IHFL had sanctioned 16 loan facilities to the tune of Rs. 2,801 crores to the Shipra Group/ Borrowers comprising of Shipra Hotels Ltd., Shipra Estate Ltd. and Shipra Leasing Pvt. Ltd. for the purposes of the construction and/or development of Housing/Residential Projects. Against the said sanctioned loan, a sum of approximately 1995.37 crores was disbursed. The financial assistance was secured by the Shipra Group by executing 22 pledge agreements. The mortgaged properties also included 73 acres of land at Noida that had been sub-let to M/s Kadam by YEIDA, and the property called ‘Shipra Mall’ in Ghaziabad.
There being defaults in the repayment of loan amount, IHFL had issued notices recalling all the loans advanced to the Shipra Group amounting to Rs. 1763 crores (approx.). A series of litigations under the SARFAESI Act before the DRT and High Court had ensued between the parties. IHFL ultimately sold the shares of M/s Kadam pledged with it to one Final Step Developers P. Ltd., a subsidiary of M3M India P. Ltd. for Rs. 750 crores. The purchase of shares of M/s Kadam by Final Step from the IHFL was funded by the IHFL itself. The mortgaged properties-Shipra Mall at Ghaziabad and the parcel of land also eventually came to be sold by the IHFL towards the recovery of its dues from the Shipra Group.
An FIR came to be filed by one Amit Walia, a Director of Shipra Hotels, against IHFL and its officers for the offences under Sections 420, 467, 468, 471, 120-B IPC, 323, 504 & 506 at Police Station Indirapuram, alleging that IHFL had illegally showed the Shipra group to be the defaulters, so that they may misappropriate the properties owned by the Group through illegal means. The FIR also alleged that IHFL had conspired with M3M India, and by forging and fabricating the documents sold 73 acres of land of M/s Kadam to M3M India, for a sum of 300 crores when the market value of the same was about 4000 crores. IHFL had also undervalued the shares and securities on the basis of false and forged documents and had caused great loss to the Shipra Estate Company and its Directors. Another FIR came to be filed by YEIDA against IHFL, M3M India, M/s Kadam and M/s Beacon Trusteeship Ltd. for the offences under Sections 420, 467, 468, 471 and 120-B.
One Mohit Singh, authorized representative of Shipra Group, also filed an FIR against Reena Bagga in her capacity as an authorized officer of IHFL and others for the offences under Section 420, 120B IPC and 82 of Registration Act. These FIRs came to be challenged by them by filing writ petition. The Directorate of Enforcement (ED) on the basis of the said FIRs registered an ECIR to investigate into the offences of money laundering under the Prevention of Money Laundering Act, 2002.
According to the appellant-ED, this Court without giving the appellant any opportunity of hearing, passed the order whereby criminal proceedings in three such FIRs were stayed. The respondent-Niraj Tyagi and IHFL thereafter filed a writ petition in the High Court seeking issuance of direction for declaring Section 420 of IPC as arbitrary and ultra vires to the Constitution of India and seeking quashing of the FIR. Respondent Reena Bagga and IHFL also filed another writ petition seeking quashing of the FIR registered against them.
The appellants being aggrieved by the interim orders passed by the Allahabad High Court had preferred the instant appeals before the Top Court. Vide the impugned orders, the High Court had stayed the proceedings of the FIRs registered against the concerned respondents-accused as also stayed the proceedings of ECIR registered by the Directorate of Enforcement against the concerned respondents, and further directed not to take any coercive action against the respondents pending the said writ petitions.
The Division Bench of Justice Bela M. Trivedi and Justice Prasanna B. Varale was of view that without undermining the powers of the High Court under Section 482 of Cr.PC to quash the proceedings if the allegations made in the FIR or complaint prima facie do not constitute any offence against the accused, or if the criminal proceedings are found to be manifestly malafide or malicious, instituted with ulterior motive etc., the High Court could not have stayed the investigations and restrained the investigating agencies from investigating into the cognizable offences as alleged in the FIRs and the ECIR, particularly when the investigations were at a very nascent stage.
“It hardly needs to be reiterated that the inherent powers under Section 482 of Cr.PC do not confer any arbitrary jurisdiction on the High Court to act according to whims or caprice. The statutory power has to be exercised sparingly with circumspection and in the rarest of rare cases. In a way, by passing such orders of staying the investigations and restraining the investigating agencies from taking any coercive measure against the accused pending the petitions under Section 482 Cr.PC, the High Court has granted blanket orders restraining the arrest without the accused applying for the anticipatory bail under Section 438 of Cr.PC”, the Bench held.
Placing reliance upon the judgment in Neeharika Infrastructure Pvt. Ltd. vs. State of Maharashtra and Others where while strongly deprecating the practice of the High Courts in staying the investigations or directing not to take coercive action against the accused pending petitions under Section 482 of Cr.PC, the Top Court had issued certain guidelines, the Bench opined, “The impugned orders passed by the High Court are in utter disregard and in the teeth of the said guidelines issued by the Three-Judge Bench of this Court.”
“Without elaborating any further, suffice it to say that judicial comity and judicial discipline demands that higher courts should follow the law. The extraordinary and inherent powers of the court do not confer any arbitrary jurisdiction on the court to act according to its whims and caprice. The impugned orders passed by the High Court being not in consonance with the settled legal position, the same deserve to be set aside and are hereby set aside”, the Bench asserted.
Thus, allowing the appeal, the Bench held that the impugned interim orders passed by the High Court qua the concerned respondents-accused in the present appeals would stand vacated forthwith.
Read Order: K. Babu v. M. Swaraj and others [SC- CIVIL APPEAL NO. 5975 OF 2023]
LE Correspondent
New Delhi, February 14, 2024: While reiterating that the defects in an election petition which constitute non-compliance with Section 83 of the Representation of the People Act, 1951 are curable defects, the Supreme Court has rejected the appeal of Congress MLA K Babu challenging the election petition moved by CPI(M) leader M Swaraj.
The issue before the Division Bench of Justice Aniruddha Bose and Justice Sanjay Kumar was whether the election petition filed against the appellant by the first respondent was liable to be rejected at the threshold. The appellant had approached the Top Court as the High Court of Kerala answered this question in the negative.
The appellant and the six respondents contested in the election to the 15th Kerala Legislative Assembly, held on 06.04.2021, from 081-Tripunithura Legislative Assembly Constituency. The appellant was declared elected on 02.05.2021, having polled 992 votes more than the next candidate, viz., the first respondent. Thereupon, Election Petition was filed by the first respondent before the High Court of Kerala under Sections 80, 81, 83, 84, 100, 101 and 123 of the Representation of the People Act, 1951 seeking a declaration that the election of the appellant was void and, in consequence, to declare him duly elected.
The appellant filed preliminary objections in the election petition. Therein, he contended that the petition was liable to be dismissed under Section 86 of the Act of 1951 for non-compliance with Section 81 thereof. He claimed that a complete election petition, after the curing of defects, was placed before the Court beyond the period of limitation and, further, sufficient number of copies, as required under Rule 212 of the Rules of the High Court of Kerala, 1971were not filed. He also claimed that the copy of the election petition furnished to him was not a true copy of the petition filed.
The second ground urged by the appellant in his objections was in relation to Section 83 of the Act of 1951, which requires an election petition to contain a concise statement of material facts and full particulars of any corrupt practice, including the names of the parties alleged to have committed such corrupt practice along with the date and place of commission of each such practice. The appellant asserted that the pleadings in the election petition lacked material facts and particulars of the corrupt practices attributed to him and, therefore, the election petition did not disclose a cause of action. He prayed that the election petition be dismissed at the threshold under Order VII Rule 11 CPC.
The High Court held that the lapses did not amount to non-compliance with Section 81(3) of the Act of 1951 and the election petition was not liable to be rejected by invoking the provisions of Section 86(1) thereof. Aggrieved by the aforestated order, the appellant filed the present case before the Supreme Court.
It was the appellant’s case that the election petition was not in compliance with Section 83 of the Act of 1951, as sufficient number of copies of the petition were not filed at the time of its presentation. According to him, facts relating to printing and publishing of the slips with the religious symbol were not furnished to the extent required and the election petition also did not disclose the source of information regarding distribution of such slips by and on behalf of the appellant.
“…it is well settled that non-compliance with the requirements of Section 83 of the Act of 1951 is not fatal, as Section 86(1) thereof only speaks of non-compliance with Sections 81, 82 or 117 being the basis for dismissal of an election petition at the outset. Defects in an election petition that constitute non-compliance with Section 83 of the Act of 1951 have been held to be curable defects”, the Bench held while referring to the judgments in Phungzathang vs. Hangkhanlian and others [LQ/SC/2001/1881] ; Umesh Challiyill vs. K.P. Rajendran [LQ/SC/2008/500] ; Ponnala Lakshmaiah vs. Kommuri Pratap Reddy and others [LQ/SC/2012/545] ; G.M. Siddeshwar vs. Prasanna Kumar (2013) 4 SCC 776 [LQ/SC/2013/267] ; and A. Manju vs. Prajwal Revanna alias Prajwal R and others [LQ/SC/2021/3204].
It was also held by the Bench that once the High Court opined that a triable issue under Section 123(3) of the Act of 1951 is made out, there were grounds to interfere therewith.
Placing reliance upon Rule 212, the Bench held that the three authenticated copies are for the use of the Court only. Further, copies of petitions are to be furnished under this Rule are clearly in addition to what is required to be filed under Section 81(3) of the Act of 1951.
It was also noticed that though the appellant also made a bald statement in his preliminary objections that the copy of the petition furnished to him was not a true copy of the election petition, he did not elaborate on what he meant by that. More importantly, a specific allegation was never made by him that the copy of the petition furnished to him was not attested by the first respondent under his own signature to be a true copy of the election petition.
“When the statutory provision unequivocally stipulates as to what is required to be done to comply with the mandate thereof, it is not permissible in law to read something more into that provision. Rule 212 of the Rules of 1971 introduces additional requirements prescribed by the High Court and the same cannot, by any stretch of imagination, be read into and be made part and parcel of Section 81(3) of the Act of 1951”, the Bench asserted.
Thus, dismissing the appeal, the Bench held that the objections raised by the appellant against the maintainability of the election petition filed by the first respondent had no merit and the order of the High Court holding to that effect warranted no interference.
Read Order: PRIYANKA PRAKASH KULKARNI v. MAHARASHTRA PUBLIC SERVICE COMMISSION [SC- CIVIL APPEAL NO(S). 1982 OF 2024]
Tulip Kanth
New Delhi, February 14, 2024: While observing that the appellant is a meritorious candidate who has cleared the main examination of State Tax Officer despite being deserving of the benefit of female reservation, the Supreme Court has exercised its jurisdiction under Article 142 of the Constitution and directed the Union to treat her as a candidate under the ‘Reserved Female Category’.
The facts of the case suggested that an advertisement was issued by the Respondent in relation to the State Services Preliminary Examination for the recruitment of persons to the post of ‘Group A’ and ‘Group B’ officers under the Government of Maharashtra (Impugned Advertisement). Pertinently, Paragraph 5.5 of the Impugned Advertisement contemplated the benefit of female reservation subject to certain prerequisites which included that the candidate must be a domicile of Maharashtra and must belong to the Non-Creamy Layer (NCL).
In the aforesaid context, the Appellant i.e., a candidate employed as State Tax Officer in the Goods and Services Tax (GST) Department submitted her application for the aforesaid examination under the ‘Open General Category’ on account of her inability to produce a valid NCL Certificate as on the last date of submission of the application form. However admittedly, the Appellant was otherwise eligible to apply under ‘Reserved Female Category’ qua the underlying examination being conducted pursuant to the Impugned Advertisement.
Thereafter, the Appellant cleared the preliminary and main examination from the ‘Open General Category’. In the interregnum, the Department of Other Backward Bahujan Welfare issued a corrigendum amending Clause 2 (iii) of a circular whereunder the procedure of obtaining; and validity of NCL Certificates’ were regulated. The Corrigendum enabled candidates to submit an NCL Certificate which would have been valid in the current financial year as against an NCL Certificate which had to have been valid as on the last date of submission of the application form.
The Appellant had otherwise been eligible to apply under the ‘Reserved Female Category’ but for mandatory requirement of a valid NCL Certificate as on 01.06.2022, subsequently obtained an NCL Certificate on 09.03.2023. Thereafter, the Appellant made a representation to the Respondent to consider her candidature as a ‘Reserved Female Category’ candidate. Aggrieved by the non-consideration of her representation, the Appellant preferred the OA before the MAT but the same was dismissed. Her writ petition before the High Court was dismissed vide the impugned Order.
The appellant submitted that her eligibility qua the ‘Reserved Female Category’ came to be revived as the Appellant was no longer mandated to furnish an NCL Certificate which was valid as on the last date of submission of the application form but instead was called upon to furnish an NCL Certificate pertaining to current financial year.
Referring to Paragraph 5.10 r/w Paragraph 5.14 of the Impugned Advertisement, the Division Bench of Justice Vikram Nath and Justice Satish Chandra Sharma opined that any application under the ‘Reserved Female Category’ was to be supported by an NCL Certificate that was valid as on the last date of submission of the application form. Subsequently, vide the issuance of the Corrigendum, the aforenoted position changed and candidates were now eligible to furnish an NCL Certificate pertaining to the current financial year.
It was noticed that in the absence of the requisite documents evidencing status as a person belonging to the NCL under the Impugned Advertisement read with the Circular i.e., a valid NCL Certificate as on the date of submission of the application form, the Appellant did not mark ‘yes’ against the specific question pertaining to her status as a person belonging to the NCL. As per the Bench, a candidate who was scrupulously following the terms and conditions of the Impugned Advertisement was constrained to apply under the ‘Open General Category’ only on account of certain logistical limitations preventing her from obtaining a valid NCL Certificate. Consequently, in the absence of the requisite documents evidencing status as a person belonging to the NCL under the Impugned Advertisement read with the Circular i.e., a valid NCL Certificate as on the date of submission of the application form, the Appellant did not mark ‘yes’ against the specific question pertaining to her status as a person belonging to the NCL.
“The aforenoted conduct of the Appellant is bona-fide. Accordingly, in our view the Appellant cannot be unfairly deprived of the benefit of female reservation merely on account of the Appellant’s honesty and restraint which did not allow her to mark ‘yes’ against a column inquiring about a prospective candidates’ status as a person belonging to the NCL, in the absence of the underlying supporting document. Additionally, other similarly situated candidates have been granted the benefit under the Corrigendum; and their otherwise defective applications have now been considered by the Respondent”, the Bench held while further adding, “In our considered opinion, the High Court adopted a hypertechnical interpretation of the Instructions without appreciating that such an interpretation would nullify the effect of the Corrigendum.”
Such an interpretation, as per the Bench, ought not to have been adopted especially in light of the fact that other persons had been granted the benefit of the Corrigendum; and the Respondent ha relaxed the Instructions qua such persons so as to enable valid NCL Certificates to be furnished.
Allowing the appeal, the Bench directed the Respondent to forthwith treat the Appellant as a candidate under the ‘Reserved Female Category’.
Read Order: VINOD KANJIBHAI BHAGORA v. STATE OF GUJARAT & ANR [SC-CIVIL APPEAL NO(S). 1571 OF 2024]
LE Correspondent
New Delhi, February 14, 2024: While granting relief to a postal assistant who had tendered a technical resignation to join the State Govt Services, the Supreme Court has reaffirmed that schemes floated by the State Government form a part of delegated beneficial legislation and ought to be interpreted widely.
The Appellant was engaged by the Central Government as a Postal Assistant in the Gandhinagar Postal Division in 1983 and thereafter continued to serve in the aforesaid role up until 16.07.1993. In the interregnum, an invitation for applications for recruitment to the post of Senior Assistant in the Ministry of Health and Medical Services, Government of Gujarat (State Government) came to be issued. Accordingly, the Appellant herein obtained a No-Objection Certificate (NoC) from the Superintendent of Post Office, Gandhinagar Division and thereafter participated in the aforesaid selection process.
In 1993, the Appellant having been selected as Senior Assistant in the State Government, tendered a technical resignation in qua his employment as a Postal Assistant in the Gandhinagar Postal Division. The Appellant joined as a Senior Assistant in the State Government and thereafter went on to serve the State Government for a period extending to 23 years up until his superannuation. Thereafter, the State Government only paid the Appellant terminal benefits/pensionary benefits to the extent of the Subject Period.
Aggrieved by Impugned Action of the State Government, the Appellant made a representation before the Chief Postmaster General, Gujarat Circle seeking the inclusion of the period of his service with the Central Government i.e., as a Postal Assistant in the Gandhinagar Postal Division between ‘1983 and ‘1993 to be considered in the grant of terminal benefits / pensionary benefits as per Rule 25 of the Gujarat Civil Services (Pension) Rules, 2022 (the “Pension Rules”). However, this representation came to be rejected on the sole ground that the Appellant had tendered an unconditional resignation. The Appellant was constrained to prefer a writ petition before the High Court but the same was dismissed.
It was the appellant’s case that the Appellant was absorbed by the State Government and consequently, in terms of Rule 25(ix) of the Pension Rules, the Appellants’ terminal benefits / pensionary benefits could not be limited to merely the Subject Period but must also include 10 (ten) years of service rendered by him to the Central Government.
“As a precursor, it would be relevant to consider the raison d'etre qua the grant of pension. Similarly, it would be equally important to clarify that pension is earned by a government servant in lieu of tireless service rendered by him / her (as the case may be) during the course of their employment; and often is an important consideration for person(s) seeking government employment. Accordingly, in our considered opinion, the raison d'etre qua the grant of pension by the State Government would inextricably be linked to a concentrated effort by the State Government to enable its former employee(s) to tide over the vagaries and vicissitudes associated with old age vide a pension scheme”, the Division Bench of Justice Vikram Nath and Justice Satish Chandra Sharma observed.
The issue before the Bench was whether the Appellants’ subsequent employment with the State Government could be construed to mean that the Appellant had been ‘absorbed’ by the State Government, such that the Appellants’ prior service with the Central Government would be considered as a part of ‘qualifying service’in terms of Rule 25(ix) of the Pension Rules.
The Bench noticed that the Appellant served the Central Government as a Postal Assistant in the Gandhinagar Postal Division for a period spanning close to a decade and volunteered a technical resignation in order to be able to serve the State Government.
Further, referring to Rule 25(ix) of the Pension Rules, the Bench noted that the qualifying service for the purpose of calculating terminal benefits / pensionary benefits under the Pension Rules would include prior services rendered by such an person under inter alia the Central Government provided that the employment of such person under the Central Government encompassed an underlying pension scheme; and such person came to be absorbed by the State Government.
Referring to the judgment in Senior Divisional Manager, LIC v. Shree Lal Meena), [LQ/SC/2019/511], the Bench said, “It is well settled that pension scheme(s) floated by the State Government form a part of delegated beneficial legislation; and ought to be interpreted widely subject to such interpretation not running contrary to the express provisions of the Pension Rules. Furthermore it would be relevant to underscore that the State Government is a model employer; and ought to uphold principles of fairness and clarity.”
It was also observed that the State Counsel’s argument was narrow and restrictive so as to limit the benefit of Rule 25(ix) of the Pension Rules only to such person(s) who may have explicitly been absorbed by the State Government as against persons such as the Appellant who had been implicitly absorbed by the State Government. The Appellants’ participation in the selection process was prefaced by an NOC from the Central Government; and subsequently was followed by the tender of a technical resignation to the Central Government upon securing employment with the State Government. This interpretation, as pr the Bench, couldn’t be said to be echoed by any express provision of the Pension Rules.
Thus, observing that the High Court erred in its interpretation of Rule 25(ix) of the Pension Rules and unfairly deprived the Appellant from seeking inclusion of the period of service rendered to the Central Government as a part of ‘qualifying service’ under the Pension Rules, the Bench allowed the appeal.
The Top Court concluded the matter by observing, “Accordingly, we direct Respondent No. 1 to consider the service rendered by the Appellant to the Central Government in his capacity as Postal Assistant in the Gandhinagar Postal Division to be considered as qualifying service; and thereafter (i) re-calculate the terminal benefits / pensionary benefits accruing in favour of the Appellant; and (ii) transmit the arrears (if any) of such terminal benefits / pensionary benefits to the Appellant within 6 (six) weeks from today i.e., 02.02.20. . Upon making the aforementioned payment, Respondent No. 1 shall be free to seek pro-rata re-imbursement / contribution from Respondent No. 2 in respect of terminal benefits / pensionary benefits paid by Respondent No. 1 for the period pertaining to service rendered by the Appellant for the Central Government.”
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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