Read Order: Nutan Kumari V. B.R.A. Bihar University and Others
Chahat Varma
New Delhi, November 6, 2023: In a significant ruling, the Supreme Court has restored the termination orders of three Physical Training Instructors (PTIs) at Bihar University, highlighting the arbitrary, discriminatory, and irrational nature of the selection process that led to their appointment.
Briefly stated, in this case, Bihar University had issued an advertisement seeking applications for the position of PTIs in four of its constituent colleges. The appellant and private respondents, submitted their applications in response to this advertisement. Subsequently, they were called for interviews conducted by the Selection Committee. What emerged from this process was that the Selection Committee conducted four separate sets of interviews for each candidate applying to different colleges. However, on the same day but at different times, marked variations in the scores assigned during these interviews were observed for the appellant and respondents No.5 to 8. Consequently, the appellant filed a writ petition challenging the selection of respondents No.5 to 8. The Single Judge, after considering all the petitions filed by the appellant and respondents No.5 to 8, ruled that the selection process was flawed and arbitrary. Displeased with this decision, respondents No.5 to 8 appealed to the Division Bench. The Division Bench overturned the Single Judge's order, contending that variations in interview scores did not necessarily indicate severe irregularities in the selection process. They believed that all candidates were subject to the same standards during interviews, thus dismissing the appellant's claims.
The division bench of Justice Hima Kohli and Justice Ahsanuddin Amanullah emphasized that the terms and conditions stated in an advertisement inviting applications from eligible candidates are binding in the selection process. Unless it can be proven that an advertisement was issued in violation of a statute or relevant rules, it must be followed by all participants. Even the Selection Committee lacks the authority to establish separate criteria for selection, as this would be equivalent to creating new selection rules. Once the selection process begins, the criteria outlined in the advertisement for assessing eligible candidates cannot be changed.
The bench further observed that merely applying for a position following an advertisement does not grant a candidate an automatic vested right of selection. Instead, the candidate only gains the right to be considered for selection in strict accordance with the existing rules.
Furthermore, the bench emphasized that once an advertisement has been issued with prescribed selection criteria, there is limited room for deviating from these norms, especially by the Selection Committee, unless it can be convincingly demonstrated that the committee possessed the authority to make such changes.
The bench opined that the Single Judge had diligently examined the entire process undertaken by the Selection Committee and concluded that it was arbitrary, irrational, and should be set aside. The specific issues identified during this review included the Selection Committee's late determination of criteria for assigning marks during interviews, which were not disclosed to the candidates beforehand. Additionally, the Committee independently allocated marks to various academic qualifications, which were not part of the original advertisement. The bench noted that the marks for interviews were set as 30% of the total marks on the same day as the interviews, and multiple interviews were conducted for candidates applying to different colleges, leading to inconsistent assessments. This lack of transparency and consistency in the selection process raised significant concerns, ultimately leading to the High Court's decision to quash the termination orders and grant relief to the PTIs.
Thus, in view of the above facts and circumstances, the bench held that the Single Judge rightly concluded that the entire process adopted by the Selection Committee was vitiated and could not withstand judicial scrutiny.
The court, as a result, found that the challenged judgment could not be upheld and, therefore, it was quashed and set aside. In its place, the judgment of the Single Judge, who had initially ruled in favour of terminating the services of respondents No.5, 7, and 8, was reinstated.
Furthermore, the court ordered the University to establish a Selection Committee to assess the candidature of the appellant and respondents No.5, 7, and 8. The Selection Committee was directed to conduct a single interview for these candidates, irrespective of the number of applications they had submitted for the subject posts. The court emphasized that no separate marks should be allocated for different qualifications possessed by the candidates during the interview, as the University's advertisement did not include such a provision.
The Selection Committee's responsibilities included creating a unified merit list, considering the qualifications and interview performance of the candidates. Subsequently, a seniority list would be generated, and candidates would be assigned to their respective colleges based on this list. The court mandated that this entire process must be completed within eight weeks from the date of the Committee's formation, and the results would be declared with notification to the appellant and respondents No.5, 7, and 8.
With the above observations and directions, the present civil appeals were disposed of. Top of Form
Read Order: Pradeep Mehra V. Harijivan J. Jethwa (Since Deceased Thr. Lrs.) & Ors
Chahat Varma
New Delhi, November 6, 2023: In a significant development, the Supreme Court has allowed a landlord to evict tenants after nearly two decades. The Top Court ruled that the tenants were essentially disputing a final order of the court, which was not permissible under Section 47 of the Code of Civil Procedure, 1908.
Briefly stated, in a longstanding dispute, the respondents had been tenants in the property since at least 1996, with the appellant as their landlord. The disagreement centred around subletting and resulted in an eviction suit in the Small Causes Court. During the legal proceedings, a settlement was reached, which included a clause stipulating that the tenants could be evicted if they failed to pay rent for two consecutive months. The landlord claimed that the tenants had defaulted on rent, leading to an application under Order XXI Rule 11, CPC for decree execution. The executing court, in an order dated 12.02.2013, determined that the decree was executable. Importantly, this order was never appealed by the judgment debtor and had become final. However, nearly four years later, the judgment debtors applied to the executing court to set aside the 2013 order, reiterating that they had not defaulted on rent. The decree holder objected to the maintainability of this application, arguing that the 2013 order had attained finality and couldn't be reopened. The executing court upheld the objections, dismissing the judgment debtors' application on the grounds of maintainability. Subsequently, the judgment debtors sought revision of this order, and the revision was allowed, leading to the setting aside of the order dated 28.09.2017. In response, the decree holder filed a petition before the Bombay High Court under Article 226/227 of the Constitution of India. However, this petition was dismissed by the Bombay High Court on 08.01.2021.
The division bench of Justice Sanjay Kishan Kaul and Justice Sudhanshu Dhulia expressed concern over the appeal's delay, highlighting misuse and abuse of execution proceedings under Order XXI of the CPC.
The bench referred to an observation made as far back as 1872, during the operation of the CPC of 1859, where the Privy Council noted that "the difficulties of a litigant in India begin when he has obtained a decree." The bench expressed concern that even today, the situation had not improved.
The bench referred to Section 47 of the CPC and highlighted that it empowers the executing court to decide all questions between the parties related to the execution of the decree. However, the key point to remember is that these questions are confined to the execution process and in the said case, it did not allow the executing court to question the validity of the 2013 order that permitted the execution. The executing court can only do so if the original court's order lacked jurisdiction. Notably, the tenants/judgment debtors did not challenge the order dated 12.02.2013 before any forum.
“The reality is that pure civil matters take a long time to be decided, and regretfully it does not end with a decision, as execution of a decree is an entirely new phase in the long life of a civil litigation. The inordinate delay, which is universally caused throughout India in the execution of a decree, has been a cause of concern with this Court for several years,” said the bench
The bench further made reference to the case of Rahul S. Shah v. Jinendra Kumar Gandhi and Others [LQ/SC/2021/2729], noting its significance regarding Section 47 and Order XXI of the CPC. In this three-Judge Bench decision, the court not only criticized the misuse of processes under Section 47 read with Order XXI of the CPC but also issued specific directions to be adhered to by all Civil Courts when exercising their powers in decree execution.
The bench expressed the view that the Bombay High Court had made an error by not intervening in this case. They believed that this case had needlessly prolonged for nearly two decades, which they considered to be an undue delay.
Consequently, the court concluded that both the order by the Appellate Court and the order by the High Court were legally unsustainable. Consequently, they allowed the appeal and upheld the order of the executing court dated 28.09.2017.
The court issued a directive for the executing court to proceed with and complete the execution process as expeditiously as possible.
Read Order: C. Anil Chandran V. M.K. Raghavan and Others
Chahat Varma
New Delhi, November 6, 2023: In a recent decision, the Supreme Court has dismissed an appeal challenging the seniority list of Assistant Engineers in Kerala. The Court held that the appellant had not been able to demonstrate that the ante-dating of the seniority of the private respondents would adversely affect his own promotion prospects.
In this case, the challenge revolved around an order in Writ Appeal, decided on 27.06.2011, passed by the Division Bench of the Kerala High Court. This order had set aside the judgment of the Single Judge, leading to the present legal dispute.
The appellant, in their writ petition, had contested an order, passed by the Chief Engineer, Irrigation and Administration, Thiruvananthapuram. This order had granted seniority from a back date to private-respondents No. 1 to 4, 7, and 8, thereby altering the seniority list of Assistant Engineers.
The petitioner's argument was that the private respondents had never objected to the seniority list of Assistant Engineers, despite it being circulated multiple times between 1996-1997. Even when the final seniority list was distributed on November 22, 2001, no challenge was raised in a reasonable time frame. The issue was brought up more than three years later, particularly when service records of candidates eligible for promotion from Assistant Engineer to Executive Engineer were requested.
Furthermore, it was contended that the private respondents, being aware of the potential repercussions on the appellant due to alterations in their promotion dates, initially included him as a respondent in the writ petition. However, the High Court did not afford the appellant an opportunity to present his case. The High Court directed the consideration of the private respondents' representation, even though the Chief Engineer, to whom the directive was directed, lacked the authority to handle such matters. Reference was made to Rule 27-B of the Kerala State and Subordinate Services Rules, 1958, to emphasize that such representations should be directed to the Government, not the Chief Engineer. The alteration in the private respondents' promotion dates from Overseer Grade-I to Assistant Engineer negatively impacted the appellant's prospects for promotion.
On the other hand, the State's counsel contended that the order of the Division Bench of the High Court, challenged by the appellant, did not justify intervention. It was clarified that the State merely complied with the High Court's directive in the writ petition filed by the private respondents. The correction in the calculation of the promotion quota for the private respondents from Overseer Grade-I to Assistant Engineer was necessitated by an error. Importantly, it was stressed that the appellant's promotion prospects remained unaffected, as separate quotas for Engineering Graduates and Diploma Holders were established for subsequent promotions to the position of Assistant Executive Engineer.
The division bench of Justice Hima Kohli and Justice Rajesh Bindal determined that there was no basis for interference in the present appeal.
This was primarily because the appellant had failed to demonstrate that the private respondents' promotion date adjustments would adversely affect the appellant's own promotion from the position of Assistant Engineer to that of Assistant Executive Engineer. The existence of distinct quotas for promotion to the next higher post, designated for two categories, Graduate Engineers and Diploma Holders, was a key factor in this determination. The appellant fell under the category of Graduate Engineer, while the private respondents belonged to the category of Diploma Holders. These were two separate streams with distinct quotas.
As a result, the present appeal was dismissed.
Read Order: Orbit Electricals Private Limited v. Deepak KishanChhabria&Ors
Chahat Varma
New Delhi, November 3, 2023: In a significant ruling, the Supreme Court has rebuked the National Company Law Appellate Tribunal (NCLAT) for defying its order in the Finolex Cables case. The Court also censured the Member (Judicial) of the NCLAT Bench for his conduct and imposed a fine of Rs. 1 crore on former Chairman and Managing Director of Finolex Cables, Deepak Kishan Chhabria, for colluding with the Scrutinizer to delay the declaration of the AGM results.
In the present matter, the National Company Law Tribunal (NCLT) had dismissed an application for interim relief by the first respondent on 31 December 2019. The first respondent had appealed to the NCLAT, and no interim relief had been granted during the appeal. The NCLAT reserved orders on the appeal on 21 September 2023 but directed the parties to maintain the status quo as of 03 May 2019 until the judgment was delivered, without providing any reasons. The Supreme Court vacated the NCLAT's interim direction and stated that any action taken during the Annual General Meeting (AGM) of Finolex Cables Limited on 29 September 2023, regarding the appointment of the Executive Chairperson, should be subject to the outcome of the pending appeal before the NCLAT. On 13 October 2023, a grievance was made to this Court that the NCLAT had proceeded to deliver its order despite being informed of this Court's direction not to do so until the Scrutinizer's report was available. Consequently, this Court required the Chairperson of the NCLAT to verify the situation and report back to the Court.
The Chairperson of the NCLAT submitted a report about events surrounding a Court order. The report contained two statements, one from a Member (Judicial) and another from a Member (Technical) of the NCLAT, explaining the sequence of events leading to the NCLAT's judgment. The statements suggested that mentioning was entertained after judgments were pronounced and that there was a misunderstanding.
However, it became apparent that the NCLAT was aware of the Court's order before delivering its judgment, which contradicted the statements in the report. This led the Court to issue a show-cause notice to the NCLAT members and the scrutinizer, asking them to explain why they should not be held in contempt.
A three-judge bench of Chief Justice Dhananjaya Y Chandrachud, Justice J.B. Pardiwala and Justice Manoj Misra observed that, based on the CCTV footage and the transcript, it was unquestionably evident that the NCLAT was informed that the court had issued an order on the morning of October 13, 2023, stating that the judgment would be delivered only after the results determined by the Scrutiniser were declared. However, the NCLAT Bench chose not to adhere to the court's order.
The bench stated that in such a situation, the appropriate course of action, if the NCLAT Bench believed that the order should be produced in accordance with the rules, would have been to defer the pronouncement of the judgment, allowing the parties to comply with the required procedure.
Thus, the bench opined that there was no doubt that the NCLAT Bench wilfully defied the court's order, even though the court's order had been brought to their attention.
The Member (Technical) issued an unconditional apology, accepting that control over the Court's procedures, especially in matters mentioned, falls under the jurisdiction of the Member (Judicial). The bench decided not to pursue this matter further and accepted the apology.
Regarding the Member (Judicial), it was noted that the statements made in the affidavit filed before the Court were contrary to the record. The Member (Judicial) did not entertain any attempt at mentioning by counsel and claimed that the order of the Supreme Court dated 13 October 2023 was not on record before the Bench, despite being informed of the order in the morning session. The bench censured the conduct of the Member (Judicial).
As for the Scrutinizer, the bench emphasized that there was a clear direction in its order dated 26 September 2023, which required the interim order passed by the NCLAT on 21 September 2023 to be vacated. It also directed that any action resulting from the AGM would be subject to the pending appeal. However, the Scrutinizer failed to implement this order, and the AGM proceeded on 29 September 2023. The Scrutinizer sought legal opinion on how to treat the votes after voting had concluded, effectively delaying the declaration of the AGM's results.
The bench found that the Scrutinizer had acted in concert with Deepak Kishan Chhabria, to delay the declaration of the AGM's results, breaching the Court's directions issued on 26 September 2023.
In response, the bench said, “We are of the view that such action by commercial interests must be dealt with firmly so as to serve a clear reminder that the process of this Court cannot be allowed to be misused for partisan purposes in commercial disputes involving warring factions.”
In light of the closure of the proceedings, the bench restated the directives from a prior court order that had set aside the judgment rendered by the NCLAT Bench on October 13, 2023.
Consequently, the case will now be transferred for further proceedings, with the appeal being listed before a Bench presided over by the Chairperson of the NCLAT for the purpose of conducting the hearing and making a final decision.
Read Order: Purushothaman V. State of Tamil Nadu
Chahat Varma
New Delhi, November 3, 2023: The Supreme Court has restored the bail of an accused in a POCSO case, which had been cancelled by the Tamil Nadu High Court without giving him an opportunity to be heard.
In the case at hand, the appellant, who was accused of an offense under Section 6 of the Protection of Children from Sexual Offenses Act, 2012 (POCSO Act), was initially convicted by the Trial Court. The appellant subsequently appealed the conviction, and the Tamil Nadu High Court accepted the appeal. On January 12, 2018, the High Court suspended the appellant's substantive sentence and granted him bail.
However, on July 7, 2023, during the proceedings of the Criminal Appeal, the appellant's legal representative requested a four-week adjournment. The High Court, only on the ground that the appellant was enjoying the facility of bail and that his advocate applied for adjournment, proceeded to cancel the bail.
The division bench, comprising of Justice Abhay S. Oka and Justice Pankaj Mithal, stressed that when the advocate representing the appellant-accused sought adjournment on untenable and unreasonable grounds, the Appellate Court had the authority to refuse the request for adjournment.
The bench referred to Bani Singh v. State of U.P. [LQ/SC/1996/1044], which highlighted the High Court's discretion to appoint an advocate to represent the appellant when the originally appointed advocate declined to argue the appeal on unreasonable grounds.
The bench clarified that under sub-section 1 of Section 389 of the Cr.P.C., when suspending the sentence of the appellant-accused who is in jail, the Appellate Court was required to release the accused on bail until the final disposal of the appeal. The second proviso to sub-section 1 of Section 389 allowed the Public Prosecutor to request the cancellation of the bail granted under sub-section 1. This second proviso to sub-section 1 of Section 389 was equivalent to sub-section 2 of Section 439 of the Cr.P.C. Consequently, the court can even Suo Motu issue a notice calling upon the accused to show cause why the bail should not be cancelled. Under no circumstances, the bail granted to an accused under sub-section 1 of Section 389 can be cancelled without giving a reasonable opportunity to the accused of being heard.
Thus, the bench concluded that in the present case, regrettably, the High Court had immediately cancelled the bail granted to the appellant-accused without affording them an opportunity to be heard on the matter.
“Such approach on the part of the High Court cannot be countenanced especially when the High Court can always deal with the situation when an adjournment is sought by the advocate for the accused at the time of final hearing of the appeal on unreasonable grounds,” said the court.
The bench emphasized that due to the advocate's default, the Appellate Court could not penalize the accused by deciding to cancel his bail solely based on the advocate seeking adjournment.
Consequently, the court quashed the impugned order and restored the earlier order dated 12th January 2018, which granted the appellant suspension of sentence and bail.
With these considerations, the present appeal was allowed.
Read Order: Rajeswari V. Union of India & Ors
Chahat Varma
New Delhi, November 3, 2023: In a recent decision, the Supreme Court has dismissed a writ petition that raised concerns regarding the allocation of cellular mobile telephone numbers and the potential privacy risks associated with recycled phone numbers.
In its order, the division bench of Justice Sanjiv Khanna and Justice S.V.N. Bhatti noted that the Telecom Regulatory Authority of India (TRAI) has a policy of not allocating deactivated cellular mobile telephone numbers to new subscribers for at least 90 days.
The bench also emphasized that it is the responsibility of the former subscriber to prevent the misuse of WhatsApp data associated with the previous phone number. This can be achieved by deleting the WhatsApp account linked to the old number and erasing WhatsApp data stored on the local device memory or cloud storage.
Furthermore, the court noted that WhatsApp, as per information available on its help centre, actively monitors account inactivity. If an account remains inactive for 45 days and is subsequently activated on a different mobile device, the old account data is removed. This measure is in place to prevent confusion and data entanglement in the case of recycled phone numbers.
Based on these explanations and safeguards provided by TRAI and WhatsApp, the court dismissed the present writ petition.
Read Order: Kum. Geetha, D/O Late Krishna & Ors V. Nanjundaswamy & Ors
Chahat Varma
New Delhi, November 3, 2023: In a recent decision, the Supreme Court has set aside a Karnataka High Court decision to partially reject a plaint in a partition suit, asserting that such partial rejection is not allowable under Order VII Rule 11 of the Code of Civil Procedure (CPC).
The case involved plaintiffs and defendants, all members of a joint family who owned multiple properties. When the plaintiffs asked for partition, the defendants initially did not oppose it but instead asked the plaintiffs to wait until the revenue records were updated so that actual partition could be affected. Consequently, the plaintiffs presented a plaint for partition and separate possession.
Four years after the suit had been initiated, the defendants filed a petition seeking the rejection of the plaint under Order VII Rule 11, CPC. The Trial Court, at that time, dismissed the application, asserting that the plaint disclosed a cause of action. However, in a subsequent development, the Karnataka High Court passed an order where it noted that the property, as described in Schedule A of the plaint, had been sold in 1919 through a registered Sale Deed. The High Court's rationale was that the plaintiffs did not contest the sale but rather argued that there was subsequent re-conveyance of the property to the joint family, although revenue records were not updated accordingly. Considering these facts, the High Court partially allowed the application under Order VII Rule 11, CPC, rejecting the plaintiffs' claims related to Schedule-A property.
The division bench, comprising of Justice Pamidighantam Sri Narasimha and Justice Sudhanshu Dhulia, emphasized that the initial evaluation of a plaint under Order VII Rule 11, CPC should focus solely on whether it discloses a cause of action. In this case, assuming the facts in the plaint to be true, the joint family properties appeared eligible for partition, subject to evidence presented during the trial.
The bench held that the High Court made an error by prematurely assessing the merits of the case. It effectively pre-judged the truth, legality, and validity of the sale deed under which Defendants No. 4 to 14 claimed ownerships. It was stated that the High Court should not have assumed the veracity of the assertions, particularly regarding the alleged previous sale of the property, or whether it had been acted upon. The bench ruled that this approach by the High Court was incorrect and went against the well-established principles of evaluating an application under Order VII Rule 11 of the CPC.
Consequently, the bench decided to set aside the High Court's judgment, dismissing the application under Order VII Rule 11, CPC, and restoring the suit, including the properties mentioned in Schedule A of the Plaint.
The bench noted another crucial point. They pointed out that in an application under Order VII Rule 11, CPC, it's not permissible to reject only a part of the plaint; it should be either accepted or rejected in its entirety.
Thus, the bench opined that the High Court erred by partially rejecting the plaint concerning Schedule-A property while allowing the plaintiffs to proceed with the case regarding Schedule-B property. Such a selective approach, when dealing with an application under Order VII Rule 11, CPC, is not permissible. Therefore, the court decided to set aside the High Court's judgment and order based on this issue as well.
Read Order: Sanjay Kumar Agarwal & Anr V. State Tax Officer (1) & Anr
Chahat Varma
New Delhi, November 3, 2023: The Supreme Court has dismissed five review petitions challenging its earlier judgment on the priority of claims in insolvency proceedings. The Court also clarified the scope of review petitions, holding that a passing reference to the impugned judgment made by a bench of equal strength cannot be a ground for review.
In the case at hand, in a judgment and order dated 06.09.2022, this court had allowed appeals concerning the Gujarat Value Added Tax Act (GVAT Act) and the Insolvency and Bankruptcy Code (IBC). It had concluded that Section 48 of the GVAT Act did not contradict the IBC's Section 53, establishing that debts owed to a secured creditor, including the State under the GVAT Act, ranked equally with specified debts. The judgment stated that the State qualified as a secured creditor under the GVAT Act, and the delay in filing a claim should not be the sole reason for rejection. As a result, the appeals were allowed, and the Resolution plan approved by the Committee of Creditors (CoC) was set aside, allowing a fresh Resolution Plan. The Review Petitioners subsequently filed five Review Petitions challenging this judgment.
The senior counsels for the Review Petitioners/ Intervenors submitted that the court in the impugned judgment had failed to consider the waterfall mechanism contained in Section 53, as also failed to consider other provisions of the IBC.
The division bench of Justice A.S. Bopanna and Justice Bela M. Trivedi clarified the scope of review petitions. They emphasized the following key points in their judgment:
- A judgment is open to review if there is a mistake or an error apparent on the face of the record.
- A judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so.
- An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of record justifying the court to exercise its power of review.
- In exercise of the jurisdiction under Order 47 Rule 1 CPC, it is not permissible for an erroneous decision to be ‘reheard and corrected’.
- A Review Petition has a limited purpose and cannot be allowed to be ‘an appeal in disguise’.
- Under the guise of review, the petitioner cannot be permitted to reagitate and reargue the questions which have already been addressed and decided.
- An error on the face of record must be such an error which, mere looking at the record should strike and it should not require any long-drawn process of reasoning on the points where there may conceivably be two opinions.
- Even the change in law or subsequent decision/ judgment of a co-ordinate or larger Bench by itself cannot be regarded as a ground for review.
The bench firmly rejected the submissions of the review petitioners, asserting that a passing reference to the impugned judgment by a Bench of equal strength is not a valid ground for review. They emphasized the principle that a co-ordinate Bench should not comment on the discretion or judgment of another Bench of equal strength. If one Bench disagrees with the decision of another Bench on a legal question, the proper course is to refer the matter to a larger Bench for an authoritative decision to avoid conflicting decisions and legal uncertainty.
The bench also clarified that the arguments presented by the counsel for the Review Petitioners, claiming that the court in the impugned decision failed to consider the Waterfall mechanism in Section 53 and other IBC provisions, were factually incorrect.
The bench noted that after a thorough examination of the Waterfall mechanism and other IBC provisions, it concluded in the impugned order that the NCLAT had erred in asserting that Section 53 of the IBC overrides Section 48 of the GVAT Act. They explained that Section 48 of the GVAT Act did not contradict or conflict with Section 53 or any other IBC provisions.
Ultimately, the bench determined that the judgment being reviewed did not fall within the scope of a review. The counsel for the Review Petitioners failed to demonstrate any mistake or error apparent on the face of the record in the impugned judgment, and they did not meet the criteria for reviewing the judgment. As a result, the Review Petitions were dismissed.
Read Order: Smt. Renu Tokas V. The State (Govt. Of NCT of Delhi)
Chahat Varma
New Delhi, November 3, 2023: The Delhi High Court has granted bail to a woman in a case involving charges of dowry death, cruelty, and harassment under Sections 498A/304B/302/306/34 of the Indian Penal Code, 1860.
In summary, the case involved the death of a woman, who was found hanging from a ceiling fan in her house. The investigation revealed allegations of cruelty and harassment by her mother-in-law, father-in-law, husband, sister-in-law, brother-in-law, and cousin brother-in-law for dowry. The deceased had previously lodged a complaint with the Crime Against Women Cell regarding the harassment.
The counsel representing the applicant argued that she was the married sister-in-law of the deceased, who was residing separately in her own matrimonial home. It was contended that there was no evidence on record to establish the applicant's presence at her brother's house on the date of the incident. Furthermore, the counsel emphasized that the matrimonial discord primarily involved the deceased and her husband. Additionally, it was pointed out that, based on the suicide note, there were no allegations related to dowry demands concerning the present applicant or any other in-laws of the deceased.
The single-judge bench of Justice Amit Sharma noted that apart from an alleged CCTV footage that could not be retrieved from the DVR by the FSL, there was no other material on record to demonstrate the presence of the applicant at the scene. The bench also pointed out that the suicide note, which was being relied upon by the prosecution, did not mention any allegation of dowry demand. The note primarily blamed the applicant and the mother-in-law of the deceased for brainwashing the husband of the deceased.
The bench opined that in the present case, the applicant was in a similar position as the co-accused, Rajbala (mother-in-law), who had been granted bail by the trial court. It was noted that the trial court had extensively analysed the facts and material of the case before granting bail to Rajbala.
The bench reiterated that bail is the rule and jail is the exception. At the bail stage, the court does not need to conduct a detailed analysis of the evidence on record, as that is a matter for trial. It was noted that the argument presented by the state, suggesting that Rajbala had been granted bail solely because of her responsibility for the minor children, was determined to be incorrect. The bench held that while the care of the minor children was a factor considered by the trial court when granting bail to Rajbala, it was not the sole basis for the decision.
The bench observed that the nominal roll received from the concerned Jail Superintendent had reflected that the applicant had been in judicial custody for 3 years, 11 months, and 14 days. It was also noted that the applicant had been released on interim bail following HPC guidelines and had surrendered as required without misusing the granted liberty. Furthermore, out of the 37 witnesses cited by the prosecution, only 9 had been examined at that time, indicating that the trial was likely to take a considerable amount of time.
Thus, considering the totality of the circumstances, the court granted bail to the applicant.
Read Order: Gaurav Mehta V. Narcotics Control Bureau
Chahat Varma
New Delhi, November 2, 2023: The Delhi High Court has granted bail to an individual accused in a drug trafficking case who had spent more than four years in custody. The Court's decision was based on the observation that, in certain circumstances, an individual's liberty should take precedence over the restrictions imposed by Section 37 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act).
The case in question involved a bail application filed on behalf of the applicant, seeking regular bail in a case under Sections 8(c)/21(c)/23/29 of the NDPS Act. The case originated from information received about two parcels suspected of containing narcotics and psychotropic tablets that were shipped to the USA and Canada by the applicant's company, Desi Global E Mart. Subsequent searches at DHL Express and the applicant's office/warehouse in West Patel Nagar, New Delhi, led to the recovery of a substantial quantity of tablets. During the investigation, the accused disclosed that the medicines found at his residence were supplied by a co-accused, and he had a limited role as a carrier in the alleged drug transactions. Despite these factors, the accused had remained in custody, with a regular bail application being dismissed by the trial court.
The single-judge bench of Justice Tushar Rao Gedelanoted that that while the co-accused individuals had already been granted regular bail, having spent varying durations in custody, ranging from 3.5 to 4 years, the applicant was the sole accused who remained in judicial custody.
The bench referred to Mohd. Muslim @ Hussain vs. State (NCT of Delhi) [LQ/SC/2023/357],wherein the Supreme Court had emphasized the importance of avoiding a strict and literal interpretation of the conditions specified in Section 37 of the NDPS Act. It was noted that such an interpretation would effectively result in a complete denial of bail, leading to punitive and unsanctioned preventive detention, which could run counter to constitutional principles. To address this concern and align with constitutional principles, the court had emphasized that the conditions for granting bail, as outlined in the NDPS Act, should be assessed in a manner that reasonably satisfies, on a prima facie basis, that the accused is not guilty.
In the said case, the court noted that the applicant had been in detention for a period exceeding 4 years and 2 months. Additionally, it was observed that despite a span of 5 years since the registration of the FIR, only the order on charges had been issued, and the actual framing of charges was still pending. The slow progression of the trial proceedings indicated that a substantial amount of time would be required to bring the case to a conclusion.
The court concluded that detention during the trial should not equate to pre-conviction incarceration and, as a result, granted bail to the applicant.
Read Order: Sanjeev Srivastava and Another V. State of NCT of Delhi & Ors
Chahat Varma
New Delhi, November 2, 2023: The Delhi High Court has quashed an FIR in a Negotiable Instruments Act (NI Act) case, holding that the issuance of non-bailable warrants and subsequent proceedings under Section 82 of the Cr.P.C. were without jurisdiction.
In this case, Mr. Arvind Gupta had filed a complaint under Section 138 of the NI Act, against the petitioners in 2016. During the proceedings, the parties reached a settlement through mediation, and the terms were recorded by the Metropolitan Magistrate. The settlement included a demand draft of Rs. 15,00,000 and 10 post-dated cheques. However, on December 15, 2018, Mr. Gupta filed an application stating that the petitioner had not complied with the settlement terms, leading to the issuance of warrants of attachment under Section 421 of the Cr.P.C. Subsequently, the Metropolitan Magistrate issued non-bailable warrants and attempted to execute them. When this failed, fresh non-bailable warrants were issued. The process server's statement was recorded, declaring the petitioners as absconders. A revision petition against this was dismissed, and the FIR under Section 174A of the IPC was registered on July 29, 2022.
The counsel for the petitioners informed the court that the dispute regarding the non-compliance of certain terms of the settlement agreement had been resolved through a separate settlement agreement. Consequently, the Metropolitan Magistrate compounded the complaint case under Section 138 of the NI Act and acquitted all the accused persons.
The single-judge bench of Justice Amit Sharma referred to Dayawati v. Yogesh Kumar Gosain [LQ/DelHC/2017/2009], and noted once the offense under Section 138 of the NI Act is compounded in terms of Section 147 of the said Act, the recovery of the agreed-upon amount must be realized in terms of Section 431 read with Section 421 of the Cr.P.C. Notably, the court can only attach the properties of the accused persons in accordance with these provisions. The issuance of non-bailable warrants by the Metropolitan Magistrate at the stage when the proceedings in the complaint case are over is not provided for. The provisions do not mandate the mandatory presence of accused persons. Warrants will only be issued for attachment and not for arrest.
Consequently, the issuance of non-bailable warrants in this case was considered without jurisdiction, and the subsequent proceedings under Section 82 of the Cr.PC. were also deemed invalid.
The court held that, considering the facts and circumstances of the case, continuing with the proceedings in the subject FIR would not serve any useful purpose.
Therefore, it was deemed appropriate to quash the FIR in order to secure the ends of justice.
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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