In this article, Uday Agnihotri pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, elaborates on legal and regulatory framework for taxation of pensions in India.

Introduction

Pension is a benefit conferred upon an employee by the employers after the retirement and hence, can be referred to as a retirement benefit. Pension, as defined by the Oxford Dictionary of Economics, is a regular income paid by the state to people above pensionable age, by former employers to people who have retired from employment, or by a personal pension fund to a contributor. Pension schemes normally give members pensions for their own lives; they vary in their provisions for surviving spouses and other dependents.[1]

This definition, however, is narrow in ambit as it is conspicuously silent on the pension paid by private employers. Pension, as understood in common parlance, is a benefit that an employee gets post his/her retirement. After January 2004, with the introduction of the National Pension System (and subsequent extension in May, 2009 to include all citizens, including self-employed professionals and others in the unorganized sector), a retired employee can receive pension from the employer or the National Pension Scheme. In addition to that, the individuals are free to invest in any pension plans as per their volition which will give them pension after their retirement.

For the purposes of understanding the framework for the taxation of pension under the Indian law, it is important at this juncture to differentiate between the types of pension. Pension can be classified as Commuted Pension and Uncommuted Pension.

Types of Pension

1. Uncommuted Pension: Uncommuted pension refers to the normal periodic pension which an employee receives post-retirement. There is no lump-sum payment (and therefore, no requirement to forgo a certain portion of the pension receivable). It is a periodic payment post-retirement, just like salary pre-retirement. For example, a person, post-retirement, receives a monthly pension of Rs. 5,000.
2. Commuted Pension: Generally, pension is received periodically i.e. just like an employee earned salary periodically (monthly, for instance) before retirement; post-retirement, the employee will receive pension periodically (monthly, for instance). However, many employers permit the employee to forgo a certain portion of the pension receivable to him and in turn, receive a lump-sum amount. This lump-sum amount received as pension is called Commuted Pension. This may be fully or partly commuted. Commuted pension can be explained through an example: a person, who is entitled to receive a pension of Rs. 10,000 monthly for the rest of his life can commute 25% of his pension in advance of the next 10 years and get the lump-sum of Rs. 3,00,000 (25% of 10,000 x 10 x 12). Along with this commuted pension, the person will receive Rs. 2,500 per month for the next 10 year and Rs. 10,000 thereafter as full pension.

Taxation of Pensions

1. Uncommuted Pension: As per Section 14 of the Income Tax Act, 1961, all income received are classified under 5 heads of income for the purposes of computation of total income and for charging income tax. These 5 heads are:

• Salary
• House Property
• Profits and Gains of Business or Profession
• Capital Gains
• Other Sources

Uncommuted Pension, for the purposes of taxation, is considered under the head ‘Salary’ and therefore, is fully taxable as salary i.e. it is treated as salary and hence, is taxable by the hands of both whether government employees or non-government employees, as per the provisions of the Income Tax Act, 1961 related to salary as well as the slab rates decided by the yearly Financial Statement (Budget).

2. Commuted Pension: Taxation of commuted pension is not as simple and easily understandable as the uncommuted pension. In case of the taxation of commuted pension, the first and the most important thing to see is whether the employee is a government employee or a non-government employee.

In case of a government employee, commuted pension is fully exempt. That is to say, if we refer back to the example of commuted pension, in case the person is a government employee, the lump-sum of Rs. 3,00,000 that he receives as commuted pension is completely exempted from income taxation and Rs. 2,500 and the subsequent Rs. 10,000 (after 10 years) would be considered under the head ‘salary’ and taxed as per the prevalent tax slabs (as this amount is uncommuted pension).

In case of a non-government employee, there can further be two situations that are required to be considered for the purposes of taxation of commuted pension. After establishing whether the employee was a non-government employee, it is imperative to ascertain whether the pension is received alone or is coupled with gratuity. Therefore, the question whether gratuity is received with the pension or not has to be answered. Gratuity can be defined as a benefit given to the employee upon leaving the job in gratitude for the services offered by him to the employer while the person was working with the employer. The Payment of Gratuity Act of 1972 governs gratuity and its administration. As per Section 4 of the Act, Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years,- (a) on his superannuation, or (b) on his retirement or resignation, (c) on his death or disablement due to accident or disease.[2]

There are two paths that determine the tax burden depending upon whether gratuity is received along the pension or not. If gratuity is received along with pension, then one-third of the amount of pension that would have been received if the entire pension (100%) was commuted is exempt from the commuted pension. The remaining, however, will be considered under the head ‘salary’ and taxed accordingly. On the other hand, in case only pension is received (gratuity is not received with it), half of the amount of pension that would have been received if the entire pension (100%) was commuted is exempt and the remaining amount would be considered as ‘salary’ and taxed accordingly.

Therefore, in ascertaining the tax liability on pension, three questions have to be answered:

1. Whether the pension received is commuted pension or uncommuted pension?
2. Whether the person receiving the pension was a governmental employee or a non-governmental employee?
3. Whether gratuity was received along with the pension or not?

Certain Special Conditions

In certain special conditions, pension is taxed slightly differently (or exempted altogether). These conditions are as follows:

1. Family Pension: Normally, pension is received by the retired employee. However, pension may be received by the spouse or other dependents of the retired employee in the form of family pension. In case of family pension, pension received is taxable under the head of ‘income from other sources’ and not ‘salary’ as there is no employer-employee relationship[3]. With this regard, commuted pension paid to the family of the retired employee is exempt from any taxation[4]. And with respect to uncommuted pension, one-third of the amount of the pension or Rs 15,000 (whichever is less) is exempt and the rest is taxed under ‘income from other sources’.
2. Pension received by family members of Armed Forces: Family pension that is received by the dependents of any member of the Armed Forces is exempted from taxation.
3. Pension received from the United Nations: Pension that is received from the United Nations (or any organization under it) by any employee or his/her family is also exempted from taxation.
4. Pension received by the Judges of the Higher Judiciary: Half of the commuted pension which is received by the retired Judges of the Supreme Court or the High Courts are exempted from taxation[5]

Conclusion

Taxation of pension under the law is not as simple a concept as it is seen ex facie. The simple reason for this is because pension has various different elements and aspects in it that makes a simple straitjacket solution not possible. To ascertain the tax liability of pension, the answers to the three questions raised above (refer to the section ‘taxation of pension’) become imperative. The three questions are reproduced as follows:

1. Whether the pension received is commuted pension or uncommuted pension?

If the pension received is uncommuted pension, then the amount of pension (treated as ‘salary’) is taxable as per the provisions of the Income Tax Act, 1961 related to salary as well as the slab rates decided by the yearly Financial Statement (Budget). However, if the pension is uncommuted pension, the answer to the next question becomes relevant in ascertaining the tax burden.

2. Whether the person receiving the pension was a governmental employee or a non-governmental employee?

If the answer to Question No. 1 is ‘uncommuted pension’, what is to be found next is whether the person receiving the pension was a governmental employee or not. In case he is a retired government employee, the commuted pension will be fully exempted. On the other hand, if the person was a non-governmental employee, the answer to Question No. 3 becomes relevant.

3. Whether gratuity was received along with the pension or not?

If the person was found to be a non-governmental employee in Question No.2, it is required to find out whether gratuity was paid along with the pension or not. If gratuity is received along with pension, then one-third of the amount of pension that would have been received if the entire pension was commuted is exempt from the commuted pension and the remaining is considered under the head ‘salary’ and taxed accordingly. On the other hand, if gratuity is not received with the pension, half of the amount of pension that would have been received if the entire pension was commuted is exempt and the remaining amount would be considered as ‘salary’ and taxed accordingly.

Apart from the aforementioned three-tier test, there are certain special conditions too, in which the tax burden is calculated differently (refer to the section ‘certain special conditions’).

[1] Definition of ‘pension’, Oxford Dictionary of Economics.

[2] Section 4, the Payment of Gratuity Act, 1972.

[3] Section 57(ii)(a), the Income Tax Act, 1961.

[4] Circular No. 573 dated 21.08.1990.

[5] Circular No. 623 dated 06.01.1993.

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In this article, Samyukta Ramaswamy pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, elaborates on breach of contract notice.

Breach of Contract

In legal parlance, a breach of contract is a type of civil wrong that entails a legal cause of action. A breach usually occurs either by non-performance of the contract or interference with the other party’s performance. Therefore, if a party to a contract fails to fulfil his or her obligation as described in the contract, or communicates an intent to not perform his or her obligation under the contract or otherwise appears unable to perform his or her obligation under the contract, such a party is said to commit a breach of contract.[1]

A minor breach of contract is a partial breach or an immaterial breach or where there has been substantial performance, in which case the non-breaching party cannot sue for specific performance, but can sue for damages. On the other hand, a material breach of contract is a failure to perform that allows the other party to the contract to compel performance of the contract, or sue for damages because of the breach. Generally, a breach of contract constitutes a material breach if the term of the contract that has been breached is a condition essential to the contract. The test of essentiality is applied in determining whether the breached term is a condition or not which requires that the term be of such importance to the promisee that he or she would not have entered into the contract unless they had been assured of strict or substantial compliance with the term of the contract which ought to have been apparent to the promisor. This serves as an objective test in determining the intention of the parties at the time of making the contract.

What is a Breach of Contract Notice?

A notice of a breach of contract notifies the counterparty to a contract that they have breached the contract by not upholding their end of the bargain. In such cases, it becomes necessary for one of the parties to the contract to give notice to the other explaining in detail how they have failed to fulfil the terms of the agreement. This is the first formal step in resolving contractual disputes. Also referred to as a type of demand letter, a notice of breach of contract letter should strictly adhere to any terms in the contract that discuss the requirements for notice of breach of contract. The breach of contract notice also lays out the actions that are to be taken in either fixing the problem or terminating the contract and paying compensation for damages incurred. While some notices are specific in their language, clearly laying out a detailed course of action that is to be followed and a timetable within which the problems are required to be fixed, other notices are more general in nature, primarily acting as an invitation to talk things over and mutually fix the breaches.

What to include in a Breach of Contract Notice?

In any Breach of Contract notice, it is important to include the following:

1. The date the notice was communicated to the breaching party.

One important function of the breach of contract notice is to create an official record of the date on which the breaching party was officially made aware/ told of the breach. This date becomes important if the dispute ends up in court. However, before sending the notice, the non-breaching party should confirm that the notice is being sent to the right person, through the proper method.

2. The notice clause in the contract. [2]

Most contracts have a notice clause that stipulates how the notice of breach of contract is to be communicated to the breaching party. It lays down the contact information of each party and how the notices are to be communicated- whether by email, fax, or post. If the procedures contained in the notice clause is not adhered to by either parties, it may affect each of their rights. For example, if a notice is sent to the wrong address or by a method not stipulated in the contract, it may not count as a notice of breach, which would give the breaching party more time to fix the problem.

3. Describing the breach in detail.

The notice of breach of contract must clearly point out what section of the contract was breached. A breach or a failure to perform under the contract is usually of three types namely:

• Where the other party failed to perform the duties specified in the contract. For instance, if the other party hasn’t paid or delivered goods that were promised under the contract.
• Where the other party refuses to perform their obligations under the contract in the future.
• Where one party makes it impossible for the other party to perform its obligations under the contract.[3]

Therefore, irrespective of what type of breach has occurred or why the breach has occurred, when writing the notice, it is important to identify which clauses of the contract have been breached. If there are more than one section that has been breached, it is good to list all of them by starting with the strongest claim.

4. Giving importance to material breach

Parties to the contract may provide notice for any type of breach, however, as a general practise, courts give more importance to ‘material’ breaches. A material breach of contract as explained previously is any action done by the other party that destroys the very value of the contract. A breach of contract constitutes a material breach if the term of the contract that has been breached is a condition essential to the contract which allows the injured party to compel performance of the contract (specific performance), or sue for damages because of the breach. While it is still possible to give notice of a non-material breach (also known as ‘partial breach’ or ‘immaterial breach’) of contract, this usually does not terminate the contract.

5. Putting forth a course of action to be adopted as a remedy for the breach.

Most of the time, a breach of contract notice is an attempt to resolve the contractual problems as between the parties while keeping the agreement intact. With that intent in mind, such notices generally provide for a period of time within which the breaching party is required to cure the breach. This is because, majority of the time, the breaching party is either unaware of the breach, or find it tasking to comply with the terms of the contract due to temporary setbacks.

Sometimes however, there occur situations where there might not be a remedy to the breach of a contract. In such cases, the notice of the breach of contract serves as notice to terminate the agreement and to seek damages.

6. Tone of the breach of contract notice

The breach of contract notice should be drafted in a professional manner and should have a dispassionate tone. The language contained therein should be very polite considering the fact that the notice could become the basis of a court action or part of an exhibit of papers filed before the court. The notice should just stick to the facts and avoid expressing emotional injuries. Lastly, it should not threaten the breaching party with a lawsuit as it may backfire and result in a very expensive lawsuit that the injured party did not want.

On a side note, it is advisable that as far as possible, an attempt be made to settle the contractual dispute informally before sending the notice of breach of contract, or at the time of sending the notice as this can help save both the parties a lot of time and money.

However, if both the parties think it fit to formally end or discharge the agreement, the best way to go about terminating the agreement would be by entering into a separate agreement to terminate the contract. This is often done using a mutual rescission agreement.[4]

Responses to a notice of breach of contract

There are four basic responses that an injured party may receive after sending a breach of contract notice to the breaching party.

• The breaching party may not respond to the letter. When this happens, it is advisable to wait for a few weeks, after which the injured party may draft a second notice that refers to the earlier one with the proper dates and send it forthwith to the other party. If there is no response to the second letter also, the injured party may take the opportunity to consult a lawyer and send a third notice on the lawyer’s letterhead.
• The breaching party may respond by stating that they are not in breach of the contract. In such a case, it is important for the injured party to consult their attorney first before drafting out a response as there is a chance that the other party is right.
• The breaching party may request to have a meeting to discuss the situation and resolve the dispute. Although this is a good way to resolve the dispute, it is important at the same time for the parties to require the assistance of a lawyer in arranging a solution especially in case a written settlement needs to be reached.
• Lastly, the breaching party may concede to the breach of contract by them. In such a case, the injured party needs to decide upon the best way to resolve the issue. Usually, a formal settlement agreement is drafted with the help of a lawyer which is signed by the parties to the contract.

In order to better understand how to draft a Breach of Contract Notice, the following template has been provided in the link mentioned below.[5]

References

[1] “Breach of Contract” at <http://thelawdictionary.org/breach-of-contract/ > last accessed on 29/08/2017.

[2] Refer <https://www.requestletters.com/home/how-to-write-a-breach-of-contract-notice-letter> last accessed on 31/08/2017.

[3] Id.

[4] Refer <http://www.nolo.com/legal-encyclopedia/breach-of-contract-notice-of-32649.html> last accessed on 31/08/2017.

[5] Refer <https://www.priorilegal.com/legal-forms-and-documents/notification-of-breach-of-contract > last accessed on 31/08/2017.

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In this article, Ram Maroo pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, elaborates on Permanent Lok Adalats.

Introduction

It is a perception that Lok Adalats is not considered to be a court in its conventional sense i.e. it does not adjudicate on facts by the application of law but on the contrary it encourages the parties to solve their disputes using other means such as conciliation to reach an amicable settlement which gets crystallized into the award of the Lok Adalat.

Based upon the Gandhian Principles,[1]Lok Adalat is one of the most important components of the ADR system operating in India.[2]

The Judge of the Lok Adalat plays an evaluative and a suggestive role and helps the parties to negotiate and reach a mutual and an acceptable settlement. The whole emphasis in Lok Adalat proceedings is on conciliation rather than adjudication[3] and the entire process is based on effective and active participation and negotiation between the parties.

Lok Adalats gained a lot of popularity during the 1980’s and was therefore granted a statutory recognition by mandating Article 39 of the Constitution of India which ultimately led to the enactment of the Legal Services Authorities Act, 1987 on November 9^th 1995.[4] Justice at Lok Adalats are provided by giving both the parties an equal opportunity to secure their position. Principles of ‘audi alterem partem hence, natural justice is duly followed before passing any order.

Permanent Lok Adalats

Unlike any other courts or tribunals, Permanent Lok Adalats works on a regular basis for permanent dispute resolution. However, the Legal Services Authorities Act was amended in the year 2002[5] and the chapter[6] pertaining to Permanent Lok Adalats was inserted.

To be the Chairman of the Permanent Lok Adalat, one must be a District Judge or an Additional District Judge or has held a judicial office higher in rank than that of a District Judge. Two other persons having adequate experience in public utility services are also appointed by the government.[7]

The jurisdiction of the Permanent Lok Adalats can only be invoked at pre-litigation stage by making an application to the Permanent Lok Adalat for the settlement of the dispute. Once, the jurisdiction has been invoked, the parties cannot take a recourse before a court of law. However, the jurisdiction of Permanent Lok Adalats does not relate to any non-compoundable offence[8] or where the value of the property in dispute exceeds Ten Lakhs. Permanent Lok Adalats cannot take cognizance of a matter which is already sub-judice in a court of law.[9]

A permanent Lok Adalat can direct the parties to produce any sort of evidence or any other documents, if the case requires to be before it while conduction a conciliation proceeding. It also must follow the principles of natural justice, fair play and equity, and is not bound by the Code of Civil Procedure, 1908 and The Indian Evidence Act, 1872.[10]

Where the parties reach an agreement on the settlement of the dispute, they have to sign the settlement agreement and the Permanent Lok Adalat then passes an award in terms thereof and must furnish a copy of the agreement to each of the parties concerned.[11] The idea of a Lok Adalat and a permanent Lok Adalat clearly differs here. Where the parties fail to reach a settlement or if the dispute does not relate to any offence, then the matter is decided based upon the merits of the case.[12] Thus, Permanent Lok Adalats have a residuary jurisdiction, in addition to the jurisdiction enjoyed by the Lok-Adalats, to decide the dispute by virtue of Section 22 C (8), even if the parties have failed to resolve the dispute after conciliation.[13]

The award of a permanent Lok Adalat is final and binding upon the parties and on every such person claiming under them and the same is deemed to be a degree of a civil court.[14] No appeal lies against the judgement of the Permanent Lok Adalat and hence, the award is final.[15] The award shall, however, be made by a majority of the members constituting the Permanent Lok Adalat.[16]

Whether Permanent Lok Adalats are an ADR Mechanism?

The classification of the Permanent Lok Adalats as an ADR mechanism has always been in question and much clarification hasn’t been provided with respect to it. In State of Punjab v. Jalour Singh[17] The Supreme Court held that such type of Lok Adalats only have a conciliatory role and the award of the Lok Adalats does not mean and imply any form of an independent verdict or an opinion derived out of the decision-making process.

The second question that comes within the ambit of questioning is whether the concept of Lok Adalats co-exists with this judgement of the Supreme Court. In State of Punjab v. Jalour Singh, the Supreme Court was dealing with an issue involving a Lok Adalat within the definition and the ambit of Sections 19, 20, 21 and 22 of the Legal Services Authorities Act, 1987. The Permanent Lok Adalats in contradistinction to Lok Adalats have been expressly conferred as an adjudicatory role by the statute.[18] When a matter, at a Permanent Lok Adalat cannot be settled by means of conciliation, it is then statutorily enjoined to decide the dispute of its merit. Therefore, the judgement laid down in the said case, does not apply with Permanent Lok Adalats as because the court was not at all considering the provision as enshrined under Section 22 C (8) of the Legal Services Authorities Act, 1987.[19]

Moreover, as soon as the amendments were made to the Legal Services Authorities Act, 1987, they were challenged, but were upheld by the Supreme Court of India.[20]

In Life Insurance Corporation of India v. Suresh Kumar[21]The Supreme Court observed that permanent lok Adalats have no jurisdiction over matters wherein the parties failed to eventually come to a reasonable settlement. However, if we closely look pon this case, Supreme Court has not considered applying Section 19 of the Legal Services Authorities Act, 1987 which states that “Continuous Lok Adalats” sometimes are loosely described as “Permanent Lok Adalats” and this shouldn’t be confused with that of Section 22 B (1) of the same Act. Further, the position was itself clarified by the Supreme Court itself in the case of InterGlobe Aviation Ltd. v. N. Satchidanand[22] that a Permanent Lok Adalat has the right to decide the case upon the merits if the parties are unable to reach an amicable situation. The Supreme Court passed a ruling saying that the Parliament has given the authority to the Permanent Lok Adalats to decide the matters upon its merit and therefore it has an adjudicatory role to play.

Hence, it is said that the dispute resolution through the system of Permanent Lok Adalats is an ADR mechanism which is hybrid in nature, and has both adjudicatory and non-adjudicatory trappings that offers a substitute to conventional system of litigation and makes the public free from the system of complexity and rigidity. A permanent Lok Adalat is a special tribunal which is not a court[23] and its decision is not subjected to successive appeals.

Hence, the dispute resolution through permanent lok Adalats is definitely an ADR mechanism and a person who is submitting into this form of conciliation is said to be aware of the law that if in case the dispute is not amicably resolved, the Permanent Lok Adalat would acquire an adjudicatory role.

Conclusion

In practice, the Permanent Lok Adalats have similar benefits to that of a normal Lok Adalat and they suffer from the same disadvantages as well. However, the permanent Lok Adalats functions continuously and they require an additional and a separate expenditure. They provide us with an additional state owned conciliation mechanism with the capacity and the time to deal with a much greater number of complex cases than that of the ordinary Lok Adalats.

References

[1] Mohd. Asad Malik, “Concept of Alternative Dispute Resolution vis-à-vis Lok Adalat”, AIHC Journal 129 (September 2007).

[2] P.T. Thomas v. Thomas Job, AIR 2005 SC 3575, See Also Vijaykumar Shrikrushna Chowbe v. Priya S. Dhanokar, “Lok Adalat – A strategic Forum For Speedy and Equitable Justice”, available at: http://papers.ssrn.com; Lok Adalats have also been described as para judicial Institutions. See Tulika Sen, “Natural Justice and Lok Adalats”, (2007) PL February 7.

[3] Ashwanie Kumar Bansal, Arbitration and ADR 32 (Universal Law Publishing Co, Pvt. Ltd., Delhi, 2005).

[4] See Law Commission of India, 222^nd Report on Need for Justice-dispensation through ADR, etc (2009).

[5] See Legal Services Authorities (Amendment) Act, 2002 (Act No. 37 of 2002)

[6] Chapter VI-A was introduced in the Legal Services Authorities Act, 1987 with the title “Pre-litigation Conciliation and Settlement.”

[7] S. 22 B(2), Legal Services Authorities Act, 1987.

[8] United India Insurance Co. Ltd. V. Ajay Sinha, AIR 2008 SC 2398.

[9] Dinesh Kumar v. Balbir Singh, AIR 2008 Himachal Pradesh 59. Such cases which are already pending in courts can only be inferred to a regular Lok Adalat, constituted under Sections 19 and 20 of the Legal Services Authorities Act, 1987.

[10] S. 22D, Legal Services Act, 1987.

[11] S. 22 C(7), Legal Services Authorities Act, 1987.

[12] S. 22 C(8), Legal Services Authorities Act, 1987.

[13] Vijaykumar Shrikrushna Chowbe and Priya S. Dhanokar, “Lok Adalat – A strategic Forum for Speedy and Equitable Justice.” See also, New India Assurance Company Ltd. V. Sabharathanam, AIR 2009 Kerala 71.

[14] In Ram Niwas v. D.D.A., AIR 2007 Delhi 115, it was held that the permanent Lok Adalat is a statutory body in terms of the Legal Services Act, 1987 and its decision must be accepted.

[15] Paras Holidays Pvt. Ltd. V. State of Haryana, 2008 (4) R.C.R (Civil) 367

[16] S. 22 E, Legal Services Authorities Act, 1987.

[17] AIR 2008 SC 1209.

[18] S. 22 C 9 (8), Legal Services Authorities Act, 1987.

[19] Pu Lalkanglova Sailo v. Pi Ngurthantluangi Sailo, AIR 2009 Gauhati 39.

[20] S.N. Pandey v. Union of India, Writ Petition (Civil) No. 543/2002 decided by the honourable Supreme Court of India vide order dated 28/10/2002.

[21] 2011 (4) SCALE 137

[22] (2011) 7 SCC 463.

[23] InterGlobe Aviation Ltd v. N. Satchidanand, (2011) 7 SCC 463.

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In this article, Satyam Mishra discusses Infringement and passing off of goods under Trademark Act, 1999.

Difference between Infringement and Passing off

• Infringement is a statutory remedy provided under section 28(1) of The Trademark Act, 1999 for which registration of a trademark is a pre-requisite, while Passing off is a common law remedy and in Passing Off claims, registration of a trademark is not required.
• Under infringement, plaintiff is only required to show deceptive similarity, as there is presumption of confusion. In passing off, apart from proving deceptive similarity the Plaintiff is also required to prove confusion in public and likelihood of injury to the plaintiff’s goodwill.

Legal remedies – Infringement and Passing off of trademark

• If the trademark is registered, section 28(1) of The Trademark Act, 1999 provides a right to get relief against the infringement of trademark in accordance with the provision of the Act.
• Passing off is not specifically mentioned in the act. An infringement proceeding cannot be initiated against unregistered trademark but Section 27(2) says that a passing off proceeding can take place for an unauthorized use of an unregistered trademark.

Things considered as Infringement or Passing off of Trademark

• Trademark infringement/Passing off is the unauthorized use of a trademark or service mark on competing or related goods and services. The success of a lawsuit to stop the infringement depends on whether the defendant’s use causes a likelihood of confusion in the average consumer.
• Under Indian legislation the same is provided in Section 29. According to Section 29, a registered trademark is infringed by a person who, not being a registered proprietor or a person using by way of permitted use, uses in the course of trade in any way which causes confusion in general public.
• If that mark is being used in different form of business from that in which registered trademark is being used and have some identical or similar feature, still it amounts to infringement/passing off of trademark.

Remedy for infringement and passing off of Trademark

There is two type of remedy is provided in case of infringement/passing off of Trademark. Plaintiff has the option to initiate proceeding under any one or both of them.

1. Civil remedies,
2. Criminal remedies

Civil Remedies

• Suit for infringement/Passing off under section 134:- Suit for Infringement/Passing off arising out of the use by the defendant of any trademark which is identical with or deceptively similar to the plaintiff’s trademark, whether registered or unregistered shall be instituted in District Court having jurisdiction to try the suit.
• Relief under Section 135:- Under Section 135(1) In a suit for Infringement/Passing off if the court agree (on the request of plaintiff ), can grant either:

1. Damages or
2. An account of profits,

Together with or without any order for the delivery-up of the infringing labels and marks for destruction or erasure.

Under Section 135(2) Court can give Ex parte or interlocutory injunction order in accordance with Section 36-42 of Specific Relief Act, 1963 or Order XXXIX Rules 1 & 2 and section 151 (Inherent power of the Court) of the code of civil procedure, 1908, for discovery of documents, preserving of infringing goods, documents or restraining the   defendant from disposing Assets which cause adversely affects the plaintiff.

Procedure under civil law

• In the case of infringement, a suit can be filed under section 134 of Trade Mark Act, 1999 in district court. Jurisdiction for the same will be, where the head office of plaintiff is situated or where the cause of action has arisen. Section 20 of CPC does not apply for the purpose of suit under 134 of Trademark Act,1999.
• If the court thinks fit it can allow any of the following order:
  • An injunction restraining further use of the infringing mark under Order XXXIX Rules 1 & 2 of CPC ie. temporary injunction or under Section 36-42 of specific relief act i.e. permanent injunction
  • Damages or an account of profits.
  • An order for delivery-up of infringing labels and marks for destruction or erasure.
• This remedies can be taken in case of infringement as well as in the case of passing off of trademark.

Criminal remedies

• Any person who uses a particular trademark without permission of the proprietor and makes that trademark deceptively similar shall be deemed to falsify a trade mark under section 102 of Trade Mark Act, 1999. Penalty for the same is given under Section 103 of the same act.
• Penalty under Section 103:- Any person falsifies any trademark or falsely applies to goods or services any trade mark shall be punishable with imprisonment for a term which shall not be less than 6 months but which may extend to 3 years and with fine which shall not be less than Rs50,000 but which may extend to Rs2,00,000.
• According to section 104 if any person who helped the accused by selling, providing or hiring services of the such good, possessing such goods for sale or any other possible way will be punished with imprisonment for a term which shall not be less than 6 months but which may extend to 6 years and with fine which shall not be less than Rs 50,000 but which may extend to Rs 2,00,000.

Except in the case where that person can prove that

1. He had taken all necessary precautions at the time of alleged offence.
2. He gave all the information in his power, to the prosecutor with respect to the person from whom he obtained such goods or things or services.
3. He had acted innocently
4. Under Section 105 if a person commits any of the offence provided in section 103 or 104 he shall be punishable for the second and for every subsequent offence, with imprisonment for a term which shall not be less than 1 year but which may extend to 3 years and with fine which shall not be less than Rs 1,00,000 but which may extend to Rs 2,00,000. Fines and imprisonment can be reduced if court thinks it fit.

This Section does not have retrospective effect

• Under Section 111 of the Act forfeiture of goods is provided in the conviction or acquittal under Section 103 if there is no intent to defraud the plaintiff, the court convicting or acquitting him may direct the forfeiture to Government of all goods and things by means of, or in relation to, which the offence has been committed.
• Section 115(3) make offence under Section 103 cognizable and under Sub-Section 4 of Section 115, any police officer not below the Rank of DSP and equivalent may, if he is satisfied that any of the offences referred to in sub-section (3) of Section 115 has been, is being, or is likely to be, committed, search and seize without warrant the goods or things involved in committing the offence, wherever found, and all the articles so seized shall, be produced before a Judicial Magistrate of the first class or equivalent. Provided that the police officer, before making any search and seizure, shall obtain the opinion of the Registrar on facts involved in the offence relating to trademark and shall abide by the opinion so obtained.

Procedure under Criminal law

• A case filed under 103 is cognizable so FIR can be filed under section 154 CrPC if the police officer refuses to register a FIR the person can file complain before the magistrate under section 156(3) CrPC in accordance with the provision procedure laid down in Section 190 CrPC.
• Upon registering the FIR or on the order of magistrate (as the case may be) the investigation will be initiated and conducted by the police officer which include search and seizure of the good with infringed trademark.
• Benefit of criminal remedy in case of infringement is that victim can initiate proceeding even against unknown persons. Sometimes it happens that the identity of the manufactures and the distributors of the infringing material is not known to the complainant and the same operates as an obstacle in initiation of criminal action, but under Section 93 and 94 of CrPC under which one can request for initiation of a search and seizure proceedings against known and unknown persons.

The post Infringement and Passing Off of Trademark in India appeared first on iPleaders.

iPleaders is looking for a skilled PHP developer for Kolkata office

iPleaders is a globally recognised legal education company with offices in Delhi and Kolkata, catering to students, entrepreneurs and professionals from 23 countries towards achieving professional growth. Our online legal education platform caters to thousands of students across the globe while our websites and blogs are visited by over 5 lakh visitors every month. We have been in operation since 2012 and have been the market leader in the domain of online legal courses and legal training workshops.

Job Description

We are looking for a Senior PHP Developer responsible for managing back-end services and the interchange of data between the server and the users. Your primary focus will be the development of all server-side logic, definition and maintenance of the central database, and ensuring high performance and responsiveness to requests from the front-end. You will also be responsible for integrating the front-end elements built by your co-workers into the application. Therefore, a basic understanding of front-end technologies is necessary as well.

The job will give you the best opportunity to learn and experiment with the latest frameworks and languages (Golang with ReactJS for an idea). It would also give you space to grow with your own tastes when it comes to usage and choice of right technology.

You would also get experience and training in building products which is highly valued in the marketplace, and get the satisfaction of creating amazing software that is used by thousands of paid customers.

Responsibilities

• Integration of user-facing elements developed by front-end developers
• Build efficient, testable, and reusable PHP modules
• Solve complex performance problems and architectural challenges
• Integration of data storage solutions
• Engage in constant learning and development

Skills And Qualifications

• Strong knowledge of PHP web frameworks such as Codeigniter, Laravel, etc.
• Understanding the fully synchronous behavior of PHP
• Understanding of MVC design patterns
• Basic understanding of front-end technologies, such as JavaScript, HTML5, and CSS3
• Knowledge of object oriented PHP programming
• Understanding accessibility and security compliance
• Strong knowledge of the common PHP or web server exploits and their solutions
• Understanding fundamental design principles behind a scalable application
• User authentication and authorization between multiple systems, servers, and environments
• Integration of multiple data sources and databases into one system
• Familiarity with limitations of PHP as a platform and its workarounds
• Creating database schemas that represent and support business processes
• Familiarity with SQL/NoSQL databases and their declarative query languages
• Proficient understanding of code versioning tools, such as Git

Tech Experience

• Stack: LAMP, MEAN (preferable)
• Database: MongoDB and MySQL
• Frameworks: Core PHP, Laravel and Symfony
• Tools: Guzzlehttp, Composer, Git, Docker (preferable)
• Projects: Payment gateways, Web Scraping, Content Management Systems, SOAP and REST APIs

Salary/ Perks/ Misc

• Basic: INR 3 to 4.8 LPA (based on experience and previous salary slips) + incentives for achieving targets.
• Annual discretionary bonus of upto INR 60,000
• Sunday off, Saturday half day
• Office in Sector V, Salt Lake, Kolkata
• Promising opportunity to grow and rise through ranks inside the company

Application

• Apply with your resume and a paragraph about yourself of not less than 100 words.
• Mention the development environments and stacks you are comfortable with.
• Describe your current work profile, your current salary, and your expected salary.
• Email to jobs@ipleaders.in with subject: “Senior PHP Developer”.

Shortlisted candidates would be invited for an in-person interview with the Technology Manager.

The post iPleaders is looking for a skilled PHP developer for Kolkata office appeared first on iPleaders.

In this article, Tejaswi does a comparative analysis of Insolvency Laws of India and The United Kingdom. A Chartered Accountant student, Tejaswi writes about things that he cares about. He loves to live a Professional Life (like #HarveySpecter). Works in QuickCompany which deals in Company Registration and Other Legal Activities.

The Insolvency and Bankruptcy Code, 2016 is obviously a reformatory move by the Indian Government as prior to its implementation, the then existed bankruptcy framework in India was unclear and was overlapping with many Acts and laws. There was no certain law to regulate insolvency or restructuring of companies in India. The lenders were unconfident with laws in India related to the recovery or restructuring of the defaulted assets.

To regain the confidence of the creditors and to promote entrepreneurship, availability of credit, and balance the interests of all stakeholders for maximization of value of assets, the new Code is introduced. The new Code consolidated the laws relating to insolvency and restructuring of corporations, individuals and partnerships. The Government has the view that such consolidation would aid great clarity in debt default laws and would facilitate the application of consistent and coherent provisions to different stakeholders affected by business failure or inability to pay debt.

Experts in the field are in the opinion that the Code assented by the President on May 28, 2016, closely mirrors the UK Insolvency Regime. It may be a fact to agree, that there were a couple of laws which were formed at the time of British rule in India were in practice prior to the launch of the new Code. The outdated laws and overlapping laws planted India in the rank of 136 on resolving insolvency. Insolvency resolution in India took 4.3 years on an average in India is self-explanatory for the worst conditions experienced by creditors.

How to repair was a big challenge for Bankruptcy Law Reforms Committee (BLRC). Adopting a successful and proven regime could be the best choice made them think that UK regime can be a better reference. As per World Bank, recovery in the UK is at a rate of 88.6 cents per dollar and that too within a period of 1 year on average, compared to 25.7 cents per dollars in India.

However, the Indian Code of 2016 cannot be exact as those of UK’s, certain key aspects of the UK legalisations may not work in Indian scenario and thus are customized to fit for Indian climate.

This article will have a close evaluation on how the Indian Code and UK Code relates to each other.

Adopted

1. Control:- Under the old laws and acts, the debtors had the upper hand to control the insolvency process. The new law has made a remarkable effort to switch the debtor in possession regime to a creditor in control. As per the new Code, now a creditor or group of creditors can initiate the insolvency process by filing an application to the Adjudicating Authority when a borrower is in default. However, the legalisation vested with the debtors has not been lifted, a borrower or debtor can still initiate the process by filing an application in the respective authority. The regime was adopted from the UK laws which is considered to be the most internationally recognized system.
2. Professionals: The appointment of a licensed professional is another key aspect adopted from the UK regime. As per the new code, the consortiums of creditors on regulatory clearances appoints an interim Insolvency professional to oversee the insolvency process. Three sets of Resolution Professionals are sought to be appointed – Interim Resolution Professional, Final Resolution Professional and the Liquidator. Under the oversight of the Board, the Insolvency Professional will develop professional standards, codes of ethics and exercise a disciplinary role till the end of the process. Insolvency professionals would handle the commercial aspects of insolvency resolution process. Insolvency professional agencies will develop professional standards, code of ethics and be the first level regulator for insolvency professionals members leading to the development of a competitive industry for such professionals.
3. Freeze:  During the insolvency process, when the creditor action has stayed, the Adjudicating Authority on the recommendation of the Resolution Professional can grant Moratorium. As per the Code, during the period of Moratorium, no suits can be instituted or recovery action can be initiated.
4. Priority: The new Code adopted distribution of payments in priority as outlined in UK regime, during the liquidation of the company. Based on the vote of the majority of the creditors, on failure of the submission of resolution plan within the prescribed period, the liquidation process is initiated. The assets held by the debtor are recovered during the liquidation process and will be distributed by the liquidator in the manner of priorities laid in the law.
5. Cross-border: As per the provision of the code, the Government of India can enter into agreements with any country outside India for enforcing provisions of the Code and notify applicability of the same from time to time. Further, assets of the debtor located outside India may also be included for the purpose of the insolvency resolution process and/or liquidation before the Adjudicating Authority.
6. Others: There are certain other parts also can be seen in the Code, which are similar in the UK regime, including the period of antecedent transaction of upto 2 years, license examination for insolvency professionals etc.

Amended or Added

1. Control: During the insolvency process in India, the insolvency professional appointed shall obtain approval from the creditors on various matters related to the insolvency process. Section 28 of the Code detailed such matters which require creditor approval. Whereas, in UK regime, generally the approval is required only at the time of appointment of such professional.

Though the creditors in India enjoy such privileges during the process, there voting rights are limited. As per the Code, only secured or unsecured creditors vote in a creditor committee, whereas in UK, all creditors including trade creditors have voting power in the creditor committee.  Apart from that the 75% of the secured or unsecured creditors will have to approve the resolution plan proposed, whereas the creditors under UK regime a simple majority can approve the plan during the insolvency process.

2. Professionals: In India, an individual or a group of agencies can act as an Insolvency Professional upon approval from the creditor’s committee. However, in the UK only licensed individuals are eligible to become an Insolvency professional. Also, in India, an Insolvency Professional is not required to provide a surety bond or professional insurance whereas the counterpart demands so. There are distinctions in the licence renewal though both demands a licensing or examination process to become an Insolvency Professional. The licences obtained in India are of life membership in nature whereas in UK it should be renewed annually.
3. Freeze: As per the Code on failure of the submission of resolution plan within the prescribed period or if it is not approved by the creditors within 180 days, the liquidation process would automatically get initiated. However, in UK, no such timeline has been specified under the law and is valid for the entire period till plan is approved, if rejected only the liquidation process shall be initiated.
4. Others: In India, there are specialized courts to deal with Insolvency as the new Code established the formation of two tribunals to act as adjudicate Authority and deal with the cases related to insolvency, liquidation and bankruptcy process. The Debt Recovery Tribunal to oversee insolvency, liquidation and bankruptcy process of individuals and unlimited partnership firms, whereas National Company Law Tribunal to administer those of companies and limited liabilities entities.

As per the Code, In India, the remuneration paid to the liquidator could be decided by the creditors and would be decided based on the scale of realization and distribution. However, in UK regime the remuneration is fixed on consensus of creditors and the insolvency professional appointed, in default the court may intervene to fix the remuneration. It is important to note here that the liquidator in India is required to liquidate the assets within a period of two years, whereas no such requirement in the UK for the liquidator.

The UK regime has influences in formulating the Insolvency and Bankruptcy Code in India, but the Bankruptcy Law Reforms Committee has made commendable efforts in customizing it to Indian Scenario. The move is expected to help India move up from its current rank of 130 in the World Bank’s ease of doing business index.

Ref: http://www.ey.com/Publication/vwLUAssets/ey-interpreting-the-insolvency-and-bankruptcy-code/$FILE/ey-interpreting-the-insolvency-and-bankruptcy-code.pdf

The post Comparative analysis of Insolvency Laws – India and The United Kingdom appeared first on iPleaders.

In this article, Parth Sarthy Kaushik discusses 5 biggest Indian IPOs of 2017 so far.

Initial Public Offering (IPO) is the process by which a private company goes public by sale of its stocks to general public. The IPO is an exciting time for a company and signifies that it has become successful enough to require much more capital to continue to grow. Following are the five biggest Indian IPOs of 2017 (so far).

General Insurance Corporation of India

General Insurance Corporation of India is the largest reinsurance company in India in terms of gross premiums. The company provides reinsurance across key business lines including fire, marine, motor, engineering, agriculture, liability, credit and finance. Through the IPO, the Government of India is selling 12.26 % stake in the company and the Corporation itself is selling 1.96 % stake.

This will be India’s third biggest public offer ever after Coal India’s Rs 15,200 crore and Reliance Power’s Rs 11,700 crore issues.

Issue Details

• Objects of the Issue: (a) Fresh Issue will be utilized to increase the capital base to support the growth of their business and maintain current solvency levels; (b) The proceeds from OFS would help the government meet its fiscal deficit target of 3.2 % of GDP for the year ending in March.
• Issue Type: Book Built
• Opening Date: October 11, 2017
• Closing Date: October 13, 2017
• Provisional Listing Date: October 25, 2017
• Issue Size: Rs. 11,372.64 Cr. (Fresh Issue- 1.7 cr. Units; OFS- 10.7cr. units)
• Face Value: Rs. 5 per Equity Share
• Price Band: Rs. 855 – Rs. 912 per Equity Share
• Sector: Reinsurance
• Ratings: Stable
• Risk Factors: Highly-regulated industry, ability to accurately assess the risk associated with the reinsured businesses and substantial exposure to agriculture sector.
• Listing At: BSE & NSE

SBI LIFE

SBI Life Insurance Company is India’s largest private life insurance firm in terms of new business premium (NBP), second only to Life Insurance Corporation of India (LIC). It was established in 2001 as a joint venture between State Bank of India (SBI), which is India’s largest state-owned banking and financial services company, and BNP Paribas Cardiff.

Issue Details

• Objects of the Issue: Providing liquidity to the existing shareholders and enhancing the “SBI Life” brand name.
• Issue Type: Book Built
• Opening Date: September 20, 2017
• Closing Date: September 22, 2017
• Listing Date: October 3, 2017
• Issue Size: Rs. 8400 Cr. (Fresh issue- 12 crore units)
• Face Value: Rs. 10 per Equity Share
• Issue Price: Rs. 700 per Equity Share
• Oversubscribed: 3.6 times
• Sector: Life Insurance
• Ratings: Stable
• Risk Factors: Change in Interest Rates, Highly Regulated Industry & Inability to Maintain Market Share
• Listing At: BSE & NSE

ICICI Lombard General Insurance

ICICI Lombard General Insurance Company Limited is ICICI Bank Ltd. is the largest private non-life insurance firm in India, having 8.4% market share on gross direct premium income (GDPI) basis. It was incorporated in 2002 as a joint venture between India’s largest private-sector bank and Fairfax Financial Holdings Limited. The company offers a comprehensive and well-diversified range of products, including motor, health, crop/weather, fire, marine, engineering and liability insurance, through multiple distribution channels.

Issue Details

• Objects of the Issue: Providing liquidity to the existing shareholders and enhancing the “ICICI Lombard” brand name.
• Issue Type: Book Built
• Opening Date: September 15, 2017
• Closing Date: September 19, 2017
• Listing Date: September 27, 2017
• Issue Size: Rs. 5700 Cr. (OFS- 8.6 crore units)
• Face Value: Rs. 10 per Equity Share
• Issue Price: Rs. 661 per Equity Share
• Oversubscribed: 3 times
• Sector: General Insurance
• Ratings: Stable
• Risk Factors: Concentration Risk, Regulatory Changes & Substantial Exposure to Crop/Weather Insurance.
• Listing At: BSE & NSE

IRB InvIT Fund

IRB InvIT Fund is an infrastructure investment trust sponsored by IRP Infrastructure Developers Limited, one of the largest infrastructure development and construction companies in India. It owns, operates and maintains a portfolio of toll-road assets in India.

IRB InvIT has the distinction of being the first IPO in the InvIT space.

Issue Details

• Objects of the Issue: Investment in the Project SPVs by way of an issue of debt.
• Issue Type: Book Built
• Opening Date: May 3, 2017
• Closing Date: May 5, 2017
• Listing Date: May 18, 2017
• Issue Size: Rs. 5291 Cr. (Fresh issue- Rs. 4,300 crore; OFS- 34.6 crore units)
• Face Value/Issue Price: Rs. 102 per Equity Share
• Oversubscribed: 8.6 times
• Tenure: 16 years
• Sector: Toll Road Construction
• Ratings: AAA/Stable
• Risk Factors: Inflation, Traffic Volume & Government Policies
• Listing At: BSE & NSE

IndiGrid InvIT Fund

IndiGrid InvIT Fund is an infrastructure investment trust sponsored by Sterlite Power Grid Ventures Limited, one of the leading independent power transmission companies operating in the private sector. It was established in 2016 and owns inter-state power transmission assets in India.

IndiGrid InvIT is first ever IPO in the Power Sector InvIT space.

Issue Details

• Objects of the Issue: Repayment of external debt as well as unsecured loans from Sterlite Power Grid Ventures Ltd. to Bhopal Dhule Transmission Company Ltd. and Jabalpur Transmission Company Limited.
• Issue Type: Book Built
• Opening Date: May 17, 2017
• Closing Date: May 19, 2017
• Listing Date: June 6, 2017
• Issue Size: Rs. 2250 Cr. (Fresh Issue)
• Face Value/Issue Price: Rs. 100 per Equity Share
• Oversubscribed: 1.3 times
• Tenure: 35 years
• Sector: Power Transmission
• Ratings: AAA/Stable
• Risk Factors: Load Availability & Market Trends
• Listing At: BSE & NSE

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This article is written by Kirti Prakash.

How I Used Facebook To Find My Startup Co-Founder

If you wish to succeed in building a successful startup, then you’ll have to nail the hiring part in your business.

If you get it right, your startup will grow like crazy.

But if you mess this up, you will continue to suffer for a long time.

And sooner rather than later bad hiring will start impacting in every function of the business.

It will cost you a lot of time and money.

I think it’s close to impossible to recover from early stage poor hiring.

And if you get your core team wrong, then you are Doomed!

Over a period I have seen that the most significant hiring any entrepreneur can make is the co-founder hiring.

Because building a business is extremely hard. It is one of the most difficult things you’ll ever attempt in your life. You need someone who can support you in this journey of building and managing your company, someone who is there to help you in your day to day decision making.

And it’s not only a matter of finding someone who complements your skill set.

But it’s way more than that.

I think there is a lot that goes on when you have a smart business partner who is on board with you. You’ll have plenty of emotional, mental & psychological support which can help you in sailing through your bad days.

And that’s the reason why I am specifically writing this story because I wanted to tell you about how I found my business partner on Facebook using a simple approach and how you can do the same by applying the same formula and get your results in a matter of few weeks.

So let’s just dive in straight to my story…

Now I was almost 6-8 weeks deep into building my product.

I was working on my product day in and day out. And after working for long extensive hours one day, I realised that this is the worst approach I can take to building a company.

If I keep on working like this, I can not go far with this product.

I will need some extra help on this. Not just an employee but someone who can put his blood and sweat like me and dedicated himself to building this company.

Hiring a senior level employee won’t just make the cut. Because I couldn’t afford to pay high salaries. I realised having a co-founder would solve this issues of mine in the fastest way possible.

So I didn’t waste much time. I started reaching out to my GANG.

I started reaching out to my school friends, college mates and other acquaintances who were there in my network.

I tried a lot of ways so that I could get one person interested in working with me.

But it’s like one of those things where the needier you get, the more it repels other people.

But after investing some time in it, I came across few people who were interested in working with me, but but but….

There was a catch to it.

The ones who were interested in working with me weren’t ready to commit to me for full-time.

I heard things like “ I don’t know, I like your project, But I am not too sure about this. I don’t think I’d be able to convince my parents/wife. “

For me, it was a no-brainer, that if someone has to work on this, they’d have to come for full time with me and work on building this together with 100% commitment to it.

Soon it was becoming hard to convince someone to come with me for a full-time GIG.

I feel bad in telling this, but I even went to the extent of making those needy “ looking for co-founder posts “ on Facebook.

Now I don’t know whether you have seen such posts or not, but you can go to startup forums on Facebook, and you will find plenty of such examples of people desperately hunting for co-founders on these groups.

But even that couldn’t get me any solid leads.

Until one day I was casually browsing on Google. I got to know about this person Nikhliesh from HiringDecoder. Nikhilesh helps early and mid-stage companies in hiring co-founder by using his simple step by step approach.

Soon we got talking on Email and then later on the phone and I got to realise of all the mistakes I have been making till now.

He helped me in refining my pitch so that it attracts the right type of people for my startup. And within 4 weeks of my hunt, I got a crazy number of applications in my email.

By the end of the process, I had close to 200+ applications with me. All these people wanted to work with me and were happy to join me as a business partner.

Now the process that I followed was simple if I can pull off results like 200+ applications I am sure you can do it too.

But if I tell you that it all happened in this easy way, it wouldn’t be fair on my part.

Coming to this point wasn’t easy.

I wasted a lot of time in going to conferences, meetups & pitching sessions in the hope that I’d be able to find a good guy in those meetups.

But If I had to go in the past, and fix one thing, I would NOT go and waste my time in any of those events.

The BIGGEST problem with these methods is that you have to put in a lot of effort and results are very less.

Now when I say that, what I mean to say is that the kind of people who come to these events are usually wantrepreneurs.

So your chances of finding a good guy in these events are very less.

So it is better to spend your time in areas where you get high quality leads with minimal effort.

FOCUSING on too many low-yield channels is only going to get you BAD leads.

Instead, you should start focusing on high yield efforts.

A good idea to approach this problem is by approaching it like a marketing funnel.

You know how a funnel is? Right?

It has a bigger mouth on the top and a narrow one on the bottom.

Your idea should be to push as many people as you can in your funnel.

So that high-quality leads can keep coming in, and on the other end, you get high-quality hires on the narrow bottom end.

A good source to find high-quality leads is on Facebook.

Facebook out of all the social networks has the best reach when it comes to access to people. It is an excellent medium to source consistent applications for finding a co-founder.

So what you need to do is, you need to get your message out there and show it to as many people as you can.

But before you start spreading your message it is important to understand that you create the right job description for your co-founder.

Since it will take a lot of time, you can learn how to build a job description by clicking on the link here.

The more time and thought that you put in at this stage, the better you’ll have the chances of finding a co-founder.

Once you have created the perfect co-founder job description, then the next thing you need to do is you need to figure out all the startup and startup related groups on Facebook and join all of them.

Now, this step might take you close to 7-10 days to get accepted in all the groups.

Try to join all the startup groups of your country, don’t try to limit yourself to the same city or the state, seek to find the best ones in your country and make your postings over there.

Now back when I did it, I joined close to hundred plus startup and startups related groups on Facebook before floating my job description over there.

One thing which you should keep in mind is that you should only join groups that have more than 300+ members. Because if you try to HIT a number less than 300, it will difficult for you get some action from that particular groups.

So try to find those groups which have this kind of numbers.

Once you have been accepted in these groups, then the next thing you need to do is, you need to start posting your job description in these groups.

Post it in as many groups as you can because the more postings you make, the more people will view it, and it will increase your chances of getting more people in your funnel.

I followed the same formula, and my job posting became amongst the most popular job postings ever.

You can copy and learn from my method and see the kind of job description I had created back then.

Please don’t copy my script word by word because what has worked for me might not work for you, so try to seek inspiration from this and build your case on your own.

You can also run Facebook Ads and put $1 a day ad budget to it. This way will get you high quality leads at a much faster pace.

If you put in the effort to make these 2 techniques work the chances are that you will be getting your results in a matter of few weeks.

When I made my post, I got

• 200 + applications.
• 52 emails
• 15 calls/ meetings
• 2 shortlisted candidates for trials.
• 1 Final recruit.

(This is how my stats looked like)

But again getting up to this point where you get lots, and lots of applications mean you follow the complete process and build a crafty co-founder job description post.

And if you create a perfect post like this you can get access to high-quality people on facebook.

And if you want to learn through the complete process of hiring a co-founder, then you can go to my ultimate guide on how to find a co-founder (which has all the word by word scripts and examples in it)

Try to use this method and let me know in the comments section if you have any doubts about it; I’d be more than happy to help if you need my help on anything.

Feel free to write in the comments section.

See you soon.

Kirti

PS – I take one to one consulting client for hiring co-founders as well, if you need particular help, write me an email & one of my team members will get back to you on it.

The post appeared first on iPleaders.

In this article, Pratyusha Kar pursuing Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, elaborates on Key features of Employment Contracts.

Introduction

With the constant evolution of employee-employer relationship, there is a perpetual divergence in the character of disputes and the nature of conflicts. Naturally, both the employee and employer always pursue to safeguard their own interests. Therefore, to strike a reasonable balance in the interests of both the groups various acts and rules have been enacted. These employment laws are not merely restricted within the limits of workplace injustice and contract agreement but are having a broader ambit of employee-employer relationship as a whole.

Further with the advent of globalisation and convenience of modern technology, there had been a phenomenal change in the employee-employer interrelationship in India. The shifting in the economic policy from regulation to liberalization and access to multinational companies has changed the complete scenario. Unique cross-border zest has been tasted in the employment agreements with several restrictions and limitations. Under present day situation, the relationship has become so diverse, intricate and ambiguous that in the present article I shall restrict my discussion only focusing on India involving several facets of employment contracts in India.

What is Employment Contract in India?

Employment contract in India is a bilateral contract agreement involving service and remuneration on quid pro quo basis for a specific period of time. The services provided by the employee are purely based on social relationship between the employee and the employer and covering no other relationships.[1] However, the Constitution of India and the Indian Contract Act 1872[2] have categorically held that in spite of agreement between the two the right to livelihood of the employee must be safeguarded.

Basic components of the Employment Contracts

The basic features of the employment contracts are based on the Indian Contract Act 1872 which include – ‘offer’ as per Section 2 (a) of the Indian Contract Act, ‘acceptance’ as per Section 2 (b) of the Indian Contract Act, ‘consideration’ as per Section 2 (d) of the Indian Contract Act, ‘competent parties’ as per Section 11 of the Indian Contract Act, ‘legal aspects’ as per Section 23 of the Indian Contract Act and ‘free consent’ as per Indian Contract Act.

Covenant clauses

In India usually the appointment letter signed by the employer and the employee acts as the general contract agreement. However, in the appointment letter itself or separate agreements containing some restrictive covenant clauses are usually signed between employer and the employee in India. Such covenant clauses are described here in under.

Confidentiality Clause

Confidentiality clause or non-disclosure of trade secret and confidential information clause are usually included in the appointment letter of the employee. This provides safety and security to the company. The employee here is not allowed to disclose any confidential information to a third party without taking permission from the employer. Normally such confidential agreements are executed separately. The IT Act 2000[3] and the IPC have the provision for criminal prosecution for breach of confidentiality. In Pyarelal Bhargava v State of Rajasthan (1963) case[4] the accused employee removed some documents temporarily, passed it to his friend and substituted with other documents was accused of theft. Supreme Court held that as the intention was dishonest mere temporary removal of the documents would be considered as larceny under section 378 of the IPC.

In Abinav Gupta v State of Haryana (2008) case[5] the accused before resigning from a company downloaded confidential documents from his company into his personal e-mail and handed it over to his new company after joining which was a competitor of the previous company. The person was held for hacking under Section 66 of the IT Act, under Section 420 of the IPC for dishonesty and under Section 406 of IPC for breach of trust.

However, in the absence of confidentiality clause in the employment agreement the employer has to depend exclusively on the judiciary and the common law rules and sometimes in absence of laid down rules under agreement clause it becomes difficult to ascertain which one is confidential and which one is not. Thus, it is better to incorporate it into the employment agreement.

Non-solicitation Clause

Sometimes this clause is included under the head of confidentiality clause discussed earlier or under non-compete clause to be discussed just after but in many cases it is drafted as a different agreement. Under this clause an employee after leaving/resigning from the organisation is restricted to provide or solicit advice to a customer of the former organisation disregarding who has proposed. Under this clause the employee also agrees not to solicit advice to his fellow worker to resign from the job and attempting to arrange jobs for the colleagues somewhere else.

In Desiccant Rotors International Pvt. Ltd. v Bappaditya Sarkar & Anr. (2009) case[6] the former manager of the company was restricted to solicit customers and suppliers of M/S Desiccant Rotors International. In Embee Software Pvt. Ltd. v Samir Kumar Shaw (2014) case[7] Calcutta High Court held that mere retention of documents by an ex-employee never amounts to breach of secrecy but the solicitation acts of a former employee inhibiting clients of the former organisation could not be allowed.

Non-compete Clause

Under non-compete clause of the agreement an employee is not permitted to work in a competing organisation for a period of six months to two years (it may vary form organisation to organisation) after termination of his job. Although Article 19(g) of the Indian Constitution administers right to practice any profession, trade or business but it is not an absolute right and restrictions can be imposed for the sake of public interest.

In Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd (1967) case[8] the court held that non-compete clauses after termination of employment is not valid as per Section 27 of the Indian Contract act.

Training Bonds

Present day employers usually organise trainings for their employees even before joining the organisation. The employees had to sign a contract bond that after completion of the training they must serve the organisation for a specific period. If they fail to serve the employer would look for compensation. However, under Indian context such clauses are not enforceable. The organisation may at least claim the actual expenditure incurred and not any penalty.

In Satyam Computer services Limited v Ladella Ravichander (2011) case[9] an employee left the job suddenly and was charged to pay Rupees two lakhs in addition to stipend charges and additional expenditure meted out by the employer for his purpose as per the bond agreement he had entered into. The Andhra Pradesh High Court held that as the employee had not caused any damage to the organisation he should not be charged abnormally and fixed an amount of Rupees one lakh considering his job period and the actual cost incurred. In the Sicpa India Limited v Manas Pratim Deb (2011) case[10] also same type of verdict was given by the Madras High Court.

Miscellaneous Clauses

Probation Period

Probationary period is the trial period before absorbing any employee into permanent status. In contract the employer must mention the period of probation. However, the employer may extend the period of probation if there is unsatisfactory performance.

Salary and payment terms

Details of the salary structure with statutory deductions and other deductions like tax, PF, insurance etc. should be mentioned in the contract.

Leaves

The leaves, holidays, and vacation policy are to be stated clearly in the contract. The leaves may include casual leaves, medical leaves, earn or privilege leaves, special leaves etc. In vacation clause the number of vacations entitled to enjoy per year and the provision to carry forward the unused vacation in the forthcoming years should be there.

Termination

One of the most important clauses in the employment contract agreement is the termination clause. In termination clause usually the notice period (usually one month) from either side is usually mentioned. This clause should also include the terms of termination, responsibilities to be carried out by the employee and the employer, compensation, if any to be paid by the employer, penalty, if any to be provided by the employee due to short notice period.

Termination may be voluntary or involuntary. When an employee retires or resigns from the company, the termination is voluntary. On the other hand if an employer terminates its employee due to breach of contract, misconduct and other similar issues, the termination is involuntary. However, in present day employment contract some post-termination clauses are also incorporated particularly covenants as discussed earlier.

Conclusion

An employment agreement in India is a form of any other contracts with some specialties. The contracts of employment is usually an appointment letter issued by the employer containing a series of clauses as mentioned earlier like confidentiality, non-solicitation, non-compete, training bonds, probation period, salary and payment terms, leaves, termination etc. and the employee merely puts his signature on a duplicate copy of the same as a token of acceptance. But if the agreement is anti-competitive in nature and restricts the employee to practice his profession it is not only illegal but also immoral. Justifiable restrictions in the employment contracts are acceptable but excesses of it lead to legal complications.

References

[1] Net Lawman, An Indian perspective on employment agreements, https://www.netlawman.co.in/ia/an-indian-perspective-on-employment-agreements

[2] Indian Contract Act, 1872.

[3] ^{Information Technology Act 2000; Section 66 (hacking), Section 65 (tampering of computer source document), Section 43 (damage of the computer system), Section 66E (violation of privacy policy).}

[4] ^{Pyarelal Bhargava v State of Rajasthan (1963) AIR 1963 SC 1094.}

[5] ^{Abinav Gupta v State of Haryana (2008), CriLJ 4356.}

[6] ^{Desiccant Rotors International Pvt. Ltd. v Bappaditya Sarkar & Anr., (2009) Delhi HC, CS(OS) No.337/2008 (decided on July 14, 2009.}

[7] ^{Embee Software Pvt. Ltd. v Samir Kumar Shaw (2012) AIR 2012 Cal 141.}

[8] ^{Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd (1967) AIR 1967 SC 109.}

[9] ^{Satyam Computer services Limited v Ladella Ravichander (2011), MANU/AP/0416/2011.}

[10] ^{Sicpa India Limited v Manas Pratim Deb (2011), MANU/DE/6554/2011.}

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This article is written by Jon. Jon is fond of reading, writing & meeting people. He loves writing about Employment Law Edinburgh. In a former life, Jon worked as a content specialist and has good knowledge about employment policies & law.

It is unfortunate that people suffering from mental illness, be it mild or severe experience shame, stigma, and misgivings when other people find out about their condition. And the saddest part about being a mentally ill person is that even your own family may not also believe that you are ill, which makes your condition even worse.

As a human being, it is important to provide help and support to those who are suffering. Mentally ill people must be understood, given care, and treated equally. It is our job as a human being to educate and raise awareness in this type of pain that is often misconstrued and mishandled. Neither spreading words nor preaching helps to tackle problems relating to mental illness. Educating people around you about mental health can bring the much required change, and this will help to make the world a better place for those who are affected by mental illness.

If you truly care, you should start making a difference in the community you are in. How can you do it anyway? Well, here is a mix of tips, ideas, and steps you can do.

1. Just talk about it or include it in regular conversation. Of course, do not come out as aggressive and toxic. If people do not want to talk about it, then avoid talking about it. If they are willing to discuss, then go ahead.
2. If you have a history of mental illness or are living/taking care of someone who is mentally ill, be sure to share your story with people who are going through the same situation as you. And if you have a good opportunity to talk about it, then do so.
3. Educate people not to be judgemental and rude. This can be a difficult thing to do, and people might shun you. Start slowly on this part. Only do this to your relatives and close friends, or people you know who would listen to what you say.
4. Help as a volunteer in organizations that focus on mental health awareness. Aside from helping mentally ill people, you can build excellent connections in organizations.
5. Encourage people to get screened. This can be difficult because of multiple reasons, so start with the ones who are close to you. Also, you do not have to push them. Some people do not want others to know they have a mental disorder. You can just inform them on how and where they can go for screening.
6. Be a better friend. Just imagine, almost 20% of young people experience a type of mental disorder at one point in their life. Even if your friends or people close to you are not screened yet, being a better friend to them will benefit them. Having a good friend not only helps in curing mental illnesses, but it also helps in preventing one from developing.
7. Start educating children about mental health awareness and non-judgemental speak. It is crucial to start making them aware at an early age. With knowledge and time, they will inevitably become good, kind adults with a heart to spare for those who are suffering, whether they are mentally ill or not.
8. Take time to spread awareness to the public. You do not need to stand up and talk loudly about mental health awareness. You can just simply give out pamphlets. The pamphlet might contain information about your organization, telephone numbers for mental illness related groups, or just a right message to share to lighten up a person’s day.

Statistics relating to Mental Illness

1. Depression is the number one cause of mental disability in the world.
2. Approximately more than 61 million Americans experience a mental condition every year. That accounts for 25% of adults in the United States. This accounts for, one in four people!
3. Around 70% up to 90% of mentally ill people have their conditions improve through treatments.
4. Around 800,000 people die because of suicide every year. If you combine the population of Maldives and the Bahamas, you will get approximately 850,000 people.
5. Only 25% of people who have a mental illness feel that they are understood by other people, or that there are people who understand mental illnesses.
6. Around 350 million people in the world are clinically depressed.
7. Almost 80% of suicide cases in the United States were committed by males.
8. Forty million people in the United States suffer from anxiety.
9. Around 30% of college students have admitted that they feel depressed to the extent that they think they are performing poorly in their studies. Around 7.5% of the college students surveyed have thought about and even considered suicide for the past year.
10. Around 3.5 million Americans suffer from schizophrenia. Do note that the development of schizophrenia starts between 16 to 25 years of age. Also, about2 million people in America suffer from bipolar disorder.

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In this article, Noopur Kalpeshbhai Dalal pursuing M.A, in Business Law from NUJS, Kolkata discusses the punishment for Publishing or Transmitting Obscene Material in Electronic Form.

Introduction

The entire world in Cyberspace is a place under one rooftop. The thoughts, considerations, articulations, views, culture, convention and traditions spill out of one corner to the next corner of the globe with a single click. With the outpouring from one corner to another of these cultures, conventions, traditions, articulations, perspectives, contemplations and thoughts the unavoidable hardship i.e. the flexibility and agreeability and blending of one culture with the other was acknowledged, a major conflict between the materialistic west and spiritual east. Pornography is one such zone of significant clash. It has been from the very initiation a debate issue. 

The Internet has offered ascend to another platform for the online distribution and utilization of obscene information and data. Billions of individuals around the globe are going through websites taking into account this information and data. These websites contribute to the biggest development sector of the digital economic world. However, as the utilization of internet-web has outgrown with the passing of time, it is misused additionally and an expansive number of various sorts of crimes are submitted through this internet web such as hacking, IPR infringement, cyber terrorism, cyber fraud, cyber defamation, cyber forgery, cyberstalking and so on. One of the major of these crimes is cyber obscenity.

Obscenity is an exceptionally delicate issue everywhere throughout the globe yet there is no settled meaning of the word “Obscenity” under any law. What is naked workmanship or sexually unequivocal thing for one individual might be obscene or porn for another. Obscenity on the Internet is not typically a crime. Internet-Web has given a medium to the assistance of violations like Pornography or Obscenity. Digital Obscenity is the exchanging of sexually expressive materials within the internet. Despite the fact that the Indian Constitution ensures the freedom to expression and freedom of speech, it has been held that a law against obscenity is constitutional. The Supreme Court of India has characterized obscene as “repulsive, offensive to modesty filthy, decency or lewd “. It is extremely hard to affirm whether any pornographic material is illegal or not? One specific obscene material might be illegal in India however not in different nations. The test for pornography was first set out by the Regina v. Hicklin[1], as a propensity to debase and degenerate those whose brains are open to such shameless impacts and into whose hands a distribution of this sort may fall.

Definition and Meaning of Cyber Obscenity

The word “Cyber Space” was first utilized by William Gibson in his novel “Neuromancer” 1982. The word Cyber or Cyberspace indicates a virtual situation inside which organized PCs’ action happens and Obscenity is any announcement or act which firmly outrages the predominant profound quality of the time. Obscenity is a lawful term that applies to anything hostile to ethics and is frequently likened with the term pornography. Obscenity is gotten from the Latin word obscene. In R.V. Hicklin[2], the word obscene was plainly characterized as “Any issue which tends to debase or degenerate those whose psyches are interested in corrupt impact.”

The Hicklin test expresses that an administering body may forbid anything that “debases and undermines those whose brains are interested in such corrupt impacts and into whose hands a production of this sort may fall.” Digital obscenity is the exchanging of sexually expressive materials inside the internet. The digital pornography or obscenity talk about is exceptionally mind boggling in light of the fact that pornography is not really unlawful. The test is the United Kingdom and different locales is regardless of whether the materials are obscene and debase its watchers, however, there are significant lawful and good contrasts as to criteria that empower law implementers to set up obscenity and deprivation. In England, for instance, people every day see scandalous pictures, however, the different aspects of the mass media. These same pictures may be lawfully obscene in some Islamic social orders, yet they are considered splendidly adequate in more lenient nations.

As per Supreme Court of India, “the idea of obscenity would vary from nation to nation relying upon the measures of ethics of contemporary society.” And that obscenity has a propensity to debase and degenerate those whose brains are interested in such improper impacts.

History of Cyber Obscenity

The delineation of such obscene expressive acts is as old as the human progress itself. However, the cutting edge idea of obscenity i.e. digital obscenity came after the foundation of the Internet. Invention of internet in the mid-1980’s was made by the National Science Foundation (“NSF’) which financed the fiber-optic joins that shaped the foundation of the Internet. At first, the Internet was, for the most part, restricted to clients who had work related electronic mail account on a PC keeps running by their manager. In 1991, the NSF lifted confinements against business utilize. Today, the Internet is accessible to anybody with a PC, modem and mobile phone. Despite the fact that obscenity was at that point exhibit in the public eye as books, magazines or recordings. Yet, after the creation of the web these are made accessible inside the virtual space i.e. the internet. Subsequent to making accessible these obscene materials in the web, these are exceptionally close to the clients. Accordingly, in the present era cyber obscenity viz. digital obscenity is conferring by individuals of each class of society in each nation. The legitimate status of the present day porn industry shifts from nation to nation. Generally, nations allow some level of entertainment to adults. While a few nations boycott the pornography. These nations are Bahrain, Cuba, Kenya, Saudi Arabia, Singapore, Indonesia, Iran, Egypt, Kuwait, UAE, Malaysia and India.

Transmitting Obscene Material in Electronic Form: A Crime

Obscenity when considered as an offence it is not defined in any acts in India, however certain laws state that ‘obscenity’ in certain situations establishes it as an offence. Indian Penal Code, 1860 and Information Technology Act, 2000 are the two legislations in India which recognizes obscenity as an offence or crime in certain circumstances. However nor the Information Technology Act, 2000 or the Indian penal code has defined the word obscene or obscenity, but as per section 67 of the Information Technology Act, 2000 and section 292 of the Indian Penal Code, 1860 elaborates and explains Obscenity as “anything which is lascivious or appeals to the prurient interest or if its effect is tend to deprave and corrupt persons.”[3][4]

Brief Explanation of Each Word

1. Lascivious: It is something which excites lust in a person;
2. Appeals to: This word here means something which arouses interest in a person;
3. Prurient interest: This word here means which is drawn by lustful thoughts;
4. Effect: This word here means to cause or change or any event;
5. Tend to deprave and Corrupt: This word here means to draw a person towards becoming immoral or bad morally;
6. Persons: This word here means natural persons including men, women, children[5]; it does not include any artificial persons.

Henceforth as per the two laws i.e. Indian Penal Code 1860 and Information Technology Act, 2000 (as amended by Information Technology Act, 2008), anything which is anything which is lascivious or appeals to the prurient interest or if its effect tends to deprave and corrupt persons are said to be obscene.

Cyber Obscenity Under Various Legislation in India

Obscenity is an offense under the Indian Penal Code, 1860. Section 292 of the Indian Penal Code, 1860 thoroughly sets out the conditions in which “obscenity” is an offense. Section 292(1) of the Indian Penal Code, 1860 laid out that any activity i.e.

(a) Deal, enlist, conveyance, open presentation or course, makes, produces or, then again has the ownership of any obscene book, leaflet, paper, drawing, painting, portrayal, or, then again figure or some other obscene protest at all or

(b) Import, send out or pass on any obscene protest for any of the reasons specified aforementioned, or knowing or having motivation to trust that such obscene protest will be sold, let to procure, disseminated or freely showed or in any way out into flow, or

(c) Partaking in or getting benefits from any business throughout which any such obscene articles are, for any of the reasons previously mentioned, made, created, bought, kept, imported, traded, passed on, openly showed or in any way put into flow, or

(d) Promotes or makes known by any methods at all that any individual is drawn in or is prepared to take part in any act or that any such obscene protest can be secured from or, on the other hand through any individual or

(e) Offer or endeavor to do any act, are the offense under section 292 of the Indian Penal Code, 1860.

Obscenity is additionally an offense under the Information Technology Act 2000. Section 67 of the Information Technology Act sets out the law that obscenity is an offense when it is published or transmitted or caused to be published in any electronic form[6].

Published

Published here means any information which is distributed and broadcasted formally by issuing and selling copies of the same for general public.

Transmitted

Transmission here means transfer, pass, communicate, a medium for transmitting, signal etc.

Caused to be Public

Caused to be public here means that to give effect of publishing some information by direct or indirect way. It also includes the publishing the certain information by any internet service provider or website server.

The Indecent Representation of Women (Prohibition) Act 1986[7], disallows obscene portrayal of girls or women. Section 2(C) of the Indecent Representation of Women (Prohibition) Act, 1986 characterizes obscene portrayal of girls or women as “the delineation in any way of the figure of a girl or women, her frame or body or any part thereof so as to have the impact of being disgusting, or slanderous to, or stigmatizing, ladies, or is probably going to debase, degenerate or harm the general population morale quality or ethics.”

This Act denies any production, show, ads, deliver or cause to be created, deal, let to contract, disseminate or circle containing obscene portrayal of girls or women and the distribution or sending by post any books, handouts, slide, film, composing, drawing, painting, photo, portrayal or figure in any shape containing obscene portrayal of a girl or women.

Cyberspace is a virtual space or world. There is no regional breaking point which separates this crime between the nations. Since in this stage in carrying out a same crime at least two nations may include in the meantime. Now and again it would be extremely hard to confirm that which nation’s’ law ought to be applied in a specific case. The Indian court embraced the approach of Common Law. As in Ranjit Udeshi v. Territory of Maharashtra[8] case Supreme Court built up an adjusted adaptation of the Hicklin test as the test for indecency in India. The Supreme Court has watched that the trial of indecency set around Cockburn C.J. in Miller V/S California ought not be disposed of.

In ensuing case, the Supreme Court additionally verbalized on the test for obscenity. In

Chandrakant Kalyandas Kakodkar v. Province of Maharashtra[9], the court held: “What is obscenity has not been characterized either in area 292 of IPC or in whatever other statutes. It just restricts or punishes the mailing, granting, sending out, distributing and offering of the obscene issues. It is the obligation of the Court to consider the obscene issue by taking a general perspective of the whole work furthermore, to decide if the obscene entries are so prone to debase and degenerate those whose minds are interested in impacts of this short.”

In Samaresh Bose v. Amal Mitra[10], the Supreme Court held that the idea of vulgarity would contrast from nation to nation contingent upon the principles of ethics of contemporary society.

Punishment Under Indian Penal Code, 1860, Information Technology Act, 2000 (As Amended by Information Technology Act, 2008) & Indecent Representation of Women (Prohibition) Act, 1986

The Punishment for an offense under section 292 of the Indian Penal Code, 1860 is on first conviction with detainment (straightforward or thorough) for a term which may stretch out to two years, and with fine which may stretch out to two thousand rupees, and in case of a moment or resulting conviction, with detainment (straightforward or thorough) for a term which may stretch out to five years, and furthermore with fine which may stretch out to five thousand rupees.

The Punishment under Information Technology (Amendment) Act, 2008 is given in distinctive stages. As they seem to be:

Punishment for Transmitting or Publishing Obscene Information in Electronic Form

As per Section 67 of Information Technology (Amendment) Act, 2008[11],whoever distributes or transmits or causes to be distributed or transmitted in the electronic form any information or data which contains sexually expressive act or direct might be rebuffed on first conviction with detainment of either portrayal for a term which may reach out to five years and with fine which may stretch out to ten lakh rupees and in case of second or resulting conviction with detainment of either portrayal for a term which may reach out to seven years and furthermore with fine which may stretch out to ten lakh rupees.

Relevant Case

This case is tied in with posting obscene, defamatory and irritating message about a divorced lady in the Yahoo message group. Emails were sent to the divorced lady (Victim) for data by the accused through a false email account opened by him for the sake of harassing the victim. These postings brought about irritating telephone calls to the woman. In light of the woman’s grumbling, the police arrested the accused. Investigation uncovered that he was a known family companion of the victim and was keen on wedding her. She was hitched to someone else, yet that marriage finished in separate and the accused began to call her again by sending such emails. On her hesitance to wed him he began hassling her through web.

Decision

The accused was discovered liable for offences under section 469, 509 Indian Penal code, 1860 and section 67 of Information Technology, Act 2000. He is indicted and condemned for the offense as takes after:

• According to 469 of Indian Penal code, 1860 he needs to undergo detainment for a 2 years and to pay fine of Rs.500/ –
• According to 509 of Indian Penal code, 1860 he is to undergo 1 year Simple detainment and to pay Rs 500/ –
• According to Section 67 of Information Technology, Act 2000, he needs to undergo detainment for 2 years and to pay fine of Rs.4000/ –

All sentences were to run simultaneously.

The accused paid fine sum and he was held up at Central Prison, Chennai. This is viewed as the principal case sentenced under section 67 of Information Technology Act 2000 in India.

Punishment for Transmitting or Publishing of Data or Information Containing Sexually Expressive Act in Electronic Form

As per Section 67 of Information Technology (Amendment) Act, 2008, whoever distributes or transmits or causes to be distributed or transmitted in the electronic frame, any material which contains sexual expressive act or lead, should be rebuffed on first conviction with detainment of either portrayal for a term which may stretch out to five years and with fine which may stretch out to ten lakh rupees. In case of second or ensuing conviction with detainment of either portrayal for a term, that may stretch out to seven years and furthermore with fine, which may stretch out to ten lakh rupees.

Punishment for Transmitting or Publishing of Data or Any Information Depicting Children in Sexually Expressive Act in Electronic Form

As per Section 67 of Information Technology (Amendment) Act, 2008[12], whoever

(a) Transmits or publishes or causes to be transmitted or published material in any electronic media form which portrays children engaged in sexually expressive act or behavior, or

(b) Creates, collects, seeks, browses, downloads, advertises, promotes, exchanges or distributes text or digital images or material in any electronic media form portraying children in any obscene or indecent or sexually expressive behavior, or

(c) Induces, Entices, cultivates children to online relationship with one or more children for any sexually expressive act or in a behavior that may offend a reasonable adult on the computer resource, or

(d) Facilitates Child abuse on online platform, or

(e) If any recordings are made on own abuse or that with others relating to sexually expressive act with children.

He shall be punished on first conviction with detainment for a term which may extend to five years along with a fine which may extend to ten lakh rupees. In the event of second or subsequent conviction with imprisonment of a term which may extend to seven years along with fine which may extend to ten lakh rupees.

As per Section 6 of the Indecent Representation of Women (Prohibition) Act 1986, any person who contravenes the provisions of this Act shall be punishable on first conviction with detainment which may extend to two years, along with fine which may extend to two thousand rupees. In case of a second or subsequent conviction with imprisonment for a term of not less than six months which may extend to five years along with a fine not less than ten thousand rupees but which may extend to one lakh rupees.

Relevant Case

Janhit Manch & Others v. The Union of India[13]: A Public Interest Litigation was filed to seek a complete ban on pornographic websites. The NGO had argued that websites displaying sexually expressive content had an adverse influence, leading youth on a delinquent path.

Impact of Cyber Obscenity on the Society and Steps that can be taken to Eradicate the Same

In recent era, Internet has turned into the most venomous and risky adversary of man and society. In spite of the fact that it opens a world brimming with learning and data, its uses are misused pointlessly to do criminal exercises and furthermore those which are illicit in nature and this is the motivation behind why we contrast advances with a coin, that is, similar to a coin innovations likewise have two sides, the head being the favorable part and the tail being the disadvantageous part. Cyber-crimes against individuals incorporates a wide range of offenses. Harassing is extremely normal and effectively done inside a talk room or by means of email. This may incorporate physical and sexual dangers, verbally abusing and obscene talk. The trafficking of sexually expressive data and information incorporates pornography of grown-ups what’s more, kids.

In genuine cases, the Internet is utilized to find people, meet them face to face and carry out genuine crimes, for example, assault or murder once the culprits are in contact with the assault.

The Crimes viz. digital obscenity taints the brain of the general population. It makes more noteworthy symptom on the psyches of the kids and the adolescent era. Furthermore, by the obscene data or information i.e. pictures, recordings, or whatever other thing influence the respect of those individuals whose pictures or recordings or names are used to do this business of obscenity.

There are certain suggestive steps, which can be given on this specific subject. By following these steps this Cyber obscenity crime can be eradicated to some degree. The said steps are briefly pointed out below:

1. To confine or to decrease the crime of digital obscenity people in general should know. Through instruction, people in general might know about the hindrances of the production of obscene material through the web.
2. There must be the workplaces of the whole sites throughout the nations of everywhere throughout the world.
3. There must be a procedure to make an email account in any site. As an application frame must be put together by the disconnected procedure to the workplaces made by those sites. What’s more, with the application shape a photo and the personality must be presented by the candidate.
4. Only by this procedure anyone should influence his or her email to account at that point there is less opportunity to transfer any obscene material through those email accounts. Since they can convict easily by those data.
5. On the conviction of the guilty party transferring the obscene data or information, the disciplines of detainment insect the fine are not adequate. There must be a discipline to suspend the guilty party to utilize his record or to make another record to a specific timeframe as indicated by the nature of the Crime conferred by him.

Conclusion

Obscenity is to a greater extent a social malice than crime (i.e. unlawful). It is an issue, which can’t be tackled in a day. I would insist that in any case demand my point that “Pornography” as such is not obscene and unlawful, yet “pornography” which is obscene is illicit and corrupt. There is a desperate need to change our standpoint and attempt to comprehend this exceptionally fundamental boundary amongst “pornography” and “obscene”.

We can’t deny the way that digital obscenity is available in our general public and it can’t be overlooked. On the off chance that we attempt or of we expect that it can be expelled in a brief timeframe then we are incorrect. It is not through enactment that we can check or control it. Since this obscenity has done the brains of web clients filthy. Nevertheless, by the institution of strict enactment for the digital world can confine its impact to some degree. One of the conceivable ways might be through expanding and spreading mindfulness among the majority. It is not just the guilty parties who transmit or distribute this data or information, it is mindful to build this crime. The overall populations who never include in such action are likewise in charge of this since they who look through these things on Internet to watch or hear. Furthermore, via looking through these things in web they are supporting fiscally those sites that are transmitting these. Since their pay relies on the quantity of the watchers of that specific destinations. In this way, on the off chance that we need to check this crime we should need to limit our hands to enter these sites and should take a look at ourselves not to give any money related help by implication.

Endnotes

[1] L.R. 3 Q.B. 360 (1868)

[2] L.R. 3 Q.B. 360 (1868)

[3] Section 67 of the Information Technology Act, 2000

[4] Section 292 of the Indian Penal Code, 1860

[5] Children as per these sections means children under the age of 18 years

[6] Section 67 of the Information Technology Act, 2000

[7] Indecent Representation of Women (Prohibition) Act 1986 referred

[8] AIR 1965 SC 881

[9] AIR 1970 SC 1390

[10] (1985) 4 SCC 289

[11] Information Technology (Amendment) Act, 2008 referred

[12] Section 67 of Information Technology (Amendment) Act, 2008

[13] In the High Court of Bombay, PIL NO.155 OF 2009

Reference of the Information Technology Act, 2000, Information Technology (Amendment) Act, 2008, Indian Penal Code 1860 and Indecent Representation of Women (Prohibition) Act 1986 has been taken for preparation of the document.

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In this article, Rishabh Saxena of NUALS discusses registration process for property brokers in India.

Introduction

India is a developing country with augmenting growth rate around 7.5% P/A. As the growth rate increases, it generates jobs which eventually make public affluent which is a good sign for the future of the nation. India is so huge and is further expanding in terms of human population that basic life necessities like food, job and house is on accelerated mode. The housing among these things is one of the major requirement as the people are growing rich. Initially, house seeking people approach a broker or agent who acts as an interface between buyer and seller and attempt to match up sellers who wish to sell and buyers who wish to buy.

Who is a broker/Agent?

In simple language, a broker is the person buys and sells goods and assets for others or can say act intermediate between two parties who are willing to exchange their assets.

Real Estate (Regulation and Development) Act, 2016 clearly states the definition of a broker in Section 2 Clause (zm) as:  “real estate agent” means any person, who negotiates or acts on behalf of one person in a transaction or transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as commission or otherwise and includes a person who introduces, through any medium, prospective buyers and sellers for negotiation for sale or purchase of plot, apartment or building, as the case may be, and includes property dealers, brokers, middlemen by whatever name called.

Broker needs to be registered first

Real Estate business is one of the largest revenue generators in India, but it never had any regulating body to make regulation and policies about it. Due to this failure, people fall in trap of developer’s and broker’s unethical ways of pursuance, they become victims of fake schemes of real estate business. Till now what happened brokers had a free play on the Indian residential real estate market where they prosper on misinforming and with flawed reasoning to their customers, so they went unchecked as there was no authority to curb them. Buyers come from the lower middle class or middle class background are primarily targeted by these brokers.

In March 2016, government passed a law  “Real Estate (Regulation and Development) Act, 2016 (RERA)” to regulate real estate market and make strict policies that have to be fulfilled by the developers and brokers while selling their property. Under RERA, brokers or agents will have to ensure they are duly registered with the regulator. After registering themselves broker becomes more accountable to home buyers and completely responsible for their business activities and practices.

Registration of brokers is also helpful to them as the real estate bill requires the developers to file the information with the regulatory authority about current status of the building projects, status of the land where housing units are developing, any delays in the completion layout plans etc. Broker also need to know all this because being an intermediate he deserves to know all this which protects him from unwittingly making false claims to a home buyer.

If any broker doesn’t register himself then he will be penalized as per the provision of the act.

How can a broker get registration

Registration of Real Estate Agents:  Section 9 of Real Estate (Regulation and Development) Act, 2016 provided that how a broker can a registration

• Section 9 (1): No real estate agent shall facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building, as the case may be, in a real estate project or part of it, being the part of the real estate project registered under section 3, being sold by the promoter in any planning area, without obtaining registration under this section.
• (2) Every real estate agent shall make an application to the Authority for registration in such form, manner, within such time and accompanied by such fee and documents as may be prescribed.
• (3) The Authority shall, within such period, in such manner and upon satisfying itself of the fulfillment of such conditions, as may be prescribed—
  • (a) grant a single registration to the real estate agent for the entire State of Union territory, as the case may be;
  • (b) reject the application for reasons to be recorded in writing, if such application does not conform to the provisions of the Act or the rules or regulations made thereunder: Provided no application shall be rejected unless the applicant has been given an opportunity of being heard in the matter.
• (4) Whereon the completion of the period specified under sub-section (3), if the applicant does not receive any communication about the deficiencies in his application or the rejection of his application, he shall be deemed to have been registered.
• (5) Every real estate agent who is registered as per the provisions of this Act or the rules and regulations made thereunder shall be granted a registration number by the Authority, which shall be quoted by the real estate agent in every sale facilitated by him under this Act.
• (6) Every registration shall be valid for such period as may be prescribed and shall be renewable for a period in such manner and on payment of such fee as may be prescribed.
• (7) Where any real estate agent who has been granted registration under this Act commits breach of any of the conditions thereof or any other terms and conditions specified under this Act or any rules or regulations made thereunder, or where the Authority is satisfied such registration has been secured by the real estate agent through misrepresentation or fraud, the Authority may, without prejudice to any other provisions of this Act, revoke the registration or suspend the same for such period as it thinks fit:
• Provided that no such revocation or suspension shall be made by the Authority unless an opportunity of being heard has been given to the real estate agent.

Punishment for not complying with the registration provision

Section 62 of RERA provides punishment for non registration and contravention which states: “If any real estate agent fails to comply with or contravenes the provisions of section 9 or section 10, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five percent. Of the cost of plot, apartment or buildings, as the case may be, of the real estate project, for which the sale or purchase has been facilitated as determined by the Authority.”

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In this article, Salonee Patil of ILS Law College, Pune put forth Legal arguments in favour & against surrogacy.

The world stands divided on the question of whether surrogacy is a legally and ethically sound practice. It has been brought to limelight with western world stars like Nicole Kidman, Sarah Jessica Parker but also Indian stars like Shah Rukh Khan and Karan Johar. Surrogacy agreements are not legalised in UK due to which the birth mother has a right to keep the child even though she has been paid for the process. Countries like Canada and Germany prohibit commercial surrogacy while both kinds prohibited in France. As of now, there is no international convention regarding surrogacy and it is a subject debated upon in recent times.

India also is amidst this discussion and is trying to weigh the pros and cons of the same. There is no law regulating surrogacy in the country however surrogacy is not illegal. Surrogacy was first recognised by the Supreme Court in the case of Baby Manji. The IMCR in 2002 issued guidelines trying to streamline the process of surrogacy in India.

This led to a major inflow of surrogacy in India. It is a well-known hub for people all over the world wanting to have a child but can’t bear one.

Legal status of Surrogacy in India

Human Beings have a natural instinct for procreation. It is one of the life functions. Every individual wants to bear a child of their own. However, this remains only a dream if a one out of the couple is infertile, or if the woman can’t carry the baby or in case of homosexual couples or people who want to lead a single life. Other reasons may include the age factor, uterine problems, failure of IVF, heart disease, etc.

Adoption is one of the options available to them however the major drawback in case of adoption is the fact that the adopted child does not bear your genetic material. This is where surrogacy steps in and rules out the shortcomings of the process of adoption for those who want ‘a part of themselves’ in their child.

Classification of surrogacy

With Surrogacy, it is possible to combine the sperm of the father with the ovum of the surrogate mother. Thus, the birth mother is also the genetic mother. This is classified as Traditional Surrogacy. It is also possible, with the advent of IVF (in-vitro fertilisation) to form a zygote and then transfer it to the surrogate mothers’ womb enabling the formation of a complete genetic descendant. This is called Gestational Surrogacy and is a preferred form of surrogacy.

Understanding Surrogacy

Surrogacy is the practice of a woman carrying child developed through her own ovum or a formed zygote till birth and then transfers all rights over the baby to the contractual parents.

Surrogacy was recognised by the Indian Supreme Court in Baby Manji case[1] and defined it as:

“..a method of reproduction, whereby a woman agrees to become pregnant for the purpose of gestating and giving birth to a child she will not raise but hand over to a contracting party.”

In 2002, the Indian Council of Medical Research[2] laid out guidelines for surrogacy, which made the practice legal, but did not give it legislative backing. This led to a booming surrogacy industry which had lax laws and no enforcement.

Depending upon the rationale or motive behind ‘carrying’ a child for someone, surrogacy can be further classified into two types-

1. Altruistic Surrogacy– A surrogate is given no financial gain for carrying a child. Only realistic out of pocket expenses are covered by the intended parents. E.g. medical costs, travel, time off work, etc. Altruistic surrogacy can use either a traditional or gestational surrogate.
2. Commercial Surrogacy– A surrogate is paid for carrying the child. Many couples are entering into overseas commercial surrogacy agreements to create a family.

Practice of surrogacy in India

Let us try and understand the status quo of practice of surrogacy in India.

It is usually the couples from abroad, or the rich class of people who approach below poverty line women to carry their children in exchange of a handsome sum of money. These women usually can’t even dream of such big money and are sucked into the system.

Since the state of affairs of India’s villages is poor, these women are usually made to stay in hostels which are specially constructed for them. This acts like a shelter from the social stigma of bearing a child for someone else. However, this is the advent of a very painful journey for most women as they are away from home. These women are provided nutritious food and are looked after for the purpose of the health of the baby. India is witnessing a rise of hospitals built specially for delivering babies through surrogacy.

After the child is born, these women have to go through separation from someone they cared for and sacrificed so much for. All the care and facility is taken away from them and they are sent back home. One may feel like discarding a package after procuring the gift from it. It is an emotionally challenging journey irrespective of the consent exercised by these women.

The good that comes out of it is that the person/ couple taking the child home is happy and the poor lady is able to pay off her debts and enable educating her children.

Surrogacy laws in India

The question of legality of surrogacy can be viewed on two fronts-

1. The contractual legality of a surrogacy agreement and
2. Other being the constitutional aspect of surrogacy practice.

We are primarily concerned with Commercial Surrogacy since it is the exploitable form of surrogacy. Altruistic surrogacy is done in good faith and hence disposes of most of the burden of unconstitutionality as well as illegality.

Surrogacy Agreement – Important clauses

The Indian Contract Act[3] governs all contracts across the territory of India. It makes provision for General and Specific Contracts. No light has been thrown upon legality of transacting upon a human child in exchange of money in Section 23[4] of the Indian Contract Act which deals with the legality of object and consideration in a contract.

23. What considerations and objects are lawful and what not– The consideration or object of an agreement is lawful, unless— it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.

Let us try to analyse the provisions of this section in order to see if Surrogacy agreements are void in India. Surrogacy agreements are not forbidden by law but whether it fits into all the other criteria is debatable.

Surrogacy in India is predominantly class oriented and it is usually the poor women from below poverty line in need of money who consent to carry a child for them. One way of looking at it is that these poor women are exploited in the name of money and their decision is motivated by earning money to satisfy their needs and may not necessarily be a conscious decision understanding reasonably what they are consenting to. Thus, there may be implied elements of fraud involved.

On the question of whether it is immoral or opposed to public policy is how one looks at the practice of surrogacy. If one thinks that a woman is doing a favour help those parents bear children who cannot naturally bear, it is a good deed. However, one cannot ignore the fact that these women end up ‘renting their womb’ and a surrogacy agreement has a living being as the subject matter of the transaction. Whether the parties can create such a right in their favour merely by consent terms is debatable.

Constitutional validity of surrogacy in India

Let us now examine some of the questions from the constitutional aspect of Surrogacy.

Right to Life, Personal Liberty, Privacy, earn a living have all been enshrined in the Constitution of India^[5]. With right to privacy recently been recognised as a fundamental right in the Constitution of India, the question whether the state can interfere and dictate the reproductive choices of a woman comes into play. The Andhra Pradesh High Court in B.K. Parthasarthi v. Government of Andhra Pradesh[6] recognized reproductive rights as a fundamental right and upheld ‘the right to reproductive autonomy’ of an individual as a facet of his right to privacy. When the concept of privacy is extended to matters of procreation, state’s interference or restrictions on procreation amount to a direct encroachment on one’s privacy

A woman should be able to exercise her right to exercise her reproductive choices as she wants. She is enabling a needy couple to have a child of their own and that is a humanitarian practice appreciable by anyone.

However, in practice it has been seen that there is more to the practice of surrogacy than humanitarianism. It is technically contracting money against newborn child (in case of Commercial surrogacy). It furthers the belief that money can buy you anything. A woman is renting out her womb due to lack of financial resources at her disposal. It is like an occupation which women resort to time and again. Babies become subject matter of transaction. It can be seen against human rights to buy babies.

Some authors[7] believe that this reflects the abolished practice of human trafficking, slavery and prostitution in certain ways. The woman is a carrier who is discarded as soon as the baby is born. She does it in exchange of money. She is made to stay in hostels and do as the doctors instruct for the health of the baby. She has dictated around and has to follow what is told. This is like slavery. The baby is ‘bought’ in exchange of money and is taken back with the parent. This is like Trafficking. It is prostitution although the actual act of sexual intercourse does not take place, the woman bears a child through either artificial insemination or IVF.

SURROGACY BILL, 2016

The Indian Government felt the need to make provisions regarding surrogacy due to large-scale exploitation of the practice in India. However, the bill[8] that is formed seeks to put an end to commercial surrogacy as only couples legally married according to Indian Law for five years can use surrogacy only if a close relative is willing to carry the baby for them. It shuts out singles, homosexuals, live-in partners, foreign citizens from utilizing India as a source to fulfil their wishes.

The Bill was originally supposed to be an ART (artificial reproductive practices) bill laying down provisions streamlining IVF etc. has turned into a pure surrogacy regulating bill. It technically bans surrogacy under the garb of streamlining it.

Legal Arguments in favour and against surrogacy

Arguments in favour of surrogacy

1. THE CHOICE AND CONSENT ARGUMENT

While there is no international charter recognising Right to Children, it is basic human desire and everyone should have the choice to have children of their own genetic material. The argument that adoption can be resorted to is baseless as it should be a matter of choice of the individual.

The surrogate is fully aware of what she is contracting to do and only as a result of consent does she choose to accept the offer made to her. It can be safely assumed that she knows the consequences of her act and goes ahead with her decision. As it is with her consent, there is no concealment of information and she makes a well-informed decision.

2. THE REPRODUCTIVE SELF-DETERMINATION ARGUMENT

“Reproductive rights embrace certain human rights that are already recognized in national laws, international human rights documents and other relevant United Nations consensus documents. These rights rest on the recognition of the basic right of all couples and individuals to decide freely and responsibly the number, spacing and timing of their children and to have the information and means to do so, and the right to attain the highest standard of sexual and reproductive health. It also includes the right of all to make decisions concerning reproduction free of discrimination, coercion and violence as expressed in human rights documents. In the exercise of this right, they should take into account the needs of their living and future children and their responsibilities towards the community.”[9]

This helps one understand that everyone has a basic right to decide the number, spacing and timing of their children and have means to do so. Surrogacy is one such method available to those who seek to have children of their genetic composition. It should not be denied to them especially when they do so without unjustly depriving the surrogate of getting something in return as a matter of her choice.

3. BENEFIT OF EVERYONE

Both the contracting parties have a lot at stake and they gain a lot out of the contract as stakeholders. While one party is monetarily enriched with gifts, respect, gratefulness and money, the other party has the joy of having their own child. As the surrogates in India are poor, they can use the money to help pay off their debts or fund education for their children. It is huge money, the kind of money most of the surrogate mothers could not consider earning given to the lack of skill or lack of access of opportunity available to them. It makes these surrogate mothers independent and self-sufficient and self-efficient.

A study conducted in July 2012, backed by the UN, put the surrogacy business at more than $400 million with more than 3000 fertility clinics all over the country. India’s leading newspaper regard Surrogacy as a multi-billion industry and also facilitates as a great source of flow of foreign exchange currency in the market.

Arguments against surrogacy

1. THE HEALTH ARGUMENT

FOR THE BABY

• ADAPTIVE NATURE: This argument primarily works against traditional surrogacy. Since traditional surrogacy involves use of the surrogate mother’s ovum, the foetus is a combination of the surrogate and the father. The baby inherits the surrogates’ genes. It is no secret that each person’s genes are adaptive to the environment they are born in. Thus, when a couple from foreign land decides to undergo traditional surrogacy involving the mother’s ovum, the risk to the health of the baby increases as it is only partly equipped with the genes to survive in the nation in which he will be brought up. This leads to harms in the initial phase of life of the baby as he has to undergo major changes with respect to the climate, weather, temperature he is born in and the same in which he will be raised.
• PRE-MATURE BIRTH: IVF is a recognised mode of formation of zygote to be implanted in the surrogate mothers’ womb. But this method has a major flaw. Babies born through IVF are said to be born prematurely and thus suffer problems. Pre-mature babies contract illness and the chances of survival are also scarce in spite of advent of technology.

FOR THE SURROGATE MOTHER

Surrogacy is seen as a way of earning money. It is practically classified as an industry. There are chances that women may resort to this method as a mode of earning their livelihood. This becomes problematic as they start contracting one baby after another. This is detrimental to the health of the surrogate mother.

Human body has limitation. Reproduction is a highly energy-consuming process and it takes a lot out of a woman. It is physically and emotionally challenging. The practice of bearing children repetitively make a woman susceptible to miscarriages. The body needs time to recover and the need of money may make women to overlook that. This may lead to complications in delivering the baby which poses threat not only to the baby but also to the mother.

2. HOW FREE IS FREE CONSENT?

One of the main arguments put forth by ones in support of surrogacy is that the surrogate mother consents to ‘renting her womb’ in order to give birth to a child for another. They argue that it is okay for a woman to accept this practice altruistically as well as commercially. This brings us to the question whether consent is really free in this case.

It is not entirely incorrect to say that the status quo of surrogacy in India indicates that it is a class- dominated practice. Class-dominating meaning it is the rich who resort to the ‘help’ of poor women to bear their child for them. The incentive for poor women to agree upon such a request to carry a baby for someone she has never seen, met or interacted with is dominated with material gains. She is showered with money and gifts and in return has to carry a baby which is not hers, bear the hormonal changes, nurture the baby for 9 months and then give it up. She does this because the money she will receive will help her educate her children, pay off debts or even have her own house. In this case, can consent really be said to be free? Who is to determine whether the husband or relatives of the woman have forced her into this practice? Since the money is for the benefit of her own family, it is quite unlikely that such a surrogate will own up for the actual reasons behind her decision.

Thus, whether the consent is really free is a mystery.

3. THE HARM ARGUMENT

“It is argued that the two suggested versions of the harm argument survive the current criticism against the standard harm argument. The first version argues that the child is harmed by being separated from the gestational mother. The second version directs attention to the fact that surrogacy involves great incentives to keep the gestational mother’s level of maternal-fetal attachment low, which tends to increase the risk of harm to the child. While neither of the two arguments is conclusive regarding the moral status of surrogacy, both constitute important considerations that are often ignored.”[10]

4. THE HUMAN RIGHT (RATHER WRONG) ARGUMENT

According to Jennifer Roback Morse[11],

Surrogacy is a medically monitored procedure which results in creation of a child. The argument that the author is trying to put forth here is the abuse of the right of choice. With respect to IVF, the parents can choose and modify characteristics of the zygote. For ensuring implantation, more than one embryo may be implanted in the uterine wall, this leads to ‘intended abortion’ of the rest. It may also be unsafe for the mother. Rest of the fusions done for this process are either frozen for experimentation or are sent to the bins.

As part of a study on infertility clinics in New Delhi, sociologist Tulsi Patel[12] from the Delhi School of Economics found poor awareness among women about the health complications and risks that repeated egg donations and pregnancies can cause. The study also found that in some cases, clinics would transfer more than the permissible number of three embryos into the uterus to better the chances of pregnancy.

Conclusion

Surrogacy, like any other practice has its pros and cons. When we evaluate the two, one realises that there is a very thin line separating the use from the abuse. It is highly necessary in the light of the shortcomings faced as seen in Indian cases like Baby Manji etc. there be a strict codification and regulation of surrogacy laws not only in India but all over the world. A common piece of international legislation is necessary as it is a cross-boundary practice.

While measures should be taken that Surrogacy does not become an unethical practice, it may not be completely absurd to strictly regulate commercial surrogacy ensuring its benefit to couples who are infertile or cannot bear children. It is an industry working beneficially for both parties and the state should recognise that.

References

[1] Baby Manji Yamada vs Union Of India & Anr. [(2008) 13 SCC 518].

[2] IMCR guidelines on Surrogacy, 2002.

[3] Indian Contract Act, 1872.

[4] S. 23 of the Indian Contract Act, 1872.

[5] Article 21 of the Constitution of India, 1949.

[6] 2000 (1) ALD 199, 1999 (5) ALT 715.

[7]An Article by Grazyna Zajdow titled ‘surrogacy is prostitution’ can be found at  https://arena.org.au/surrogacy-is-to-prostitution-by-grazyna-zajdow/

[8] The Surrogacy (Regulation) Bill, 2016.

[9] According to the 1994 Cairo Programme of Action, International Conference on Population and Development.

[10] https://www.ncbi.nlm.nih.gov/pubmed/2466423

[11] 15 Reasons to oppose Surrogacy- http://www.christianpost.com/news/15-reasons-to-oppose-surrogacy-164740/

[12] http://news.trust.org/item/20170119050530-j6hgv

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In this article, Aishwarya Rastogi discusses all you need to know about contempt of court.

Introduction

Watchdog of the Indian constitution, entrusted with the mighty task of dispensing justice in the country, Judiciary of India forms one of the three main pillars of the union government. Judiciary ensures justice and equality to every individual and institutions, therefore, the makers of the constitution upheld the sanctity and prestige of the revered institution by placing provisions under articles 129 and 215 of the constitution, which enables the courts to hold individuals in contempt if they attempt to demean or belittle their authority. There have been several legislations passed since as early as 1926 to govern the law of contempt in the country, the current one being The Contempt of Courts Act, 1971 which stood amended last in 2006.

What is Contempt of Court?

In common parlance, ‘contempt of court’ can be understood as an offence of lowering or defying the authority of the court by disobeying its instructions. It’s worth noting, however, that the term has been defined in the Act for the very first time in the history of the contempt law. Section 2(a) of The Contempt of Court Act, 1971, defines the term to mean ‘civil contempt or criminal contempt.’ The two although fundamentally different in character and essence can sometimes be very hard to differentiate. While civil contempt is a wrong of private nature that injures the interests of the party that is entitled to benefit from the order so disobeyed, criminal contempt is a misdeed against the society at large where the contemner by his words or actions undermines the authority of the court and brings it disrepute.

Sections 2(b) and 2(c) of the Contempt Act seek to very meticulously define civil and criminal contempt respectively. Whereas civil contempt is a ‘wilful disobedience to any judgment, decree, direction, order, writ or other processes of a Court or wilful breach of an undertaking given to the court’, ‘criminal contempt’ is ‘the publication (whether by words, spoken or written, or by signs, or by visible representation, or otherwise) of any matter or the doing of any other act whatsoever which:

• Scandalises or tends to scandalise, or lowers or tends to lower the authority of, any court, or
• Prejudices, or interferes or tends to interfere with the due course of any judicial proceeding, or
• Interferes or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner.’

The Calcutta High Court in Legal Remembrancer v. Motilal Ghose and the Allahabad High Court in Vijay Pratap Singh v. Ajit Prasad have both outlined the difference between the two contempt. According to the latter, whereas the purpose of civil contempt is to make the contemner right the wrong done to a party by imposing sanctions, the idea behind criminal contempt is to punish the contemner who has, by virtue of his insolent tone or behaviour, dishonoured the court and therefore impeded the process of justice. More often than not, however, there are cases of contempt that are neither typically in the nature of civil nor criminal. For instance, when a contemner while disobeying an order of the court conducts himself in a rather impertinent, brazen manner, he brings upon himself the charges of fine or imprisonment as well, apart from whatever sanctions the court chooses to impose. Such acts of contempt are called Sui Generis.

Historical Background of the Act

The law pertaining to contempt in India, like all other laws in the country, traces its history to English laws and statutes. It is interesting to note in this context that there were no statutory laws to this effect until the year 1926 and the law relating to contempt was governed by the corresponding British legal principles and laws governing their superior courts of record. The Contempt of Courts Act, 1926 was the first statutory legislation that granted powers to High Courts of Judicature established by Letters Patent to punish contempts of subordinates courts. The Act, however, failed to provide for contempt of courts subordinate to Chief Courts and Judicial Commissioner’s Court, as also for an extra-territorial jurisdiction of High Courts and was therefore repealed by The Contempt of Courts Act, 1952, with the institution of which all the respective Indian states Acts also stood rescinded.

The Contempt of Courts Act, 1952 did not confer any new powers on the courts. It, however, made two significant digressions from the prior Act of 1926 in that, one, it redefined ‘High Court’ to include the Courts of Judicial Commissioner and two, provided for the aforesaid to try for contempts subordinate to them as well. Surprisingly though, the term ‘contempt’ had not been defined in any of the Acts yet and there was a still lot of ambiguity present around the law of contempt. Also, it was realised that the said law needed to be dealt with in light of two fundamental rights granted in the constitution, namely, freedom of speech and expression and right to personal liberty. Thus, there was set up a committee in 1961 under the chairmanship of late H.N. Sanyal, the recommendations of which took the form of the Contempt of Courts Act, 1971, and overhauled the entire law relating to contempt in the country.

Brief Overview of the Act

The Contempt of Courts Act, 1971 applies to the whole of India except to the State of Jammu and Kashmir insofar as the offence is not in relation to the Supreme Court. The Act confers upon certain courts power to punish individuals for contempt of themselves as also of subordinate courts and also puts a limiting check on their said powers via elaborate provisions. The Act that is comprised of a total of 24 sections, among other things, talks about the meaning of contempt, definitions of civil and criminal contempt, what constitutes a contempt, defences available, extraterritorial jurisdiction of the High Court, their power to punish contempts of subordinate courts, and procedure after cognizance.

The statute of 1971 has recently been amended by the Contempt of Courts (Amendment) Act, 2006 to include the defence of truth under Section 13 of the original legislation. Section 13 that already served to restrict the powers of the court in that they were not to hold anyone in contempt unless it would substantially interfere with the due process of justice, the amendment further states that the court must permit ‘justification by truth as a valid defence if it is satisfied that it is in public interest and the request for invoking the said defence is bona fide.’ This was certainly a step in the right direction that would not only balance the powers under the Act as well as the two fundamental rights but also serve to check the untoward arbitrariness in the judicial proceedings relating to contempt.

Criticism

The warhorse of the Indian constitution and an eminent lawyer, Mr Fali Nariman, who recently came to the rescue of Justice Markandey Katju in his contempt case has rightly remarked in his speech that “the offence of scandalising the court is a mercurial jurisdiction in which there are no rules and no constraints.” It would not be wrong to say that there is an element of uncertainty in the current legislation where it talks about how all acts, words, signs and visible representations that scandalise or prejudice or interfere with the process of justice are punishable offences. The Act nowhere sheds a touch of light on what might constitute “scandalising the court” however. What might have meant to scandalise the court in the year 1971 might not mean the same thing in 2017.

Conclusion

While freedom of speech and expression and right to personal liberty are important, no less important is the faith of the people in the judicial institution of the country. Sine qua non of a healthy, civilised society, saddled with the exacting task of disbursing justice, the Judiciary of India must be greeted with proper and equitable standards of reverence. The three main purposes as rightly laid down by the House of Lords in Attorney General v. Times Newspapers Ltd. are ‘to enable the parties to litigation and the witnesses to come before the court without outside interference; to enable the courts to try cases without such interference; and to ensure that authority and administration of law are maintained.’ It is therefore imperative to preserve the last bastion of the Rule of Law in the country and uphold its dignity.

Whereas Articles 19(1)(a) and 21 continue to put a question mark on the face of the entire legislation, it is important to note that, while there may be a shade of precariousness in the current legislation that needs to be plugged, the statute by way of Sections 13 and 16 puts a dampening check on the discretionary powers of the court. Section 16 levels the playing field by bringing judges and magistrates on an equal footing with the ordinary individuals as far as contempt is concerned. Section 13 allows for the defence of truth in the contempt proceedings while also prohibiting the judges from charging anyone except when there is a palpable and substantial obstruction of justice.

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In this article, M.S. Ram pursuing law from School of Law, SASTRA University, discusses the legal consequences of non-performance of a contract.

Introduction

The author of this paper critically analyses the legal framework and consequences which is triggered when the circumstances of a particular case culminate into the breach or non-performance of a contract. When a party performing a contract does not do so to the standard required by the contract[2] or within the timeframe set, that party breaches the contract.[3] Breach also includes non-performance of the contract. The breach of a contract by a party will consequently lead to the providing of remedy as a legal obligation, towards the innocent party. This paper delves into some of the scenarios where legal obligations are breached due to non-performance and the remedies available for such breach by analyzing the legislation and the decided cases.

Legal Provisions under the Indian Contract Act, 1872

The Indian Contract Act, 1872 was drafted by the lawmakers based on the principle of Contracts derived from the English Law. Chapter XVI of the English Law of Contract provides for Damages arising with respect to a breach of legal obligations. Chapter VI of the Indian Contract Act deals with consequences of the Breach of Contract and Section 73 to 75 contains remedies for the breach.

Section 73. Compensation for loss or damage caused by breach of contract – When a contract has been broken, the party who suffered by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.

Such compensation is not to be given for any remote and indirect loss or damage sustained by the reason of breach.

Compensation for failure to discharge obligation resembling those created by contract

When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract.

Explanation: n estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account.

74. Compensation for breach of contract where penalty stipulated for – When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by the way of penalty, the party complaining of the breach is entitled, whether or not actual damage has been proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named, as the case may be, the penalty stipulated for.

Explanation – A stipulation for increased interest from the date of default may be a stipulation for penalty.

Exception – When any person enters into a bail-bond, recognizance, or other Instrument of the same nature, or under provisions of any law, or under the orders of the Central Government or of any State Government, gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein.

Explanation – A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested.

Legislative Intent behind Section 73 & 74

• Section 73 is declaratory of the Common Law as to damages.[4]
• Section 73 and 74 are for the benefit of a party willing to perform contract, and not for the defaulting party.[5]
• Section 74 provides for the measure of damages in two classes: (i) where the contract names a sum to be paid in case of breach; and (ii) where the contract contains any other stipulation by way of penalty. In both the cases, the measure of damages is by s. 74, reasonable compensation not exceeding the amount or penalty stipulated for.[6]
• Section 74 boldly cuts the most troublesome knot in the Common Law doctrine of damages.[7] The distinction between penalty and liquidated damages has been removed by the Contract Act, and now every case (except bail bonds or where the bond is given for the performance of any public duty or act in which in which any public are interested) in which a sum is named as damages to be paid in case of breach of contract, the court is not bound to award more than ‘reasonable compensation’ not exceeding the amount so named.[8] It has been observed that question as to unconscionable bargains must be decided according to this section, and the principles of the English courts of equity are not applicable.[9]

Damages – An effective Remedy

• An action for damages is always available as a matter of right when a contract has been broken, as against the relief of specific performance, which lies in the discretion of the court.[10]
• Even where the plaintiff has been able to prove his loss, damages may not necessarily be a full recompense for his loss; ‘it must be remembered that the rules as to damages can in the nature of things only be approximately just’.[11]
• Compensation has also been granted on the same basis for expenses incurred and loss suffered in reliance of a promise to grant a lease, applying the doctrine of promissory estoppel.[12]

Tortious and Contractual Liability – A brief Comparison with respect to Damages

• The function of damages in both the areas is compensatory, and these are assessed according to plaintiff’s actual loss. The test of the burden of proof, of remoteness and causation,[13] are the same.
• Damages in both the cases are assessed as a rule with reference to the date of breach of contract or of duty.[14]
• The function of damages in contract is to compensate losses,[15]e., to give him the gains he had expected from performance of the contract;[16] whereas damages in tort seek to protect the ‘reliance’ or ‘status quo’ interest, i.e., to put the plaintiff in a position as if the tort had not occurred.[17]
• The defence of Contributory Negligence is not available in contract unless the defendant breaks a contractual duty of reasonable care in a manner which is independently actionable in tort.[18]
• Punitive damages are awarded in tort, but not in contract. The standard of predictability of loss is normally more exacting in contract than in tort.[19]

Express Provisions under the Contract for Reliefs

• A contract may contain, within itself, the elements of its own discharge, in the form of provisions, express or implied, for its determination in certain circumstances, e.g. a contract may be made by the parties, subject to a condition subsequent.

In Head v. Tattersall,[20]where the buyer was given the option of returning the horse bought if it did not come up to the required standard.

• A continuing contract may contain a provision, making it determinable at the option of one of the parties, upon certain terms. Such a provision was implied, for instance, by custom in the ordinary contract of domestic service, which can be terminated either by a month’s notice or the payment of a month’s wage.[21]
• The parties to a contract can create, for themselves, special rights and obligations such as providing for themselves the measure of damages for breach.[22] Section 62 of the Sale of Goods Act, 1930 is statutory recognition of this right, under which it is open to parties to a Sale of Goods to provide their own measure of damages in case of breach of contract.[23]
• Parties may provide that in the event of a breach, no compensation will be payable, except for refund of amounts paid. Such terms are enforceable.[24]

Waiver of Right in Contractual Agreements

• Parties may, by making express provisions exclude the right to claim damages for its breach. Such provision is valid, provided it is expressed in plain and unambiguous language.[25]
• Under English Law, attempts to exclude or limit liability for breach of contract are restricted by statute.[26]

Actual or Anticipatory Breach

A breach of contract may take place before the time fixed for performance of the contract if the promisor has repudiated the contract,[27] or where the promisor has disabled himself from performing the contract;[28] but a party is not entitled to claim damages for breach of contract where, upon repudiation by the other party before the date of performance, it has chosen[29] not to put an end to the contract, but has kept the contract open.[30] In such a case, the damages will be assessed on the date the performance was due;[31] even though the plaintiff’s loss may have increased after the date of repudiation,[32] and no obligation to mitigate applies where the repudiation is not accepted.[33]

Prospective Damages and Arising Claims

Prospective damages are awarded in respect of future damages or loss, as opposed to that which he has sustained at the time of trial. In case of pecuniary loss, it may be quantified separately, but in case of general damages for pain and suffering or loss of amenity, a single sum is given for past or future suffering.[34]

Difficulty of Assessment is no bar

The mere fact that it is somewhat difficult to assess the damages, with certainty or precision, does not disentitle the plaintiff to compensation for the loss suffered.[35] In Chaplin v. Hicks,[36] the plaintiff, who was on the short list in a beauty competition organised by the defendant, but was given no opportunity to appear at the final selection through the defendant’s negligence, was awarded GBP 100 as damages.

Effect of Termination of Contract under Express Provisions

Where one party has terminated the contract under the provisions of the express terms of the contract, the other party can claim damages for breaches upto the date of termination, but not for the benefit of the defendant’s future performance lost because of termination.[37]

Essential Condition, Warranty, and Effect of Breach

A condition is a clause ‘going to the essence of the contract’ and a warranty is a clause ‘only collateral to the contract’.[38] The difference between an essential condition and a non-essential promise (a warranty) is this, in the former case, the innocent party, on becoming aware of the breach, can consider himself discharged and sue for damages for loss of contract or keep the contract on foot and recover damages for the particular breach. In the latter case, only the later course is available and not damages for loss of contract.[39]

Plaintiff’s Conduct Disentitling Damages

Loss which is caused by the plaintiff’s failure to fulfil his duty, is not recoverable from the defendant.[40] A party to a contract cannot be in a better position by reason of his own default, than if he had fulfilled his obligation.[41]

Kinds of Damages

A contractual right when being violated confers the legal right to claim damages and this might be in various forms and kinds. Some of the kinds of damages include:

General and Special Damages

• In relation to liability, general damages are those which arise naturally and in the normal course of events; whereas special damages are those which do not arise naturally out of the defendant’s breach, and are recoverable only where they were in the reasonable contemplation of the parties at the time they made the contract.[42]
• In relation to pleadings, general damages are those which will be presumed to be natural or probable consequence of the wrong complained of, with the result that the plaintiff is required only to assert that such damage has been suffered, whereas special damage refers to those losses which must be specifically pleaded and proved.
• In relation to proof, general damages are those losses – usually but not exclusively non-pecuniary – which are not capable of precise quantification in monetary terms, whereas special damages are those losses which can be calculated in financial terms. Special damages represent the precise amount of pecuniary loss which the claimant proves to have suffered from the set of facts pleaded.[43]

Nominal Damages

Nominal Damages are awarded when there is an infraction of legal right, and though it gives no right to any real damages, yet gives the right to a verdict because of the infringement.[44]

The plaintiff is awarded nominal damages when:

• The defendant’s breach of contract has, in fact, caused no loss to the plaintiff;[45]
• The defendant has committed a technical breach of contract and the plaintiff himself had no intention of performing his terms;[46]
• The plaintiff fails to prove the loss, that he may have suffered from the breach of contract;[47]
• He has suffered actual damage, which has arisen, not from the defendant’s wrongful act, but from the conduct of the plaintiff himself,[48] or an external event;[49]
• The plaintiff merely seeks to establish the infringement of his legal right, without being concerned about actual loss.[50]

Aggravated and Exemplary Damages

In certain cases, the court may award more than normal measure of damages, by taking into account the defendant’s motives or conduct. Such damages may be:[51]

• ‘aggravated damages’, which are compensatory in that they compensate the victim of a wrong for mental distress, or injury to feelings, in circumstances in which that injury has been caused or increased by the manner in which the defendant committed the wrong, or the defendant’s conduct subsequent to the wrong; or
• ‘exemplary damages’ are intended to make an example of the defendant; they are punitive and not intended to compensate the plaintiff for any loss, but rather to punish the defendant.

Liquidated and Unliquidated Damages

Damages are said to be liquidated when they have been agreed and fixed by the parties. Section 74 applies to these damages. In all other cases, the court quantifies or assesses the damage or loss; such damages are unliquidated. It is possible that the parties fix an amount as liquidated damage for a specific type of breach only; then the party suffering from another type breach may sue for the unliquidated damages arising from such breach.[52]

Remoteness

• The term ‘remoteness of damage’ refers to the legal test used for deciding which type of loss caused by the breach of the contract may be compensated by an award of damages.[53]
• In deciding whether damages claimed are too remote, the test is whether the damage is such as must have been in the contemplation of parties as being a ‘possible result’ of the breach.[54] If it is. Then it cannot be regarded as too remote.[55] The damages are to be assessed on the basis of natural and probable consequences of breach.[56] Actual knowledge must be shown; mere imprudence and carelessness is not knowledge.[57]

Specific Performance as Damages

Where a party to the contract commits breach, the other party is, as a rule, entitled to claim damages, and cannot compel the actual performance by the recalcitrant party but the rule of specific performance can be granted by the courts[58] in those rare cases where damages would be inadequate.[59]

Conclusion

Damages in law were contemplated to be used as an effective and also a deterrent mechanism to ensure compliance in respect to fulfilling contractual obligations. However, there is a shift in the trajectory in which the contract law has evolved with respect to provisions relating to damages. There has been a lot of developments which in turn has made sure that contract law has to be revisited to govern latest trends, some of which does not come under the ambit of the codified law which is more than 140 years old.

References

[2] The standard may be strict or may require only the exercise of reasonable care, ante p. 499.

[3] J. Beatson on ANSON’S LAW OF CONTRACT, 28^th edn., pg. 589, para. 1.

[4] AKAS Jamal v. Molla Dawood Sons & Co., AIR 1915 PC 48.

[5] Timblo Irmaos Ltd v. Jorge Anibal Motos Sequeira, AIR 1977 SC 734.

[6] Fateh Chand v. Balkishan Das, (1964) 1 SCR 515 at 526-527.

[7] Ibid.

[8] Maula Bux v. Union Of India, AIR 1970 SC 1955.

[9] Lala Balla Mal v. Ahad Shah, AIR 1918 PC 249.

[10] Specific Relief Act, 1963, ss 10-24, particularly ss. 10 & 20.

[11] Rodocanachi v. Milburn, (1886) 18 QBD 67 at 78.

[12] Food Corporation of India v. Babulal Agrawal, AIR 2004 SC 2926.

[13] Beoco Ltd. v. Alfa Laval Co. Ltd., (1995) QB 137.

[14] Miliangos v. George Frank (Textiles) Ltd., (1976) AC 443 at 468.

[15] Treitel, The Law of Contract, 10^th edn., p. 875.

[16] BR Herman and Mohatta v. Asiatic Steam Navigation Co. Ltd., AIR 1941 Sind 146.

[17] Livingstone v. Rawyards Coal Co., (1880) 5 App Cas 25 at 39 per Lord Blackburn (HL).

[18] Barclays Bank plc. v. Fairclough Building Ltd., (1995) QB 214.

[19] Henderson v. Merret Syndicates Ltd., [1995] 2 AC 145.

[20] (1871) LR 7 Ex 7.

[21] Moult v. Halliday, (1898) 1 QB 125 at 130.

[22] Union of India v. Tribhawan Das Lalji Patel, AIR 1971 Del 120 at 122.

[23] Sitaram Bindraban v. Chiranjilal Brijlal, AIR 1958 Bom 291.

[24] Syed Israar Masood v. State of Madhya Pradesh, AIR 1981 SC 2010 (2).

[25] Pollock & Mulla on THE INDIAN CONTRACT AND SPECIFIC RELIEF ACTS, 14^th edn., at p. 1143, para 3.

[26]English Unfair Contract Terms Act, 1977.

[27] Section 39; Manindra Chandra Nandi v. Aswini Kumar Acharjya, AIR 1921 Cal 185.

[28] Grant Smith &Co. and McDonnel Ltd. v. Settle Constn. And Dry Dock Co., AIR 1919 PC 85(promissory rendering it impossible to perform because of loss of subject matter by his own negligence).

[29] Indian Contract Act 1872, s. 39.

[30] Narsimha Mudali v. Potti Narayanasami Chetty, AIR 1926 Mad 118.

[31] Tai Hing Cotton Mill v. Kamsing Nitting Factory, (1979) AC 91; Maung Po Kyaw v. Saw Tago, AIR 1933 Ran 25. Ibid.

[32] Tredegar Iron and Coal Co. Ltd. v. Hawthorn Bros & Co., (1902) 18 TLR 716 CA.

[33] British Westinghouse Electric & Mfg. Co.Ltd. v. underground Electric Railways Co. of London Ltd. (1912) AC 673 at 689.

[34] Jefford v. Gee, (1970) 2 QB 130 at 147.

[35] Chaplin v. Hicks, [1911] 2 KB 786; K Narendra v. Riviera Apartments (P.) Ltd., AIR 1999 SC 2309.

[36] [1911] 2 KB 786

[37] Financings Ltd. v. Badlock, (1963) 2 QB 104.

[38] Heyworth v. Hutchinson, (1867) 2 QB 447 per Lord Blackburn at 451.

[39] AH McDonald & Co. Ply. Ltd. v. Wells, (1931) 45 CLR 506 at 513-514.

[40] Roper v. Johnson, (1873) LR 8 CP 167.

[41] Jiwa Ram v. Man Singh, AIR 1934 Lah 84.

[42] India General Navigation and Rly. Co. Ltd. v. Eastern Assam Co. Ltd., AIR 1921 Cal. 315.

[43] President of India v. La Pintada Cia Navegacion SA, (1985) AC 104 at 125-27.

[44] Mediana (Owners) v. Comet (Owners), The Mediana, (1900) AC 113.

[45] Clifton v. Hooper, (1844) 6 QB 468.

[46] Weld & Co. v. Har Charn Das, AIR 1921 Lah. 316.

[47] Vikas Electrical Service Pann Bazar Hubli v. Karnataka Electricity Board, AIR 2008 Kant 88.

[48] Hiort v. London & North West Rly. Co., (1879) 4 Ex D 188 (CA).

[49] Grant Smith & Co. and McDonnel Ltd. v. Settle Consstn. And Dry Dock Co., AIR 1919 PC 85.

[50] Surrey County Council v. Bredero Homes Ltd., [1991] 3 ER 705.

[51] Halsbury’s Laws of England, Vol. 12(1), 4^th edn., Reissue 31 July 1998, DAMAGES, para 811.

[52] Aktieselskabet Reidar v. Arcos. [1927] 1 KB 352.

[53] Chitty on Contracts, 28^th edn., Vol. II, p. 1289, paras 27-039.

[54] Pravudayal Agarwala v. Ram Kumar Agarwala, AIR 1956 Cal 41.

[55] Hadley v. Baxendale, (1854) 9 Exch 341.

[56] Pravudayal Agarwala v. Ram Kumar Agarwala, AIR 1956 Cal 41.

[57] Monarch Steamship Co. Ltd v. A/B Karlshamns Oljefabriker, (1949) AC 196.

[58] Specific Relief Act, 1963,Chapter II

[59] Specific Relief Act, ss. 10,14.

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In this article, Bedadutta Nag pursuing M.A, in Business Law from NUJS, Kolkata discusses Anti-Money Laundering Laws in India.

INTRODUCTION

The term “money laundering” is generally attributed to the collective of procedures involved in legitimising assets amassed by means which may not be have been legitimate. Described otherwise, it involves the transmutation of ill-gotten proceeds into ostensibly legitimate assets, and sometimes into businesses developed as means to generate more revenues to finance the very ill-means from where the proceeds were generated in the first place.

In most jurisdictions today, this term is taken to have conflation with other kinds of financial and business crime, and malpractices affecting the set order of the financial system in such jurisdictions, including but not limited to obfuscation of the source of money, or even the mode of generation of money from a source considered to be illegal in the country where the money is being utilised.

Background

Organised societies with flourishing monetary systems have been plagued by effects of money laundering (in various forms) and such societies have also been combating the same ever since. In most jurisdictions across space and time, an enduring method to ‘salvage’ one’s wealth from unwanted state action, has been the use of parallel banking or Informal value transfer systems that allowed people to move money out of the country avoiding state scrutiny. On the other hand, rulers, administrators, and governments have also been acting against such activities in some way or other sometimes, by declaring such practices to be illegal outright, and on some other times, permitting a free run with the ambitions of generating more wealth to finance the state machinery.

On that note, an attempt is hereby made to understand the way money laundering activities take place in India – a country which is fast emerging as an economic superpower, alongside a long history of prevailing graft and corrupt practices at various levels. An attempt is also made to understand the endeavours that have been taken up at the legislative levels and even the administrative levels to counter such activities. Whereas pieces of legislation have been brought into force over various periods of time, the most potent legislation enacted and enforced against money laundering practices is the Prevention of Money Laundering Act 0f 2002. In addition to the legislative endeavours, judicial precedents set forth on the subject of money laundering and the concurrent pieces of legislation have also been highlighted.

THE INDIAN PERSPECTIVE

In line with the topic of discussion, an attempt is now made to comprehend the scenario of how money laundering has affected the financial system in India, and how laws and procedures have been formulated to counter money laundering, as such.

On money laundering, India has been vulnerable and combative, to say in a nutshell. The country has been classified as a high-risk zone in terms of money laundering. Out of 152 countries, India was ranked 79^th in the year 2015 and out of 149 countries, India was ranked 78^th for the year 2016[1], by the Anti Money Laundering (AML) Basel Index.

Money laundering activities have also been the leading cause behind a thriving black economy which exists in India. Very briefly explained, black economy means an economic ecosystem which runs and sustains itself on the availability of black money. Black money refers to cash saved from one’s black income, that is income which is earned from illegal or means which are unaccounted for, as discussed in the preceding clauses. In addition, such activities also create avenues for existence of parallel economies, whereby part of a transaction is paid for with accounted amounts and the other with unaccounted amounts, and the vendors in this regard make use of undervalued invoices to do transactions as such.

Anti-Money Laundering Laws in India

The successive governments in India, since independence, being aware of the ground realities, have been at various times, proactive in the formulation of laws and legal mechanisms to counter the effects of money laundering and break the existing networks.

In India, before the enactment of the Prevention of Money Laundering Act 2002, a number of statutes addressed scantily the issue in question. These statutes were The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974, The Income Tax Act, 1961, The Benami Transactions (Prohibition) Act, 1988, The Indian Penal Code and Code of Criminal Procedure, 1973, The Narcotic Drugs and Psychotropic Substances Act, 1985, The Prevention of Illicit Traffic in Narcotic Drugs and Psychotropic Substances Act, 1988.

Money Laundering is a global menace that cannot be contained by any nation alone. The Prevention of Money Laundering (Amendment) Bill 2011 was necessitated in view of India being an important member of the Financial Action Task Force and to bring prevention of money laundering legislation on par with global norms. The said Bill is still pending for approval in the Parliament.

The major pieces of legislation preceding the Prevention of Money Laundering Act, 2002 or the PMLA, inter alia, which directly or indirectly aim to curb and combat money laundering activities are noted and listed in the following manner:

The Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974

This was passed in the year 1974 in furtherance of the government endeavours to retain foreign exchange within the country by providing for ‘preventive detention in certain cases for the purposes of conservation and augmentation of foreign exchange and prevention of smuggling activities and for matters connected therewith’. The Act was enacted to give wide powers to the executive to detain individuals on the apprehension of their involvement in smuggling activities. It has been effective since 19^th December, 1974 and had repealed the Maintenance of Internal Security Act, 1970.

The Act is based on the concept of Preventive Detention, which apart from being a colonial legacy, is also given explicitly in our constitution as ‘the necessary evil’, and laws exist under Article 22 of the Indian Constitution for the same for reasons related to security of the state and maintenance of public order. As per the provisions of section 10 the prescribed periods of detention are 1 (one) to 2 (two) years.

One noticeable element in respect of this piece of legislation is the complete disregard of any judicial proceeding in respect of any action taken in respect of this law. All decisions in furtherance of the Act may be taken by the state governments or the central government. The relevant provisions in this regard, which must be taken note of are power to make orders detaining certain persons (section 3), execution of detention orders (section 4), power to regulate place and conditions of detention (section 5), revocation of detention orders (section 11).

There have been calls to repeal this Act many times, however, the provisions are no longer given effect.

The Benami Transactions (Prohibition) Act, 1988

This Act was passed in the year 1988, ‘to prohibit Benami transactions and the right to recover property held Benami and for matters corrected therewith or incidental thereto’.

Under section 2(a) of this Act, a ‘Benami transaction’ is defined as follows:

“Benami transaction means any transaction in which property is transferred to one person for a consideration paid or provided by another person;”

Section 3 of the Act, categorically debars anyone from entering into a Benami transaction.

The Act further lays down that properties acquired underBenamii transaction are liable to be acquired by the competent authority without any liability of compensation to be payable by such authority.

The Indian Penal Code, 1860 and Code of Criminal Procedure, 1973

The Indian Penal Code of 1860 is the major substantive law which identifies a number of criminal activities and also prescribes penalties for them. The Code of Criminal Procedure of 1973, on the other hand is a piece of procedural law which lays down procedures to be followed in criminal cases.

To better understand laws against money laundering, reference must be made to these laws as well.

As such it may be noted that the laws as such also have a close relation with PMLA. A number of offences under the Indian Penal Code have been noted as being scheduled offences within the meaning described in the PMLA.

Further section 65 of the PMLA also lays down that the provisions of the Code of Criminal Procedure are to be followed in respect of the various proceedings stipulated under the PMLA.

The Narcotic Drugs and Psychotropic Substances Act, 1985 – the NDPS Act

This Act was passed in the year 1985 with the objective of consolidation and amendment of laws relating to narcotic drugs, to make stringent provisions for the control and regulation of operations relating to narcotic drugs and psychotropic substances, to provide for the forfeiture of property derived from, or used in, illicit traffic in narcotic drugs and psychotropic substances, the implementation of the provisions of the International Convention on Narcotic Drugs and Psychotropic Substances and for matters connected therewith.

This Act, keeping in line with its objectives identifies, lists, and describes various forms and types of narcotic drugs and psychotropic substances. In consonance, there are many offences as well which have been identified as such.

The Act, though in essence seeks to stop and restrict the transport, and vending of narcotic and psychotropic substances, and does not really speak about money laundering activities, it may however be noted that the trade of narcotic substances does generate a lot of hard cash for people involved in it. So much so that a substantial portion of the money involved in drug trafficking is then mobilised to give it legitimacy, or in other words, the same money gets laundered.

The NDPS Act by acting against practices pertaining to the drug trading and trafficking puts a direct restriction on the flow of money into illicit activities.

As such the offences under the NDPS Act are noted as scheduled offences under the PMLA.

By-Laws

Apart from the laws discussed above, a special mention may also be made on the EC Directive on Prevention of the use of the Financial System for the Purpose of Money Laundering, 1991.

Notwithstanding the fact that most of such laws, as have been listed hereinabove, were quite potent, they still proved to be inadequate in core money laundering matters. One reason causing such inadequacy could be that such laws were effected piecemeal and were simply targeting specific acts and omissions which could have a remote connection with money bearing relation to grey businesses and vocations, and not the act of money laundering. In other words, the cannons targeted the effect and not the cause behind them.

Eventually, to curb instances of Money Laundering, the Prevention of Money Laundering Act (PMLA) was introduced in the Lok Sabha on 4th August 1998 and was eventually passed on the 17^th January, 2003.

Apart from the enactment and enforcement of the PMLA, several other steps have been and are being taken by the government to ensure that the instances of money laundering are prevented.

The Prevention of Money Laundering Act, 2002

The Prevention of Money Laundering Act, 2002 or the PMLA is an Act of the Parliament of India enacted to prevent money-laundering and to provide for confiscation of property derived from money-laundering.

The PMLA and the Rules notified there under came into force with effect from July 1, 2005. The Act and Rules notified thereunder impose obligation on banking companies, financial institutions, and intermediaries to verify identity of clients, maintain records and furnish information in prescribed form to the competent authorities formed and appointed in that regard [e.g., Financial Intelligence Unit – India (FIU-IND)]. The Act was subsequently amended in the years 2005, 2009 and 2012.

The Objectives

The PMLA seeks to combat acts pertaining to money laundering in India and in view of this, it mainly has three main objectives:

• To prevent and control money laundering
• To confiscate and seize the property obtained from the laundered money; and
• To deal with any other issue connected with money laundering in India.

Key Concepts in the PMLA

The PMLA, it may be reiterated, is the most exhaustive piece of legislation meant to identify acts and practices pertaining to money laundering and combat the effects thereof. Within its ambit, a number of concepts have been defined, described and dealt with in detail, which would have a direct reference to money laundering activities.

Some of such key-concepts are discussed hereinafter in the following manner.

Money-laundering

The concept of money laundering is described under section 3 of the PMLA, in a manner to include those activities whereby there are ‘attempts to indulge or assist other person’ or become ‘involved in any activity connected with the proceeds of crime and projecting it as untainted property’ are said to be activities which may be acts of money laundering.ii) Proceeds of crime: This is one of the most important terms to be understood insofar as the aim is to understand the scope of the term money laundering within the PMLA. This term is defined within the PMLA to describe properties and assets acquired out of a criminal activity.

Beneficial Owners

Activities given effect with the ulterior motive to launder money, usually operate under a veil, which makes it necessary to have the veil lifted out of monetary transactions and identify the movement of money, and also identify the persons benefitting out of such transactions. Which is why, the term beneficial owner has been used in many places throughout the PMLA.

The term ‘beneficial owner’ is defined under section 2(1) clause (fa) of the PMLA to mean a person who ultimately owns or controls a client regarding a reporting entity, or someone on whose behalf a transaction is effected and who is meant to reap the ulterior benefits out of such transactions.

In addition to the aforementioned definition of ‘beneficial owners’ provided within the PMLA, additional description are provided under the MASTER DIRECTION ON KYC NORMS ISSUED BY RBI FOR REGULATED ENTITIES[2], to identify beneficial owners in respect of myriad situations.

In accordance with the RBI regulations as such, the following provisions may be taken note of.

Company as a customer

Pursuant to the provisions of the section 3(a) (ii), in the event the customer is a company, the beneficial owner is the natural person/s, who, whether acting alone or together, or through one or more juridical person, has/ have a controlling ownership interest or who exercise control through other means.

And in pursuance of the above provisions the following concepts used bear the meanings attributed in the following manner.

The term “Controlling ownership interest” refers to the ‘ownership of/ entitlement to more than 25 per cent of the shares or capital or profits’ of the concerned company.

The term “Control” means and includes the right to appoint majority of the directors or to control the management or policy decisions including by virtue of their shareholding or management rights or shareholders agreements or voting agreements. Where the customer is a partnership firm, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/ have ownership of/ entitlement to more than 15 per cent of capital or profits of the partnership. Where the customer is an unincorporated association or body of individuals, the beneficial owner is the natural person(s), who, whether acting alone or together, or through one or more juridical person, has/ have ownership of/ entitlement to more than 15 per cent of the property or capital or profits of the unincorporated association or body of individuals.

And the term “Central KYC Records Registry” (CKYCR) means and includes an entity defined under Rule 2(1)(aa) of the Rules, to receive, store, safeguard and retrieve the KYC records in digital form of a customer.

Payment System

The term payment system has been defined as a system that enables payment to be effected between a person making a payment (designated as a ‘payer’ in the PMLA) and a beneficiary, involving clearing, payment, or settlement service or all of them. It includes the systems enabling credit card, debit card, smart card, money transfer or similar operations.

Adjudicating Authority

The Adjudicating Authority is the authority appointed by the central government through notification to exercise its jurisdiction, powers, and authority conferred under the PMLA. It decides whether any of the property attached or seized is involved in money laundering. The Adjudicating Authority shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but shall be guided by the principles of natural justice and subject to the other provisions of PMLA. The Adjudicating Authority shall have powers to regulate its own procedure. Presumption in inter-connected transactions Where money laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money laundering, then for the purposes of adjudication or confiscation, it shall be presumed that the remaining transactions form part of such inter-connected transactions.

Non-Profit Organizations

“Non-profit organisations” (NPO) means any entity or organisation that is registered as a trust or a society under the Societies Registration Act, 1860 or any similar State legislation or a company registered under Section 25 of the Companies Act, 1956.

Reporting Entities

The PMLA further has provisions pertaining to certain units known as ‘reporting entities’ within its ambit. Within clause (wa) of section 2(1), reporting entities include banking company, financial institution, intermediary or a person who may be carrying out a business or profession specifically designated within the PMLA.

Designated Business or Profession

Within the ambit of the PMLA, certain businesses and professions and the persons associated therewith are also included within the meaning of a ‘reporting entity’. Such persons include the followings

• A person carrying on activities for playing games of chance for cash or kind, and includes such activities associated with casino;
• A Registrar or Sub-Registrar appointed under Section 6 of the Registration Act, 1908, as may be notified by the Central Government.
• Real estate agent, as may be notified by the Central Government.
• Dealer in precious metals, precious stones and other high value goods, as may be notified by the Central Government.
• Person engaged in safekeeping and administration of cash and liquid securities on behalf of other persons, as may be notified by the Central Government; or
• Person carrying on such other activities as the Central Government may, by notification, so designate, from time to time.

The above description is mentioned under the Section 2(1)(s) of the PMLA.

Procedure under the PMLA

Obligations of the Reporting Entities

The reporting entities are tasked under the provisions of the PMLA to perform the major activities mandated by the law. In their specific capacities are obligated to perform certain functions, which concisely include the followings:

1. Maintenance of records;
2. Furnish information pertaining to such records;
3. Verification of identity of its clients by carrying out due diligence procedures;
4. Identification of beneficial owner, in respect of the transactions undertaken with its various clients.

The aforesaid obligations in detail are provided under section 12 of the PMLA.

In addition to the above-mentioned obligations, it is also the duty of the reporting entities to provide access to necessary information as and when called for by a director (appointed under the provisions of the PMLA).

The necessary provisions in this regard occur under section 12A of the PMLA.

For all the obligations which are to be shouldered by a reporting entity, the PMLA specifically gives exclusions to reporting entities against any kind of civil or criminal proceedings. Such exclusion or exemption also extends to the directors and/or employees of the concerned reporting entity.

Monetary Penalties on Reporting Entity

Notwithstanding the protection of law according to reporting entities, it may also be noted that the reporting entities are also subject to vigilance and for obligatory violations, such reporting entities may also get penalised.

In accordance with the provisions of Section 13(2)(d), it may be noted that reporting entities may get penalised for non-maintenance of records or non-submission of information sought from such reporting entity. As such, monetary penalties can be imposed on defaulting reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each instance of failure.

Burden of Proof

The offence of money laundering as noted under section 3 of the PMLA is considered an aggravating one, and an accusation under the same shifts the onus of proof on the person accused of having committed the offence, as such.

Following the provisions as noted above, In the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and (b) In the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering.

Presumption of inter-connected transactions

In cases where money laundering was effected by involvement of two or more inter-connected transactions and one or more such transactions is or are proved to be involved in money laundering, then for the purposes of adjudication or confiscation, it shall be presumed that the remaining transactions form part of such inter-connected transactions.

The relevant provision in this regard occur under section 23 of the PMLA.

Essentially, under PMLA, the burden of proof lies on the person who claims that the proceeds of crime alleged to be involved in Money-Laundering, are not involved in Money-Laundering. The presumption against the accused or any 3rd party is good enough to discharge the onus of the authorities under PMLA.

Even in the case of Records, and Properties, which are found in the possession or control of any person in the course of a survey or search under the Act (Section 16, Section 17 and Section 18 of PMLA), under a presumption is raised that such records or property belongs to such person, and the contents of such records are true, and further that signatures and any part of such records in hand-writing of a particular person or in the hand-writing of such person, the presumptions as to the records in property are absolute, and the onus to prove the same otherwise, lies on such person. It is clear that, a person accused of an offence under Section 3 of PMLA, whose property is attached and proceeded against for Confiscation, shall discharge the onus of proof (Section 24) vested in him by disclosing the sources of his Income, Earnings or Assets, out of which or means by which he has acquired the property attached, to discharge the burden that the property does not constitute proceeds of crime.

Where a transaction of acquisition of property is part of inter-connected transactions, the onus of establishing that the property acquired is not connected to the activity of Money-Laundering, is on the person in ownership, control or possession of the property, though not accused of a Section 3 offence under PMLA, provided one or more of the interconnected transactions is or are proved to be involved in Money-Laundering.

Attachment

Defined under section 2 clause 1(d), the term attachment refers to the procedure for transfer, conversion, disposition or movement of property in pursuance of an order passed in accordance with chapter III of the PMLA.

Kinds of Penalties under the PMLA

The PMLA is a piece of criminal legislation, where presumption of guilt has precedence and the burden of proof lies on the person accused of a violation. Following this there are certain penalties which are prescribed within the provisions of the PMLA.

The PMLA prescribes that any person found guilty of money-laundering shall be punishable with rigorous imprisonment from three years to seven years and where the proceeds of crime involved relate to any offence under paragraph 2 of Part A of the Schedule (Offences under the Narcotic Drugs and Psychotropic Substance Act, 1985), the maximum punishment may extend to 10 years instead of 7 years.

Powers of attachment of tainted property Appropriate authorities, appointed by the Govt of India, can provisionally attach property believed to be “proceeds of crime” for 180 days. Such an order is required to be confirmed by an independent Adjudicating Authority.

The Authorities – PMLA

Section 48 of the PMLA lays down the provision on the authorities holding competence under the Act. The authorities are as follows.

• Director or Additional Director or Joint Director,
• Deputy Director,
• Assistant Director, and
• such additional directors/officers whose appointment may be deemed necessary under the provisions of the PMLA.

Special Court and Appellate Tribunals

Special Courts

Section 43 of Prevention of Money Laundering Act, 2002 (PMLA) says that the Central Government, in consultation with the Chief Justice of the High Court, shall, for trial of offence punishable under Section 4 of the PMLA, by notification, designate one or more Courts of Session as Special Court or Special Courts for such area or areas or for such case or class or group of cases as may be specified in the notification.

Section 43 and the relevant subsequent provisions in this regard.

Trial under Special Courts formed under the PMLA

Special courts formed under the provisions of the PMLA are empowered to take cognisance of complaints made by an authority authorised in this behalf under the PMLA. And even if the proceedings under the provisions of the PMLA are being conducted by a court other than a special court under the PMLA, then the proceedings could be committed to the special courts formed under the PMLA.

The relevant provisions under the PMLA occur under section 44 of the PMLA.

Appellate Tribunals

An Appellate Tribunal under the PMLA is a body which may be appointed by the (union) Government of India. It is given the power to hear appeals against the orders of the Adjudicating Authority, and any other authority under the PMLA.

Orders of the tribunal can be appealed in appropriate High Court (for that jurisdiction) and finally to the Supreme Court.

Procedure of Appellate Tribunals

The appellate tribunals formed under the provisions of the PMLA to adjudicate upon orders of the special courts, are not bound to follow the procedural requirements of the Code of Civil Procedure.

Procedure of appeal to the Appellate Tribunals

Section 26 of the PMLA lays down the procedures pertaining to the filing of appeals to appellate tribunals. The provisions therein specifically permit a ‘person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal’. Subsequently, appeals may also be preferred by reporting entities ‘aggrieved by any order of the Director made under sub-section (2) of section 13, may prefer an appeal to the Appellate Tribunal’.

Further, it is stipulated that appeals as such are to be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed. This is also subject to the provision that the Appellate Tribunal may after giving an opportunity of being heard entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. Once an appeal is received by the Appellate Authority, the authority may give an opportunity of being heard to each concerned party and subsequently pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.

Representation

An appellant filing an appeal before an appellate tribunal may represent his case in person or take the assistance of an authorised representative.

The relevant provision in this regard occur under section 39 of the PMLA.

Appeals to High Courts

In the event there are grievances against orders passed by an appellate tribunal, the aggrieved party may take a further appeal against such order to the high court of competent jurisdiction.

Offences – Cognisable and Non-Bailable

The offences under the PMLA are to be treated as cognisable and non-bailable. The specific provisions in relation thereto occur under section 45 of the PMLA.

Bar on Civil Proceedings

Section 67 of the PMLA specifically lays down that suits cannot be brought in any civil court to set aside or modify any proceeding taken or order made under PMLA, 2002 and no prosecution, suit or other proceeding shall lie against the Government or any officer of the Government for anything done or intended to be done in good faith under the PMLA, 2002

Scheduled Offence

The offences listed in the Schedule to the Prevention of Money Laundering Act, 2002 are scheduled offences in terms of Section 2(1)( y) of the Act.

The scheduled offences are divided into two parts – Part A & Part C. In part A, offences to the Schedule have been listed in 28 paragraphs and it comprises of offences under various pieces of legislations relating to criminal activities which includes – Indian Penal Code, offences under Narcotic Drugs and Psychotropic Substances, offences under Explosive Substances Act, offences under Unlawful Activities (Prevention) Act, offences under Arms Act, and so on. Part ‘C’ deals with trans-border crimes, and is a vital step in tackling Money Laundering across International Boundaries. Prior to 15th February, 2013, i.e., the date of notification of the amendments carried out in PMLA, the Schedule also had Part B for scheduled offences where the monetary threshold of rupees thirty lakhs was relevant for initiating investigations for the offence of money laundering. However, all these scheduled offences, hitherto in Part B of the Schedule, have now been included in Part A of Schedule w.e.f 15.02.2013. Consequently, there is no monetary threshold to initiate investigations under PMLA.

MAJOR ACTS COVERED IN THE SCHEDULE

• Indian Penal Code, 1860;
• NDPS Act, 1985;
• Unlawful Activities (Prevention) Act, 1967;
• Prevention of Corruption Act, 1988;
• Customs Act, 1962;
• SEBI Act, 1992;
• Copyright Act, 1957;
• Trade Marks Act, 1999;
• Information Technology Act, 2000;
• Explosive Substances Act, 1908;
• Wild Life (Protection) Act, 1972;
• Passport Act, 1967;
• Environment Protection Act, 1986;
• Arms Act, 1959.

ANTI-MONEY LAUNDERING REGULATORS IN INDIA

FIU-IND Financial Intelligence Unit – India (FIU-IND)

FIU-IND Financial Intelligence Unit [FIU-IND] was set by the Government of India, on 18 November 2004, as the central national agency responsible for receiving, processing, analysing, and disseminating information relating to suspect financial transactions. The FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation, and enforcement agencies in pursuing the global efforts against money laundering and related crimes. FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.

As an entity involved in intelligence gathering, the main function of FIU-IND is to receive reports/data/information regarding cash/suspicious transactions, the analysis of such data/information and, as appropriate, the dissemination of valuable financial information to intelligence/enforcement agencies and regulatory authorities. In this regard, the major functions of the FIU-IND may be noted as follows[1]:

• Collection of Information: Act as the central reception point for receiving Cash Transaction reports (CTRs), Cross Border Wire Transfer Reports (CBWTRs), Reports on Purchase or Sale of Immovable Property (IPRs) and Suspicious Transaction Reports (STRs) from various reporting entities.
• Analysis of Information: Analysis of received information in order to uncover patterns of transactions suggesting suspicion of money laundering and related crimes.
• Sharing of Information: Sharing of information with national intelligence/law enforcement agencies, national regulatory authorities, and foreign Financial Intelligence Units.
• Act as Central Repository: Establishment and maintenance of national database on cash transactions and suspicious transactions based on reports received from reporting entities.
• Coordination: Coordination and strengthening the collection and sharing of financial intelligence through an effective national, regional, and global network to combat money laundering and related crimes.
• Research and Analysis: the monitoring and identification of strategic key areas on money laundering trends, typologies, and developments.

OTHER ANTI-MONEY LAUNDERING REGULATOR(S)

The major data collection agency for all information and investigation pertaining to activities of money laundering is the FIU-IND.

There are various bodies and authorities involved in the implementation and enforcement of the anti-money laundering laws. RBI is one of such authority which lays down anti-money laundering guidelines for banks and other financial institutions to adhere to. Similarly, SEBI has also prescribed certain requirements relating to Know Your Customer (KYC) norms for the financial intermediaries in securities market to follow to combat money laundering.

Further, there are law enforcement bodies like the Directorate of Enforcement and the Central Bureau of Investigation – Economic Offences Wing, dealing with money laundering issue.

Further, the Income Tax Department, Government of India under the Income Tax Act, is also authorised to take steps to prevent the offence of money laundering by imposing tax on undisclosed foreign income and assets on Indian residents. This has been further augmented by enactment of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

The scope of authority and powers of such anti-money laundering regulators in India are discussed in the following manner.

Enforcement Directorate

The prime objective of the Enforcement Directorate is the enforcement of two key Acts of the Government of India namely, the Foreign Exchange Management Act 1999 (FEMA) and the Prevention of Money Laundering Act 2002 (PMLA) The ED’s (Enforcement Directorate) official website enlists its other objectives. Some of such objectives are cited hereinafter.

1. The investigation of contraventions of the provisions of Foreign Exchange Management Act, 1999(FEMA) which came into force with effect from 1.6.2000. Contraventions of FEMA are dealt with by way of adjudication by designated authorities of the Enforcement Directorate, whereby penalties of up to three times the sum involved can be imposed.
2. The investigation of offences of money laundering under the provisions of Prevention of Money Laundering Act, 2002 (PMLA) which came into force with effect from 1.7.2005. Taking actions of attachment and confiscation of property if the same is determined to be proceeds of crime derived from a Scheduled Offence under PMLA. And in pursuance thereof the prosecution of persons involved in the offence of money laundering. There are 156 offences under 28 statutes which are Scheduled Offences under PMLA.
3. The adjudication of ‘Show Cause Notices’ issued under the repealed Foreign Exchange Regulation Act, 1973 (FERA) till 31.5.2002 for the alleged contraventions of the Act which may result in imposition of penalties. And in pursuance thereof to pursue the prosecutions launched under FERA in the concerned courts.
4. Acting as sponsor to cases of preventive detention under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974(COFEPOSA) in regard to contraventions of FEMA.
5. Rendering cooperation to foreign countries in matters relating to money laundering and restitution of assets under the provisions of PMLA and to seek cooperation in such matters.

Securities and Exchange Board of India (SEBI)

The Preamble of the Securities and Exchange Board of India Act, 1992 describes the basic functions of the Securities and Exchange Board of India as “…to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto”

Functions of SEBI

In accordance with the provisions of section 11 of the SEBI Act, the SEBI is entrusted with the following functions:

• To protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit;
• The SEBI may also take measures pertaining to:
• Regulating the business in stock exchanges and any other securities markets;
• Registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner;
• Registering and regulating the working of the depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the Board may, by notification, specify in this behalf;
• Registering and regulating the working of venture capital funds and collective investment schemes, including mutual funds;
• Promoting and regulating self-regulatory organisations;
• Prohibiting fraudulent and unfair trade practices relating to securities markets;
• Promoting investors’ education and training of intermediaries of securities markets;
• Prohibiting insider trading practices with respect to securities;
• Regulating substantial acquisition of shares and take-over of companies;
• Calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, other persons associated with the securities market, intermediaries, and self-regulatory organisations in the securities market;
• Calling for information and records from any person including any bank or any other authority or board or corporation established or constituted by or under any Central or State Act which, in the opinion of SEBI, shall be relevant to any investigation or inquiry by the SEBI in respect of any transaction in securities;
• Calling for information from, or furnishing information to, other authorities, whether in India or outside India, having functions similar to those of the SEBI, in the matters relating to the prevention or detection of violations in respect of securities laws, subject to the provisions of other laws for the time being in force in this regard. This shall be subject to the provision that the SEBI, for the purpose of furnishing any information to any authority outside India, may enter into an arrangement or agreement or understanding with such authority with the prior approval of the Central Government;
• Performing such functions and exercising such powers under the specific provisions of the Securities Contracts (Regulation) Act, 1956, as may be delegated to it by the Central Government;
• Levying fees or other charges for carrying out its functions;
• Conducting research for the above purposes;
• Calling from or furnishing to any such agencies, as may be specified by the SEBI, such information as may be considered necessary by it for the efficient discharge of its functions;
• Performing such other prescribed functions within its capacity.

Reserve Bank of India (RBI)

The Reserve Bank of India is the central bank of the Republic of India. And in such capacity, the Reserve Bank of India also has some regulatory powers to keep a check on money laundering activities.

The major powers and functions and powers of the RBI may be analysed in the light of the Reserve Bank of India Act, 1935 and in the light of the Banking Regulation Act, 1949.

The powers accorded under the RBI Act may be summarised as follows.

1. To transact Government business.
2. To transact Government business of States on agreement.
3. to issue bank notes.
4. Setting the denominations, legal tender, and forms of notes.
5. Issue of special bank notes and special one rupee notes in certain cases.
6. Maintaining cash reserves of scheduled banks.
7. Publication of consolidated statement by the Bank.
8. Power of Bank to collect credit information.
9. To call for returns containing credit information.
10. To furnish credit information to banking companies

Further, the major powers of the Reserve Bank of India under the Banking Regulation Act may be summarised as follows:

• Power to control advances by banking companies
• Power to give directions
• Section 36AA – Power of Reserve Bank to remove managerial and other persons from office
• To act as the official liquidator
• Power of Reserve Bank to apply to Central Government for suspension of business by a banking company and to prepare scheme of reconstitution or amalgamation
• To impose penalty/s in certain cases.

Insurance Regulatory & Development Authority of India (IRDA)

The IRDA was formed to bring about regulation in the insurance sector, it was decided that a regulatory body shall be formed by the name of the Insurance Regulatory and Development Authority.

The IRDA was formed by an Act of the Parliament of India, which was known as the Insurance Regulatory and Development Authority Act, 1999.

Income Tax Department

The Income Tax Department or the IT Department is the agency which oversees the monitoring the income tax collection by the Government of India. It functions under the Department of Revenue of the Ministry of Finance.

The IT Department is responsible for administering following direct taxation acts passed by Parliament of India.

• The Income-tax Act, 1961
• Expenditure Tax Act, 1987

And such other Finance Acts (Passed Every Year in Budget Session).

CASE LAWS

To understand the implications and interpretations of a piece of legislation, it is very essential to go through and comprehend the observations of the judiciary adjudicating on the provisions of the law. And therefore, three major cases bearing relation to interpretation and applicability of critical areas in the PMLA are discussed hereinafter.

In case of Narendra Mohan Singh and Another vs Directorate of Enforcement, the Hon’ble Jharkhand High Court took a strict view in respect of the applicability of the PMLA and its various provisions regarding ‘presumption’. However, the judiciary has also been a supporter of fair trial procedures, which may be noted in the judgement provided in the case of Sarosh Munir Khan vs. The Deputy Director (noted under para 6.2 hereunder).

Presumption in inter-connected transactions: Narendra Mohan Singh and Another vs Directorate of Enforcement And … on 22 March, 2014 [2]

In the instant case, it was submitted on behalf of the petitioners (i.e., Narendra Mohan Singh and Ankita Singh), that that “to establish an offence of money laundering, it is essential that the persons, charged, should have directly or indirectly attempted to indulge or knowingly assisted or knowingly been a party or actually involved in any process or activity connected with proceeds of crime.” Further it was contended that whereas, in terms of Section 2(u) of PML Act, “proceeds of crime” means property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence and the scheduled offence in terms of definition given under Section 2(1)(y) of the PML Act, happens to be the offence under Part A, Part B and Part C of the schedule, but allegation against the petitioners of projecting a sum of Rs. 1 crore as untainted money, is never the subject matter of the charge sheet submitted by the CBI and, therefore, any prosecution under Section 3 of the PML Act against the petitioners would not be maintainable as for prosecuting a person under PML Act, precondition is that one should involve himself in the process or activities connected with the proceeds of crime and the proceeds of crime be derived or obtained because of criminal activity relating to scheduled offence. But, here in the case as has been stated above, the charge upon which cognizance has been taken under the PML Act, that never form part of the charges upon which CBI has submitted charge sheet.

And in furtherance of the above, it was further submitted that, it was further submitted that the PMLA after amendment could not be given retrospective effect as the statute, which affects substantive rights is always presumed to be prospective in operation unless made retrospective.

Refuting the contentions stated hereinabove the Hon’ble Jharkhand High Court adjudged that whereas questions were raised over the maintainability of the supplementary complaint on the premise that the provisions as contained in Section 44 (1)(b) and 45 of the PML Act, refers to ‘a complaint’. Even if such reference is there of ‘a complaint’, it never prevents of filing of supplementary complaint as the reference of a complaint has been made in those provisions in the context that whenever a complaint filed by an authority authorized, court may take cognizance over it. And therefore, it was also decided that there was no illegality with the order taking cognizance.

Sarosh Munir Khan vs. The Deputy Director [534/ MUM/ 2013] – Importance of Procedure

In this case, it was held that a concerned adjudicating authority operating under the provisions of the PMLA, can pass an order confirming “provisional attachment”, once it has considered that the material on record including material or evidence furnished in response to the notice issued under Section 8(1), the subsequent reply furnished in response thereto, and taking all and other relevant material into consideration, a finding gets recorded that the property or so much of it, is involved in money-laundering.

Rama Raju, S/ o B. Ramalinga Raju Vs. Union of India (UOI), [MANU/ TN/ 1696/ 2011]; [(2012) 1MLJ419] 

In this case, it was held that section 24 shifts the burden of proving that proceeds of crime are untainted property onto person(s) accused of having committed the offence under Section 3. In response to a notice issued under Section 8(1) and qua the legislative prescription in Section 24 of the Act the person accused of having committed the offence under Section 3 must show with supporting evidence and material that he has the requisite means by way of income, earnings or assets, out of which or by means of which he has acquired the property alleged to be proceeds of crime. Only on such showing would the accused be able to rebut the statutorily enjoined presumption that the alleged proceeds of crime are untainted property.

COMBATING MONEY LAUNDERING – A SHORT GLOBAL PERSPECTIVE

The magnitude of money laundering activities and the amount of money laundered each year is gauged by way of the estimations issued by various government and non-government financial research entities. Although, various estimates of the scale of global money laundering are sometimes repeated often enough to make some people regard them as factual — no researcher has overcome the inherent difficulty of measuring an actively concealed practice. Regardless of the difficulty in measurement, the amount of money laundered each year is in the billions of US dollars and poses a significant policy concern for governments.

Some of such risks and concerns are of the following nature:

• Reputational risk;
• Loss of revenue required to sustain governance and fund public welfare projects;
• War on Drugs
• Terror Funding

As a result, governments and international bodies have undertaken efforts to deter, prevent, and apprehend money launderers. Financial institutions have likewise undertaken efforts to prevent and detect transactions involving dirty money, both as a result of government requirements and to avoid the reputational risk involved. Issues relating to money laundering have existed as long as there has been large scale criminal enterprises.

The Financial Action Task Force (on Money Laundering) or the FATF

Formed in 1989 by the G7 countries, the FATF is an intergovernmental body with an aim to develop and promote international response to combat money laundering.

The FATF Secretariat is housed at the headquarters of the OECD in Paris. In October 2001, FATF expanded its mission to include combating the financing of terrorism. FATF is a policy-making body that brings together legal, financial, and law enforcement experts to achieve national legislation and regulatory AML and CFT reforms.

As of 2016, its membership consists of 35 countries and two regional organizations. FATF works in collaboration with a number of international bodies and organizations. These entities have observer status with FATF, which does not entitle them to vote, but permits them full participation in plenary sessions and working groups.

FATF’s three primary functions with regard to money laundering are

• Monitoring members’ progress in implementing anti-money laundering measures,
• Reviewing and reporting on laundering trends, techniques, and Monitoring members’ progress in implementing anti-money laundering measures, Reviewing and reporting on laundering trends, techniques, and countermeasures, and
• Promoting the adoption and implementation of FATF anti-money laundering standards globally. The FATF currently comprises 34 member jurisdictions and 2 regional organisations, representing most major financial centres in all parts of the globe.

CONCLUSIVE NOTES

The activities pertaining to money laundering have been rampant in the Indian society, despite best efforts of the government to stop such practices. Through legislation and administrative bodies and efficient regulators who work tirelessly in this regard, the war on money laundering activities continues to go on. However, it may be noted that although such activities may be put in check at a domestic level, it may be taken note of that such practices are never restricted to the confines of a single jurisdiction. Restrictions at a particular jurisdiction, encourage launderers to shift base to another jurisdiction which may provide a hospitable environment for their activities to thrive. Information revealed in the Panama Papers leak is one shining example of how liberal policies in some jurisdictions may actually be detrimental to the interests of another jurisdiction and the people living there. Money laundering does have implications, which are nothing short of being serious. It may be noted that funds brought in by illicit means, for legitimisation may, once legalised, be then again used for vested interests of the beneficiaries, who may not always have good intentions in mind. Crime can only beget more crime – and the vicious circle would only continue.

Whereas check needs to be maintained at all times on money laundering activities, it may also be noted that strict economic and taxation policies have a way of getting projected as being punitive on honest people with legitimate business interests. And therefore, one of the better ways to stop money laundering practices may be for governments to take such legitimate interests into confidence and provide them protection and certain benefits, which may altogether stop people from engaging in money laundering activities altogether. Tax reforms could be one such step in the right direction.

[1] http://fiuindia.gov.in/files/About%20FIU-IND/functions.html

[2] Reported online at – https://indiankanoon.org/doc/155886752/

[1] https://index.baselgovernance.org/sites/index/documents/Basel_AML_Index_Report_2016.pdf

[2] https://rbi.org.in/scripts/BS_ViewMasDirections.aspx?id=10292

The following books, write-ups and articles were referred and relied on, during the making of the article:

1. Singh, Anand. Anti-Money Laundering Laws in India [Kindle Edition]; East Law Mate (email – easylawmatebooks@gmail.com); 2016;
2. Chandna, Varun. The Curious Case of Black Money and White Money: Exposing the Dirty Game of Money Laundering! [Kindle Edition] Notion Press, McNichols Road, Chetpet Chennai – 600 031; 2017;
3. UNDERSTANDING THE BLACK ECONOMY AND BLACK MONEY IN INDIA; Kumar, Arun. Understanding the Black Economy and Black Money in India: An Enquiry into Causes, Consequences & Remedies; Aleph Book Company. [Kindle Edition]; 2017;
4. Study Report on COFEPOSA Act, 1974; Dutta, Dr Tanisha, Sen Kamanasish, Koudinya N. Varun, National Academy of Customs, Excise and Narcotics (NACEN), Faridabad

[URL: www.nacenkanpur.gov.in/download3.inc.php?rid=32]

1. Taxmann. Prevention of Money Laundering Act 2002 with Rules; Taxmann Publications (P.) Ltd.,; Kindle Edition.

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In this article, Funnisha Garg pursuing M.A, in Business Law from NUJS, Kolkata discusses Clubbing of petitions.

Introduction

Article 32 of the Constitution gives Supreme Court of India the power to issue orders or issue writs. Five writs provided by the Indian Constitution are habeas corpus, mandamus, prohibition, Quo Warranto and certiorari, as appropriate for any application of rights.

The Constitution also gives the High Court the power to issue writs too. Article 226 of the Constitution states: “Notwithstanding the provisions of Article 32, each High court shall have the power, in the territories for which it exercises its jurisdiction, to issue to any person or authority, even in the appropriate cases, habeas corpus, mandamus, prohibition, warrant and certiorari, or one of them, for the application of any of the rights conferred by Part III and for other purposes.”

Types of Writs

Habeas Corpus

A judicial writ of Habeas Corpus is employed by the courts to search out if an individual has been illicitly detained. If the solution is affirmative, the court will order for his unharness. If an individual has been illicitly detained, he himself, an acquaintance or perhaps a relative can file a judicial writ of Habeas Corpus. Habeas Corpus is Latin for ‘Let North American country have the body’ (or, allow us to see the one that has been illicitly detained). Through Habeas Corpus, the court will so conjointly summon the person detained or captive to the court.

To file a Habeas Corpus petition. Although typically a petition is to be filed by the person being detained or in remission, as per Habeas Corpus, the other person will have a go at it on behalf of the detained individual. This written petition will be issued by a public authority or any specific individual.

Mandamus

A judicial writ of mandamus is issued by a better court to a court, assembly or a public authority to perform an act that such a court is sure to perform. If a public official isn’t performing his duty, the court will order it or him/her to try to do that. Writ of mandamus suggests that we have a tendency to command.[2]

To file a Mandamus petition

The writ will be issued against anyone, as well as the president or governor of the state, a personal person or a judge. Anyone or a personal body will file a judicial writ petition for writ of mandamus, subject to the person/persons having legal rights to try to, therefore, within the matter involved.

Prohibition

A judicial writ of prohibition, referred to as a ‘stay order’, is issued to lower court or a body to prevent acting on the far side its powers.

While the writ of mandamus is issued for any activity that’s not legal, the writ petition is issued against the lower courts, like magistrates and commissions, for inactivity within the matter of concern. The High Court and Supreme Court will issue the judicial writ of Prohibition.

Writ of Certiorari

The writ is issued by the Supreme Court to a lower court or the other body to transfer a selected issue to the upper courts than itself. The writ is issued by the high court to the lower courts or the Tribunal, once a slip-up of jurisdiction or law is believed to be committed then the writ could be a curative writ.

Quo Warranto

The writ of hearing (by what warrant) is issued to inquire regarding the lawfulness of a claim by a person or authority to in a Public Office, that he or she isn’t entitled to. The writ is merely for the public offices and doesn’t embrace private institutions/offices.

The writ will be filed providing your basic rights are being violated. Generally, you’ll be able to file a writ petition against state and government agencies. However, a writ Petition may be issued against private authorities after they are discharging public functions.

Writ jurisdiction of the Supreme Court

1) Appellate Jurisdiction
2) Original Jurisdiction 
3) Advisory Jurisdiction[3]

Appellate Jurisdiction

Appeals permitted under the Constitution, Article 132[4] – It provides for an appeal to the Supreme Court of any court, civil court, court or tribunal, order or decree, even if the Supreme Court certifies that the case raises a question of considerable law on the interpretation of the Constitution

Article 133 provides for an Appeal to the Supreme Court from any judgment, decree or final order during a civil proceeding of a High Court if it certifies that the case involves a considerable question of law of general importance and in its opinion, the same question must be determined by the Supreme Court.[5]

Article 134 provides for an Appeal to the Supreme Court from any judgment, final order or sentence in a criminal proceeding of the High Court if, [6]

• Appeal Reversed an order of acquittal of an accused person and Sentenced him to death or
• It Certifies that the case is a fit for appeal to the Supreme Court.

Appeal by Special Leave

Article 136 provides that the Supreme Court could in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any case or matter passed or created by any Court or assembly within the territory of India except the Court or tribunal accepted by constituted by or under any law relating to armed forces.[7]

ORIGINAL JURISDICTION

Writs Article 32 – Guarantees the proper to manoeuvre the Supreme Court for social control of basic rights. Supreme Court has power to issue directions or orders or writs as well as the writs within the nature of Habeas Corpus, Mandamus, Prohibition, hearing and judicial writ, whichever could also be acceptable, for social control of those rights.[8]

Original Suits

Article 131 grants exclusive jurisdiction to the Supreme Court in any dispute between, [9]

• Government of India and one or a more of States or
• Between Government of India and any State or States on one side and one or a more of the different States on the opposite side
• Between 2 or a more of States, in so far as such disputes involve any question on which the existence or extent of a legal right depends

Transfer of cases

Article 139A(1)[10] provides that wherever cases involving constant or well constant queries of law ar unfinished before the Supreme Court and one or a more of High Courts or before 2 or more of High Courts, and also the Supreme Court is glad, on its own motion, or an  application created by the Attorney-General for India or by a party to any such case, that such question is substantial question of general importance, the SupremeCourt could withdraw the case or cases unfinished before the tribunal or the High Courts and get rid of all the cases itself.

Article 139A(2)[11] It states that the Supreme Court may, if it deems it appropriate, with respect to the ends of justice, transfer to any other High Court any case, proceeding or other pending proceedings before any High Court.

The Code of Civil Procedure, 1908[12] provides that the Supreme Court could transfer any suit, appeal or different proceedings from a High Court or different civil court in one State to a High Court or different civil court in the other State.

Section 406 of the Code of Criminal Procedure, 1973 provides that the Supreme Court could transfer any specific case or charm from one tribunal to a different tribunal or from a court subordinate to at least one tribunal to a different court of equal or superior jurisdiction, subordinate to a different tribunal.

Election disputes

Article 71[13] provides that each and every doubt and disputes about the election of a President or Vice- President are needed to be inquired into and determined by the Supreme Court.

ADVISORY JURISDICTION

Article 143(1)[14] provides that if at any time it seems to the President that an issue of law or truth has arisen, or is probably going to rise, that is of such a nature and of such public importance that it’s expedient to get the opinion of the Supreme Court upon it, he could refer the question to its Court for thought and also the Court could, once such hearing because it thinks work, report back to the President, its opinion on it.

Article 317[15] provides that the Chairman or the other member of a Public Service Commission can be removed from his workplace by order of the President, on the ground of wrongful conduct, once the Supreme Court on a reference being created by the President, has on inquiry reported that he ought, on such ground, To be far removed from his workplace.

Section 53K[16] provides for removal and suspension of chairman and Members of the legal proceeding assembly in consultation with the judge of India on any of the grounds laid out in clauses (a) to (f) of subsection (1) of Section 53K once a search by a judge of the Supreme Court.

REVIEW

Article 137[17] provides that, subject to the provisions of any law and rules created under Article 145, the Supreme Court has the facility to review any judgment pronounced or order created by it. Under the Supreme Court Rules, 1966 such a petition is to be filed among 30 days from the date of judgment or order and, as so much as practicable, it’s to be circulated, while not oral arguments, to the same Bench of Judges who delivered the judgment or order sought-after to be reviewed.

CURATIVE PETITION

As laid down by this Court within the case of Rupa Ashok Hurrah vs. Ashok Hurrah[18] even once dismissal of a review petition under the Constitution of India[19] Supreme Court, could entertain a curative petition and rethink its judgment/order, in the exercise of its inherent powers so as to stop abuse of its method, to cure gross miscarriage of justice and such a petition will be filed providing a Senior Advocate certifies that it meets the necessities of this case. Such a petition is to be initially circulated, in chambers, before a Bench comprising of 3 senior most judges and such serving judges who were members of the Bench that passed the judgment/order, subject material of the petition.

Clubbing of petitions on Gujarat incidents

The Supreme Court these days directed symptom of all public interest petitions for a joint hearing by a Bench headed by the judge, already hearing petitions about the simplest bakeshop case.[20]

A Bench, comprising Justice S. Rajendra man and Justice A.R. Lakshmanan, directed that the petitions filed by social activists Mallika Sarabhai and Digant Oza and journalist Indukumar Jani. Seeking appointment of an impartial inquiry into the communal violence within the State by a special investigation team be heard together. The court had, in April last, issued notice on the petitions to the Gujarat Chief Minister, Narendra Modi, the Vishwa Hindu Parishad, the Bharatiya Janata Party, the State Director General of Police and different senior police officers.

During the resumed hearing those days, the Bench felt that each one the connected matters could be heard along and directed listing of these petitions before the judge Bench. In their petitions, Mallika Sarabhai and the others also had submitted that within the communal riots that followed the Godhra train carnage, there was total chaos, widespread violence and destruction of property belonging to the minorities, apart from the killings of quite 1,000 persons in Gujarat.

They said the resultant impact of the month-long incidents were that 20 lakh persons had lost their homes and properties and many of them had taken shelter within the relief camps, whose condition was miserable and unsanitary. The petitioners contended that visible of the actual fact that there was alleged connivance or deliberate inaction on the part of the Chief Minister, there would be no impartial inquiry in the slightest degree and no truth would kick off nor the guilty would be punished.

Clubbing of two suits – Case Study

Depends on the facts of the cases. If similar then yes. But as one is criminal and other is civil the possibility of clubbing both in my opinion is far remote.
If the Grievances of the petitions are co-associated with one another the Hon’ble Chief Justice of High court will allow the case to a single judge to take up 2 distinct matters under 2 different Laws along for better administration of justice.

MouthShut.com v. Union of India [21]Presented by the company Mouthshut.com to protect the freedom of speech and expression on the Internet. He argued against Section 66A and prayed for the modification or deletion of the IT Regulation of the Indian Technology Act. The Supreme Court, in a benchmark trial on March 24, 2015, has decided in ffavourof the candidate and the reversed section. 66A, declaring it unconstitutional and ordering the reading of the various sections of the law of IT Act. As a result, users are free to publish anything online, and publishers cannot be required to reduce content without a court order. This applies to all content generated by online users

Contents

• Significance
• Background

Significance

The cause and its proceedings were monitored by on-line Intermediaries, ISPs, medium service suppliers and social media corporations in India as well as overseas. According to the center for Communication, Governance, “this is one of the case under which India’s Supreme Court can outline contours of free speech online.” The case was clubbed along with a petition filed by Shreya Singhal a Law Student, challenging India’s IT Act’s section 66A. As a result of the hearing of all the petitions challenging the IT Act was clubbed along by a Supreme writ, the matter is usually conjointly referred as a Shreya Singhal case. Before the decision, CNN reportable that “…Mouthshut.com has taken its case to the country’s Supreme Court to guard what it says are the rights of Indian citizens and customers enshrined by the Indian constitution.”

Background

MouthShut.com approached the India’s highest court- the Supreme Court of India disputation regarding the Draconian impact of Sec. 66A. It conjointly prayed that India’s info Technology Rules 2011 be invalid or changed. These petitions were filed in April 2013. The writ petition was filed by MouthShut.com under Article 32 of the Constitution because the IT Rules were violative of Articles 14, 19 and 21 of the Constitution of India.
Mouthshut.com He argued that people who post comments on the site are denied the fundamental right to freedom of expression because of the provisions of Section 66A. In addition, the same as the rules of creating an IT burden, forcing them to detect content and practice censorship online. While a private party can claim that related content is degenerating or violating copyright, such determinations are generally created by the judges and involve a factual and attentive investigation of the interests and competing factors that the signatories are unwilling to create. Signatories receive communications and phone calls from cybercars and police stations, asking them to remove content and provide information to the user, which hinders the operation of their business[22]

Writ petition On April 29, 2013, Mr. Harish Salve attorney had defended the applicant. Accepting the petition, Supreme Court Judge TS Thakur and Sudhansho Mukhopadhya ordered that the petition would require a simultaneous hearing with “Shreya Singhal against Union of India[23].

Later, several different civil liberty organizations, NGOs, people and also the internet and Mobile Association of India filed their own petitions that are labelled along with the main petitions.

Delhi High Court Junks Pleas Against clubbing End-Use Of Mines

Delhi HC laid-off the pleas of some private corporations challenging the decision of the Ministry of Coal to club all sectors, barring power, under one class for coal block auctions.[24]

“The writ petitions are laid-off,” a bench of justices BD Ahmed and Sanjeev Sachdeva said.

The decision comes after almost 18 months once it had been reserved on April 13, 2015 on the pleas of 4 corporations — Utkal Coal Ltd, Monnet Ispat and Energy Ltd, Jayaswal Neco Industries Ltd and Bhushan Power and Steel Ltd.

The companies had previously argued that due to the “wrong” classification, the basic sectors such as iron and steel, which art is protected under the coal charter 2014, were losing out to aluminium companies at the auction.

They had argued that the government’s decision to club all end-uses, except power, under ‘non-regulated sector’ has led to a “skewed” bidding method during which unequal were competing with one another for mines.

• The question raised during this petition is whether or not the provisions of Section 220[26] would apply to an individual who has been defendant of committing 3 offenses of a same kind within one year, however, the place of incident, Police Station/ Station Division and witnesses being different’
• Petitioner is facing trial within the following 3 cases:-

a) FIR No.376/07 underSection 328/379/420/468/471/ 411/34 of the Indian Penal code registered on 23.10.2007 in police office city;

b) FIR No.396/07under Section 328/379/411/34 of the Indian Penal code registered on 19.11.2007 in police office Mandir Marg, New Delhi;

c) FIR No.12/08 under Section 328/379/411/34 of the Indian legal code registered on 08.01.2008 in Police Station city Cantt. 

• Within the said 3 cases, Petitioner has been charged sheeted for committing Associate in Nursing offense punishable under Section 411 of the Indian Penal code, i.e., for the offense of buying stolen articles.
• Joint trial of the above than same 3 cases was sought-after by the Petitioner by moving an application under Section 408 of Code of Criminal Procedure before the learned Session decide and also the same stood declined by holding as under:- ‘It so, emerges that each one the cases relate to totally different incidents and thus the judgment within the case of Sudhir and others (Supra) is of no facilitate to the applicant/accused as 3 criminal cases that ar sought-after to be transferred by the applicant/accused to at least one court, relate totally different incidents, distinct police stations and whereby witnesses also are totally different. Within the circumstances, there’s no justification to permit the prayer of the (Sunil Gaur, Jan 2009)applicant/accused. The application is hereby dismissed.
• Section 220 of the Code of Criminal Procedure was invoked by the applicant to request for clubbing of the 3 cases pending against him for the offense punishable under Article 411 of the Indian Penal Code. Section 220 Cr. P.C. It is expected that, if a series of acts, therefore, relate to one another to form the same transaction, more crimes than the one committed by the same person, it can be charged and prosecuted in court for each of these offenses
• During the course of the arguments, learned counsel for the Petitioner has placed reliance upon case of ‘Adnan Bilal Mulla vs. State of Maharashtra[27]’, wherever it had been found that the common thread was running through the different incidents of blast at different places in metropolis and also the trial of metropolis blast cases was clubbed along within the peculiar facts of the same case by holding that the affiliation between the series of acts is a vital ingredient for those acts to constitute the same transaction.
• Reliance has been placed by the Petitioner upon the case of ‘Smarty Machra and Another vs. State’[28],whereby defendant persons were found to possess conjointly committed totally different offences of theft of car stereos and it had been command that it’s necessary that the defendant persons need to have been defendant of conjointly committing different offences of same kind to attract section 223 of the Cr. P.C.
• The quantitative relation of the author cited judgments doesn’t apply to the case of Petitioner as he’s facing trial in these 3 totally different cases along with his co-defendant, not for the main offense of possessing stolen articles. Moreover, the exercise of jurisdiction under Section 220 of the Cr. P.C. is discretionary one. The learned Session Judge, Delhi justly refuses to exercise it within the present case to the club along with these 3 cases as FIR No. 396/07 pertains to the totally different session division. However, it’s found that the opposite 2 FIRs, i.e., FIR Nos.376/07 and 12/08 pertain to the police office in Delhi Cantt. And thus to at least one Session Division; and to avoid multiplicity of proceedings, the trial of said 2 FIRs same to be pending before 2 totally different Additional Sessions Judges, at Dwarka Courts, New Delhi can be conveniently assigned to one court.
• It has been expressed within the present petition that the trial of FIR No. 376/07 is pending before the learned District and Additional Sessions Judge, Dwarka Courts at the stage of arguments on the purpose of charge and also the trial of FIR No. 12/08 is additionally pending before Sh. N.K. Kaushik, learned Additional Session Judge, Dwarka Courts, at the stage of arguments for the purpose of charging.
• In reading about the preceding position, this petition is part accepted to the extent that the learned Sessions judge Delhi is directed to assign the trial of FIR No. 376/07 registered at police office Delhi Cantt., and also the trial of FIR No. 12/08 registered at police office delhi Cantt., to at least one court, to enable the Petitioner to move application under Section 220 of Cr. P.C. For clubbing the trial of the said 2 FIRs, if therefore suggested. The prayer of the Petitioner for transferring FIR No. 396/07 registered at police office Mandir Marg, Delhi to a court of various session division, wherever the opposite 2 FIRs are pending, is herewith declined.
•  With said directions, this petition and pending applications stand disposed of.

HIGH COURT OF CHHATTISGARH BILASPUR[29]

Two or more claim cases arising out of the same accident, ought to be clubbed along for a trial.

• APPEAL under SECTION 173 Of The Motor Vehicles Act, 1988. JUDGMENT 
  
•  Invoking the legal proceeding jurisdiction of this Court under Section 173 of the motor vehicle Act, 1988, appellant/claimant herein has challenged the award dated 16/01/2001, gone the Motor Accident Claims Tribunal, Sakti, District Bilaspur (in short ‘the claims Tribunal’) in Motor Accident Claim Case No 05/1992, by that the Claims Tribunal has rejected her claim petition filed under Section 166 of the Motor Vehicle Act, 1988.

Brief facts necessary for disposal of this appeal are as under:

• The appellant/claimant filed an application under Section 166 of the Motor Vehicle Act, 1988 pleading inter alia, that on 20/08/1991 at Chandrapur (Dabhra), Tahsil Sakti, on account of collusion of 2 vehicles i.e Truck and motorcar, she suffered injuries. It had been pleaded that the Truck was owned by the non applicant/respondent No. 2 & insured with non-applicant/respondent No. 3 and motorcar was owned by a non-applicant/respondent No. 4 & insured with non-applicant/respondent No. 5 and claimed compensation to the extent of 54,450.
• Learned claims Tribunal to shut scrutiny of oral and documentary proof on record held that the appellant/claimant isn’t established the actual fact of accident on 20/08/1991 and any did not prove negligence on the part of the respondent/driver and consequently, the appellant/claimant isn’t entitled to any compensation and rejected the appliance under Section 166 of the Motor Vehicle Act, 1988.
• Mr. Sachin Singh Rajpoot, learned counsel showing as an acquaintance of the Court submits that the appellant/claimant has filed a copy of the award passed in Motor Accident Claim Case No. 01/1992 (Chetan & another v. Tej Singh & others) selected 16/01/2001 and Motor Accident Claim Case No. 02/1992 (Banarsi Sahu et al.v. Tej Singh & others) selected 16/01/2001, arising out of the same accident, in which, the appellant/claimant has conjointly suffered injury. He submits the actual fact of the accident has proved to be within the same claim cases Chetan & another v. Tej Singh & others and Banarsi Sahu and other v. Tej Singh & others and Banarsi Sahu and other. v. Tej Singh & Others (supra), and compensation has been awarded to appellant/claimant by the Claims assembly in those cases; whereas the appellant’s/claimant’s claim petition has been rejected, holding that accident has not been proven.
• He any submits that the finding recorded by the Claims assembly during this regard is perverse. He last submits that the Claims assembly need to have detected all the claim cases along and need to have determined all the claim cases by common award, so as to avoid conflicting award in connecting claim cases.
• Per contra Mr. H.B. Agrawal Sr. Counsel, showing with Mr. Pankaj Agrawal and Mr. Sourabh Sharma, counsel appearing for the for the respective Insurance Company supported the award stating inter alia that the impugned award is strictly in accordance with law and no interference is called for in the exercise of appellate jurisdiction under Section 173 of the Motor Vehicles Act, 1988.

The court held that,

The court held that the Claims in Motor Accident Claim Case No. 01/1992 (Chetan & another v. Tej Singh & others) selected 16/1/2001 and Motor Accident Claim Case No. 02/1992 (Banarsi Sahu and another v. Tej Singh & others) decided on 16/1/2001.

Claim Case No. 01/1992 (Chetan & another v Tej Singh & others) selected 16/01/2001.

Claim Case No. 02/1992 (Banarsi Sahu & others v. Tej Singh & others) selected 16/01/2001.

Claim Case No. 05/1992 (Kamla Tibeto-Burman v. Tej Singh & others) selected 16/01/2001.

• All 3 claim cases are arising out of 1 accident occurred on 20/08/1991, on account of collusion between 2 vehicles i.e. Truck No.
• BR-14/A/2473 and Jeep B.P.T.-266; resulting in passing of 2 conflicting awards by the Claims Tribunal.
• The M.P. Motor Vehicle Rules, 1994 (hereinafter referred to as ‘Rules of 1994’) has been enacted. Rule 237 of the Rules of 1994 prescribes the procedure in connecting cases.
• Procedure in connecting cases ;- (1) wherever 2 or a more of cases pending before a Claims Tribunal arise out of Same accident, and any issue concerned is common to 2 or a lot of cases, such cases, may, so far as the evidence bearing on such issue is concerned, be held simultaneously
• Whereas action is taken under sub-rule (1) the proof pertaining to the common issue or problems shall be recorded on the record of 1 case and also the Claims Tribunal shall certify under its hand on the records of any such different case, the extent to that proof, therefore, recorded applies to such different case and also the indisputable fact that the parties to such different case had the chance of being present, and, if they were present, of cross-examining the witnesses.
• Within the instant case, Rule 237 of the Motor Vehicle Rules, 1994 has not been followed in its letter and spirit and also the 3 claim cases arising out of same accident dated 20/08/1991, are tried on an individual basis while not following the procedure laid down in Rule 237 of the principles of 1994; resulted the passing of conflicting awards by the claims Tribunal. By the impugned award, i.e. Motor Accident Claim Case No. 05/1992 (Kamla Tibeto-Burman Tej Singh & others) has been rejected holding that the accident isn’t proven, whereas, in Motor Accident Claim Case No. 01/1992 (Chetan & another v. Tej Singh &others) and Motor Accident Claim Case No. 02/1992 (Banarsi Sahu and other. v. Tej Singh & others) arising out of same accident, the accident has commanded to be proven by the Claims tribunal in its award dated 16/01/2001 and also the award directional the compensation has been passed, that might be avoided following the mandate of Rule 237 of the Motor Vehicle Rules, 1994.
• The Division Bench of M.P. HC had once in a while to contemplate the impact of Rule 237 of the M.P. Rules 1994 in Capital Roadways and Finance (Pvt.) Ltd., Bhopal v. Mohan Bai wd/o Mehtab Singh and others[30], para-6 as beow:
• Within the instant case, the photocopy of the policy was on record in each of the case. The 2 Claim cases arising out of same accident are determined in 2 separate cases by two separate Judges. In one in every of the cases, the actual fact of policy is held to be proved, however the liability of the insurer is restricted to Rs. 50,000/-whereas within the differential case, the Claims Tribunal command that the insurance itself isn’t proven though in one of the 2 cases the actual fact of pendency of the connected case in another Court was delivered to the notice of the learned member. Such eventualities giving rise to conflicting findings will be avoided if claims arising out of same accidents between the same parties are clubbed along for a trial and call. See- Rule 237 of the M.P. Motor Vehicle Rules, 1994 that on principle will be created applicable by getting orders for clubbing the cases for trial that arise from the same accident:
• Thus, for the explanations aforesaid the award gone the learned claims Tribunal rejecting the claim petition filed by this appellant/claimant holding that the accident isn’t proven cannot be sustained and is herewith reserved. The matter is remitted to the learned Claims Tribunal to contemplate a new, once giving chance to steer proof to the parties and shall conjointly confine the mind the award passed within the Motor vehicle Claim Case No. 01/1992 (Chetan & another v. Tej Singh & others) and Motor Accident Claim Case No. 02/1992 (Banarsi Sahu and other. v. Tej Singh & others). The Claims assembly can pass the award ideally within a period of four months. Since the appellant/claimant has not appeared before this Court, the Claims Tribunal can decide the claim case once noticing the parties, strictly in accordance with law.
• This Court appreciates the valuable help rendered by Mr. Rajput, Learned counsel, Who appeared as a friend of Court

[1] Shah, V. (2016, December 13). What is a Writ and What is a Writ Petition? Retrieved August 16, 2017, from https://vakilsearch.com/advice/writ-petition-india-filing-drafting/

[2] http://www.legalservicesindia.com/article/article/analysis-of-writ-of-mandamus-592-1.html

[3] Jurisdiction of the Supreme Court of India. Advocate in Delhi, Supreme Court, High Court, DRT, CAT, BIFR, CLB, India. N.p., 26 June 2012. Web. 16 Aug. 2017.

[4] Article 132 of the Constitution of India, 1950

[5] Article 133 of the Constitution of India, 1950

[6] Article 134 of the Constitution of India, 1950

[7] Article 136 of the Constitution of India, 1950

[8] Article 32 of Constitution of India, 1950

[9] Article 131 of Constitution of India, 1950

[10] Article 139(1) of Constitution of India, 1950

[11] Article 139A(2) of Constitution of India, 1950

[12] Section 25 of Code of Civil Procedure, 1908

[13] Article 71 of the Constitution of India, 1950

[14] Article 143(1) of the Constitution of India, 1950

[15] Article 317 of the Constitution Of India, 1950

[16] Section 53K of the Competition Act, 2002

[17] Article 137 of the Constitution of India, 1950

[18] 2002 (4) SCC 388

[19] Article 137 of Constitution of India, 1950

[20] The Hindu : Clubbing of Petitions on Gujarat Incidents Ordered. Group Publication, 26 Sept. 2003. Web. 16 Aug. 2017.

[21] “Mouthshut.com v. Union of India.” Wikipedia. Wikimedia Foundation, 18 Apr. 2017. Web. 16 Aug. 2017.

[22] http://sflc.in/mouthshut-com-india-pvt-ltd-v-uoi-w-p-c-no-217-of-2013

[23] http://courtnic.nic.in/supremecourt/temp/217201332942013p.txt

[24] India, Press Trust of. “Delhi High Court Junks Pleas Against Clubbing End-Use Of Mines.”NDTV.com. N.p., 05 Oct. 2016. Web. 16 Aug. 2017

[25] http://delhicourts.nic.in/Jan09/Kimti%20Lal%20Jain%20Vs.%20State.pdf

[26] Sec 220 of code of Criminal Procedure

[27] 2006 Crl.LJ 564

[28] 2007 (2) JCC 1570

[29] http://highcourt.cg.gov.in/Afr/courtJudgementandAFR/2013/Sep/MA238of01.pdf

[30] (1999(2) M.P.L.J. 554

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This article is written by Aayush Raj. Aayush is a Research Associate at Confederation of Indian Industry.

Bi-halter control syndrome: Do we aim to promote governance or legal quagmire?

Committee on Corporate Governance set up by SEBI has recommended that auditors come under the regulatory purview of SEBI. Is this step worth the call?

Introduction

“Given SEBI’s mandate to protect the interests of investors in the securities market and regulating listed entities, the Committee recommends that SEBI should have clear powers to act against auditors and other third-party fiduciaries with statutory duties under securities law (as defined under SEBI LODR Regulations), subject to appropriate safeguards. – Report submitted by the Committee on Corporate Governance”

Auditors have an important role to play in a business organisation, and their (in)abilities were deftly portrayed during the Satyam fiasco[1]. Though various factors influence business operations, continuously generating financial resources form the focal point, and it can be easily discerned that auditors have a crucial role to play.

In the contemporary context, business organisations are not mere profit-making enterprises. They have social objectives to fulfill. Furthermore, the companies today are run by publicly funded money (in the form of market investments) and therefore misappropriation may negatively affect the economy of the country writ large. Today, the fact if companies are operating in a responsible manner can be gauged only on the basis of various reports and documents published by it, whether statutorily mandated or not. Financial reports mirror a company’s performance and compliance with the laws reflects its statutory commitments. However, the ineffectiveness of description(s) in these documents and statements was denuded in the Satyam scandal, which surfaced within a mere gap of six months of the company being awarded Golden Peacock Award for excellence in corporate governance. It was a dent not only to the corporate governance standards nationally but globally. Though the perpetrators continue to suffer their due, the fait accompli was ruinous. Few thousands of lives were at stake and the documents still unequivocally presented a compliant company.

This manifests in itself the role which auditors can play. In light of such unsettling disruptions, it is only a matter of time that the corporate governance mechanism is overhauled in the country. The recent recommendation by the committee on corporate governance to vest SEBI with the power to overview auditors reflects the commitment of the country and the government towards improving corporate governance standards in India. But with the already existing system, is the step worth the call. This paper analyses the pros and cons of the step and finally makes certain recommendations based on good corporate governance and auditor regulatory practices globally.

International Scenario

The United Kingdom provides a unique insight with respect to regulation of accountants in the country. In the UK the chartered accountants may be members of organisations affiliating chartered accountants in their home country and hold membership of the Institute of Chartered Accountants in England and Wales. However, they are subject to regulation by the Financial Reporting Council which is also responsible for setting UK’s Corporate Governance and Stewardship Codes[2].

In the US, in wake of emerging scandals, a new quasi-governmental regulator for auditors of public companies, the Public Company Accounting Oversight Board (PCAOB) was constituted in the year 2002[3]. It primarily regulates audit firms centring on investor protection (somewhat resembling the role played by SEBI in India).

Other countries have established independent audit regulatory bodies such as Canadian Public Accountability Board (CPAB) of Canada, High Council for Statutory Audit of France, Auditor Oversight Body (AOB) of Germany, Certified Public Accountants & Auditing Oversight Board (CPAAOB) of Japan, Audit Oversight Board Securities Commission Malaysia of Malaysia, Federal Audit Oversight Authority (FAOA) of Switzerland, etc.

Indian regulation of public company auditors:

In India statutes, rules therein, and regulations issued by regulatory agencies regulate auditors, both firm, and individual. A deeper insight into these proactive measures is not within the ambit of this thematic paper. Here we provide a general overview of regulations which deal with the misconduct by individuals.

Chartered Accountant Act, 1949

Definition of professional misconduct – “the expression “professional or other misconduct” shall be deemed to include any act or omission provided in any of the Schedules[4]”

The definition and explanation provided for in the schedule are wide enough to include professional misconduct which has a material effect over the interest(s) of investors in a company. On being found guilty of professional misconduct, the name of such a member can be removed from the register, thereby disabling him/ her from continuing practice as CA.

Apart from this statutory provision, the decision[5] of the Bombay High Court conferring the right to the SEBI, for initiating action against CAs involved in the cooking of the books suo moto, is of extreme relevance.

Analysis of the recommendation

Pros

The external oversight by SEBI on auditors stand justified and a step to foster good corporate governance on various fronts. First, one of the principles of natural justice is ‘nemo judex in causa sua’ which means that no person should be a judge in its own case. If an inference is drawn from this principle (and some might argue this to be a far-fetched extension of the principle), ushering SEBI to exercise oversight over auditors might appear an effective idea. This view is further invigorated by the recent shift towards good governance which lays emphasis on external review of organisational operations. A group of certain members might not jeopardise interest(s) of other member(s) of the group due to common interest(s). However, an independent body does not owe such an allegiance and thus stands justified to a large extent in driving efficient organisational system.

Second, ICAI has been reprimanded by the government of its inefficiency in dealing with cases of professional misconduct. Though, in this context, the government is inclined to formulate a new authority, the National Financial Reporting Authority. However, the vesting of powers in SEBI may help mitigate/ invigorate the in/efficiencies of the present regulator.

Third, if seen from the investor perspective, SEBI stands at a better pedestal than any other agency to deal with the issue(s) [without many allusions, SEBI has its own limitations] related to investor protection. The primary need of an independent regulator emerges for protecting the interest of investors. Punishing the wrong-doer is only a deterrent step, which might be of little value to an investor, though not completely irrelevant. Safeguarding their interest is SEBI’s prerogative and thus SEBI befits the market demands.

Cons

First, SEBI is already burdened with the complex web of issues related to improving the standards of corporate governance across the nation. Adding a new burden does not appear an appealing idea. This might dilute the effectiveness of SEBI as an agency for implementing corporate governance standards in the country.

Second, With the NFRA being mooted at the national level, ICAI existent for over six decades, powers being conferred upon SEBI, might be a concrete manifestation of justice being delayed. The confusion around jurisdiction may find firm roots, in turn, triggering legal quagmire between national agencies competing with each other for jurisdiction. This would hamper investor interests exponentially.

Third, unlike the UK in India membership with the national chartered accountant authority is a pre-requisite of practicing as a CA. Therefore, the powers that be cannot unilaterally shift the burden of oversight onto a regulatory agency like Securities and Exchange Board of India. Let me illustrate this in a better way: Let us assume that a businessman appoints two-drivers, one for the domestic and another for business purposes. Both are vested with the powers to drive the same horse-cart. Now, until the two drivers are independently exercising the powers vested in them within their respective domain, no conflict arises. But let us further assume that a cross-road between domestic and business purpose occurs and the businessman calls for the service of both the drivers simultaneously. It would be a situation of bi-halter control; rendering either the horse(s) too confused or the cart ending up in an accident. The powers that be need to decide at the outset how it would disengage call for such situation while conferring regulatory oversight to SEBI.

Recommendations

In order to propose any recommendation with respect to regulating the conduct of accountants, which the government can implement, it is important to identify the existing gaps/ inefficiencies in the Act of 1949. As stated above the Act deals with various forms of misconduct by an accountant and provides for disciplinary action against them. However, the Act only deals with the after-effect of misconduct that is it adopts a post-risk mitigation approach. This approach has an adversarial effect on the interests of investors because, by the time, the fraud is detected the investors’ money is already gone. This does not create a deterrent effect on fraudsters.

We have other agencies that work towards this end of fostering good corporate governance. The Serious Fraud Investigation Office is a statutory office for detecting and prosecuting or recommending for prosecution for white-collar crimes/frauds. However, its effectiveness may be gauged in future because the body is a recent development in India.

It is a matter of fact widely accepted that in India laws are tigers on the paper, the effective implementation of which is the prime concern. Therefore, we need to develop a two-fold strategy in order deal with the broader ambit of corporate frauds, of which regulating accountants is a part. On the one hand the government should make a move to identify risks of corporate frauds, and on the other hand the implementation of existing laws should be strengthened to concretise a deterrent effect in minds of fraudsters.

The first recommendation that we propose is the use of pre-risk identification technique. In order to facilitate this, it is important that various regulatory agencies such as SEBI, SFIO, CBI, ICAI, etc. work in collaboration. In addition to the agencies mentioned, the government should establish an independent authority at the pan-India level to collect information from and protect the interests of whistleblowers. Information collected from whistleblowers should be properly investigated whether for governmental organisations or publicly listed companies. The protection provided for by the Whistleblower Protection Act should be safeguarded. This is only vouched and invigorated by the fact that whistleblower allegations with respect to corporate frauds are found to be true generally[6]. This is aligned with our recommendation of risk-identification approach to inhibiting corporate frauds. Accountants may be of immense help in fraud identification.

The second recommendation is to clearly define the ambit of the jurisdiction of various regulatory agencies and their powers. If the power to review auditors is proposed to be vested with the SEBI, it should not oust the ICAI of its current authority in toto. An approach to make the review process independent should be adopted, as proposed. Though the power to bring an action or initiate an action may be vested in an authority characterised by the harmony between various regulators. Conferring powers of arrest to the SFIO is an exemplary step to promote corporate governance and strengthening the regulatory agency in the country.

The third recommendation is collaboration/ case-study/ research with the International Forum of Independent Audit Regulators (IFIAR) for proper development of modus operandi of SEBI as a regulator of auditors. Recommendations can also be garnered from independent auditor institutes in other countries and indigenous model developed thereafter.

The corporate governance regulation in India has come a long way but is still in its developing stage. The government should focus on developing strengthened regulatory agencies aimed at minimum interference by the judiciary. This would promote the overall investor confidence in the market and thereby boost the Indian economy achieving the ends of inclusive development in India.

[1] Satyam Scandal: Who, what and when, The Hindu, April 09, 2015

[2] About the Financial Reporting Council

[3] About the Public Company Accounting Oversight Board

[4] Section 22, Chartered Accountant Act, 1949

[5] Writ Petition No. 5249 of 2010, Bombay High Court

[6] http://www.moneylife.in/article/nse-admits-that-whistleblowers-allegations-have-been-found-to-be-true-by-an-independent-agency/49307.html

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In this article, Parth Sarthy Kaushik discusses rules governing the removal of Independent Directors and the need for reform.

The role and significance of independent directors has been formally recognized by the Companies Act, 2013. The law, with the aim to strengthen the corporate governance norms, details the obligations of independent directors which includes, inter alia, the duty to look after the interests of minority shareholders and scrutinizing the performance of management by providing an objective opinion on the strategy and functioning of the company.

JJ Irani Committee on Company Law (2005) observed that independence of the board of directors from external influences is critical for effective corporate governance and an independent director would play a key role to balance the interests of various stakeholders. The rationale behind formalising the institution of independent directors arises from the fact that non-independent directors (who are appointed by majority shareholders/promoters) represent the interests of majority shareholders and their approach is dictated by such interests. Therefore, independent directors are considered quint-essential in bringing objectivity to the governance process in the larger interests of the company by taking into account the interests of all stakeholders, particularly the minority shareholders. Thus, the Companies Act, 2013 casts an onerous burden on independent directors to discharge their fiduciary duties in addition to the obligations mandated by the statue.

However, in light of the on-going Tata boardroom battle, which has resulted in the ouster of a number of independent directors, serious concerns have been raised on the vulnerability of the institution of independent director and the need for their protection against a vindictive management. In the present context, it is very crucial to ensure that independent directors are treated fairly so that they can perform their duties without the fear of repercussions from the majority shareholders.

Duties and Obligations of Independent Directors

Section 149 (8) of CA, 2013 lays down that the independent directors are required to follow the professional code of conduct as specified in Schedule IV of the Act. The Schedule dictates that independent directors shall discharge their responsibilities in a professional and faithful manner. It also lays down the duties and obligations of independent directors to promote investor confidence, secure the interests of minority shareholders and ensure compliance with applicable laws.

Section 149(7) casts a duty on an independent director to make a self-declaration, prior to their appointment stating that he/she meets the criteria prescribed for the position on which they are being appointed. Further, Section 173(3) provides that any decision taken by the board in the absence of independent directors is required to be circulated to all directors and cannot be implemented without the approval of at least one independent director.

Therefore, the Companies Act, 2013 makes certain that any person appointed as an independent director is qualified to identify any mismanagement in the company, making the role of independent directors very critical in safeguarding the interests of a company. This mandates independent directors to exercise a high level of commitment and due-diligence in the discharge of their statutory obligations.

Present Framework for Removal of Independent Directors

The process of removal (and appointment) of independent directors is in the hands of majority shareholders. Section 169 of the Companies Act, 2013 lays down that an independent director can be removed by way of an ordinary resolution requiring a simple majority (at least 50%). This essentially means that independent directors can be removed on the whims of controlling shareholder (promoters), and thus makes it untenable for independent directors to perform their duties in an independent and honest manner which resultantly defeats the purpose of their appointment in the first place.

Although CA, 2013 provides that the Independent director sought to be removed, shall be given a reasonable opportunity of being heard. The absence of any rule requiring a sufficient cause for removal effectively makes this requirement redundant. It is also interesting to note that in the case of re-appointment of an independent director, the shareholders are required to move a special resolution requiring a special majority (at least 75%).These lacunae in the framework governing the functioning of independent directors call for urgent reforms in order to mitigate the influence exercised by the majority shareholders in the process of appointment/removal/re-appointment of independent directors.

TATA Boardroom Battle and Case of Nusli Wadia

Mr. Nusli Wadia, who had been an independent director (in some of Tata Group Companies) was removed by Tata Sons (which is a dominant shareholder) after Mr. Wadia voiced his support for Mr. Cyrus Mistry, who had been thwarted from the position of Chairman of Tata Group. Under the present framework, Tata Sons has every right to seek removal of any director on board including an independent director. But the manner and surrounding circumstances which lead to the ouster of Mr. Wadia raise a very important question i.e. whether independent directors be able to discharge their duties while questioning management and ensuring good governance in the company? The emphatic answer is, No.

Although, in the case of Tata Group, the cause for the ouster of independent director is the support shown for the ousted chairman who does not enjoy the support of majority shareholders but the larger concern is that, If independent directors can be removed at whims and fancies of controlling shareholders, then their role will be reduced to that of ‘yes men’ which would prove counterproductive to the objective sought to be achieved by the formalisation of the role of independent directors under the Companies Act, 2013.

Suggestions for Reforms

The role of an independent director is that of vigilant gatekeeper of the company activities. In addition to their obligation to monitor the actions of company management, they also have a fiduciary duty towards all the stakeholders (including employees, and minority shareholders). Therefore, independent directors must be truly independent of management.

The following suggestions are to ensure that independent directors remain outside the influence of controlling shareholders and are able to perform their duties without any bias:

1. Appointment of some of the independent directors shall be made by minority shareholders and majority shareholders shall not be allowed to vote in the election of such independent directors. Furthermore, on approval of appointment by minority shareholders, the majority shareholders shall be precluded from the process of removal of such independent directors for a specified time period;
2. Both majority shareholders as well as minority shareholders shall elect the rest of independent directors based on the system of proportionate voting in the proportion of their respective shareholding in the concerned company; and

Sufficient cause must be shown for the removal of an independent director which should be explicitly defined by the company in its bye-laws and removal should be approved by a special majority (at least 75%).

Conclusion

The Companies Act, 2013 imposes a high level of responsibility on independent directors and makes them liable in cases of failure. Further, independent directors are expected to be independent of the management and act as the trustees of minority shareholders.  This essentially requires independent directors to be fully aware of the decisions taken by the company management and raise red flags wherever any mismanagement is detected. But the scheme of the Act fails to protect independent directors if they fall out of favours with the majority shareholders.

Therefore, in order to mitigate the influence of majority shareholders, a stricter regime governing appointment/removal of independent directors needs to be introduced that creates a fair balance between the interests of a diversified shareholder group and protects the sanctity institution of independent directors.

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