We hear a lot about being self-sufficient, independent, being in control.
It is a critical phase of human evolution – growing from a child to a functional adult.
As we grow up, a lot of our struggles are all about getting to that place, where are you independent, strong, can stand on your own legs, where you take responsibility for what happens in your life. And that’s beautiful.
That drive, however, of being self-sufficient, of having enough control on your environment, of doing things that are in your control, of fearing loss of balance due to leaning on someone else, never really goes away,
There is a time when that drive stops leading you to growth. There is a space in life where our hunger for independence becomes a desire for control and anxiety about anything that we cannot control and ceases to serve us. There is a time when our desire for independence becomes fear of inter-dependence and inability to collaborate.
It becomes the weight that holds us back from flying. It stops us from growing any further.
Why so? There is a point where personal growth is all about the team. The community. The others who you must work with.
After all, a well-organized and cohesive team, even if consisting of not so naturally talented people, always defeats a highly skilled or talented individual.
Team > individual.
The reason the human race succeeded in dominating the earth is that we could build massive groups that came together, under one banner of abstract ideas and built massive civilizations.
If India is a significant economic power in the world today, it is because we have been able to bring together a massive number of people who believe in shared values, a shared flag, a constitution, a political system that all of them trusted, an economic system that a ginormous number of people can rally behind.
If Apple is the most valuable company on earth then it is because so many fans can repose their faith in it, and hundreds of thousands of employees take pride in working for it.
Big projects that make a big difference, more money, or greatest impact will always involve a team. Bigger the team, bigger your chance of getting extraordinary results.
Your ability to attract a team and then retain them, while building a culture that promotes growth, may determine your professional success beyond being a mid-level employee.
There is a time when your own skills will matter less than your ability to assemble a team of people with the right skills and ensuring that they can work together with an eye on the finish line, and get the job done.
Even those who seem to be working alone, like a great concert singer or a tennis player, do not really work alone. Every great tennis player had a team behind him that led to his success, even if he plays alone in the court. I bet he also has a huge team even now. There are coaches, nutritionists, psychologists, mentors, friends and family which make it possible for them to get to their best, and then give their best in the court.
Many lawyers think that arguing amazingly before a judge is a single-player game. It requires you to develop an amazing legal brain, and a reputation, and boom. It is the individual who is doing the work every day.
That is not true. Every great lawyer, even arguing counsels who appear to be arguing alone before a judge, has a great team behind him that enables him to go a great performance every single day. There are clerks, mentors, juniors, secretaries, clients, vendors, peers, judges and others who are making it all possible.
This is even truer in law firms. People who cannot collaborate do not survive long in big law firms. In companies, it is all about being a team player if you are an in-house counsel. It may be possible to survive as an independent counsel or a judge if you can’t work with a team, but it severely restricts your growth opportunities and makes your life really difficult in general.
If you are stagnating in your career, this is something to seriously think about. Is it because of your inability to inspire or to get a team to back you?
Think about how you look at your own learning and development. Do you try to learn everything on your own? Or are you open to having a team help you with it?
If you buy a premium course from LawSikho, it would be like having a team that is invested in your success, in you getting the results you want in your life.
Collaborate with us, because we are committed to creating training programs that in turn create extraordinary lawyers. Give us a call and let’s talk about how our team can speed up your learning and development and help you to get to your career goals faster.
We are available on 011-4084-5203
Check out the courses in which we are taking enrollment:
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Shriya Sehgal, a first-year student pursuing BBA.LLB. from Symbiosis Law School, Noida. This is an exhaustive article dealing with the various aspects of the Competition Act, 1998.
Introduction
The Competition Act, 1998 is considered to be one of the major sources of competition law in the United Kingdom. It is also the most recent statute there pertaining to competition matters. This Act provides a contemporary skeleton for identifying as well as tackling the conditional business practices. Also, this Act provides a shield against the abusive nature of dominant markets. In other words, this Act protects the country against the damaging effect on the competition via any agreement or business practice.
The Act is divided into IV parts and 14 schedules, Chapter I (Agreements) and Chapter II (Abuse of Dominant Position) of Part I being the important ones for the scope of this article.
Competition Act, 1998: Overview
Outline of the Act
Part I: Chapter I and Chapter II prohibitions
Part I consists of six chapters, that is, from Section 1 to Section 60. Chapter I prohibits any agreement or concerted (collaborative) practice that is performed with the purpose of preventing, restricting or distorting competition, provided an exemption from the prohibition applies. Article 101 of the Treaty on the Functioning of the European Union (TFEU) also prohibits such agreement or concerted practice which affects the trade practices between European Union Member State.
In case of breach of Chapter I prohibitions, companies and individuals are liable to certain fines. The individuals may also be disqualified from serving as a director for a period of up to 15 years.
On the other hand, Chapter II prohibits the use of a dominant market position in the United Kingdom. Article 102 of TFEU may also be breached by such abuse to the extent that it affects trade between the Member States. The penalties for breach of Chapter II prohibition are the same as those that apply to Chapter I prohibition. There are no criminal penalties for completely unilateral conduct which constitutes an abuse of market power.
Part II: European Investigations
Part II of the Act throws light on market investigations. The European Commission was given the power to investigate markets in 2004. The European Union market investigation power is inspired by the power under United Kingdom legislation to carry out competition investigations into markets. This Part provides various provisions such as the power to enter a business or non-business premises under a warrant with respect to related Articles; privileged communication; power to conduct an investigation; offences etc.
Part III: Amendments to the Fair Trading Act, 1973
Part III of the Act deals with ‘Monopolies’ and consists of four sections, that is, from Section 66 to 69. The Fair Trading Act, 1973 has extended as well as integrated the United Kingdom competition law by controlling monopolies, mergers, takeovers, resale prices, and restrictive trade agreements. This Act established a regulatory authority, namely the Office of Fair Trading (OFT) with powers to supervise all aspects of competition policy along with specific responsibilities to oversee matters affecting consumers’ interests. The Act’s provisions have now been superseded by the Competition Act, 1988 relating to monopolies, resale prices, and restrictive trade practices. However, OFT is still responsible for the regulation of mergers and takeovers.
There are certain areas of competition law that the Competition Act 1998 does not cover. Moreover, there are situations that affect the competition in an unacceptable way which further helps them to escape from the scope of the prohibitions contained in Chapters I and II of the Act. Therefore, the Act did not repeal the Fair Trading Act, 1973 with the purpose of maintaining the competition scrutiny over mergers as well as monopolistic situations.
Part IV: Miscellaneous amendments
Part IV of the Act is a supplement to this Act and consists of seven sections, that is, Section 70 to 76. This Act has ceased the existence of various Acts such as Monopolies and Restrictive Practices Act, 1948; Monopolies and Mergers Act, 1965; Restrictive Practices Court Act, 1976; Resale Prices Act, 1976; and has the following views about the Schedules:
Schedule 12: Minor and consequential amendments set out in this Schedule are to have an effect.
Schedule 13: Transitional provisions and savings set out in this Schedule are to have an effect.
Schedule 14: Enactments set out in this Schedule are repealed.
Competition and Markets Authority (CMA) guidance
Competition and Markets Authority (CMA) is an independent non-ministerial department which is established with the purpose of promoting competition for the benefit of consumers. This Authority works within as well as outside the United Kingdom. It is led by the Chief Executive and senior team, and their work is supervised by the Board. In certain investigations, the decisions are taken by the independent members of the CMA panel.
It is their responsibility to ensure that the consumers get a good deal while buying goods and services, and businesses operate within the law. They investigate mergers between organisations; investigate the market in case of consumer or competition issues; protect consumers from unfair trading practices; take action against the anti-competitive behaviour of businesses. They are majorly responsible for enforcement of the Chapter I prohibition as well as Chapter II prohibition.
Delegated legislation under the Act
A significant amount of legislative changes can be noticed in the United Kingdom for the purpose of adapting competition law to the needs of the market as well as its development. Following are the important acts in chronological order:
Nowadays, competition law in the United Kingdom is regulated primarily by:
Fair Trading Act 1973;
Competition Act 1998; and
European Community Legislation (it is either implemented or directly applicable).
Chapter I Prohibition
Section 2(1): The prohibition
Chapter I prohibition includes Section 2(1) of the Act which applies to anti-competitive agreements and practices between undertakings, which is based on Article 101 of TFEU. In order to infringe the prohibition the following four elements must be satisfied:
An agreement, decision or concerted practice;
Between undertakings;
May affect trade within the United Kingdom; and
Object or effect the prevention, restriction or distortion of competition within the United Kingdom.
Subject to section 3
Section 3 of the Act excludes certain agreements to fall under the ambit of Section 2. This Section provides for three broad categories for exclusion from the Chapter I prohibition, namely:
Schedule 1- mergers and concentrations;
Schedule 2- competition scrutiny under other enactments;
Schedule 3- planning obligations and other general exclusions.
Moreover, the exclusions can be added or removed by the Secretary of State.
Agreements between undertakings, decisions by associations of undertakings or concerted practices
This Se ction strictly applies only to agreements between undertakings, decisions by an association of undertakings or concerted practice. Thus, the scope of this Section has been limited to the mentioned agreements only.
Undertakings
Basic definition
Under competition law, undertaking refers to any entity engaged in economic activity. Here, economic activity is an activity involving offering goods or services in a given market irrespective of its legal status and the way it is financed. Thus, public bodies are not excluded under this definition. Moreover, it is not essential to earn profits to be regarded as an undertaking.
Undertakings related by control
According to the governing rules of concentrations, “undertakings concerned” refers to the direct participants in a merger as well as the acquisition of control. In other words, it refers to an undertaking over which the public authorities directly or indirectly exercise dominant influence by virtue of their ownership, financial participation, or the rules which govern it.
An authoritative influence or control of public authorities is presumed when they:
Hold the major part of the undertaking’s subscribed capital;
Control the majority of the votes attached to shares issued by the undertaking; or
Are in a powerful position to appoint more than half of the members of the undertaking’s administrative, managerial or supervisory body.
Undertakings, not persons
The term ‘undertaking’ is wide enough to include any legal or natural person who is engaged in economic activity. This interpretation remains unaffected by the legal status and the way it is financed. Thus, public sector bodies engaged in economic activities can be undertaking for this purpose. It further includes businesses, firms, holdings, companies, sole traders and non-profit making organisations.
For instance, a parent company and its subsidiary, or two companies having the same parent, will be regarded as a single undertaking. They are considered to be a single undertaking because they function as a whole. Moreover, the agreements between them are regarded as the mere allocation of functions within a single group.
Agreements
Chapter I prohibition primarily includes ‘gentlemen’s agreements’ along with formal written agreements between undertakings. Such formal and informal kind of agreements or undertakings is either oral or in writing. It need not be legally enforceable but necessarily involves the meeting of minds or ‘concurrence of wills’ between two undertakings.
Decisions by associations of undertakings
A decision is generally referred to as an initiative taken by an association which has ‘object’ or ‘effect’ of regulating the commercial behaviour of its members in the market, which includes:
Guidelines;
Recommendations;
Resolutions;
Oral exhortation;
Disciplinary (ruling of the administrative body);
Statutory rules, by-laws, articles of incorporation.
In case of an infringement of conduct, the association, as well as their constituent members, can be held liable.
Under European Union law, this behaviour of bringing undertakings together under an associative form is not prohibited, provided it aims to damage the competition.
Concerted practices
Basic definition
It generally refers to a form of coordination between undertakings without the conclusion of a so-called agreement where the concerned undertakings knowingly substitute practical cooperation for the competition risk between them. Such practice can amount to direct as well as indirect contact between firms whose intention is to do either of the following:
To influence the conduct of the market; or
To disclose intended future behaviour to competitors.
The basic difference between agreements and concerted practice from a subjective point of view is that they are intended to catch forms of secret cooperation having the same nature and are only distinguishable from each other by their intensity and the forms in which they manifest themselves.
Direct and indirect contact between competitors
When suitable market conditions are established for concerted practice, coordination or cooperation must arise from a direct or indirect link between the competitors in order to prove this collusive practice. This link can be used as evidence, as well as parallel behaviour. To be clear, the aim of this link should be to remove the uncertainties in the market and the future behaviour of the competitors.
Object or effect the prevention, restriction or distortion of competition within the United Kingdom
Overview
Article 101(1) TFEU prohibits agreements and concerted practices which have their ‘object’ or ‘effect’ the prevention, restriction or distortion of competition. To this end, it has for some time been settled that when surveying possibly prohibitive and restrictive conduct, the attention on ‘object’ and ‘effect’ are elective as opposed to total contemplations.
Restriction of competition by object
In this case, an understanding is exhibited to have an anti-competitive ‘object’, there is no compelling reason to think about the impacts of the agreement. Anti-competitive impacts are assumed and the agreement falls inside the Article 101(1) TFEU prohibition, even without affirmation that it really creates negative impacts. Be that as it may, where no anti-competitive object is set up, an appraisal of the understanding’s belongings must be done by the investigating authority.
While the differentiation between the two classifications of infringement has been dependent upon some contention, on a fundamental level ‘object’ infringement emerges from conduct that is intrinsically hostile and henceforth at the more serious end, here ‘serious’ suggests an accepted probability of damage as well as an absence of pro-competitive features. Interestingly, agreements that are less clearly anti-competitive require investigation of their actual impacts before being denounced under Article 101(1) TFEU.
Where an agreement is arranged as restrictive ‘by object’, the onus falls on the collaborating parties to legitimise their agreement under Article 101(3) TFEU exception criteria. In this way, a ‘by object’ discovery makes it simpler for authorities of competition to set up an infringement while venture parties would be left safeguarding their game plans exclusively on ‘efficiency’ grounds under Article 101(3) TFEU which is a significant troublesome task.
Restriction of competition by effect
In the EU there is authoritatively no such ‘rule of reason’ while surveying whether an agreement produces real or potential anti-competitive impacts, not least in light of the fact that any agreement found apparently prohibitive under Article 101(1) TFEU is fit for being absolved under Article 101(3) TFEU. Notwithstanding, contentions have been progressively advanced in class proposing that thought of useful parts of the agreement ought to be figured into the Article 101(1) TFEU step, that is, not only at the Article 101(3) TFEU arrange. In this regard, it is presented that Article 101(1) TFEU adequately includes a ‘rule of reason’ under which it is important to decide if customers may be more terrible yet for the agreement.
Appreciability
Effect restrictions
An understanding, regardless of whether between competitors or non-competitors, won’t trigger Article 101(1) TFEU prohibition where its effect on competition isn’t ‘appreciable’. At the end of the day, the prohibition doesn’t matter when any recognised anti-competitive impacts are ‘insignificant’ as the inconvenient consequences for the competition must be of an adequate extent to justify the consideration of the Commission. The Commission’s De Minimis Notice on Agreements of Minor Importance (educated by, yet not to be mistaken for, the de minimis doctrine) is non-binding guidance setting out how the Commission will manage and evaluate the issue of appreciability.
Object restrictions
It is measured by the Notice with the assistance of market share thresholds that the Commission won’t think about an appreciable restriction of competition, that is, ‘de minimis’ and hence not inside Article 101(1) TFEU. This gives a sheltered harbor inside which parties can profit instead of explaining every one of the conditions wherein appreciability will be found. Be that as it may, even where the applicable thresholds are not surpassed, the assumption of non-appreciability won’t be kept up where the understanding being referred to contains a ‘by object’ restriction.
Applicable law and territorial scope
The United Kingdom competition rules are interpreted and applied in accordance with the European Union competition law. The Competition Act prohibitions are modeled upon those contained in Article 101 and 102 of the TFEU.
Section 2(2): Illustrative list
This Section includes a list of examples of anti-competitive agreements that resembles Article 101 of TFEU. When compared to Article 101, this is a non-exhaustive, illustrative list and does not set a limit on the investigation and enforcement activities of the Office of Fair Trading. Article 81 is considered as a Guideline to the same, as the Chapter I Prohibition does not deal with various types of unlawfully coordinated conduct in detail. However, the EU guidelines on the horizontal and vertical agreements discussed in Chapter I will be applied in the United Kingdom. Here, horizontal agreements refer to undertakings at the same level of supply whereas, vertical agreements refer to the agreements between a supplier and an acquirer at a different level of production or distribution chain.
The following agreements restrict competition in the United Kingdom market:
Directly or indirectly fixing prices;
Fixing trading conditions;
Sharing markets;
Limiting or controlling production or investment;
Collusive tendering (bid-rigging);
Joint purchasing or selling;
Sharing information;
Exchanging price information;
Exchanging non-price information;
Restricting advertising;
Setting technical or design standards.
Here, price-fixing, market sharing, bid rigging and limitation of the supply or production of goods and services are hard-core cartels.
Section 2(3): Extraterritorial territory
This Section states that Section 2(1) can be applied only when the following are implemented or intended to be implemented in the United Kingdom:
Agreements;
Decisions by associations of undertakings;
Concerted practices.
Section 2(4): Voidness
This Section holds all the agreement or decision to be void if they are prohibited by subsection (1) of Section 2.
Severance
English contract law provides that severance is possible in certain circumstances, although the rules on this subject are complex. It is a matter of the applicable law of the contract, rather than the choice of law, rules of the court in which the action is brought to determine whether severance is to be affected and, if so, by what criteria the severance is to be affected. Severability is possible in English law where it would not fundamentally change the character, scope, purpose, substance or intention of the agreement.
Is the agreement Void or illegal?
An agreement that infringes Article 101(1) is not only void and unenforceable but is also illegal. This has serious consequences, for instance, a party who has paid money to another under an illegal agreement cannot recover that money unless it can be shown that the parties were not in equal fault. Also, it would be contrary to the effective application of Article 101 for national law to impose an absolute bar on an action by one party to an agreement that restricts competition against another party to it, however, EU law does not prevent national law from denying a party who has significant responsibility for the restriction of competition the right to obtain damages from the other contracting party. This principle would presumably be applied in a case concerning Section 2(4), pursuant to the governing principles clause in Section 60 of the Competition Act.
Transient voidness
An agreement may, in its lifetime, drift into and out of unlawfulness under Article 101(1), and therefore be void and unenforceable at some times but not at others. The same, presumably, is true of Section 2(4).
Section 2(5) and 2(6): Interpretation
These provisions explain that, except where the context otherwise requires, any reference in the Act to an agreement includes a reference to a concerted practice and a decision by an association of undertakings.
Section 2(7): the United Kingdom
Section 2(7) provides what “the United Kingdom” means, in relation to an agreement that operates or is intended to operate only in a part of the UK. The UK for this purpose includes the following:
England;
Wales;
Scotland; and
Subsidiary islands (excluding the Isle of Man and the Channel Islands) and Northern Ireland.
Section 2(8): The Chapter I prohibition
This Section provides that the prohibition imposed by Subsection (1) shall be referred to as ‘the Chapter I prohibition’ in this Act. This expression is, therefore, a legislative expression that is similar to Section 18(4) of the Act which recognises the ‘Chapter II prohibition’.
The Chapter I prohibition: excluded agreements
Section 3 provides for various exclusions from the Chapter I prohibition. Some of these exclusions are also applied to Chapter II prohibition. Section 59(2) provides that if the effect of one or more exclusions is that the Chapter I prohibition is not completely applicable to one or more provisions of an agreement, those provisions do not have to be overlooked while considering whether the agreement itself infringes the prohibition for other reasons or not. Thus, the effect of the agreement as a whole can be considered.
Section 3(1) provides that the Chapter I prohibition does not apply in cases where it is excluded by or as a result of the following:
Schedule 1: mergers and concentrations;
Schedule 2: competition scrutiny under other enactments;
Schedule 3: planning obligations and other general exclusions.
Schedule 4 on regulatory rules of various professions has been repealed.
Schedule 1: Mergers and concentrations
This Schedule deals with the application of Chapter I as well as Chapter II prohibitions related to mergers and concentrations. This exclusion is automatic and does not require an application of the CMA. However, the prohibitions under this Schedule will not apply to mergers under the Enterprise Act nor the concentrations in respect of which the European Commission has exclusive jurisdiction.
Relationship of Chapter I and Chapter II prohibitions with United Kingdom merger control
The exclusion applies to any transaction where enterprises cease to be distinct, irrespective of whether there is a relevant merger situation that is capable of being investigated under the Enterprise Act. Moreover, ‘ancillary restrictions’ fall outside the Chapter I prohibition. To be ancillary the restriction must be directly related to the merger provisions and necessary to the implementation of the same. The CMA stated that it will generally follow the European Commission’s approach and will not explicitly state in a decision which restrictions are ancillary.
Newspaper mergers
The exclusion for certain newspaper mergers has been repealed from the Chapter I prohibition.
Clawback
The ‘clawback’ provisions apply only to Chapter I prohibition and not to Chapter II prohibition. This Schedule provides for the possibility of withdrawal of paragraph 1 exclusion by the CMA and the same can remove the benefit of the exclusion by a direction in writing if it considers the following:
An agreement would infringe the Chapter I prohibition, if not included; and
The agreement is not a protected agreement.
Protected agreements
The CMA cannot exercise the right of clawback in case of a protected agreement. The Act defines four categories of protected agreement:
An agreement in relation to which the CMA or Secretary of State has published its or his decision not to refer a merger for an in-depth investigation. The CMA cannot reverse the decision not to refer a merger under the Enterprise Act by seeking to apply the Competition Act 1998.
An agreement where the CMA has found there to be a relevant merger situation.
An agreement that would result in enterprises ceasing to be distinct in the sense of Section 26 of the Enterprise Act.
Relationship of Chapter I and Chapter II prohibitions with EU merger control
This Schedule also provides that the Chapter I prohibition does not apply to concentrations which have a European Union dimension. This provision is necessary as it provides that no Member state can apply its national legislation on competition to any concentration that has an EU dimension since the European Commission has exclusive jurisdiction in such cases.
No clawback
Since this schedule deals with matters that are within the exclusive jurisdiction of the European Commission, it follows that the CMA does not in this situation enjoy a right of clawback as it does in case of a merger that is subject to the Enterprise Act 2002.
Schedule 2: Competition scrutiny under other enactments
Schedule 2 excludes agreements that are subject to competition scrutiny under other legislation. The Government explained that so far as specific agreements are subject to competition scrutiny under regimes established to deal with circumstances of particular sectors, it is inappropriate to subject them to the Chapter I prohibition, as it would create unjustified double jeopardy.
Communications Act, 2003
Section 293 of the Communications Act, 2003 provides that the Office of Communications should periodically review the networking arrangements between Independent Television Ltd. including an assessment of their effect on competition. They have also conducted annual reviews of these arrangements.
Financial Services and Markets Act, 2000
The Financial Services Act, 2012 amended the Financial Services and Markets Act, 2000 in order to enhance the competition scrutiny of regulating provisions or practices adopted by the Financial Conduct Authority (FCA). The Financial Services Act, 2012 established the FCA with the strategic objective of ensuring the following:
Financial markets function well;
Operational objectives of securing consumer protection;
Protecting the integrity of the United Kingdom financial system;
Promoting effective competition in the interest of consumers.
The FCA replaced the Financial Services Authority which no longer exists. Moreover, the CMA may give advi,ce to either regulator that one or more regulating provisions may cause the prevention, restriction or distortion of competition in the supply of goods and services in the United Kingdom. The CMA has agreed a Memorandum of Understanding with the FCA which records the basis on which they will cooperate on financial services matter.
Section 3 of the Act provides the power to amend Schedule 1 and Schedule 3 only. Thus, there is no power to amend Schedule 2.
Schedule 3: Planning obligations and other general exclusions
Schedule 3 is generally referred to as ‘General Exclusions’ and includes various matters that are excluded despite being considered important.
Planning obligations
Agreements involving planning obligations are excluded by Schedule 3. For instance, when planning permission is given, provided the developer agrees to provide certain services or access to facilities.
Agreements in the subject of directions under Section 21(2) of the Restrictive Trade Practices Act, 1976 are excluded from Chapter I prohibition under Schedule 3. However, this was repealed (w.e.f. 1 May 2007).
EEA regulated markets
This Schedule also excludes various matters concerning EEA regulated markets, that is, financial services, from Chapter I prohibition. According to the definition provided in paragraph 3(5) it refers to a market that is listed by another EEA State and doesn’t require a dealer physically on the market where trading facilities are provided including other trading floors of the market.
Services of general economic interest
In case of an undertaking, neither the Chapter I prohibition nor the Chapter II prohibition is applicable. This provision is based on Article 106(2) TFEU and the important guidelines on the same are mentioned in Guidelines on Services of general economic interest exclusion, and Public Bodies and competition law. The guidance notes that as soon as public-sector activities are exposed to economic regulation, it is possible that functions that were earlier considered to be social might be regarded as economic. Consequently, an entity engaged in those activities might be regarded as an undertaking.
The CMA will interpret the exclusion strictly and their guidance notes that in a number of EU cases Article 106(2) has been applied where an undertaking was subject to a universal service obligation and needed to be protected. Moreover, the combined effect of privatisation, liberalisation and EU initiatives has been that the number of exclusive rights held by the undertakings has been reduced. Generally, it is considered that effective competition will best serve the consumer’s interest over time.
The exclusion of services of general economic interest within the energy and railway sectors has been dealt with under specific guidance.
Compliance with legal requirements
In case of an agreement or conduct that is required to comply with a legal requirement, neither the Chapter I prohibition nor the Chapter II prohibition is applicable. Here, legal requirements refers to the one imposed by or under any enactment in force in the United Kingdom, by or under TFEU or the EEA Agreement and having legal effect in the United Kingdom without further enactment or under the law in force in another Member State having legal effect in the UK. as per the CMA’s guidance such exclusion applies in limited circumstances only. Moreover, this exclusion applies only where the regulated undertaking is required to act in a certain way and not to the discretionary behaviour of the undertaking.
Avoidance of conflict with international obligations
This Schedule provides power to the Secretary of State to order the exclusion of the application of Chapter I prohibition from an agreement or a certain type of agreement where it is appropriate in order to prevent a conflict between the provisions of the Competition Act and an international obligation of the United Kingdom. The order can provide conditions such as application in specified circumstances and retrospective effect. Similar provisions are contained in this Schedule for exclusion from the Chapter II prohibition. Moreover, the term ‘international obligation’ further includes intergovernmental arrangements relating to civil aviation because such arrangements that permit flights between the United Kingdom and other countries are not made as treaties and therefore, don’t give rise to the international obligation.
Public policy
This Schedule provides power to the Secretary of State to order the exclusion of the application of Chapter I prohibition from an agreement or a certain type of agreements where there is the existence of exceptional and compelling reasons of public policy for doing so. The order can provide conditions such as appliance in specified circumstances and retrospective effect. Similar provisions are contained in this Schedule for exclusion from Chapter II prohibition.
Coal and steel
This Schedule provides that Chapter I and Chapter II prohibitions do not apply to an agreement or conduct within the exclusive jurisdiction of the European Commission under the European Coal and Steel (ECSC) Treaty. However, this provision doesn’t serve any practical purpose now.
Agricultural products
This Schedule provides that the Chapter I and Chapter II prohibitions do not apply to agreements that fall outside Article 101 TFEU by virtue of Regulation 1184/2006. Moreover, provisions are made for clawback.
Professional rules
Schedule 4 provides that Chapter I prohibition is not applicable to designated professional rules. Originally, the exclusion was justified on the grounds that the professional rules contained disciplinary arrangements, were liable to judicial review and, most importantly, protected the public. As per Section 207 of the Enterprise Act, 2002, Schedule 4 was repealed with effect from 1 April 2007 after reviewing the level of competition in the professions. The CMA, then OFT plays an active role in reviewing the markets for professional services which led to lifting up of various restrictions imposed on the providers of professional services.
Section 50: Vertical agreements
Section 50 of this Act provides for the exemption of vertical agreements from the Chapter I prohibition only and not Chapter II prohibition. The same was affected by the Competition Act 1998 (Land and Vertical Agreements Exclusion) Order 2000, however, vertical price-fixing remained unaffected. The treatment of vertical agreements in domestic as well as EU law was brought into alignment with each other by Regulation 1/2003. Consequently, the exclusion of vertical agreements from Chapter I prohibition was repealed which left them with the benefit of the EU block exemption or UK parallel exemption for such agreements.
Section 50: Land agreements
Agreements relating to land were excluded from Chapter I prohibition only and not Chapter II prohibition from 1 March 2000 to 5 April 2011. However, the exclusion was revoked by the Competition Act 1998 (Land Agreements Exclusion Revocation) order, 2010. The rationale behind the exclusion was that commercial leases contained restrictive covenants and imposed conditions with the primary aim of estate management. The exclusion was uncertain with respect to such covenants and rendered conditions void and unenforceable. The application of Chapter I and II prohibitions have been published to them to provide assistance to undertakings and their professional advisers in following of the revocation of the exclusion for land agreements guidance. The guidance also states that a minority of land agreements will be caught by the Chapter I prohibition.
The Chapter I prohibitions: Exemptions
Introduction
Section 9 of the Competition Act provides a legal exemption to the Chapter I prohibition. Similar to the EU law, undertakings shall conduct a self assessment of whether an agreement that infringes the Chapter I prohibition satisfy the criteria of Section 9 of the Act which is similar to Article 101(3) TFEU. The important Sections can be briefly understood as follows:
Section 6 and 8: Adoption of domestic block exemption;
Section 10: Parallel exemption, where an agreement satisfies the EU block exemption or would do it if it were to affect trade between the Member States; and
Section 11: Exemption for other agreements that were primarily concerned with certain agreements in the air transport sector but is now obsolete.
Exemption criteria
Section 9 of the Act is similar to Article 101(3) TFEU, the only difference being that the latter is limited to goods whereas the domestic provision can also be applied to the services.
Burden of proof
Section 9(2) provides that the burden of proof shall lie on those undertakings who claim the benefit of Section 9(1). There is no agreement that cannot be defended under Section 9(1) on a priori grounds. For instance, an agreement that restricts competition by the object may be legal provided the parties to the agreement can show that it satisfies the criteria of that provision.
Scope of section 9(1)
According to a reputable source, it was held in a debate that Section 9 shall be interpreted in the same manner as Article 101(3) TFEU. Moreover, Section 9(1) should be interpreted in a broad manner having regard to non-economic benefits or more narrowly according to an economic efficiency standard.
The application of section 9(1) in practice
According to the competition authorities and the courts in the United Kingdom, very few applications of Section 9(1) can be seen. The following are a few examples of the same:
LINK Interchange Network Ltd. applied this Section to arrangements that provided for a centrally set multilateral interchange fee for the operation of the LINK network of automated teller machines in which the major banks and building societies of the United Kingdom participate.
In MasterCard, the OFT concluded that the collective fixing of the interchange fee did not satisfy the requirements in this Section of indispensability since it extended to services that were not within the scope of the payment system.
In Memorandum of Understanding on the Supply of oil fuels in an emergency, the OFT granted an individual exemption to an agreement that would improve distribution by enabling the Government to direct supplies of fuels to essential users such as providers of emergency services in the event of a fuel shortage.
Section 9(1) has been raised before the domestic courts but does not appear to have been the subject of many reported judgments.
Block exemptions
Section 6 of the Competition Act allows the Secretary of State, acting upon a recommendation from the OFT, to adopt block exemptions. A block exemption may contain conditions and obligations and may be of limited duration, by virtue of Section 6(5) and 6(7) respectively. The procedure for adopting block exemption is set out in Section 8. There are a number of EU block exemptions, and these are applicable to agreements caught by the Chapter I prohibition by virtue of the parallel exemption provisions in Section 10. One block exemption has been adopted under the Competition Act, for public transport ticketing schemes that allow passengers to purchase tickets that can be used on the service of the participating travel operators. The block exemption entered into force on 1 March 2001 and expired on 29 February 2016. The CMA has adopted the OFT’s guideline on the block exemption.
Section 10 of the Competition Act provides for ‘parallel exemptions’. An EU block exemption has block exempted many agreements. However, there are others that would be exempted but for the fact that they do not produce an effect on trade between the Member States since such agreements would not infringe Article 101(1) they would not require or benefit from block exemption under Article 101(3). Further, Section 10 can be briefly understood as follows:
Section 10(1) and (2) of the Act provides that any agreement that benefits from a block exemption under EU law or affects the trade between the Member States will also be exempted from the Chapter I prohibition. A consequence of the availability of the parallel exemption is that the parties to such agreements do not need a block exemption under domestic law.
Section 10(4) ensures that the duration of any parallel exemption is in line with the position in EU law.
Section 10(5) provides for the CMA in accordance with rules made under Section 51 of the Act to impose, vary or remove conditions and obligations subject to which a parallel exemption is to have an effect, or even to cancel a parallel exemption.
Section 10(6) enables the above mentioned cancellation to be retrospective from before the date of the CMA’s notice.
The Chapter II Prohibition
The prohibition
Chapter II of the Competition Act prohibits the abuse of a dominant market position in the United Kingdom. Such abuse may also breach Article 102 of the TFEU to the extent that it affects trade between the Member States. The civil sanctions for breach of the Chapter II prohibition are the same as those that apply to breach of Chapter I prohibition and it can be enforced by the CMA or private litigants in the same way. There are no criminal sanctions for purely unilateral conduct which is deemed to constitute an abuse of market power.
Section 18
Section 18 of the Act deals with ‘Abuse of a dominant position’ in the United Kingdom. Thus, the prohibition imposed by this Section is referred to as “the Chapter II prohibition”.
‘The Chapter II prohibition’
The Chapter II prohibition targets anti-competitive conduct by undertakings exercising significant market power. It is based on Article 102 and prohibits:
Abusive conduct;
By one or more undertakings which, either singly or collectively, hold a dominant position in a market; and
Which may affect trade with the United Kingdom.
Article 102 of TFEU is like the Chapter II prohibition, yet applies in an EU setting. It bans maltreatment of a prevailing business sector position influencing exchange between the member states of the EU. Similar instances of direct thought to be oppressive for Chapter II apply to Article 102.
‘Undertakings’
As explained under Chapter I prohibition, undertakings can be broadly interpreted to include any natural or legal person engaged in economic activity, irrespective of its legal status and the way in which it is financed. Public sector bodies engaging in economic activities can be undertakings for this purpose.
Affecting trade within the United Kingdom
There is no requirement that the abuse occurs in a United Kingdom Market. It is sufficient that the undertaking committing the abuse is dominant in relation to a United Kingdom market, and that the conduct complained of may produce effects on trade in the United Kingdom or part of the United Kingdom.
Voidness
The Chapter II prohibition does not expressly render void contractual provisions that constitute an abuse of a dominant position. Consequently, this flows automatically from the illegality of the conduct constituting the abuse.
Market size
The size of the market plays a crucial role in the assessment of market power. The following cases consider the market size as an imperative factor:
Economies of scale exist where average costs fall as yield rises. Within the sight of enormous economies of scale, a potential contestant may need to enter the market on a huge scale, in connection to the size of the market to compete adequately. The enormous scale section may require generally huge sunk expenses and may be bound to pull in a forceful reaction from occupants. These variables may in certain conditions comprise hindrances to passage.
System impacts are much the same as economies of scale which may make a new section harder where the base practical scale is enormous in connection to the size of the market. For example, regarding clients of the system.
The quality of purchasers and the structure of the purchasers’ side of the market may compel the market intensity of a seller. Size isn’t adequate for purchaser control. Purchaser control requires the purchaser to have a decision.
In general, purchasers’ power is beneficial in two circumstances. Firstly, when there are large efficiency gains that result from the factors like a size that give the purchaser its power and these are passed on to the final consumer through downstream competition. Secondly, when it exerts downward pressure on a supplier’s prices and the lower prices are passed on to the final consumer.
The relevant market
A determination that an undertaking enjoys such a position of economic strength that it can be considered dominant may depend crucially on how the relevant market is defined. This must be carefully considered through an assessment of:
The goods or services which form part of the market, that is, the relevant product market; and
The geographic extent of the market, that is, the relevant geographic market.
Assessing dominance
Dominance within a market will depend on a close examination of the conditions of competition within the relevant market, including various factors such as market shares, the position of competitors, barriers to entry and the bargaining strength of customers.
Market shares
Market conditions are affected by market shares. A company may generally be considered dominant if it is able to behave to an appreciable extent independently of its competitors, customers and ultimately consumers, thereby preventing effective competition on the relevant market. As a rule of thumb, dominance will not be generally considered to exist below a market share of 40%. Above 50%, however, a rebuttable presumption of dominance exists.
Entry barriers
The barrier to entry of new enterprises into the relevant market is a major restraint on the dynamics of competition. When a dominant enterprise in the relevant market controls an infrastructure or a facility that is necessary for accessing the market and which is neither easily reproducible at a reasonable cost in the short term nor interchangeable with other products/services, the enterprise may not without sound justification refuse to share it with its competitors at reasonable cost.
Other factors in the assessment of market power
The power of the market can be assessed on the basis of various factors, such as:
Market share;
The size and resources of the enterprise;
Size and importance of competitors;
The economic power of the enterprise;
Vertical integration;
Dependence of consumers on the enterprise;
The extent of entry and exit barriers in the market;
Countervailing buying power;
Market structure and size of the market;
Source of dominant position viz. whether obtained due to statute etc.;
Social costs and obligations and contribution of enterprise enjoying dominant position to economic development.
Super-dominance
Sometimes a firm or a company might be referred to as being ‘super-dominant’. Unlike dominance, there is no formal legal definition of this term. However, super-dominance is generally taken to refer to a situation where a firm’s position is so large in a given market that any residual competition is, at best, marginal. It is on this basis that some have suggested that such a company (one with a very high market share and evident economic strength) has an even greater ‘responsibility’ to the market.
Abuse
The concept of abuse is broad: any conduct by a dominant company that allows it to enhance or exploit its market position to the detriment of competitors or consumers may be considered abusive. Most of the cases considered by the OFT or CMA to date have related to conducting alleged to have excluded competitors from a market. The forms of conduct that have been reviewed by the United Kingdom competition authorities for their potential exclusionary effects include:
Refusal to supply so as to prevent effective competition;
The conclusion of exclusive purchasing, supply or distribution agreements so as to create a barrier to entry;
Trying or leveraging so as to extend a position of dominance from one market to another;
Pricing with exclusionary effects; and
Applying discriminatory standards to independent parties compared to those applied to affiliate companies.
Cases in which conduct has been alleged to exploit customers have been fewer in number and most have related to excessive pricing. However, concerns have also been raised by the United Kingdom competition authorities in relation to conduct that discriminated between customers.
Examples of abuse
Following are the various examples or types of abuse:
Exclusionary abuse
Abuse portrayed as ‘exclusionary’ is a conduct by the dominant undertaking which is equipped for avoiding contenders, in entire or partially, from productively entering or staying active in a given market and which, as an indirect outcome, will at last detrimentally affect customers. Exclusionary practices are normally observed as the most unsafe kind of abuse. This is on the grounds that they can undermine the competitive procedure over the longer term by anticipating small or new contenders turning out to be reasonable challengers to a dominant company and in this way denying clients the chance to profit by better choice and competition. Some of the instances of exclusionary abuse are as follows:
Predatory pricing: Conduct explicitly planned for dispensing with a contender’s situation as a rival either by constraining it out of the market or by preventing market entry. This is accomplished by a dominant organisation by renouncing benefits in the present moment so as to drive out or demoralise contenders. When the dominant organisation has effectively avoided existing contenders or potential contestants, it will have fortified its position and be free.
Refusal to deal: A dominant undertaking’s opportunity to pick with whom it conducts business might be constrained where, as a vertically incorporated undertaking.
Loyalty rebates: A refund given to a customer once a threshold quantity has been purchased over a particular period can encourage customers to place all of their orders with one firm rather than split their orders amongst competing firms. This effectively amounts to an exclusivity obligation in its effect.
Tying and bundling: Techniques used by firms to link the sale of two distinct products together may make it more difficult for rivals of the stand-alone products to compete. See further, Tying and bundling the challenge of new markets to Article 102 TFEU.
Exploitative abuses
Such type of abuse is not at all like exclusionary abuse that target contenders and, in this manner, hurt consumers in an indirect way because of avoidance of competitors and a resulting decrease in competitive offerings. Instead, ‘exploitative abuses’ don’t adversely influence rivals. They involve consumers being hurt legitimately by the dominant firm which utilises its market capacity to obtain rents from its clients which might not be ordinarily reachable.
The fundamental case of exploitative conduct is where a dominant firm charges unnecessary prices to its clients. While the worry with respect to excessive pricing is natural, practically it is implemented once in a while by the authorities as it includes a stipulation of the ‘right’ competitive price and accordingly entails price regulation.
Exploitative abuses likewise may include the dominant firm discriminating between consumers or tying items to the extent that it urges consumers of a primary item (for instance, a razor) to purchase secondary (optional) items (for instance, razor blades) at exorbitant prices and under out of line terms.
Reprisal abuses
The idea of a ‘reprisal’ abuse includes a dominant organisation ‘going overboard’ to dangers it sees to its business advantages. The dominant organisation endeavors to caution, discipline or punish the trading partner or contender by, in addition to other things, expanding costs charged, ending supply or buying connections or affecting lawful procedures. These abuses are exclusionary in their goal and impact.
Dividing the Single Market
A dominant organisation that obstructs the activities of the Single Market, for instance, by confining the progression of products over national outskirts, may comprise an abuse. This might be where conduct limits rival present in one Member State from contending with a prevailing occupant dominant in another Member State.
Objective justification
Generally, harsh conduct won’t interfere with Article 102 TFEU where the prevailing organisation can build up an ‘objective justification’ for its activities. To accomplish this, the predominant organisation should show that the conduct accomplishes an authentic objective, that is, securing or improving public interest, safeguarding the dominant company’s business advantages including commercial interest and producing efficiencies that would somehow not be acknowledged for the conduct being referred to.
It ought to be noticed that the ‘objective justification’ consideration isn’t an exclusion procedure much similar to the treatment of restrictive agreements under Article 101(3) TFEU. In other words, the issue of ‘objective justification’ goes to the subject of whether investigated one-sided conduct is, actually, a ‘misuse’, that is, the absence of objective justification is required before conduct can be lawfully portrayed as a ‘misuse’.
Besides, and not at all like the Article 101(3) TFEU process, the onus is additionally on the Commission to affirm to the imperative lawful standard that there is no objective justification for the conduct being referred to. Be that as it may, the dominant company is relied upon to feature the reasons why it accepts the conduct as justifiable.
Conduct of minor significance
In order to avoid the prohibition regime being unduly burdensome on small businesses, the Act provides limited immunity from financial penalties for small agreements in relation to infringements of Chapter I prohibition and for the conduct of minor significance in relation to Chapter II prohibition. The category of conduct prescribed for the purposes of section 40(1) of the Act is conducted by an undertaking. The applicable turnover of such an undertaking should not exceed £50 million for the previous one business year in the calendar year during which the infringement occurred.
Article 3(2) Regulation 1/2003
The exemption to the combination rule as characterized in Article 3 (2) of Regulation 1/2003 tends to endeavors that don’t include a predominant situation inside the significance of Article 102 TFEU. Some new Member States like the Czech Republic utilise this special case in an odd manner along these lines restoring national limits to the hindrance of the internal market, that is, a level playing field and eventually European consumers. This was not the expectation of Guideline 1/2003.
Exclusions
Exclusions for mergers subject to the United Kingdom or EU merger control
Chapter II prohibition does not apply to conduct resulting in a relevant merger situation or in a concentration having European Union dimension. This exclusion is generally linked to the exclusion of mergers from the Chapter I prohibition, which has been discussed earlier.
Financial Services and Markets Act, 2000
The exclusion from the Chapter II prohibition for conduct pursuant to the regulatory provisions of the Financial Services and Markets Act, 2000 has been repealed. The Financial Services Act 2012 amended the Financial Services and Markets Act 2000 in order to enhance the competition scrutiny of regulating provisions or practices adopted by the Financial Conduct Authority (FCA) and/or the Prudential Regulation Authority. Agreements, practices or conduct that were encouraged by any of the former Financial Services Authority’s regulating provisions were excluded from Chapter I and Chapter II prohibitions from 1 March 2000 to 1 April 2013. This exclusion was repealed by the Financial Services Act 2012.
Other exclusions
Section 19(1) provides that Chapter II prohibition does not apply to cases excluded by Schedule 3. Some of the exclusions in Schedule 3 apply only to Chapter I prohibition, however, the following paragraphs under Schedule 3 are also excluded from the application of the Chapter II prohibition:
Paragraph 4: Services of general economic interest;
Paragraph 5: Compliance with legal requirements;
Paragraph 6: Avoidance of conflict with an international obligation;
Paragraph 7: Exceptional and compelling reasons of public policy.
Governing Principles Clause: Section 60 of the Competition Act, 1998
The Competition Act prohibitions are modeled upon those contained in Articles 101 and 102 TFEU. To minimise divergence between the application of the respective prohibitions, Section 60 of the Competition Act incorporates into United Kingdom law:
A governing principle that United Kingdom law should not diverge in its substantive applications from EU law;
An obligation on national courts and tribunals to ensure consistency of interpretation between the Competition Act, TFEU and established and future jurisprudence of the European courts; and
A general duty to have regard in determining any matter to any ‘relevant decision or statement’ of the European Commission.
This ‘governing principle’ provision is completely new to English law and is likely to cause difficulties in interpretation as its meaning is not entirely clear.
Section 60(1)
This Section requires United Kingdom authorities and courts to apply United Kingdom competition law on competition questions in a manner consistent with the interpretation and application of the same question in EU law. Moreover, such questions do not include procedural questions. This provision was inserted into the Act in order to ensure that United Kingdom businesses did not have to face the compliance costs of being subject to two similar but differing competition regimes. Much of the interpretation of EU competition law is carried out by the General Court of the Court of Justice of the European Union (CJEU) and the CJEU itself.
This Section provides that whether or not the relevant agreement or conduct affects trade between the Member States. In cases where there is an effect on inter-state trade, the obligation to observe consistency with EU law is reinforced by the Modernisation Regulation. The Modernisation Regulation was a necessary move to re-orientate enforcement of EU competition rules away from the commission towards the Member States and to minimise conflicts between national and EU competition rules. Since the introduction of the Modernisation Regulation, the CMA and the United Kingdom have been vested with a number of powers and responsibilities.
‘So far as is possible’
The phrase ‘so far as is possible’ deals with the scope of this Section. This Section applies to United Kingdom competition law on competition questions, excluding procedural questions. Such questions must be consistent with the interpretation and application of the same question in EU law.
‘Having regard to any relevant differences’
The Office of Fair Trading consultation draft on the Major Provisions of the Act states that the obligation to have regard to ‘relevant differences’ means that there will be certain areas where European Commission legal principles will not be relevant, for example, the objective of establishing a European single market. Thus, relevant differences can be taken into consideration.
Corresponding questions
In cases where there is a close similarity or connection with the competition questions within the European Union, then such questions must be dealt with in a manner that is consistent with the treatment of the European Union.
Questions arising in relation to competition
The goal of consistent interpretation applies ‘in relation to competition’. This begs the question whether the governing principle clause should apply, for example, to procedural matters, or to the general principles of law recognised by the European courts. It is now accepted that Section 60 imports the ‘high-level principle’ as basic procedural safeguards, as well as the specific case law on Articles 101 and 102. Examples of ‘high-level principles’ are:
Equality;
Legal certainty;
Legitimate expectations;
Proportionality;
Privilege against self-incrimination.
Section 60(2) and (3)
These subsections discuss the duty of consistency, decisions or statements of the Commission and the Court of Justice.
The duty of consistency
The Competition Act imposes a positive obligation on national courts and tribunals, including the Competition and Markets Authority, when determining a question under the Competition Act to ensure that there is no inconsistency between the following:
Their decisions;
The relevant principles;
Decisions of the European courts.
Having regard to decisions or statements of the Commission
The United Kingdom courts are not only guided by the European courts but are also required to have regard to any relevant decision or statement of the commission. The following points can be noted in relation to this:
Unlike the obligation in relation to the court decisions, there is no absolute obligation on United Kingdom courts and tribunals to ensure consistency between national decisions and decisions or statements of the commission. rather these will be of persuasive authority only.
The Competition Act is silent in relation to statements by European institutions other than the Commission. A national court could, nonetheless, clearly have regard to minutes of Council meetings or report of Parliamentary debates if it considered theses of relevance to the case at hand.
The reference to the ‘statements’ of the Commission encompasses, for example:
Notices on Interpretation;
Competition Policy Reports;
Guidance (including that on enforcement policies);
Bulletins;
Press Releases.
References to the Court of Justice
Under subsection (2) and (3), ‘court’ refers to any court or tribunal. However, the Court of Justice has the following relevance under this Section:
Consistency of interpretation: Article 267 of TFEU allows national courts to request preliminary rulings from the Court of Justice of the European Union on matters of EU law. In relation to particularly difficult cases involving the interpretation of the Competition Act prohibitions on which there is no existing authority at the EU level, the United Kingdom government is of the view that a reference to the CJEU under Article 267 TFEU is open to the CMA. CJEU has itself confirmed that it has jurisdiction to rule on the interpretation of national law in appropriate cases in so far as the national law directly incorporates or mirrors the provisions of EU law.
European Commission proceedings: The Commission initiate formal proceedings in relation to an agreement or conduct that affects interstate trade, this automatically relieves the competence of the CMA and United Kingdom courts to apply Article 101 or 102 in that case. The Modernisation Regulation imposes a specific duty on courts to refrain from making a decision which may conflict with a decision contemplated by the Commission. This may require the court to stay proceedings or to refer questions for a preliminary ruling to the European Court of Justice (ECJ) under article 267 of TFEU.
The Competition Act in Practice
Appeals against infringement decisions
Several infringement decisions have been appealed to CAT. Most of them were upheld on substance. This can be better understood with the help of an example, that is, JJB Sports PLC v Office of Fair Trading. In this case, some of the findings of infringements were set aside for want of evidence in Football shirts and in the Construction bid-rigging appeals. The only infringement decision to have been overturned in its entirety was Attheraces. The OFT had concluded that the collective selling by the Racecourse Association of the non-licensed betting office (‘non-LBO’) media rights to horse racing at 59 racecourses in Great Britain infringed the Chapter 1 prohibition and that it did not satisfy the criteria of section 9(1) of the Competition Act, which provided a defence for restrictive agreements that produce economic efficiencies. The Racecourse Association (and the British Horseracing Board) appealed to the CAT, which disagreed with the OFT’s analysis. The CAT held that the OFT had failed to define the relevant market correctly. The OFT had defined a market for non-LBO media rights, but the CAT considered that this was too narrow. Thus, the CAT concluded that this was a sufficient reason in itself to set the decision aside. However, the CAT went on to consider whether assuming that the OFT had correctly defined the relevant market where collective selling amounted to an infringement of Chapter I prohibition. It was then concluded by the CAT that collective selling was necessary since there was no other economic way of selling the media rights in question.
Appeals against non-infringement and case-closure decisions
On several occasions third party complaints have challenged decisions by one of the United Kingdom competition authorities to close the file before the CAT. The CAT has sometimes held that the authority has decided that the prohibitions in the Act had not been infringed and made an implicit non-infringement decision. However, in several cases the CAT found that the authority had closed the files on administrative grounds, without expressing a view on the substance and therefore its decision could not be appealed to the CAT.
Sectoral regulators
There have been the following two findings of an infringement by a sectoral regulator:
English Welsh & Scottish Railway; and
Fine imposed on National Grid by OFGEM.
There have been three cases in which a regulator closed its file on the basis of legally-binding commitments given by the parties. In 2012 the Government announced its intention to retain the concurrency provisions but to improve the way in which they operate in practice. These changes were introduced by the Enterprise and Regulatory Reform Act, 2013.
The CMA has entered into a ‘Concurrency Memorandum of Understanding’ with each of the sectoral regulators. The CMA is required to prepare an annual report on how the concurrency arrangements have operated, if concurrency operates in an unsatisfactory manner, however, the Secretary of State may make an order removing the competition powers from a sectoral regulator.
Conclusion
It can be concluded that the Competition Act 1998 is an exhaustive Act dealing with the nuances of competition in the United Kingdom. It can also be seen that the past experience of the market has an effect on consumers, businesses, and competitors. Thus, the Government takes into consideration various factors for the welfare of all the parties.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This Article is written by Abhishek Dubey, a 2nd-year law student from Chanderprabhu Jain College of Higher Studies and School of Law. This article discusses how an Indian company can acquire foreign companies and also the procedure, issues & trends of acquiring foreign companies.
Introduction
Mergers and acquisitions are narrow concepts that require significant knowledge. Concepts such as cross border merger or acquisition require more knowledge and understanding.
‘Inbound merger’ is a part of a ‘cross bound merger’. When an Indian company acquires a foreign company, it is known as an Inbound Merger or Acquisition. In an inbound merger and acquisition, the Indian company is a parent company.
The considerations that need to be taken care of in inbound merger and acquisition are:
Impact of government regulators in matters of employment law, taxation and licensing, etc.
The potential difficulty in a stage of merger and acquisition in both countries.
National security between the countries.
The cultural difference between the countries.
Legal and cultural differences in case of due diligence.
Coordination of intellectual property.
There are a lot of things to be taken into consideration. Proper due diligence is required. This is because such tasks are difficult due to the complex procedure and the separate set of laws and significant rules, etc.
Procedure for an inbound merger or for acquiring a foreign company
Transfer of securities
The issue or transfer of security should be made in accordance with the Foreign Exchange Management Act regulations such as pricing guidelines, entry route, and sectoral caps. Some specified conditions in case of special circumstances include, where the foreign company is a joint venture or wholly or subsidiary owned, the provision contained in Foreign Exchange Management regulations incorporated in the year 2004, should be followed for the transfer and issue of securities.
Borrowings
In the case of borrowing by a foreign company from an Indian company, the Indian company becomes liable. Any borrowing if done overseas, that is borrowing from an Indian company, entering into the books of the resultant company shall conform to external commercial borrowing norms within a period of two years.
Where the assets are not permitted to be sold, it shall be sold within a period of two years from the date of sanction of the scheme. The sale should proceed immediately.
Office
An office that is situated outside India, after being acquired, is to be treated as a branch of the acquiring company i.e., the resultant company may undertake any transaction of that branch under the 2015 regulation of FEMA.
Bank account in the country of the transferor entity
The resultant company is permitted to open a bank account in a foreign country for their transaction.
Valuation: The valuation of an Indian company with a foreign company should be in accordance with Rule 25A of Companies Act which provides for accounting standards accepted internationally.
Deemed approval: Prior approval of RBI is necessary according to subsection (2) of 234 which states that foreign companies with the approval of RBI may merge with the Indian company. This is unusual and should be left to the person managing the FEMA Act.
For Approval by the Reserve bank, the application has to be sent to the following address:
The Chief General Manager,
Reserve Bank of India,
Foreign Exchange Department,
Overseas investment Division,
Sir P.m Road Floor,
Mumbai- 400001
A letter from an Authorised Dealer of IP should mention the following details:
Transaction number generated by the overseas investment division.
Brief details about Indian entity and foreign entity.
Background and details about the transaction.
Reason for seeking approval under FEMA regulation.
Observation of the designated Authorised Dealer Bank with respect to the following:
Prima facie validity of joint venture/ wholly owned subsidiary outside India.
Contribution to external trade and other benefits which will accrue to India.
Financial position and intellectual property record of an entity, etc.
Rules applicable under the provisions of Companies Act 2013
General provision of Companies Act 2013
Section 230(2) of the Companies Act 2013 states that when an Indian company wants to acquire a foreign company, the application has to give to the tribunal and the application should also be given to call for the members and creditors of the company for their consent. The company should also disclose the corporate debt structuring to the tribunal.
Notice to the regulator and the role of Competition Commission of India
Notice to the regulator and other authorities, which are being affected by the merger or acquisition should be given to the Competition Commission of India. They should revert back within 30 days of such notice. There are some rules which are not expressed in the Companies Act 2013 such as sectoral regulation. So, due notice should be given to the Competition Commission of India.
Even High Courts are taking steps with regards to the approval of a merger from the Competition Commission of India, Once the Competition Commission of India does not object or make any representation in front of the tribunal within 30 days, then the tribunal may assume that the Competition Commission of India does not have any objection.
Provision of Section 234 of Companies Act 2013: Progressive or Regressive
The Companies Act 1956 restricted cross border merger. This policy was restricted for the protection of Indian companies only. The Indian government is moving towards an ‘Open Door Policy’. Such a policy is an inbound foreign investment with relaxation on capital account transactions.
It should also be appreciated that such a restrictive protectionist condition is not present in many advanced jurisdictions like USA and UK. Otherwise, the year 2003 amalgamation of Veracity Technology Inc. with MosChip semiconductor technologies ltd. would not have been possible. The introduction of Section 234 is a welcoming step.
Central government forming rules in consultation with the RBI:Sub-section(1) 234 of Companies Act 2013 states that the Central Government may make rules in consultation with the RBI in relation to merger and Acquisition.
Depository receipt as payment of consideration to the shareholders of the merging Company: One radical feature of sub-section(2) of 234 of the Companies Act provides for payment of depository receipts to the shareholders of the merging company. But depository receipts has major issues. If the Indian Depository Receipt has to be made as attractive as the American Depository Receipt and Global Depository Receipts, then effective and simpler policies should be made.
Issues in the case of the Inbound Merger for existing Companies
Wholly owned services and joint venture companies can be the operating entity engaged in trading of goods and services or they can be a manufacturing entity which would not have a significant income. Section 47(6) of the Income Tax Act 1961 treats inbound mergers as tax neutral subject to the condition.
The key issues relating to inbound merger and acquisition are:
The merger of the foreign domiciled holding company
Loans obtained prior to the merger
RBI has permitted Indian companies to take over guarantee and outstanding borrowing which should conform to the norms of “External Commercial Borrowings”. If an Indian company does not borrow from recognized lenders and borrows money from a non-recognized financial lender, then the company is considered a non-recognized borrower.
If the eligible borrower and eligible lender’s conditions are satisfied but the minimum maturity period is not specified in that situation, the Indian party has to renegotiate before the merger within years as per the guidelines issued by ECB.
Migration of foreign accumulated losses
Section 72A of the Income Tax Act provides for carrying forward and the setting off of accumulated losses in certain cases for companies that fall within the definition of the industrial undertaking. Currently, there is no mechanism in the Income Tax Act to absorb foreign tax losses.
Another issue is the Minimum Alternate Tax
This provision specifies that the Indian company has to incorporate tax liability of the foreign company which is being amalgamated.
The merger of operating an overseas Wholly-Owned Subsidiary/ Joint venture
Issues such as foreign accumulated losses and foreign liabilities will be more relevant in cases of a foreign company mergers.
Additional key considerations in such a scenario would be:
The merger of overseas Manufacturing entities
As mentioned in the “Foreign Exchange Management Act”, the office of a foreign company would be treated as a branch of an Indian company. In the case of a manufacturing entity, its warehouse and factories would be considered as an office operating outside India. In the case of post-merger, the manufacturing entities would continue its operations, which will lead to establishing permanent business outside India. These could have permanent establishment implications in a foreign country.
Further, such a branch will lead to commercial liabilities such as employee contracts, customer and vendor contracts. Merging a foreign manufacturing entity into an Indian entity will lead to an Indian holding entity that would lead to a commercial reality. Given such implications, the Indian company will choose its wholly-owned subsidiary/ joint venture engaged in a foreign company with its Indian holding company.
The merger of trading and service sector entities
The Indian company may either propose to bring an end to the wholly-owned subsidiary/ Joint venture company or continue the same, even post the merger. If an Indian company intends to cease its operations, the overseas company has to shut its operation and then merge into an Indian entity.
However, if the intended company continued its operations in case of even post-merger, then the following issues may arise:
Transfer of foreign employees to India
The foreign employees will be transferred to India and the salaries, payroll and provident funds of employees will have to be dealt with accordingly. In the case of post-merger, the employees and overseas branches will form a place of business outside India and will constitute a permanent establishment. In case the foreign employees opted for Employee Stock Option Plan, they will continue to hold in the case of the same post-merger i.e., the acquired company ceases to exist and becomes part of the acquiring company.
Determination of Outward Direct Investment threshold step down subsidiaries
While evaluating in case of an inbound merger, the Indian Company is required to evaluate the net worth of 400 per cent. This is because such an entity will directly become part of the Indian subsidiary company. However, in the case of an outbound merger, it is not required to mention whether the threshold will be determined on the basis of net worth appearing in case of a balance sheet.
Discharge of consideration to joint venture partner under the share swap
Where the company has been merged with an Indian company, a joint venture partner would receive his share of that Indian company on account of such a merger. To this extent, it would be regarded as a share swap under FDI regulation and will not require any permission from the Government.
Inbound structure of foreign companies
Wholly owned subsidiary and joint venture companies: 100% FDI is permitted in a company under automatic route i.e., the fact that no permission is required from the Government in the inbound merger as per the Regulations (schedule 1 20(r)4).
Limited Liability Partnership: 100% FDI is permitted in the case of LLP under Schedule 6 of inbound regulation, subject to the conditions of FDI.
An Indian company can establish a branch office and liaison office or project office: A foreign company can establish these offices in India under the FEMA Regulation of 22(R)(5) that is under service activity.
Trends of inbound merger and acquisition in India
As per the Hindu report, the inbound merger jumps to 30 per cent while an outbound merger drops down by 35 per cent. This was a research study conducted by ‘Venture Capital Intelligence’ which focuses on merger & acquisition and private equity deals. In 2011, value for inbound deals was announced as $9.99 billion and 50 transactions in the year 2010 were announced for $ 8.4 billion.
The top deals in the year 2011 were Vodafone acquiring Essar Group for $5.46 billion dollars, Tata group acquired Corus for $12.8 billion and Bharti Airtel acquired Zain Africa for 10.8 billion.
Conclusion
The Corporate Sector is moving towards a stage of globalization. Its principle has to be accepted through favourable legislation. Because of the presence of technical legislation, it is impossible to achieve success in one attempt.
Cross Border Merger defines an inbound merger between an Indian company and a foreign company where the resultant company is an Indian company and where there is a takeover of the assets and liabilities of a foreign company. The functional aspect of an inbound merger has been provided in the regulation of the Foreign Exchange Management Act.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Anuj co-founded SureClaim to fix the broken claim experience of insurance customers. He believes technology can play a major role in empowering customers. His understanding is shaped by his decade long stint in healthcare and health-tech companies.
Health insurance is expensive, and that is a major reason why you could be tempted to go without it. But you know what’s more expensive than health insurance. It’s not having one at all.
When you fall sick or undergo a medical emergency, without health insurance coverage, you find yourself digging into your savings or crippling with medical debt. Health insurance is one of the most important aspects of financial planning, and you must be vigilantly careful when investing in it. And then, you also need to make sure that when the time comes, you claim what you’re paying for.
There are several mistakes that people make when it comes to choosing and claiming from health insurance. Learn about them here so you can avoid them:
1. Choosing a Health Insurance Policy with the Lowest Premium
A premium is an amount you pay each year to ensure that your health insurance kicks in when you need it the most. When you buy health insurance with the lowest premium it may or may not cover the cost of your medical treatment or room rent in full when you are in a medical emergency. And if it does, you may exhaust your cover in no time, leaving you no choice but to dig into your savings or liquidate your assets.
The clever way to go about it is assessing your finances and your family’s medical needs, comparing different health insurance policies, knowing the features they offer, and then finalizing on the one that ensures you will get the maximum possible payout for your medical treatments and hospitalisation. Moreover, insurance with the lowest premium may come at an additional cost. So, analyse your options and buy a policy that may not be the cheapest but ensures maximum coverage.
2. Relying Only on Your Corporate Health Insurance Plan
Relying solely on your employer’s health insurance plan seems like a cost-effective option, but does the policy cover your family including parents? Will it be enough for you and your family? Additionally, the employer has the right to suddenly decide to cut down the benefits leaving you high and dry. So, you must ask yourself other important questions – what if I leave the job? How will I be covered if I start a business?
You should have your own health insurance policy so you can claim from it if your corporate policy cannot pay for your medical treatments or does not cover certain ailments or if it gets exhausted and another medical emergency strikes you in the same year. The main advantage of an additional policy is that you can continue this policy lifelong even after retirement.
3. Not Reading the Policy’s Fine Print
Health insurance policy documents are detailed, cover a thousand scenarios and use the industry jargon which can be difficult to understand. So, a lot of people don’t read it assuming their health insurance plan will cover all their medical expenses, only to get a costly surprise later.
Reading the fine print is essential as it gives you information on everything you need to know about your health insurance policy. It tells you which medical services will be covered, which treatments are not covered during the waiting period, what percentage of per day hospital charges your plan will cover, how much of the room rent and nursing charges it will cover, how much you will have to pay on your own, and a lot of other things. If you are not able to demystify your policy, then you can consult an online claim advisory portal for clarifications related to your doubts.
4. Letting Your Insurance Lapse
Health insurance policies need to be renewed every year. Don’t wait for it to lapse. Because once it lapses, you will not get any of the continuity benefits. Insurance policies impose a waiting period on pre-existing diseases and certain ailments that have a high occurrence rate. So, if you don’t renew your policy even during the grace period, you lose out on the accrued years and your new policy will impose the waiting period again. Moreover, you also accrue a no claim bonus with every claim-free year but letting your insurance policy lapse means you miss out on a big benefit.
5. Not Considering Zone-Based Pricing
Most health insurance plans are priced according to the tier of the city and every city falls into a specific zone. The premium outgo will be relatively higher for those living in a metro city or a Tier-I city as compared to those living in Tier-II & III cities. For example, a person living in Bangalore will get a policy at a higher price compared to someone living in Chandigarh who can buy the exact same policy and coverage at a lower price. So, you must buy insurance in tier 2 or tier 3 city if you’re originally from there.
6. Not Appealing the Claim Rejection
You recently had a medical procedure, but when you filed your medical claim, your insurance company rejected the claim. It’s understandable that you are frustrated and upset. But that should not keep you from appealing a claim rejection. Take a step to understand the reason for claim rejection by consulting a claim expert online and checking your options.
A claim expert acts as a trusted advisor and will review your paperwork and policy documents, go over the process of appealing the claim rejection and help you prepare a strong appeal which you can put up confidently to get the insurance company to reverse its decision.
The Bottom Line
We all make mistakes from time to time. But when it comes to health insurance coverage and medical care, the mistakes can prove to be very costly. The health insurance mistakes mentioned above are spelt out to you so that you don’t commit the exact same mistakes and put yourself at the risk of not using your health insurance to its maximum potential.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Akella Poornima, a 2nd-year law student of LL.B 3 yrs, Symbiosis Law School, Pune. This article talks about copyright policies, the rights of bloggers, and infringements related to blogs.
Introduction
With globalization in India and abroad, the IT sector has boomed into new advancements, where technology has given employment to people from different fields. With such rampant growth, the bloggers around the world have got a massive audience to their content and worldwide recognition for their creativity and uniqueness. Today, blogs of different types – ranging from food, travel, lifestyle, philosophy, ideas, science, counselling and whatnot – are prevailing in the society at various social networking platforms as well.
For every such blogger, these blogs are self-made creative works that they produce after a lot of research and labour. It is because of their sheer talent that they are able to produce a new vision, or give an insight upon previously produced work. Hence, it is important that every such piece of information is protected under the law with recognition and sole rights given to its creator.
Scope
Copyright laws are a matter of concern when blogs are to be protected. These blogs come under intellectual property (IP). It protects blog posts as well as contents in eBooks, music, videos, software, podcasts, photos, etc and provides recognition of its creator upon it. In short, the copyright laws aim to protect every original work of its author including literature, drama, pantomimes and choreographic works, pictorial, graphic, and sculptural works, audio-visual works, sound recordings, derivative works, compilations, and architectural works.
The only limitation is that its scope does not include ideas, which means that for original work to be copyrighted, it needs to be in its final form. No intermediaries can be copyrighted. Also, no idea can be copyrighted but the way of expressing those ideas can be copyrighted.
Otherwise, registration can also be done manually but sometimes this becomes a tedious process.
Although this facility of registration comes automatically to bloggers once they put their hard work online, it still doesn’t appear to be enough to prove ownership in case of infringements. In short, to have complete protection i.e., to have the right to sue anyone for copyright infringement, it is mandated that the work produced is officially registered.
Also, it is possible that the blogger, if he wishes to, can copyright his entire blog provided that he is able to protect the content of the posts that are published through the registration date. For the posts uploaded after the registration dates, additional registrations are required.
To avoid such discrepancies, one can periodically send in registrations for an entire blog i.e., monthly or yearly. On the other hand, one can register the most important posts and content as soon as one creates it.
Apart from these, several websites have a policy wherein the website itself gets copyright over the content that is displayed there and in such cases, the writers of these blogs or contents get acknowledgement for the work done.
Further, for manually registering copyright in India, the applicant has to follow the following steps:
An application has to be made to the Copyright Office either in person or through post. E-filing facility is provided as well but to file an application online, it is required to produce the required documents as per the category the work belongs to. The checklist for the same is available at the website of the Copyright Office, Government of India.
The prescribed fees have to be paid for the application. The applicant himself or the person who is granted the Power of Attorney can file the application.
A Dairy Number is issued to the person whose application is successfully filed.
After this, call on objections will be there, for which there is a wait for 30 days and applications are put at a stay. If objections are raised during that period, a notice is issued to both parties and an opportunity is provided of being heard by the Registrar who will decide the matter.
Once the matter is cleared there will be scrutiny by the examiner who, if in the case finds any discrepancies again, will refer it to the Registrar who would further hear the matter. In case of no discrepancies, the registration will be approved by the Deputy Registrar and extracts from the Register are sent to the applicant resulting in successful registration of the Copyright.
“Fair Use” of the content
Fair use in the general sense means to use someone else’s content for criticizing, commenting upon, reporting, learning, researching, etc on a copyrighted work while making one’s own content. In general terms, it is a kind of defence against copyright infringement. But, such “fair use” of content must undergo the following four factors:-
The intention behind using the content — Content must be used with commercial or nonprofit intention and must be adding something new to the original IP.
The nature of the content — Using copyrighted content more than often can violate the rights of the originator.
The amount or quantity of content that is used — Using large quantities of someone else’s work within one’s own content can impact fair use more than small amounts.
The value of the original work not to be manipulated while using old content — If the use of an old work does not add anything new (as contribution) to the original work, it is said to have breached the fair use of content. The previously acquired work can only be used to add value to the original work and cannot be used as a concrete substituted content.
It is also important to notice that the ‘fair usage of content’ and its standard principles are also applied to our own content which others may use to criticize, comment, or report on.
Copyrighting work under a Pseudonymous identity
Original works produced under pseudonymous identity can be protected but the length of the time the copyright remains in effect is relatively shorter than it would under a real name.
Section 54(b) of the Copyright Act, 1954 provides that the pseudonymous bloggers must remain in the default position until the true identity of the author is disclosed or the identity is presumed to be in the satisfaction of the Copyright Board.
Details such as “Statement of Particulars” with separate columns for the names of the author, copyright owner, and publisher is required for filing of an application.
For anonymous bloggers, the name of the author is usually the pseudonym that is used in connection with the work, and the name of the copyright owner is the real name of the author of the work produced. It is important to note that when such declarations upon the original creator’s name is not mentioned, the copyright protection goes to the publisher of that work.
Apart from the benefits of having copyright under an anonymous identity, there also comes some limitations. Section 23 of the Copyright Act, 1957 states that anonymously or pseudonymously published work, when the real name of the author is not disclosed, in such a case the copyright subsists for 60 years from the year after the work is published.
However, if the real name of the author is disclosed within this period, the copyright in such a case continues to subsist for 60 years from the year after the death of the author. This provision includes an explanation stating the identity of an author to be true and authentic if it has been disclosed when any act of disclosing is done publicly by both the author and the publisher or otherwise when disclosure is done in such a way as to satisfy the Appellate Board.
Protecting IP without registering
Apart from blogs being protected, IP’s can also be protected. There are multiple ways.
Secondly, creating a special page mentioning the terms, conditions, and policies regarding reposting content can prove helpful.
Thirdly, signing up for a Creative Commons license would help to tame, manipulate and be creative with the content within the limit copyright policies.
Using Google alerts, searches, or plagiarism sites notifying plagiarized content is important too.
Adding watermarks to the visual content indicating the creator’s name and website.
If the blogs are discovered with stolen IP’s, then one can issue a DMCA takedown notice.
DMCA Protection
The Digital Millennium Copyright Act (DMCA) protects creative works on the internet for rights management in digital works. It covers all kinds of artistic works such as articles, videos, and photographs. It aims to protect both copyright owners as well as internet service providers.
It has a protection badge (an icon) on the websites of the bloggers indicating the content has an ownership statement certificate. Further, it is helpful in finding out whether the website is verified, unverified or authorized. Also, taking DMCA protection badges assures the readers that the copyright infringements will be strictly taken care of.
The DMCA.com Badge has specific terms of use and should only be linked to the Website Protection Certificate. Cases where the Protection Badge is being used for alternate purposes and not linked to a protection status on the web page or when such protection badge is located on websites which use stolen content must be reported immediately.
What is a DMCA Takedown Notice?
The “DMCA takedown notice” functions to notify all the stolen contents in the websites to legally take it down from such platforms. The main objective behind DMCA is to fight plagiarism.
How to takedown plagiarised content?
Google DMCA is an easily accessible option for any blogger whose blog has been stolen. Otherwise, if the stolen content is put on some particular websites or appropriate platforms, the original creator of the blog needs to file a DMCA complaint against those specific sites.
Google removes the copied or plagiarised content easily when the original blogger reports about it on the blogger platform. Google platform has unrestricted access to all the contents put in there.
But when the report for plagiarism needs to be noticed for another platform like WordPress, the blogger will have to file for the URL to be removed from Google Search.
These takedown notices also work for copied blogs on the blogger/BlogSpot platform. Here is a way how to go about it. In this way one can remove the copied content from the Google search permanently.
Log in through your Gmail account before proceeding.
Find the “Legal Removal Request” page on it and click on “Submit a Legal Request”. Then go to “Tool”.
Report the file there and click on any of the listed options provided there.
Further, go to the “Blogger/Blogspot” button. Scroll down to “what can we help you with” and then click on “I have a legal issue that is not mentioned above” followed by “I have found content that may violate my copyright”.
In the “Are you the copyright owner or authorized to act on his/her behalf?” option, Click on “Yes, I am the copyright owner or I am authorized to act on the copyright owner’s behalf”.
In “What is the allegedly infringing work in question?”, further click “other” and the blogger will get an instruction further.
Now one has to read the instructions and click the last link to fill out the DMCA complaint form.
Fill and submit the form. The links that are copied from you will be removed from the blog and from Google search engine within 2 days.
In this way, one can also increase the traffic of original content.
Responding to a takedown DMCA complaint
There are some rare cases where Bloggers get “takedown DMCA complaints” upon their own content which is originally created by them only. There are cases where a person receives a complaint where all the affected URL’s are originally made by the blogger. This remedy allows them to submit a DMCA counter-notification form.
It is important to note that one cannot exhaust this remedy if one has used any other content which is not owned like images, text, video, JavaScript and any other forms of content. Doing so can lead to the deletion of one’s own blog also.
In such a case, follow the steps provided below and re-install the content.
Login in blogger account to find a notification to remove the content, and then click on the “Here” link.
Check for another page there – “Removing Content From Google”.
Tick radio button on Blogger/BlogSpot.
Now select Radio Button “I would like to file a counter-notice to reinstate content that was removed due to an alleged copyright violation.”
Read instruction, If you agree then click on “yes” button.
Click on“This Form” Link.
One will find another page for DMCA counter-notification form. Fill up Complainant’s Information.
Now enter all the links whose content is completely copyrighted by you in the field of Material In Question, and also fill up Clarification details about that article content.
Select the Date, Read the Instructions provided, and when you agree with all the terms and conditions, click on Submit Button that set.
Civil remedies for copyright infringements
In certain cases the copyright lies with publishers as well as the original content creators. These rights include publishing, performing and producing the work in a material form, making copies of the work, distributing and displaying the work in a commercial setting and seeking remedies for unauthorized use of the copyrighted work.
These remedies are as follows:
Interlocutory Injunctions
These are court orders to prevent the work from being done or stop the progress of work until the case is in a determination by the court.
Pecuniary Remedies
Section 55 and 58 of the Copyright Act of 1957 provides pecuniary remedies. The owner under this can seek compensatory damages arising out of the infringement done. Also, the account of profits through unlawful conduct can be sought. And finally, conversion damages are assessed according to the value of that article.
Mareva Injunction
When defendant tries to delay the proceeding or puts into action any kind of obstruction in the execution of the decree passed, in such a case, Mareva injunction comes into play. The Order in XXXVIII, Rule 5 of The Civil Procedure Code, 1908 gives power to the court to put some or all of such defendant’s property under the court’s disposal.
Norwich Pharmacal Order
When information needs to be extracted from the third party, the Norwich Pharmacal order is passed.
Criminal Remedies for Copyright infringements
The Copyright Act, 1957 provides the following remedies for infringement in Sections 63-70:
Imprisonment from six months to three years.
Fine, not less than 50,000 and up to 2,00,000.
Conclusion
Safety of the blogs is the most crucial thing when it comes to bloggers. Even copyright lawyers sometimes face difficulties in interpreting and arguing on the technicalities of copyright law. In such a scenario, it becomes very important, perhaps suggestive, that all necessary steps for recognition and ownership over content are done beforehand.
It is very much recommended that in case if anyone finds any difficulty/discrepancy in relation to copyright laws, legal advice must be taken.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Kashish Kundlani, a third-year student of (BBA. LL.B) Ramaiah Institute of Legal Studies, Bangalore. In this article, parliamentary privileges given to the members of parliament and to the members of the legislature of a state under Article 105 and Article 194 of the Constitution have been discussed.
Introduction
Article 105 and Article 194 grant privileges or advantages to the members of the parliament so that they can perform their duties or can function properly without any hindrances. Such privileges are granted as they are needed for democratic functioning. These powers, privileges and immunities should be defined by the law from time-to-time. These privileges are considered as special provisions and have an overriding effect in conflict.
Privileges mentioned in the constitution
Freedom of speech and publication under parliamentary authority
This is defined under Article 105(1) and clause (2). It gives the members of parliament freedom of speech under clause (1) and provides under Article 105(2) that no member of parliament will be liable in any proceedings before any Court for anything said or any vote given by him in the Parliament or any committee thereof. Also, no person will be held liable for any publication of any report, paper, votes or proceedings if the publication is made by the parliament or any authority under it.
The same provisions are stated under Article 194, in that members of the legislature of a state is referred instead of members of parliament.
Both the Articles, Article 19(1)(a) and Article 105 of the Constitution talks about freedom of speech Article 105 applies to the members of parliament not subjected to any reasonable restriction. Article19(1)(a) applies to citizens but are subject to reasonable restrictions.
Article 105 is an absolute privilege given to the members of the parliament but this privilege can be used in the premises of the parliament and not outside the parliament.
If any statement or anything is published outside the parliament by any member and if that is reasonably restricted under freedom of speech then that published article or statement will be considered as defamatory.
The appellant is an elected member of the West Bengal Legislative Assembly. The appellant had an intention to ask certain questions in the assembly and therefore he gave the notice for the same. The questions to be asked in the assembly were refused in compliance with the rules of procedure for the conduct of the business in the assembly. But the appellant published those questions he was not allowed to ask in the assembly in a local newspaper called JANAMAT.
The first respondent, who was then functioning as a Sub-Divisional Magistrate and because of whose conduct the matter of questions arose, filed a complaint against the appellant and two others, the editor and the printer and publisher of those questions.
The complaint by the petitioner contained that the appellant had made slanderous accusations against him with an intention to be read by the members of the public. These accusations were false and the appellant published them, having an intention of harming the reputation of the complainant. He also alleged that publishing such false questions in the journal first requires prior permission by the government in instituting the legal proceeding against the public servant.
In this case, it was held that the provisions of Article 194 even though disallowed by the speaker were a part of the proceedings of the house and publication for the same will not attract any sections of the Indian Penal Code.
He will not be prosecuted, as Article 194(1) not only gives them freedom of speech but also give the right to ask questions and publish them in the press.
The facts of the case are – some of the MP’s received bribes to vote against the motion of no-confidence against the Prime Minister P.V. Narsimha Rao. He was charged under IPC and Prevention of Corruption Act on the grounds that he bribed some MPs to vote against the no-confidence motion when he was serving as the Prime Minister. In this case, the question arose that under Article 105(2) does any member of parliament have any immunity to protect himself in criminal proceedings against him?
It was held by the majority of the Court that under Article 105(2) the members of the parliament will get immunity and thus, the activity of taking bribe by the MP’s will get immunity despite anything said by them or any vote given by them in the Parliament. The Court further explained that the word “anything” here will be interpreted as a wider term. The Court interpreted the term “anything” in a wider sense and did not prosecute P.V. Narsimha Rao.
Power to make rules
The Parliament has the power, which is given by the Constitution of India, to make its own rules but this power is subjected to the provisions of the Constitution. Though it can make its own rules, the rules should not be made for its own benefit. If they make any rule which infringes any provision of the Constitution then it would be held as void.
Internal independence/autonomy
For the effective working of both the houses of parliament and their members, internal independence should exist without the interference of any outside party or person. The houses can deal with their respective issues internally without any interference of the statutory authority.
The Indian Judiciary might not interfere with the proceedings or issues dealt in the parliament or by the members in the course of their business. Nevertheless, it may interfere in the proceedings if it is found to be illegal or unconstitutional.
Freedom from being arrested
The member of parliament cannot be arrested 40 days before and 40 days after the session of the house. If in any case a member of Parliament is arrested within this period, the concerned person should be released in order to attend the session freely.
Right to exclude strangers from its proceedings and hold secret sessions
The object of including this right was to exclude any chances of daunting or threatening any of the members. The strangers may attempt to interrupt the sessions.
Right to prohibit the publication of its reporters and proceedings
The right has been granted to remove or delete any part of the proceedings took place in the house.
Right to regulate internal proceedings
The House has the right to regulate its own internal proceedings and also has the right to call for the session of the Legislative assembly. But it does not have any authority in interrupting the proceedings by directing the speaker of the assembly.
Right to punish members or outsiders for contempt
This right has been given to every house of the Parliament. If any of its members or maybe non-members commit contempt or breach any of the privileges given to him/her, the houses may punish the person.
The houses have the right to punish any person for any contempt made against the houses in the present or in the past.
Privileges and fundamental rights
Part III of the Constitution contains fundamental rights wherein Article 19(1)(a) grants freedom of speech to the citizens. It is subjected to reasonable restrictions. These restrictions are:-
Sovereignty and integrity of India should be maintained,
Security of the states should be maintained,
Public order should not be disturbed,
Decency and morality should be maintained,
Defamation should be avoided,
Incitement to an offence should be avoided,
Contempt of court should be avoided,
Friendly relations with foreign states should be maintained.
Where on the other hand the members of parliament have been granted powers, privileges etc. their powers or privileges are absolute unlike fundamental rights for the citizens.
The Parliament enjoys mostly all the supreme powers while making laws and exercise its power to the best possible extent because of the absolute nature of its powers and privileges.
The powers of the legislators are too wide such as they decide their own privileges, include points which can breach the laid down privileges, and also decide the punishment for that breach.
Article 105(3) and Article 194(3) states that the parliament should from time to time define the laws or pass the laws on the powers, privileges and immunities of the members of the parliament and members of the legislative assembly.
The facts of the case:- The U.P. Legislative Assembly issued a warrant against the Home Minister who was arrested from his residence in Bombay on the ground of contempt of the house. The Home Minister under Article 32 applied a writ of Habeas Corpus on the ground that his detention under Article 22(2) violates his fundamental right.
The Supreme Court accepted the arguments and ordered his release according to Article 22(2) He was not presented before the magistrate within 24hrs of his arrest or detention. Not presenting him before the magistrate resulted in the violation of his fundamental right under Article 22(2). In this case, it was opined that Article 105 and Article 194 cannot supersede the fundamental rights.
The facts of the case:-the petitioner is the editor of the English Daily newspaper of Patna. He published a report on the proceedings of the Bihar Legislative Assembly and the reports were said to be removed by the speaker.
The editor was presented before the Legislative Assembly to give reasons for the breach of privilege committed by him. At first, he was held guilty for his conduct. Then, in an appeal, the editor under Article 19 (1)(a) argued that he has a right to freedom of speech. But the Court denied all the arguments based on Article 19(1)(a) as it is a general provision and Article 194 is a special provision. If at any time both of these articles come under any conflict the latter will prevail over the former. As the general provision cannot overrule the effect of the special provision.
It has also been suggested that if both Articles, Articles 19(1)(a) and 194, are in conflict, the rule of Harmonious Construction (every statute should be read as a whole and interpretations consistent of all the provisions of the statute should be adopted when in conflict of any statute or any part of the statute) should be applied.
Privileges and the law courts
Article 143 confers the power on the President to consult the Supreme Court if at any time it appears to the President that a question of fact or a law arises or may arise in future. Also, such questions must be of public importance or it must be advantageous to seek the opinion of the Supreme Court. And after such hearing, if the court thinks it relevant, it may give its opinion to the President.
The house of parliament though have a lot of powers, privileges and immunities but despite all these advantages it cannot act or perform similar to a Court. The Courts are the one who interprets the laws or acts passed by the parliament. For instance, if any offence is committed even in the house of parliament the jurisdiction vests with the ordinary Courts.
The facts of the case – Keshava Singh, who was a non-legislative member of the assembly, printed and published a pamphlet. Because of the printing and publishing of the pamphlet, the Speaker of the U.P. Legislative assembly criticized him for contempt and breach of the privilege of one of the members. On the same day, Mr Keshava being present in the house committed another breach by his conduct.
As a result of his conduct in the house, the speaker directed him to be imprisoned, issued a warrant for the same and ordered his detention in jail for 7 days.
Under Article 226, a writ of Habeas Corpus was applied in his petition. The petition claimed that the detention in jail is illegal and is done with malafide intentions. The petition also stated that he was not given any chance to explain or defend himself. The petition was heard by the 2 judges who gave them interim bail.
As a result of the decision in Keshava’s case, the assembly passed a new resolution.
In this resolution, it was laid that the 2 judges entertained the writ filed by the petitioner and his lawyer. In its resolution, the assembly issued a contempt notice to present the two judges and the lawyer before the house and explain the reasons for their conduct. It also ordered that Keshava should be taken into custody. Under this, they moved petitions under 226 and filed a writ of mandamus before the Allahabad High Court to set aside the resolution passed by the assembly.
It was held by the majority of the Supreme Court that the conduct of the 2 judges does not amount to contempt.
The Court further explained that if in the matters of privileges stated under Article 194(3) then the house will be considered as the sole and exclusive judge provided that it should be stated in that. But if any such privilege is not mentioned in the article then it’s the Court who has to decide upon it.
Conclusion
After analysing Article 105 and 194, one can clearly infer their absoluteness. These special provisions are granted to the Parliament for its effective functioning. These articles also impose duties upon them to make effective laws which do not harm the rights of others. The parliament or the Legislative Assembly though can exercise their powers, privileges and immunities, cannot act as an ordinary Court of justice
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Gurkaran Babrah, a first-year B.A. LLB law student at Symbiosis Law School. Noida. This article provides an overview of mergers & acquisitions happened in the year 2019.
Introduction to Mergers & Acquisitions
Merger and acquisition is a very general term that is widely used to describe the consolidation of companies or assets. The term M&A also refers to the desk at the financial institutions that deal with such activity. Mergers and acquisitions are the kind of transactions which comprise of ownership of companies, large business organisations, or their major operating units. These are merged, consolidated or transferred to other entities. As the situations in the market are not static, the business strategy keeps changing according to the situations.
M&A allows enterprises to downsize, grow or change the nature of their business. In legal terminology or from a legal point of view, the merger is nothing but a legal consolidation of two different companies or entities. Mergers usually happen between two companies or organisations which are generally of the same size, and which recognise the advantages and disadvantages of each other.
Usually, the terms of the mergers are mutually and fairly agreed by the companies merging and they become equal partners of the newly merged company. Daimler-Benz and Chrysler is a good example. They ceased to exist independently when they merged together and formed a new entity called Daimler-Benz.
Whereas an acquisition is different from mergers. The acquisition is when one company purchases another company’s shares to gain control over that company. If a company gains more than 50% of another company’s shares and other assets then it gives the acquirer the right to make all decisions regarding the newly acquired assets without the approval of the company’s stakeholders.
Laws regulating M&A
There are a number of legislations, government regulators and agencies which control the mergers and acquisitions in the country. All these are mentioned below:
Legislations
The Companies Act, 2013
The Competition Act, 2002
The Foreign Exchange Management Act, 1999 (in cases of cross border mergers)
Security Exchange Board of India (substantial acquisition of shares and takeovers) Regulations, 2011
The Income Tax Act, 1961
The Indian Stamp Act, 1899
Government Regulators and Agencies
National Company Law Tribunal (NCLT)
Competition Commission of India (CCI)
Reserve Bank of India (RBI)
The Income Tax Department (ITD)
Securities and Exchange Board of India (SEBI)
Registrar of Companies and Regional Director under Ministry of Corporate Affairs
In 2019 there were several M&A transactions throughout the year. Some of the biggest mergers and acquisitions of 2019 are listed below:
FIS to acquire WORLDPAY
Fidelity National Information Service is a company at the international level which provides financial services, technology, and outsourcing services. It is headquartered in Florida, US. FIS provides payment processing and banking services, banking software and outsourcing of associated technology. It has a portfolio of different products for financial services including both investment and retail banking.
Whereas the Worldpay group was earlier known as RBS world pay. This is also a payment processing company and was listed on the London Stock Exchange.
Merger
In March, FIS which is a global leader announced a deal of $35 billion to acquire Worldpay. Worldpay process more than 40 billion transactions across 140 countries and 120 currencies. This is one of the biggest deals in the technology industry.
TATA STEEL’S acquisition of stakes in BHUSHAN STEEL
Tata steel limited is an Indian steel company. It was founded by Jamsetji Tata and was established by Dorabji Tata in 1907. It started producing steel in 1912 and by 1939 and it became the largest steel plant in the British empire. It further launched its moderation and expansion programs in 1951 and upgraded itself to 2 million metric tonnes per annum. It is headquartered in Kolkata, West Bengal.
Tata steel today is one of the top steel-producing companies globally with annual crude oil delivery of 27 million tonnes. It is the second-largest steel producing company in India if measured by domestic production with an annual capacity of 13 million tonnes. Now tata steel operates in more than 26 countries with its key operations in India, the United Kingdom and the Netherlands gives employment to approximately more than 80,000 people. It’s one of the largest plants is located at Jamshedpur, Jharkhand.
Whereas Bhushan Steel was established on January 7, 1963. It was earlier known by the name of Jawahar Metal Industries. In 1947, Brij Bhushan Singal and his sons Sanjay Singhal, Neeraj Singal and associate companies took over the management of the company by acquiring the entire stake.
They both entered into an agreement and signed a deal. Tata steel acquired 72.65% of Bhushan steel’s stake for 35.200 crores. T V Narendran Tata Steel’s Global CEO & MD who chaired the meeting briefed the members on the corporate insolvency resolution process of the company, its financial performance for the year ended March 31, 2018 and activities in connection with aligning the company’s operations with that of Tata Steel.
UBER buys ride-hailing rival CAREEM for $3.1 Billion
Ride-hailing major Uber buys out its middle east rival Careem, just before its much-anticipated IPO. The motive behind this deal was straightforward – to buyout rivals in geography, in other words, buy dominance in geography.
It was an important acquisition for Uber given it had to retreat from other geographies like China, Russia, and Southeast Asia. Careem is operational in 14 countries which means it gives Uber dominant access to a vast region. Uber CEO Dara Khosrowshahi said about the deal, “build new products and try new ideas across not one, but two, strong brands,”.
ULTIMATE SOFTWARE Acquisition at $11 Billion
Ultimate Software agreed to be acquired by a private equity group for $11 billion. The move will allow the cloud-based human capital management vendor to leave the pressures of Wall Street behind — at least for a while.
The Feb. 4 announcement was a surprise considering Ultimate appears to be thriving and has delivered steady year over year growth, said Holger Mueller, principal analyst for Constellation Research. “Usually private equity investors acquire troubled companies or those in transition but Ultimate is doing really well.”
The 29-year-old human capital management company, which provides a suite of tools including payroll, benefits management and talent acquisition, has more than 5,000 customers in 160 countries, and delivered $1.1 billion in revenues in 2018, up from $940 million in 2017. It dominates the market among mid-sized companies, and it has been expanding its client base to support larger global companies, making it increasingly competitive with Workday, ADP, and other industry leaders. This merger is one of the biggest deals in recent HR technology history.
NIMH with ICMR – NIOH
NIMH was established in the year 1990 by the Government of India. The registered office is located at Kolar gold fields, Karnataka. NIMH focuses on health issues and conducts applied research related to health activities. This Institute is also specialized in providing technical support to mining and mineral-based research works.
Whereas NIOH functions on a large scale like the health sector which further includes occupational hygiene and occupational medicine. Relating the working and performance of autonomous institutes, Expenditure Management Commission recommended, inter-alia, that- “Organisations with similar objectives can be considered for a merger to encourage synergy in operations and reduction in cost”. Therefore, it recommended the merger of NIMH with NIOH.
This merger will automatically manage all the working people with NIMH in NIOH in a similar post/pay scale and their pay will be protected. NIMH, ICMR, NIOH, MoM and Department of Health Research (DHR), MoH&FW will take required actions for affecting dissolution and merger/amalgamation of NIMH with NIOH.
SALESFORCE acquired Analytics Platform TABLEAU
Tableau helps people see and understand data. Tableau’s self-service analytics platform empowers people of any skill level to work with data. From individuals and non-profits to government agencies and the Fortune 500, tens of thousands of customers around the world use Tableau to get rapid insights and make impactful data-driven decisions.
Salesforce is a cloud-based customer relationship management (CRM) platform for supercharging every part of your company that interacts with customers — including marketing, sales, commerce, service, and more.
Tableau and Salesforce both entered into an agreement in which Salesforce will acquire Tableau in an all-stock, transaction pursuant to which each share of Tableau Class A and Class B common stock will be exchanged for 1.103 shares of Salesforce common stock, representing the enterprise value of USD 15.7 billion (net of cash), based on the trailing 3-day volume-weighted average price of Salesforce’s shares as of June 7, 2019.
DENA BANK, BANK OF BARODA, AND VIJAYA BANK
Vijaya bank was a public sector bank and had its corporate office in Bengaluru, India. Vijaya bank offered a wide variety of financial products and services to customers through its various channels of delivery. It was established by a group of farmers on 23 October 1931.
The bank was established on Vijayadashami and hence it was named Vijaya bank. The bank was headquartered in Mumbai (earlier known as Bombay) and has (1874) branches. It was founded in 1938 and nationalised in 1969 by the Indian Government. It was founded by the family of DevkaranNanjee under the name of Devkaran Nanjee Banking Company. It was incorporated as a public company in December 1939.
It is an Indian multinational bank and it is the third-largest public sector bank. Vijaya Bank and Dena Bank have become a part of Bank of Baroda from April 1 and with the effect of the merger, it has become India’s largest bank. This merger will provide customers with access to a large number of branches. Bank of Baroda is expected to make more profits with its increased share in the market.
All the customers of the Dena Bank and Vijaya Bank now have access to around 104 overseas branches of the Bank of Baroda. As per the merger, the shareholders of the Vijaya bank will get around 402 equity shares of Bank of Baroda for every one thousand shares they possess.
The customers need not close their accounts and they can continue with the Vijaya Bank and Dena Bank. However, they are required to make cash and cheque deposits in the branch of Bank of Baroda Bank because it is the parent bank.
SACHIN BANSAL acquires CRIDS
Former Flipkart CEO Sachin Bansal has acquired Chaitanya Rural Intermediation Development Services Private Limited (CRIDS), a non-banking finance company (NBFC).
Bansal invested INR 739 Cr ($104 Mn) and took over as the CEO of CRIDS. In a media statement, Bansal said that this acquisition is his entry into the financial services world. He lauded the founders of the company to have built a great company that provides much needed financial access to the underserved audience which is left out of the formal market.
Currently, it has a presence in Karnataka, Bihar, Jharkhand, Maharashtra and Uttar Pradesh. Post-acquisition, the co-founders will continue in their respective roles of growing the existing business segments.
NVIDIA to buy MELLANOX for nearly $7 billion
NVIDIA and Mellanox today announced that the companies have reached a definitive agreement under which NVIDIA will acquire Mellanox. Pursuant to the agreement, NVIDIA will acquire all of the issued and outstanding common shares of Mellanox for $125 per share in cash, representing a total enterprise value of approximately $6.9 billion. Once completed, the combination is expected to be immediately accretive to NVIDIA’s non-GAAP gross margin, non-GAAP earnings per share and free cash flow.
The acquisition will unite two of the world’s leading companies in high-performance computing (HPC). Together, NVIDIA’s computing platform and Mellanox’s interconnects power over 250 of the world’s TOP500 supercomputers and have as customers every major cloud service provider and computer maker.
The data and intensity of modern workloads in AI, scientific computing and data analytics is growing exponentially and has put enormous performance demands on hyper-scale and enterprise data centres. While computing demand is surging, CPU performance advances are slowing as Moore’s law has ended. This has led to the adoption of accelerated computing with NVIDIA GPUs and Mellanox’s intelligent networking solutions.
Data centres in the future will be architected as giant compute engines with tens of thousands of compute nodes, designed holistically with their interconnects for optimal performance.
An early innovator in high-performance interconnect technology, Mellanox pioneered the InfiniBand interconnect technology, which along with its high-speed Ethernet products is now used in over half of the world’s fastest supercomputers and in many leading hyper-scale data centres.
With Mellanox, NVIDIA will optimize data centre-scale workloads across the entire computing, networking and storage stack to achieve higher performance, greater utilization and lower operating costs for customers.
“The emergence of AI and data science, as well as billions of simultaneous computer users, is fueling skyrocketing demand on the world’s data centres,” said Jensen Huang, founder and CEO of NVIDIA. “Addressing this demand will require holistic architectures that connect vast numbers of fast computing nodes over intelligent networking fabrics to form a giant datacenter-scale compute engine.
GOOGLE to acquire LOOKER for $2.6 billion
Google Cloud CEO Thomas Kurian has set out some serious goals for the company to catch up with the rivals AWS and Microsoft in the cloud space. One of the biggest announcements since he took over the company’s realm has come in the form of its plan to acquire business intelligence platform, Looker for a $2.6 billion in an all-cash deal.
The last big deal for Google Cloud was the $625 million deal which it paid for Apigee in 2016. “We are excited to welcome Looker to Google Cloud and look forward to working together to help our customers solve some of their biggest challenges,” said Sundar Pichai, CEO, Google.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
The article is written by Abhishek Dubey, a 2nd-year law student from Chanderprabhu Jain College of Higher Studies and School of Law. This article discusses the details about the essentials of an Asset Purchase Agreement and also the common mistakes made by people in Asset Purchase Agreements.
Introduction
The Asset Purchase Agreement is an agreement between the seller and the purchaser of assets. In an Asset Purchase Agreement, the individual value of assets is assigned and the seller transfers the assets to the purchaser.
The assets transferred in an asset purchase agreement include:
Plant and machinery.
Goodwill.
Stock.
Premises etc.
Advantages of the asset purchase agreement
It gives the buyer a choice to purchase the particular asset which he wants to buy.
It gives a choice to the seller to decide the fair market value of assets.
Disadvantages of the asset purchase agreement
The tax imposed on the seller is high and so the seller may insist on receiving a higher price.
If the assets are sold, the employment agreements with key employees may have to be renegotiated.
Essentials of an Asset purchase agreement
Sale and transfer of specified assets
The seller agrees to sell, assign, convey and transfer the specified assets. The transfer of assets should be free from liens and liabilities to the purchaser. If the purchaser agrees to buy on those terms, all duties, obligations, and liabilities attached to the assets shall be borne by the purchaser under the contract. As specified in the contract, title and risk shall be transferred to the purchaser. The seller shall also transfer the royalty fee and all intellectual property attached to the asset. This will be specified in the license agreement.
Purchase price
The purchase price payable for the assets shall be a lump-sum amount and it shall be paid by a bank draft or by telegraphic transfer. The way of transfer of price has to be notified by the seller to the purchaser prior to five days of closing of the agreement. In this agreement, the purchase price may be deducted and set off. Apart from the purchase price, no other price is to be paid by the purchaser like conveyance charges, taxes etc. And the purchase price shall not be subjected to an escalation. The purchaser shall be responsible for any tax payable after the transfer of assets and if there is any existing liability attached to the assets, then it should also be transferred beforehand.
Representation and Warranties
The seller represents that the statements contained in the agreement are true and shall remain true to the closing date. The buyer also represents that the statements contained in this agreement are true.
Condition Precedent
The obligation of the purchaser shall be subject to the schedule contained in the asset purchase agreement. The content of the schedule can be negotiated as per the requirement of the parties.
Conduct before the closing of the agreement
During the period of transaction from date of agreement upto the date of closing of agreement, the seller shall carry out its business in the same manner as earlier, pay its debts and taxes when due, pay or perform the other obligation when due.
Closing
The closing of the agreement shall be made in accordance with the terms of the agreement. Prior to closing, the seller shall give all notices and documents of an asset to the purchaser. The closing condition may be waived off by purchaser and eagerness to close may lead to a problem if due diligence has been performed inadequately. Closing of the agreement includes the delivery of the certificate and other deliverable instruments by the seller to the purchaser.
Post-closing obligations
On and after the closing of the agreement, the seller shall be obliged to promptly deliver any notice, payment, and information to the purchaser in relation to the business he receives.
The seller agrees that on and after closing of the agreement, it shall not cause its affiliate, associate, whole-time director directly or indirectly engaging in any of the following activities:
The business of the purchaser.
The use or disclosure of client or intellectual property database and any other confidentiality of information.
The solicitation of any customer or supplier to terminate or otherwise modify their relationship with the business.
The purchaser also agrees that on and after closing, it shall not cause its affiliate,associates, whole-time director to directly or indirectly to engage in any of the following activities such as:
The Business of the seller.
The use or disclosure of client or intellectual property database and any other confidentiality of information.
Conditions subsequent
Within 30 days before termination of the agreement, the seller shall apply for and receive the consent of the party on terms favourable to the seller. If the seller has not taken the consent of another party, then all the liabilities arising in relation to the contract in future shall be transferred to the seller, by default and the seller shall discharge his obligations for the same. Regional provident fund of employees shall be transferred to the purchaser and the same shall be informed by the seller to regional provident fund commissioner.
Indemnification
Seller agrees to indemnify the purchaser on instances such as losses, penalties, suits, etc.
Procedure for indemnification is as follows:
The indemnified party shall give notice to the indemnifying party specifying details and amount of assets in good faith.
The indemnified party and indemnifying party shall consult with each other and if there are any changes required, the same shall be made in a mutually acceptable manner and in good faith.
With respect to the claim between the parties, the indemnifying party shall notify the indemnified party about the claims in assets after the transfer within 15 days and the indemnified party shall give notice and documents related to that claim to indemnifying party.
If the indemnified party disputes the claim, the indemnifying party without prejudice may apply to the court or tribunal for setoff, deduction and any payment etc.
If any third party claims against the assets arises, the indemnified party shall notify it to the indemnifying party and the indemnifying party shall make the statement in good faith for the choosing of assets. This will be done in front of counsel chosen by the indemnifying party and counsel should be satisfied with the statement made by the indemnifying party.
If the indemnifying party doesn’t respond to the notice made by the indemnified party within thirty days then the indemnified party can act on behalf of the indemnifying party.
If the indemnifying party dispute the claim, the indemnified party without prejudice can go to the court or tribunal for the claim and that shall be entitled to claim set-off price.
The indemnification rights of parties are independent and in addition, some other rights and remedies are also available to the parties as prescribed by law.
Terms and termination
This agreement between the parties shall be executed from the date of execution by both parties. Also, the agreement may be terminated before closing:
With mutual consent of purchaser and seller.
By purchaser, upon written notice to the seller if there has been a breach of warranty.
By purchaser in the event that the seller becomes insolvent or bankrupt.
Miscellaneous
The seller shall not assign the agreement to any of the other parties such as their son or daughter and any other relative of the seller without the consent of the purchaser and the purchaser can assign the agreement to any other party after giving notice to the seller.
This agreement shall be governed by the law in India and shall be subject to the jurisdiction of Indian courts.
The parties should agree that any dispute arising out of this agreement shall be settled by the arbitration and both parties should appoint the arbitrator by mutual consent.
All the notices, documents, and other information shall be delivered between the purchaser and seller in writing. This agreement may be modified and supplemented by a written instrument executed by the parties. If any provision of this agreement becomes unenforceable or invalid such provision should be interpreted as broad as to make it enforceable. There shall be no delay or omission in the exercise of any right, power or remedy accruing to the purchaser upon any breach or default of seller under this agreement.
All parties to the agreement shall pay all costs, expenses subject to the negotiation, execution, and delivery of this agreement.
In the asset purchase agreement people fail to take even the basic steps which protect their interests and rights. So the asset purchase agreement should be well-drafted to execute a deal.
Entering into a deal with the wrong person
The best-drafted asset purchase agreement will be of no use when the deal is with an incompetent and fraud person. Therefore, critical due diligence is required to be performed, critical due diligence includes:
Review of books for the past five years.
Interviewing customers and partners.
Checking if any proceeding is against the seller.
Making things clear about secured and unsecured debt.
It gives an idea about the details of the seller.
Essential parties are not part of the asset purchase agreement
In an asset purchase agreement, it often happens that the shareholders of the company buys the assets themselves but sign it in the name of another company and treat themselves as the owner of the company.
Failure to identify and address essential condition of the deal
Condition precedents (condition relating to the agreement) are important terms and conditions between buyer and seller. Any event occurring during the transaction must be resolved before the transaction gets completed. Buyer and seller have to ensure that all the conditions mentioned in the asset purchase agreement are properly addressed such as:
Bank approval.
Approval from the authorities.
Third-party approval etc.
Failure to specify a“long stop date” in the agreement
Longstop date gives both parties an exit opportunity if the delay becomes unsuitable for them. It often happens that a deal between the buyer and seller can be delayed from a week to a month. In that situation, both buyer and seller should specify the long stop date in their agreement.
Failure to agree on necessary financial adjustment
In some deals, the buyer includes post-acquisition adjustments in their agreement to protect themselves. Upon completion of the transaction, the accountant of the buyer finalizes the account and determines the net asset value of the company to decide whether the price paid for the purchase of assets was favourable or not. If the price is greater than the market value, the buyer will be granted a chance for reconciliation. An alternative to post-acquisition adjustment can be a “locked box” in which the seller makes a detailed commitment.
Failure to specify closing requirements
An asset purchase agreement should specify the detailed action to be taken and detailed documents to be submitted after the closing of the agreement. For example, change of bank and regulatory signatories, a charge of customer and financial records, original documents and regulatory approval. This also includes escrow under these agreements.
Failure to protect against competition from seller
Any buyer should not forget to include a non-competition clause in their agreement so that the seller is not able to compete with the buyer in future. The terms and conditions of non-competition should be such that, the seller should not hire the key professional of the purchaser and should not attract the customer of the seller.
No effective dispute resolution system
In asset purchase agreements, arguments over money are very common. This problem could be solved by having an expert settling the dispute.
Not hiring lawyers for review, negotiation and drafting of the asset purchase agreements
The asset purchase agreement is a very complex deed. It requires an expert and knowledgeable attorney who can not only draft the agreements but can also negotiate the deal as well. Many people do not want to hire lawyers for the drafting of agreements, but after the transaction they regret it. Hiring a professional to negotiate and review is the very first step towards closing the deal.
Conclusion
An asset purchase agreement is a must for ensuring that the party gets the highest value from the sale or purchase of assets. In addition, all the terms of the contract are reviewed and the parties can derive maximum benefits. Asset purchase agreement is an agreement between the seller and purchaser for sale and purchase of assets. The asset purchase agreement can be used by the seller or a purchaser for the purchase of all or a portion of assets. If the agreement between seller and purchaser is for sale of portion of assets then agreement will specify those particular assets.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Jessica Kaur, a first-year student currently pursuing B.A. LL.B. (Hons.) at Rajiv Gandhi National University of Law, Punjab. Here, she discusses the concept of sedition as given in Section 124A of the Indian Penal Code, 1860.
Introduction
Sedition is a controversial term that is rampantly and carelessly thrown about in today’s societal dialogue. With a distaste for the Government’s policies rising in the general populace, the expression of discontent by the youth is often labeled as sedition. However, many don’t know what it actually constitutes. Thus, we must first ask ourselves, what does sedition mean in law?
In this article, we shall look at the various aspects related to the crime of Sedition- understanding its essential elements as given in Section 124A of the Indian Penal Code, 1860 and examining certain important case laws that have led to the evolution and establishment of this concept. We will also analyse the Constitutional validity of the law with the help of major judgments given by the court, and look at possible reforms that can be brought in it.
Meaning of ‘Sedition’
The Constitution of India, 1950 grants us certain Fundamental Rights, which represent our basic human rights and liberties which all of us are entitled to. One of these rights is the ‘Right to Freedom of Speech and Expression’, granted by Article 19(1)(a). This right isn’t absolute though, and certain reasonable restrictions can be put on it in specific situations such as prevention of defamation of another person, maintenance of public order and decency, protection of the integrity of the nation, etc. which are mentioned in Article 19(2). One of the cases where the ‘Right to Freedom of Speech and Expression’ can be restricted is in the case of Sedition.
Sedition refers to overt actions, gestures or speech by a person in oral or written form which expresses his or her discontent against the established Government in the state, with the aim to incite violence or hatred against it. Classified as a crime in India since 1870, it has been defined under Section 124A of Chapter VI of the Indian Penal Code, 1860. This Section says that whoever, by spoken or written words, signs, etc. excites or attempts to excite hatred or disaffection towards the Government of India is said to have committed the crime of sedition.
Let’s have a look at some of the main cases which have shed light on the meaning and application of this law.
Reg v. Alexander Martin Sullivan (1868)
In this case that was held in the United Kingdom, Fitzgerald, J. defined sedition as any practice, “by word, deed or writing”, which intends to disturb the peace in a state and incite discontentment against the Government in the state and the laws of the empire. He said that the aim of sedition is to stir up opposition and rebellion in the state. It is an indication of disloyalty against the state. He further added that sedition is a crime against society and is very similar to treason, often barely falling short of being classified as the latter. This case acted as a founding stone in the establishment of sedition as a concept.
Queen-Empress v. Jogendra Chunder Bose and Ors. (1891)
Facts
In this case, Jogendra Chunder Bose was accused of inciting rebellion through an article he had written in his own Bengali magazine named ‘Bangobasi’. In this article, he had criticised the Age of Consent Act, 1891 which raised the legal age for sexual intercourse for women from 10 to 12 years. He called it “forced Europeanisation”, criticising the interference of the British government in Hindu customs.
Judgment
While the Act itself was perhaps a boon for Indian society and was supported by reformers and women’s rights groups, the question here was of sedition and inciting violence against the Government. “Disaffection” towards the Government was defined in this case by Chief Justice Petheram as “a feeling contrary to affection, in other words, dislike or hatred” and included disloyalty towards the Government.
With regard to the fate of the accused in this case, Bose was released on bail and the case against him was dropped.
Queen-Empress v. Bal Gangadhar Tilak (1897)
This was the first case in which Section 124A was defined and applied.
Facts
In this case, the advocate and prominent freedom fighter Bal Gangadhar Tilak was charged with sedition. He spoke against the Indian Civil Services Officer Rand, who was the Plague Commissioner in Pune. Rand’s plague control methods were considered tyrannical by many, including Tilak. His revolutionary speeches encouraged other individuals to spread violence against the British, which ended with the death of two British officers.
Judgment
The court defined disaffection as the absence of affection. Therefore, it means “hatred, enmity, dislike, hostility, contempt and every form of ill-will to the Government.” The court further added that no man should excite or attempt to excite this kind of disaffection; he should not make or attempt to make anyone feel any kind of enmity towards the Government. With this in mind, the court convicted the freedom fighter of the crime of sedition and sentenced him to 18 months of rigorous imprisonment. However, he later received bail in 1898.
Which activities are considered seditious?
Going by the interpretation of sedition by Indian courts, the following are some examples of activities that are considered seditious in nature:
A group of people raising slogans against the Government of India.
A speech made by a person that clearly incites violence or public disorder.
Written work, like a newspaper article, which incites violence or public disorder.
Punishment for Sedition
As given under Section 124A of the IPC, a person convicted of sedition is punishable with either imprisonment ranging from 3 years to a lifetime, a fine, or both.
Sedition is a cognisable offense, which means the police can arrest a person accused of sedition without needing a warrant for the same.
Sedition is a non-bailable offense, which means a person arrested for sedition cannot be released on bail by the police as a matter of his right. He has to apply for bail before a court or a magistrate.
Sedition is a non-compoundable offense, which means it cannot be settled with a compromise between the accused and the victim.
Origin of Sedition in India
The Anti-Sedition law was first formulated in India by British historian-politician Thomas Macaulay in 1837, but it was not included in the Indian Penal Code when the same was enacted in the year 1860.
Subsequently, in 1870, Section 124A was added to Chapter VI of the IPC, which deals with offenses against the state. This was done as a response to the rising radical Wahabi movement, led by Syed Ahmed Barelvi. Moreover, people were increasingly demanding more autonomy and independence for India. This was against the interests of the British government. Therefore, it sought to curb people’s speech and expression through this law.
Some of the most famous sedition cases during the British Raj involved charges against the leaders of the Indian Independence Movement. The first among them was the trial of Jogendra Chunder Bose in 1891, which we discussed above. There were many more cases against the speeches and newspaper articles written by Indians. The most well-known cases, however, were the three cases of Bal Gangadhar Tilak (one of which we discussed previously) and the trial of Mahatma Gandhi in 1922. In this case, Mahatma Gandhi and Shankerlal Banker were accused of sedition for three articles published in the magazine ‘Young India’, which criticised the British government. Gandhi’s powerful speech in court where he pleaded guilty to the charges against him led to a ruling in his favour.
After Independence, the Constitution (First Amendment) Act, 1951 added the term “public order” to Article 19(2), which meant that a citizen’s freedom of speech and expression could be put under legislative restrictions to maintain public order and stability too. Thus, sedition was recognised as a crime, though the then Prime Minister Jawaharlal Nehru was of the opinion that anti-sedition law held no place in free India. Since then, there have been numerous cases involving sedition where the courts have questioned its validity, but the Supreme Court in Kedar Nath Singh v. State of Bihar (1962) ruled in favour of this law. This continues to be the current stand of the court even today.
Essential Ingredients of Section 124A
Not every action of an individual, even if it expresses some sort of discontentment, can be classified as sedition. There are certain essential elements that such an action must include in order to be considered seditious. These elements can be derived from the explanation of sedition as given in Section 124A of the IPC. Let’s quickly have a look at them.
Words, Signs, Visible Representation or Otherwise
The first and foremost element of sedition under Section 124A is some act done by a person or a group of people- a gesture or sign, spoken or written words, etc. In a trial for sedition, the first thing that must be proved is that the person under trial actually participated in the act before checking if it was seditious or not. Without concrete gestures or words that can be traced back to the accused, a case for sedition cannot even exist against him.
Click Above
Brings or Attempts to bring into Hatred or Contempt, or Excites or Attempts to Excite Disaffection
The essence of sedition lies in the intention of the person being accused. Such a person must have an active intention to create hatred, contempt, or disaffection towards the government in the minds of people. Disaffection has been specifically defined by Explanation 1 under Section 124A, as all feelings of disloyalty and enmity towards the state. The intention of a person to spread hatred or disaffection can be inferred from the act or speech itself. Under the Section, the mere attempt to excite hatred is also punishable and so it is not necessary to check whether the person achieved this purpose or not.
In case it is a speech, it should be studied as a whole, freely and fairly. On this basis, the intention of the speaker should also be judged. Words should not be taken out of context. Only if the speech advocated for a rebellion or action to overthrow the Government through dishonest or illegal means, with the use of violence or even the threat of violence, should that speech be included in sedition.
In this case, the appellant delivered a speech in Calcutta on 13th April 1941, due to which he was accused and convicted of sedition and sentenced to “rigorous” imprisonment of 6 months along with a fine of Rs. 500. This ruling was challenged on the grounds that the appellant’s speech did not amount to sedition.
Judgment
The court held that sedition essentially means a person’s intention to promote public disorder or his reasonable anticipation that his words or actions will promote public disorder. Therefore, “incitement to violence or the tendency or the intention to create public disorder” is a crucial element of sedition. Regarding the facts of the case, it was held that the speech by the appellant did not exceed the legal limits of criticism of the Government and, therefore, could not be considered sedition under the Defense of India Act, 1939 (this Act was repealed in 1947).
Government Established by Law
The main principle behind sedition is that the Government established by law in a state should remain stable and there should be no such contempt towards it which could threaten the integrity of the state through a rebellion. Therefore, an essential element of the crime of sedition as per Section 124A is that the actions or words of the person should have expressed hatred towards the Government and it should incite disaffection and violence against the Government established by law in India.
In the case of Kedar Nath Singh v. State of Bihar (1962) (which will be discussed in detail later), the Supreme Court noted for the first time, that the term “Government established by law” here does not mean “the persons for the time being engaged in carrying on the administration”, but instead referred to the Government as “the visible symbol of the State”.
Expressing Disapprobation- Explanations 2 and 3
Three explanations have been given in Section 124A. Two of them- Explanation 2 and 3– attempt to explain what cannot be included in sedition. They say that comments which express a person’s disapprobation i.e. disapproval or dislike of the measures or actions of the Government of India are not considered sedition if their only aim is to bring about a lawful change in the Government’s policies, without wanting to excite hatred or contempt towards it. With the addition of these explanations to the IPC, the court has attempted to prevent a literal interpretation and application of Section 124A.
These two explanations are extremely crucial, and Section 124A would be incomplete without them. This is because they recognise a citizen’s ‘Right to Freedom of Speech and Expression’, indicating that criticism of the state and its policies by the people is a fundamental part of a democracy and therefore, it cannot be snatched away.
Constitutional Validity of Section 124A
In post-Independence India, Section 124A has come under criticism many times on the grounds that it curbs our ‘Freedom of Speech’. Many people have called it a tyrannic relic of the colonial times, questioning its existence in a free India based on the principles of democracy. Thus, critics have claimed that this provision of the Indian Penal Code stands in violation of the Constitution of India. However, what does the law have to say about this?
Let’s take a look at the 1951 case of Tara Singh Gopi Chand v. the State, where the Punjab and Haryana High Court addressed the issue of Constitutional validity of Section 124A.
Tara Singh Gopi Chand v. the State (1951)
Facts
In this case, two pleas were pending against Tara Singh with regards to two speeches that he had given, one in Karnal and one in Ludhiana. One of the sections under which he was charged was Section 124A. He challenged this, saying that the very crime of sedition is inappropriate in India after the foreign rule has ended, and submitted that Section 124A should be declared void as it is in contravention of the ‘Right of Freedom of Speech and Expression’ guaranteed by Article 19 of the Constitution.
Judgement
The High Court agreed with the claim of Constitutional invalidity of Section 124A, and that it was a violation of the ‘Fundamental Right to Freedom of Speech and Expression’. It struck down this provision and at the same time, quashed the proceedings against Tara Singh and ordered for him to be set free.
The Allahabad Court passed a similar ruling in the case of Ram Nandan v. State (1959), where Section 124A was declared ultra vires of the Constitution.
In the face of such sentiments against the Anti-Sedition law, the Government of India appealed to the Supreme Court. For the first time, the Apex Court addressed the issue of the legality of this colonial-era law in the case of Kedar Nath Singh v. State of Bihar (1962). Let’s examine this case, which has proved to be one of the landmark cases relating to the concept of sedition.
Kedar Nath Singh v. State of Bihar (1962)
Facts
In this case, the appellant was charged with sedition for certain speeches that he had delivered. In his speeches, he called officials of the CID “dogs”, and members of the Government “Congress goondas”, whose election was a mistake by the people. He encouraged the audience to strike against the then Government and drive them out like the British. For this, he was convicted under Section 124A by a Magistrate’s court in the state of Bihar. He appealed to the Patna High Court but his conviction was sustained. He then obtained special leave to appeal to the Supreme Court, where his main argument was that the restrictions imposed by Section 124A on the ‘Freedom of Speech and Expression’ of a person were beyond the ambit of the legislative power as given by Article 19(2).
Judgement
The Supreme Court noted that Article 19(2) of the Constitution, which imposes certain restrictions on the ‘Freedom of Speech and Expression’, was amended in 1951 to include public order. This means that any comment by a person which threatens to disturb public order or the security of the state is a crime against society and cannot be allowed. This is what sedition does. The court said that sedition has been ruled as a crime to prevent the subversion of the Government by inciting contempt or hatred towards it, which can rock the very stability of the society. It, however, clarified that a citizen is allowed to criticise the Government so long as he does not intend to cause public disorder or violence. Hence, essentially, it sided with the ruling given in the previously mentioned case of Niharendu Dutt Majumdar v. King-Emperor (1942). Thus, Explanations 2 and 3 were added to Section 124A.
Is Anti-Sedition a good law?
The Supreme Court gave its judgment based on the conclusion that some sort of restriction on the ‘Freedom of Speech and Expression’ is necessary to maintain public order and is essential to prevent any threat to the integrity and stability of the nation. This is true- our Fundamental Rights cannot be absolute; they need to be confined in reasonable boundaries to ensure that they don’t bring harm to others around us. However, criticism of the state is a part of the very essence of democracy, which has been emphasized by the courts too. The problem arises when the Anti-sedition law is misused against the citizens and used as a tool to suppress free speech in order to make the public quietly abide by whatever the Government says.
Here are some of the arguments given by people for and against the Anti-Sedition Law:
Arguments in favour of Section 124A
Preserves national integrity: The Anti-Sedition law is essential to protect and preserve the stability of the Government and to prevent speech and expression that aims to cause public disorder. All this is necessary to ensure that national integrity and security remains intact.
Punishment for hostile activities:There are areas in the country that face hostile activities and insurgencies created by rebel groups, like the Maoists. They cause violence and attempt to establish parallel administrations in the areas. They openly advocate the overthrowing of the government for their personal interests. These groups must be strictly punished.
Contempt:The Government of India is an official authority provided for in the Constitution and established by law. Therefore, there must be restrictions on expressing unnecessary contempt or ridiculing the Government beyond certain limits. If contempt of court invites penal action, then contempt of the Government should too.
Arguments against Section 124A
Colonial tool for suppression: The Anti-Sedition Law was first added to the Indian Penal Code in 1870 by the British. It is no surprise that the provision aimed at suppressing the resistance of the Indian masses towards foreign rule. Many freedom fighters were charged under this law, including Bal Gangadhar Tilak and Mahatma Gandhi. The Mahatma, in fact, described this law as the “prince among the political sections of the Indian Penal Code designed to suppress the liberty of the citizen”.
Vague law:The law is vague, because it contains terms like “disaffection”. It is not clear what can or cannot be classified as disaffection in various situations. This means that the law can be interpreted differently as per the whims and interests of the authorities involved. In recent years, the law has sometimes been used to persecute political dissent. Some of the most recent examples include the arrest of a Manipur student activist for a social media post on the Citizenship Amendment Act, 2019, the arrest of 14 students of Aligarh Muslim University for raising “anti-national” slogans, and the charge of sedition on four Kashmiri students in Rajasthan over social media posts about a recent terror attack in Jammu and Kashmir.
Inconsistent with International Commitments: India has signed various international treaties and covenants, including the International Covenant on Civil and Political Rights (ICCPR) in 1979. It sets forth international standards for the protection of freedom of expression in the world. However, misuse of sedition and arbitrary charges in India are inconsistent with such types of international commitments.
Unnecessary provision:There are other provisions in the Indian Penal Code and the Unlawful Activities (Prevention) Act, 1967 that criminalise “disrupting the public order” or “overthrowing the government with violence and illegal means”. One example is Section 121A, which penalises conspiracy to wage war against the Government. Therefore, as there are other provisions which criminalise actual tangible threats to the Government, Section 124A is not required.
As we see above, the disadvantages of this law seem to outweigh the advantages. However, considering the approach taken by the Supreme Court as well as the views of the Government on this law, it seems that this section is unlikely to be scrapped soon. But, it is possible to make certain reforms in the law after proper review and deliberation. This is discussed in the next section.
Proposals for Reform of Section 124A
While the Anti-Sedition law may not be scrapped, it can be reformed to restrict its application to only those cases where the speech or actions by individuals are extremely hateful and pose a serious threat to the national security and integrity.
Restrictive Application
In the 2015 case of Shreya Singhal v. Union of India, the issue before the court was ‘In exactly which situations the Government could restrict the speech and expression of a person when he or she made comments that appeared offensive?’. While the immediate concern was the restrictions given under Section 66A of the Information Technology Act of 2000, it also had great implications for Section 124A, which was addressed in this case. The court declared that a line needed to be drawn between advocacy and incitement by the speech. The Constitution, through its guarantee of ‘Freedom of Speech and Expression’, permitted the state to restrict this right not when a person advocated the use of force or violation of law, but only when he incited or attempted to incite the same.
Reduction in Quantum of Punishment
The punishment for a person convicted of sedition should be made more reasonable, in accordance with the changing times. Today, with greater freedom of speech and expression and stronger views on the government amongst the masses, the crime of sedition in most cases does not warrant imprisonment up to a life sentence or other such harsh punishments. Also, it is always possible in cases of sedition that the person’s words were taken out of context or that they were said in the heat of the moment. Unless the seditious actions have actually brought concrete damage to another, they should be dealt with more rationally.
In 2018, the Law Commission of India published a consultation paper recommending that it was time to re-think or maybe even repeal Section 124A. It said that expressing frustration over the state of affairs could not be treated as sedition. At the same time though, the report said that if contempt of court invites punishment, then contempt of Government should too.
There has been an increase in sedition charges pressed against authors, journalists, human rights activists, students, etc. The most recent cases of sedition have included personalities such as Arundhati Roy, Hardik Patel, Kanhaiya Kumar, and others. Some of these cases were dealt with unreasonably and did not require the application of Section 124A. The Government, throughout the years, has been criticised multiple times for using this law to suppress the voices of individuals. Only time will tell what the future holds for this law and its usage in India.
Conclusion
Sedition is, no doubt, a controversial concept; it must be held in a delicate balance with our ‘Right to Freedom of Speech and Expression’. While no citizen should be allowed to spread unnecessary hatred among the masses and incite violence against the Government (especially in a country founded on the principles of non-violence) every citizen should also possess the freedom to express their views on the Government. The interpretation laid down by the Indian courts and the actual implementation of this law sometimes differ, which has led to people labeling the applied law as “draconian”. In an era where the citizens are increasingly aware of their rights and liberties and have a growing sense of duty and responsibility in this democratic system, perhaps it is the perfect time to consider reform in this law.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Dhruv Vatsyayan of Law School, Banaras Hindu University who is pursuing his 1st year of B.A.LL.B and is a sports enthusiast by passion. In this article, he deals with the Legal aspects of Merchandising and licensing in sports.
Introduction
Sports in the last few decades has become an industry rather than just a recreation activity, what it conventionally used to be. After the tele-broadcasting revolution took a major share in the entertainment industry, sports marketing and commercialization also boomed.
Most of the revenue is gained through the sale of broadcasting rights, through organizing events and through merchandising.
Merchandising in sports involves dealing with various laws and going through various agreements and contracts.
So, in this article, we will be discussing the legal angle of merchandising in sports.
Sports Merchandising
To start with sports merchandising let’s first understand what exactly merchandising is.
In a broader sense, merchandising means promotion and marketing of some event or organization by means of specially made goods and services and making them available in retail stores.
For example, these days we can find Marvel’s Avengers’ merchandise or DC’s Justice League’s customized goods in every second retail shop, be it of clothing or something else. And obviously, these things are done to promote respective cinematic productions.
In a similar way, merchandising also works in case of the promotion of sporting leagues, teams, clubs, and personalities.
Sports merchandising principally involves licensing, agreements and Intellectual property laws for coping up with the logo and patent-related issues. Sports Merchandising can be classified as:
Merchandising related to Sports personalities.
Merchandising related to teams or clubs.
Merchandising related to events, leagues, and tournaments.
There are various clubs and leagues across the world that are a perfect example of capitalizing the means of promotion through merchandising and licensing. For example, Football clubs like Barcelona, Liverpool, and Chelsea or, Baseball teams like the New York Yankees and Texas Rangers, are big names that have successfully capitalized upon sports merchandising.
The process involved in all sorts of merchandising remains the same, though, there are minute differences like interests involved, stakeholders and rights & duties.
Let us talk a bit about the emerging market of sports merchandising in India.
Sports Merchandising in India
When in the year 2001, the demigod of cricket, Sachin Tendulkar struck a whopping 100-crore deal with Mark Mascarenhas’ sports management firm, WorldTel, people started criticizing him for going after big money and all. But I guess, Tendulkar was able to see the future of the sports industry and especially that of cricket after 10 or 15 years from then.
Eventually, with the emergence of the Indian Premier League around the year 2010, every bit of Indian Cricket got commercialized and merchandising started to play a major role in the sports industry and market.
Now, let’s take the case of football, as it holds the largest percentage share in the sports merchandising industry worldwide. Due to exponential growth in viewership of football tournaments during the last few years, it has also become a major player in this industry. With Football Club merchandising having witnessed a huge increase in demand, various football clubs have gotten their roots in Indian Market like the Real Madrid Football Club and FC Barcelona. Their licensed merchandise now includes apparel, school bags, stationery, and other miscellaneous stuff.
With the emergence of various different sporting leagues like ISL, PBL and Pro Kabaddi League in India, this market has witnessed sporadic growth in the last decade.
In words of Market Expert, Jibi George, “The Indian Sports licensing market is digging its heels in and is ready to play ball.”
Now, let’s delve into the intricacies of the legal aspect of sports merchandising.
Sports Merchandising and IP
To be able to deal with the legal aspect of sports merchandising, we should first know about what are the laws applicable and involved in the same.
The first thing which comes to mind is Intellectual Property Laws.
Let’s first figure out the relation between IP Laws and Sports Merchandising. IP Law forms a major part of laws involved in sports merchandising because it includes patents, trademarks, designs, copyrights, and other intellectual properties.
Let’s start with trademarks and sports merchandising. Trademarks are the most used Intellectual Property in the Sports Industry. Things which are covered under the trademark are:
Names of Franchise or League
Taglines
Logos
Flags
Trademarks are responsible for adding value to a brand and giving identity to it. This brand value per se is used in the process of merchandising and then making revenue and profit from it.
Trademarks can be registered under various categories and classes like clothing or glassware etc. For example, Real Madrid Football Club, apart from being a football club, also sells and distributes several classes of merchandised products like caps, bags, bottles, clothing, etc. So, the logo and other intellectual properties are needed to be protected from unauthorized use and counterfeiting.
To seek redressal in case of a trademark dispute, the stakeholder needs to prove 3 basic requirements:
That the trademark has acquired goodwill in the market.
That there was a misrepresentation of the trademark.
And, there was damage caused due to this misrepresentation.
Merchandising related to goods and services is mostly covered under trademark laws. It’s so because almost every class of goods will be having either logo or tagline or name imprinted or carved upon it.
Let us understand this by an illustration, Chennai Super Kings, which is a franchise team in the Indian Premier League is going to start the sale of its merchandised goods and apparel. So, it will be using its logo which consists of a solid yellow colored background and outline of an aggressive lion. To protect it from unauthorized use, they will register it under the trademark laws. Similarly, their tagline, which reads ‘WHISTLE PODU’ will also be protected under the same. And, once they are registered, they can claim damages for any unlicensed or unauthorized use.
The process of getting trademarks registered varies from country to country. In India, it can be done through a trademark agent or a lawyer. Also, it can be registered internationally under the Madrid system of registration of trademarks and is applicable to various territorial jurisdictions.
Another important Intellectual property involved in the practice of merchandising is personality rights.
Let’s first understand what does personality rights stand for. Personality rights are a set of rights available to an individual to control the exploitation of his/her name, image or any other part of his/her personality. Today when most of the sportspersons have become brands themselves, it’s important to protect these rights too. It’s necessary because, the celebrity status, formed due to popularity is and can be used for image creation, brand endorsement and capitalizing on fame by generating revenue and gaining monetary profits from it.
Many of the famous players like David Beckham, Alan Shearer, and Sachin Tendulkar have registered their names as trademarks so that no one else can use it for gaining monetary profit.
Now, let’s look upon how these personality rights are applicable in merchandising and licensing. These days, the gaming industry is booming like anything and so is the sports gaming industry. These gaming production companies tend to use the names of the players in the games and having a trademark upon one’s name restricts this. In return for using names, royalties are being received by the players.
For example, there is this famous PC game, by FIFA itself, which contains the names of the players in its database. Thus, before using these names, which have been trademarked by the owners, FIFA had to make a contract with them and thus offered them some royalty.
Similarly, leading video gaming company, Electronic Arts or EA produces this famous cricket video game called EA Sports Cricket. Thus, to avoid such problems, they use similar-looking fake names of real players like Sachin Tendulkar becomes S.Tendehar and M.S.Dhoni becomes D.Dhenier.
This is done primarily to avoid the expenses of licensing.
Another use of personality merchandising in the era of the internet and smartphones is in the field of personal apps and games. Most of the famous players have their own mobile applications as a part of merchandising.
Some of the examples are Sachin Tendulkar, Ravindra Jadeja, and Murali Vijay.
Famous players also get associated with apparel making brands and then, the players and developers, both land on an agreement to produce merchandise having names and using the personality rights of the player. And, the companies make great profits by capitalizing on those names. Some such examples are M.S.Dhoni associated with SEVEN, Virat Kohli associated with WROGN and not to forget, Cristiano Ronaldo having own brand with the name CR7.
Recently, in the year 2019, Indian Cricketer, Virat Kohli got into a contract with a cartoon production company for the production of a cartoon, SUPER V, whose protagonist looks like Virat Kohli himself.
Click Above
Merchandising Agreement
A Merchandising Agreement is an agreement, which describes the terms and conditions through which the owner of a trademark grants a license to the licensee for using the IP of the licensor. These agreements can vary in scope and also vary in the extent of how complex they are. The broadness of scope depends upon the owner himself.
Following are the issues which are most commonly dealt with in a merchandising agreement:
Rights and Duties of both the parties
Products to be covered under the agreement
Duration and term of an agreement
Remuneration
Payments
Dispute resolution and redressal
In most of cases, the owner of the trademark receives some advanced payment and royalty payments depending upon the percentage of merchandise sales throughout the duration and term of the agreement.
In case, where the licensee fails to abide by the agreement, the licensor can put an end to the agreement. However, such actions are normally avoided as such deals involve huge finances at stake.
Now let’s discuss why parties would be willing to take part in the contract.
The owner of the trademark may benefit from the merchandising agreement by granting rights of their IP to another party or the licensee and can gain by generating revenues from that. Similarly, the licensee can generate profits by counting and capitalizing on the popularity of the licensor by making huge sales of the goods and services.
Essentials of a Merchandising Agreement
While there are no such thumb rules for essentials of the agreement but there are some elements that are generally found in an Agreement or a Merchandising Agreement per se.
These are:
Identification of the parties:In the merchandising agreement, parties to the contract should be clearly listed out contract. It should also identify all of their information that is needed to enter into an agreement. This becomes even more important where there are various parties involved in the agreement. Let’s take an illustration, there is this Baseball franchise willing to contract to license out for their official merchandise with an Active Wear Manufacturing Brand. But, the distribution part is to be done by another company. So, in this situation, as 3 parties are involved, the agreement must identify all the parties and their rights & duties distinctly.
Interpretation and Definitions:Every agreement contains some terms which unless defined are ambiguous and unclear. Thus, such words and terms should be clearly defined and explained with illustrations if needed. Hence, the agreement is interpreted in accordance with such definitions and explanations.
Grant of Rights:The clause related to the grant of rights is very important in the merchandising agreement and in every agreement in general. It discusses the nature, scope, and extent of grant of rights offered by the licensor to the licensee. In most of the agreements, this clause talks about the exclusivity of the rights and the territory specified. It specifies the territories where the licensee has the right to sell the merchandise and exclusively deals with the number of licensees in a particular territory. For example, A cricket club has granted rights to Firm A to sell goods in a Territory X, then it will be considered as an exclusive right.
Term and Termination:Such agreements must clearly specify the term of the agreement. The term means the period of time which both the parties have agreed upon and for that period only the license remains valid. Normally, it is seen that most companies follow the strategy of signing an agreement for a shorter term and then renewing it later, as the case may be.
Suppose, such a situation arises where there is a need to terminate the license before the completion of the term, then the agreement must have provisions dealing with such situations. In such cases, where the licensee fails to perform what was expected from him to perform according to the agreement, or it carries on activities outside the ambit of the agreement, then the licensor can terminate the agreement if he finds it to be feasible.
Licensed Product and Property:The agreement must clearly state the properties and products which are to be licensed for merchandising.
It should also clearly describe the features of the product precisely and it may also mention if the party wants to reserve the right for making any changes in the product concerned or not.
The territory should be defined:The agreement must distinctly define the territories for which licenses are being granted. This essentially means defining geographical territories. For example, Chennai Super Kings enters into an agreement with Bewakoof.com for official merchandising. Then the agreement between them should specify that the license will grant rights for sale only in the territory of India and not elsewhere.
The agreement may also specify media and channels through which the licensor wants the goods to be distributed, be it through retail stores or through online retailing.
Royalties:This includes the amount to be paid by the licensee to the licensor for sale of each unit of the good. It may be an up-front license fee or compensation to the licensor.
Timing of Payments:The parties must agree upon the issue of the timing of the payment and the same must be specified in the agreement.
The payments can be made quarterly, which is most commonly found there but can also be paid in half-yearly or monthly terms.
Indemnity Clause:The merchandised goods are generally perceived as being produced by the party carrying that trademark. Thus, any defect or decline in the quality of the product may lead to a decline in the reputation of the licensor. Thus, to avoid such situations, it is a prudent choice to put a clause in the agreement which indemnifies the licensor from any claims from a third party arising out of any defect in the goods.
Conclusion
As it has witnessed an unpredictable growth in the last couple of decades, the industry of sports licensing and merchandising has become a hugely profitable market. It is based on the goodwill associated with licensor’s product which paves a path to a lucrative market.
And, licensing laws and IP laws are obviously intertwined with the growth of the merchandising industry in sports.
Thus, it is quite evident that the future of the sports industry lies in the growth of the merchandising industry as it popularizes the sport and generates a hefty revenue out of it.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Aarchie Chaturvedi, a 1st-year student currently pursuing BA-LLB from the National University of Study and Research in Law, Ranchi. This is an exhaustive article about the freedom of trade and commerce, containing the provisions of Article 301 to 307 and the landmark judgments.
Introduction
Trade has always been important because no country or state can produce all the products it needs. For this reason, we need regulations and laws governing, managing and facilitating trade. The freedom of trade, commerce, and intercourse is provided under Part XIII of the Indian Constitution in Articles 301 to 307. Article 301 lays down the general principles of trade and commerce whereas Article 302 to 305 enunciates the restrictions which trade is subjected to. The source for adopting these provisions was the Australian Constitution.
The object of such provisions in a Federal Constitution
The makers of the Constitution wished to encourage the free flow of trade and commerce in India because, according to them, a country should work as a single economic unit without any barriers or obstacles in internal trade. They perceived that economic unity and integration of the nation would be the main sustaining power for stability and cultural unity of the federal polity.
In a federation, it is essential to reduce the barriers (tariffs, non-tariffs, quotas, etc.) between the states as much as possible so that the people feel that they are members of the same country though living in different geographical areas of the nation.
Freedom of trade, commerce, and intercourse
Article 301 talks about the freedom of trade, commerce, and intercourse throughout the country. It states that subject to other provisions under Part XIII, the freedom to carry on these activities shall be free. Freedom here means the right to freedom of movement of persons, property, things that may be tangible or intangible, unobstructed by barriers within the state (intra-scale) or across the states (inter-scale).
The three main words used in this article are:
Trade
Trade means buying and selling of goods for profit-making purposes. Under Article 301, the word trade means an actual, organized & structured activity with a definite motive or purpose. For the motive of Article 301, the word trade is interchangeably used with business.
Commerce
Commerce means transmission or movement by air, water, telephone, telegraph or any other medium; what is essential for commerce under Article 301 is transportation or transmission and not gain or profit.
Intercourse
It means the movement of goods from one place to another. It includes both commercial and non-commercial movements and dealings. It would include travel and all forms of dealing with others. However, it is argued that the freedom guaranteed in Article 301 does not reach out to intercourse in its broadest meaning. There are two reasons for this. First of all, the word “intercourse” is used in juxtaposition with the words ‘trade and commerce’ and hence this word here will mean “commercial-intercourse” and not purposeless motion. The second reason being that though Article 301 imposes a limitation on the power of Legislature and Parliament (provided to them under Article 245 and 246) but the word intercourse is not included as a subject of legislation under the Seventh Schedule (as the words trade and commerce have been) and so the word intercourse can not be implied to have the widest of the meaning when used here.
The use of the word ‘free’ in Article 301 does not mean freedom from laws and rules governing the country. There is a clear distinction between the laws obstructing freedom and laws containing rules and regulations for the proper conduction of trade activities in a smooth and easy manner.
Activities which are not trade
Article 301 gives the freedom of trade, commerce, and intercourse but there are certain activities which may be covered under the ambit of the trade, commerce or intercourse activities but are not protected by the freedom guaranteed under Article 301 of the Indian Constitution.
Illegal activities, like lottery and gambling, can be an example. The bar on these illegal activities was upheld by the Supreme Court in the case ofState of Bombay v. R.M.D. Chamarbaugwala (1957).In this case, it was held that all activities of criminal nature or those activities which are undesirable would not be given any protection under Article 301. Some examples of such activities can be clicking obscene pictures for money, trafficking of women and children, hiring goondas or terrorists, etc. Though the forms, methods, and procedures of trade may be applied these activities are extra-commercium(not subject to private ownership or acquisition), and thus are not covered under Article 301. Inter-relation between Article 301 and Article 19(1)(g)
Article 301 under Part XIII empowers the free flow of the stream of trade throughout the country whereas Article 19(1)(g) under Part III provides the freedom to practice any occupation, trade or business in the interest of the general public. The right under Article 301 is constitutional and can be claimed by anyone. The right under Article 19(1)(g) is fundamental and can be claimed only by citizens. Thus, this aspect of limitation of Article 19 is dealt with under Article 301 which gives the right to both citizens and non-citizens to move the court if their right has been infringed.
Article 19(1)(g) contains restrictions to the freedom of carrying an occupation or trade while Article 301 is accompanied by Article 302-307 which lay down the restrictions to the free flow of trade in the country. However, the restrictions specified in Article 302-307 should have indirect results and should not directly reduce the freedom laid down in Article 19(1)(g). Article 301 is thus considered an explanatory provision to Article 19(1)(g) and also has a more limited scope than Article 19(1)(g) because it is only concerned about the flow of goods and services.
It is also often argued that Article 301 is the right available for trade as a whole whereas Article 19(1)(g) is the right for individuals. However, this is not true. Article 301 is derived from Section 92 of the Australian Constitution and hence this right is available to individuals as well.
Thus both of them can be said to be interrelated in some aspects. They also can be seen as interrelated concepts at the time of emergency. At the time of emergency, rights under Article 19(1)(g) are suspended. At that time the court looks forward to the rights provided under Article 301 to check whether any violation has occurred or not.
Parliament’s power to regulate trade and commerce in the public interest
Article 302 gives power to the Parliament to impose restrictions on the freedom of trade, commerce or intercourse carried on within a state or across states anywhere in the territory of India. These restrictions can solely be imposed taking into due consideration the interests of the public. The power to decide whether something is in the interest of the public or not is solely given to the Parliament. It can be seen as in the case ofSurajmal Roopchand and Co v/s the State of Rajasthan (1967) were under the Defence of India Rules, in the interest of the general public, restrictions were imposed on the movement of grain.
States power to regulate trade and commerce
The power of the Parliament in Article 302 is kept in check by Article 303. Article 303(1) states that the Parliament does not have the power to make any law which will keep one State at a more preferable position than the other State, by virtue of any entry in trade and commerce in any one of the lists in 7th Schedule. However, Clause (2) states that the Parliament can do so if it is proclaimed by law that it is essential to make such provisions or regulations, as there is indeed a scarcity of goods in some parts of the country. The power to decide whether there is a scarcity of goods in some parts of the territory or not is vested in the hands of the Parliament.
Article 304(a) further says that the State should impose taxes on any goods transported/imported from other States if alike goods are taxed in the State too. It is done so that there is no discrimination between goods produced within the State and goods imported from some other states. In the case of State of Madhya Pradesh v/s Bhailal Bhai,(1964) the State of Madhya Pradesh imposed taxes on imported tobacco which was not even subject to tax in the very own State i.e State of Madhya Pradesh. The Court disapproved of the tax statement that it was discriminatory in nature.
Restrictions on trade, commerce, and intercourse among States
Clause (2) of Article 304 guides the States to impose certain reasonable restrictions on the freedom of trade, commerce, and intercourse as may suit the public interest. But no Bill or Amendment for such shall be put forward in the State Legislature without the prior approval of the President. A law passed by the State to regulate interstate trade must thus fulfill the following conditions-
An approval from the President must be taken beforehand,
The restriction must be sensible and rational,
It must be in the interests of the public.
These conditions make it clear that the Parliament’s power to regulate trade and commerce is superior to the State’s power.
Saving of Existing Laws
Article 305 of the Indian constitution saves already formed laws and laws providing for State monopolies. Article 305 can only do so until the President is not ordering something opposite to it or otherwise to the law already formed. In Saghir Ahmad v/s The State of UP,(1954), the Supreme Court raised the query that whether an Act that provides for State monopoly in a specific trade or commerce would be held violative of the Constitution of India under Article 301.
Article 19(1)(g) was amended by the First Constitutional Amendment taking out such activities from the purview of Article 19(1)(g). And now after the Constitution’s 4th Amendment, already formed laws and laws made hereafter for State monopoly in trade, are immune from attack on the ground of violation of Articles 301 & 304.
Appointment of authority for carrying out the purposes of Articles 301 to 304
Article 307 under Part XIII permits the Parliament to designate such authority as it deems fit for carrying out the provisions laid down in Articles 301, 302, 303 and 304. The Parliament can also bestow such authorities with functions and powers as it feels are required.
Landmark Judgments
Atiabari Tea Co. vs the State of Assam (1961)
Facts
In this case ofAtiabari Tea Co.Ltd. v/s the State of Assam, Assam Taxation Act levies a tax on goods transmitted through Inland Waterways and road. The petitioner in the present case carried on the business of transporting tea to Calcutta (now Kolkata) via Assam. Now while passing through Assam for the purpose of transportation to Calcutta, the tea was liable to tax under the said Act.
whether it could be protected by making it fall under the ambit of Article 304 (b) or not?
Judgment
The Supreme Court said that the disputed law undeniably levied a tax that directly and immediately infringed the movement of goods and therefore it comes under the purview of Article 301. The Supreme Court further clarified that these taxes can only be levied after fulfilling the conditions of Article 304(b) which states that the sanction by the President is required before any State enacts such a law. In this case, the requirements of Article 304(b) were also not fulfilled. Freedom assured under Article 301 would become non-existent or imaginary if transmission of goods is obstructed without meeting the criteria set out by Article 302 to Article 304 of the Constitution.
Automobile Transport Ltd. vs State of Rajasthan (1963)
The appellant challenged the validity of the tax levied under Article 301. Now whether the tax levied was constitutionality correct or not had to be checked.
Judgment
It was held by the court that in the present case the tax imposed is valid as it is only a regulatory measure or a compensatory tax for the facilitation of the smooth running of trade, commerce, and intercourse. The Court commented that the taxes are the sole key for a state, in order to preserve the financial health of the state at large. The concept of “Compensatory or Regulatory Taxes” has evolved to ensure that the state will levy such taxes that are set as an objective in the form of compensation, that is, for the public interest as well as for regulatory purposes if necessary. They would be used within the state. If the same is challenged in the Court as being an infringement or as being violative of the freedom under Article 301 then that would not be considered as an infringement and such a measure or tax does not even need the validation of the provisions under Article 304(b).
Whether it was violative of the freedom guaranteed Article 301 of the Constitution?
Judgment
The Supreme Court held the law void. It remarked that such a law was restrictive and not regulatory thus violative of the freedom provided under Article 301.
G.K.Krishna vs State of Tamil Nadu (1975)
Facts
In the case ofG.K Krishna v/s State of Tamil Nadu, a govt notification under Madras Motor Vehicles Act was issued, increasing the motor vehicle tax on omnibuses from Rs 30 to Rs 100. The government’s argument while imposing this tax was that this was done to stop the unhealthy competition between omnibuses and regular stage carriage buses and to reduce the misuse of omnibuses.
Issues
The petitioner in his argument questioned:
whether the tax was compensatory or regulatory?
whether it was a barrier to the freedom of trade, commerce, and intercourse or not?
Judgment
The Supreme Court held that the tax on carriage charges was of compensatory or regulatory nature and was not therefore violative of the freedom guaranteed under Article 301. The Courts while explaining its rationale behind the judgment said that these taxes are not barriers but a medium that facilitates trade. A tax to become a prohibited tax must be first a direct tax. A direct tax is a tax that infringes the transmission of goods or services in a trade or business. The Court, however, presented its view in this regard that no citizen has the right to engage in any service without reimbursing the State for the special service. Here, in this case, safe and efficient roads are required for the smooth running of vehicles. The maintenance of such roads will cost the money of the Government and the use of public motor vehicles stands in direct relation to it. Therefore the imposing of tax should not seem unreasonable i.e. making of a special contribution over and above the contribution generally provided by the taxpayers to the state. The increase in tax was thus held correct and valid in the eyes of law.
Conclusion
When the Constitution provides the freedom of trade, such freedom cannot be absolute. Thus Article 302 to 305 impose restrictions and ensures that trade is conducted in a lawful manner throughout the states and the country. All these provisions together ensure the provision of Constitutional status to the freedom of trade, commerce, and intercourse. Now at least there would be no unreasonable interference with trade and commerce based upon geographical variations or any other such barriers.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article has been written by Kavita Chandra, a student of Vivekananda Institute Of Professional Studies, affiliated to Guru Gobind Singh Indraprastha University, Delhi. She has discussed the provisions relating to the Constitution of criminal courts under the Code of Criminal Procedure, 1973.
Introduction
The judicial system in India is one of the most efficient judicial systems in the world and it has been established in such a way so that it caters to the need of every person in the country. The Indian Judiciary is well established with quite a lengthy and complex hierarchy of courts. The judicial system is in the form of a pyramid, with the Apex Court being at the top of the hierarchy. The courts have been created in such a manner that even a person from a remote area can approach the courts to get their disputes resolved.
Functionaries under the CrPC
The functionaries which are empowered to exercise the powers and discharge duties under the Code of Criminal Code, 1973 are the police, prosecutors, courts, Defence Council, Prison Authority and Correctional Services. Amongst these the role of Magistrates and Court is pivotal while others are in a way accessories to it.
Roles and functions of these types of machinery
POLICE
There is no provision in the code that creates the police or police officers. It assumes the existence of police and arms them with various responsibilities and powers.
Organisation
The Police Act, 1861establishes the police force. The Act says that “the police force is an instrument for the detection of crime and its prevention.” The Director-General of Police is vested with the overall administration of police in an entire state, however, in a district, under the general control and directions of District Magistrate, administration of police is done by DSP (District Superintendent of Police).
A certificate is provided to every police officer and by virtue of such certificate, he is vested with the functions, privileges and powers, of a police officer. Such certificate will cease to be in effect once he/she is no longer a police officer.
Powers and functions under CrPC
TheCode confers upon the police officers certain powers such as the power to investigate, search and seizure, make an arrest and investigate the members enrolled as police officers. Extensive powers are conferred to the officer in charge of a police station.
PROSECUTOR
A crime is a wrong that affects the whole society and because of this reason the state represents the society as a whole and is represented by lawyers called Public Prosecutors. In a criminal court, prosecution of all the offences is conducted by Public Prosecutors.
Constitution
Asper Section 24 of Cr.PC Central and State, the government is empowered to appoint Public Prosecutors at state and district levels to conduct appeal and prosecution under High Courts and Subordinate Courts. The Section further provides that Additional or Assistant Public Prosecutor shall be appointed and they shall work under the directions given by Public Prosecutor.
Further, it specifies the rules for appointment of Public Prosecutor as “if a person has been practising as an advocate for 7 years or more then such person shall be eligible to be appointed as Public Prosecutor of District Court or High Court. The Court in Phool Singh v. State of Rajasthan held that “ if the victim requests the State to appoint a Special Public Prosecutor in a case, then the State shall appoint the same and such Special Public Prosecutor shall be paid by the victim.
Powers and Functions
The Code provides that every trial before a Session’s Court shall be conducted by the Public Prosecutor. His goal is not merely to produce a conviction but to help the court in arriving at a just decision. Section 301empowers a Public Prosecutor or Assistant Public Prosecutor to appear before any criminal court and conduct prosecution without any written authority. Thus, he has the right to conduct the prosecution. As per Section 321,if the court allows, a Public Prosecutor can withdraw from conducting prosecution against any person.
In Md. Mumtaz v. Nandini Satpathy,the Apex Court explained the role of Prosecutors under CrPC and observed that it is the duty of a Public Prosecutor to aid the court by placing all the evidence in his possession in front of the court even if it is in favour of the accused. In the machinery of justice, a very responsible role is assigned to the public prosecutor, thus he shall be personally indifferent towards the result of the case.
COURTS
The setup of criminal courts in India is of 2 types i.e. District and Metropolitan areas.
District
The setup of criminal courts in district areas is at 3 levels: –
At the lower level of the judiciary the courts are called courts of Judicial Magistrate which are of 3 types: –
Judicial magistrate
Judicial magistrate second class
Special magistrate court
At the middle level of the judiciary, the courts at the sessions level include: –
Court of sessions
Additional courts of sessions
Assistant courts of sessions
Special courts
At the higher level of the judiciary, there are High Court and Supreme Court.
Metropolitan areas
The courts at the session’s level are referred to as metropolitan courts and they are of 2 types: –
Metropolitan magistrate courts
Special Metropolitan Magistrate
Chief Judicial Magistrate/Chief Metropolitan Magistrate exercises supervisory authority or administrative authority of all the magistrates in sessions/division or metropolitan areas.
DEFENSE COUNSEL
In most of the cases an accused person is a layman and is not aware of the technicalities of law, therefore, asperSection 303, an accused person shall have a right to be defended by a counsel of his own choice. As the accused or his family employs the pleader to defend the accused against the alleged charges, such a pleader is not a government employee. For ensuring a just and fair trial it is essential that a qualified legal practitioner presents the matter on behalf of the accused.
Therefore, Section 304 provides that if the accused does not have sufficient means to hire a counsel, a pleader shall be assigned to him by the court at the state’s expense. There are various schemes through which an accused who does not have sufficient means to hire a pleader can get free legal aid, such as the Legal Aid Scheme of State, Legal Aid and Service Board, Supreme Court Senior Advocates Free Legal Aid society and Bar Association. The Legal Services Authorities Act, 1987 provides needy people with free legal aid.
PRISON AUTHORITIES AND CORRECTIONAL SERVICES
The court does not create but presupposes the existence of prison authorities and the Prison. As per Section 167 Magistrates and judges are empowered by the code to order the detention of under-trial prisoners in jail during the pendency of the proceedings. The courts have the power under the Code to impose imprisonment sentences on convicted persons and to execute such sentences send them to prison authorities.
The entire territory of India consists of states and Section 7 of the Code states that “the basic territorial divisions of the State are the districts and the Sessions Divisions”. Considering the special needs of big cities like Bombay, Calcutta, Madras, etc. the Code has recognised them as metropolitan areas and each such area shall be considered as a separate sessions division and district. According to this territorial demarcation, the criminal courts of India include the Supreme Court of India, High Courts, Court of Session in every Session Division and Courts of Judicial Magistrates in every district.
Classes of criminal courts
Section 6 of the Cr.P.C provides for the classes of criminal courts in every State apart from the High Courts and the Supreme Court, namely –
Court of Session
Judicial Magistrates of the first class and, Metropolitan Magistrates in any metropolitan areas
Judicial Magistrates of the second class; and
Executive Magistrates
Hierarchy of Criminal Courts
The hierarchy of the Criminal Courts in India can be understood through the following chart:
The Supreme Court of India – The Supreme Court Of India being the apex court of India was established under Article 124 of the Constitution of India.
The High Courts – Article 141 of the Constitution Of India governs the High Courts and the High Courts are bound by the judgment of the Apex Court.
Lower Courts of India have been classified as follows:
Metropolitan Courts
Chief Metropolitan Magistrate
First Class Metropolitan Magistrate
District Courts
Sessions Court
First Class Judicial Magistrate
Second Class Judicial Magistrate
Executive Magistrate
Separation of Judiciary from the Executive
The Code under Section 3(4)separates the judiciary from the executive and states that, subject to the provisions of the Code:
Judicial Magistrate shall exercise the functions relating to matters in which appreciation or shifting of evidence is involved or which involve the formulation of any decision by which any person is exposed to a penalty or punishment or detention in custody, inquiry or trial.
Executive Magistrate shall exercise the functions regarding the matters which are executive or administrative in nature, for example, the granting or suspension or cancellation of a license, withdrawing from prosecution or sanctioning a prosecution.
Court of Session
Section 9 of the Cr.PC empowers the State Government to establish the Sessions Court and such court would be presided over by a Judge appointed by the High Court. The Additional and Assistant Sessions Judges are also appointed by the High Court to exercise jurisdiction in the Court of Session. The Sessions Court ordinarily sits at such place or places as ordered by the High Court, but if in a case, the Court of Sessions decides to cater to the general convenience of the parties and witnesses, then, it may, with the consent of the prosecution and the accused preside its sittings at any other place. As per Section 10of the Cr.P.C, the assistant sessions judges are answerable to the sessions judge.
Court of Judicial Magistrate
Section 11of the Cr.P.C states that in every district (not being a metropolitan area), the State Government after consultation with the High Court has the power to establish courts of Judicial Magistrates of the first and second classes. If the High Court is of the opinion that it is necessary to confer the powers of a Judicial Magistrate of the first or second class on any member of the Judicial Service functioning as a Judge in a civil court, then the High Court shall do the same.
Chief Judicial Magistrate and Additional Chief Judicial Magistrate
As per Section 12of the Codein every district other than metropolitan areas, Judicial Magistrate of the first class shall be appointed as the Chief Judicial Magistrate. The High Court is also empowered to designate Judicial Magistrate of First Class as Additional CJM and by such designation, the Magistrate shall be empowered to exercise all or any of the powers of a Chief Judicial Magistrate.
Sub-Divisional Judicial Magistrate
In a sub-division, the judicial magistrate of the first class may be designated as the Sub-divisional Judicial Magistrate. Such magistrate shall be subordinate to the Chief Judicial Magistrate and will thus work under its control. Further, the Sub-divisional Judicial Magistrate shall control and supervise the work of the Judicial Magistrates (except the Additional CJM) in that subdivision.
Special Judicial Magistrates
By Section 13 the High Court is empowered to confer upon any person who holds or has held any post under the Government, the powers conferred or conferrable by or under this Code on a Judicial Magistrate of first or second class. Such Magistrates shall be called Special Judicial Magistrate and shall be appointed for a term not exceeding one year at a time. In relation to any metropolitan area outside the local jurisdiction of a Special Judicial Magistrate, he may be empowered by the High Court to exercise the powers of a Metropolitan Magistrate.
Local Jurisdiction of Judicial Magistrate
According to Section 14, the Chief Judicial Magistrate shall define the local limits of the areas within which the Magistrates appointed under Section 11 or under Section 13 may exercise all or any of the powers with which they may be vested under this Code. The Special Judicial Magistrate may hold its sitting at any place within the local area for which it is established.
The jurisdiction in case of Juveniles (Section 27)– This section directs that a juvenile (person below the age of 16) can not be given a death penalty or a punishment of imprisonment for life. Chief Judicial Magistrate or any other Court specially empowered under the Children Act, 1960 (60 of 1960) tries such type of cases.
Subordination of judicial magistrate
Section 15(1) provides that a Sessions Judge shall be superior to the Chief Judicial Magistrate and the Chief Judicial Magistrate shall be superior to the other Judicial Magistrate. This can be clearly understood by the above-mentioned diagram explaining the hierarchy of courts.
Courts of Metropolitan Magistrate
They are established in every metropolitan area. The presiding officers shall be appointed by the High Court. The jurisdiction and powers of such Metropolitan Magistrates shall extend throughout the metropolitan area. The High Court shall appoint Metropolitan Magistrate as the Chief Metropolitan Magistrate.
Special metropolitan magistrates
The High Court may confer upon Special Metropolitan Magistrates the powers which a Metropolitan Magistrate can exercise in respect to particular cases or particular classes of cases. Such Special Metropolitan Magistrates shall be appointed for such term, not exceeding one year at a time.
The Special Metropolitan Magistrate may be empowered by the High Court or the State Government to exercise the powers of a Judicial Magistrate of the first class in any area outside the metropolitan area.
Subordination of Metropolitan Magistrate
Section 19 of the Code provides that the Sessions Judge shall be superior to the Additional Chief Metropolitan Magistrate and Chief Metropolitan Magistrate and other Metropolitan Magistrates shall be subordinate to the CMM.
The Chief Metropolitan Magistrate has the power to give special orders or make rules regarding the distribution of business among the Metropolitan Magistrates and allocation of business to an Additional Chief Metropolitan Magistrate.
Executive Magistrate
As per Section 20, in every district and in every metropolitan area, Executive Magistrates shall be appointed by the State Government and one of them shall be appointed as the District Magistrate. An Executive Magistrate shall be appointed as an Additional District Magistrate and such Magistrate shall have such of the powers of a District Magistrate under the Code.
As executive magistrates are supposed to execute administrative functions they were neither given power to try accused nor pass verdicts. They are mainly concerned with administrative functions. The executive magistrates have the power to determine the amount of bail according to the provisions of the warrant issued against the accused, pass orders restraining people from committing a particular act or preventing persons from entering an area (Section 144 Cr.P.C), they are the authority to whom people are taken to when they are arrested outside the local jurisdiction, the executive magistrates are the only one with the power to disperse a crowd or an unlawful assembly, further, they are authorized to use force while doing the same according to the gravity and requirements of the situation. Executive Magistrates are assisted by the police while executing their functions.
As perSection 21, Special Executive Magistratesshall be appointed by the State Government for particular areas or for the performance of particular functions.
Local jurisdiction of the executive magistrate
Section 22of the CrPC empowers the District Court to define the areas under which the Executive Magistrates may use all or any of the powers which are exercisable by them under this code but under some exceptions, the powers and jurisdiction of such Magistrate shall extend throughout the district.
Subordination of executive magistrate
As per Section 23, the Executive Magistrates would be subordinate to the District Magistrate however Additional District Magistrate shall not be subordinate to the District Magistrate. Every Executive Magistrate but, the Sub-divisional Magistrate shall be subordinate to the Sub-divisional Magistrate.
The executive magistrates shall follow the rules or special orders given by the district magistrate, regarding the distribution of business among them. The district magistrate also has the powers to make rules or special orders relating to the allocation of business to an Additional District Magistrate.
Hierarchy of Executive Magistrate
Sentences which can be passed by the various courts
Sentences passed by the High Courts and Sessions Judges (Section 28):
Any sentence which is authorised by law can be passed by the High Court.
A Sessions or Additional Sessions Judge can pass any sentence authorised by law. But, while passingdeath sentence prior confirmation from High Court is required.
An Assistant Sessions Judge has the authority to pass any sentence of imprisonment for more than 10 years other than a death sentence or life imprisonment
The Court of Chief Judicial Magistrate can pass any sentence of imprisonment for more than seven years but not a death sentence or life imprisonment.
The Judicial Magistrate of first class can pass a sentence of imprisonment for a term, less than three years, or a fine less than ten thousand rupees or both.
The Judicial Magistrate of second class may pass a sentence of imprisonment for a term, less than one year, or a fine less than five thousand rupees.
The Chief Metropolitan Magistrate has the same powers as that of a Chief Judicial Magistrate and of MM, in addition to the powers of the Magistrate of first class.
Conclusion
One ofthe main constitutional goals is proper administration of justice has to be in consonance with the expectations of the society. The goal can be achieved if the citizens living in our country can easily knock the doors of the courts whenever a dispute arises.
The criminal courts are constituted in such a way that every citizen can access it for justice. Citizens are also empowered to appeal to higher authorities if they feel that justice is denied to them by lower courts. Therefore, through this system, it has become easy for the citizens to approach the Judiciary.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Yamini Jain, a student of III year BA LLB at ILS Law College, Pune. It provides a brief overview of the provisions relating to First Appeals under the Code of Civil Procedure, 1908 along with relevant case laws.
Introduction
An appeal is a remedial concept determined as an individual’s right to seek justice against an unjust decree/order via referring it to a Superior Court. Sections 96 to 99A; 107 to 108 & Order 41 of the Code of Civil Procedure, 1908 deal with appeals from original decrees known as First appeals.
Meaning of appeal
The term ‘appeal’ nowhere has been defined under the CPC. The Black’s Law Dictionary, while construing the concept of ‘appeal’ in its most original and natural sense, explains it as “the complaint to a superior court for an injustice done or error committed by an inferior one, whose judgment or decision the Court above is called upon to correct or reverse. It is the removal of a cause from a Court of inferior jurisdiction to one of superior jurisdiction, for the purpose of obtaining a review and retrial”.
Essentials of appealing cases
An appeal is a proceeding where a higher forum reconsiders the decision of a lower forum, on questions of law & fact with jurisdiction to confirm, reverse, modify the decision or remand the matter to the lower forum for fresh decision in compliance of its directions. The essentials of appealing cases can be narrowed down to 3 elements:
A decree passed by a judicial/administrative authority;
An aggrieved person, not necessarily a party to the original proceeding; and
A reviewing body instituted for the purposes of entertaining such appeals.
Right to appeal
The right to appeal is a statutory & substantive one. The statutory nature of an appeal implies that it has to be specifically conferred by a statute along with the operative appellate machinery as opposed to the right to institute a suit, which is an inherent right. It is substantive in the sense that it has to be taken prospectively unless provided otherwise by any statute. This right could be waived off via an agreement, and if a party accepts the benefits under a decree, it can be estopped from challenging its legality. However, an appeal accrues to the law as found on the date of the institution of the original suit.
One right to appeal
Section 96 of the CPC provides that an aggrieved party to any decree, which was passed by a Court while exercising its original jurisdiction, is conferred with at least one right to appeal to a higher authority designated for this purpose, unless the provisions of any statute make an exception for it. Section 97, 98 and 102 of the CPC enumerate certain conditions under which no further appeal is permitted, hence attributing to a single right of appeal.
No right to appeal
No person has a right to appeal against a decision unless he is a party to the suit, except on special leave of the Court. An essential element to be taken into account while considering one’s right to appeal is whether such person is adversely affected by the decision/suit, which is a question of fact to be determined in each case.
Distinction between suit and appeal
Suit
Appeal
Where a cause is created and issues are disputed on questions of both facts and law, it is known as a suit.
An appeal only reviews & corrects the proceedings in a case already constituted but does not create a cause.
A suit is an attempt to achieve an end via a legal procedure instituted in a Court of law for enforcing one’s right/claim.
As per Dayawati v. Inderjit, it is the continuation of a suit in certain situations.
A suit is filed in the lowest Court in its respective hierarchy for trial.
An appeal is filed in an Appellate Court for the purposes of reviewing the decision of the inferior Court.
Garikapati Veeraya v. Subbiah Chaudhary
In the instant case, it was held that the pre-existing right to appeal to the Federal Court continued to exist and the old law which created such a right also continued to exist. It construed to the preservation of this right while recognizing the change in its judicial machinery from the Federal Court to the Supreme Court. However, the continuance of the old law is subject to the provisions of the Constitution.
The distinction between appeal and revision
Appeal
Revision
An appeal lies to a Superior Court from every original decree unless expressly barred.
A revision to High Court is available only in those cases and against such orders where no appeal lies.
A right of appeal is one of substantive nature conferred by the statute.
There is no such right of revision because revisional power is purely discretionary.
An appellate jurisdiction can be exercised only through a memorandum of appeal filed before the Appellate Court by the aggrieved party and cannot be exercised suo motu.
The revisional jurisdiction can be exercised suo motu as well.
An application for appeal is maintainable on legal grants as well as on question of fact.
An application for revision is maintainable on the ground of jurisdictional error.
An appeal abates if the legal representative of the deceased are not brought on record within the time allowed by law.
A revision may not abate and the High Court has a right to bring the proper parties before the Court at any time.
A Court of appeal can, in the exercise of its powers, set aside the findings of facts of subordinate Courts.
The High Court or the revisional Court cannot, in the exercise of its revisional powers, set aside the findings of facts of subordinate Courts.
Section 96 of the CPC provides that an appeal shall lie from a decree passed by any Court exercising original jurisdiction to the authorized appellate Courts, except where expressly prohibited. A combined reading of Sections 2(2), 2(9), & 96 of the CPC indicates that a regular First appeal may/may not be maintainable against certain adjudications.
Second appeal
Section 100 provides for a second appeal under this code. It states that an appeal shall lie to the High Court from a decree passed in the first appeal by a subordinate Court, excepting the provisions speaking to the contrary. The scope of exercise of jurisdiction under this section is limited to a substantial question of law framed at the time of admission of appeal or otherwise.
Conversion of an appeal into revision
In the case of Bahori v. Vidya Ram, it was held that since there’s no specific provision under the CPC for the conversion of an appeal into a revision or vice versa, the exercise of power by the Court has to be only under Section 151. Further, the inherent powers of the Court, though discretionary, permit it to pass such orders as may be required to meet the ends of justice. The only precondition to such conversion is that due procedure is adhered to during the filing of the original appeal/revision.
Who may appeal?
A regular first appeal may be preferred by one of the following:
Any party to the suit adversely affected by a decree, or if such party is dead, by his legal representatives under Section 146;
A transferee of the interest of such party, who so far as such interest is concerned, is bound by the decree, provided his name is entered on the record of the suit;
An auction purchaser may appeal against an order in execution setting aside the sale on the ground of fraud;
No other person, unless he is a party to the suit, is entitled to appeal under Section 96.
A person, who is not a party to the suit, may prefer an appeal from a decree/order if he’s bound/aggrieved/prejudicially affected by it via special leave of the appellate Court.
Appeal by one plaintiff against another plaintiff
In Iftikhar Ahmed v. Syed Meherban Ali, it was concurred that if there exists a conflict of interest between plaintiffs and it is necessary to resolve it via a Court to relieve the defendant, and if it is in fact decided, it will operate on the lines of res judicata between co-plaintiffs in the subsequent suit.
Appeal by one defendant against another defendant
The rule in a case where an appeal is preferred not against the originally opposite parties but against a co-defendant on a question of law, it could be allowed. Such an appeal would lie even against a finding if it’s necessary while operating as res judicata (a matter that has been adjudicated by a competent Court and hence may not be pursued further by the same parties).
Who cannot appeal?
A party who waives his/her right to prefer an appeal against a judgment cannot file it at a later stage. Further, as inferred from Scrutton L.J.’s words:
“It startles me that a person can say the judgment is wrong and at the same time accept the payment under the judgment as being right….In my opinion, you cannot take the benefit of judgment as being good and then appeal against it as being bad”,
If a party ratifies any decision of the Court by accepting and acknowledging the provisions under it, it may be estopped from appealing that judgment in a higher forum.
The appeal against ex parte decree
In the first appeal under Section 96(2), the defendant on the merits of the suit can contend that the materials brought on record by the plaintiff were insufficient for passing a decree in his favour or that the suit was not otherwise maintainable. Alternatively, an application may be presented to set aside such ex parte decree (it is a decree passed against a defendant in absentia). Both of these remedies are concurrent in nature. Moreover, in an appeal against an ex parte decree, the appellate court is competent to go into the question of the propriety or otherwise of the ex parte decree passed by the trial court.
No appeal against consent decree
Section 96(3), based on the broad principle of estoppel, declares that no decree passed by the consent of the parties shall be appealable. However, an appeal lies against a consent decree where the ground of attack is that the consent decree is unlawful being in contravention of a statute or that the council had no authority.
No appeal in petty cases
Section 96(4) bars appeals except on points of law in cases where the value of the subject-matter of the original suit does not exceed Rs. 10,000, as cognizable by the Court of Small Causes. The underlying objective of this provision is to reduce the number of appeals in petty cases.
The appeal against Preliminary Decree
Section 97 provides that the failure to appeal against a preliminary decree is a bar to raising any objection to it in the appeal against a final decree. The Court in the case of Subbanna v. Subbanna provides that, the object of the section is that questions which have been urged by the parties & decided by the Court at the stage of the preliminary decree will not be open for re-agitation at the stage of preparation of the final decree. It’d be considered as finally decided if no appeal is preferred against it.
No appeal against a finding
The language of Section 98(2) is imperative & mandatory in terms. The object appears to be that on a question of fact, in the event of a difference of opinion, views expressed by the lower court needs to be given primacy & confirmed. The appellate court cannot examine the correctness of the finding of facts and decide upon the correctness of either view.
The appeal against a dead person
A person who has unknowingly filed an appeal against a person who was dead at the time of its presentation shall have a remedy of filing an appeal afresh against the legal heirs of such deceased in compliance of the Limitation Act.
Forms of appeal
Appeals may be broadly classified into two kinds:
First appeal; and
Second appeal.
The sub-categories under appeals are:
Appeal from original decree;
Appeal from order;
Appeal from appellate decree/second appeal/to High Court;
Appeal to the Supreme Court.
Forum of appeal
It is the amount/value of the subject-matter of the suit which determines the forum in which the suit is to be filed, and the forum of appeal. The first appeal lies to the District Court if the value of the subject matter of the suit is below Rs. 2,00,000; and to the High Court in all other cases.
Presentation of appeal
Order 41 provides the requirements for a valid presentation of an appeal that has to be made by way of a memorandum of appeal which lays down the grounds for inviting such judicial examination of a decree of a lower court.
Summary dismissal
In Hanmant Rukhmanji v. Annaji Hanmant, it was held that when an appellate Court dismisses an appeal under Section 151, a judgment has to be written summarising the cogent reasons for such dismissal, along with a formal decree.
Doctrine of merger
Any decree passed by the appellate Court is a decree in the suit. As a general rule, the appellate judgment stands in the place of the original judgment for all purposes, i.e. the decree of the lower Court merges in the decree of the Superior Court. In-State of Madras v. Madurai Mills Co Ltd., it was held that this doctrine is not a rigid one with universal application, but it depends on the nature of the appellate order in each case and the scope of the statutory provisions conferring such jurisdiction.
Cross objections
According to Order 41, R.22(1) & 33, cross-objections can be made by the defendants. They’re necessary only when some directions are issued against them that are to be challenged on the basis of which part relief has been granted to the plaintiff even without such cross-objections.
Powers of Appellate Court
Section 107 prescribes the powers of an appellate Court:
To remand a case;
To frame issues & refer them for trial;
Reappraisal of evidence when a finding of fact is challenged before it;
To summon witnesses;
Can reverse inference of lower Court, if not justified;
Appreciation of evidence.
Duties of an appellate court
The appellate Court has a duty to analyze the factual position in the background of principles of law involved and then decide the appeal.
To provide cogent reasons for setting aside a judgment of an inferior Court.
To delve into the question of limitation under Section 3(1) of the Limitation Act.
To decide the appeal in compliance with the scope & powers conferred on it under Section 96 r/w O.XLI, R.31 of the CPC.
Judgment
Section 2(9) states that a “judgment” refers to the statement given by the Judge on the grounds of a decree/order.
Decree
Section 2(2) provides that a “decree” is a formal expression of an adjudication which conclusively recognises the rights of the parties with any of the disputed matters in a suit, and maybe preliminary/final. It includes the rejection of a plaint under Section 144 but does not include adjudication that’d result in an appeal from order; or any order of dismissal for default.
Letters patent appeal
Section 100A expressly bars a Letters Patent Appeal from an order of a learned Single Judge of the High Court, on/after 01/07/2002, in an appeal arising from an original/appellate decree. The bar is absolute & applies to all such appellate orders.
Appeal to SC
Article 133 of the Constitution of India & Section 109 of the CPC provides the conditions under which an appeal could be filed in the Supreme Court:
From a judgment, decree, or final order of the High Court;
A case pertaining to a substantial question of law of general significance;
The High Court opines it to be fit for the Supreme Court to deal with such a question.
Conclusion
Appeals are recognized as statutory rights of persons aggrieved by any decision of an inferior court in the interest of justice. First appeals are a form of appeal prescribed under the Code of Civil Procedure. The period of limitation in case of an appeal to the first appellate authority is 90 days where it lies to the High Court. Finally, it can be concluded that the provisions of the CPC extensively deal with the substantive as well as procedural aspects relating to all kinds of appeals, while making express modifications in order to be accommodative of the more specific legislation.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by M.Arjun, a final year student of Government Law College, Thrissur. In this article, he discusses the Data Protection Bill 2019 And Its Repercussions.
Introduction
With internet penetration recording an all-time high of 58%, data has become an outright solution for most of the present-day problems. The world’s largest and most substantial data protection regulation, the General Data Protection Regulation (GDPR) hit the European Union by storm as it came into force from May 25, 2018. Despite having the second-largest internet users in the world, India was lacking a comprehensive data protection regulation. The need for such a regulation was addressed through the Personal Data Protection Bill 2019 (PDPB).
On July 28, 2018, Justice Sri Krishna Committee submitted the draft of the Personal Data Protection Bill. The draft invited a lot of criticism for certain provisions such as the data localisation policy. The bill was introduced in the parliament on December 11, 2018. Later, it was referred to the Joint Select Committee which has to submit its report when the Parliament meets for the budget session on 2020.
What is it all about?
The PDPB regulates the processing of “personal data” which is basically any data that can identify an individual. The Bill applies to any private/public body or corporation incorporated in India. It also applies to any overseas corporation dealing with personal data of Indian entities. Data, as per the Bill, should be processed in a ‘fair and reasonable’ manner. The bill also includes “sensitive personal data” which requires a more severe level of supervision and regulation. Sensitive personal data includes financial data, biometric data, data about caste, religion and political beliefs etc. The Bill grants an individual certain rights during data processing. Data fiduciaries/processors are under certain obligations to maintain definite standards for data protection. However, exemptions are provided for some entities and certain kinds of data processing.
Implications of the Bill
The Personal Data Protection Bill is expected to have great implications for data fiduciaries and data principals. A data fiduciary refers to an entity that collects user data whereas data principles are the common users whose data is collected. The PDPB can have a great impact on Indian data subjects considering the amount of personal data processed on the internet. The Bill can change the way how data is collected and processed throughout the Indian cyberspace. From internet giants like Facebook and Amazon to a very basic blog that collects personal data, compliance with PDPB is inevitable.
How does the PDPB affect the Data Principals?
India’s data protection regulation is expected to resolve one of India’s modern problems i.e coping with data leakages. The PDPB provides the basic framework for ensuring data privacy through minimising data breaches. The Constitution grants a fundamental right to privacy. Additionally, various provisions for data protection under the Information Technology Act couldn’t suffice India’s rising problems pertaining to data protection. The Bill provides various rights to the data principals on their data with regards to the data processing. It includes:
Right to confirmation and access
The data principal will have the rights to know about his personal data which is processed by the data fiduciary. He is entitled to get a confirmation on whether his data is already processed or is under processing. The data principal is also empowered to get an abstract of the processing activities undertaken by the data fiduciary. It should be noted that the information provided by the data fiduciary should be in a clear and concise manner which is easy to understand.
Right to correction and erasure
The Bill sanctions the data principal to make corrections in relation to his/her personal data. It includes:
Correction of any misleading data,
Completion of any incomplete personal data,
Updation of any obsolete data,
Erasure of any data whose processing is no longer necessary.
Data fiduciaries can reject the application of the data principal on the grounds that such data is integral for processing, provided that it makes a written justification for the same. If the data fiduciary rejects the application of the data principal without any reasonable justification, the data principal can dispute it. If any correction, modification or erasure is effected, the data fiduciary is under the obligation to notify the changes to all the parties with whom the data is disclosed or shared.
Right to be forgotten
This right enables the data principal to restrict or discontinue the disclosure of his personal data if such disclosure is:
Made with consent and such consent is withdrawn,
Data collected is no longer useful for the purpose for which it is collected,
Contrary to any law or any provisions made under any law.
For availing this right, the data principal has to file an application with an adjudicating officer who shall make an order for the same.
Right to data portability
The right to data portability confers the data principal, a right to receive his personal data in a commonly used or machine-readable format when the processing is done through automated means. It also facilitates the data principal to transfer the personal data to a different data fiduciary. This right to transfer the data may not be available if such transfer is not technically feasible, if it reveals the trade secret of the transferor or is in compliance with law or an order of the court.
Obligations of Data Fiduciaries
The Bill imposes certain obligations on data fiduciaries in relation to:
Purpose Limitation
The Personal Data Protection Bill mandates the data fiduciaries to process personal data
only for clear, specific and lawful purposes. The processing shall be done only in a fair and reasonable manner in accordance with the consent given by the data principal. When the data is processed for a purpose incidental to the purpose consented by the data principal, the data principal should reasonably expect the circumstances of such processing. The Bill also directs the data fiduciary to only collect the data required for data processing
Serving the notice
The data fiduciary is expected to serve a notice to the data principal at the time when the personal data is collected. If the data is already obtained, the data fiduciary should inform the data principal that his personal data is collected along with the following details:
Purpose of collection;
Source of collection;
Nature and categories of data collected;
Basis of data processing;
Identity and contact details of the data fiduciary and Data Protection Officer, if required;
Individuals and entities with whom the data may be shared;
Information about cross border transfer of data;
Information pertaining to grievance redressal;
Any other information as specified by the regulations.
In certain circumstances such as, in compliance with an order of a court of the state, medical emergencies, disasters and public order situations the data fiduciaries are not required to serve a notice.
Standards for the collected data
The data fiduciary is expected to maintain the quality of the data collected. It should take the necessary steps to maintain the correctness, completeness and accuracy of the data collected. It shall maintain the data collected with a certain level of prudence. When the personal data transferred to other data fiduciaries are not maintained as per the directions, the data fiduciary should inform the same to the data principal.
Storage Limitation
The Bill prohibits the data fiduciaries from retaining the personal data after the period necessary for processing. Such data should be deleted once its purpose is served. Data fiduciaries are also expected to conduct a periodic review for the same. However, data fiduciaries are allowed to retain the data on explicit consent from the data principal or if it’s necessary for complying with any law in force.
Processing of Personal Data On Non-Consensual Grounds
Generally, the personal data of an individual can only be processed with the consent of the data principal. However, there are instances in which it can be processed without his consent, if such processing is in relation to the performance of a state function. It includes activities like the issue of license and certificates as well as for providing any service supplied by the state. Consent is also not necessary when the data processing is as per the order of a court or in compliance with any law in force. The Bill also permits an employer to use the personal data of the employee without his consent in situations such as:
For recruitment and termination of an employee.
For providing any service to the employee.
For verifying the attendance of the employee.
Any other activity for assessing the performance of the employee.
The conditions referred above are for the processing of personal data without the consent of the data principal. It does not apply for the processing of sensitive personal data.
How Does The Bill Affect An Entity That Collects Personal Data?
Data fiduciaries never had to comply with any data protection mechanisms to date. But the PDPB bill imposes a significant amount of compliance and data protection standards on them. A data fiduciary is expected to act in conformity with these policies and guidelines. They are:
Privacy by design policy
As per the privacy by design policy, the data fiduciary should give foremost importance to privacy throughout its activities. It implies that the data fiduciary shall hold the privacy of a data principal in all of its managerial, organisational, and business activities. Data should be processed in a transparent manner considering the obligations laid down by the Bill. No innovation should come with the cost of privacy of a data principal. The data fiduciary should employ sufficient technological standards for the protection of privacy and the interests of the data principal should be considered throughout the processing activities. It is also obliged to submit the privacy policy to the “Data Protection Authority” which verifies and certifies the privacy by design policy. The privacy policy shall be uploaded on the website of the data fiduciary as well the Authority.
Transparency in processing
Data fiduciaries are directed to maintain transparency throughout the process of data processing i.e from the time of collection of data until the data is deleted. The categories of data collected and the manner by which data is collected should be communicated to the data principal. All the purposes for data collection including the information related to cross border data transfers should be disclosed. The rights available to the data principal under the Bill along with the right to file a complaint to the Authority against the data fiduciary should also be conveyed. The data fiduciary can give and withdraw consent through a consent manager who shall be registered under the Authority.
Security safeguards
The Bill imposes certain security safeguards on the data fiduciaries. It should employ certain security mechanism for eliminating all sorts of harm that may be incurred during data processing activities. It should use technologies such as de-identification and encryption to safeguard personal data. Moreover, the integrity of the data should be protected so that unauthorized data disclosures and destruction of data can be avoided. A review of security safeguards should be conducted from time to time and the data fiduciaries should take appropriate measures.
Reporting of a personal data breach
Data fiduciaries are obliged to report any sorts of data breaches. When such breach may result in harm to a data principal, It shall inform the Data Protection Authority about the breach through a notice consisting of the following particulars:
Nature of the personal data subjected to breach;
Number of data principals affected;
Consequences of the breach;
Actions taken to cure the breach.
The notice shall be made without any undue delay, within the time prescribed by the regulations. The Authority may also direct the data fiduciary to communicate the breach with the data principal considering the severity of the breach. The Authority can also post the details of the breach on its website.
Grievance redressal
Data fiduciaries are expected to follow certain immediate grievance redressal procedures for remedying any sort of data breaches. Data principals can file a complaint when the provisions of the Bill are not complied by the data fiduciaries. Such a complaint is filed to:
Data Protection Officer- If the data fiduciary is classified as a “significant data fiduciary”.
Any other officer as may be prescribed in case of other data fiduciary.
A complaint filed should be resolved by the data fiduciary within 30 days of receipt of such complaint. If it fails to resolve the complaint with the prescribed time or if the redressal mechanism was not satisfactory, the data principal can file a complaint with the Data Protection Authority in the prescribed format.
Significant Data Fiduciary
As mentioned in the above paragraph, the PDPB has given the power to the Data Protection Authority to classify a certain set of data fiduciaries as “significant data fiduciary” on the basis of:
The volume of data processed.
The sensitivity of data processed.
Turnover of the data fiduciary.
Use of new technologies in the data processing.
Risk of harm caused by data processing.
Any other factor which may cause harm during data processing.
A data fiduciary classified as significant data fiduciary is mandated to register itself with the Data Protection Authority in the manner specified by the regulations.
The Central government can classify certain social media intermediaries as “significant data fiduciaries” on the basis of a certain threshold which varies according to the nature of the social media intermediary. The Bill regards social media intermediaries as an entity that allows the exchange of information online. These entities are expected to have a considerable impact on electoral democracy, the security of the state, sovereignty and public order.
Significant data fiduciaries are mandated to follow a higher degree of compliance and security standards for data protection. It includes:
Data Protection Impact Assessment
When the significant data fiduciary undertakes data processing activities, involving complex technologies and sensitive personal data, the Bill mandates the data fiduciary to conduct a Data Protection Impact Assessment (DPIA). The Authority by law shall select certain data fiduciaries or a class of data fiduciaries who are required to comply with the same. It may also specify the cases where a data auditor is required to audit the DPIA. The Data Protection Impact Assessment shall include:
A detailed list of processing activities including the nature and purpose of activities;
Assessment of harm that may be caused while processing;
Measures for minimising and removing such harm.
The Data Protection Impact Assessment shall be reviewed by the Data Protection Officer, who shall submit a report of the same to the Authority in the manner specified. If the Authority finds that even after the DPIA there is a probability for any harm to the data principal, the Authority can cease such data processing or mandate other conditions for such processing.
Maintenance of Records and Audit of Data
A significant data fiduciary should keep up to date records of all data processing activities in the manner specified in the regulations. Various records include:
List of all important operations in the data processing life cycle;
Records of periodic review of security safeguards ;
Records of Data Protection Impact Assessment;
Any other aspects of processing as specified under the regulation.
A significant data fiduciary should audit all its conducts and policies with the help of an independent data auditor. The Authority shall register persons with expertise in fields such as data science, privacy, data security etc as an independent data auditor. It shall entrust the independent data auditor to provide a rating known as the “data trust score”. The Authority shall appoint an auditor to audit the data processing activities when the data processing activities are apprehended to cause any harm to the data principal.
Data Protection Officer
Every significant data fiduciary should appoint a Data Protection Officer with sufficient qualifications and experience to perform various functions such as:
Maintaining the records specified under the Bill;
Conducting Data Protection Impact Assessments;
Act as a point of contact for the data fiduciary for grievance redressal mechanisms
Advising and assisting for ensuring compliance with various provisions under the Bill.
The data fiduciary can assign other functions which it may consider necessary. The Data Protection Officer should be based in India and act as a representative of the data fiduciary.
Restrictions On Transfer of Data Outside India
The data localisation policy of the Draft Bill submitted by Justice Sri Krishna committee invited a lot of criticisms. It required a copy of personal data to be stored in India for every cross border transfer of data. Further, it prevented sensitive personal data to be transferred outside India. The PDPB bill has diluted the provisions related to the cross border transfer of data. As per the Bill, there are no restrictions on transfer and processing of cross border personal data.
Sensitive personal data can be transferred outside India for the purpose of processing. However, such data should be stored in India. Cross border transfer of sensitive personal data should only be done after explicit consent from the data principal subject to other conditions mentioned in the bill. The Central Government can also classify a certain set of data as “critical personal data” whose processing can be done only in India.
Data Protection Authority
The Bill proposes the creation of the Data Protection Authority (DPA) as the regulatory and enforcing body. The Authority shall have a chairperson and 6 other members with at least 10 years experience on matters relating to data protection, information security, data privacy, data science etc. The Bill explains various matters in relation to the powers, functions and administration of the Data Protection Authority.
It shall create a “code of practice” that ensures that the data fiduciaries are in compliance with the Bill. Code of practice can be generally applicable or may be specific to a particular industry. It also has the power to conduct inquiries, investigations and appoint inquiry officers in the exercise of its functions specified in the Bill.
The DPA has the power to impose penalties for offences committed in contravention to the provisions envisaged in the bill. The penalties are classified into 2 brackets depending upon the provisions contravened by the data fiduciary. Penalties can range from Rupees 5 crore or 2% of global annual turnover (whichever is higher) and extend up to 15 crores or 4% of global turnover (whichever is higher). Re-Identification of data is criminalised and is subjected to a fine which may extend up to Rs 2 lakh or an imprisonment of up to 3 years. Re-Identification of data is the practice of matching anonymous data with publicly available information to identify an individual.
Compensation is provided to data principals who suffer harm during data breaches. An adjudicating officer of the DPA decides the compensation if the data breach is due to negligence or breach on the part of data fiduciary. The decision of the adjudicating officer can be appealed in the Appellate Tribunal.
Exemptions
The PDPB bill comes with certain exemptions. The Central Government in writing can exempt any government agency from the provisions of the Bill if it is necessary for the prevention of a cognizable offence relating to the security of the state, sovereignty and integrity of India, friendly relations among states and public order. Certain kinds of personal data such as the one used for research, statistical and journalistic purposes are also exempted. Personal data processed by a natural person for personal and domestic use are also exempted from the purview of the Bill. However such data should not be processed for commercial activities. Finally, a regulatory sandbox to encourage innovation in new fields of technologies such as Artificial intelligence, Blockchain etc is also exempted from certain provisions of the Bill.
What It Means to Startups And Small Businesses?
Just like the GDPR, the new data protection regulation is said to have its implications on startups and small businesses. One year after the implementation of GDPR, studies suggest that the investments for tech start-ups in the European Economic Area had considerably gone down. Several data-driven start-ups had to shut down when compliance costs and legal complications became insurmountable. They will be forced to comply with data protection norms directed by the Bill and the ‘Data Protection Authority. Non-compliance with the law can result in heavy penalties.
Startups/small businesses will have a hard time ensuring compliance with the Bill. The cost involved in compliance can cause trouble for small businesses. Restrictions on using, modifying, storing and processing of data can cause headaches for startups relying largely on personal data. They have to depend more on existing businesses for anonymised data which may kill the competition in the industry. Government entities are also expected to gain an unfair advantage over the private service providers due to the exemption available to the government agencies for data processing. Monetising first-hand personal data had been the life-line for start-ups which by the new regulation can be a challenging thing to do. The Internet And Mobile Association of India (IAMAI) has already mentioned its concern that the Bill can have adverse effects on innovations and tech-startups. However, most of the obligations do not apply to small entities that process personal data manually barring by any automated means.
Conclusion
There is no doubt that the PDPB can solve a lot of India’s problems relating to data protection and privacy. The PDPB draws a lot of inspiration from the GDPR. The GDPR does not exempt government agencies and also has compulsory provisions to inform the data principals in cases of data breaches. Whereas in PDPB, it is the discretion of the DPA to inform the data principal.
Justice Sri Krishna, who prepared the Draft Bill, believes that the exemption of government agencies is a clear dilution of the Bill. It means that the ultimate beneficiaries of the Bill, the data principals, will be deprived of their rights granted by the Bill if the data processing is done by government agencies. Amidst all the data leakages caused by Aadhar, the Bill was expected to cure a lot of data-related problems. But exemption of Central Government agencies can defeat a lot of purposes intended by this much-needed legislation.
The Joint Parliamentary Committee has invited the comments from the major stakeholders to address any loopholes in the Bill. However, the final Bill is not expected to have significant changes from the one introduced in the Parliament. All data-driven businesses are going to have a busy time complying with the Bill once it becomes a law.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
The Stamp Duty collection mechanism with respect to the securities defined in Section 2(h) of Securities Contracts (Regulation) Act, 1956 such as shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; was a confused mechanism until the Amendment Act of 2019 of the Stamp Duty Act, 1899 proposed by Finance Act, 2019. The collection mechanism as proposed is a centralized mechanism adopted by such amendment.
As per the Section 9A sub-section (1) of the Amendment Act of 2019 of the Stamp Duty Act, 1899, only the Stock Exchanges, Clearing corporations authorized by stock exchange and Depositories will be liable to impose and collect the stamp duty when any of securities is being sold, transferred or issued through them, on behalf of State Government. Moreover, it has also clearly mentioned that no stamp-duty shall be charged or collected by the State Government associated with the transactions mentioned in sub-section (1). Therefore, through the orchestration of such centralized mechanism, the Union has entered and breached the Sate list and its power to legislate on it by providing a uniform stamp duty rates in the Schedule I of the Stamp Duty Amendment Act, 2019. This is the Centralized Collection Mechanism introduced by the Finance Act, 2019 aiming towards streamlining the collection mechanism throughout the nation, and minimal tax evasion.
In this article, the central collection mechanism for number of securities as mentioned above will be discussed and it is streamlining along with various new express provisions clearing the air on number of confusions such as who will pay the stamp duty, at what rate, basis of levying of stamp duty, place of paying stamp duty, etc. and the critical analysis of the amendment as whole. The Central Government (Ministry of Finance) has in its notification dated 10th December 2019 appointed 9th January 2020 as the date on which these provisions comes into force.
I. Transactions involved under the Centralized Collection Mechanism
The Finance Act, 2019 is making a notable transformation in levying and collection of Stamp duty on the securities mentioned under Section 2(h) of Securities Contracts (Regulation) Act, 1956. The Act involves the following transactions falling under its ambit:
Sale of Securities through a Stock Exchange.
Transfer of Securities for consideration, made by a depository
Creation in the records of depository pursuant to an issue of securities.
The power of Central Government to make rules under Section 73A with respect to manner of collection of the stamp duty in all the above mentioned transactions makes the Centralized Collection Mechanism more effective. The supportive instruments to be made in due process of the above transactions will not be levied with any Stamp Duty.
II. Confusions Resolved by Centralised Collection Mechanism
1. Basis of levying of Stamp Duty on securities
The sale of securities through stock exchange shall be made as per the market value of the securities. The uniformity of the stamp duty on the basis of the transaction’s value traded on the stock exchange at the time of settlement of a transaction. The instrumentality of the same has resolved the confusion as far as the basis of deciding the stamp duty value on such transactions is concerned.
2. Place of levying the stamp duty
The major confusion which prevailed for a considerable period of time was the state according to which the stamp duty will be payable by the party, whether according to the place of execution of marketable security or the place of registered office of the party. The Finance Act 2019 has made it clear that the place of registered address of the issuer will be the deciding factor of the place of levying stamp duty, i.e. respective state stamp duty laws.
3. Physical form of securities
The physical form of issuance of securities and sale or transfer of security in physical form, will be dealt as per the prevailing stamp duty rates in those respective states. The Centralised Collection Mechanism has no role in physical issuance or transfer/sale of securities except that of Demat i.e. electronic form.
4. Schedule I and Uniformity of Stamp Duty Rates
The Finance Act, 2019 has made notable changes in the Schedule I of the Stamp Act, 1899, by revisiting the stamp duty rates, and has made them uniform on number of transactions. Along with such uniformity of rates, the state governments are strictly prohibited to impose or collect stamp duty on such transactional secondary instruments. Moreover, it is clearly stated that the sale or transfer of securities for consideration shall be made as per the rate mentioned in Schedule I of Act.
Therefore, the Amendments proposed by the Finance Act, 2019 in the Stamp Duty Act, 1899 have solved number of confusions and considerably affected the Stamp Duty, as far as:
Basis of levying of stamp duty on securities is concerned
Place of levying of stamp duty of securities or instruments is concerned.
Rates of Stamp Duty of securities in Demat form is concerned.
Other than these notable transformations the Amendment has cleared the air on the rates of stamp duty to be levied on instruments and transactions, which were earlier used to be manipulated by the States or evaded by the parties themselves, thereby harming the State exchequer.
III. Schedule I of the Indian Stamp Act, 1899
S.no.
INSTRUMENT
STAMP DUTY
1.
Issue of debenture
0.005%
2.
Transfer and re-issue of debentures
0.0001%
3.
Issue of security other than debenture
0.005%
4.
Transfer of security other than debenture on delivery basis
0.015%
It is significant to mention that the amendment in India Stamps Act, 1899 has increased the definition meaning of instruments, including electronic instruments, and the principal instrument considered for levying the stamp duty is as per Section 9 A and no other instrument will be considered for levying stamp duty.
IV. Impact on Arrangements
Purchase of Listed Shares – The purchase of listed shares will be levied with stamp duty as per this amendment. The inclusion of Demat shares which were earlier exempted from stamp duty under this new law will lead to the purchase of listed shares expensive but with a uniform rate of stamp duty. This change has been effected by amending the definition under Section 2(14) of the Act, hereby including the word “electronic” in the definition of instruments.
Merger and Acquisition – It has been long debated in the end number of judicial pronouncements that whether the scheme of merger and amalgamation is subject to the levy of stamp duty by states. This question has been put to rest bereft of judicial pronouncements effect. It has been made clear in the Act itself by bringing of Demat shares and that of sale, transfer or transaction made through Stock Exchange or Depository under the radar of the Centralised scheme. As soon as such sale, transfer or transaction is reported to the Stock Exchange or Depository, the stamp duty runs its course on the market value of such securities at the time of settlement or on consideration amount.
Equity Pacts – The inclusion of equity pacts under derivatives under Schedule I of the Act has made the equity pacts expensive but streamlined them too, saving them from the inconsistent state stamp duty laws, by providing the uniform rates of stamp duty under Schedule I of Act.
V. Critical Analysis of the Amendments
1. State Power to Legislate is compromised
By involving provisions such as Section 9A in the Act for Centralised collection mechanism wherein it is expressly mentioned that the instruments involved in transaction mentioned in Section 9A sub-section 1 will only be levied by stamp duty, and no other state government can levy its stamp duty on secondary instruments. In addition to it, the revision of Schedule I of the Act has also breached the State list and compromised their power to legislate and decide their rates of the stamp duty.
2. State Exchequer
However the State exchequer has not been compromised in the said amendments, only the collection mechanism is deflected from State Governments to Stock Exchange and Depository, which will collect the Stamp Duty on instruments on behalf of the States and transfer the same to the States within 3 weeks of every calendar month, failing which will have to pay the penalty.
Conclusion
The major takeaways are that the inconsistent State laws on stamp duty that underplayed the potential of Mergers and other business arrangements which remained in confusions due to inconsistent and corrupted system with respect to the levy of state wise Stamp Duty, will now be encouraged and bring in investments with the centralized collection mechanism bringing Stock Exchange and Depository as major players in stamp duty collection. Moreover, the demat (electronic) shares will also come under the radar of Centralised Collection Mechanism, so the purchase of listed shares will be expensive in comparison to the earlier Act, with the levy of Stamp duty. This system has without affecting the State Exchequer has streamlined the Stamp Duty collection system, bringing unified rates of stamp duty into existence.
Section 9A sub-section (3) of the Amendment Act, 2019 of India Stamps Act, 1899
Section 62A of the Amendment Act, 2019 of India Stamps Act, 1899.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Devansh Sharma, 1st year Student, at Law School, Banaras Hindu University. This article deals with the procedures and provisions related to arrest and provisions to prevent arrest.
Introduction
Many incidents related to false arrests and harassment of arrested persons can be seen in everyday newspapers. The events or procedures of arrest are highly stressful and can cause panic to the person facing it. The ultimate need of the hour for a person at the time of arrest is released and their ultimate friend is a lawyer. Thus, it is very important for a lawyer to be quick and effective with procedures and provisions to avoid such events of arrest. A client expects his lawyer to be efficient enough to provide quick solutions in urgent situations. Arrest is one such situation. Hence, it becomes necessary to understand the basics of an arrest to help your client.
Let us start by understanding the term “arrest” and provisions related to it.
Arrest
Arrest is the first step towards custody or detention. It is very often regarded as the start of judicial proceeding. AnThe arrest can be in the form of physical restraint or by words.
The circumstances under which a person can be arrested are:
Arrest with arrest warrant
Arrest in connection with suspicion of a certain offense.
Arrest to prevent any offense.
Types of arrest
There are basically two types of arrests:
Arrest made in pursuance of a warrant issued by a magistrate.
Arrest without a warrant but is made in accordance with a provision permitting such an arrest.
In the case of State of Haryana & Ors vs Dinesh Kumar, it was held that arrest is defined neither in CrPC, nor in IPC or any other enactment dealing with criminal offences and the only indication of arrest can be found in Section 46 that defines the mode of arrest.
The court cited the meaning of arrest given in Halsbury’s Laws of England and the Court stated that the word ‘arrest’, in its ordinary sense, means apprehension or restraint on the personal liberty of an individual. An arrest involves the act of taking a person into custody under the authority of any law, which provides the powers to detain a person for a criminal charge or for prevention of a criminal offence.
In the case of Directorate of Enforcement vs Deepak Mahajan, the court noted that custody and arrest are not synonymous terms. Taking a person into judicial custody is followed by an arrest.
In the case of Joginder Kumar vs the State of UP, CrLJ, 1994, the court held that there must be a justifiable reason to arrest and no arrest can be made merely because it is lawful to do so.
Similarly, in the case of State of Rajasthan vs Bhera CriLJ 1997, it was held that the ‘reasonable suspicion’ and ‘creditable information’ must be related to the grounds on which a police officer arrests the person.
Section 42 allows a police officer to arrest a person for non-cognizable offences if he refuses to give his name and residence information.
Arrest by a private person
The incidences of an offender being tied up to a tree or locked up in a room etc. are very common, but are certainly unlawful. However, there are some legal powers given to private individuals regarding arrests. Section 43(1) mandates that any private person can arrest another person who has committed a non-cognizable offence or a non-bailable offence in his presence. He can also arrest any proclaimed offender but without any unnecessary delay, the arrested person should be handed over to a police officer or must be taken to the nearest police station instead of confining or restraining him in a private place.
If the person fails to present the arrested person to the police station and confines him to his own custody then that person would be charged with wrongful confinement under Section 342 of IPC. The private person must state the reason for arresting the other person, for example, if the other person was drunk or trying to assault others.
Arrest by Magistrate
Under Section 44(1), the powers of the magistrate regarding arrest have been mandated. This Section provides for wider power of arrest than a private person as the magistrate can arrest for non-cognizable offences. If a magistrate, whether judicial or executive, within his jurisdiction, find out that an offence has been committed in his presence, then the magistrate is empowered to either arrest the offender himself or order any other person to arrest the offender.
A magistrate can also arrest or give an order to arrest any person at any time, in his presence and within his jurisdiction by issuing a warrant.
Section 45 says that members of armed forces are protected from arrest under certain circumstances.
Section 46 of CrPC describes the mode in which the arrests, with or without a warrant, are to be made.
The arrest should be in the form of touch or confinement of the body of the person to be arrested.
An arrest is defined as the restraint on personal liberty, hence the person being arrested must submit to the custody of the arrester, or the arrester, by touch or confinement, may arrest the other person.
Mere oral declaration of arrest would not amount to arrest unless the person to be arrested submits to the custody or the arrester by touch or confinement arrests the person.
Submission to the custody can either be expressed by words or by action.
In the case of Bharosa Ramdayal vs Emperor (A.I.R. 1941 Nag. 86), the court held that if a person makes a statement or accepts to the police, about the commission of any offence by himself, then he is said to have submitted to the custody of the police officer.
If the accused proceeds towards the police station on being directed by any police officer then he is said to have submitted to the custody. In such cases, physical contact is not essential.
In the case of Birendra Kumar Rai vs Union of India, CrLJ,1992, it was held that handcuffing of the arrested person is not necessary. An arrest can be completely spoken if the person submits to custody.
Under Section 46(2) if such person forcefully resists the arrest or attempts to evade the arrest, then the police officer or another person may use all means necessary to make the arrest. If the person to be arrested tries to run away or escape the arrest then the police can use physical force to immobilize the accused.
However, Section 46(3) says that the police has no right to use such an amount of force that would result in the death of a person who is not accused of an offence punishable by death or imprisonment for life.
Section 47 gives an authority to police to search a place where a person who is to be arrested has entered. Moreover, Section 48 allows the police officers to move out of their jurisdiction in pursuit of the offender.
But Section 49 restricts the police from using force more than necessary to prevent the arrested person from escape.
Special protection as to females
Due to the rise in violation of the rights of the women, Section 46(4) was inserted into CrPC. This section prohibits the arrest of any women before sunrise or after sunset. In exceptional circumstances, a woman police officer is entitled to arrest after making a written report and obtaining prior permission from First Class Judicial Magistrate.
In the case of State of Maharashtra vs Christian Community Welfare Council of India (2003) 8 SCC 546, the court departed from the long tradition of not arresting women at night in the absence of a female constable. The Supreme Court held that strict adherence to such provision would cause practical difficulties in the investigation procedure of the agencies.
The Court stated that all the requirements must be made for the presence of a female constable but if the presence of female constable is not possible then the investigating officer should state lawful reasons for arrest before arresting the women.
Click Above
Rights of the arrested person
The arrested person has some rights which are provided to save him from the arbitrary use of power by the police. CrPC under a different provision provides for the following rights:
Right to be informed about the person’s arrest to their family.
In the case of Shri D.K.Basu, Ashok K.Johri vs State of West Bengal, State of U.P. (AIR 1997 SC 610), the Supreme Court provided for the guidelines of the arrest. The Court stated that the officer while arresting any person must have his name and designation mentioned on his badge and the police officer must also mention the same to the person.
The Court also gave guidelines to make a memo of every arrest. The memo must mention:
The name of the person to be arrested;
Name of the person arresting;
Charges;
Place where such arrest is made;
Countersigned by 3 witnesses.
Provisions for White-Collar Crimes
The White Collar crime in India can be broadly covered under the following headings:
Bribery
Extortion
Fraud
Embezzlement
Cybercrime
Blackmail
Bank Fraud
Insider Trading
Money Laundering
There are several provisions that provide for punishments of white-collar crimes:
Criminal Procedure Code also deals with provisions of arrest under various sections for such white-collar crimes.
Provisions of Arrest under GST
If the Commissioner of CGST or SGST has reasonable grounds to believe that a person has committed an offence under Section 132 of the CGST Act, he can be arrested upon authorisation from CGST or SGST officer. The arrested person should also be informed about the grounds of his arrest and he should be presented before a magistrate within 24 hours in case of a cognizable offence.
Arrestable Offences under CGST
Section 132 provides for arrestable offences that are:
A taxable person supplying any goods/services without any invoice or issuing a false invoice;
Issuing any invoice or bill without supply of goods/services in violation of the provisions of GST;
Collecting any taxes under GST but not submitting it to the government within 3 months;
Collecting any taxes under GST in contravention of provisions, and not depositing the same to the government within 3 months will be an offence under GST;
The person is convicted earlier of an offence under Section 132 i.e., this is his 2nd offence.
Under Section 132 it is essential that a person is arrested only where the tax evasion is more than 100 lakh rupees or where a person has earlier been convicted of an offence under Section 132.
Bails under GST can be granted for non-cognizable or non-bailable offences.
Provisions relating to arrest under customs
The Customs Act under Section 104 provides for powers of arrest. It mandates that if an officer of customs is empowered by general or special order of the Commissioner of Customs in this behalf and if the officer has reason to believe that any person in India or within the Indian custom waters has been guilty of an offence punishable under Section 135, then the officer of customs can arrest that person. The officer shall also inform him of the grounds for such arrest as soon as possible.
Section 104 of the Customs Act also states that every person arrested under sub-section(1) should, without unnecessary delay, be taken to a magistrate.
When an officer of customs arrests any person under sub-section(1) of Section 104, he shall, for the purpose of releasing such person on bail or otherwise, have the same powers and be subject to the same provisions as the officer-in-charge of a police station and is subject to under Section 142 Code of Criminal Procedure, 1898 (5 of 1898).
Nothing that is mentioned under the Section143 Code of Criminal Procedure, 1898 (5 of 1898) shall recognise an offence under the Customs Act as a cognizable offence.
Provisions of bail
The term bail is not defined under CrPC. Bail is the security given by the accused to the court affirming his will to attend the proceedings of the court for his trial. Bail is a method used to ensure the presence of an accused before the court. Only police and courts are capable of granting bail.
Bail: When to be granted and when not
Criminal Procedure Code defines bailable offences as offences described as bailable in the first schedule or which are made bailable by other laws in force.
The gravity of the offence, danger of accused absconding, tampering of evidence, previous conduct, health, age and sex of the accused person form the basis of distinction between bailable and non-bailable offences. Section 436 of CrPC gives the accused a right to demand and be granted bail for bailable offences.
Section 437 CrPC lays down certain basic criteria for exercising the judicial discretion for grant or denial of bail in case of non-bailable offences. Anticipatory bail, under Section 438 CRPC, can be sought in cases where the apprehension of arrest arises.
An interesting question was answered in case of Haji Mohamed Wasim And Ors v. State of U.P., that questioned the validity of bail granted by police officers. The accused on bail, which was granted by the police preferred to not appear before the court. Hence, the trial court issued a non-bailable warrant. The accused challenged the warrant under Section 482. The court ruled that he has to take fresh bail from the trial court.
Bail by police
The Police Officer has powers to release an accused person on bail from the custody when arrest is made under:
Arrest without the issuance of a warrant;
Arrest with the issuance of a warrant.
Sections 42, 43, 56, 59, 71, 81, 169, 170, 436, 437 and Schedule I Column 5 of the Criminal Procedure Code has conferred upon the police the powers to grant bail.
Bail when arrest made without a warrant
Section 42 Cr.P.C. 1973 gives the officer powers to arrest when the offender refuses to give name and address or if the given name and address is considered to be false. If the police officer is aware of those particulars, neither the question of arrest nor of bail arises. The police officer cannot detain the accused after the name and address have been ascertained if the accused is willing to execute the necessary bonds.
In case of arrest by a private person, the arrested person should be, without unnecessary delay, handed over to a police officer, or be brought to the nearest police station. Bail will depend upon the police officer before whom the person has been brought. The arrested person shall at once be released, if there are no sufficient grounds to believe that he has committed any offence. But if such a person comes under the provisions of Section 41, a police officer can re-arrest him and then the determination of the question whether bailable or non-bailable and the desirability of release on bail etc. will arise.
Section 56 says that a police officer who makes an arrest without a warrant must take the arrested offender, before a magistrate or before the officer in charge of a police station. However, according to Section 56, there is an inbuilt provision authorizing a police officer to admit the arrested offender to bail.
Section 169 CrPC refers to the grant of bail not at the start but only on the making of an investigation under Chapter XII of the Code. Till then bail is not authorized under this section.
Section 437(1) grants the power to release a person accused of a non-bailable offence on bail. This power is conferred upon officer-in-charge of the police station.
Bail when arrest is made in pursuance of a warrant
Section 71and Section 81 of the Criminal Procedure Code grants power to provide bail when an arrest is made in pursuance of a warrant.
The powers of police to grant bail are controlled by directions prescribed under Section 71 of the Code. Whereas Section 81 empowers the police officer to grant bail when the arrested person has been accused of a bailable offence, even if no direction to such effect has been given in the warrant. But in case of a non-bailable offence, the directions given on the warrant has to be followed strictly.
In the case of Lachmi Narain vs. Emperor, the Court stated that it is entirely the discretion of the Court to issue a warrant and give directions for the release of the arrested person on bail.
Bail for non-bailable offences
Section 437deals with the provisions of bail in bailable offences. Grant of bail is a rule whereas refusal is an exception under the provisions of this Section. A person has the right to be released on bail for a bailable offence. In cases of bailable offences, there exists the concept of compulsory bail.
Section 437 empowers two authorities to grant bail:
Court: Itincludes a High Court and the Court of Session, and
Officer-in-charge of the police station: Officer, who has arrested a person suspected of a non-bailable offence without a warrant.
Refusal of bail in bailable offences
Section 436 (2) of the Criminal Procedure Code has empowered the Court for denial of bail in cases of bailable offences when the court feels that the accused fails to comply with the conditions of bail bonds.
Anticipatory bail
Under the Code of Criminal Procedure, there is a provision for anticipatory bail under Section 438. This provision allows the accused to seek bail when there is an apprehension of an arrest for commission of a non-bailable offence.
The filing of anticipatory bail is notified to the opposing party to let the opposition contest the bail application in court. Anticipatory bail is an order to release a person on bail, which is passed even before the person is arrested. It can only be given by the Sessions Court and the High Court.
Eligibility
Any person under an apprehension of getting arrested-
on false or trumped-up charges, or
due to enmity with someone, or
fears that a false case is likely to be built up against him,
then the person has the right to move to the Court under Section 438 for grant of anticipatory bail. The court can, if it deems fit, direct that during such arrest, the accused shall be released on bail.
Conditions
The Court can induce conditions for an anticipatory bail, as it deems fit, including:
The person must be present for interrogation by the police officer whenever required;
The person must not, directly or indirectly, induce any person, familiar with the facts of the case, trying to dissuade him from disclosing facts to the Court or to any police officer;
The person must not leave India without the prior permission of the Court.
If the person is arrested afterwards but is ready to comply with the conditions of bail, he must be released on bail. If the magistrate taking cognizance of the offence decides that a warrant must be issued against the person, the magistrate must issue a bailable warrant in conformity with the directions of the court granting anticipatory bail.
Cancellation
An accused is free on bail as long as it is not cancelled. The Court can direct that the person who has been released on bail to be arrested again. The Court can also commit him to custody on an application of the prosecution.
Release under Section 482 of CrPC
Section 482 of the Code of Criminal Procedure talks about the inherent powers of the High Court to prevent the abuse of the procedure of the Court. For example, if a false FIR is filed against the client then in pursuance of that an application can be filed in the Court seeking to quash the same. Upon approval of the application by the court, the FIR will be quashed and the client will be released immediately.
Article 226 and Article 32
In cases related to wrongful confinement of the client by the police or any other private person, a writ of Habeas Corpus can be filed in the Court in order to seek the release of the client. Habeas Corpus is a writ petition requiring a person under arrest or detention to be brought before a judge or into Court. This is especially done to secure the person’s release unless lawful grounds are shown for their detention.
Conclusion
Though we have some major provisions of arrest and those related to its prevention, there will be cases when your client is arrested and has been taken to the police station and those situations can be really panicking. But there are certain pieces of advice that a lawyer can provide to his/her client regarding how to handle the situations by the time he/she reaches the police station. Ask your client to stay calm and comfort him with the information that the police officers can not hurt him. Further, advise the client not to get into arguments with the police officers, and ask him not to talk to the police about the matter related to the case until you arrive. Moreover, the client can disclose his basic details like name and address which the police is entitled to know but should not reveal anything else and should seek legal advice or should ask the officer to make a call to inform his family and his lawyer about the arrest. Providing your client with such initial advice will enable him to help himself in the police station and eventually help you to deal more effectively during the arrest proceedings.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Kashish Kundlani, a third-year student of (BBA.LL.B) Ramaiah Institute of Legal Studies, Bangalore. In this article, Section 307 and Section 308 of the Indian Penal Code, 1860 have been discussed. These sections talk about the attempt to commit murder and attempt to commit culpable homicide.
Introduction
Culpable homicide and murder are defined in Section 299 and Section 300 of the Indian Penal Code respectively. There is a very thin line between the two offences.
Furthermore, an attempt to commit the same is also an offence under the Indian Penal Code. Their attempts are respectively defined under Section 307 and 308. Under both the Section a lot of weightage has been given to the intention and knowledge to commit such offence and both the Sections requires a proper analysis while convicting any person under this.
Meaning of Attempt
Section 511 of the Indian Penal Code talks about the punishments relating to an attempt to commit any offense but it does not define the term “Attempt”.
If the crime is impossible to commit, then it will not be considered as an offence. This is with the exception that, instigating or manipulating someone in order to make him commit the crime is not an offence.
It is an offence under the attempt to commit a crime.
Stages of a crime
If a person commits a crime voluntarily or even if he prepares to commit a crime, the following four stages of a crime should be present.
Stage 1: Intention
Intention to commit a crime is a mental stage. It is the willingness of a person to commit an act. The law does not consider the importance of intention. Like mere intention to commit an offence without any physical act done, does not constitute a crime. The guilty mind or evil intent should be visible.
Stage 2: Preparation
This stage involves the arrangements to execute a crime. One should keep in mind that at this stage, no offence has been committed yet.
As preparation for any purpose is not a crime. But certain acts under the Indian Penal Code can be prosecuted at this stage.
For example- Preparation to wage war against the state and preparation to commit dacoity are punishable at this stage.
An illustration for this stage is- If ‘L’ purchases a pistol in order to kill his enemy ‘S’ and keeps it in his pocket and does nothing. This is not a crime, this is just a preparation to commit the crime.
Stage 3: Attempt
The attempt of crime occurs when preparing for it, is done. The attempt is a direct action towards the committing of an offence.
Most of the sections of the Indian Penal Code makes the attempt of any crime, a punishable offence.
Stage 4: Completion or Accomplishment
To make it a complete offence or a complete crime, the completion of the crime is very important. If a person attempts to commit a crime and eventually succeed in it, then he will be held guilty.
Through an illustration, we’ll summarize the 4 stages-
Stage 1: Intention ‘X’ makes a plan to kill ‘Y’.
Stage 2: Preparation Buys a pistol to kill him.
Stage 3: Attempt X points the pistol at Y and shoots him.
Stage 4: Completion Y is killed because of the gunshot.
Then X will be held guilty of murder.
But if Y is only injured then X will be held guilty of attempt to commit murder.
Scope of Section 307 and Section 308
Section 307 of the Indian Penal Code addresses an attempt to commit murder.
Whoever does the act with guilty intention or knowledge, and the person knows that the act is likely to cause death or has a knowledge that by the act or injury the result will be death, only then he would be held guilty of murder.
For example- Mr. T is planning to murder Mr. P. He collects some toxic chemicals with an intention to mix it in Mr. P’s food.
Until Mr. T has served the food, he hasn’t committed any offence.
But if he places the poisoned food on Mr. P’s table, or gives it to Mr. P’s servant, then Mr. T has committed an offence of attempt to murder.
Ingredients of this offence
The nature of the act done.
Intention or knowledge of committing an offence.
The performing or executing of an offence towards it.
The act in the ordinary course of nature will cause death.
The two most important ingredients
Knowledge or intention to commit an offence
To decide upon any act done under Section 307, the 3 essentials are-
Nature of an act done.
Intention or knowledge of committing an offence.
Performing or executing of an offence towards it.
The objective of this section is that the intention or knowledge of the accused is significant.
To constitute an offence of murder, intention or knowledge is necessary.
Without any intention or knowledge, it is difficult to determine whether there was an ‘attempt to murder’.
The performance or executing of an offence towards it
Just wrong and evil intent to do an act is not enough to constitute a crime. To make the act punishable, a physical and voluntary act or omission must be visible. The act done should also be capable of causing death in the ordinary course of nature.
Punishment under Section 307 of IPC
Imprisonment may extend to ten years. The offender might also be liable to pay a fine.
In an attempt to commit murder, if it results in injury to any person, then the offender shall be imprisoned for a time period that may vary from 10 years to life imprisonment. It may also be accompanied by any amount of penalty.
If any person is already convicted for life imprisonment, hurts someone again with the intent to commit murder, then he will be punished with death penalty.
Section 308 of the Indian Penal Code talks about the attempt to commit culpable homicide.
Whoever does any act with intention or knowledge,that by such an act he is likely to cause death, he would be held guilty of culpable homicide.
For example- P shoots D as he got provoked by the words of D. If D dies, then P will be held for culpable homicide. Whereas If D does not die then P will be held guilty for an attempt to commit culpable homicide under this section.
Click Above
Ingredients of this offence
Nature of an act.
Intention or knowledge of the offence.
Likely to cause death.
Executing their act or performing their act towards it.
Culpable homicide not amounting to murder.
Punishment under Section 308 of IPC
Section 308 states that anyone accused under this Section will be sentenced to either imprisonment which may extend to three years, fine, or both.
If a person is injured in the attempt to commit culpable homicide, then the offender will be sentenced to imprisonment for a term which may extend to seven years, or fine, or with both.
Is an attempt to commit murder and culpable homicide a bailable and cognizable offence?
Bailable Offences- Offences in which the permission from the court to release the arrested person is not required. The arrested person by fulfilling the necessary requirements can be released and the police cannot refuse the person.
Cognizable Offences- Offence in which the police has the authority to arrest any person without any warrant and also has the authority to start an investigation with or without any permission of the magistrate by filing FIR.
Attempt to commit murder and culpable homicide are both non-bailable and cognizable offences.
The four appellants were held guilty under Section 395 of the IPC by the Sessions Court for committing dacoity in the house of Hardeo Mahton.
During the trial, it was held that appellant No. 2 will also be charged for attempt to commit murder under Section 307 of IPC. While the appellants were committing dacoity, appellant No. 2 fired a gun at Burhan Mahton which injured him gravely.
The Sessions Court held that Burhan Mahton died because he succumbed to the injuries caused by accused No. 2 and the accused No.2 would be held guilty of attempt to murder under Section 307.
The Trial Court convicted the accused under Section 395 for dacoity and under Section 307 for an attempt to murder. He punished all the accused of dacoity and gave them nine years imprisonment. The accused was also sentenced to nine years of rigorous imprisonment. It was held that accused no. 2 will serve both punishments simultaneously.
The four convicts filed for an appeal before the High Court. The High Court upheld the decision of the Trial Court and dismissed their plea.
The Apex Court considered all the evidence and dismissed their appeals.
Bishan Singh and Govind Ballabh were convicted for the commission of an offence under Section 147 and 308/149 of the Indian Penal Code. Out of a group of 6, they were the only two who had survived. Harish Bhatt, the plaintiff, was assaulted by the accused with lathis. They also took out Rs.400 out of his pocket. In order to save him, the plaintiff’s brother Ghanshyam intervened. But all of the accused attacked Harish Bhatt with an intention to kill him. As a result, Harish Bhatt did not die but received several grievous injuries because of their attack.
Trial Court
The trial judge convicted the appellant under Section 147 IPC for rioting and under 308/149 of IPC. The court sentenced them to imprisonment for one year under Section 147 IPC and four years under Section 308/149 IPC.
In his FIR, the informant said they were threatened by the accused. They argued that the act was done with the intention of murder, but the offence was recorded under 147 and 323 of IPC when it should be recorded under Section 308.
The judge after analysing the non-presence of the ingredient of Section 308, convicted them under Section 323 and 325.
In this case, the appellant was convicted under Section 307 of India Penal Code. The court sentenced him to five years of imprisonment and charged him of Rs. 5000 as a penalty.
The court held that the appellant was guilty under Section 307 and the bail will not be granted. The Court also held that injuries on the other person, regardless of their severity, would attract punishment under Section 307. All the injuries will be considered as an offence and the person committing will be held guilty.
Conclusion
After the analysis of Section 307 and 308, it has been well established that not only committing an offence, but attempt is also punishable. But it should be kept in mind that for an attempt to be punishable, the presence of an intention and preparation of the crime is important.
The need to reform this section arises when an analysis of Section 307 and 308 is done with Section 511. Under Section 511, all the crimes, regardless of the possibility to perform, are considered as an offence, and are punishable under this act. In Section 307 and 308, the intention, knowledge, and means to perform it, are elements the courts deem essential for an act to become a crime.
For example- If a man threatens to kill another person by using a child’s pop gun. No offence is committed here because it lacks the necessary arrangements or proper means to perform it. But similarly in some situations, if someone fires a gun at something thinking it to be a person where actually there is nobody, then the previous example will be held punishable under Section 511. Whereas the latter example will not be held punishable under Section 307 this is because it is an impossible attempt and the means or proper preparation to commit such offence is missing.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
Until 2007 Nokia dominated the sales of mobile phones across the globe. When Steve Jobs made an insanely amazing gadget called an iPhone which did not have a keyboard and was an all-touch gadget, the market and the public went into euphoria.
“Wow, there’s this beautiful looking iPhone that also offers apps you can buy from its AppStore! I mean, how crazy is it?!!?”
Nokia’s demise is a prime example of what other industries can learn from. Businesses need to react to innovation coming from outside the industry. Even a company that was on top and dominating its market was surprisingly vulnerable and fell from the top to bottom in no time.
Not only Nokia, but Blackberry also met the same fate around the same time.
The technology industry has accepted that constant innovation is the only way to stay relevant.
But what about us? Do we also need to innovate, learn, strive continuously to do well and stay relevant in our own fields?
It would appear so. The internet and social media have unleashed a global phenomenon. If you think your job is secure and you are safe, you may discover to your surprise that some kid with a computer in some corner of the globe has stolen your lunch.
There was a time when once you made a reputation in a certain court or an area of practice you could bank on it for the rest of your life. Is it still that way? If it is, is that going to change in the years to come?
Lawyers for a long time thought that they are insulated from this change, but no more. There are winds of change that started as a surprising breeze and is now about to turn into the perfect storm.
Three major trends we have observed and predict the intensification of in 2020 are as follows.
There is a lot more money in emerging areas rather than old mainstays
Lawyers always made money in India with property matters, criminal cases, banking matters, tax, company law and corporate transactions. However, new areas like technology law, media law, legal services for startups, insolvency, VC transactions, data protection and cybersecurity laws, energy law, environmental law etc have arrived as new areas of work with a lot of potential and more money.
Let me use an example. Employment law was never considered lucrative in India. However, it is rapidly becoming a money-spinner given new sensitive client concerns like sexual harassment law, foreign employee issues, employment visa, data protection or breach of privacy by employees, ESOP and attrition management.
On the other hand, employees are increasingly suing their employers for failure to treat fairly. The number of cases for breach of agreement, failure to furnish an experience letter, delay in payment of salary, and wrongful termination is on the rise as Indian employees are upwardly mobile and now have the information, education, and resources necessary to engage in litigation.
As the Indian economy inexorably marches from mostly unorganized sector to more and more formal businesses, employment agreements are being drafted, enforced and brought up in negotiations. The government has also reformed labor laws to a great extent, and businesses are still trying to understand the full impact of these laws.
In practice areas that have existed for the last 50 years or more and were considered attractive, there are too many legal service providers, and there are always many new lawyers willing to drive prices down. While the top lawyers in those areas are still able to charge a premium, the lawyers in the middle are finding it hard to hold steady. It is very hard, for this reason, to go and build a practice in a district court or a High Court compared to an NCLT or REAT.
Younger lawyers have done well before forums like COMPAT, TDSAT, APTEL while they have not made much of a dent in High Court or Supreme Court practice.
New practice niches with very few lawyers offer opportunities and more margin because it is harder to find a competent lawyer in these niches.
If you are trying to build your career strategy today, it is fine to opt for the perennial favorites, but do take into account emerging areas too.
Definition of legal services is changing
There was a time when good legal services only meant the lawyer going to a court and winning the case, or just closing a deal as a corporate lawyer.
Lawyers only focused on the core part of legal work and did not consider customer services or ease of the customer in accessing their services or marketing or technological interventions to be part of their work.
Many lawyers relied on information asymmetry and their exclusive license to appear before the court to get clients. Unfortunately, as there are way too many lawyers out their today, and information about every lawyer is widely available on the internet, legal knowledge alone does not entitle a lawyer to charge money from clients.
They have to provide a good client experience, which goes much beyond mere doing of legal work. Of course, competence in doing legal work is still the sine qua non, but other areas of business-specific expertise of lawyers are becoming very valuable too.
A relationship based on trust and convenience has to be built up with potential clients and existing clients have to be supported in a way that they want to come back.
There are now law firms that are hiring consultants for client experience design, which includes the experience of the client from the moment they reach out over a call or email or step in through the door and meet the receptionist.
Many clients are fed up with chasing their lawyer for updates about hearing etc, whereas some lawyers are introducing automated CRM systems that send regular updates automatically to clients and remind them of important dates.
Imagine the vast difference in the experience of the client, and tell me, which lawyer would the client prefer to work with?
Increasingly, the clients are taking the center stage in legal practice because a new breed of young lawyers and law firms have realized that quality of client experience is a great differentiator and major success trigger.
Similarly, lawyers with a flair for educating their clients and engaging with the public are building stronger brands. Law firm marketing has become a profession as lawyers are specializing in it, while even individual lawyers have come to realize the importance of marketing and are trying to improve at it.
Most importantly, technological disruption and reimagination of the legal service is reaching a stage of intensity where it is extremely hard to ignore. Lawyers who are adopting technology better are miles ahead of the rest. Being a lawyer does not mean just the ability to draft legal documents, do legal research and appear before judges – it means a lot more today.
While some lawyers see opportunity in it, others used to the old ways are positively threatened by it.
Younger lawyers will find it easier while older lawyers have it harder
Young lawyers had it hard in the legal profession so far, and the older lawyers with more experience had an upper hand. However, technology has changed that equation a great deal. Lawyers who grew up using the internet are using new technology to build their brand, find clients, learn new skills, automate their work and deliver better customer experience while many older lawyers are at a complete loss about what is going on.
Some of the old guards often try to block the young lawyers in the name of professional rules, but so far the juggernaut has not been slowed down at all and it is unlikely to stop. Creative lawyers always find various ways around the rules.
One major reason why younger lawyers took a long time to get anywhere in the legal profession was that they were at the mercy of senior lawyers to learn any practical skills. Since they could not learn the work in any other way, or faster, they could not venture out on their own early in their career.
Even legal books were priced so prohibitively that they could not afford their own law books initially. Buying a set of SCC or AIR on your own required to save up money over the years for most young lawyers and a chamber that could accommodate all such books.
The situation is not like that anymore given the wide availability of legal resources online, and advent of LawSikho where they can learn practical legal skills online in a far more systematic way.
How can we help you to benefit from these trends?
LawSikho courses have been created keeping these trends in mind.
We teach courses that are old favorites while creating courses that can get you inroads into emerging areas with maximum opportunities.
Our assignments and lessons are planned in such a way that you learn actual skills that employers and clients are happy to pay for.
We teach you 2 specific skills every week that a client will pay at least 10k or more if an individual lawyer was to do the work.
Imagine learning 100 such practical skills, chosen for their immediate relevance and demand in the market, every year. How can that help you to expand your area of practice and influence as a lawyer?
Our students rapidly increase their income, get promoted faster and land coveted job offers all the time.
If you want to know how we do this, you can try out any of our premium courses risk-free (below are a few in which enrollment is currently open) :
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
Start-ups are of a certain nature- usually starting off as small businesses, owned by a small number of people, looking for investment to take their business to the next level. With the growing number of start-ups that were emerging, the Start-up India initiative was kick-started by the Government of India in January 2016. An action plan was set up to make the market conducive for the growth of start-ups and which promised certain incentives including tax benefits to attract the creation of new Start-ups. In pursuant of this, the Finance Ministry has come out with multiple policies to benefit the ecosystem.
Changes through Notifications
The DIPP issued numerous notifications post the establishment of the Start-up India initiative. The Notification dated 11th April 2018 remains the most significant one, which laid down what entities constituted start-ups, how they should register themselves and how to avail tax benefits specifically with respect to the Section 56 provision. Some of the significant revisions are listed below.
Definition
The DIPP issued a notification establishing what entities constituted start-ups and what tax benefits they received. Any kind of incorporated private company or partnership firm, up to 7 years from their incorporation, was established as a start-up. The Biotechnology sector was accorded a 10-year period from their incorporation.
Further, the start-ups should be working towards innovation, development or improvement of goods and services. Additionally, they should not have had a turnover of over twenty-five (25) crore rupees in any financial year. However, it is to be noted that an entity formed by splitting up or reconstruction of an existing business shall not be considered a ‘Startup’.
Constitution of an Inter-Ministerial Board
On meeting these requirements, an application of exemption has to be made to an inter-ministerial board consisting of officials across over eight different government departments for the start-ups to obtain an exemption. These measures have proven to be extremely cumbersome and time-consuming to the start-ups.
Recognition
To be recognized as a start-up, new procedural guidelines were introduced as follows:
(i) an online application was to be made through the mobile app or portal set up by the DIPP
(ii) The application was to enclose: (a) a copy of Certificate of Incorporation or Registration, and (b) a note on the nature of business highlighting how it is working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.
The DIPP after reviewing the documents and making enquiries, may recognize the applicant as a start-up or reject it after providing reasons.
Change in the procedure to apply for Section 80-IAC relief
An application through Form 1 can be made for the issuance of the certificate under Section 80-IAC of the ITA,1961, for the purposes of obtaining a tax holiday for the first 3 years of an eligible start-up. It has tocontain the name of the start-up, date of incorporation, PAN, Address etc. Annual Financial Statement and Copies of the Income-tax returns for the past 3 years should be attached with the form as well.
Section 56 relief
The most significant aspect of this notification was with respect to the Angel Tax Provision.
To provide a little background, as a principle, investments/capital income are not taxed under the Income Tax Act, 1961 (hereinafter “the Act”), as it is considered to be an asset and income that is taxable at a later stage – in the form of dividends or capital gains. However, with the insertion of Section 56(2)(viib) in the Act by the Finance Act 2012, any investment made by a resident, in premium, exceeding the Fair Market Value (FMV) of the shares are to be taxed to the extent of the premium. This was done in pursuance of the initiative by the then finance minister, Shri Pranab Mukherjee to counteract the “malaise of generation and circulation of black money”. This provision was introduced in the Act along with provisions such as the General Anti-avoidance Rules (GAAR) and the inclusion of Specified Domestic Transactions within the ambit of the transfer pricing provisions, in furtherance of the same motive.
This section has cost the lifeline of start-ups very heavily at the rate of 30% of the premium investment raised. Hence, after hearing a lot of outcries, the CBDT notification, via the power conferred to it by proviso (ii) of Section 56(2)(viib) of the Act, exempted investments from a certain ‘class of persons’. It exempted investments from resident ‘persons’. The ambit of persons is defined under S.2(31) of the Act. This was seen as a major relief to investors and start-ups alike. However, foreign investments were still taxed.
Additionally, even post the notification from the CBDT, notices were sent to start-ups to pay a massive 30% income tax on premium investments received by them. Relief accorded was quickly snatched away from the start-ups and many were in a state of panic. Thus, began a back and forth game between the start-ups and the various government departments.
The notification dated 11th April 2018 granted an exemption to registered start-ups under the section, if the investment fulfilled certain guidelines. The guidelines stipulated the investment made in premium to be below ten (10) crore rupees and further cast a mandate upon the investor to have an average returned income of at least twenty-five (25) lakh rupees or have a net worth of over two (2) crore rupees as on the preceding financial year. It further mandated a report from a merchant banker as under Rule 11UA of the Rules. It is to be noted here that chartered accountant was removed from being able to value unquoted shares under Rule 11UA(2)(b) via a notification from the CBDT notification dated 24th May 2018. These measures were taken to avoid falsification of valuation.
However, it is to be noted that stakeholders in the Start-up industry, were not happy with this notification as the financial thresholds for attracting tax liabilities remained low. Hence, after subsequent requests from the industry, the Ministry made further revisions. The latest notification exempts registered start-ups for up to 10 years from incorporation/registration, which maintain a turnover below 100 crores in every financial year and issues share capital worth less than 25 crores. However, the exemption comes with conditions that start-ups cannot invest in capital assets and securities, among other things, for a period of 7 years post the exemption period, which is a major limitation for start-ups.
Changes through the Budget 2018
Corporate Tax Rate Cut
The budget of 2018 brought with it a relief for small and medium-sized companies in India. Especially Start-ups. The corporate tax rate was cut from 30% to 25% for companies with a turnover of up to 250 crores in FY 2016-17. This is a significant amount of money saved for Start-ups, which can boost their business performance. This reduces the cost of doing business, which means more funds can go back into investing in the growth of the Start-up.
Amendment in Section 80IAC
Section 80IAC provides a tax holiday for eligible start-ups for profits up to 3 consecutive years. The Budget extended the period of incorporation of start-ups from 1 April 2016 to – 1 April 2019 to 1 April 2016 to – 1 April 2021 to be eligible to avail benefits under Section 80 IAC of ITA. This brings within the bracket of benefit, a larger number of start-ups. Further, now eligible start-ups can claim a tax holiday for any 3 years out of their 7-year status as a start-up. The 7-year period is counted from the date of incorporation.
Exemption on Salary up to 40,000
The Standard Deduction for salaried individuals was reintroduced and granted INR 40,000, in place of travelling and medical allowances. This does not create substantial benefits for medium or large-sized companies which give relatively higher salaries. But for smaller start-ups, this comes as a great relief for its workers. Thus, increasing the supply of job applicants and indirectly helping start-ups grow.
No Education Cess on the Import of goods abolished
Education Cess and Secondary and Higher Education Cess were abolished on the import of goods. Although nominal, it a boost for start-ups in the sector of import of goods.
EPF Contribution
The government introduced a contribution of 12% of wages for new employers towards EPF across all sectors for the next 3 years. This helps start-ups by reducing their financial liabilities.
Conclusion
As can be seen through the above illustrations, a wide range of policies and regulations were changed in 2018 for start-ups, to promote and accelerate our economy. The government sees the massive potential hidden in the start-up ecosystem. India is expected to become a $10-trillion economy by 2030, and start-ups are the seeds to this grand idea.
Endnotes
DIPP Notification No. G.S.R. 364(E).
Ibid.
Section 56(2)(viib), Income Tax Act 1961.
CBDT Notification No. 45/2016, 14th June 2016.
CBDT Notification No. 23/2018/ F.no. 370142/5/2018- TPL, 24th May, 2018.
DPIIT Notification No. G.S.R. 127(E), 19th February 2019.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
This article is written by Shubhangi Upmanya, pursuing BBA.LLB. from Vivekananda Institute of Professional Studies, Indraprastha University. In this article, she has discussed the provisions related to bail.
Introduction
India witnesses a lot of crimes on a daily basis and the police many times are successful in tracing the criminals who they believe did the crime. The trial starts after some weeks or months from their conviction. The convicted criminals may at times, not be guilty and still be required to face jail time. The only way out of this is to get a bail.
The concept of bail was only prevalent in England during 399 BC. Its first instance was when Plato tried to procure a bond in order to release Socrates. Getting inspired from that, India also, later on, introduced this concept.
Well, if you get a call and learn that your client is jailed, then let’s see how to get him out of it.
The basic concept of bail
The term ‘bail’ means a kind of security or bond which is given to release a person from prison. It is a pro tem release of a criminal before his trial begins. The term ’bail’ is not defined anywhere in the Criminal Procedure Code, 1973, however, the terms ‘bailable offense’ and ’non-bailable offense’ are defined in Section 2(a) of Cr.P.C.
Evolution of the concept
As mentioned earlier, the concept was first introduced in England. The judges in England used to travel from place to place to hear the cases which took place from session to session. During this, the prisoners would face a hard time because of the unhygienic prison conditions. So the system of bail was introduced to release the prisoners awaiting trial.
Later on, the Charter of Rights, the Magna Carta was introduced in the year 1215, which gave the right to the citizens, which stated that a man can not be convicted until he has faced the trial. The offenses were divided into bailable and non-bailable, back in 1275 by the statute of Westminster.
The Habeas Corpus Act came in the year 1679, according to which the magistrate can release the prisoners by taking some sort of surety. The English Bill of Rights introduced in the year 1689 provided a shield against the excessively high amount of bail. Currently, the Bail Act of 1976 is been followed in England.
Talking about the United States, the Bill of Rights was subsumed in its Constitution in the year 1791. It guaranteed all the provisions related to bail.
In India, the provisions regarding bail are incorporated in the Criminal Procedural Code,1973.
The Sections 436 to 450 deals with the grant the bail and bonds, in cases of criminal nature.
Let’s look at these provisions in depth.
In which cases can you get your client, bail?
Section 436
Section 436 of CrPC states that any person who is detained by a police officer, who doesn’t have a warrant or that person is prepared in the custody of the police officer before the court has granted him bail, shall be released on bail through a bond without any kind of sureties.
If the person has failed to follow the bail-bond then he can be refused bail. In case, the person appears in the court, such refusal will be subject to the court and it can call that person and impose penalty given under Section 446 of Cr.P.C.
Types of bail
Generally, there are three types of bail. Let’s have a look at them.
Regular bail
When a person has been arrested and is kept in custody, then the person can be released on a regular bail under Section 437 and Section 439 of the Cr.P.C.
Section 437
It states that, if any person is detained for the commission of a non-bailable offense, without a warrant by a police officer, or when there are reasons to believe that there are not sufficient grounds to prove that the person has committed any non-bailable offense, then he can be released. This has to be followed in case he appears in any other court other than the Court of Sessions or the High Court.
Even so, this person can not be granted bail if there are reasons to believe that he is guilty of any offense punishable with a death sentence or life imprisonment or he has earlier been convicted for an offense which was punished with punishments of the same nature.
Section 439
It gives special powers to the High Court and the Court of Sessions regarding the same.
It enables these courts to release the people on bail for the offenses specified in Section 437(3) of CrPC. The court can impose any condition which it thinks is necessary.
It further provides that any condition which the Magistrate imposes can be set aside if the High Court has granted bail after giving notice to the public prosecutor. The bail, in this case, should be provided in case the offense can be tried exclusively by the Court of Sessions and is punishable with life imprisonment.
Under both of these Sections, the courts can again direct the arrest of that person.
Interim bail
Before the procedure for granting a regular bail or anticipatory bail, interim bail is provided. It is given for a temporary period. The reason behind this is that the granting of bail by the High Court or the Court of Session requires documents to be sent by the lower courts, which takes time. So, for the time being, the provision of interim bail is provided.
The Interim bail can be extended and if its period expires then the person to whom it is granted has to be put in jail again.
It provides that any person who anticipates that he can be arrested in pursuance of any accusation of committing a non-bailable crime can apply for the grant of anticipatory bail. Application has to be made to the High Court or the Court of Sessions.
According to this Section if a person is released then there are some conditions that will follow-
The person has to be present during the investigation whenever required,
The person can not induce any person to disable him to enclose the facts against him during the proceedings,
The person shall not leave India without the prior permission of the court.
It was further provided that if any person is arrested by a police officer without a warrant then he can be given bail.
Circumstances under which bail is given by police
When the arrest is made without a warrant
Section 43 of the Cr.P.C. provides for the arrest of any accused by a private person. The private person after the arrest should bring the convicted person to the police station or hand him over to the police officer as soon as possible. The police will if it thinks that the convicted person should be released, release him.
Section 56 of the Cr.P.C. enables the police officer to bail that person out under the provision contained in this Section.
Section 169 of Cr.P.C. state that the bail can only be set when the investigation is made. Until then this Section does not provide bail. Bail can be given by the officer-in-charge of the police station or the police officer who is investigating.
Section 170 of Cr.P.C. confers authority to give bail, in the officer-in-charge of the police station in case the person is accused of committing a non-bailable offense.
When the arrest is made with the issuance of the warrant
Section 73 of Cr.P.C. states that if the court is issuing the warrant under which it is specified that if the person executes a bond in which he has provided sureties for appearing before the court when the court specifies, then the police officer to whom the warrant is issued will be allowed to give bail to the person.
According to Section 81 of Cr.P.C. and Section 82 of Cr.P.C., it is specified that if the arrest is made in the district, the police officer other than District Superintendent of Police or the Commissioner of Police can release the accused from custody, but in case the arrest is made out of such district then the District Superintendent of Police or the Commissioner of Police in the area of arrest can release the convicted.
Theories behind the provision of bail
Well, there are some theories that are believed to take place in pursuance of granting bail. Let’s have a look at some.
Sometimes the innocents in prison are awaiting trial while being imprisoned all that time, which should not happen.
Internment without trial violates the basic rule of law.
Detention until not proven guilty is violative of Article 21 as it hampers personal liberty and life.
The detention proves to be expensive.
It may cause lots of financial suffering on the part of the family of the accused.
The person who is incarcerated will get less opportunity to prepare for his case whereas the person who will be bailed out can present his defense in a proper way.
Process of bail
When a person is accused of a crime, the first step the police take is getting him booked. The police gather his personal information such as date of birth, address, etc and then do a little investigation into his personal history, check on his previous criminal records, if any.
The police also check if he is intoxicated while the charge sheet is being prepared.
Bail application
When the person is convicted of a crime, he has a right to apply for bail. Applying for bail depends upon the juncture at which the case is. To give you an illustration, if the manager of an office apprehends that he can be booked for harassment, alleged by an employee, who is a woman in his office, then, in this case, he can file an anticipatory bail application.
If the person is arrested, hitherto, the first thing he will do is to call you, his criminal defense attorney and apply for bail. Now, we know there are two types of offenses, bailable and non-bailable. In the case of a bailable offense, the accused has to file an application by filing the Form-45 which is provided in the second schedule. This has to be filed in the court where the case proceedings are to be heard. The court has to approve the bail. In case of non-bailable offense, the suspect has to fill up the same form and file it in the court where his case is to be presented, the only change is that here the court has the discretion to grant bail.
Furthermore, every bail application should stand as distinct, as every case has different scenes and many uncommon facts.
Bail on Appeal
When a person is already convicted and applies for appeal in the Higher Court, meanwhile he can apply for bail. There are many things that have been taken into consideration like what if the appeal will be granted by the Higher Court or if there was a grave mistake made on the part of the Lower Court in deciding the case, etc.
Bail hearing
The bail hearing is the process, wherein the judge hears all of the reasons to grant bail and then announces the decision, based on whether he is convinced to grant the bail or not. It is important to understand the motive of the hearing and choose who is representing the convict in the hearing. It is the main role that you, as an attorney, will have to play. Herein, all the evidence and the facts are presented before the court. And the attorney has to convince the judge so that he starts to believe that there is a likelihood that the accused should not be convicted after his trial and he is innocent.
What all will the judge consider while hearing your case proceedings?
Well, he has to be sure before he gives you bail, so he will be more likely to consider the following factors-
The character of the accused,
Nature of the crime for which the accused has been convicted,
His employment situation and financial conditions,
His background history,
Whether the accused has been convicted before and if yes, then his regularity in the scheduled appearances by the judge,
His family background and history,
For how many years he has been a resident of the community, he is currently living in.
All the evidence regarding these factors is to be presented by the accused and his attorney.
However, the judge can grant bail or cancel it due to a lack of evidence or if he thinks the evidence is not proper. When the judge grants the bail then he imposes some conditions along with it. These conditions are most likely related to alcohol tests, constraints in travel, necessary conditions in employment, periodic meetings with an officer.
The judge while giving bail, takes into consideration all the factors governing the bail.
These factors can be-
A threat to the community at large
The judge takes into consideration public safety by ensuring that the accused after bail is granted, does not do anything that hampers the safety of the general public.
To make certain of that, the judge looks for certain factors-
If the accused is charged with an offense of minor nature.
His level of involvement in the alleged crime.
His past records.
If he has been convicted for violence.
If he is of a violent nature.
If he has some medical condition which creates a certain disorder.
Whether he is small or weak for his age to commit that crime.
Flight risk
In order to make certain that the suspect appears in court whenever the judge schedules the meeting, the judge has to take into account the risk of the suspect to flee.
To give you an illustration, Anuj was convicted for money-laundering, he was released on bail as he was a well established and a famous person. But soon after he ran away to another country where the police can not capture him.
So, this is the flight risk which has to be taken care of and certain factors by which it can be made certain are-
For how long the convicted has been a part of the community?
How many family members live in that community?
Whether the suspect surrendered voluntarily or was chased down by the police?
Did the suspect cause any hindrance in the investigation?
Whether the suspect gave a comprehensive statement to the police?
The regularity of the suspect while attending his school or college which will show his regularity to attend the scheduled meeting.
Whether the suspect let the investigation go in a convenient manner?
Some other factors are necessary to consider such as the trial period of the convict, substance abuse and drug history of the convict.
The defense attorney along with the suspect has to provide the evidence necessary for the verification of the factors stated above, which the judge will take into account while making the judgment regarding giving the bail or not.
Setting the bail amount
The judge announces an amount to be paid by the accused when he appears in court. The provision of the setting of the amount is in order to ensure that the suspect appears in court at the time scheduled. In many jurisdictions, there is a provision of the bail schedule which provides for a predetermined amount for different criminal acts. To give you an example, assume, the bail amount set for robbery is Rs. 1000 whereas the bail amount set for an act of manslaughter is Rs. 10000. The initial amount set can be reset or altered, that is it can be increased or decreased in conformance with the circumstances. It is done because the initial amount is set in accordance with the first appearance of the convict in jail.
The factors that impact the setting of the bail amount are-
The gravity of the crime;
Accused previous criminal records;
Employment status of the accused;
The accused bond with his relatives;
His roots in the community.
Bail Schedule
The accused can instantly get the bail even before going to the court, which is in the police station itself.
The police stations, generally have a posted bail schedule for determining the amount in accordance with the crime committed. The crimes in the posted bail schedule are ones which are committed generally. Hence, the accused after being booked can get immediate bail by paying the amount mentioned in the posted bail schedule. But to bring it to notice, the amount specified for the respective crimes is not flexible, that is if someone is wanting to pay an amount less than the amount specified then the police station can not lessen it and the accused has to go to the court for the same.
Bail posted through mathematical methods
Nowadays, some courts have started to set bail by means of an algorithm. They follow mathematical methods to get the result of the exact amount of bail to be set. In this, the information of the accused is filled in which gives out a certain score as an output. This algorithm considers all the factors such as past criminal records, age, residence, etc. In order to ensure that the particular person accused will not fail to appear before the court or flee. It also checks for the probability of the accused to commit another crime.
Cancellation of bail
In certain cases, the judge will deny the bail completely. It can be denied at any stage of the case. The convicted person who applied for the bail will again have to go to jail. However, in a case where police have already provided the bail, the judge can not deny or cancel it. But in instances where the convict is likely to flee or when some other jurisdiction has placed a hold on the accused then, the judge will cancel the bail and let the other jurisdiction review and make the charges.
For example, Meera is residing in Australia and her family is in India. In Australia, she is caught for carrying a deadly weapon. Apart from this, she was also carrying a passport and Rs. 1 lac in cash. The judge while giving her the bail will look at her residential status, the passport which shows her chances to flee and her ties with the community in Australia.
In order to negate this, she will have to provide the judge with the proof for each of the contentions.
Section 437 in clause 5 says that if the accused is released on bail under sub-clause 1 and 2 of the same Section then the court can cancel the bail if it thinks it is necessary.
Section 439 in clause 2 says that the High Court or the Court of Sessions has the authority to convict and commit the accused again into custody.
Posting of bail
Let us discuss various options for posting the bail.
Cash bail
In this type of bail, the accused has to the full amount as specified, in cash. The court can sometimes take the amount via a credit card or a cheque.
Surety bond
It is generally known as a bail bond. this comes into play when the accused is not able to pay the entire amount of the bail. The relatives or friends of the accused, in this case, can contact a bail agent, who is also known as the bail bondsman. The bail bondsman is supported by an insurance company and he is made liable to pay the entire amount in case the accused fails to do so in the future. Now, what does this bail agent get? Well, he charges some sort of interest like 5 percent or 10 percent and asks the accused to pledge some kind of collateral or surety like his house or any kind of property.
Citation
Also known as release on cite-out, this process does not even require the suspect to get booked. In this, there is just a citation given which provides for the accused to appear in court from time to time. It will save time for the officers and allow them to chase down more serious offenders, as it saves them from following the procedure of booking the suspect and other procedure that is further carried out.
Release on Own Personal Recognizance
When there is a case, which is of minor nature, or the accused is involved in a very minute manner in it, then the person can be released on his own personal recognizance without giving the bail amount. In this case, the judge also has to take into account the flight risk and the risk of the accused to be a danger to society. The suspect only has to appear before the court from time to time, when specified.
Property bond
This is a method that provides that the accused instead of giving money as the bail amount can give legal authority to the court over his property. If the accused does not appear in the court at the time when the court calls, then the court can forfeit his property.
Bail provided in a bailable offenses
Section 436 of the CrP.C. deals with the provision of bail in case of a bailable offense. The person has a right, under this Section, to get bail and get out of jail after paying the bail amount with or without sureties.
Some bailable offenses are-
Causing hindrance in a peaceful assembly where people are worshiping,
Causing hindrance in the work of a public servant,
Bribing during election campaigns,
Fabricating incorrect evidence, etc.
Bail provided in a non-bailable offenses
The person per se does not have any right to apply for bail in the case where he has committed a non-bailable offense. To give bail even in a non-bailable offense is the courts’ discretion.
The judge may take into account the following conditions-
If the convict is a woman or a child,
If there is not enough evidence to believe that the accused is liable of the offense,
If the accused is mentally or physically sick.
Judicial trends
State of Rajasthan v. Balchand
In this case, the accused was convicted of killing the lover of his wife he saw them in objectionable circumstances. The trial court convicted him of the murder, later on, he was released by the High Court to which he had appealed. The High Court ruled out that it was under sudden provocation that he killed the man but later on an appeal was made to the Supreme Court by the State through special leave petition and he was again convicted. He then applied for bail on which Justice Krishna Iyer said that providing bail under these circumstances will go against the fair system of the administration of justice.
Manka Gandhi v. Union of India
In this case, Justice Krishna Iyer contended that there is no definition of the word ‘bail’ given in the Criminal Procedural Code. Justice PN Bhagwati also added that bail has to be provided in accordance with the economic condition of the accused as many accused who apply for bail are poor.
Hussainara Khatoon and others v. Home Sec, and the State of Bihar
In this case, a rule was laid down that if a man stays in jail for a period more than the period which he has to spend in jail after he is convicted for a crime, then he ought to be released.
Conclusion
It is important to doubt first and then prove but the presumption of innocence is also necessary. With this thought, the provision of granting bail was introduced. It has proven as a remedy to let the innocent man be saved from spending his time in jail before his trial and also allows him to enhance his case preparation while allowing the lawyer to create a good understanding of the case. Because of this, the attorney is able to get in touch with the family members of the accused and gather letters of support that help build the case. Still, the setting of the bail amount is not done accordingly. Measures should be taken to make certain that poor convicted people can give the bail amount as they can be innocent too. Also, the bail system should be enhanced when someone is convicted in the case of Driving under Influence(DUI) and Driving While intoxicated(DWI) as it is very ambiguous for the court to provide bail in such cases.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
