Satyam Infoway Ltd v. Sifynet Solutions (P) Ltd, (2004) : case analysis

This article is written by Ashutosh Singh. The article deals with the analysis of the M/s Biofarma v. Sanjay Medical Stores, (1997) case in the light of trademark infringement and passing off.

Introduction

Trademark is an intangible asset that has a great impact on the market. Once a trademark becomes well known, it creates revenue for the trader/manufacturer. The trademark can also be assigned and licensed to the prospective user for some consideration. Thus, the quality of the product and the trademark name is of great value to the trader and needs to be protected.

The present case is about the infringement of trademark and passing off damages. The plaintiffs are Biofarma and another and the defendants in the case are Sanjay Medical Store and others. The judgement was delivered by a single bench comprising of M.K. Sharma, J. The judgement of the case was passed on 31^st March 1997. The plaintiffs in the case had filed a suit for trademark infringement and passing off against the defendants. The dispute was over the alleged deceptive similarity in the trademarks of the two parties. The disputed products of both parties were pharmaceutical Schedule ‘H’ drugs.

Passing off and infringement of well-known trademarks is a common offence and of great importance in view of the several inconsistencies in the implementation of the existing laws. Trademark is the only intellectual property right that can be retained permanently as long as one renews it regularly.

The problem of passing off and infringement arises when another entity imitates the trademark of the true owner in order to make a profit from the goodwill and reputation of the said trademark. Passing off hasn’t been defined in the Trademark Act, 1999 however, its mention has been made in a few places in the Act.

Facts of the case

The plaintiffs, in this case, filed a suit praying for a permanent injunction to restrain the defendants, their dealers, agents, stockists and servants from using the trademark ‘trivedon’ that was of the defendant.
Plaintiff no. 1 and plaintiff no. 2 entered into an agreement whereby plaintiff no. 1 has allowed plaintiff no. 2 to use their trademark.
The plaintiffs said that ‘flavedon’ is a registered trademark of plaintiff no. 1 in India and the product was introduced in India for the first time in the year 1987 and it is the largest prescribed drug in the French market.
The defendants are selling pharmaceutical products under the trademark ‘trivedon’ which are used for the treatment of heart ailments and coronary diseases. These are similar to the drugs used by the plaintiffs under the trademark ‘flavedon’. Thereby defendant no. 2 is allegedly infringing the trademark of the plaintiffs. The plaintiffs claim that the two marks are also phonetically similar.
The plaintiffs claim that the trademark ‘trivedon’ of the defendant is deceptively similar to that of the plaintiffs ‘flavedon’ and therefore accused the defendants of passing off damages.
The plaintiffs also filed an application for a temporary injunction under Order 39(Rules 1 and 2) of the Code of Civil Procedure, 1908 to stop the defendants from using the trademark ‘trivedon’ to manufacture, sell or offer for sale any pharmaceutical products.
Accordingly, the present suit had been filed by the plaintiffs claiming for the aforementioned reliefs.
Defendant no. 2 contested the suit and the application which were under Order 39 (Rules 1 and 2) of the Code of Civil Procedure and submitted their reply opposing the relief sought by the plaintiffs for grant of a temporary injunction.

Issues

Whether the plaintiff is entitled to be granted an injunction as prayed for in the application on the alleged ground that there has been an infringement of their trademark?
Whether there have been actual instances of deception and confusion amongst the public caused by the product of the defendant?

Laws involved in the case

Section 29 of the Trademarks Act, 1999 comes into play when a registered trademark is said to be infringed by a mark that is deceptively similar or identical to the registered mark in relation to goods and services.
Section 134(1)(c) in the Trademarks Act, 1999 institutes the law of passing off and gives the jurisdiction under which the suit can be instituted.
Section 135 in the Trademarks Act, 1999 provides injunctive relief and explains the various ways an injunction can be given.
Section 2(h) of the Trademarks Act, 1999 defines the term ‘deceptively similar’.
Order 39, Rules 1 and 2 of Code of Civil Procedure, 1908 has provision for the Courts in India to control and regulate the granting of a temporary injunction. Rule 1 of the order is relevant to the cases where a temporary injunction may be granted and Rule 2 is relevant where an injunction is granted to restrain repetition or continuance of breach.

Arguments submitted by the plaintiffs

The counsel for plaintiffs submitted that:

The drugs under the trademark “flavedon 20” of the plaintiffs are the cellular anti-ischemic drug used to treat ischemic heart disease. The plaintiffs further argued that their mark “flavedon 20” is totally originally created by them.
It is exclusively associated with the plaintiffs who have been using the said mark in India through plaintiff no. 2 after an agreement with them since 1987.
In response to the defendant’s argument, ‘Trimetazidine’ is a Schedule ‘H’ drug used for the treatment of ischemic heart diseases and it is not available across the countertop unless prescribed by a physician/ cardiologist.
The plaintiffs referred to the decision of Bombay High Court in Astra IDL Limited v. Ttk Phartila Limited Supra (1991) and a decision given by the Delhi HC in the case of Ciba Geigy Ltd. v. Cross lands Research Laboratories Ltd (1994).
It was held in the above-mentioned cases that in the present circumstances and predominantly in the Indian context, the doctor’s prescription is very important but the ground reality cannot be ignored, since in India many times schedule drugs that are to be sold under doctor’s prescription or by a licensed store are even sold without the competent doctor’s prescription. This then reduces the weightage given to this aspect while considering the question of deceptive similarity.
According to the Counsel for the plaintiff, the price difference is a reason for deception because the drug of defendant no. 2 is priced lower than that of the plaintiffs and therefore there is a fair chance of the customers being deceived by the manufacturers, retailers, and chemists when they give the customers a drug which is priced lower than that of the plaintiffs.
The plaintiff alleged that the mark which is accepted and used by the defendants ‘trivedon’ is deceptively similar to that of the mark ‘flavedon’ which is registered by the plaintiff. The plaintiffs then relied upon various cases mentioned herewith: –

M/s. Pidilite Industries Pvt. Ltd.v. M/s. Mittees Corporation and another (1988).
M/s. Corn Products Refining Co. v. Shangrila Food Products Ltd (1959).
Astra lDL Limited v. Ttk Pharma Ltd (1991).
Ciba Geigy Ltd. v. Torrent Lab. Pvt. Ltd. reported in April (1992).
Anglo-French Drug Company v. M/s. Balco Pharma (1984).
Kaviraj Pandit Durga Dutt Sharma v. Navaratna Pharmaceutical Laboratories (1964).
Ciba Geigy Ltd. v.Cross lands Research Laboratories Ltd (1994).
Tata Iron and Steel Company v. Mahavir Steels and Others (1992).
Tata Oil Mills v. Wipro Ltd, and another (1986).
Ranbaxy Laboratories v. Dua Pharmaceuticals (1988).
Amritdhara Pharmacy v. Satya Deo Gupta (1962).
The plaintiff relied on the aforesaid judgments in support of their arguments because they are all cases dealing with trademark infringement and passing off which has caused a lot of damage to the complainants in each case and the judgments pronounced in these cases have been in favour of the complainants and have a close similarity to the present case. Moreover, the plaintiffs, in this case, have been prior users of the trademark ‘flavedon’. The plaintiffs say that the use of an almost identical trademark creates a lot of confusion in the minds of the consumers in the market.

Arguments submitted by the defendants

The defendants submitted that the trademarks of the plaintiff (flavedon) and that of the defendant (trivedon) are very different. In their defence, they said the following:

Their opening syllables are completely different.
The suffix ‘vedon’ is commonly used by many other pharmaceutical manufacturers.
‘Trimetazidine’ is a Schedule ‘H’ drug that is used for the treatment of ischemic heart diseases and is not available on countertop unless prescribed by a physician/ cardiologist.
There is also a significant difference in the prices of the drugs manufactured and sold by the two parties.
Even the packaging of the products sold under the two conflicting trademarks is different.
Defendant no. 2, submits that they honestly envisaged and took up the trademark ‘trivedon’ and applied for the approval of the Food and Drug Administration (FDA) to manufacture and market the said drug on 30.8.1994. They said that they arrived at the name of the trademark by clubbing three letters from the active ingredient ‘trime tazidine’ which is contained as a single ingredient product of the defendants. They got approval from the FDA to manufacture the pharmaceutical preparation containing 20 mg of ‘Trimetazidine’ under the trademark ‘trivedon’ in the month of October 1994.

The defendants after the approval commenced manufacture of anti-angina medicinal preparation under their own developed manufacturing process from February 1995 that is marketed under the trademark ‘trivedon 20’. The number ’20’ in the trademark signifies the 20 mg, that is, the potency of the generated drug.

Observations of the Court

The Court observed that the product of the plaintiffs and defendants are both used for similar types of diseases i.e., ischemic heart disease.
‘Trimetazidine’ is the base of the said product from which the defendant has clubbed the first three syllables to create ‘tri’ which is part of their trademark ‘trivedon’.
‘Don’ implies a new era in medicine and is generally used in the pharmaceutical trades as part of the brand name. The letters ‘ve’ have been added to the letter’s ‘tri’ with the suffix ‘don’.
The plaintiff on the other hand coined their trademark ‘flavedon’ and there is no pharmaceutical product with the suffix ‘vedon’ which is registered before the plaintiffs did. Therefore, the plaintiffs claimed that the words ‘flavedon’ / ‘vedon’ have come to be associated with them.
The Court observed that in the case, Mis. Johan A. Wolfing v. Chemical Industrial & Pharmaceutical Laboratories Ltd. (1983), in deciding two disputing marks which are allegedly descriptively similar, the Court relied upon the decisions of the SC in Corn Products Refining Co. v. Shangrila Food Products Ltd. Supra, (1959) and K. R. Chinna Krishna Chettiar v. Sri Ambal & Company and Another (1969) that it is not permissible to divide and split up the words of the two disputing marks.
In this present case, the rival trademarks have different opening syllables which are distinct from one another. Thus, the principle laid down in the case of Ciba Geigy Limited v. Sun Pharmaceutical Industries (1992) appears to be applicable. The Gujarat High Court in the aforesaid case said that since the drugs were Schedule ‘H’ drugs, available on prescription of a registered medical practitioner only, there was no question of deception or confusion likely to occur.

Judgement

Upon the merits of the case, the single bench said that it was not appropriate to grant a temporary injunction to the plaintiffs and their application for the same stood rejected subject to the condition that defendant no.2 furnishes an undertaking to pay the plaintiff any damages within 3 weeks if the suit on merits is decided in favour of the plaintiffs. Defendant no.2 was also ordered to maintain an account of the sale and submit it to the Court every quarter till the disposal of the suit. The application of the plaintiffs was thus dismissed by the Court.

Obiter dicta

The term “deceptively similar” is defined in Section 2(d) of the Trade and Merchandise Marks Act, 1958. A mark would be thought to be deceptively similar to another mark if it has a close resemblance to the other mark such that it is likely to deceive or cause confusion in the mind of its consumers/users.

For concluding on the matter of deceptive similarity, the Courts have laid down some factors which are:

Consideration of the nature of the marks, whether they are word marks, level marks, or composite marks.
Whether the marks are similar in idea and are phonetically similar.
The similarity in the nature of the goods is represented by the marks.
The similarity in the character, nature, and performance of the goods of the competitor traders.
The class of purchasers and the degree of care, on education, and intelligence they will exercise in purchasing the goods bearing the marks.
The mode of purchase/placing order of these goods.
Any other relevant circumstances
It is also settled that weightage should be given to each of the factors mentioned aforesaid and it depends upon facts of each case and hence the same weightage cannot be given to each factor in every case.

Ratio decidendi

The two marks, ‘trivedon’ of the defendant and ‘flavedon’ of the plaintiff are found to be prima facie dissimilar to each other. In the words of Lord Diplock who had told in American Cynamid v. Ethicon Ltd.(1975) that it’s not really the Court’s part at that stage of litigation when more information and supporting documents are required, to try to resolve conflicts of evidence on affidavit about facts on which the claims of the concerned party may ultimately depend. The Court should refrain from deciding difficult questions of law that call for detailed arguments and mature considerations as these matters should be dealt with at the trial.

Therefore, the introduction of the practice of requiring an undertaking as to damages on the grant of an interlocutory injunction because it helped the Court in achieving its objective, of refraining from expressing any opinion upon the merits of the case until the hearing. Since the marks of the plaintiffs and defendants, in this case, are not the exact mark on the registration, but allegedly similar to each other, hence the test of passing off is applicable to this case to see if they are deceptively similar and are likely to cause confusion and deception in the minds of their users.

In Ruston and Hornsby Ltd. v. Zamindara Engineering Company (1969), the Apex Court has laid down the test for passing off and infringement and held that the test for both is the same.

Critical analysis

There is no doubt that the trademark of the plaintiff was registered before that of the defendants and they both have been used for the treatment of ischemic heart disease but there ends the similarity as rightly pointed out by the Court that the starting syllables are different, the thought behind coining of the marks is different, their price and packaging is also different and at first look, it doesn’t look like an infringement of the trademark. However, the question then arises to ascertain the case of passing off, for which it is not necessary to prove intention. A deceptive mark can be a mark that is likely to cause confusion in the minds of the buyers of the said drugs. The Court in this case rightly did not grant an injunction to the plaintiff and ordered the defendant to maintain an account of sale and submit the same every quarter to the Court as the Court should refrain from deciding difficult questions of law which call for detailed arguments and mature considerations as these matters should be dealt with at the trial.

Conclusion

The case was settled on 9^th October 1998 by a two-bench consisting of R Lahoti, J. and C Mahajan, J. by Delhi High Court in which the bench felt that there was no evidence that the defendants at any time attempted passing off their products as that of the plaintiffs. And for this reason, the 2 judge bench upheld the order given on 31^st March 1997 by a single bench and said that it had not made an error either on facts or in law in refusing the grant of ad-interim injunction to the plaintiff-appellant and the suit was dismissed.

References

All about corporate reporting in light of environmental sustainability

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December 9, 2023

This article has been written by Piyush Mahanta and edited by Shashwat Kaushik.

Introduction

The world is more interconnected today than ever. This has been achieved in very recent decades. Though trading has been one of the most ancient forms of connectivity on a global scale, it still serves the most basic purpose of being connected with other parts of the world. While it may seem at first that businesses have only one goal, i.e., to earn profit, which is true but not entirely. In the ever growing interconnected world, not only the government but also businesses are somewhat answerable to the public. With the world moving into a digital age, the actions that a business takes are becoming more and more visible to the general public. This, in turn, puts some responsibilities on these businesses throughout the world. The responsibility of the business is to show what value the business or company brings to society and its stakeholders at large. For companies to show their value, they need to report certain things to the government, which are then made available for public scrutiny. These reports are what we know as corporate reporting.

Not only are the companies obligated to undertake this corporate reporting morally but also legally. This is because in many countries, including India, there are certain legislation and regulatory bodies that mandate companies above a certain level to file their corporate report in a timely manner. Furthermore, a company’s reputation can also be linked to such reports, which further increases the importance of the reports.

Relationship of corporate reporting with the environment

Companies or corporations are required to responsibly report their financial and non-financial information to their stakeholders on a quarterly or annual basis. The corporation may include any information that it deems fit for achieving its goals, but mostly corporate reporting includes audit reports, financial statements, long-term and short-term objectives, upcoming projects, corporate governance and most importantly, corporate responsibilities.

CSR as a part of corporate reporting

While there are several other important parts of the corporate report that a company needs to file, CSR is one of the most prominent parts of any such report. This is because CSR stands for Corporate Social Responsibility, which fundamentally is focused on the aspects that are heavily intertwined with the ‘society’ at large. CSR is a window through which the public can look inside the actions of any company that have some impact on the elements of society. These elements can be the environment, communal issues, education, Health and many more. Corporate reporting is a great source for the public to see what activities a company or corporation has taken or is planning to take to create value for its stakeholders.

CSR’s role in sustainability

It is no secret that society is more important than running a business because it is society from which business comes and not the other way around. This makes it quite obvious that the future of any such society needs to be secured. The idea of sustainability says exactly the same thing. By judiciously using resources and taking action, the future of society can be ensured to be at the same level as it is in the present, at the very least. This is where companies are playing a pivotal role in making our planet more habitable. CSR or corporate social responsibility, makes companies responsible for making wise choices and implementing policies that can be beneficial for society. These can range anywhere from conducting tree planting activities and reducing pollution output to make the environment more habitable to running programmes to support the education and health infrastructure of poor countries. Such activities are one step towards making our environment more sustainable.

While these things sound really positive, the unfortunate fact is that most corporations only do them to comply with the laws and rules that are implemented by the government and not for the sake of the betterment of society. Something that is more unfortunate is that many companies find ways to avoid undertaking CSR just to spend less from their pockets.

When it comes to bringing sustainability, it needs to be understood that businesses play a very important role in shaping the lives of people and an even more important role in shaping the future of society. They may shape it according to their own will and whims, but it needs to be ensured that such change only has a positive impact and, therefore, brings the concept of CSR into the picture.

What is sustainability

According to the United Nations Brundtland Commission, sustainability means “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”

Also, according to the National Environmental Protection Policy Act of 1969, the US is committed to sustainability, which defines its national policy as “to create and maintain conditions under which humans and nature can exist in productive harmony that permit fulfilling the social, economic and other requirements of present and future generations.”

Meaning of sustainability

According to the United States Environmental Protection Agency (EPA), the concept of sustainability is simple: We rely on the natural environment for everything we need to live and thrive, either directly or indirectly. Sustainability means creating and maintaining the conditions that allow humans and nature to coexist in a way that supports both current and future generations.

From a business point of view, sustainability for a company can mean doing business activities without creating any negative effect or impact on the environment or society in general. In specific scenarios, this can have different implications with regard to the subject and the goal of the company, but the nature is similar. Business decisions that consider society and the environment as important factors can be considered sustainable business decisions. This is because such business decisions create a positive impact on people’s lives and are therefore sustainable for a longer period of time, whereas when a business decision causes negative effects on people’s lives, they tend to face backlash from society and the government, making them unsustainable.

Scope of achieving sustainability

Sustainability can be achieved in a number of areas. Corporations can contribute to and impact many lives by undertaking activities in various fields and aspects of society.

A field like healthcare is one such aspect where a number of communities throughout the world and in India as well need dire support to meet their basic medical needs. People don’t have enough resources to purchase medicines or are not able to get proper treatments and facilities. These people can greatly benefit from the support of corporations. Undertaking activities such as medical aid camps, funding trusts to create new hospitals and medical facilities, and providing medicines to the needy communities can help ensure a sustainable future for such communities.

Supporting environmental causes through the means of adopting new and green technology, promoting the use of green energy and opting to voluntarily create a more habitable environment can also increase the sustainability of our environment.

Impact on the environment and society

The amount of impact that sustainable practises can have on society and the environment is truly worth every single effort. It is common knowledge today that we are destroying our world at a rapid pace, and the population on Earth won’t be able to survive for long if the current situation keeps on growing. It is to be understood that companies and the rise of industries were the most prominent reasons behind this scenario being present here. While most of the impact that these businesses had on the environment until the late 1970s was negative, it started to change when global leaders realised that such practises are not sustainable forever and that, at some point in time, there will come a day when neither the environment nor society will survive.

Thus, it is more than ever important to actually understand the impact of these corporate actions and tailor them in such a way that they reduce the negative effects that have accumulated over time and bring about positive results to make the environment better and make society able to sustain itself for a longer period of time. This conclusively makes it evident that sustainable practises do have a major impact on the very existence and well-being of human civilization, no matter to which part of the world it may belong.

Present situation of sustainability

In an effort to address the most pressing global challenges, the United Nations adopted a set of 17 Sustainable Development Goals in 2015. These goals serve as a comprehensive blueprint for achieving a better and more sustainable future for all. They aim to eradicate poverty, protect our planet, and promote peace and prosperity by 2030.

As of 2022, there has been a considerable improvement in monitoring progress towards the Sustainable Development Goals (SDGs) through the use of ESG software or sustainability tools, as per international comparison data. The global SDG database now includes 217 indicators, a significant increase from 115 indicators in 2016. However, there are still significant gaps in data with regard to geographical coverage, timeliness, and granularity, which pose a challenge for accurately assessing progress towards achieving the 2030 Agenda.

The convergence of the climate crisis, the ongoing war in Ukraine, a bleak global economic outlook, and the persistent impacts of the COVID-19 pandemic have revealed major systemic vulnerabilities, severely impeding progress towards the Goals. With only seven years remaining to achieve the goals, the stakes are enormous.

Increasing demand of CSR

In recent decades, there has been a significant shift in the public’s expectations of corporations. Gone are the days when profits were the sole objective of businesses. Today, people across the globe demand that companies prioritise more than just financial gain. In fact, a staggering 91% of the world’s population expects businesses to contribute to society in meaningful ways beyond their bottom line. Moreover, consumers are increasingly drawn to brands that demonstrate a commitment to corporate social responsibility (CSR), with 88% indicating a preference for such companies. The impact of this shift is visible in the business world, with companies that have embraced these expectations enjoying success and growth, while those that have failed to adapt have lost market share or even gone out of business.

Government’s mandate on CSR

On April 1, 2014, India became the first country to legally mandate that corporations must contribute towards social responsibility. The new law requires companies to allocate funds towards activities that are beneficial to society, such as education, healthcare, and environmental conservation. If any amount remains unspent in their corporate social responsibility accounts, the government now requires companies to set up a CSR committee. The Ministry of Corporate Affairs has amended the rules governing corporate social responsibility (CSR), according to an official notification. This move aims to ensure that companies contribute to social development while also promoting transparency and accountability in corporate operations.

In India, the concept of CSR is governed by Section 135 of the Companies Act, 2013. Thus, it is mandatory for the companies covered under Section 135 to comply with the CSR provisions in India. Section 135 (1) of the Act states, “Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director” and Section 135 (5) states, “the Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy.”

Therefore, under the Act, certain classes of profitable companies (companies with an annual turnover of 1,000 crores and more, a net worth of Rs. 500 crores and more, or a net profit of Rs. 5 crores and more) are required to establish a CSR Committee and spend at least 2 percent of their average net profit of the preceding three financial years on CSR activities in a particular financial year. This also includes the Section 8 companies within the scope of Section 135 if they fall under the mentioned classes of profitable companies.

Societal pressure on corporations

The way a business conducts its operations ethically has a significant impact on how customers choose to buy from it. A recent survey conducted by Environics International has shown that more than 20% of respondents have either rewarded or punished companies based on their social performance. This highlights the growing importance of social responsibility in investing, which has been around for generations but has gained much popularity among millennials.

According to SoFi Learn, a whopping 92% of millennials plan to invest their entire holdings in socially responsible investments. Investors today rely on reporting standards such as the ESG (Environmental, Social and Governance) and GRI (Global Reporting Initiative) to evaluate business investments and their potential long-term returns. This indicates a shift towards ethical and socially responsible investing practises that prioritise sustainable growth and development.

The middle-aged generation, commonly referred to as Generation Y or Millennials (referring to people born from 1981-1996 according to the Pew Research Centre), is increasingly conscious of the corporate world’s operations and its impact on society. They are naturally suspicious of businesses’ motives, and their desire to make a positive impact on the world has led to the rise of an overwhelming demand for corporate social responsibility (CSR). Instead of blindly supporting corporations with unclear intentions and shady operations, millennials strongly prefer businesses that are transparent and committed to giving back to society. According to a 2015 Cone Communications Millennial CSR Study,more than 90% of millennials would switch to a brand associated with a cause. They are willing to make personal sacrifices, like paying more for a product, sharing products rather than buying, or taking a pay cut to work for a responsible company, to make a positive impact on issues that matter to them. This trend highlights the importance of businesses’ social responsibility and the need for them to be transparent in their operations.

Customer perception influencing the market

Over the past few years, many thriving multinational corporations have been strengthening their corporate social responsibility (CSR) strategies. With the motto, “doing well by doing good,” these companies devise marketing campaigns to foster ethical consumption and develop a positive image as a socially responsible entity in the eyes of consumers (Baskentli et al., 2019). In today’s world of social and environmental crises, consumers expect companies to act transparently, avoid exploiting workers, and promote positive development.

Emerging markets have shown remarkable growth in their share of world trade over the last few decades. This notable expansion in their participation in the global economy has prompted a growing interest in sustainability. As per the World Bank’s report (2022), in 2021, USD 182 billion was invested by these markets in green, social, and sustainability-linked bonds, which is three times the amount invested in 2020.

The majority of consumers and investors are influenced by a company’s dedication to making positive changes in the world. Specifically, 77 percent of consumers are more likely to purchase from companies committed to making a difference, while 73 percent of investors prioritise environmental and social efforts when making investment decisions. Twenty-five percent of consumers and 22 percent of investors cite a “zero tolerance” policy towards companies that embrace questionable practises on the ethical front.

How sustainable corporate reporting can be helpful

Sustainable corporate reporting seems to be the need of the hour for many companies. This is because, as has been mentioned previously, the perception of the customers is greatly influenced by the CSR activities that a company is undertaking. This makes it even more clear that to portray the image of a company on the positive side of the spectrum, undertaking CSR work is going to be a key determinant.

Furthermore, as the world tends to increase its social media engagement, it becomes more than necessary for companies to have a strong social media presence. If this presence can be paired with showcasing the CSR activities and the amount of positive impact as a result of undertaking such CSR activities, corporations can build a perception of reliability, trust and faith. This will cater to corporations as a means of paving the way for building strong customer relations, which is essential for profit making.

Therefore, CSR is not only a government mandate or burden that needs to be done in order to maintain the books of audit and compliance; rather, it is a tool for businesses to tap into the areas of positive outreach and developing strong brand perception. If done correctly and strategically, CSR can be a rewarding means of business marketing.

How to ensure corporate reporting is in sync with environmental sustainability

Ensuring corporate reporting to comply with practises that are environmentally sustainable might seem like burdensome work. Surprisingly, it is not at all burdensome when it can be paired with some profit of its own. The strategy that a company may opt for just has to be profitable enough to fund the process itself and, in the best case, have some surplus profit money as well.

Investing in greener energy can be a starting point for this. If your company heavily depends on the energy that is generated or processed by the means of old school machinery, it might be highly possible that it is not based on renewable energy, and therefore it might be the right time to replace them with machinery that is based on renewable energy. This might seem like a big investment, but it is only a one-time investment, which certainly means that the running cost of such machinery will be way less than what it was previously and the added bonus will be less pollution generated by it.

Investing in R&D work, which is based on the study and development of cutting-edge technology that can solve environmental issues, can also be a great alternative. Investing in this kind of research means investing in the future. Not only will it be helpful for the planet, but it will become a replacement for other existing products on the market once it is fully developed. This can mean getting a competitive edge over others and that too in a positive way.

Apart from these, there can be numerous ideas for undertaking activities that can make a company’s corporate reporting in sync with environmental sustainability. All it takes to bring out those ideas is to give sustainability its deserved importance and thoughts. As it has already been mandated by the Government of India through the Companies Act, 2013, that every specified company needs to establish a CSR committee, it is more than enough to understand that it is going to be more and more essential for companies to understand the importance of CSR. Thus, it is better to take action early and prioritise activities that are mutually beneficial for the companies and our planet.

Way forward with corporate reporting in consonance with sustainable environment

Once it is understood that creating a sustainable environment is everyone’s duty, whether it’s an individual or corporation, the steps that need to be taken in order to create that environment come into play.

Future prospects of the growing demand

The United Nations Global Compact (UNGC) has established a set of comprehensive guidelines for corporate sustainability with the aim of promoting responsible corporate behaviour and advancing sustainable development. These guidelines require companies to adhere to responsible principles, support the well-being of society, and drive sustainability in the corporate framework. In order to ensure transparency and accountability, corporations are required to submit annual reports detailing their efforts towards achieving these goals.

The International Labour Organisation (ILO) has been actively promoting the social and economic progress of societies by emphasising the importance of corporate social responsibility (CSR) for corporations. As part of its efforts to support international labour standards, the ILO recognises the value of CSR activities adopted by corporations. ILO has set its sights on implementing the InFocus Initiative, which follows the guidelines of the MNE declaration that lays down good CSR practises and policies. ILO’s implementation of this initiative will establish its leadership position in the area of CSR. The Organisation for Economic Co-operation and Development (OECD) has issued guidelines for multinational enterprises that focus on responsible business practises to be carried out according to their standards and principles. These guidelines are designed to promote environmentally and socially responsible corporate behaviour. By adhering to these guidelines, corporations can play a vital role in bringing about positive changes in society.

Specifically for India, the Companies Act 2013’s Schedule VII outlines the activities a company can include in its Corporate Social Responsibility Policy. Activities relating to:

Eradicating extreme hunger and poverty;
Promotion of education;
Promoting gender equality and empowering women;
Reducing child mortality and improving maternal health;
Combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria, and other diseases;
Ensuring environmental sustainability;
Employment enhancing vocational skills;
Social business projects;
Contribution to the Prime Minister’s National Relief Fund or any other fund set up by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women; and
Such other matters as may be prescribed.

By keeping these in mind, we get to see that it’s becoming increasingly important for CSR programmes to be effective and impactful. To achieve this, leaders, managers, and field staff need to think creatively and come up with innovative ideas that go beyond traditional approaches. It’s crucial for everyone at all levels to be involved in ideation, as only then can we keep up with the challenges we face.

Moreover, technology infusion and application play a key role in the success of CSR strategies. In the current era of a technology-driven society, it’s imperative to leverage technology as a major enabler. This involves the integration of appropriate technologies developed by academics, technological institutions, and industry to enhance the impact of CSR initiatives. By embracing creativity, innovation, and technology, we can develop effective CSR strategies that have a positive impact on society and the environment.

Addressing the enormous problems faced by India today and in the future is beyond the scope of CSR organisations alone. The total expenditure on CSR in the country accounts for only about 5 percent of the nonprofit sector’s spending in India and approximately 1.5 percent of the government’s expenditure on social programmes. Therefore, partnership and collaboration will play a crucial role in achieving a significant impact and reaching a larger audience.

By including employee engagement in CSR initiatives alongside customer-focused activities, organisations can make a significant impact. Implementing CSR in organisational policy not only helps in building a positive image but also encourages employees to become ambassadors of the brand. This way, they are more likely to recommend the brand to others and advocate for it, leading to better brand recognition and a positive work culture.

Needs of the future

Climate

It is an undeniable fact that human activities, mainly the emission of greenhouse gases, have caused global warming. In fact, the global surface temperature has already risen by 1.1°C above the 1850-1900 average during the last decade. Greenhouse gas emissions have been on the rise and different regions, countries, and even individuals have contributed unequally to this increase. Unsustainable energy use, land use and land-use change, consumption and production patterns, and lifestyle choices are among the main culprits behind this phenomenon. As a result, we have already witnessed significant and rapid changes in the atmosphere, ocean, cryosphere, and biosphere. Climate change caused by human activities has already started impacting the weather and climate worldwide. If we do not change our ways and continue emitting greenhouse gases, we will experience even more global warming, which will magnify numerous hazards simultaneously.

This certainly means that efforts to eliminate the threat of global warming are becoming extremely crucial with each passing year. It is only through the collective effort of all, including but not limited to the people, government, private corporations, and other stakeholders, that this can be achieved.

Education

Over the years, technology has played a crucial role in expanding access to education for learners who have encountered significant barriers to attending school or receiving guidance from trained teachers. This has been possible through a wide range of technological advancements that have helped to bring education to hard-to-reach learners.

As a result of the COVID-19 pandemic, technology played a vital role in facilitating remote learning. However, despite the widespread implementation of distance learning, a significant number of students were unable to benefit from it. It is worth noting that nearly 95% of education ministries worldwide adopted some form of distant learning during school closures, which had the potential to benefit over 1 billion students. The resources utilised during the pandemic were initially developed in response to previous emergencies or to cater for rural education. Remarkably, some countries have been practising remote learning for several decades. Nonetheless, it is disheartening to note that at least half a billion students, equivalent to 31% of students worldwide, were unable to benefit from remote learning. This was mainly due to their economic status, with the poorest students (72%) and those in rural areas (70%) being the most affected.

When we digitise educational content, we make it easier to access and distribute. Teachers and learners can now find relevant materials through digital libraries and educational content at repositories like the National Academic Digital Library of Ethiopia, the National Digital Library of India, and the Teachers Portal in Bangladesh. To help organise content, learning management platforms have become a key part of the contemporary learning environment by integrating digital resources into course structures.

The world is moving towards becoming more and more digitised, and the education sector needs to be equipped with proper digital mediums. This will not only ensure the quality of education, but it will also ensure that this education reaches all those who are in need of such education. While governments throughout the world, including the GOI, are actively pursuing this goal, it becomes an area where companies can come forward and bring innovation to bridge the gaps that are lying there.

There are many fields in which attention and action are required to meet the needs of the forthcoming future. But the most crucial ones are the climate (our natural environment) and education paired with healthcare. Once these are dealt with efficiently, one can move on to the economic aspects of life.

Conclusion

The world is going through a phase of immense transformation, where digitization and globalisation have caught up with the unprecedented speed of growth but on the other hand, we are heading towards a future where the resources and inclusiveness of the world remain behind a big question mark. It is up to the collective efforts of all of us to come up with an answer in favour of this question mark.

It is at this point where corporations can play a major and crucial role by engaging in activities that can potentially have a positive impact on society at large. A prominent tool for doing so is corporate social responsibility and by including sustainable practises in corporate reporting, the benefits of working for society can even have a positive impact on the businesses themselves. Corporate reporting, when paired with environmentally sustainable practises, can have a huge impact on society and on corporations engaged in such practises as well. All it needs is the vision to combine these two prospects into one strategy.

References

https://www.epa.gov/sustainability/learn-about-sustainability
https://www.thecollector.com/environmental-impact-industrial-revolution-pollution/
https://www.un.org/sustainabledevelopment/blog/2023/07/press-release-world-risks-big-misses-across-the-sustainable-development-goals-unless-measures-to-accelerate-implementation-are-taken-un-arns/
https://wethinkitmattersinc.com/the-demand-for-corporate-social-responsibility-csr-in-todays-economy/
https://bthechange.com/csr-in-india-is-now-a-law-2502aa6d0daa
https://conecomm.com/2017-csr-study/
Jaiyeoba, H.B., Abdullah, M.A. and Hossain, S. (2022), “Measurement invariance across gender for the CSR as a promotional tool for halal certified companies in Malaysia”, Journal of Islamic Marketing, Vol. ahead-of-print, doi: 10.1108/jima-09-2021-0287.
https://thedocs.worldbank.org/en/doc/4de3839b85c57eb958dd207fad132f8e-0340012022/original/WB-GSS-Bonds-Survey-Report.pdf
https://www.aflac.com/docs/about-aflac/csr-survey-assets/2019-aflac-csr-infographic-and-survey.pdf14
https://online.hbs.edu/blog/post/corporate-social-responsibility-statistics
https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_SPM.pdf
https://unesdoc.unesco.org/ark:/48223/pf0000386147
https://www.epa.gov/sustainability/learn-about-sustainability
https://www.thecollector.com/environmental-impact-industrial-revolution-pollution/
https://www.un.org/sustainabledevelopment/blog/2023/07/press-release-world-risks-big-misses-across-the-sustainable-development-goals-unless-measures-to-accelerate-implementation-are-taken-un-arns/
https://wethinkitmattersinc.com/the-demand-for-corporate-social-responsibility-csr-in-todays-economy/

All about geographical indications

By

Diva Rai

-

December 9, 2023

Registration process of Geographical Indications — Image source - http://bit.ly/2J4uwGc

This article is written by Shubhangi Sharma and Shriya Singh. It aims to discuss in detail the geographical indications. It covers its meaning, origin, international position as well as significant cases regarding it along with its types and importance.

Table of Contents

Introduction

A geographical indication is a type of intellectual property right that is basically used for product protection with regards to its geographical origin, and the idea behind it is that the qualities of that product are derived from the concerned place of production. As the geographical indication is usually closely tied to the cultural heritage and traditional methods of production of the particular region the product belongs to, geographical indication helps not only to preserve and promote these traditions but is also essential for maintaining cultural diversity and identity.

Let us study in detail the geographical indications and their importance.

What is geographical indication

A geographical indication is a sign used on products that has a specific geographical origin and includes the qualities or reputation of that origin. A geographical indication is given mainly to agricultural, natural, and manufactured handicrafts arising from a certain geographical area. Geographical indications (G.I.) are one of the forms of IPR which identifies a good as originating in the respective territory of the country, or a region or locality in that particular territory, where a given quality, reputation or other characteristic related to the good is essentially attributable to its geographical origin. The relationship between objects and place becomes so well known that any reference to that place is reminiscent of goods originating there and vice versa. It performs three functions:

First, it identifies the goods as to the origin of a particular region or locality;
Secondly, it suggests to consumers that goods come from a region where a given quality, reputation, or other characteristics of the goods are essentially attributed to their geographic origin;
Third, they promote the goods of producers of a particular region. They suggest to the consumer that the goods come from this area where a given quality, reputation or other characteristics of goods are essentially attributable to the geographical region.

G.I. is a kind of sign used for goods that have a specific geographical origin and possess qualities or a reputation that are due to that particular place of origin. Basmati rice and Darjeeling tea are examples of G.I. from India. Article 22 of the TRIPS Agreements defines a geographical indication as a sign that is used on goods that have a specific geographical origin and which possess qualities, reputation or characteristics that are essentially attributable to that particular geographical place of origin.

As a result, India was implemented in 1999 when the TRIPS Agreement was incorporated as a member state of the Sui-Genis law for the protection of geographical Indication. The object of the Geographical Indicators Goods (Registration and Protection) Act, 1999, has three folds:

By specific laws governing the geographical Indication of goods in the country, which can adequately protect the interests of the producers of such goods,
To exclude unauthorized persons from misuse of geographical signals protect consumers from fraud, and
Promoting Indian geographical bearing goods in the export market.

A registered geographic sign prohibits in any way the use of a geographical insignia which indicates in the designation or representation of goods that such goods originate in a geographic area. For example, Basmati rice and Darjeeling tea are examples of G.I. from India. The connection between the goods and place becomes so much recognized that any reference to the place reminds those specific goods being produced there and vice-versa. Some of the Examples of Indian geographical indications which are registered in India are:

Basmati rice
Darjeeling tea
Banaras Brocades and Sarees
Coorg orange
Phulkari
Kolhapuri chappals
Kangivaram sarees
Agra Petha

Geographical Indication in India

In India, Section 2 (1)(g) of the Geographical Indication of Goods (Registration and Protection) Act 1999, designs geographical indication in relation to goods to mean and identification which identifies such goods as agriculture goods, natural goods or manufactured goods as originating or manufactured in the territory of a country or a region or locality in that territory where a given quality reputation or other characteristics of such goods is essentially attributable to its geographical origin and in the case where such goods are manufactured goods, one of the activities of either the production aur of processing or preparation of the goods concerned takes place in such territory, region or locality, as the case may be.

For the purpose of this provision, any name that is not the name of a country, region or locality of that country shall also be considered a geographical indication if it relates to a specific geographical area and is used upon or in relation to a particular goods originating from the country, region or locality, as the case may be.

Trademark and geographical indication

Both trademarks and geographical indications are distinctive symbols, and they both differentiate some products from others.

However, there are remarkable differences between the two-

BASIS	TRADEMARK	GEOGRAPHICAL INDICATION
Meaning and scope	A trademark is a sign that an individual trader or company uses to distinguish its own goods or services from the goods or services of its competitors.	A geographical indication is used to show that certain products have a certain regional origin. A geographical indication must be available for use by all the products in that concerned region.
Origin	A trademark arises from the creative genius of man.	A geographical indication is not created; it is there in nature due to the existence of human and natural factors.
Social recognition before protection	In the case of a trademark, social recognition must or must not already be there before the idea and need for its protection arise.	For a geographical indication, social recognition is already there before the idea and need for protection come to light.

Types of geographical indication

Theoretically or otherwise, the geographical indications have been classified into four types, namely-

Quality-neutral geographical indications,
Qualified geographical indications,
Direct geographical indications, and
Indirect geographical indications.

Quality-neutral geographical indication

There is no apparent connection between the distinctive features of the products and the place of their origin for the quality-neutral geographical indications. It merely demonstrates that the product is made at the indicated location by the source indication.

Qualified geographical indication

The qualified geographical indications establish a link between the attributes or reputation of the products and the nation, area or place that they are concerned with. A single name is used to designate or identify these products. These are often referred to as applications of origin.

Direct geographical indication

The products of geographical indication tags for the direct geographical indications are denoted by the names of the geographical places they belong to.

For example, tea from Darjeeling is referred to as Darjeeling tea, and champagne from the place Champagne is famously known as champagne.

Indirect geographical indication

If the public at large believes that the products are identifying a certain geographical origin, the indirect geographical indications are termed “non-geographical names or symbols”.

For instance, consider the term “feta,” which has no geographical place in Greece but is yet claimed by Greece to be associated with a region and protected by geographical indication law.

Another example is the rice variety known as “Basmati,” which has no specific location in India. The Trade Agreement on Intellectual Property Rights covers “other signs of geographical significance, whether… composed of words, phrases, symbols or emblematic images,” in the event that indirect geographic indicators are recognised.

Functions of geographical indications

Geographical indications, being a form of intellectual property protection that is used to identify and promote products that originate from a specific geographical region, perform a range of economic and other functions that usually depend upon how the producer is using the geographical indications in consonance with the consumer’s view of them. The primary functions of geographical indication are as follows-

It provides for legal protection

Geographical indications are legally recognised and protected under various national and international laws as well as agreements such as World Trade Organisation agreements on trade-related aspects of intellectual property rights. Protection shows that the use of geographical indications is controlled and monitored, as they are essential for protecting the identity, quality and reputation of products associated with specific geographic regions, which benefit both the producers and the consumers.

What are the benefits of protection as a geographical indication

The research and practice communities in India have given geographic signals a great deal of attention. Having a product protected by geographical indicators may have advantages. Although the advantages will differ from nation to nation, using GIs might boost export revenue and positively impact rural development. Each must assess in particular if the compromises, if any, necessary in discussions to extend TRIPS recognition and protection are justified by the short- and long-term benefits, as well as its current and potential geographical indications and capacity to administer an extended system.

Currently, semi-processed goods like coffee and tea, processed meals like beverages, fruit marmalades, preserves, and sauces, and staples like rice and salt are all commonly used labels to highlight the GI connection between a food and a location. Whether used alone or in conjunction with trademarks, geographical indications, albeit less common than trademarks in terms of values and volumes processed and sold, have the potential to be very beneficial for small businesses and rural areas. Numerous foods with geographical indications are handmade, traditional, and from rural areas. They are produced by tiny or microbusinesses. These characteristics frequently increase their allure and cost, particularly when they are offered in export or domestic niche markets like gourmet or specialised markets. Furthermore, in many Indian regions, the effective application of geographical indicators may have a limited but favourable impact on farming, food processing, rural development, and export revenue. Rural towns could gain social and economic advantages by promoting their local cuisine.

The study’s most significant conclusion is the unmistakable proof of the producers’ increased disposable income during the post-geographic indicators era. The product’s increasing demand pattern following the protection of intellectual property rights and product diversity may be the cause of the higher revenue trend. Thus, it can be concluded that providing this geographical indication with the proper legal protection would greatly benefit in preventing abuse and spurring economic development.

Geographical indication as an indicator of origin

Geographical indications serve as an identification of the product’s origin or have some other connection to it. Terroir refers to the entirety of the local environment, encompassing terrain, soil composition, weather patterns, and expertise, which geographical indications refer to when they are tagged with any product.

A widely accepted hypothesis states that the geographical indications serve as a special combination of the origin and quality functions. They provide details about the product’s geographical origin as well as non-geographic characteristics related to that origin. The idea of terroir serves as the foundation for combining these two roles.

“A relatively small area or surroundings whose geology, topography, microclimate, flora and other related factors bestow distinctive qualities to a product” is the narrowest definition of terroir. Every product ought to represent its location in an eminent manner. As a result, distinct products can be identified with one another and linked to their place of origin. There is no justification for referring to things from different regions using the same geographical term because they are distinct from one another.

Geographical indication acts as a producer’s device

Geographical indications contribute to the preservation of product originality and quality. Uniform product quality is ensured by producers operating within the designated geographical area who frequently adhere to traditional or particular production processes and norms.

A producer should make an effort to set his products apart from those of other producers. It has always eluded manufacturers of highly commoditized goods, like agricultural products, to harness the power of branding. Geographical indications give producers a new or additional way to identify their goods as excellent and entice consumers to make additional purchases. For small-scale producers that cannot afford the substantial expenditures required to support a single brand, this might be quite important.

As long as the promotion and investment functions are adequately safeguarded, producers may use regional indications to support the prices of their products. Producers may capitalise on customer demand for diverse, high-quality products by using geographic indications to unlock value. This is why producers find geographic indications valuable.

It provides information to consumers

Geographical indications guarantee that items live up to expectations by suggesting attributes they possess or that consumers connect with them. The relevance of a geographical indicator is in the way the customer associates the name of the geographical place with attributes like flavour, quality, or other relevant features.

If there is no reciprocity or association between the geographical region and the quality attribute, then the geographic indication will be clearly worthless for the consumer. Information helps consumers make logical decisions. Obtaining information regarding the quality of a product that cannot be examined or evaluated before purchase is frequently challenging and time-consuming. You have to take risks. The product’s source helps the customer recognise it and offers a range of subjective expectations regarding its quality and features. These expectations might be derived from advertisements, past usage, or even suggestions from others. Since certain items cannot be replicated elsewhere, it is imperative to prevent misleading indications in the interest of customers if a geographical indication conveys non-geographical traits developed from the product’s geographical origin.

Consumers are shielded against the use of false or misleading labels by the information offered by registering a geographical indicator, which also gives them options for products and information to help them make decisions.

It helps in preventing misuse

Geographical indications guard against the unapproved use of a product’s name, stopping third parties from falsely promoting goods as being from the same place of origin. This keeps customers from becoming confused and safeguards the original product’s reputation.

It protects local cultures and traditions

Geographical indications contribute to the preservation of culture by preserving traditional production techniques, consumption patterns, and cultural identity. The protection of geographical indications begins with this function. Protection of geographical indications and related rules may only be warranted if the indicators truly serve their intended purposes. It is appropriate to use geographic indicators to preserve regional customs, national culture, and cultural variety. This is due to the fact that geographical markers, rather than encouraging innovation, reward producers who stick to the customs of the production location.

Geographical indicators protect national treasures from imminent extinction and also raise the marketing value of traditional artisan products. Products with regional designations can be “cultural,” according to Broude, in three ways:

the production culture of it,
the consuming culture of it, or
as a component of cultural identity.

A product is granted protection against geographical indications not only because of its place of origin but also because it complies with certain requirements regarding production processes and content. These practices are frequently based on historical and social contexts and are not essential to the final product’s features and attributes. The extinction of the practices would also mean the extinction of the related manufacturing culture. Thus, in order to preserve the historical and cultural integrity of production, geographical indication regulations are applied. However, a culture of consumption is necessary for the survival and appreciation of product traits and attributes. By giving customers precise information about the place of origin of items, we can preserve this culture of consumption. Products with geographic indications serve as cultural icons or components of cultural identity. They may stand for or symbolise a nation or an area.

Geographical indicators, then, serve as a safeguard against the homogeneity that results from globalisation and serve as the keepers of cultural identity. Products covered by registered geographical indications are known for their quality due to a combination of human and environmental variables, including regionally specific manufacturing techniques and natural elements like climate. The ageing process of Roquefort cheese in the caves in the Roquefort district of France serves as an example of how a product’s climate can alter its quality.

It promotes rural development as well as sustainability

Products with a geographic indication have a significant impact on producers in developing nations. The fact that these traditional goods and activities are tied to social structures is one of their salient features. For their food, security, and health, many people in underdeveloped nations rely on these traditional practices. For the impoverished in many nations, traditional medicine offers the only affordable option.

A good indicator should be protected because of its touch of rural and traditional attributes. Maintaining a high standard of quality is essential to building a solid reputation and, frequently, a monopoly that allows you to charge more. Geographical indications can thus support significant corporate interests by helping to promote a region’s products.

Rural places gain extra impetus from geographic indications. When a geographical indication is granted, the right holders will have the chance to profit financially from it as well as the ability to keep out unauthorised users by creating a barrier to entry in a certain market niche.

These characteristics will then translate into a fair allocation of expenses and advantages for the communities and holders of geographical indications. Intergenerational fairness will be aided by the subsequent generation of incentives stemming from economic motivations to support and maintain traditional methods and know-how. The society at large and the holders of geographical indications will also profit from other indirect advantages, such as the generation of jobs, the preservation of people in rural regions, and the potential for tourism.

Local producers and the regional economy are anticipated to gain from a few fundamental characteristics of a geographical indicator. They are listed below-

Geographical indications are preserved indefinitely as long as local knowledge is maintained and they are kept from becoming generic. This indicates that the primary purpose for which marketing expenses are required is to inform customers about upcoming product advancements.
The right is not given to a single producer but to a group of producers as a whole. As a result, the entire community will gain, which could boost the local economy.
Geographical indicators, in contrast to other intellectual properties, are recognised rather than generated; that is, investments are tied only to building a product’s reputation, whereas other intellectual properties are related to the process of manufacturing items initially.

It provides a competitive advantage

Products with geographical indications eventually enjoy a competitive advantage in the market because they are associated with a particular region’s quality, heritage and unique characteristics.

History of geographical indication

Governments are protecting trade names and trademarks used in the context of food products identified from a particular region, which until the late nineteenth century, laws were used or passed against inaccurate trade descriptions, which Usually protect against suggestions that have a certain origin, quality, of the product. , or association when it does not. In such cases, the competitive freedom that arises from the grant of a monopoly of use on a geographic indication is justified by governments for consumer protection benefits or producer protection benefits.

One of the first G.I. systems used in France since the early part of the twentieth century is known as the Appellate d’Orgine Controloli (AOC). Items which meet geographic origin and quality standards can be approved with a stamp of government that serves as the official certification of the product’s origin and standards to the consumer. Examples of products that have such ‘appellation of origin’ include Gruyère cheese (from Switzerland) and several French wines.

Among the major developing economies, India has a quick and efficient G I tagging mechanism.

Geographical indications have been associated strongly with the concept of Terrero and as a unit with Europe, where there is an existence of a tradition of linking certain food products with particular regions and their origin. India has put in place a Sui Generis system of legislation for G.I. security as well as G.I. protection in particular. “Sui Generis” can be termed as of its own kind and involves laws which are recognized nationally. The laws relating to the preservation of G.I.s in India are the ‘Geographical Indications (Registration and Protection) Act, 1999’ (G.I. Act), and the ‘Geographical Indications (Registration and Protection of Goods) Rules, 2002 (G.I. Rules). India enacted its G.I. law for the country to enforce national intellectual property laws in compliance with India’s obligations under TRIPS. Under the G.I. Act, under the G.I. Act, since 15 September 2003, the Central Government has established a Geographical Indication Registry in Chennai, with the jurisdiction of Pan-India, where rights holders can register their G.I.

International stance on geographical indication

Since ancient times, geographical indications have been the most common and popular assignments for specific items. Before the coming of agreement on the Trade-related Aspects of Intellectual Property Rights, there were three International multilateral agreements which were working on the issue of protection of geographical indication, namely –

The Paris Convention
The Madrid Agreement
The Lisbon agreement

The Paris Convention

The Paris Convention represented 1883 industrial property security, which limited bogus and deceitful indications through more extensive and broad measures. It defined geographical indicators as indications of sources or appellations of origin.

The appellation of origin is a special kind of geographical indication that has been mentioned under this convention but has not been defined.

An indication of source is any expression or sign that indicates that a product or service originates in a country, origin or specific place where it has originated. For example, made in India or champagne.

The Madrid Agreement

The Madrid Agreement for the Repression of False and Deceptive Indications of Sources on Goods of 1989 expressly targeted its smothering and obstructing weakening of geographical indications into non-exclusive terms. It provided better protection for geographical indications as it prohibited misleading indications along with false indications.

The Lisbon Agreement

The Lisbon Agreement of 1958 provides a strong insurance policy intercontinental in-role mint arrangement in geographical science. It ensured appellation of origin guarantee. It offered stronger protection for appellations.

The characteristics of the above-mentioned three conventions, coupled with a few additional ones, safeguard the trade-related aspects of intellectual property rights agreements against geographical indications in the world.

TRIPS and Geographic Indication

Member states of the Trade-related Aspects of Intellectual Property Rights treaty are required to provide the mechanism that enables interested parties to prevent untruthful and misleading uses of geographical indication.

For instance, tea growers in Nepal may not call their tea Darjeeling tea or Kangra tea, even if the tea grown is genetically identical.

The literal truth is not a defence if geographical indication misleads the public. Article 23 of the trade-related aspects of intellectual property provides for additional protection for a geographical indication of vines and spirits. It includes three important elements, which are-

The provision in the legality means for interested parties to prevent the use of a geographical indication identifying wines and spirits not originating in the place indicated by the geographical indication.
The possibility to refuse or invalidate the registration of a trademark for vines or spirits that contains or consists of a geographical indication identifying wines and spirits is at the request of an interested party.
There would be a possibility to call for future negotiations aimed at increasing protection for individual geographical indications for wine and spirits.

Article 24 of the trade-related aspects of intellectual property rights provides for an exception and expressly reserves the right to use geographical indications that are identical with the term customary in common language.

The name has become a common or generic term. For instance, cheddar now refers to a particular type of cheese not necessarily made in Cheddar of the United Kingdoms.

What role does WIPO play in protecting G.I.

The Uruguay Round of GATT negotiations began in 1986, at the same time as India’s development policy-making process was in a watershed. As a paradigm shift in its policy by the time India launched its large-scale economic reform package in 1991, the Uruguay Round of negotiations were going well, paving the way for Margakesh in 1994 and world trade. Organization established. The NDA remained a cautious and somewhat dysfunctional player during the early years of the Uruguay Round of negotiations, given its longstanding legacy of growth strategy and inward protectionist trade policy.

However, in Doha, India wanted to patronize other products beyond wine and spirits under the Doha Geographical Indication (G.I.).Many countries wanted this high level of security to be seen as a negotiation for other products, as they see a higher level of security to improve their products by separating their products from their competitors more effectively and They are “belittling” other countries. Conditions. Some others opposed the move, and the debate includes the question of whether the Doha Declaration provides a mandate for negotiations. Those opposing the expansion argue that the current (Article 22) level of protection is sufficient. They warn that providing augmented security will be a burden and disrupt existing legitimate marketing practices. India, along with a host of other similar countries, pressed ‘expand the scope of Article 23’ to cover all categories of goods. However, countries such as the United States, Australia, New Zealand, Canada, Argentina, Chile, Guatemala and Uruguay are strongly opposed to any ‘expansion’. The ‘expansion’ issue formed an integral part of the Doha Work Program (2001). However, as a result of the wide divergence of views among members of the World Trade Organization, there has not been much progress in negotiations, and implementation remains an ‘outstanding implementation issue’.

Need for geographical indications

Given its commercial potential, G.I.’s legal protection assumes great importance. Without proper legal protection, competitors who have no legitimate authority over the G.I. can ride free on its reputation. Such unfair trade practices lead to loss of revenue for G.I. right holders and also confuse consumers. Furthermore, such practices may ultimately disrupt the goodwill and reputation associated with a geographical indication.

What is a “generic” geographical indication

If a geographical term is used as a designation of a type of product rather than an indication of the place of origin of that product, the term does not serve as a geographical indication. Where a certain country has occurred at a certain time, that country may feel that consumers have understood a geographical term that once stood for the origin of the product.

Benefits of geographical indications

The organizations or companies who register their geographical indications enjoy various advantages from the registration, including:

Registered geographical indications have the exclusive right to access or use G.I.’s products during the business.
Authorized users enjoy the right to sue for infringement.
It provides legal protection to geographical signs in India.
Prevents unauthorized use of registered geographical indications by others.
It provides legal protection to Indian geographical signals which in turn promotes exports.
It promotes the economic prosperity of producers of goods produced in a geographical area.
A registered owner can also approach for legal protection in other WTO member countries.
It provides legal protection to the respective goods in domestic as well as international markets.

What are the subject matters which are not registrable under geographical indication

For registration, the indications should fall within the purview of Section 2(1) of the Geographical Indication Act, 1999. When this happens, it must also meet the provisions of Section 9, which prohibits the registration of a geographical indication.

The use of which would cause confusion or confusion; or
The use of which shall be contrary to the time of enactment of any law; or
Which includes or is libellous or indecent matter; or
Which is likely to involve or cause force injury at any time; Religious sensitivity of any class or class of citizens of India; or
Which would otherwise be destroyed for protection in a court; or
Those determined to indicate common names or objects and, therefore, to be preserved in their country of origin or which are not in use in that country; or
However, this is actually true as the area or locality in which the goods originate but misrepresents the individuals that the goods originate in another area, region or locality as the case may be.

Rights granted to the holders

Right to sue: The exclusive rights have been granted to the person who is protected under the Geographical Indication Act and, therefore, can be inherited, gifted, sold, licensed, entrusted or mortgaged. The holder of geographical Indication has a type of property that he can use subject to certain conditions and take legal action against a person who uses his invention without his consent. Does and can receive compensation against real property.
The right to grant license to others: The holder has the right to transfer a license or grant a license or enter into any other arrangement for consideration regarding their product. A license or assignment must be given in writing and registered with the Registrar of geographic indications, for it to be valid and legitimate.
Right to exploit: Authorize user exclusive right to use geographic Indication with respect to geographic goods for which the geographic Indication is registered.
Right to get reliefs: Registered Proprietors and authorized Users or Users have the right to obtain relief in relation to the violation of such geographical Indication.

Who can apply for geographical indication registration

Any person, manufacturer, organization or authority established by or under the law may apply for the registration of Geographical Indication of their product.

The respective Applicant should represent the interests of producers.
The Application should be in the prescribed form in writing, which mentions each and every detail about the product.
The Application should be addressed to the Registrar of Geographical Indicators along with the prescribed fee for the registration of the product.

Whom to apply

The Application must be submitted to the Registrar under the Act, the Controller of Patents, Designs and Trademarks who are appointed under sub-section (1) of Section 3 of the Trademarks Act 1999 shall be the Registrar of Geographical Indications. He shall be assisted by the respective number of the officers, who are appointed by the central government as they may think fit.

A full modern patent office and the country’s first geographical indication (G.I.) registry in Chennai is a really good step in this field. The Registry will further supplement this by meeting the requirements outlined in the Act. Every application should be filed in the Office Registry of Geographical Indication within the territorial boundaries of the country or region or locality in the country where the geographical indications are situated.

Whom to consider an authorized user

The authorized user is:

The manufacturer of the goods can apply for registration as an authorized user.
It must be in relation to a registered geographical indication.
He should apply in writing with the prescribed fee.

Whom to consider as the registered proprietor of a geographical indication

The registered proprietors of Geographical Indications are:

A person, manufacturer, organization or association established under law or legislation may be a registered owner.
Their name must be entered in the Register of Geographical Indicators as there are registered owners for the Geographical Indication.

Requirement of registration

Under the Indian Act, no protection is conferred on an unregistered geographical indication. Consequently, the proprietor of an unregislative geographical indication has no remedy against the infringement of his mark. So, one can conclude that the registration of geographical indications is mandatory under the laws of India.

However, passing off action by the original proprietor of a mark has not been barred.

Tirupati Laddu Controversy

In the Tirupati Laddu controversy, public interest litigation was filed before the Madras High Court against the geographical indication tag for the Tirupati Laddu.

That petition was dismissed on the ground that an alternative and efficacious forum was available for the adjudication of such disputes, and hence, the public interest litigation was dismissed with directions to the petitioner to approach the appropriate authority for the same.

Under the Geographical Indication Act, such a petition could have been filed either before the geographical indication registry or the Intellectual Property Appellate Board.

Mr. R.S. Praveen Raj, a resident of Thiruvananthapuram and a scientist at the National Institute of Interdisciplinary Science and Technology, made a play against the geographical indication tag of laddus.

The petition raised certain issues fundamental to the nature of geographical indication protection on the grounds of violation of Section 11(1), Section 9(a) as the registration is likely to deceive consumers, and Section 9(d) as the registration is likely to hurt the religious susceptibilities of the community in India.

It was rejected by the geographical indication registry of Chennai, stating that the applicant failed to prove locus santdi and interest in the registered goods.

Jamnagar Petrol

Reliance Industries Limited had filed the geographical indication application for Krishna Godavari gas and Jamnagar petrol, diesel and LPG.

The application sought authorised usage of the name Jamnagar LPG for oil, petroleum and diesel. Though the application was published in the journal, it was abandoned midway by Reliance Industries Limited in the wake of two separate oppositions to it.

Section 11(2) of the Geographical Indication Act mandates an application to contain a statement that proves or establishes that the geographical indication to designate the goods originating from the concerned region in respect of specific quality, reputation and other characteristics that are due exclusively or essentially to the geographical environment with its inherent nature and the human factor.

Under specification, Reliance Industries Limited stated that the required standards are met by its petrol, fuel, diesel and LPG. There was no mention of any unique properties possessed by the goods in the application by Reliance Industries Limited except compliance with the standards of the International Organization of Standardization.

Basmati Rice

In September 1997, the United States granted a patent to Ricetec Incorporation, which is a United States multinational company, for new lines and grains in the name of basmati rice.

This was objected to by two Indian non-government organizations. The Centre for Scientific and Industrial Research also objected to it. All of them called for a revision of United States rights standards to specify that the term basmati can be used only for rice grown in India and Pakistan and Jasmine for Thai rice.

The Indian government, after putting together the evidence, officially challenged the patent in June 2000.

The contention of Ricetec was that the name basmati is not a name of geographical rice, and hence, it is not qualified for protection under the trade-related aspect of the intellectual property rights agreement.

However, it was proved that though the name basmati is not a name for any geographical area, it’s still inextricably linked to its region of origin, that is, India.

Ricetec also contended that basmati is a generic name and has fallen into the public domain.

In 2000, after litigation and hearings, the United States Patent Trademark Office granted patents only to a few varieties instead of the sweeping claim of new lines and grains.

It was against this backdrop that the Geographical Indication Act of India was passed in 1999.

Darjeeling Tea

Tea Board, a statutory authority of the Government of India established in 1953 under the Tea Act of 1953 for the purpose of controlling the Indian tea industry, owns the geographical indication for Darjeeling tea, which is the tea grown in 87 gardens in the district of Darjeeling.

The keyboard has fought more than 15 cases against the infringement and misuse of Darjeeling tea.

The board was successful in seeking rejection of the trademark application for Darjeeling Nouveau in the name of the Republic of Tea, United States of America, on the basis of its geographical certification mark for Darjeeling word and logo.

The opposition had been filed by the tea board before the Trademark Trial and Appeal Board.

The Trademark Trial and Appeal Board held that the Republic of Tea had not proved that consumers view Darjeeling tea as a generic type as opposed to tea grown in the Darjeeling region of India.

It also recognised the tea board’s continuing effort to maintain control of the mark and protect its value as a geographical indication.

The trade mark trial and appeal board held that the regulations and licensing program put in place by the tea board constitute adequate provision for control.

In its decision, the Court of Appeal, Paris, held that Mr. Dusong’s mark of Darjeeling with a cattle device impairs the geographical indication of Darjeeling and is prejudicial to the tea board’s interest in the same. Accordingly, the impugned mark was nullified.

Registration process of geographical indications

Step 1: Application filing

Please check if the Indication falls within the definition of Section 2(1)(e) of the Gl Act.

The association of individuals or producers or any association or authority should represent the interest of the producers of the goods concerned and file an affidavit as to how the Applicant claims to represent their respective interests.

Applications must be made in triplicate.
The Application must be signed by the Applicant or his agent and must be accompanied by a description of the case.
Describe the special features and how those standards are maintained.
Three certified copies of GI-related field maps.
Description of the inspection structure if there is an area for regulating the use of G.I.
Provide details of all applicants with the address. If there are a large number of manufacturers, then collective reference applications for all producers of goods and G.I. should be made. If registered, it should be indicated accordingly in the register. The Application must be sent to a respective address in India.

Steps 2 and 3: Preliminary Examination and Examination

The examiner will check the Application for any deficiencies.
The Applicant should take measures in this regard within one month of communication.
The content of the case description is evaluated by an advisory group of experts who will master the subject.
Furnished will ascertain the correctness of the description.
After that, an examination report will be issued.

Step 4: Show cause notice

If the Registrar has any objection to the Application, he shall file such objection.
Applicant must reply within two months or apply for a hearing.
The decision will be duly communicated. If the Applicant wants to appeal, he can request it within a month.
The Registrar also has the right to withdraw an application, if it is mistakenly accepted, after giving it on the occasion of a hearing.

Step 5: Publication in Geographical Indication Journal

Every Application, within three months of acceptance, will be published in the Geographical Indications Journal.

Step 6: Resist Registration

Any person opposing the G.I. application, published in the journal, can file a notice of protest within three months (another month upon request which is to be filed before three months).
The Registrar will provide a copy of the notice to the Applicant.
Within two months, the Applicant will send a copy of the counter statement.
If he does not do so, he is believed to have dropped his Application. Where a counter-claim has been filed, the Registrar will serve a copy on the person giving notice of the protest.
Thereafter, both parties will lead their respective evidence through affidavits and supporting documents.
After this, the date of hearing of the case will be fixed.

Step 7: Registration of Application

Where an application for G.I. has been accepted, the Registrar will register the Geographical Indication. If the date of filing the Application after being registered will be considered as the date of registration.
The Registrar will issue a certificate to the Applicant with the seal of the Geographical Indicators Registry.

Step 8: Renewal of Application

A registered G.I. will be valid for 10 years and can be renewed on payment of a renewal fee.

Step 9: Additional Security for Notified Goods

An application can be made to the Registrar for respective goods which are notified by the Central Government for additional protection for the registration of geographical Indication in Form GI-9, there will be three copies of the case details and three copies of the issued notification.

The Application will be made jointly by the registered owner of Geographical Indication in India and jointly by all the producers of Geographical Indication.

Step 10: Appeal

Any person who is aggrieved by an order or decision may prefer an appeal to the Intellectual Property Appellate Board (IPAB) within three months.

Validity of registration

The Registrar’s certificate of registration serves as initial proof that the geographical indication was properly registered. Without further evidence of original production, it is admissible as sole evidence in all courts and before the Appellate Board.

Effect of registration

The Geographical Indications Act does not require the registration of geographical indications. Better legal protection against violations of registered geographical indicators is provided to authorised users by registration.

However, no infringement proceedings may be initiated to stop infringement or to recover damages in the case of unregistered geographical indications. No one will have the exclusive right to use any of those geographical indicators; instead, two or more approved users will have co-equal rights against other parties. The following rights come with registration-

Subject to the restrictions and conditions associated with registration, registration grants the exclusive right to use the registered geographical indicator with respect to the goods to which it refers. There are co-equal rights for two or more co-users.
Additionally, registration grants the right to infringement remedies.
If a passing-off action has already been launched, its scope will be expanded as a result of the registration of a geographic indication while the case is pending.

Registration of Geographical Indication as a Trade Mark

Geographical indicators cannot be registered as trade marks by the Registrar of Trade Marks because they could mislead or confuse people regarding the genuine location of origin. The Geographical Indication Act of 1999, Section 25, renders a trade mark’s registration void suo moto or upon the request of a concerned person. This Act’s Section 25 forbids anybody from using a public property that is in the form of a geographical indicator as a trade mark that could cause confusion in the marketplace.

However, trademarks comprising geographical indications that have been legitimately applied for or registered prior to the effective date of this Act are protected under Section 26 of the Geographical Indication Act, 1999.

In the case of Tata Groups Mount Everest Mineral Water Ltd. v. Bisleri, Mount Everest Mineral Water (2010), the registered owner of the trade mark “Himalaya”, asked the Delhi High Court to issue an interim injunction prohibiting Bisleri from using the mark on its packaging.

Bisleri submitted a request to the Intellectual Property Appellate Board to have the Himalaya trade mark registration revoked. Because the Geographical Indication Act prohibits any private entity from registering a geographical term as a trade mark and the word “Himalaya” refers to a mountain range, Bisleri argued that it cannot be registered as a trade mark.

The Intellectual Property Appellate Board stated in its ruling that there would be a requirement placed on registration, stating that it does not grant the sole right to use the word “Himalayan” or the device depicting a mountain and that the term should only be applied to water that originates from the Himalayan mountain. The highest authority, the Intellectual Property Appellate Board, stated that no corporation is granted the exclusive right to use the term “Himalayan” as a trade mark for its products just because it was registered.

Infringement of geographical indication

A registered geographical indication is violated by a person who is not a registered proprietor or authorized user who uses such a sign on the goods or suggests that such goods originate in another geographic area, which confuses someone other than the actual place of goods public. A geographical indication of the trademark also infringes upon any use that constitutes an act of “unfair competition”, a detailed explanation of 1 and 2 of Section 2(b). This provision seeks to give effect to Article 22(2)(b) of the TRIPS Agreement, which requires members to “provide legal means for interested parties to prevent any use that the Article 10bis of the Paris Convention (1967). A geographical indication is also violated by a person who is not a registered proprietor or authorized user, who uses another geographical indication for the goods, which is actually true as to the region, or locality from where the goods originated and publicly misrepresentation that goods originate in a region, or a locality to which such registered geographical indicators belong.

Article 22 (4) of the TRIPS Agreement states that the preservation of the geographical Indication of a trademark must be enforced even if the G.I. “is truly true as to the area, region, or locality in which the goods are in another territory” is generated “.

When someone uses a registered geographical indicator for which they are not legally permitted to do so, that use is considered an infringement. The use of a registered geographical indication in any way to indicate or suggest that goods originate in a location other than their true origin or to present goods in a way that misleadingly directs consumers towards that location constitutes infringement by an unauthorised user.

Therefore, it is illegal to use a registered geographical indication if someone-

uses the product’s geographic indicator to suggest in a way that deceives the public that the items are made somewhere other than where they really originate,
makes use of the geographic indication in a way that would be considered unfair competition,
uses a different geographical indication for the commodities in a way that deceives the public into believing that the items are made in the area, region, or place that is associated with the registered geographical indication.

The rights holder must provide proof in the complaint that-

The geographical indication of the rights holder is being used in connection with goods in an alleged infringement, which may cause confusion among the public as to where the infringing goods originated. The alleged infringement involves a mark that is identical to or similar to the geographical indication of the rights holder.
The illegal act infringed upon the right holder’s exclusive use of rights, resulting in financial loss for the right holder or damaging the right holder’s goodwill and reputation.

Upon becoming aware of any infringement, the rights holder may send a cease and desist notification to safeguard its geographical mark against unapproved usage. After that, the rights owners may choose to file a criminal or civil lawsuit against the infringer, depending on the infringer’s response.

Remedies for infringement of geographical indication

Remedies relating to infringement of geographical indications are similar to remedies related to trademark infringement. Similarly, under the (Indian) Geographical Indicators Goods (Registration and Protection) Act, 1999, falsification of a geographical indication. Remedies which are available for conservation of geographical indications may be broadly classified into two categories:

(i) Civil remedies

Injunction

Injunctions include temporary injunction and permanent injunction. An injunction is granted for the protection of violations of related items, documents or other evidence in respect of the subject of the suit. An injunction is granted for restricting the defendant from disposing of or dealing with his products which may adversely affect plaintiffs’ ability to recover damages, costs or other pecuniary remedies which may be finally awarded to the plaintiff as compensation of damage. The aforesaid remedy of injunction is more effective and can prevent greater harm to the plaintiff. Or other peculiar remedies that may eventually be given to the plaintiff.

Damages

The remedy of damages or account of profits in the form of compensatory damages is available to prevent infringers from infringement. Damages (other than nominal losses) or accounts of profits may be ruled out Where the defendant satisfied the court that he was unaware and there was no reasonable basis for that Assuming that the plaintiff’s geographical Indication was registered when he was engaged in using it; And when he became aware of the existence and nature of the geographical Indication, he stopped using it.

Delivery of the infringing labels and indications containing products

It is in the court’s discretion to order the infringer to deliver up infringing labels and indications for destruction by taking relevant circumstances into consideration the court may or may not order for such remedy. All the mentioned remedies are also available for the action of passing off. The actions of Passing off are initiated against the infringement of unregistered geographical indications.

(ii) Criminal Treatment.

Criminal remedies are more effective as compared to civil remedies because the former can be disposed of quickly. Pendency of civil suits does not justify a stay of the criminal proceedings which involve the same question. Criminal proceedings directly attack the violator’s honour and social status In some cases he comes forward for the Settlement of the matter out of court to save their reputation. Chapter VIII of the Act deals with offences and punishment for such crimes. The Act has penal provisions for violation of various provisions related to Geographical indications which are discussed below:

Falsifying and incorrectly applying geographical indications to the goods.
Selling goods to which false geographical indications apply.
Misrepresentation of a geographical indication in registered form.
Improperly describes a place of geographically connected business indication Registry.
Falsification of entries in the register.

The punishment granted for the infringement offences varies from six months to three years imprisonment and a fine of not less than rupees fifty thousand but may extend to rupees two lakh. However, the court for adequate and special reasons in writing may grant lesser punishment.

Cases

Banganapalle Mango

‘King of Fruits’ means mangoes from Banganapalle received a G.I. tag in the year 2017. The government-fixed logo features a yellow-coloured shiny fruit around which the tagline says “Banglapple Mango from Andhra Pradesh,” showing farmers with images of a man and a woman. From now on anyone has to apply to become the first authorized user to sell or produce and this will require a No Objection Certificate (NOC) from the Commissioner of Horticulture Development Agency, Government of Andhra Pradesh, Department of Horticulture.

The fruit is also known by many types of sages such as Beneshan, Banahan, Benishan, Chapati, Safeda, Banganapalli, Banginapalli, Banganapalle, etc. The main attraction of the fruit is that it can maintain its quality in cold storage for three months. Documents submitted to the Registry stated that ‘the prominent feature of Banganapel mangoes is that they have very light spots on their skin, stones are diagonal in shape and have very thin seeds, which have sparse and soft fibres.

The government also called the original centre of Kurnool district, which includes Nandyal Mandal in Banganapalle, Penam and Telangana and Khammam, Mahbubnagar, Rangareddy, Medak, and Adilabad districts. According to an affidavit furnished in 2011, the then Commissioner of Andhra Pradesh, Rani Kumudini said that about 7,68,250 families were involved in the production of Banganapalle mangoes. An estimated 24.35 lakh metric tons of mangoes were grown every year in Andhra Pradesh, and around 5,500 tons of Banganpal mangoes were exported annually to countries like the U.S., U.K., Japan and the Gulf countries.

Banglar Rasogolla v. Odisha Rasagola (2017)

In November 2017, the West Bengal State Food Processing and Horticulture Development Corporation Limited registered G.I. as Ras Banglar Rasogola. It was reported that Bengal won the dormant war between Odisha and Bengal, which would own the famous dessert. The legal battle for G.I. registration started when objections to G.I. registration were lodged, and it was said that this famous dessert originated at Jagannath temple in Puri, Odisha. An application to remove the registration of G.I. status was filed in February 2018. Meanwhile, the G.I. Registry in July notified that Odisha registered G.I. as ‘Odisha Rasgola’, after which several reports were released. Odisha did not give up in the race but won one. It is very important to note that the G.I. registry has not registered the word all Rasogola / Rasgola ‘. It has prefixed two words specifically for the G.I. tag, one is ‘Banglar’, and the other is ‘Odisha’. To say that ‘rasogola / rasgola’ is a general term, which any person can use in his trade and business. Thus, as far as the law is concerned, neither of the two states has a monopoly on the word ‘Rasogola / Rasola’. Therefore, it is free to sell sweets to anyone in the trade as Rasgulla / Rasgola or any other synonym. What is prohibited is the use of the words “Odisha rasgola” and “Benglar rosogola” by anyone other than authorized users ‘under the law.

Geographical idications as a tool for economic development

The ramifications of geographical indications for goods for producers in developing countries are substantial. The connection between these traditional goods and activities and community involvement is one of their key features. These kinds of traditional activities are essential to the health and food security of millions of people living in poor nations. For those in need, traditional medicines may offer the only accessible, cost-effective treatment. Any trade benefit derived from the geographical indications classification is essentially pro-poor, given that geographical indications typically rely on products like agriculture, fishery, handicrafts, and artisanal goods. This is in contrast to other intellectual property rights, such as trademarks and patents, where the majority of the beneficiaries are wealthy individuals.

By bringing in more money and job possibilities locally, improved geographical indications, protection and marketing could have a direct impact on lowering absolute poverty. As a result, geographical indications can greatly advance human development and have a role to play in lowering poverty vulnerability.

Furthermore, the local producers and the surrounding economy stand to gain from a few fundamental geographical indication characteristics. Below are their details-

First, as long as local knowledge is maintained and the indication is kept from becoming generic, geographical indications are retained indefinitely and without time restriction. This indicates that the primary purpose for which marketing expenses are required is to inform customers about upcoming product advancements.
Secondly, the entitlement is bestowed upon a group of producers rather than a single producer. As a result, everyone in the community will gain, which could boost the local economy.
Third, geographical indications, in contrast to patents and copyrights, are recognised rather than created, meaning that investments are limited to enhancing the reputation of an already-existing product, whereas patents and copyrights are associated with the creation of new items.

Through its reputation as a reliable source of income, geographical indications certification lessens the vulnerability of rural impoverished people to poverty, which in turn discourages migration from rural to urban areas by keeping rural farmers on their farms.

This has two important ramifications, which are as under-

First, the indigenous knowledge of the place does not disappear; rather, it develops into a more refined form, and
Second, the migratory rate decline lessens the strain on metropolitan centers, which are frequently overcrowded in developing nations.

Additionally, the geographical indications might promote tourism in the area. The geographic location and geographical indications of goods may interact in both directions. In a sense, the environment in which geographical indications of goods were produced may be responsible for some of their quality attributes. In addition, the geographical indications’ widespread appeal fosters a positive perception of the area, which supports the growth of the tourism industry, which in turn supports neighborhood businesses and community development.

European Union and Indian Free Trade Agreement vis-a-vis geographical indication

The Free Trade Agreement was to be entered into by the European Commission to regulate issues such as competition policy, the rights of foreign investors, open government purchasing practices as well as environmental social and Human Rights clauses.

However, sharp differences arose with respect to intellectual property rights, competition, agriculture, public procurement, market access and transparency.

For instance, a concern raised by Amul in 2013 was that it was feared whether the reduction in import duties would enable the European Union to dump subsidized products in the Indian market as the European Union did not allow the import of Indian dairy products under its strict sanitary standards, which are suspected to be nothing but a non-tariff barrier.

Conclusion

From the above case, we can conclude that a registered G.I. tag prohibits the holder from using the registered mark of G.I. or its name in any product which is similar to or misleading the registered product. It is possible. It may not be the same as a registered product, but it may have a registered name. Since the adoption of the TRIPS Agreement, there has been increased awareness of the need for adequate protection of geographic signals for all products. In addition, the negotiations by the World Trade Organization in the field of industrial and agricultural products demonstrate the increasing importance of increasing the level of conservation of geographical signals for wines and spirits for all products. Nations have to understand the fact that protection for G.I.s is best provided under national laws because it is not the provisions of the treaty but the actual national laws that provide protection in relation to G.I.s. Such protection is an invaluable marketing tool and an added value for exports because it increases the likelihood of market access for such goods. The G.I. tag is an essential component for creating and maintaining abstracts and originality of the product of certain essentials and characteristics. India is not far behind in legally pursuing this aspect of intellectual property.

Frequently Asked Questions (FAQs) (New heading)

What is the appellation of origin?

The term appellation of origin has been understood as the geographical name of a country, region or locality that serves to designate a product originating there with regards to the quality and characteristics it exclusively or essentially has from the geographical environment, which is inclusive of natural and human factors.

What is passing off?

Whenever a case of false representation arises, it tends to deceive customers into believing that someone else is the goods and services that they are providing and not theirs but of the one who is responsible for making such representation. There is a remedy available under such circumstances, known as passing off.

In order to prove passing off, one needs to fulfill three essential conditions-

Goodwill
False or misrepresentation
Injury or damage

What is the neo-classical model theory?

According to neoclassical growth theory, different labor and capital inputs into the production function lead to short-term equilibrium. The theory also contends that technological advancements are necessary for economic growth and that technological change has a significant impact on economies.

According to neoclassical growth theory, an economy can only grow if three things happen. These three are stated under

technology,
capital, and
labor.

Does Kancheepuram silk enjoy the status of a geographical indication?

The Kancheepuram region of Tamil Nadu, India, is well-known worldwide for its silk products, and this is where the silk is created. Registration was used to seek protection for Kancheepuram silk as a handicraft.

This silk’s reputation has been shaped by its high caliber and expert craftsmanship. Heavy silk and gold fabric are used to weave Kanchipuram sarees. In order to stop the use of the brand name Kancheepuram silk for other silk products made outside of Kancheepuram, the geographical indicators registry registered Kancheepuram silks as a geographical indication in 2005–06.

References

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Exploring the role of IoT in smart energy management

By

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December 8, 2023

This article has been written by Sanskar Tiwari pursuing Diploma in Technology Law, Fintech Regulations and Technology Contracts and edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

In the present, the amenities accessible to the common man as a utility were not even a luxury to the nobility a hundred years ago; they were, in fact, past imagination. There has been a rapid advancement of human civilization in terms of technology, which has inundated humanity with umpteen comforts and conveniences. But the cost generated by producing these comforts and conveniences is now getting too high to pay for humanity. The consequence is that natural resources like petroleum, coal, thorium, etc. are drying up quickly, carbon emissions are hitting new heights every year and consumption of energy is increasing at a very rapid pace. Hence, it is very essential and pertinent to look into energy consumption. A lot of energy is wasted just because it is not properly managed or optimised. Hence, energy management becomes a very essential and basic approach to saving energy and optimising energy usage.

The Internet of Things (hereinafter referred to as ‘IoT’) plays a very vital role in energy management in the modern era. IoT automates the process of energy management, which is often referred to as ‘smart energy management’. IoT based smart energy management systems are in high demand today. The article discusses the relevance of IoT based smart energy management and later delves into the question of how IoT can even help counter electricity thefts in India, which also amounts to smart energy management.

IoT and smart energy management

First, let us understand what exactly is meant by IoT and smart energy management.

What is an IoT

IoT refers to a group or network of objects/devices that are connected to each other, may be via wifi, bluetooth, physical wires, or cellular networks, and that are often embedded with sensors, softwares or other technologies that collect data from the surroundings. The collected data is capable of being shared with other objects or devices in the network and is generally shared with the cloud storage platform or central server, which then analyses the data and puts it to beneficial use in a wide range of industries. The devices in the network can collect and exchange data with each other and with other systems. In other words, it can be said that IoT enables objects/devices to interact with each other.

The most classic example of an IoT is a smartwatch, which is embedded with sensors that can measure blood pressure, SPO2 levels, heartbeat, calories burned, etc., and it shares the data with a smartphone to which it is generally connected via Bluetooth.

Smart energy management

Smart energy management (referred to as ‘SEM’ hereinafter) focuses on controlling, monitor and optimising three aspects of energy, i.e., its generation, production and consumption, via the use of IoT (modern technology, software, etc.). Smart energy management is not possible without IoT. Hence, IoT is a non-negotiable part of the SEM. The fundamental goal of the SEM is to conserve energy, consequently minimising costs and reducing the negative impact on the environment. SEM is needed at both the household level and at the industrial or commercial level.

Smart energy management is generally done by installing a SEM system that is embedded with IoT.

The SEM system first collects data regarding anomalies, power wastage, power consumption/production, environmental factors such as temperature, humidity, motion, etc. via various sensors and metres, which are part of the SEM system.
Then the collected data is transmitted to a cloud based storage platform or to a central control unit.
Then this data is processed and analysed using machine learning techniques and software algorithms.
Based on the analysis of the data collected, energy usage is regulated and optimised, thus avoiding waste.
SEM systems can also operate and control energy storage functions and switch between different sources, such as solar energy, batteries, regular power supplies, etc.

Some SEM systems are basic, like smart air conditioners or smart bulbs, which efficiently save energy, while others are complex, such as multi-building automation utility systems.

Let’s take a practical look at the SEM system

A building is attached to a SEM system with various sensors.

Air conditioners generally operate within a fixed range of temperature, which leads to repetitive on and off cycles of the compressor. As the air conditioner attains required temperature as per the ambient temperature of the building and also takes into consideration the outside climate via atmospheric climate sensors, the compressor is accordingly switched off and on accordingly to save energy.
Lights are switched off immediately as there is no motion detected in a room via inbuilt motion detectors.
When the water storage tank is almost filled with water up to the brink, which is sensed by a sensor monitoring the water level in the tank, which further forwards the information to the central controlling unit, which switches off the water supply via the water pump.

Similarly, SEM systems may be used in industries for optimisation of the energy usage involved in large and complex machines.

Why resorting to IoT based smart energy management is better

Earlier, there was no provision for electricity itself. Later, electricity was discovered and put to use for the benefit of humanity. In the initial years of the usage of electricity, the only electrical appliances used were fans, bulbs, and tubelights. But with constant innovation in technology, more appliances were invented and now a modern household is unthinkable without appliances like refrigerators, microwaves, induction ovens, toasters, air conditioners and heaters, hair dryers, electrical irons, geysers and so on. This implies that earlier, the management of electricity with limited appliances was simple and could be managed simply by human effort (by switching on and off the appliances as per the needs of the people) but now the same has become so complex that it is not convenient or too cumbersome a task to rely on human effort for energy management. Modern skyscrapers and industries are mushrooming and their energy management is almost impossible with human effort. Hence, IoT-based SEM systems come to the rescue.

Traditionally, in India, as responsible human beings, people were expected to have the duty (dharma) of conservation of resources, which included efficient use of them as well. But this duty is now not binding and unenforceable in nature; therefore, energy is bound to be wasted because some people are responsible but some are not. Let’s take a real-life example of my observation at the school I studied. There were people (students) who acted very responsibly and switched off lights and fans when there was no one in the classroom. At the same time, there were people who were not sensitive enough to even know this, and some people even possessed the attitude that my parents are spending a good amount of money on the school; therefore, I am rather going to ensure I am able to get the value back, and even if for that matter, I may ensure that all lights and fans are on when no one is in the classroom. So, IoT-based SEM systems can help to rule out the human factor, which is either for or against (depending upon the biases that a person may have) and the conservation of energy takes place without any bias (uniformly), hence rendering the process efficient and automated.

Relevance of IoT based smart energy management in India

The use of SEM systems is not as rampant in India as it is in western countries. Still, there are many households throughout the country that don’t have access to a 24 hour electricity supply. But in metro cities like New Delhi, Bangalore, Gurgaon, and Mumbai, it is gradually coming into trend in newly built flats, villas and bungalows. And at the commercial/industrial level, companies in India are actively resorting to SEM systems. Newly constructed skyscrapers are fitted with SEM systems. Given the growing energy consumption in India, it is pertinent to adopt IoT based SEM.

Does reduced incidences of electricity thefts also amount to SEM

As mentioned above, SEM aims to curb energy waste, optimise it and minimise costs. Electricity theft mainly leads to the following repercussions

● Indiscriminate/reckless use of energy, as people are not concerned with electricity bills.

● Loss of revenue to the supplying company or the government, as the case may be.

So, if electricity theft is curbed, then it would curb the indiscriminate use of energy; hence, energy shall be saved and the energy so saved may be put to efficient usage. Secondly, it shall lead to minimising the costs that are borne by the supplying companies or the government due to electricity thefts. So, clearly, it can be established that reducing/curbing incidences of electricity theft also amounts to SEM. It is immaterial whether SEM is at the level of a home, a building or a factory or at a higher level, such as SEM in relation to a city or a country.

Can IoT solve the rampant problem of electricity theft in India

The IoT can solve the problem of electricity theft. Electricity theft may be committed in many ways, such as by tampering with the metre, thereby stalling the readings, tapping into the electrical cables, or using the electricity (allocated for household usage) for commercial usage. Let’s see how IoT can help tackle electricity theft:

Smart metering: They can’t be tampered with easily. They provide real time energy consumption data. They can detect aberrant consumption patterns, which may indicate theft and alerts may be sent to the utility providers. Hence, the Indian Government is promoting and installing smart metres in households under various schemes like Smart Metre National Programme, Revamped Distribution Sector Scheme, etc.
Tamper detection: IoT powered sensors may be installed at the distribution equipment or channels, which can immediately detect unauthorised access or tampering. These sensors can send immediate alerts for a rapid response.
Geospatial analysis: Amalgamating geospatial information with IoT can help pinpoint and focus on the areas prone to electricity theft. This can facilitate the enforcement of preventive measures.
Data analytics: IoT enabled smart metres can collect vast amounts of data, which may be analysed via machine learning and advanced data analytics algorithms so as to identify anomalies and patterns associated with theft.

Conclusion

In the modern era, with ever rising consumption of energy, it has become imperative to look into our own actions regarding the manner of usage of energy, like ‘Whether the usage is efficient or not?’, ‘Whether there is wastage or not?’. Here, IoT based SEM becomes relevant to attenuate such a premise. IoT based SEM has copious benefits, such as minimising carbon emissions and costs, reducing energy waste, optimising the energy saved, etc. Iot based SEM is very efficient and reliable as compared to human effort because of physical impossibility and human bias. IoT can also help reduce incidents of theft, which also amounts to SEM in a more comprehensive sense, as discussed above. Development and growth are inevitable but it is a choice that we have as a generation about whether to make that growth or development sustainable or not. And IoT based SEM is a very pertinent step towards the goal of sustainable growth and development.

Apart from solely relying on SEM via IoT, it is high time for humanity to become responsible and, as far as practicable, try to act in a way that is not detrimental to the environment, other creatures or other human beings. This is what is enshrined under Article 51A(g) of the Constitution of India and has been stressed on many occasions by the United Nations.

References

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Madhya Pradesh Shops and Establishments Act, 1958

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December 8, 2023

This article is written by Ziya ur Rahman Karimi. This article provides a detailed and comprehensive analysis of the Madhya Pradesh Shops and Establishment Act, 1958. The article further comprehensively explains the provisions of the Act, like the procedure for registration of establishments and shops, the rights of workers regarding hours of work, leaves, and payment of wages. It also discusses the duties and responsibilities of the authorities and the provisions of offences and penalties under this Act.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Madhya Pradesh is a large state where numerous shops and establishments exist and form part of its economy. Have you ever thought, based on which laws and rules, these establishments and shops, which include restaurants and theatres, amongst other things, are carried out smoothly in Madhya Pradesh? Well, it is the Madhya Pradesh Shops and Establishments Act, 1958, and this article provides a detailed and comprehensive analysis of the said Act.

The Madhya Pradesh Shops and Establishment Act, 1958, is a set of guidelines that lays down the rules and laws for ensuring the smooth and fair functioning of shops and establishments like restaurants, eating houses, residential hotels, theatres, or other places of public amusement or entertainment. This legislation covers topics like the registration process of establishments, the opening and closing hours of different categories of shops and establishments, how many working hours are fixed for an employee in these establishments, as well as the holidays and provisions regarding leaves and payment of wages. It also gives certain rules and guidelines regarding the employment of young persons and women and completely prohibits the child from working in any establishment. It is pertinent to mention here that this legislation empowers a few authorities responsible for ensuring that the provisions under this Act are followed by employers and owners. It also imposes penalties for certain offences and, thus, ensures complete enforcement of this Act.

Therefore, whether you are a business person, owner of a shop, or academician and you are here just for the purpose of research or someone who is just keen to explore this legislation to understand how things work regarding the functioning of the shops and establishments in Madhya Pradesh, just go through this article once. You will learn all about the Madhya Pradesh Shops and Establishments Act, 1958.

Objectives of Madhya Pradesh Shops and Establishments Act, 1958

To protect the rights of employees: One of the main objectives of this Act is to ensure and safeguard the rights and interests of workers. This Act provides various provisions regarding working hours, the right to leave, and provisions regarding wages and holidays.
To ensure uniformity in the functioning of shops and establishments: This Act aims to ensure uniformity and consistency of practice in the operation of shops and commercial establishments, and, for this purpose, it provides guidelines regarding opening and closing hours.
To promote safety and health at the workplace: This Act seeks a safe and healthy environment for work, and for that, it gives guidelines for cleanliness, proper ventilation, and precautions against fire incidents.
To regulate the operation of shops and establishments in accordance with the Act: This Act makes the registration of establishments mandatory to make sure that they are following the rules and regulations as specified in the Act.

Important definitions

There are thirty definitions described under Section 2 of this Act. Let us discuss the important ones below.

Shop

Section 2(24) defines the term “shop” as any premises where goods are sold either by retail or wholesale, or both, or where services are provided to customers. It includes offices, store rooms, godowns, warehouses, and workplaces, whether on the same property or somewhere else, that are used in connection with such trade or business. However, this definition does not include a commercial establishment, residential hotel, restaurant, eating establishment, theatre, or other place of public entertainment or a shop that is attached to a factory where the employees are entitled to benefit under the Factories Act, 1948.

Establishment

Section 2(8) of the Act defines the term “establishment.” As per this Section, establishment refers to a shop, commercial establishment, hotel, restaurant, eating-house, theatre, or other public amusement or entertainment place to which this Act is applicable.

In addition to this, the Government has the power to notify and designate any other establishment having a similar nature to those mentioned in this provision as an “establishment.”

Residential hotel

According to Section 2(22) of the Act, a residential hotel refers to any premises where a bona fide business of supplying payment, lodging, or board and lodging to travellers and other members of the public is carried on. It also includes a residential club.

Restaurant or eating-house

Section 2(23) defines the term “restaurant or eating-house” as any premises that are principally or wholly used for the business of supplying meals or refreshments for consumption on the premises; it also includes a Halwai’s shop. However, a restaurant or a canteen attached to a factory will not come under this definition if their employees are entitled to the benefits provided for the workers under the Factories Act, 1948.

Theatre

Section 2(26) defines the term “theatre” as any premises that are primarily or entirely for exhibiting pictures or any other optical effects using a cinematograph or such other suitable apparatus, or for a dramatic performance, or any other public amusement or entertainment.

Commercial establishment

Section 2(4) of the Act defines the term “commercial establishment.” As per this Section, a commercial establishment refers to an establishment that carries on any business, trade, or profession or performs any work having a connection with any business, trade, or profession.

The commercial establishment includes the following:

A registered society under the Madhya Pradesh Societies Registration Act, 1959, or deemed to have been registered under the said Act, and a charitable or other trust, whether registered or not, that conducts any business, trade, profession or work which Is connected with or incidental or ancillary to such business, trade, or profession, whether for profit or not;
An establishment which is engaged in advertisement, commission agency, forwarding, or commercial agency or which is a clerical department of a factory or any industrial or commercial undertaking;
An insurance company, joint stock company, bank, broker’s office and exchange;

However, the term “commercial establishment” does not include a factory, shop, residential hotel, restaurant, eating house, theatre, or other place of public amusement or entertainment.

Exceptions to Madhya Pradesh Shops and Establishments Act, 1958

Section 3(1) provides that this Act will not apply to certain persons and establishments, which are as follows:

Persons come under clause (a) of sub-section (2) of Section 6 and hold positions of management or are employed in a confidential capacity. But the condition is that they must not be more than ten percent of the total number of employees in the establishment or three in number, whichever is less;
Persons engaged in work that is inherently intermittent, such as watchmen, caretakers, travellers, and canvassers, are also exempted from the application of this Act.
Persons engaged exclusively in preparatory or complementary tasks, for example, clearing or forwarding clerks, responsible for the despatching of goods by rail or other means, customs formalities or as messengers;
Persons exclusively employed in the collection, delivery or transportation of goods;
Offices of the Union or State Government, local authorities, the Reserve Bank of India, the State Bank of India, and the Life Insurance Corporation.
Establishments completely dedicated to the treatment or care of the sick, infirm, destitute or mentally unfit;
Bazaars, fairs or exhibitions for charitable purposes or any other such purpose from which no profit is derived;
Stalls and refreshment rooms at railway stations or railway dining cars;
Non-residential clubs; and
The government has the power to declare any other class of establishments or class of persons under this category by notification.

How to register a shop or establishment under Madhya Pradesh Shops and Establishments Act, 1958

Section 6(1) of the Act provides that all establishments that come under the definition must have to be registered as per the procedure provided under this section.

The procedure of registration

The complete procedure of registration as provided under Section 6(2) is being discussed step by step as follows:

Submission of statement to the inspector

The employer of an establishment to which this act is applicable has to send a statement to the inspector of the concerned area. Such a statement must be in accordance with the prescribed form, accompanied by the specified fees, and have to be sent within 30 days from the date when this Act becomes applicable to an establishment.

Such a statement must include the following.

The name of the employer, the manager, and, if a person holds any kind of position in the management of such establishments, names of all these persons should also be inserted;
The postal address and the date when the business was started;
The name of the establishment, if any;
The category of the establishment, i.e., to specify whether it is a commercial establishment, shop, eating-house, residential hotel, restaurant, eating-house, theatre, etc.
Any other information, as may be prescribed.

Now, shops or establishments can also be registered online. Click here to proceed with online registration.

Registration certificate

Section 6(3) authorises the inspector to, after receiving the statement and fees and after verifying the authenticity and genuineness of all the information, register the establishment. After registration, the inspector will issue a registration certificate, as per the prescribed format. It is also necessary to display the registration certificate at the establishment.

Labour commissioner

Section 6(4) says if there is any doubt as to the uncertainty or disagreement between an employer and the Inspector regarding the appropriate category of the establishment, the Inspector shall refer the matter to the Labour Commissioner. The Labour Commissioner, after conducting an inquiry in this regard, will decide the matter and determine the category of the establishment. The decision of the Labour Commissioner shall be final for the purposes of this Act.

Renewal of registration certificate

Under Section 6(5), the government has the authority to ask for the renewal of the registration certificate. But the time of renewal must not be less than 5 years. On the renewal of registration, the employer has to pay fees as the government prescribes. However, as provided under Section 6(6), the registration fee and the renewal fee shall not exceed two hundred and fifty rupees per establishment.

Reporting changes to the inspector

According to Section 7 of the Act, it is the duty of an employer to inform the inspector about any changes regarding the information that was provided in the statement under Section 6. This information must be given within seven days after the change has happened.

If necessary, the inspector will make amendments to the register of the establishment and update the details accordingly, or issue a fresh registration certificate. However, the condition is that the inspector must be satisfied with the correctness of the information received.

Notification of closure of establishment to the inspector

The employer must notify the inspector in writing within ten days of closing the establishment. The inspector, after verifying and being satisfied with the correctness of the information, will remove the establishment from the register and cancel the registration certificate.

Important provisions of Madhya Pradesh Shops and Establishments Act, 1958

Provisions for shops and commercial establishments

Opening and closing hours

Section 9 of the Act provides that the government will prescribe timing for the opening and closing hours of shops and commercial establishments. It will not be allowed for them to open before or close after the prescribed time. However, opening and closing hours may vary depending on the area in which the shop or commercial establishment is located and the category to which they belong.

Prohibition of hawking outside permitted hours

According to Section 10, it is not permissible to sell the same class of goods in or close to a street or public area before or after the hours set by the government in Section 9. However, this section will not apply to newspapers.

If someone violates the above provisions, their goods will be seized by the inspector and returned only upon paying fifty rupees as security for an appearance in court. If the violator does not pay the amount seized, goods will be presented before the court of law as early as possible, and the court can give an order for temporary custody and disposal of goods as per the Code of Criminal Procedure, 1973.

Hours of work in shops and commercial establishments

Section 11 sets 48 hours as the maximum limit for an employee to work in a shop or commercial establishment in a week. This rule is subject to the following conditions:

In the case of the shop, the maximum limit for a day is nine hours.
In the case of the commercial establishment, the maximum limit for a day is ten hours.

No employee shall be required to work more than this limit.

However, employees can work for more than the above limit with certain conditions, which are as follows:

Employees can work for a period exceeding the hours specified above, but these extra hours must not exceed six hours in a week.
Employees are also allowed to work up to twenty-four hours on specific occasions, as determined by the government, but these specific occasions must not be more than six days in a year.

Rule 9 of the Madhya Pradesh Shops and Establishments Rules, 1959 states that the following days shall be the days for additional overtime for purposes of making accounts, stock-taking or settlement:

31st day of March;
Day of Diwali;
30th day of September;
Last day of Vikram Samvat.
30th day of June;
31st day of December; and

Spread-over in shops and commercial establishments

According to Section 12, the spread-over of a worker’s hours of working in any shop or commercial establishment must not exceed 12 hours on a day. However, in certain circumstances, spread-over may extend to thirteen or fourteen hours, for example, in cases where, on any day, a shop or commercial establishment is completely closed for three continuous hours. Further, the government can also increase the spread-over period.

Weekly holidays in shops and commercial establishments

Section 13 of the Act provides that it is mandatory for every shop and commercial establishment to be closed one day a week. It is unlawful for employers to call employees to work on a weekly holiday. Further, the government has the authority to fix any day of the week as a closed day for all categories of shops or commercial establishments, and the employer cannot alter it.

If a public festival coincides with any holiday, the employer is allowed to keep the shop or establishment open, but he must close it any other day within three days before or after the festival. No deductions can be made from the wages of employees for days the establishment or shop remains closed, as per this Section.

However, it is apt to mention that as per a notification published on November 17, 2020, it is now permitted for all the registered shops to be opened on weekly holidays, and Section 13 will not apply to them, but the condition is that the employer has to pay separately to employees for week holidays.

Provisions for residential hotels, restaurants, and eating-houses

Opening and Closing Hours of Restaurants and Eating-Houses

Section 14 provides that restaurants and eating houses must follow the following regulations regarding the opening and closing hours:

Residential hotels, restaurants, and eating houses must not open before 5 a.m. and not remain open after 1:30 a.m. for service.
Employees cannot commence work before 4:30 a.m. and they must not work after 2 a.m.
If a customer was present and being served or was waiting to be served at the time of closing, service will be provided to the customer in half an hour following the closing hour.

The government has the authority to fix different opening and closing hours for different restaurants for different areas, festivals, or special occasions.

Restrictions on the selling of products

Section 15 lays down that, except for consumption in premises, products of a similar nature that are sold in such shops must not be sold in any restaurant or eating-house before or after the hours fixed for the opening and closure of such shops under Section 9.

Provisions regarding working hours, spread-over periods, and holidays are almost the same as those provided for shops and commercial establishments. However, for further details, Sections 16, 17, and 28 of the Act can be referred to.

Identity cards for employees in residential hotels, restaurants, and eating houses

Section 18A makes it necessary for employers to provide workers with an identity card. These cards must contain the following details:

Name of the employer and employee;
Name of the establishment, if any;
hours of work, the interval for rest if any and the holiday of the employee;
age of the employee;
the signature (with date) of the employer;
the identity mark of an employee; and
signature or thumb impression of the employee.

During working hours, employees must carry the identity card containing the aforementioned information.

Provisions for theatres and other places of public amusement or entertainment

Closing hours of theatres and places of entertainment

Section 19 of the Act states that theatres or any other place of entertainment must be closed by 1 a.m. It is also provided under Section 20 that after the closing hours of shops under Section 9, no such products of a similar nature that are sold in such shops will be sold in theatres or other places of public amusement or entertainment except for consumption on the premises.

Working hours

As per Section 21, no employee of a theatre or other place of public enjoyment or amusement will be required or permitted to work more than 48 hours per week, or 9 hours in a day. Section 22 says that a worker’s spread-over in a theatre or other place of public enjoyment or amusement cannot go beyond twelve hours a day. However, the government has the power to increase the spread-over period, whether generally or in the case of a particular theatre or other place of public amusement or entertainment.

Provision regarding the employment of children, young persons and women

Prohibition of children to work in any establishment

Section 24 of the Act provides that no child will be allowed to work in any establishment, even if the child is a family member of the employer. For the purpose of the application of this provision, the child doesn’t need to be working as an employee; any other kind of work is also prohibited. Section 2(2) of the Act defines the word “child” as a person whose age is below 14 years.

Young persons and women at work

The following are the rules for employees who are young persons or women

As per Section 25 of the Act, young persons and women, even if they are members of the employer’s family, are allowed to work in any establishment before 7 a.m. and after 9 p.m. Section 2(30) defines “young person” as a person who is between 14 to 17 years of age.
Section 25A sets the limit of work hours for young persons, it provides that the maximum work hour for young persons is 5 hours in a day, and, after three hours, there must be an interval of at least half an hour for rest.
Further, Section 25B prohibits employers from asking women and young persons to do any work that, as per the government, is dangerous to life, health or morals.
Rule 19 of the Madhya Pradesh Shops and Establishments Rules, 1959 gives the inspector the authority to ask the employer to produce documents for any worker if he suspects that the employee is a child or young person.

It is important to mention that the State Government of Madhya Pradesh, through a notification on August 1, 2022, has now permitted women to work between 9 p.m. and 7 a.m., but for this, shops and establishments have to ensure the fulfilment of the terms and conditions that have been provided in the same notification for the safety and security of working women.

Leave and payment of wages

Employee’s right to leave

Section 26 of the Act deals with the provisions regarding the provision of leaves to an employee. It provides as follows:

Every worker has the right to leave for one month after completing every 12 months of continuous work, despite taking breaks due to illness, authorised leave of up to 90 days, or due to lockout or legal strike.
Every year, employees shall be entitled to avail casual leave for up to 14 days.

However, the following points must be considered in this regard:

An employee can accumulate privilege leave under sub-clause (a) only up to a maximum period of 3 months.
Holidays under Sections 13, 18, and 23 will also be included in these leaves.
Casual leave cannot be combined with privilege leave.

If an employee entitled to leave is fired by the employer before taking it or quits his employment after applying for leave but the leave was not granted, the employer must pay the employee as per Section 27 of the Act and in case of refusal by the employer.

Employee’s right of payment during leave

Section 27 of the Act provides that every employee is entitled to get payment during leave as per the average daily wages for the three preceding months; overtime earnings will not be considered. According to Section 28, an employee entitled to leave under Section 26 must be paid half of the total amount for the leave period before leave starts.

The inspector has the authority to take legal action on behalf of workers as per Section 29 of the Act to recover unpaid amounts.

Health and safety at the workplace

According to Section 31 of the Act, the premises of every establishment must be clean and free from any foul odours arising from drains, privies, or other nuisances. Proper ventilation is also mandatory, as per Section 32, to ensure that the indoor environment is suitable, healthy, and comfortable for employees. Similarly, Section 33 makes it necessary for every establishment to take adequate precautions against fire.

Authorities for enforcement and inspection

Duties and power of local authority

Section 34 of the Act deals with the powers and duties of local authorities as follows:

It is the responsibility of local authorities empowered by the government to ensure the enforcement of the provisions of this Act within their jurisdiction.
These local authorities can give any of their powers and functions, except the power of making by-laws, to any of their officers.
The government has the power to cancel the empowerment order of a local authority at any time.

To ensure effective control over the local authorities entrusted with duties under this Act, the government can authorise an officer, who must not be below the rank of a labour officer, to supervise and direct the enforcement of this Act, and, for this purpose, such officer will have all the powers of an inspector. Section 35 of the Act empowers local authorities to make by-laws to carry out the provisions of the Act, provided that the by-laws must not be inconsistent with the provisions of this Act.

Annual report

Under Section 36, it will be the duty of local authorities to submit to the government an annual report on the enforcement and working of the Act within its jurisdiction. Such a report must be submitted within three months after the closing of the year.

Appointment of inspectors

Section 40 of the Act provides that local authorities have to appoint a sufficient number of qualified persons as inspectors for the area of its jurisdiction. According to Rule 17 of the Madhya Pradesh Shops and Establishments Rules, 1959, a person is qualified to be appointed as inspector under this section if he can speak, read, and write Hindi and is either a graduate or a matriculate with at least seven years of experience of service under the government or a local authority. Further, a person cannot be appointed as an inspector if he has any kind of interest or share in any establishment that comes within the area of his jurisdiction.

Duties and powers of inspector

Section 41 provides the following powers to an inspector:

The inspector has the authority to enter establishments or any place that he reasonably believes to be an establishment.
To make examinations of the premises, records, and registers and to take any other evidence as he thinks necessary to carry out the purpose of this Act.
An inspector has powers similar to those of an officer-in-charge of a Police Station under the Code of Criminal Procedure, 1973 for the purpose of investigation of offences under this Act.

Offences and penalties

This Act provides various punishments and penalties for different offences to make sure that no one can violate the provisions of the Act. These offences and their penalties are discussed in the following table, along with relevant sections.

Relevant Sections	Offences	Penalties
Section 44	This Section provides punishment for offences, which are as follows:If an employer fails to send a statement, notification of change or notification of closing of the establishment within the period specified respectively under Sections 6, 7, and 8 of the Act; orIf there is any violation of the provisions of Sections 9, 13, 14, 15, 19, 20, 31, 32, or 33; orIf any establishment allows any person to work in contravention of Sections 11, 12, 16, 17, 18, 21, 22, or 23; orIf in any establishment a child,woman, or young person is allowed to work in violation of Sections 24, 25A, or 25B; orIf an employer does anything against the provisions of Sections 43, 54, 57 or 58; orIf there is a violation of any of the provisions of this Act for which no specific punishment has been provided.	Punishment with a fine note of less than fifty rupees which may extend up to five hundred rupees.
Section 44 (Proviso)	If the employer continues to violate the provisions of sub-sections (2) and (5) of Section 6 after the expiry of the tenth day following the conviction.	An additional fine will be imposed on the employer, which may be up to fifty rupees for each day till the contravention continues.
Section 45	If a person violates the provisions of Section 10.	Punishment with a fine of up to one hundred rupees.
Section 46	If a worker violates the provisions of sub-section (3) of Section 13, sub-section (2) of Section 18, sub-section (2) of Section 25, or Section 57.	The employee, upon conviction, shall be punished with a fine of up to 50 rupees.
Section 47	This Section provides punishment for offences as follows:If an employer, with the purpose of deceiving makes or causes to be made false entries in any such register, record or notice that has been prescribed under this Act to be maintained; orIf an employer with the purpose to deceive wilfully omits any entry which was required to be maintained under this Act from any such register, notice or record as mentioned above; orIf an employer maintains more than one set of registers, records or notices; orIf an employer sends or allows an inspector to send false information or statements.	Imprisonment up to one year with a fine that may extend up to one thousand rupees. Offences mentioned under this section shall be tried in the court of a judicial magistrate.
Section 48	If an employer previously convicted under Sections 9, 11, 12, 13, 14, 16, 17, 18, 19, 21, 22, 23, 24, 25, 25A, 25-B, 43, 49, 54, or 58, found guilty again under any of the sections mentioned above.	Punishment of at least fifty rupees up to one thousand rupees.
Section 49	If any person obstructs the inspector wilfully in the exercise of any power under Section 41.	Punishment of at least fifty rupees up to one thousand rupees.

Liability of owners, directors, and shareholders

Section 50 of the Act provides for liability in cases of a company, firm, or association, as follows:

Liability of partners or members in a firm or association

If the owner of an establishment is a firm or association of individuals, all the members and partners will be prosecuted and punished similar to that of an employer.

Liability of directors or shareholders in a company

Where the owner of an establishment is a company, all the directors, or in the case of a private company, all the shareholders, will be held liable similar to that of an employer.

Liability of employer for the first offence

Where an offence is committed for the first time under this Act, the manager or the employer will be held liable similar to that of an employer.

Conclusion

It is clear from the above discussion that this Act plays a crucial role in managing the fair operation of shops and establishments within the state. It ensures that employers and owners are fulfilling their responsibilities and that the rights of employees and workers are not violated. Adherence to the regulatory framework as provided under the Act becomes crucial not only for legal compliance but also for the functioning of business in an era of dynamic economic evolution.

Frequently asked questions

What is the Madhya Pradesh Shops and Establishment Act, 1958?

This is a state legislation that primarily deals with shops and commercial establishments in Madhya Pradesh. It provides comprehensive rules and regulations for the operation of shops and establishments and various aspects like working hours, opening and closing hours, holidays and leave policies, wages of workers, penalties for offences and violations, etc.

Is it mandatory for all establishments to register under this Act?

Yes, it is mandatory for all shops and establishments that come under the definition provided by this Act to be registered.

Can a government authority visit a shop or establishment for inspection?

Yes, this Act gives authorities the power to visit and inspect shops and establishments to make sure that they are following the provisions of the Act. This inspection process might be in the form of examining premises, registers, and records and taking appropriate action in cases of violations.

Is there any provision under this Act for the wages of workers who do overtime work?

Yes, it says that if an employee is required to work more than the limit of hours of work, he will be paid at the rate of twice the overtime as compared to his ordinary wages.

Can an employee in any such establishment or shop be fired from the job all of sudden or is there any procedure for dismissal?

Section 58 of the Act says that if a person has been employed for three months or more, he cannot be removed from employment without prior notice of at least one month or wages instead of such prior notice. However, if such an employee is found guilty of misconduct, the employer can remove him without following this procedure.

References

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Rajasthan Shops and Commercial Establishment Act, 1958

By

-

December 8, 2023

This article is written by Shriya Singh. It discusses in detail the process of getting shops, commercial establishments, and other similar facilities registered in Rajasthan under the state legislation, that is, the Rajasthan Shop and Commercial Establishment Act 1958. It also talks about regulations regarding the working conditions in such facilities.

This article has been published by Sneha Mahawar.

Introduction

To conduct business, shops and establishments require a rightful licence. However, there are different requirements for different states, such as registration procedures. To aid the fluctuations, there are separate acts to govern the shops and establishments of the respective states.

In light of the above-mentioned scenario, the Rajasthan Shops and Commercial Establishments Act 1958 is a significant piece of legislation in that state that governs the employment and working conditions for shops, commercial establishments, and other establishments in the state of Rajasthan.

The Rajasthan Shop and Commercial Establishment Act 1958 governs the shops, businesses, and commercial establishments in that state. It regulates the working hours, leave policies, and other issues relating to the rest period, opening and closing hours, national and regional holidays, wages, etc. Let’s delve deeper into it.

Objective of the Act

The principle goals of the Rajasthan Shops and Commercial Establishments Act of 1958 are given under

It gives authority to the state to establish laws in accordance with their regional culture.
It boosts the registration of small businesses.
Protective discrimination under the Act gives female employees preferential treatment.
It also aims to transform the unorganised sector into an organised one.
It prevents child labour.
It looks after the working hours, etc.
It also controls the wages for the unorganised sectors.

Applicability of the Act

Section 1 of the Rajasthan Shops and Commercial Establishments Act 1958 provides for the applicability of the Act. It states that the said Act is applicable to the whole of the state of Rajasthan. It further states that it shall apply in the first instance to such areas as the state government may specify in the public domain, that is, in the official gazette.

Important definitions

Section 2 of Chapter I of the Rajasthan Shops and Commercial Establishment Act of 1958 is the definition clause of the Act. It assists in the interpretation of the further provisions and understanding of the Act.

Some of the important definitions of the Rajasthan Shops and Commercial Establishment Act of 1958 are discussed below.

Apprentice

Section 2(1) defines apprentice as persons who are not less than 12 years of age and who are employed for the purpose of being trained in any trade, craft, or employment in any establishment, irrespective of whether they are employed on payment of wages or not.

Commercial Establishment

Section 2(3) defines a commercial establishment as a commercial, banking, administrative or insurance facility for employees who are primarily engaged in clerical work, hotels, lodging, cafeterias, restaurants or any other eateries, theatres and other locations that include management of service. It also includes within it the facility for public entertainment or other entertainment purposes that the state government has, in the official gazette, declared commercial for the purpose of this Act.

Employee

An employee, as per Section 2(5) of the Act, is a person who is wholly or principally employed in any establishment in connection with that establishment. The employer’s family is not included in it, but it has within its ambit an apprentice, any clerical or other staff members of a factory or industrial establishment who are not included within the Factories Act of 1948.

Employer

Section 2(6) states that an employer is a person who has charge or has ultimate control over the affairs of any establishment. It includes the manager, agent, or any other person acting for the general management or control of any establishment.

Establishment

Section 2(7) defines an establishment as a shop or a commercial establishment.

Shop

According to Section 2(17), shop means any premises where trade or business is carried out or where services are provided to customers. It further states that shops include offices, store rooms, godowns, or warehouses, irrespective of whether they are on the same premises or not, until they are used in connection with such trade or rendering of service. However, it does not include a commercial establishment or a shop that is attached to a factory where the persons employed in the shop are allowed to benefit from the workers under the Factories Act of 1948.

Year

For the purpose of this Act, the term ‘year’ according to Section 2(21) means a year that begins on the first day of the month of January.

Exemption

Section 3 of the Rajasthan Shops and Commercial Establishment Act 1958 provides that the action does not apply to

The offences of the central government, state government, or local authorities, as well as the offences under them.
The offences of the Reserve Bank of India.
The establishments for the treatment or care of the infirm or mentally unfit.
The people whose employment is intrinsically intermittent, like travellers or caretakers.
The bazaars or fairs for the sale of work for charitable or other purposes from which no private profit is derived.
The libraries where the lending of books and magazines is not carried out for any financial benefit other than charitable, religious, philanthropic, or educational objectives.

Section 3(2) provides that any establishment or class of establishment or persons of the class of persons to whom the Act applies may be exempt from all or any of its provisions if expressly provided by notification in the official gazette by the state government, either permanently or for any specific period of time.

Registration under the Act

Section 4 of the Rajasthan Shops and Commercial Establishment Act 1958 provides for the registration of establishments. It specifies a time period within which the employer of every establishment has to mandatorily send a statement in the prescribed form to the inspector of the area concerned, along with the fee as may be prescribed.

The above-mentioned time period is provided under Section 4(3). The provision bifurcates into two, as stated below:

For establishments that existed on the date on which the Rajasthan Shops and Commercial Establishments Act 1948 came into force, the period prescribed is within 30 days from the date on which the Act comes into force.
For new establishments, within 30 days from the date on which the concerned establishment commences its work.

Section 4(1) purports the content of the prescribed form mentioned above. The form must contain:

The names of the employer and the manager, if there are any in the establishment.
The postal address of the establishment.
If there is any name associated with the establishment, then that name.
And such other particulars as may be prescribed.

Section 4(2) envisages that once the statement in the prescribed form along with the prescribed fees is received, the inspector shall register the establishment in the register of establishments in the manner as may be prescribed upon being satisfied with the correctness of the statement received. The inspector shall issue the registration certificate to the employer in the prescribed form.

The issued registration certificate would be required to be prominently displayed at such establishments.

Procedure for registration

The procedure for registration under the Rajasthan Shops and Commercial Establishments Act 1958 has been provided in the official domain by the state government on the Labour Department management system portal.

The step-by-step procedure is given as follows:

The applicant is required to go to the labour department management system portal.
Once the portal has opened, he has to click on the menu icon for establishment registration and then click on the option for Rajasthan Shops and Commercial Establishment Act 1958.
A form will appear that has to be filled. Appropriate documents are required to be attached to the form.
After filling out the form and attaching the required documents, the applicant is required to submit the form. Once the form is submitted, the labour department management system application number will be generated.
The applicant will receive an acknowledgement message from the department on their registered mobile number as well as via email if the application and the attached documents are correct.
The applicant can then download his registration certificate online after paying the prescribed fees.

Documents required for registration

With the e-filing of the application along with the e-payment of fees, the following documents are required to be attached mandatorily:

Passport size photograph of the employer
Photo of the shop along with its owner
A systematic list of the management employees in .xls format
The rate of wages in .xls format
The details of employees working in the establishment in .xls format
The weekly holidays for the employees in .xls format
The address proof of the establishment.
If the shop is taken on rent, then a copy of its rental agreement
If the shop is owned, then its ownership document proof
An affidavit declaring that employers have registered the facility with the Ministry of Labour as per the Rajasthan Shops and Commercial Establishment Act of 1948
Photo ID/ PAN card/ driving licence/ Aadhar card/ passport.

Rules and Regulations for Rajasthan Shops and Commercial Establishments Act, 1958

There are a set of rules and regulations provided for registration under the Rajasthan Shops and Commercial Establishment Act 1958. They are provided on the portal of the Labour Department management system, as stated below:

Applicants would be considered solely liable for the correctness and generosity of the information that is uploaded by them in the form of documents for the registration form under the Act.
As the fees once submitted become non-refundable, it is advised for the applicants to check the detailed guidelines and rules prior to submitting their application.
The registration fee would be charged accordingly in the event of addition if, during amendment, the maximum number of employees changes.
The employer information can be changed only in the event of the death of the current employer or in addition to the amendment fees if such a change happens during the amendment period.
It is strictly specified that the misuse of the act would not be acceptable and would be treated as a crime that is punishable under the law.
The right to cancel the registration is reserved with the Rajasthan Labour Department if any detail is found to be fraud at any subsequent stage.

Procedure for renewal

The portal of the labour development management system provides the procedure for the renewal of the application.

The procedure is as under

Login to the labour development management system portal.
Click on establishment renewal.
A sub-menu will appear. Click on the renewal option.
A list of Acts would appear; select the appropriate one.

Now there would be two scenarios: either the registration number would exist in the labour development management system or the registration number would not exist.

The registration number exists in the labour development management system

If the registration number exists in the labour development management system, then enter the registration number and click on the search button, or select the appropriate district, then enter the establishment date or the registration date and click on the search button.
Then select the appropriate result by clicking on the radio button in front.
Click on the submit button
A renewal form appears in which data is already filled. There would be renewal details to be filled out, the button for which would appear at the bottom.
Fill in the renewal details. The following details would be required:

The appropriate number of years for which the renewal is required
The year in which the licence or registration would expire
The current value of the number of employees in the shop or establishment
The registration certificate of the establishment
A scanned copy of Form 5

Then click on the submit button, and the form will be submitted.
The labour development management system applicant ion number will be generated, which has to be kept safe for future use regarding retrieving information.
The applicant can download the renewed certificate once he has paid the prescribed renewal fees.

The registration number does not exist in the labour development management system

A text box would appear; enter the registration number in it.
Click on the search button.
As the registration number does not exist in the labour development management system database, the result would appear with a message that the record is not found in the system and would ask the user to click on the submit button to enter the information.
Click on the submit button.
A list of Acts would appear, select the appropriate one.
A new form would appear. Fill in all the required fields and upload the requisite documents. In addition, fill in the renewal details.
Submit the form, and all the information will be sorted. A new registration number would be allotted to the user for his establishment’s future use.
The labour development management system application number will be generated, which has to be saved for retrieving information in the future.
The applicant can download the renewed certificate after paying the prescribed renewal fees.

Other important provisions of the Act

Working hours regulations

Section 7 of the Rajasthan Shops and Commercial Establishments Act 1958 states that no employee in any establishment is required to work for more than 9 hours on any day and adds an additional restriction by stating that no employee is required to work for more than 48 hours in any week.

It also gives two conditions:

The total number of hours, including overtime, should not increase by 10 hours on any day except on days of stock-taking and preparation of accounts.
The total number of overtime hours worked by an employee shall never increase by 50 in one quarter.

Opening and closing times

According to Section 11 of the Rajasthan Shops and Commercial Establishments Act 1958, an establishment is not allowed to be opened on any day or closed on any day later than such hour as may be prescribed through a general or special order by the state government.

The state government is given the authority to fix a time at which an establishment or class of establishments will be open or closed in any local area by general or special order after making an inquiry in the prescribed manner.

Weekly holidays

The Rajasthan Shops and Commercial Establishment Act 1958 deals with weekly holidays in Section 12. It states that

Every establishment must keep one day of the week closed. The employer is required to fix such a day of closure at the beginning of the year, and he should inform the inspector about it. A clear notice regarding the same should be displayed in a conspicuous location inside the shop or other commercial establishment.
The employer may not change such days more than once every six months. Any change made must be notified to the inspector and the appropriate change must be made in the notice that is required to be displayed in the shop or other facility.
Once the state government is satisfied that an establishment employs additional workers to meet the criteria that every employee in an establishment is granted at least one complete day in a week as a holiday, it shall grant permission to such establishments to remain open throughout the week.
On a weekly holiday or a day when the establishment is closed, it is not considered legal for an employer to call the employee at the shop or establishment. The illegality covers the travel of any employee to perform any job related to the business of such a shop or establishment.
The wages of the employee would not be withheld on account of the holiday that was granted to him as a mandate under the Rajasthan Shops and Commercial Establishment Act 1958. Even if an employee only receives payment based on daily pay, he would still be paid for that weekly holiday.

Leaves policy

According to Section 14 of the Act, every worker who has worked 240 or more days in an establishment over the course of a year is entitled to leave with pay for a certain number of days determined at the rate of:

When it comes to an adult, one day for every twelve days of work they worked for the previous year.
When a child is concerned, then, one day for every fifteen days of work they put in over the course of the previous year.

Certain days will be deemed days that the employee worked in an establishment for the purposes of calculating the period of 240 days or more for the purposes of this section, but he will not be entitled to leave for these days. It is,

any days off, whether mandated by contract, agreement, or standing orders
maternity leave for a woman employee for any number of days up to twelve weeks
the leave accumulated in the year before the one in which it is taken

Employment of women

Section 22 of the Rajasthan Shops and Commercial Establishment Act 1958 deals with the employment of women. It states that no woman between the ages of 12 and 15 shall be posted to work in any establishment during the night, irrespective of her being appointed as an employee or otherwise.

Section 23 provides restrictions on the owners or managers of any establishment. It states that the owners or managers of the establishment shall not knowingly employ a woman during the 6 weeks following the day on which she has delivered a child. It also states that a woman shall not engage in any employment in any establishment during the 6 weeks following the day on which she has undergone delivery of her child.

Section 24 states that when a woman employed in an establishment provides notice either orally or in writing in the prescribed form to the employer stating that she is expecting a child to be delivered within 6 months from the date of such notice, she is required to absent herself from work up to the day of her delivery.

This absence of a woman at work during a pregnancy period would be considered her maternity leave under this Act, as per Section 25. Also, her absence due to illness medically certified to arise out of pregnancy or confinement shall also be treated as authorised absence on leave with regard to her maternity leave.

Employment of children

By virtue of Section 21 of the Rajasthan Shops and Commercial Establishment Act 1958, children are not allowed to work in an establishment if they have not attained the age of 12.

Section 22 provides that a child between the ages of 12 and 15 should not be required to work in any establishment during the night, and his being appointed as an employee would be immaterial for the night shift.

Discharge

According to Section 28A of the Act, unless there is a justifiable reason and after giving the employee at least one month’s prior notice or on payment of one month’s wages in lieu of such notice, no employer shall discharge or dismiss any employee who has been in such employment continuously for a period of not less than six months: With the caveat that such notice is not required if the employee’s services are terminated due to misconduct, as may be defined in the rules made in this regard by the state government, and supported by sufficient evidence documented at an enquiry held for the purpose in the prescribed manner.

Termination

Section 28B of the Act states that no employee who has worked continuously for an employer for at least six months may leave the company without giving the employer one month’s written notice.

When an employee violates the law, the employer may deduct the unpaid wages for up to one month or for the number of days the notice is less than one month, or he may apply to the prescribed authority designated under Section 28-A for the awarding of appropriate monetary damages against the employee who violated the law.

Inspection

Section 36 of the act provides that considering the general special order by the state government. An employer is required to maintain resistors and records. Such records are required to be displayed on the premises of his establishment or shops.

Compliance Forms

There are certain forms that are required to be complied with by the shops and establishments registered under the Rajasthan Shops and Commercial Establishment Act of 1958. They are given under

FORM NUMBER	PARTICULARS OF THE FORM
Form 1	The prescribed form for a declaration under Section 4 states that all employers must register their shops or establishments with the Ministry of Labour.
Form 2	The prescribed form for facility registration is that all members must register their facility with the Ministry of Labour according to the Rajasthan Shops and Commercial Establishment Act 1958.
Form 4	The prescribed form to notify a change. It demands that all employers must notify The Ministry of Labour of any change that affects the organisation.
Form 5	The prescribed form to request for renewal of the registration certificate. All employers must renew their office registration certificate in accordance with the Rajasthan Shops and Commercial Establishment Act 1958 in this form.
Form 7	The prescribed form for the notice of a close day or any change in it. All the employers must display Form 7 notice of the off day or any change about that on the blackboard.
Form 10	The prescribed form for the physician certificate. In accordance with the Rajasthan Shops and Commercial Establishment Act 1958, all employers are required to obtain a health checkup and physician certificate prior to the recruitment of an individual.
Form 11	The prescribed form for the employment record which every employer is required to maintain.
Form 13	The prescribed format of employed daily time is closer to what every employer is required to maintain.
Form 14	The prescribed format of employee working hours record that every employer is required to record in respect of every employee.
Form 15	The prescribed form for the weekly holiday notification that every employer must retain.

Conclusion

The Rajasthan Shops and Commercial Establishment Act of 1958 provides for the rights and travel ages of the employees working in the shops and establishments situated in the state of Rajasthan. It not only provides for the registration procedure but also provides for the welfare of the employees and employers of the shops and establishments in the state.

It is a very significant piece of legislation for both the welfare of the places where the work is done and of the workers that are employed in those places to do the work.

Frequently Asked Questions (FAQs)

What is protective discrimination?

In every society, there is a section that is intentionally or unintentionally neglected, making it the underprivileged section of the society. Protective discrimination is a policy that focuses on the underprivileged section of society through the formulation of policies regarding their special privileges, affirmative programs, etc. It is intended to curb the problem of social backwardness.

References

https://labour.rajasthan.gov.in/RulesShop.aspx

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 skills.

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Punjab Shops and Commercial Establishment Act, 1958

By

Rachit Garg

-

December 7, 2023

This article is written by Monesh Mehndiratta. The article explains the important provisions of the Punjab Shops and Commercial Establishment Act, 1958, and also provides the objective and purpose of enacting such legislation.

Introduction

Do you buy things from shops and commercial establishments?

I am sure everyone does, but have you ever wondered how these shops and other such establishments are regulated? Moreover, the question to be considered is how are these shops and establishments registered, and what are the terms of employment in such shops and establishments?

All these questions paved the way for the present article. The present article deals with one such piece of legislation that provides provisions for regulation, registration, and other rules related to shops and establishments in the state of Punjab. The Punjab Shops and Commercial Establishments Act, 1958, deals with registration, regulation, terms of employment of young persons and women, and wages paid to the employees employed in such shops and commercial establishments. So, let us try and understand the purpose and objective of enacting such legislation and its important provisions.

Purpose and objective of the Act

The purpose of the Act is to regulate the working conditions in shops and commercial establishments in the State of Punjab. It provides conditions of work and employment in these establishments. It extends to the State of Punjab but is applicable at the first instance to the areas mentioned in the Schedule.

Non-applicability of the Act

Section 1 provides that the Act is applicable to the whole State of Punjab. However, Section 3 is an exception and provides certain establishments to which the Act is not applicable. These are:

Offices of Central or State Government, except for commercial undertakings, railway administration, or local authority, and the Reserve Bank of India.
Any railway service, air service, service of water transport, tramway, telegraph, or telephone service, sanitation, or undertaking supplying power, light, or water to the public.
Lawyers’ offices,
Dining cars of railway,
Any person employed in the above employments,
Any employee whose working hours are governed by Factories Act, 1948,
Any person with intermittent work,
Stamp vendors’ establishments and petition writers.

Important definitions

The Act provides definitions of some important terms used in the provisions under Section 2. These include terms like commercial establishments, employee, employer, factory, inspector, opening hour, retail trade, shop, spread over, etc. The two most important definitions are explained below:

Employer and employee

The term ‘employer’ is defined under Section 2(vii) of the Act. It means a person who is in charge of owns or controls the affairs of an establishment. The term also includes family members of the employer, manager, agent, or any other person controlling the affairs of the establishment. The employee, on the other hand, means a person who is wholly or principally employed in an establishment, whether permanently, periodically, contractually, or on piece rate wages or commission, even though he does not receive the reward for the labour. However, it does not include family members of the employer, as given in Section 2(vi) of the Act.

Manager

A manager is a person who is declared so by the employer of an establishment having five or more employees, where he himself does not work personally, as defined under Section 2(xvi) of the Act.

Shop

The term shop is defined under Section 2(xxv). It means a place where a trade or business is carried on or where services are provided to customers. It also includes offices, store rooms, godowns, sale-depots, or warehouses, either on the same premises or on different premises, that are used in connection with such trade or business. However, it does not include a shop or commercial establishments that are attached to a factory and where the employees are given benefits as mentioned in the Factories Act, 1948.

Establishment

The term is defined under Section 2(viii) of the Act. It means a shop or a commercial establishment. Commercial establishment is further defined under Section 2(iv) of the Act. It includes:

Premises where any business, trade, or profession is carried out for the purpose of earning profit and includes any journalistic or printing establishments.
Premises in which business of banking, insurance, stocks, shares, brokerage, and produce exchange is being carried on.
Premises used for hotel, restaurant, boarding, theatre, cinema, or other places of public entertainment.
Any other place notified by the government as a commercial establishment.

Essential provisions of the Act

Employment of young people

The conditions for the employment of young people in shops and establishments are given under Section 6 of the Act. These are:

The total number of hours of employment for young people is thirty hours in a week and five hours in a day. This does not include the time for rest and meals, as mentioned in Section 6(1).
Any young person will not be employed for more than three hours continuously, and so must be given an interval of at least half an hour for rest or meal (Section 6(2)).
The government has the power under Section 6(3) to prescribe more conditions with respect to the business of establishment and also the conditions regarding the daily employment period of young people.
If an employer fails to comply with the provision, he will be liable for conviction or a fine of fifty rupees, which may extend to two hundred rupees as given in Section 6(4).

Working hours

The provision related to hours of employment is given under Section 7 of the Act. According to the section, the hours of employment of any person in an establishment must not exceed forty-eight hours in a week and nine hours in a day. In cases of seasoned or occasional work pressure, if the employee works overtime:

The time must not exceed fifty within a period of one quarter and
The employee must be paid for overtime, which is equal to twice the rate of normal wages.

The section also bars an employer from employing any person who has been previously employed on that day or week in another establishment or factory for a longer period of time. In cases of contravention, the employer must prove that he was not aware or could not reasonably ascertain that the person was employed previously in another establishment. Also, the employee is barred from working for more than the hours mentioned in the Act.

Intervals for rest and meals

The provision related to intervals for rest and meals is given under Section 8 of the Act. Section 6 provided that an employee would not be allowed to work for more than five hours in a day before he had an interval of half an hour to rest or take meals. However, Section 8 gives an exception to this rule, which is chowkidar, watchman, or guard. It also provides that the working hours of an employee will be fixed in such a way that, by including the time for rest and meals, the spreadover must not exceed ten hours a day.

Opening and closing hours

According to Section 9 of the Act, the opening and closing hours of all classes of employment will be decided by the government, and they might be different for different classes of establishments situated in different areas. However, according to Section 4 of the Act, the above provision is not applicable to:

Clubs, hotels, boarding houses, stalls, and refreshment rooms at railway stations.
Barbers and hairdressers’ shops.
Establishments dealing with food items.
Chemist shops.
Shops dealing with articles required for funerals, burials, or cremations.
Places of public entertainment except cinema halls.
Establishment of petrol.
Tanneries.
Oil mills not registered under the Factories Act, 1948.
Brick and lime kilns.
Commercial establishments manufacturing bronze and brass utensils.
Saltpetre refineries.
Cycle stands and repair shops, etc.

Section 10 further provides that every establishment will be closed on every Sunday, and the government can prescribe any other day as a closed day for the whole State. This is not applicable to the following establishments, according to Section 4:

Cinema houses.
Establishments of hides and skins.
Ice factories.
Establishments of motor vehicle services, cycle repairs, spare parts, etc.
Establishments of hire tents, crockery, furniture, gaslights, fans, etc.
Establishments for the retail sale of murmura, sugar-coated gram, reories and other such commodities.

Section 10 further provides that any establishment may be opened on a close day if:

There is a festival.
Employees are paid remuneration that is double their normal wages for working on such days.

The employer has a duty to inform the prescribed authority about the working hours of employees, interval time, and other necessary information within 15 days of registration of establishment in a prescribed manner. The working hours may be changed by the employer once a quarter in a year, and the same must be informed to the prescribed authority in a prescribed manner 15 days before making such changes.

Off day of employees in a week and holidays

According to Section 11 of the Act, no employee is allowed to work:

Before opening hours and after closing hours.
On a close day, as the establishment has to observe a close day.
On one day in a week in any other establishment.
The watchman may be allowed to work on an off day only when he is given one such day in a week.

Section 12 deals with holidays. It provides the employees of every establishment in the state:

Holidays with wages on Independence Day, Republic Day, and Gandhi Jayanti.
Three other such holidays on festivals declared by the government with wages.
If an employee is required to work on such holidays, he will be paid double his normal wage calculation per hour.

Registration of establishments

The following are the steps for registration of establishments in the State as given under Section 13 of the Act:

The employer must send the following details in the form of a statement to the prescribed authority in a prescribed manner:
- Name of employer and manager,
- Address of establishment,
- Name of establishment,
- Persons employed,
- Other particulars.
The authority will check the correctness of the statement and register the establishment. It will issue a registration certificate to the employer, which must be shown to the inspector if demanded.
The certificate can be renewed every year by March 31, for which the grace time is thirty days.
In case, there is a change in any of the information given in the statement, the employer must inform the authority within seven days of such change, and the authority will make the changes in its register after checking its correctness.
If the establishment is to be closed, the employer will have to inform the same to the prescribed authority within 10 days of closing, who will then remove the name and details of the establishment from the register on being satisfied with its correctness.

Wage period

A wage period is a period within which wages are paid to employees. Section 16 deals with the wage period and provides that it must be fixed by a person who is responsible for making the payment of wages to the employees. It further provides that no wage period must exceed a month and that wages must be paid before the expiration of the seventh day from the date when wages became due. If any employee is terminated, he must be paid wages within two days of such termination or when he quits, on or before the next payday.

Deductions from wages

According to Section 17 of the Act, the wages will be paid without any deductions except those authorised under the Payment of Wages Act, 1936.

Removal of employees

Section 22 of the Act provides that no employee will be removed from the establishment unless and until he is served with one month’s prior notice or pay. No such notice is required to be served if the employee is removed due to his misconduct or if he has not been in service continuously for three months.

In cases of contravention of the above provision, the judicial magistrate may award compensation, which is two months’ salary, to the employee if he has been removed without reasonable cause. No compensation will be given until it has been claimed by the employee within six months of such removal.

Section 23 further provides that an employee who has been in service for three months continuously is not allowed to terminate or quit the service unless he has given notice to the employer seven days prior. If no notice is served, the employer may forfeit his unpaid wages for seven days and not more.

Employment of women

Conditions

Section 30 of the Act provides conditions of work for the employment of women in any establishment in the State. These are:

No woman will be allowed to work in any establishment during the night. However, this is not applicable to any establishment engaged in the treatment of sick, destitute, mentally unfit, or infirm people.
No woman will be employed in any establishment for six weeks after her miscarriage or confinement.

Maternity benefits under the Act

According to Section 31, every woman employed in an establishment in the State continuously for a period of six months or more will be entitled to maternity benefits. The government will set the payment or amount. It will be paid for six weeks before delivery, including the day of delivery, and six weeks after delivery.

Power of government

The government has the following powers under the Act:

Enforcement and inspection

According to Section 19, the government has the power to appoint officers to make inspections under the Act. These are empowered to:

Enter any place of establishment at any reasonable time with assistants.
Examine the premises, registers, records, and notices related to establishment.
Any other power prescribed by the government to carry out the purpose of the Act.

Power to make rules

According to Section 34, the government may make rules regarding:

The manner in which registers are to be kept.
Officers are required to make inspections and call for necessary information.
Rules and regulations regarding which agency and the manner in which prosecution is to be instituted.
The manner in which the statement has to be submitted for registration of establishment.
The manner in which any notice is to be given to the authority under the Act.
The manner in which the employer is required to submit the details of the close day, opening and closing hours, and other particulars.
Health and safety of employees.

Penalties under the Act

According to Section 26, if any person contravenes the provisions of this Act and no penalty has been prescribed, he shall be liable to pay a fine which is one hundred rupees for the first offence and three hundred rupees for subsequent offences. Also, the fine for every subsequent offence in the same year will not be less than one hundred rupees.

Conclusion

Shops and commercial establishments play an important role in our daily lives as they easily provide us with the essentials and other necessary materials. If there is no legislation regulating them, it will pose great challenges to the customers. This is why it is necessary to have proper legislation in this regard. The State of Punjab has been successful in enacting one such legislation to regulate shops and commercial establishments in the state. The Act provides terms and conditions of work for the employment of young persons and women in such establishments and other benefits. It also provides penalties if an employer fails to comply with any of the provisions of the Act. This Act can serve as an inspiration for the other states in the country to enact similar legislation in their respective states to regulate shops and other commercial establishments.

Frequently Asked Questions

Which Act was repealed by the 1958 Act?

The Act repealed the Punjab Trade Employees Act, 1940, according to Section 35 of the 1958 Act.

What do you mean by spread over?

According to Section 2(xxvi), the period between the commencement and termination of employment or work is known as spread over.

What is the meaning of normal wages under the Act?

It means basic wages plus allowances, which include cash, equal to the advantages accruing by the concessional sale, which the worker is entitled to but does not include a bonus.

Can a child be employed in an establishment under the Act?

No, a child who has not completed the age of fourteen years cannot be employed in any establishment under the Act. This is also given under Section 29 of the Act.

References

Doctrine of severability

By

Diganth Raj Sehgal

-

December 7, 2023

This article is written by Heba Ali, a BBA LLB student at Symbiosis Law School, Noida; and by Gautam Badlani. This article discusses the doctrine of severability and its features in detail. It explains the concept of the doctrine of severability and also enlists the Constitutional justification for the application of this doctrine. Moreover, the article also sheds light on how the doctrine of severability has been incorporated in the field of arbitration.

It has been published by Rachit Garg.

Table of Contents

Basis Of doctrine

This doctrine of severability is also known as the doctrine of separability. The word “to the extent of the inconsistency or contravention” makes it clear that when some of the provision of a statue when some of provisions of a statute become unconstitutional on account of inconsistency with fundamental rights, only to the repugnant provision of the law in question shall be treated by the courts as void, and not the whole statute.

The doctrine of severability means that when some particular provision of a statute offends or is against a constitutional limitation, but that provision is severable from the rest of the statute, only that offending provision will be declared void by the Court and not the entire statute.

The doctrine of severability says that if good and bad provisions are joined together by using the word ‘and’ or ‘or’ and the enforcement of good provision is not made dependent on the enforcement of the bad one that is the good provision can be enforced even if the bad one cannot or had not existed, the two provisions are severable and the good one will be upheld as valid and given effect to. On the other hand, if there is one provision which is capable of being used for a legal purpose as well as for illegal one, it is invalid and cannot be allowed to be used even for the legal purpose.

In this doctrine, it is not the whole act which is held invalid for being inconsistent with the Part three of the constitution which is given to the citizens of India. It is only those parts that are inconsistent and are violative of the fundamental rights. But just the part which violates the fundamental rights is separable from that which does not isolate them. If it is there that the valid portion is combined with the invalid portion that it is impossible to separate them. Then in such cases, the court will leave it and declare the whole Act as void. This process of doing it is known as the doctrine of severability.

The honourable Supreme Court of India has used this doctrine in the case of A.K Gopalan vs State of Madras it was held by the court that the preventive detention should be removed from section 14 then it would be valid and by removing this will not affect the act and it will remain valid and effective. The doctrine was further was also applied in D.S Nakara vs Union of India where it was that the act remained valid and the portion which was not consistent was declared as invalid and this was because it was easily separated from the valid part. Also, State of Bombay vs F.N Balsara here it was held that the provision of the Bombay Prohibition Act, 1949 where the entire act was declared as void and it did not affect the rest of the part and there was no need to declare the whole statute as void.

The doctrine of severability was even used in the case of Minerva Mills vs Union of India where section 4 of 55 of the 42nd Amendment Act, 1976 was struck down for being beyond the amending power of the Parliament and then it had declared the rest of the Act as valid. Then in another case of Kihoto Hollohan Vs Zachillhu which is very famously known as the defection case. In this case the paragraph 7 of the Tenth Schedule which was first inserted by the 52nd Amendment Act of 1985 was declared as unconstitutional because it had violated the provisions under Article 368(2). But, the whole part was not declared unconstitutional. So, the rest of the Tenth Schedule excluding paragraph 7 was upheld by the Constitution.

The doctrine of severability was considered by the Supreme Court of India in the case of R.M.D.C vs Union of India and the rules regarding severability was laid down in this case-

The intention of the legislature behind this is the determine whether the invalid portion of the statute can be severed from the valid part or not.
And if both the valid and invalid parts can’t be separated from each other then the invalidity of the portion of the statute will result in the invalidity of the whole act.
Even if the invalid portion is separate from the valid portion.

It is the power and duty of the courts to declare a law which is inconsistent with the constitution of India to be unconstitutional. The foundation of this power of judicial review as it was explained by a nine-judge bench is the theory that the constitution which is the fundamental law of the land, is the will of the people, while the statute is only the creation of the elected representatives of the people, when therefore the will of the legislature as declared in a statute, stands in opposition to that of the people as declared in the Constitution, the will of the people must prevail.

Also, the power to annul the acts of the executive and the judiciary which violates the constitution is given by the Constitution itself in the judiciary. But, the same is not part of the legislature which is the creature of the constitution or one can say a law-making body. It is not correct to say that the views of the legislators must prevail because they are answerable to the people. In determining the constitutionality of a provision the court will first question whether the law is constitutional or not because there will be a possibility that it might be contravening a lot of articles that are enshrined in the Constitution.

The Indian Constitution guarantees certain fundamental rights to citizens as well as non-citizens. These sacrosanct fundamental rights are contained in Part III of the Constitution. Article 13 of the Constitution provides that laws in contravention of these fundamental rights are void.

However, in certain cases, only certain specific provisions of a statute are violative of the Constitution, while the remaining portions are valid. In such cases, the courts read down and invalidate only the inconsistent provisions and retain the remaining portions. This is known as the doctrine of severability. The doctrine of severability was evolved by the English courts and has been adopted by the Indian courts. This doctrine is also recognized in several other jurisdictions.

Since the doctrine of severability is applied only where a law is found to be contravening fundamental rights, it is evident that a plea to apply the doctrine of severability can be taken by only those persons who are granted fundamental rights under the Constitution.

Practice of doctrine of severability

The practice of Doctrine of Severability has been in practice for a very long time and it is not a new thing. It has been adopted in many countries like the United Kingdom, Australia, the United States of America, Malaysia and so as well in our country which is India. In England, United Kingdom the doctrine of severability goes back to when it originated in the case of Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Company Ltd. In this case, in other countries like the United States of America, the first case of the doctrine of severability was decided in the year 1876. After this, a question evolved which question if Congress knew about the invalid portion had it enacted it the first time. In this particular case, the case was centred around the Fifteenth Amendment of the American constitution which spoke about voting rights not being denied to American male citizens based on colour or race etc.

Then in the very popular case of Champlin Refining Co. v. Corp. Commission of Oklahoma an oil refining company challenged several provisions of the Oklahoma statute which further argued the various provisions that had violated the Commerce Clause and even the Fourteenth Amendment that talks about the due process and equal protection clauses. And in determining whether any of these or any one of them could be struck down and further separated from the residue of the oil and gas statute at issue. In the year 2006, the Supreme Court of the United States of America propounded the three principles as an underlying rationale. Then in the case of Ayotte vs. Planned Parenthood of N. New Eng., here also the court had laid down the three principles of severability.

In another case which is Cardegna. Vs Buckeye Check Cashing was in the year 2006 when the defendant which was the Buckeye took a loan amount from a subsidiary that was a business. Later on he took another loan amount which was higher than the loan amount which was previously taken and then he was later unable to pay it back. He then filed a class action suit with the help of a lawyer. The suit was regarding the interest rates charged by the plaintiff were higher when compared with others that were charged by the company which was at least 45 percent higher than the prescribed normal rates. But, the court in Florida stated that it is not only one part of the contract that could be challenged but it needs to be the whole contract. And so this means that the doctrine of severability which earlier was thought could be applied cannot be applied now. Further the honourable Supreme Court of gave the decision and declared that the whole of the contract was void ab initio on the grounds that such void contracts that are absolutely void and useless from the initial stage itself.

The doctrine of severability has now it just been part of the western world but also has spread to the eastern countries of the world. Like from India to Malaysia and in Malaysia this doctrine was evolved in the very popular case which is Malaysian Bar & Anr. V. Government of Malaysia. When we talk about India with respect to the doctrine of severability then we need to study and understand how Article 13 of the Indian Constitution came into being. This doctrine works when it becomes evident that any part of the law offends the Constitution . When we talk about incontext of Indian Constitution then it will be the fundamental rights which is guaranteed by the Constitution. So, this doctrine will work especially when subjected to this part which is Part III of the Indian Constitution.

Constitutional justification of the doctrine of severability

The application of the doctrine of severability for saving the valid parts of partly invalid provisions is justified by the use of the expression ‘to the extent of’ in Article 13 of the Constitution. Article 13 expressly states that a law in contravention of the provisions of the Constitution shall be invalid only to the extent of the inconsistency. Thus, the part of the law that is consistent with the constitutional provisions should be saved by the application of the doctrine of severability. It is necessary that the valid part be severable in application or severable in enforcement from the invalid part.

Similarly, Articles 251 and 254 also provide that when there is a conflict between the state law and the union law relating to a matter enumerated in the concurrent list, the union law would prevail and the state law would be rendered inoperative only ‘to the extent of’ the repugnancy.

Thus, it is evident that the makers of the Constitution themselves envisaged the application of the doctrine of severability.

General principles of the doctrine of severability

As per the general rule, where a rule contains a valid and an invalid part and the valid part is severable from the invalid part, the invalid part should be omitted and the valid part should be retained. If the invalid part can also be saved by reducing its scope, then it should be retained and read down to reduce its scope.

Where the provision under consideration is in the nature of an exception to the general scheme of the statute, the mere invalidity of the general provision will not imply the invalidity of the entire statute. The general scheme would be void only if it is established that the exception is inherently and intimately linked with the general provisions.

It is not necessary for the court to even strike down a complete provision. Where the objectionable and valid parts are contained in the same section and the two parts are distinct and severable from each other, then the court may invalidate only the objectionable part.

The doctrine of severability can be applied to the decisions of the courts as well as quasi judicial bodies.

There are two primary factors that the courts consider while determining whether the doctrine of severability should be applied or not. The first factor is the legislative intent. If the courts find that the legislative intent behind the enactment of the concerned statute favours severance, then the courts will apply the doctrine. The second factor is public interest. The courts apply the doctrine of severance only if it is evident that the application of this doctrine would serve the public interest.

The doctrine of severability can be applied to invalidate the unconstitutional portion of a provision that is not related to the overall object of the statute. Thus, the unconstitutional portion can be separate and severed from an otherwise constitutional provision. This process of omitting an unconstitutional portion does not amount to judicial legislation.

R. M. D. Chamarbaugwalla v. Union of India (1957)

In the case R. M. D. Chamarbaugwalla v. Union of India (1957), the Supreme Court laid down the guidelines relating to the application of the doctrine of severability. In this case, the constitutionality of the Prize Competition Act, 1955, was challenged, which imposed a prohibition on games of chance as well as games of skill. Applying the rule of severability, the Court held that the part restricting the games of skill was ultra vires, while the remaining statute was saved. The Apex Court enumerated the following:

The intention of determination is of paramount importance while deciding whether the doctrine of severability should be applied to a particular legislation or not. In determining the intention of the legislature, the court should refer to the history of the Act, the internal and external aids to interpretation, and the mischief that the legislation intends to address.
The court should consider the question as to whether the legislature would have enacted the valid portion if it knew that the invalid portion was ultra vires.
If the court finds the answer to the aforementioned question to be positive, then the court can apply the doctrine of severability.
This doctrine can be applied only in those cases where the valid and invalid parts can be severed. This doctrine cannot be applied where the valid and objectionable portions are inextricably linked in such a manner that they cannot be severed. In such cases, the entire statute will have to be struck down on the grounds of being ultra vires or unconstitutional.
Similarly, the entire statute will have to be struck down if the effect of severance is such that the valid residue part becomes substantially different from what the legislature intended it to be.

Chintaman Rao v. State of Madhya Pradesh (1950)

Facts

In Chintaman Rao v. State of Madhya Pradesh (1950), the government enacted a law to prohibit agricultural labourers from being engaged in the manufacture of beedis. The purpose of the law was to facilitate greater production of food crops and to ensure that adequate labour was available for agricultural purposes. The law authorised the Deputy Commissioner to prohibit the agricultural labourers of a particular notified region from being engaged in bidi manufacture during the agricultural season.

Issue

The Deputy Commissioner issued an order prohibiting all persons residing in the notified villages from undertaking work in bidi manufacturing. The order was challenged on the ground of being violative of the fundamental right to carry on any trade or occupation contained in Article 19(1)(g) of the Constitution.

Decision of the Court

The Supreme Court found the law to be violative of the fundamental rights of the people in the villages. The Court observed that the order of the Commissioner prevented not only the agricultural labourers but also the old, infirm, women, and other persons from working in the beedi manufacturing activities. Thus, those who could not be employed in agricultural activities were also restricted from undertaking beedi manufacturing work.

The Court observed that the portion of the law that imposed restrictions on agricultural labourers could not be separated from the portion imposing restrictions on other persons. The language used in the Act was wide enough to cover both constitutionally permissible and impermissible restrictions. Thus, the doctrine of severability could not be applied to the case.

Expanding the scope of the Act

The doctrine of severability can also be instrumental in expanding the scope of the provision. There is no such principle that the operation of the doctrine of severability should always result in limiting the scope of the concerned statute. This doctrine may also be applied to expanding the width and scope of a statute.

The doctrine of severability may also be applied for the purpose of omitting the discriminatory portion of a statute while retaining the beneficial part.

D.S. Nakara v. Union of India (1982)

Facts

In D.S. Nakara v. Union of India (1982), the government had initiated a new non-contributory pension scheme. However, the scheme was made applicable from a particular date, and the benefits were available only to the persons who retired after the stipulated date. The persons who retired before the prescribed date were not entitled to the benefit of the scheme.

Arguments

The petitioners contended that the discriminatory portion should be read down by applying the doctrine of severability. However, the Attorney General pleaded that the legislature has the competence to determine the scope of the beneficial legislation. The judiciary would be transgressing into the legislative field by applying the doctrine of severability to expand the scope of the scheme. Lastly, the Attorney General submitted that the doctrine of severability should always cut the scope of the scheme and not enlarge it.

Judgment

The Supreme Court held that the classification on the basis of the date of retirement was arbitrary and violative of Article 14 of the Constitution. Thus, the Court applied the doctrine of severability and read down the provision making the classification on the basis of retirement date. The scope of the Act was thus enlarged, and the people who retired before the prescribed date were also brought within the purview of the Act.

The Court observed that the reading down of the objectionable portion would not make the overall scheme vague or unenforceable, and thus, there was no difficulty in severing the illegal and arbitrary portion.

Article 14 of the Constitution targets arbitrariness, and if an arbitrary portion of a statute can be omitted by the application of the doctrine of severability, then the same should be struck down while retaining the overall scheme.

Whether one could challenge the constitutionality of a law

One can challenge the constitutionality of law but only if our rights are directly affected by a law. Then only we can question the constitutionality of the law. It follows in such ways-

When a person is outside the class that might be injured by the statute then he has no right to complain. Then where a statute affects bona vacantia, then there is no person who is competent to challenge the validity of such statute. Again, where the statute operates as a contract, either party to the contract is entitled to challenge the validity of the statute.

Presumption taken by the courts

It is always on the person who attacks and tries to show that it is contravening the constitution then it is him on whom the burden is upon to show that courts that while performing its duties it has the constitutional principles by and its guidelines while laying down its decisions as it said in the case of Chiranjit Lal Chowdhury vs The Union Of India And Others. If it happens that the challenge is not on the provisions of the Constitution then the courts have to consider and make sure that it is intra vires and try to interpret the same. So, it is clear that the burden fully lies upon the person who questions the decision and challenges it in a court of law.

If something happens and the constitutionality of the act is challenged then the person must show that he has sustained some injury as a result of that or that he/she is in immediate danger of sustaining some direct injury as a result of the statute or law coming into force. And if it even abridge the fundamental rights of the person in any form then the aggrieved person has all the powers to approach the courts without waiting or delaying for the State to take some or any type of action. And if it happens that the person does not possess any of the fundamental rights then he/she cannot challenge the validity of the law on the grounds that it is inconsistent with a fundamental right. Even a corporation has a legal entity separate from that of its shareholders. Hence, in the case of corporations, whether the corporation itself or the shareholders would be entitled to impeach the validity of the statute and this will depend upon the question whether the right of the corporation or of shareholders have been affected by the statute that has been impugned.

When it happens that the fundamental rights of the company is impugned by the statute then it also affects the interest of the concerned shareholders then in such cases the shareholders also impugns the constitutionality of the statute. In such situations what happens is that the joinder of the company as co-petitioner would not bar relief to the shareholders even though the company is not a ‘citizen’ and so would not be entitled to relief. Also, the possibility of financial relief due to the management of the company being taken over by the government is sufficient to give locus standi to a shareholder.

Effects when a law is declared as unconstitutional

Article 141 of the Constitution of India says that the honourable Supreme Court of India is binding on all the courts which is within the territory of India. For example, once if any law or any statute is declared unconstitutional by the Supreme Court of India then it shall be from that date onwards will be binding on all lower courts in India. The effect of this is that the decision operates as a judgement in rem against all the persons who may or is going to seek relief in any court in India. So, in further proceedings then there is no onus on the party to affected to establish its unconstitutionality again and then the court is bound to reject the law which is declared as invalid by the honourable Supreme Court.

The same thing is applied when the law has been declared to be unconstitutional partially. If the law is sought to be enforced in a case then in such cases no notice is to be taken by the Court of that part which has been declared by the Supreme Court as unconstitutional. In other words, it means that the Court will read the Statute in such a manner that the part of the section which has been declared as invalid as never existed before. If it happens that the person is prosecuted for the contravention of the section which has been declared as invalid then no onus is cast upon the accused to prove that his/her case falls upon and under that part of the section which has been held invalid. On the other hand, it happens that the prosecution cannot succeed unless it is proven that the accused has contravened that part of the section which is enforceable and valid after the honourable Supreme Court decision.

No distinction is made where a case where the law is declared to be invalid because of the lack of legislative competence and a case where it is declared invalid on the ground of contravention of a fundamental right. Even Article 245(1) of the Constitution of India lays down very specifically that the legislative power whether it is of Union or of a State Legislature is and will always remain subject to other provisions of the Constitution. The result is that when a legislature makes any law which is contravening a provision of the Constitution like say any of the fundamental rights then the position will remain the same as if they had no power to legislate over the subject-matter of the legislation at all. Then, accordingly, the declaration of invalidity of the law by the honourable Supreme Court goes through the legislative power in either of the cases as held many cases by the court itself.

Effects on unconstitutional statute due to constitutional amendment

Earlier back in the days there were a lot of confusion upon this topic when there is a constitutional amendment and because of this there is some effects on the unconstitutional statute. The ‘doctrine of eclipse’ can be invoked in the case of pre-constitution law which was valid when it had been enacted. But, there was some inconsistency with the constitution which came into existence subsequently, if and when the shadow is removed, the pre-constitution law becomes free from all kinds of infirmity.

But the thing is that the principle cannot be invoked in the case of a post Constitution law which is void ab initio. In view of Article 13(2), the fundamental rights constitute express limitations upon the legislative power of a legislature making a law after the commencement of the Constitution and no distinction can be drawn between a post-Constitution law which is ultra-vires that is beyond the legislative competence of the legislature and a law which contravenes a fundamental right. It is that a post-Constitutional law which violates a fundamental right is void ab initio and no subsequent amendment of the Constitution can revive such still-born law, unless such amendment is retrospective.

Power of a legislature when a statute is declared unconstitutional

When a statute is declared unconstitutional by a Court of law then the Legislature cannot directly override that decision which is taken and further pronounce the statute to have been valid on the date of judgement. It is, however, so that the competence of the Legislature to a new law which is further free from the unconstitutionality and then provide that anything done under the offending law shall be deemed to have been under the new law and subject to its provisions.

Effects of a proclamation of emergency upon the unconstitutional statute

A Proclamation of Emergency which is made under Article 352 is prospective in its operation. Article 358 in the Indian Constitution which frees the Legislature from the limitation which is laid down in Article 19 during the proclamation of emergency means during its continuance. But it does not operate to validate a law which is enacted prior to the Proclamation which was invalid owing to the contravention of Article 13(2). Then such laws will be void ab initio and cannot be revived by the proclamation of the emergency. So, now if any executive action which is taken in the exercise of any power in the hands by such a void law will also be invalid. Even though such action takes place after the commencement of the Proclamation or a continuation of pre-Constitution executive action.

Whether a eight could be waived

The important question which has been there over the years was that whether a fundamental right could be waived which has been answered by the Constitution Bench of the honourable Supreme Court. Like for example in the case of Behram vs State of Bombay where the honourable Venkatarama J.had expressed the view that such of the rights as are for and in the interest of the individuals and is totally different from the interest of the general public, could be waived accordingly even the right which is guaranteed by Article 19(1) which also comes under this category.

But everyone else didn’t have the same viewpoint which is the majority that included Mahajan, C.J., Mukherjee, Bose and Hasan, JJ. And they expressed the viewpoint even without deciding the question which was mainly for the good of the individuals. This has also been laid into our Constitution on grounds of public policy and in pursuance of the objective declared in the Preamble itself. So, in the end the conclusion is that none of the fundamental rights could be waived.

Then again in the case of the Basheshar v. Commr. Of I.T., Justice Bhagwati and Subba Rao, JJ. have held that a fundamental right being in the nature of a prohibition addressed to the State, none of the fundamental rights in our Constitution can be waived by an individual and this declaration was given with what the majority have viewed in the Behram’s Case.

In the very famous case of Olga Tellis vs Bombay Corpn. where the Constitution bench has unanimously held that there cannot be any estoppel against the Constitution which is the supreme law of the land. Also, a person cannot waive any of the fundamental rights conferred upon him by the Constitution itself which is stated in Part III. In many of the cases there have been situations where the courts without even entering into the question of waiver, the Court has held that a person who has applied for an appointment to an office by an Act is not prevented from challenging on the ground that it violates his or her fundamental right which is guaranteed under Article 16.

Effect of acquiescence

There have been cases over the years where it has been held that if a person has gained any kind of benefits under statute then he/she cannot challenge its constitutionality or its validity in any case. Like in the case of Nain Sukh v. State of U.P. where the Supreme Court has observed that a person who had been allowed to contest an election which is being conducted on the basis of separate electorates which is formed on the communal lines then he/she cannot seek remedy under Article 32 of the Constitution of India after they are done with the election.

Doctrine of severability and arbitration

The doctrine of severability is also applicable to the arbitration proceedings initiated under an arbitration agreement. The doctrine of severability has been incorporated under Section 16 of the Arbitration and Conciliation Act, 1996.

As per Section 16, an arbitration agreement is to be severed and considered separately from the contract that contains the arbitration agreement. Thus, even if the parent contract is held to be invalid, the arbitration clause would survive. Similarly, the invalidity of the arbitration clause will not affect the legality of the parent contract. The courts are to determine the legality of the parent contract and the arbitration clause separately and independently of each other.

Heyman v. Darwins (1942)

The doctrine of severability was first applied to arbitration cases by the House of Lords in the case of Heyman v. Darwins (1942). In this case, the parties had entered into an agency contract that contained a broad arbitration clause. The respondent repudiated the contract, and the appellant sought damages for the injury caused due to the repudiation. The appellant had filed a writ petition claiming damages.

The respondent contended that the parties should be referred to arbitration as the contract contained an arbitration clause. The appellants contended that the contract ceased to have effect upon repudiation by the respondents, and thus the arbitration clause was not applicable.

However, the House of Lords applied the doctrine of severability and held that the mere repudiation of the contract would not suspend the arbitration clause. Repudiation would not affect the right of the parties to seek remedy through arbitration. The reasoning given by the court was that the respondents had repudiated the contractual obligations owed to the appellants and not the arbitration clause. The Court also observed that the purpose of the contract is distinct and separate from the purpose of the arbitration clause. Thus, the arbitration clause would continue to have effect.

Arbitral Awards

The doctrine of severability is not only applicable to arbitration contracts but also to arbitral awards. Section 34 of the Arbitration Act provides for making an application before a court of law for the setting aside of an arbitral award.

Section 34(2)(a)(iv) provides that an arbitral award can be challenged on the ground that it contains decisions of matters and disputes that were not submitted to arbitration or which were beyond the jurisdiction of the arbitral tribunal. This provision expressly states that if the portions of the arbitral award that deal with matters within the arbitral tribunal’s competence can be severed from the portions that deal with matters beyond the tribunal’s competence, then only the objectionable parts should be set aside and the residue award should be upheld.

In the recent case of NHAI v. Trichy Thanjavur Expressway Ltd. (2023), an application was filed before the Delhi High Court for setting aside an arbitral award. The Delhi High Court found that certain parts of the arbitral award were objectionable and liable to be set aside. The Delhi High Court held that the doctrine of severability can be applied to arbitral awards under Section 34(2)(a)(iv), where the objectionable portions can be severed from the overall award without affecting the good parts of the award. It is essential that the valid part be independent and not have any correlation with the invalid part. Applying the doctrine of severability, the Court invalidated the objectionable part of the award and retained the remaining portions.

International perspective

The international conventions and practices also recognize the application of the doctrine of separability to arbitration agreements. The principle is incorporated in Article 16 of the Model Law formulated by the United Nations Commission on International Trade Law (UNCITRAL), which states that a decision by the arbitration tribunal holding the parent contract to be null and void will not ispo jure imply that the arbitration clause is also invalid.

Similarly, Article 23 of the UNCITRAL Arbitration Rules, 2010 also provides that the illegality of the contract does not automatically effectuate the arbitration clause.

US perspective on the doctrine of severability

The doctrine of severability is also an integral part of the legal system of the United States of America. The doctrine of severability is considered to be a form of statutory interpretation where the courts interpret the manner of operation of a statute once they conclude that a part of the statute is constitutionally invalid.

The US courts maintain a strong presumption in the favour of severability. The court refuses severability only when it is conclusively established that the legislative intent was opposed to severability. If the residuary valid portion that would be left after severing the invalid part is capable of functioning as an independent scheme, then the courts incline in the favour of severability.

Murphy v. National Collegiate Athletic Association (2018)

Facts

In the recent case of Murphy v. National Collegiate Athletic Association (2018), the validity of the Professions and Mateaur Sports Protection Act, 1992, was challenged before the United States Supreme Court. This Act prohibited the States from promoting, endorsing, or sponsoring sports gambling. The Act defined amateur sport organisations as any governmental entity that scheduled, organised or sponsored the conduct of any sports competition in which one or more amateur sportsmen participated. In cases of violation of the provisions of the Act, the Attorney General could initiate a civil action in the District Court of the concerned district.

Issue

The provisions of this Act were challenged on the ground that they violated the anti-commandeering doctrine. The anti-commandeering doctrine forms part of the 10th Amendment and provides that the federal government can direct state officials to enforce the federal laws. New Jersey had challenged the law on the ground that it prohibited the states from modifying or repealing their gambling regulation laws and thus violated the anti-commandeering doctrine.

Judgment

The US Supreme Court held that since the Act prohibited the states from licensing the schemes relating to sports gaming, it issued a direct order to the states and thus breached the anti-commandeering doctrine. The Court then considered the possibility of the application of the doctrine of severability. While determining the applicability of the doctrine of severability, the Court has to find the answer to the question – “Would Congress still have passed the valid sections ‘had it known’ about the constitutional invalidity of the other portions of the statute?” The doctrine can be applied only where the answer to the question is affirmative.

However, the Court held that the provisions of the Act were inextricably linked and could not be severed from each other.

Criticism to the doctrine of severability

While the doctrine of severability has been an integral part of Indian as well as other legal systems, there are certain grounds on which this doctrine can be criticised. These grounds are:

The doctrine of severability requires the courts to determine the legislative intent. The courts have to answer the question as to whether the legislature would have passed the concerned statute had it known that some parts of the statute were constitutionally invalid.

However, no legislature passed a statute with the idea that some part of it may be constitutionally objectionable. Thus, the courts have the dubious function of determining the intent that never existed. There is no evidence as to the actual intent of the legislature, and the hypothetical intent is based merely on the views of the courts.

The doctrine of severability gives the courts the power to excise or expand the scope of a particular statute. This may amount to a transgression into the legislative field.
The doctrine of severability also expands the scope of a particular suit or petition. The petitioner might have challenged a particular provision of a statute, but if the court determines that the provision is unconstitutional, then the validity of the entire statute comes under scrutiny. Once the court finds that the provision challenged by the petitioner is ultra vires, it goes on to examine whether the remaining provisions are valid and whether they can be severed from the objectionable provisions.

The exercise of this power becomes unjustified when the petitioner has no locus standi to challenge the constitutionality of the entire statute, but due to the operation of the doctrine of severability, the entire law comes under the scrutiny of the court. As per the general principle, a plaintiff has to establish the locus standi for every provision that he challenges. However, there is a visible departure from the general principle in the case of the application of the doctrine of severability.

Conclusion

The doctrine of severability creates a legal fiction that permits the courts and tribunals to separate the invalid part of the law from the valid and lawful part. Thus, the courts are able to declare the invalid provisions as ultra vires while retaining the overall statute. This doctrine has been recognized in England and other common law countries as well.

The operation of this doctrine can have the effect of both limiting and expanding the scope of the concerned statute. In the case of beneficial statutes, the courts often apply the doctrine of severability to expand the scope of the beneficial legislation. This doctrine is also applicable to arbitration agreements and helps promote arbitration.

It is evident that the doctrine of severability also forms an integral part of United States constitutional law. There are many similarities between the general principles relating to the operation of the doctrine of severability in India and the United States.

Frequently Asked Questions (FAQs)

What is the doctrine of occupied fields?

The doctrine of occupied field has been incorporated under Entry 52, List I, and Entry 24, List II, to the Seventh Schedule of the Indian Constitution. It provides that for the regulation of certain industries in the public interest, Parliament can make laws with respect to these industries, and the exercise of such power by Parliament would exclude the concerned industries from the purview of the legislative power of the states.

What is the concept of colourable legislation?

The doctrine of colourable legislation provides that the legislature cannot indirectly do something that it is incapable of doing directly. Thus, if one legislature transgresses into the boundary of another legislature and tries to regulate some matter indirectly that it is not capable of regulating directly, then such an act would be rendered invalid by the doctrine of colourable legislation.

What is the difference between the doctrine of severability and the doctrine of eclipse?

The doctrine of eclipse provides that if a pre-constitutional law is found to be in contravention to the constitutional provisions, then it will stay in a dormant state. Once the legislature makes an amendment to the law and removes the shadow of contravention, the law will be revived.

The difference between the doctrine of severability and the doctrine of eclipse is that the doctrine of eclipse applies to pre-constitutional laws, while the doctrine of severability applies to the laws that were enacted after the constitution came into force.

References

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Awareness of handling people : ways and means of leadership

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December 6, 2023

This article has been written by Golock Chandra Sahoo pursuing a Personal Branding Program for Corporate Leaders and edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

A leader makes him/her alert as to the ways/means of handling people. That is the main characteristic needed to succeed as a great leader. No doubt, a leader manages the things to be done and for this, all environmental awareness, including self-awareness is necessary for providing good leadership. As per the Stanford Research Institute, a leader in effect should have 12 percent knowledge of doing and 38 percent knowledge of handling people. This 38 percent knowledge is acquired by a leader through practise and holds good for any organisation, irrespective of its type. Even the head of the family acts with this knowledge. In any organisation, a leader faces four types of people (sub-ordinates, colleagues, boss/bosses, outside stakeholders). Managing all of these people may not be uniform. A leader is to yield the best out of all associates. Persuading people to work in any adverse situation is a stupendous task that requires motivation and the right perspective. Some fundamental ways of handling people and making them work can be discussed in the succeeding paragraphs.

Ways of handling sub-ordinates

Unless the sub-ordinates work in the right manner, the boss can’t come up with a right and effective decision. So, decision making at the top level depends on the ways the people in the lower echelon or same echelon of the organisation function. Here are some guidelines as to how to deal with subordinates.

Know your subordinates by name- This enhances closeness. Express your directions on the documents by marking the name of the person. This may act miraculously and the subordinate will definitely be enthused to work or act as per the direction.

Bharat is a vast land of varied religions, cultures, castes, languages, customs, creeds etc.- A leader should learn to pay respect to all religions and refrain from criticising any. Any subordinate feels tempted when it is addressed in his/her mother tongue. So it is essential for a leader to learn the language of the subordinates. Please know that knowledge of other’s languages will act fantastically in motivating your subordinates.

Try to develop self-discipline first, before advising any- An officer/middle level boss attending to his/her duties at 11 A.M can’t direct the lower level people to attend office by 10 A.M. Direction will never yield ordinarily. Learn to control yourself. One should be vigilant to watch all the words, actions, thoughts, conducts and, above all, his/her heart.

Never give false promise/promises to enhance your credibility- One can’t satisfy all by being positioned somewhere. That is never possible. Therefore, a true leader should at times work with autocracy and, most of the time, act democratically. The style of functioning should be a mixture. Next, sympathy is not a permissible mode. Any subordinate who is shown, or judged or assigned anything sympathetically may turn bitter afterward. Pay Rs. 5/- to a beggar for, say, five days, and from the sixth day on, the same beggar will demand more. That is the dark symptom of sympathy. A leader should be empathetic and that will provide all that is due after parting with something.

Courtesy costs nothing but pays much- A leader should be courteous and be free from anger and emotion. It should be the virtue of a leader to scold in private but praise in public. So anger is only applicable to privacy and emotion in public. For any bad work of the team, discredit should be shouldered by a leader. If the work is acclaimed publicly, all credit should be given to the group. This temperament works with strong group cohesion and bonding and the group performs with sincerity and diligence in all situations.

It is advisable to set targets for all- In case it is not possible, give the opportunity to your subordinates to fix their own targets and do so with intimation from you. Target fixing or setting shows you the speed at which your group performs or your organisation flourishes. A leader should be able to measure/analyze the shortfall in every case and direct remedial measures, if required, with constructive criticism. This action may help someone improve. Again, s/he should review the implementation step by step while corrective steps are under way.

Be accessible and fix times to meet your subordinates- Please make it a point that every subordinate develops a sense of you as a member of their family. While someone is ill or having some difficulty, a successful leader should treat this moment as an opportunistic means to come to their rescue.

Be communicative- Listen more and talk a little. Communication skills enable you to know your people. Communication skills play an important role in knowing your people. Once someone is attached to work under your control, as the true leader, you should have through knowledge of all of their whereabouts, such as family history, educational and professional data, technical background, residential status, etc. This will enable you to correctly fix assignments for that subordinate. Every time, constantly practise listening before responding.

A good leader should create every scope for career advancement of the subordinates- In government organisations, career progression is assured in terms of monetary hikes. Though the post is not upgraded, all financial benefits automatically accrue to a person. So s/he never feels demotivated to work for the betterment of the organisation. In any case, there should not be any barrier for someone to be upgraded if she/he is not adversely characterised in any situation.

Ways of handling colleagues of equal status

Handling people of equal cadre/status is a tough and arduous task. Your colleagues may be jealous of your calibre and position or of your goodwill with the boss. Therefore, it is advisable to tactfully handle them in the course of your official assignments or off the record additional responsibilities. It happens more often with private entities. Here are some notable tips.

Avoid seeking any sort of unfair advantage from any of your colleagues- This may create confusion and hinder your regular tasks. Developing this attitude may sometimes lead to untoward incidents, which may not be managed easily.

Never disclose any of your points of discussion- It is very likely that, at any time, they may play the role of critics with this information. This may irritate your boss and your relationship with your boss may be shattered for no immediate reason on your end.

Don’t interfere in the work domain of your colleagues- Similarly, never use any of your colleagues to assist you in any of your assignments. This may bring difficulties to your effective management of relationships between colleagues subsequently. Rather, extend all cooperation for the completion of the assigned tasks of your colleagues, if needed, as this is in the better interest of the organisation.

Maintain all cordial relationships with your colleagues- Be well mannered to all working with you horizontally. This will reduce your official strain and you may then be tempted to work in a better spirit.

Ways of handling boss

The boss, the head of the organisation, is never predictable, so handling the boss is a very daunting task. But one can manage the immediate boss with specific knowledge. These can be stated as follows.

You should have every piece of information about the academic and professional background of your boss, including their working experience. His method of work should be known to you and this may enable you to work under him/her with the fewest complexities. Some bosses need an explanation of all issues directly from the dealing hand when cases are put up to him/her. Yet some others are there who give direction on the basis of recorded data in the file. So for dealing with the bosses in the latter category, one is to take all precautions with the submission of papers and documents.
While talking to your boss, you should be very brief and to the point. Before approaching your boss for any issue, decide the mode of your presentation. While talking directly, avoid all bluffs. Avoid diverting the topic for any reason unless directed specifically.
Don’t interrupt while your boss talks to you. Listen with undivided attention. Try to read the body language of your boss, if possible, through direct eye contact. This may aid you in understanding the directions and style of acting of your boss and accordingly, you may manage your activities.
It is advisable to highlight all the good work of your subordinates in front of the boss and no complaint should ordinarily be raised against anybody. Please know that all bosses are problem solvers, never creators.
Improve yourself to keep you updated technologically and add value. Assignments should be cleared on time. The manual task age is gradually becoming out of track. The more you know technology, the more you will be demanded by your organization and in the process, your boss may find you more valuable.
Never propose any single action for any issue directly to your boss. It is better to inform everyone of the pros and cons of an issue, along with some suggested actions. A PowerPoint presentation helps a lot. Present in such a manner that your preferred option to solve the issue catches attention. Act diplomatically to present the issues of inherent bottlenecks and act for any preferred solution. Remember that the decision of your boss is final and binding, so avoid saying no.
Practise highlighting the strength of your boss to others. In terms of grapevine communication, this message will automatically reach your boss and s/he may be impressed with this information. Alternatively, spread of this message may give you moral strength to perform with attention and devotion
Feed your boss with every requisite material before your boss proceeds for a meeting. In the course of a meeting, don’t offer any suggestions directly from your side unless you have been specifically called upon by your boss to do so.

Ways of handling stakeholders

Stakeholders include customers, shareholders, creditors, investors, employees and even inhabitants of the adjacent society. For a private entity, it is essentially required that the organisation care for all so that none feels neglected. Similar is the case with government organisations, where, of course, no separate investors are there. Here are some basic points that should be observed in handling and managing stakeholders.

It should be seen by the person at the helm of affiars that the organisation takes an interest in providing the employees with the requisite facilities. Employees should have transportation facilities; organisations should have a daycare centre; and maternity and paternity benefits should be available. On the whole, organisations may practise having a good work culture so that all are enthused to work. Work culture may cover an up-gradation in time or incentivize people to gain motivation on a large scale. The organisation should see good governance and best practises with employees at work. Leaders are therefore the agents of change on behalf of the organisation to manage the employees to the best of their ability.

Shareholders like to see that the company is on the way to profit with all legalities and ethics. Only such companies can raise shares in the open market with the least amount of advertising or promotional activity. Investors like to invest in such companies. Creditors never hesitate to supply on credit with the trust that their payment will never be blocked, as the organisation is on the way of developing financially and ethically.

Corporate social responsibility of business is the acceptable ideology of the organisations, under which the organisations go for investing funds for the development of the nearby society. It may cover developing schools for the children of the inhabitants of the nearby and adjoining localities, taking up the development of roads and bridges, ponds/pools or developing market facilities. These involve cost and no profit, with the specific aim of developing the people staying nearby. The long term objective of the investment may enable the organisation to get easy manpower without any complications. Maintaining crèches on the organization’s campus may enable the stress free engagement of women employees. In this context, one can cover theories of corporate social responsibilities. Shareholder’s theory, which came in 1970, gives importance to the interests of the shareholders. Next came the Stakeholder’s Theory of 1984, which mainly covers the three “p”s (people, profit and plan). One leader acts in the interest of people, in the interest of the organization and with an organised and unending plan of action in mind. The leader is duty bound to watch that courteous service is offered to all constituting the organisation’s culture and such a climate should prevail.

Conclusion

A successful team leader should see that prompt and due attention is there for the people around him/her. They may be the colleagues, the bosses or any outsider coming to the organisation to carry out their work. Motivating people to act in the interest of the organisation is a strategy that all leaders should possess. People are undoubtedly the force and they should be handled carefully and tactfully to bring all round effectiveness and efficiency to any organisation.

References

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 skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join: