In this article, Ashok Samal from HNLU, Raipur discusses Human Rights violation of prisoners in India.

What are Human Rights

All human beings are born independent, free and equal in dignity and rights. They are endowed with reason and conscience and should act accordingly, living in a high spirit of love and brotherhood.

Human rights are rights inherent to all human beings, irrelevant to our nationality, place of residence, sex, national or ethnic origin, color, religion, language, or any other status. We are all equally entitled to our human rights without discrimination as these rights are fundamental to us because we are human. These rights are all interrelated, interdependent and indivisible.

Universal human rights are often expressed and guaranteed by law, in the forms of treaties, statutes, customary international law, general principles and other sources of international law for example ‘The Universal Declaration of Human Rights’. International human rights law lays down obligations of Governments to act in certain ways or to refrain from certain acts, in order to promote and protect human rights and fundamental freedoms of individuals or groups.

Non-discrimination is a sine-qua-non principle in international human rights law. The principle is present in all the major human rights treaties and provides the central and particular theme of some of the international human rights conventions such as the Convention on the Elimination of All Forms of Discrimination against Women.

The principle applies to everyone in relation to all human rights and freedoms and it prohibits discrimination on the basis of a list of never-ending categories such as sex, race, color and so on. The principle of non-discrimination is complemented by the principle of equality[1],“All human beings are born free and equal in dignity and rights.” Also, at the individual level, while we are entitled our human rights, we should also respect the human rights of others.

Human Rights of Prisoners: World perspective

The principle of universality of human rights is the cornerstone of international human rights law. This principle, as first emphasized in the Universal Declaration of Human Rights in 1948, has been reiterated in numerous international human rights conventions, declarations, and resolutions. The 1993 Vienna World Conference on Human Rights, for example, noted that it is the duty of States to promote and protect all human rights and fundamental freedoms, regardless of their political, economic and cultural systems.

Who are Prisoners

“In our world prisons are still laboratories of torture, warehouses in which human commodities are sadistically kept and where spectrums of inmates range from driftwood juveniles to heroic dissenters”

“Convicts are not by mere reason of the conviction denuded of all the fundamental rights which they otherwise possess.”[2].

The word ‘prisoner’ means any person who is kept under custody in jail or prison because he/she committed an act prohibited by law of the land. A prisoner also known as an inmate is anyone who, against their will, is deprived of liberty. This liberty can be deprived by forceful restrain or confinement.

The Indian socio-legal is based on non-violence, mutual respect and human dignity of the individual. By committing a crime, a person does not change from being human and still is endowed with all the aspects which demand him to be treated with human dignity and respect that a human being deserves.

Human rights are necessitated because of the reason of human life. Being in civilized society organized with law and a system as such, it is essential to ensure for every citizen a reasonably dignified life[3]. Even if the person is confined or imprisoned because of his wrong, he is entitled to their rights unaffected by the punishment for wrongs, simply because if a person under trial or a convict, his rights cannot be denuded.

“No one shall be subject to torture or cruel, inhuman or degrading treatment of punishment”[4]

Prisoners have basic legal rights that can’t be taken away from them. These include:

• The right to food and water.
• Protection from torture, violence and racial harassment.
• Being able to get in touch with an attorney to defend himself.

Human Rights in India

Human rights are those rights that are fundamental to the human life. Human rights are rights to certain claims and freedoms for all human beings all over the world. These rights, besides being fundamental and universal in character, assumed international dimension. These rights ensure to make man free. Universalization of Rights without any distinction of any kind is a feature of human rights. These rights recognize the basic human needs and demands. Every country should ensure human rights to its citizens. The Human rights should find its place in the Constitution of every country.

Human rights in India is an issue complicated by the country’s large size, its tremendous diversity, its status as a developing country and a sovereign, secular, democratic republic. The Constitution of India provides for Fundamental rights, which include freedom of religion. Clauses also provide for freedom of speech, as well as separation of executive and judiciary and freedom of movement within the country and abroad. The country also has an independent judiciary and well as bodies to look into issues of human rights.

The 2016 report of Human Rights Watch[5] accepts the above-mentioned faculties but goes to state that India has “serious human rights concerns”. Civil society groups face harassment and government critics face intimidation and lawsuits. Free speech has come under attack both from the state and by interest groups.

The problem about human rights varies from society to society in India. The entitlement of civil, political, economic, and social right of individuals varies from country to country according to the laws governing these rights of the citizens of that country.

It is the duty of every nation to create such laws and conditions that protect the basic Human rights of its citizens. India being a democratic country provides such rights to its citizens and allows them certain rights including the freedom of expression. These rights, which are called ‘Fundamental Rights’ form an important part of the Constitution of India.

These rights are fundamental in three different ways, first, these are basic human rights as human beings and secondly, our Constitution gives us these fundamental rights and guarantees because these rights are necessary for the citizens of our country to act properly and live in a democratic manner and thirdly, the procedure for the effective enforcement of these guaranteed Fundamental Rights has been mentioned in the constitution itself. Every citizen of India has the right to move to a court of law if he/she is denied these rights. The Constitution is there to safeguard her/his rights.

The Constitution guarantees to us six Fundamental Rights. The six Fundamental Rights as mentioned in our Constitution are, The Right to Equality[6], The Right to freedom[7], The Right against Exploitation[8], The Right to Freedom of Religion[9], The Cultural and Educational Rights[10] and The Right to Constitutional Remedies[11].

Human Rights of Prisoners in India: Current Scenario and Violation

The practice of torture in prison has been widespread and predominant in India since time immemorial. Unchallenged and unrestricted, it has become a ‘normal’ and ‘legitimate’ practice all over. In the name of investigating crimes, extracting confessions and punishing individuals by the law enforcement agencies, torture is inflicted not only upon the accused but also on bona fide petitioners, complainants or informants amounting to cruel, inhuman, barbaric and degrading treatment, grossly derogatory to the individual dignity of the human person. Torture is also inflicted on women in the form of custodial rape, molestation and other forms of sexual torture.

The Hon’ble Supreme Court of India in the case of Joginder Kumar v. State of UP and Ors. said that the “the quality of a nation’s civilization can be largely measured by the methods it uses in the enforcement of criminal law. The horizon of human rights is expanding. At the same the time, the crime rate is also increasing. the court has been receiving complaints about violation of human rights because of indiscriminate arrests. A realistic approach should be made in this direction. The law of arrest is one of balancing individual rights, liberties and privileges, on one hand and individual duties obligations and responsibilities on the other; of weighing and balancing the rights, liberties and privileges of the single individual and those of individuals collectively; of simply deciding what is wanted and where to put the weight and the emphasis; of deciding which comes first ­– the criminal or society, the law violator or the law abider.”[12]

Article 21 of the Constitution guarantees the right of personal liberty and thereby prohibits any inhuman, cruel or degrading treatment to any person whether he is a national or foreigner. No person shall be deprived of his or personal liberty except according to procedure established by law. This Article also protects people for being retrospectively punished for activities which were given a status of crime after they committed the act.[13]

The Hon’ble Supreme Court of India had occasion to deal with the rights of prisoners in the case of Sunil Batra v. Delhi Administration[14]. In that decision, this Court gave a very obvious answer to the question whether prisoners are persons and whether they are entitled to fundamental rights while in custody, although there may be a shrinkage in the fundamental rights. This is what this Court had to say in this regard:

“Are ‘prisoners’ persons? Yes, of course. To answer in the negative is to convict the nation and the Constitution of dehumanization and to repudiate the world legal order, which now recognizes rights of prisoners in the International Covenant on Prisoners’ Rights to which India has signed assent. In Batra case, the Hon’ble Court has rejected the hands-off doctrine and it has been ruled that fundamental rights do not flee the person as he enters the prison although they may suffer shrinkage necessitated by incarceration.

To handcuff is to hoop harshly and to punish humiliatingly. The minimum freedom of movement, under which a detainee is entitled to under Article 19[15], cannot be cut down by the application of handcuffs. Handcuffs must be the last resort as there are other ways for ensuring security.

Article 14[16]; gives the right to equality and equal protection also to the prisoners. If any excesses committed on a prisoner, by the police is considered as a violation of rights and it warrants the attention of the legislature and judiciary. The right to meet friends, relatives and lawyers are provided under article 14 and article 21. Such rights are pretty reasonable and non-arbitrary. Even prison regulations recognize the right of prisoners to have interview with a legal adviser necessary, in a reasonable manner. Right to free legal aid is also provided under this article 14 and 21[17].

ROLE PLAYED BY THE INDIAN JUDICIARY

The Indian Supreme Court has been active in responding to human right violations in Indian jails and has, in the process, recognized a number of rights of prisoners by interpreting Articles 21, 19, 22, 32, 37 and 39-A of the Constitution in a positive and humane way.

Justice V.R. Krishna Iyer in the case of State of M.P. v Shyamsundar Trivedi[18] said that “Convicts are not by mere reason of the conviction denuded of all the fundamental rights which they otherwise possess”

“Like you and me, prisoners are also human beings. Hence, all such rights except those that are taken away in the legitimate process of incarceration still remain with the prisoner. These include rights that are related to the protection of basic human dignity as well as those for the development of the prisoner into a better human being.”[19]

If a person commits any crime, it does not mean that by committing a crime, he/she ceases to be a human being and that he/she can be deprived of those aspects of life which constitute human dignity.

Disturbing conditions of the prison and violation of the basic human rights such as custodial deaths, physical violence/torture, police excess, degrading treatment, custodial rape, poor quality of food, lack f water supply, poor health system support, not producing the prisoners to the court, unjustified prolonged incarceration, forced labor and other problems observed by the apex court have led to judicial activism.[20] Overcrowded prisons, prolonged detention of under trial prisoners, unsatisfactory living condition and allegations of indifferent and even inhuman behavior by prison staff has repeatedly attracted the attention of critics over the years. Unfortunately, little has changed. There have been no worthwhile reforms affecting the basic issues of relevance to prison administration in India.

– (Justice A N Mulla Committee, 1980-83)

Isuues of concern regarding prisoners in India

The Hon’ble Supreme Court of India in the case of Rama Murthy V state of Karnataka[21] specified 9 problems that the Indian Prisons are afflicted with. Those being: –

• 80% prisoners are under trials
• Delay in trial.
• Even though bail is granted, prisoners are not released.
• Lack or insufficient provision of medical aid to prisoners
• Callous and insensitive attitude of jail authorities
• Punishment carried out by jail authorities not coherent with punishment given by court.
• Harsh mental and physical torture
• Lack of proper legal aid
• Corruption and other malpractices.

Solution to those problems. Worldwide and in India

A sentence of imprisonment constitutes only a deprivation of the basic right to liberty. It does not entail the restriction of other human rights, with the exception of those which are naturally restricted by the very fact of being in prison. Prison reforms are necessary to ensure that this principle is respected, the human rights of prisoners protected and their prospects for social reintegration increased, in compliance with relevant international standards and norms.

In order for a prison system to be managed in a fair and humane manner, national legislation, policies, and practices must be guided by the international standards developed to protect the human rights of prisoners. Prison torture in all forms is banned by the 1948 Universal Declaration of Human Rights (UDHR), the 1949 Geneva Conventions (signed 1949), the American Convention on Human Rights (signed 1977), the International Covenant on Civil and Political Rights (signed 1977), and the United Nations Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (signed 1988).

Prison authorities have a responsibility to ensure that the supervision and treatment of prisoners is in line with the rule of law, with respect to individuals’ human rights, and that the period of imprisonment is used to prepare individuals for life outside the prison following release. But often national legislation and rules relating to the management of prisons are outdated and in need of reform

Human rights of prisoners can be enforced through various methods some of which are listed below,

Prison Welfare Schemes

Prison welfare schemes should be introduced in prisons all around the world so that some productive work is done by the prisoners so that they do not indulge in other nefarious activities while they are in jail and utilize their time in doing some erstwhile activity. The jail authorities help the prisoners or inmates, as referred by jail authorities, to conduct themselves in a better way which helps them lead a better life after their release. The atmosphere provided by the jail authorities compels the prisoners to work which diverts their mind from other mischievous things.

• The prisoners can also participate in games and sports activities within the. For example, sports fest is organized during winter sports festivals, which are popularly known in the jail as “Tihar Olympics”[22]. Drug de-addiction centers can be opened up in every prison so that the drug abuse and drug addiction of the inmates can be curbed so that they can live a better life after prison.
• Prisoners can be made to work in various factories so they understand the importance of work and inculcate these principles in their life outside prison too.
• Recreational facilities can be given to the inmates such as vocational training, education both for adults and formal education, computer courses, games and competitions are held every now and then, also yoga and meditation, creative art therapy, painting etc. These recreational facilities help the inmates to change their behavior and become good citizens.
• Job Placement should be provided to the prisoners so that they can earn their dignity back in the society which they lost when they were arrested.
• The inmates can not only prepare eatable goods but also shirts, carpets, khadi clothes, etc. Other than this a few inmates can be allocated creative work like making furniture, showpieces like small temples, flower vases, braille books for the blind, wooden chairs, tables etc. These goods can not only be sold but can also be used by the inmates.
• Such types of programs should not be optional and this should be strictly enforced by the jail authorities. Every inmate has to be involved in it. This motivates the inmates to live a better life after the end of their term and also these programs help in bringing out gems from people who had sunk into the deep coal mine of crime.

Healthcare

• Equivalence of healthcare and the right to health is a principle that applies to all prisoners, who are entitled to receive the same quality of medical care that is available in the community. However, this right is rarely realized in prisons, where usually healthcare services are extremely inadequate. Prison health services are almost always severely under-funded and understaffed and sometimes non-existent.
• The right to health includes not only the access to preventive, curative, reproductive, palliative and supportive health care but also the access to the underlying determinants of health, which include: safe drinking water and adequate sanitation; safe food; adequate nutrition and housing; safe health and dental services; healthy working and environmental conditions; health-related education and information and gender equality.
• Improved prison management and prison conditions are fundamental to developing a sustainable health strategy in prisons. In addition, prison health is an integral part of public health, and improving prison health is crucial for the success of public health policies.
• Thus, we should[23], in confluence with advocates and social activists working all across India aim at getting prisoners released, especially indigent ones, who are or have been undergoing trials and have been languishing in the prison for a long period of time. For this purpose, we can help the poor prisoners in economic and social ways by filing bail applications, filing for surety bonds and in cases where the indigent prisoners are unable to pay for the same, by providing for monetary assistance in collaboration with NGO initiatives all over India.

The prisoners who are in prison for long periods of time need constant care and support because they do not lose their humanity by committing a crime. They are endowed with and deserve an equivalent amount of human dignity and respect. The prisoners need to be visited regularly to ease them of their rigorous prison life and need to be talked to about the problems that they are facing. Also educational, rehabilitation and mental health counseling can be provided to the prisoners.

The prison is supposed to be for a reformatory purpose. However, the entire purpose fails when the prisoners are denied the very rights that are fundamental to their being a human being. Thus, we should take steps to ensure that their basic human rights are not infringed and that they live with dignity, because, after-all, they are humans too.

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References

[1] Article 1 of the Universal Declaration of Human Rights

[2]  Justice V.R. Krishna Iyer.

[3] Article 21 of the Constitution of India.

[4] Universal Declaration of Human Rights, 1948

[5] https://www.hrw.org/publications

[6]   Article 14-18 of The Constitution of India,1950.

[7]   Article 19-22 of The Constitution of India, 1950.

[8]   Article 23-24 of The Constitution of India, 1950

[9] Article 25-28 of The Constitution of India, 1950

[10] Article 29-30 of The Constitution of India, 1950

[11] Article 32 of The Constitution of India, 1950

[12] (1994) 4 SCC 260

[13] Selvi v. State of Karnataka; (2010) 7 SCC 263

[14] (1980) 3 SCC 488 W.P. (C) No. 406

[15] The Constitution of India, 1950

[16] Ibid footnote 9

[17] The Constitution of India, 1950.

[18] (1994) 4 SCC 395

[19] Charles Shobraj vs. Superintendent, 1978

[20]  NHRC, 1993

[21] (1997) 2 SCC 642

[22] http://www.delhi.gov.in/wps/wcm/connect/lib_centraljail/Central+Jail/Home/Reformation

[23] Human Rights Law Network

In this article, P Mohan Chandran who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Concept of Acquiescence in IP litigation in India.

CONCEPT OF ‘ACQUIESCENCE’ IN IP LITIGATION IN INDIA

In today’s world of ‘passing off’ and ‘infringement’, you must be extra vigilant in protecting your intellectual property (IP). You just cannot relax by merely filing an application or obtaining a registration, which may just be the first step in a long battle ahead. Whenever it comes to your cognizance that someone else is using your trade mark (TM), never let it go by easily because if you fail to take an action soon, you will be unable to act on it ever unless you are fortunate enough to prove fraudulent usage on part of the other party or person. This article aims to decode the concept of ‘acquiescence’ with respect to TM infringement with the help of the judicial cases in this matter.

WHAT IS ‘ACQUIESCENCE’ IN IP LAW?

Acquiescence implies your passive consent to allow another person to use your registered TM despite knowing that someone else is using your TM. So, once this ‘passive consent’ is not challenged by you within a statutory limit of five years, you lose the opportunity to sue the other party for infringement.

What the Law States

 “If a trader allows another person who is acting in good faith to build up a reputation under a trade name or mark to which he has rights, he may lose his right to complain, and may even by debarred from himself using such name or mark”.[1] 

According to section 33 of the Trade Marks Act, 1999, the other user can take up the defense of acquiescence against TM infringement provided, he has adopted and used the TM in good faith. Here, good faith implies ignorance or lack of knowledge on part of the other user of the existence of the TM infringed by him. However, the scope of this section has been challenged on several occasions. There is still plenty of uncertainty whether this doctrine can deny relief of permanent injunction.

What the Courts Say

If the owner of a TM, even after being aware of the use of his TM by another, fails to take any action against the other user and instead allows him to invest in publicizing his TM and expanding his business over a period of time, then the owner of the TM may not be entitled to the remedy of injunction against the other user of his TM, which he could otherwise bring upon to restrain the other user from the use of his TM. According to the TM law, such conduct of the TM owner conveys an ‘acquiescence’ i.e., implied consent by the TM owner in the use of his TM by the other user.

However, there is an exception to every rule and this one, too, has an exception. Where the other user has applied for registration of ‘your TM’, or for something similar, fully cognizant of the fact that such a TM already exists and you failed to take any action for a period of five years against him, then as per the law, you still have a right to sue the other user as long you prove the mala fide intentions of the defendant. The assumption of ‘good faith’ in such cases is not applicable, as there is clear dishonesty on the part of the defendant. In such cases, the court would well be justified in concluding that the defendant had an intention to commercially benefit from the plaintiff’s name and reputation. This has been the judicial trend in India and continues to be so as held in the case of Emcure Pharmaceuticals Ltd. vs. Corona Remedies Pvt. Ltd., where the High Court of Bombay upheld that “a mere failure to sue without a positive act of encouragement is no defense and is no acquiescence.” 

The judiciary in India has always acknowledged the fact that that a mere procrastination by the owner of a TM in filing a suit against the unauthorized use of his TM by the other user does not indicate the owner’s acquiescence in the use of his TM by the other user.

‘ACQUIESCENCE’ PRIOR TO THE TRADE MARKS ACT, 1999

 Before the enactment of the Trade Marks Act 1999, defense of ‘acquiescence’ was not clearly established under the Trade and Marks Act, 1958, or under the Trade Marks Act 1940, but still the other user of the TM used it as a defense against the owner of the TM under the relevant provision that referred to ‘acquiescence’ by the owner of the TM under the TM law applicable at that time. For instance, legal opinion allowed the other user of the TM to take the defense of ‘acquiescence’ within the expression ‘special circumstances’ in section 10(2) of the Trade Marks Act, 1940, which read as under:

Sec.10 (2): “In case of honest concurrent use or of other special circumstances which, in the opinion of the Registrar, make it proper so to do he may permit the registration by more than one proprietor of trade marks which are identical or nearly resemble each other in respect of the same goods or description of goods, subject to such conditions and limitations, if any, as the Registrar may think fit to impose.”[2] 

Later, when Trade Marks Act, 1940 was revoked and Trade and Merchandise Marks Act, 1958 was effectuated, the other user took the defense of ‘acquiescence’ against the owner of the TM within the expression ‘special circumstances’ under clause (1) of sub-section (b) of Section 30 of the Trade and Merchandise Marks Act, 1958, which read as under:

Sec.30. “Acts not constituting infringement: (1) Notwithstanding anything contained in this Act, the following acts do not constitute an infringement of the right to use of a registered trade mark – (b) the use by a person of a trade mark in relation to goods connected in the course of trade with the proprietor or a registered user of the trade mark if, as to those goods or bulk of which they form part, the registered proprietor or the registered user conforming to the permitted use has applied the trade mark and has not subsequently removed or obliterated it, or has at any time expressly or impliedly consented to the use of the trade mark.”[3] 

The Trade and Merchandise Marks Act, 1958, has been replaced by the Trade Marks Act, 1999. The Trade Marks Act, 1999, which came into force in 2003, has made a clear provision for the defense of ‘acquiescence’ for the other user of the TM against the owner of the TM under sec.33 of the Act.

Sec.33 of the Trade Marks Act, 1999 provides for the defense of ‘acquiescence’ to the other user of the TM against the owner of the TM and is an improvement over the earlier reference to the acquiescence within the statutory provision under the Trade and Merchandise Marks Act, 1958 and Trade Marks Act,1940. Sec.33 of the Trade Marks Act, 1999 establishes the defense of ‘acquiescence’ to the user of the TM against registered owner of the TM with more clarity.

‘ACQUIESCENCE’: NOT FOR THE FRAUDULENT OTHER USER 

The current Trade Marks Act, 1999 – according to sec.33 – clearly provides that the other user of the TM can take the defense of ‘acquiescence’ against the owner of the TM, if he has used the TM in good faith. It is to be noted that even before the enactment of the Trade Marks Act, 1999, while dealing with the defense of ‘acquiescence’ taken by the other user of the TM, judicial opinion in India had firmly established that there is no scope for the doctrine of ‘acquiescence’ where a fraud is involved. The Indian judiciary had persistently held that for the defense of ‘acquiescence’ under TM law, another pre-requisite is that the other user must have used the TM in ‘good faith’ and in total ignorance of the title of the owner of that TM.

The Indian judiciary has clearly established that the other user may prove that the owner of the TM failed to take action even though he was aware about the unauthorized use of his TM, and by his conduct encouraged the other user to use his TM, yet the other user cannot claim the benefit of the defense of ‘acquiescence’ if he is unsuccessful in proving that he had used the TM in good faith and in complete ignorance that the owner had already adopted the TM.

‘ACQUIESCENCE’: ‘DELAY’ COUPLED WITH ‘IMPLIED CONSENT’

When we trace back judgments of the Indian courts since the beginning, i.e., even before the enactment of the Trade Marks Law in India, we discover that judicial opinion in India had firmly established that simple delay by the owner of a TM in filing the suit against the unauthorized use of his TM by the other does not indicate owner’s acquiescence in the use of his TM by the other. For the defense of acquiescence against the owner of TM, the other user of the TM must prove that the owner of the TM, apart from procrastinating in taking action against the unauthorized use of his TM by the other user, also encouraged him to use his TM by his conduct.

In the case of Kanungo Media Pvt. Ltd. Vs. RGV Film Factory, 2007 (34) PTC 591 (Del), it was held that delay in taking action implies acquiescence and that the TM owner’s silence in claiming his rights amounted to a waiver of his rights.

In the case of Ramdev Food Products Pvt. Ltd. vs. Arvindbhai Rambhai Patel and Others, 2006, (33) PTC 281 (SC), the Supreme Court held that ‘acquiescence’ includes an element of delay, when a party allows the other to violate his right and expend money, and the conduct of the party is such that it is inconsistent with the claim for exclusive rights for TM. Mere silence or inaction does not constitute acquiescence. Action and conduct of both parties should be scrutinized to establish whether it would be unfair and arbitrary to prevent the defendants on the ground of delay. Loss of time, unless compounded with other factors, is usually not considered as a bar to grant injunction.

BURDEN OF PROOF ON THE OTHER USER

An analysis of several judicial judgments over a period of time proves that the person claiming the defense of acquiescence has the burden of proving the following:

1. That the TM holder was aware of the infringing activity.
2. That the TM holder was involved in an activity of encouragement – ‘encouragement’ here includes things such as inaction by the TM holder to send any specific notice of infringement to the other user.
3. That the other user has acted upon such act or omission to the detriment of the TM holder.

SELECT CASE LAWS ON ‘ACQUIESCENCE’ IN IP LITIGATION

Case Law-1:

Khoday India Limited vs The Scotch Whisky Association and others (Civil Appeal 4179 of 2008)

Date of Judgment: May 27, 2008

In this case, the issue was whether the TM ‘Peter Scot’ should be deleted from the Register of Trademarks (section 46 of the Trademarks Act provides for rectification of the register).

The following are the brief facts of the case:

In 1968, Khoday India Ltd (KIL) began manufacturing ‘Peter Scot’ whisky, and in 1974 got its TM registered. After 13 years, the Scotch Whisky Distillers Association (SWDA) – an industry body of distillers, blenders and exporters of Scotch whisky – moved the Assistant Registrar Trademarks for cancellation of the registered TM ‘Peter Scot’ because the TM was deceptively similar to a foreign mark (Scotch whisky).

The Supreme Court bench, comprising Justice Sinha and Justice LS Panta, gave the verdict in favor of KIL and said they could continue being the registered proprietor of the ‘Peter Scot’ TM. One of the factors that could have influenced the court to such a judgment was the delay or acquiescence by SWDA, i.e., SWDA waited for 12 long years to move the Registrar for deletion of the said TM, although it was aware about registration of the ‘Peter Scot’ TM as early as September 1974. The court held that because of the peculiar facts and circumstances of the case, the action of the respondents was barred under the principles of acquiescence/waiver.

To sum it up, the point driven home by Justice Sinha is that if you delay enforcing your rights, you run the risk of sending an indirect and wrong indication to the other user that you have either waived your rights or acquiesced it in the infringement.

Case Law-2

SRF Foundation & Another v. Ram Education Trust (1980/2014)

Date of Judgment: May 11, 2015

Facts of the Case:

‘SRF Foundation’ is the plaintiff No.1 in this case. It is a registered non-profit society involved in numerous social and community activities, including administering schools such as ‘The Shri Ram School’. The name/mark ‘Shri Ram’ has been used by the plaintiff No.1 since 1988, who has had a good reputation. While plaintiff No.2 has been involved in instituting schools in India and overseas. With this reputation, the plaintiffs achieved their objective to overcome the shortage of good schools by entering into an agreement with ‘Educomp Infrastructure and School Management’ to establish five schools under the name ‘The “Shriram Millennium School’. ‘Ram Education Trust’, the defendant, started “Shri Ram Global Pre-School” beside the plaintiff no. 1’s school in Gurgaon. The plaintiffs filed for the registration of TM, but subsequently withdrew and the defendant instead registered their TM. The plaintiffs, being the real brother of the defendant’s trustee, sent emails to his brother to caution the defendant of the reputation and goodwill of the name/mark and to prevent using it. However, the defendant continued to use the name/mark ‘Shri Ram’. The plaintiffs advertised declaring that the name/mark of the school does not belong to them. Subsequently, the defendant’s lawyer issued a legal notice to the plaintiffs to retract the advertisement and to tender a public apology. The plaintiffs filed a suit for permanent injunction, ‘passing off’ and account of profits in the Delhi High Court, apart from filing an application seeking interim injunction.

Arguments by the Plaintiffs

The plaintiffs argued that the inherent right to use the name ‘Shri Ram’ rested with each of the members of the Shri Ram family, subject to such right being restricted to its domain of business and not violating upon others rights. They had no objection if the said TM was used by the defendant in other activities or services, but not this activity, as they had been using the name/mark ‘Shri Ram’ for about two-and-a-half decades, the reason being they had goodwill in these services, contributing to monopoly over the name / mark. Though the plaintiff and the defendant belonged to the same family, yet the use by the defendant hampered the plaintiff’s reputation. Due to passing-off the services of the plaintiffs by the defendant, the public were ambiguous about which school belonged to whom. Thus, there was no authorized use of the name/mark. The use of ‘Shri Ram’ in the name/mark caused confusion and was deceptively similar.

The plaintiffs further contended that there was a prior use of the name/mark by them, as the name/mark had been used by them widely for several years before the defendant.

Arguments by the Defendants

The defendants argued that there were parallel rights to use the name/mark, and hence, the defendants were protected under the legacy of the Late Shri Ram Family. The defendant and the plaintiff shared a common family name. Therefore, there contended that there could not be a claim of any proprietary right or monopoly by the plaintiffs. The defendant’s schools are ‘Shri Ram Global School’, ‘Shri Ram Centennial School’, and ‘Shri Ram Global Pre-School’ which are unique from the plaintiffs, which are ‘The Shri Ram School’ and ‘Shri Ram Millennium School’, in terms of different suffixes and logos. The defendants, therefore, argued that there was an authorized use of the TM by the defendants, and the plaintiffs could not have monopoly rights over the TM ‘Shri Ram’. The defendants also further contended that the name/mark was not deceptively similar or confusing as it could be identified because of different logos and suffixes.

The Elements of Passing-off

To succeed in a suit on passing-off, four main requirements should be satisfied by a party who intends to seek the relief of injunction:

1. Prior use
2. Claimant of the right must be the owner of the TM
3. Confusion and deception
4. Delay, if any.

Regarding the first and the second requirements, the defendant already approved the prior use by the plaintiffs, but denied the exclusive right over the mark/name. The defendant informed the court that no such written document existed that stated that the plaintiffs had an exclusive right. However, the plaintiffs had a reputation and no other family member, though involved in contribution to education, had acquired such goodwill, because of the establishment of Mawana School initiated by the Shri Ram family relatives before the use by the plaintiffs was limited to the place, as pointed out by the plaintiffs and, thus, considered by the court.

Regarding the third requirement, it was held that the defendant adopted the TM even though the plaintiffs had been using it for about two-and-a-half decades, thus, creating confusion by starting school with the name/mark ‘Shri Ram’ in the same locality as that of the plaintiffs. Therefore, the name/surname, being unique, is protected as per law.

The delay of about three years in approaching the court was because the plaintiffs, though they were aware about the use of ‘Shri Ram’ by the defendant, did not take any action against them. Thus, there was a procrastination for a significant period of time, leading to the applicability of principle of acquiescence. The reason given by the plaintiffs was of proximity of relation between the founding members of the plaintiff and defendant as they were real brothers, and the plaintiffs tried to caution and resolve the matter amicably.

The Court Observation & Judgment

The court observed that the parties had ‘Shri Ram’ in common and the same was an essential part of their services. It was held in Himalaya Drug Company v/s M/s SBL Ltd., that if the essential features of the TM are same, then the logos are deceptively similar. The TM ‘Shri Ram’ was also used by the defendant like the plaintiff and, therefore, it was also deceptively similar.

The court ordered that the defendant would be allowed to use the mark ‘Shri Ram’ temporarily, but within six months they had to use the disclaimer in their signboard and all stationery material that they had no connection with the plaintiff’s school. They were also restrained from using the TM ‘Shri Ram’ in relation to schools which were under construction. Further, they were directed to give bona fide description that the school was run by Vivan Bharat Ram under the legacy of his grandfather, Shri Ram.

CONCLUSION 

In case of infringement of a registered TM, the owner of the TM can not only prevent the unauthorized use of his TM by the remedy of injunction against the other user, but also can enforce the right to oppose the registration of his TM by the other user under the TM law. But the owner of a TM is not entitled to claim the benefit of these remedies if he deliberately fails to take action against the unauthorized use of his TM by the other user and by his inaction encourages the other user to invest in widely publicizing his TM and expand his business over a period of time. Such an inaction by the owner of a TM despite being aware of the use of his TM by the other person over a period of time implies ‘acquiescence’, i.e., implied consent of the owner of the TM in the use of his TM by the other user.

On the other hand, it is also an established rule of law that the other user of the TM can take the benefit of the defense of ‘acquiescence’ against the owner of the TM only if he establishes that he had used the TM in good faith and in total ignorance of the title of the owner.

It has been observed that before the enactment of the Trade Marks Act, 1999, the judicial opinion in India had firmly decreed that for the defense of ‘acquiescence’ against the owner of the TM, the other user must establish all the four conditions as under:

1. ignorance of the other user about the owner’s right to title to the TM
2. knowledge of the owner of the TM that the other user is using his TM
3. no objection from the owner of the TM despite being aware of unauthorized use of his TM by the other user, and
4. the other user used it over a period of time.

All the aforesaid pre-requisites are statutorily established under sec. 33 of the Trade Marks Act, 1999, which is currently applicable in India. It is also resolved that although under the TM law there can be only single mark, single source and single owner of a TM, yet the ‘acquiescence’ of the owner of a TM in the use of his TM by the other user confers a legal right upon the other user to use not only TM simultaneously with the owner of the TM, but also to apply for the registration of the TM in his name under the TM law in India.

BIBLIOGRAPHY & REFERENCES

[1] Dr. Meenu Paul, “Acquiescence” of Proprietor of a Trade Mark in the Use of His Trade Mark by the Other: “Meaning” and “Consequence” Under the Trade Marks Law in India, NALSAR Law Review, Vol.3, No.1, 2006-07, https://www.nalsar.ac.in/pdf/Journals/Nalsar%20Law%20Review-Vol.%203.pdf.

[2] The Trade Marks Act, 1940, http://www.wipo.int/edocs/lexdocs/laws/en/in/in128en.pdf.

[3] The Trade and Merchandise Marks Act, 1958, http://www.wipo.int/edocs/lexdocs/laws/en/in/in005en.pdf.

1. Devina Choubal, Denial of Injunction on the Grounds of Acquiescence and Delay by Plaintiffs: SRF Foundation v. Ram Education Society, (Aug. 20, 2015, 1:38 PM), https://iiprd.wordpress.com/tag/delay-and-acquiescence/.

2. Swati Bhanot, Court Rules on Passing Off: Denies Injunction Due to “Delay” and “Acquiescence”, (Sept. 18, 2015), https://www.candcip.com/single-post/2015/09/18/INDIA-Court-Rules-on-Passing-Off-Denies-Injunction-Due-to-%E2%80%9CDelay%E2%80%9D-and-%E2%80%9CAcquiescence%E2%80%9D.

3. Shamnad Basheer, Indian Supreme Court on an “IP” Roll: “Scotch” Whisky Denied Protection While Music “Compulsory Licensing” Scope Expanded, (May 28, 2008), https://spicyip.com/2008/05/indian-supreme-court-on-ip-roll-scotch.html.

4. Durga Bhatt, The Law on Acquiescence: Wake Up Before It’s Too Late! (Sept. 18, 2014), http://www.selvamandselvam.in/blog/the-law-on-acquiescence-wake-up-before-its-too-late/.

5. Meenu Paul, “Acquiescence” of Proprietor of a Trade Mark in the Use of His Trade Mark by the Other: “Meaning” and “Consequence” Under the Trade Marks Law in India, NALSAR Law Review, Vol.3, No.1, 2006-07, https://www.nalsar.ac.in/pdf/Journals/Nalsar%20Law%20Review-Vol.%203.pdf.

6. Intellectual Property & Information Technology Laws News Bulletin, Vol.III, Issue 2, (Oct. 2010), http://www.manupatrafast.in/NewsletterArchives/listing/IP%20IT%20Vaish/2010/October-2010.pdf.

7. Gunjan Paharia & Komal Kaul, Indian Courts on Trademark Infringement: An Overview, (June. 15, 2015), INTA Bulletin, Vol. 70, No.11, http://www.inta.org/INTABulletin/Pages/IndianCourtsonTrademarkInfringement_7011.aspx.

8. Vijay Pal Dalmia, Guide to De-Mystifying Law of Trade Mark Litigation in India, (Sept. 29, 2010), http://www.mondaq.com/india/x/111142/Trademark/Guide+to+DeMystifying+Law+of+Trade+Mark+Litigation+in+India.

In this article, Vincent Kofi who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses How to start an Event Management Business in India: Process, Compliance, Best Practices, and Relevant Laws.

Introduction

• Currently, according to Getz and Page’s (2016) analysis, the size of the Indian event management industry is about USD 172 million. Broadly, the industry caters to personal, organizational, cultural, and leisure event categories, which can be further categorized into social and corporate events.
• The event management industry in India is at a budding stage and largely unorganized, and it mostly comprises self-employed entrepreneurs and house makers. Getz and Page (2016) further establish that the current growth of the industry is facilitated by the growing company and household incomes, as well as the increasing number and rate of TV and sports events, reality shows, corporate conferences and awards, etc. As people’s incomes grow, people increase their expenditure on parties, weddings, among other social and personal functions.
• There are only a few learning centers providing training related to events management, but from the market trend, the centers are likely to become many as people are becoming aware of the opportunities linked to the industry. This paper discusses how to start an event management business in India, particularly digging into the process, compliance, best practices, and relevant laws.
• However, first, it is important to understand the Indian event management market industry.

The Indian Event Management Market and Industry

• Event management is a very broad market. The market is customer driven since clients have more purchasing power coupled with low brand shifting cost. Although there are not many businesses offering events management services, there is so much competition in the market because of lack of entry barriers.

Accordingly, in Shekhar Singh’s (2014) view, whoever wants to start an event management business in India needs to create a niche for his or her business. For instance, one would choose to specialize in managing marriage or corporate events, or choose to market campaigns. Researching on the niche is very vital because it can reveal about the number of competitors in a specific area of interest, the competitor’s customer base, any unattended areas within the niche, and most significantly, how the competitors bill their clients.

• The corporate market category includes companies as well as charities and nonprofit firms. Based on observation, charities and nonprofit organizations are mostly involved in events meant to increase their public support base and raise money, such as hosting athletic competitions and gala fundraisers.
• There are thousands of this kind of events throughout the year across India (Pai, Sridhar, Badwaik, & Rajeevan, 2015). When they are very large, they need specialized event planning experience. However, it is helpful to start with smaller events as one learns and gains experience to manage larger ones. In addition to nonprofit organizations’ events, there are companies’ hosted events, which include conventions, trade shows, holiday parties, staff and investor meetings, and company picnics.
• Since there is a big market for these kinds of events, it would be wise considering them when one is deciding on the niche into which to venture. The other kinds to consider are social events, which include birthdays, weddings, sweet 16 parties, anniversary parties, reunions, etc. Depending on an entrepreneur’s goal and capability, he or she may choose to manage all types of events or create a niche in one or more of the types. With the proliferation of social media and its influence, the market for anniversaries, birthdays, and other social events is likely to continue growing. This market will mostly comprise the people getting married, parents lionizing golden anniversaries, and others commemorating their wedding anniversaries.
• Most of the event planners rarely work 9-to-5. Events are mostly organized in the evenings, holidays, weekends, and on specific seasons. It then follows that the amount of time an entrepreneur spends managing events depend on the specialization chosen. Almost half of the Indian event management industry is unorganized. However, due to the ubiquity of newspapers and TV channels, advertisers have resolved to using experiential marketing, where they connect with their consumers through events rather than merely on media.
• This way, Lee and Chhabra (2015) argue, the advertisers are getting better and faster results. This approach is intensely practiced by India’s largest event management at the present, Wizcraft. With the improving economy, the live entertainment arm of event management is equally growing and is likely to grow even faster as consumers are growingly becoming discerning. In fact, the discernment is growing from the TV channels increasing reality show content to about 40% (Malur & Lakshmikantha, 2014). These shows broadcast singing and dancing competitions, for instance, which need event management services.
• Because of the promising event management industry in India, there is a significant number of international brands setting camp in the country as investors. For instance, in the recent past, the international mega-brand WPP Digital entered the Indian market through Encompass Events, while Interpublic group entered through investing in Lintas India. There has been a recent joint venture amalgamating Viacom and Network 18 and Viacom—both formed Viacom 18, which is a well performing entertainment and event platform (Sulehria, 2017).
• With the increasing competition, even from the international brands, the local event management firms are becoming more professional and creative. Following the understanding of the current Indian events management market, it is necessary to understand the process, compliance, best practices, and applicable laws.

Process, Compliance, Best Practices, and Applicable Laws

First in the process of venturing into events management is acquiring relevant skills or knowing a way of getting someone with the experience and expertise to help the business grow faster. However, this may not be necessary if an entrepreneur has worked elsewhere and is prepared to apply the acquired planning experience in the new venture.

• Being able to do this, just like in any other business, a prospective entrepreneur must have some critical skills. For instance, to succeed in the market, an entrepreneur needs to be a good decision-maker to be able to evaluate options. The entrepreneur also needs to be able to come up with new and innovative solutions to problems, which also means he or she must have leadership qualities (Zakarevičius, & Župerkienė, 2015).
• To start off well, it is safer basing one’s specialization or choice of niche on personal experience. For instance, if one’s background is corporate, then it is safer specializing on corporate events at first, such as organizing corporate sporting events, and later diving into newer niches.
• An entrepreneur seeking to starting an events management business needs to have impregnable analytical aptitude and an eye for detail. The person needs to be able to market his or her services while selling his or her ideas. When money starts flowing in, the businessperson needs to know how to manage it as he or she tracks financial transactions.
• According to Zakarevičius and Župerkienė (2015), such a person should be a good time manager and able to prioritize work related tasks. The person must be able to motivate himself or herself, as well as others and know how to engage clients and close sales. In other words, the entrepreneur must be able to understand team formation and manage people successfully. Acquiring these skills faster needs one to train and get certified, which will demonstrate one’s competitive distinction in terms of professional experience, knowledge, skills, and capacity to plan and manage an event successfully.

The second in the process is knowing the right people.

• Besides having relevant skills and knowing exactly what to do in running an event management business, whom one knows is equally important, especially in a market that is becoming very competitive. Getz and Page(2016) claim that knowing the right people in the industry helps in equipping one with practical information in starting and running the event management business.
• Accordingly, the entrepreneur interested in the industry can use social media to find relevant people. For instance, LinkedIn would be important in finding and joining appropriate groups and participating in relevant discussions that would help in starting and running the business.
• In addition, the entrepreneur needs to be attending exhibitions, seminars, and trade shows to expand his or her contacts and network. It is also important to attend events managed by the people already in business to create more contacts, including of suppliers, and to create a list of potential sponsors.

After acquiring the necessary skills, knowledge, and contacts, the third step in the process is to plan.

• Locally, one can choose to incorporate as a sole proprietorship, partnership, or private (or public) company (Singh, 2016). When choosing a business structure for an event management business, one needs to consider the structure’s liability, funding, taxation, and ownership and control. Differently said, making the best choice demands balancing various factors, such as the business’s nature and objectives, degree of control the owner desires, amount of capital the business requires and the available and preferred sources of funding, tax implications, and liabilities the structure will bear.
• Creating a business plan will lead to the fourth stage in the process, which involves registering a business entity. Registration at this stage is important because an entrepreneur needs to secure a business name before using it in many other documents and in marketing. In India, one can choose to register a business entity through Ministry of Corporate Affairs (MCA) or Registrar of Firms, or on the Startup India portal or mobile application. There are many business structures from which to choose depending on one’s business needs and objectives.
• Mallen and Adams (2017) advise that the information will be important because knowing one’s audience and competition helps in finding one’s niche and deciding on how and where to promote his or her services.
• The templates provided by banks usually comprise all financial modeling templates that one would need to create year on year projections. The templates sourced from banks will also be very important in case one needs to raise business funds from a bank. The development of a business plan will need the inclusion of the market information obtained from the research in the previous steps.
• An events management firm or entrepreneur needs a good business plan. One of the areas to start searching is banks—banks would be having templates for a business plan of events management.
• Mallen and Adams (2017) advise that the information will be important because knowing one’s audience and competition helps in finding one’s niche and deciding on how and where to promote his or her services.
• The templates sourced from banks will also be very important in case one needs to raise business funds from a bank. The development of a business plan will need the inclusion of the market information obtained from the research in the previous steps.
• An events management firm or entrepreneur needs a good business plan. One of the areas to start searching is banks—banks would be having templates for a business plan of events management. The templates provided by banks usually comprise all financial modeling templates that one would need to create year on year projections.
• If one chooses to incorporate an events management business as a partnership, he or she shall need to be aware that the formation will be governed and regulated under the Indian Partnership Act, 1932. The Limited Liability Partnership Act, 2008 governs and regulates LLPs, while the Companies Act, 1956 governs and regulates companies (Singh, 2016). One is not compulsorily required to register an event management business if he or she chooses a partnership structure.
• However, without registering and being governed and regulated by the Indian Partnership Act, 1932, a partner cannot litigate the business or any other partner to the firm. In addition, neither the business nor its partners can sue a third party. Finally, the business cannot arrogate set off against a suit made by a third party. One cannot start and run a business as an LLP or a company without registering with Registrar of Companies. In addition, for companies, a Certificate of Incorporation is required as conclusive evidence for legal existence (Singh, 2016).
• If the entrepreneur chooses to register as a partnership firm, he or she needs to understand that the firm is not a separate entity from its partners and that it cannot be listed on the stock exchange. While an LLP is a distinct legal entity under the Limited Liability Partnership Act, 2008, it cannot as well be listed on the stock exchange. Partnership firms do not have perpetual succession since their perpetuity depend on the partner’s will.
• However, LLPs and companies have perpetual succession and partners or members may come and go. There are no legal capital requirements if the entrepreneur chooses to start the events management business as a partnership firm or LLP, but as a private company, the entrepreneur must have a minimum paid up capital of Rs.1 lakh, while a public company needs at least Rs.5 lakhs (Chakraborty, 2013).

• In terms of charter documentation, Perry-Kessaris (2016) records, a Partnership Deed is a charter of a partnership business structure that describes its scope of operation, and the partners’ rights and duties.
• An LLP’s charter is an LLP Agreement, which describes its scope of operation and the partners’ rights and duties vis-à-vis LLP’s. A company’s charter is its Memorandum and Article of Association, which also denotes its scope of operation.
• The entrepreneur also needs to understand that if he or she chooses to incorporate as a partnership firm, he or she must be in company of one (1) to nineteen (19) more partners.
• If he or she chooses an LLP structure, he or she needs at least one (1) more partner, but there is no limit on the highest number of members to involve.
• However, a private company legally requires between two (2) and fifty (50) members, while a public company needs at least seven (7) members.

After registering with relevant authorities and securing a name with which to do business, the fifth step in the process is to define exactly what one is going to offer in the events management industry.

• The exact service is dependent on, among other things, the findings of research on the target market and competitors. Based on the findings, for instance, registered events management firm would decide to offer all event planning services under one roof, including registration, hiring venues, promoting events, catering, etc. Otherwise, the firm would specialize in one or two niches. The final stage in preparing is to get relevant papers in order.
• Accordingly, one needs to understand the legal procedures involved in completing the required paperwork. A firm should check to ensure it has all the required licenses and certificates. If possible, the event management firm needs to have business insurance for its employees and the public, especially the people attending the events it organizes and hosts as Hopkin (2017) advises.
• Ahead of planning and hosting any event, an event management firm must seek a set of licenses for compliance and best practices. For the events hosted in hotels, most hotels give event organizers a list of licenses that they must have and hand over to the hotel at least a day before the event. Hypothetically, according to James (1982), every event needs a No Objection Certificate from the Additional Collectors office, a No Objection Certificate from the Fire Brigade, a No Objection Certificate from the Local Police Station, a No Objection Certificate from the Traffic Police Department, a Police Commissioners Note, and Rangbhoomi License.
• If an event has a DJ, then the event management firm needs to add a Phonographic Performance Ltd. License and a Novex License except when the music played is produced by Yashraj Films. Planning and hosting a Live Performance at an event requires an Indian Performing Rights Society Ltd. License.
• If alcoholic beverages are used in the event, then the management needs to have a Liquor License. If the management uses or plans to use a generator at a venue, then a Public Works Department License is required.
• If the event management firm plans to use performers from countries other than India, then a Foreign Artist Permission must be obtained. In addition, the firm needs to submit to authorities the documents required by the law, more especially the performer’(s) copies of passport and visa.
• To get the licenses just described, an event management firm needs to submit to authorities a No Objection Certificate from the venue, the venue’s floor plan, and a Letter of Application to the various identified licensing departments (James, 1982).
• The letter must have a business entity letterhead and be accompanied with an affidavit on a stamp paper. Regarding foreigner artists, in application, the event management business entity needs to submit to authorities the artist’s visa and copy of contract with the entity. It is advisable to get the foreign artistes on business visa rather than an employment visa. If an event involves paid attendants and/or sponsors, the management firm needs an Entertainment Tax directorate.
• In addition to the laws and regulations specific to the event management industry, the event management firm must ensure it does not do anything contrary to India’s supreme law, the Constitution. Closer home, the general business laws must be adhered to ensure compliance and best practices. For instance, the Indian Contract Act of 1872 is still applicable, and it includes such guidelines as those specific to contracts. Since the event management industry is largely about contractors, such as between artists and event planners or suppliers and hotels, the Indian Contract Act of 1872 and newer Acts must be followed closely. In case one chooses a partnership structure for running the business, the Partnership Act of 1932 would be very helpful. India experienced a high economic growth in the start of the 21st century, leading to the passing of the Competition Act of 2002 and the Limited Liability Act in 2008 by the Ministry of Corporate Affairs (Rankin, 2016). These laws serve to push for sustainable competition in markets, promote free trade, hence protect consumer interests, and forbid anti-competitive business activities.
• If the event management firm is a company, it will find the Companies Act of 2013 useful because the law gives guidelines on acquisitions and mergers, shareholding, boardroom decision-making, corporate social responsibility, etc. (Singh, 2016).
• The firm must also understand that the country’s law protects employees as well as employers and consumers. Employees are protected by the Payment of Wages Act of 1936, the 1972 Payment of Gratuity Act, the Payment of Bonus Act of 1965, the Industrial Disputes Act of 1947, and the Industrial Employment Act of 1946. On the other hand, the Indian business laws protecting consumers include the Consumer Protection Act, 1986 and the Consumer Dispute Redressal Forums at national and local levels (Saini & Budhwar, 2014).

Conclusion

India is an emerging market. It is among the biggest and fastest growing economies across the globe today. Accordingly, starting and running any business in India, let alone an events management business, would need investors who can understand some intricate and some simple realities unique to the country, including the government’s evolving policies, revisions to the existing statutes, and the laws enacted recently. While the process, compliance, best practices, and relevant laws discussed in this paper establish the general laws governing a business firm in India, it is important to adhere to local laws. In other words, a business entity must obey the laws of the state and city in which it is incorporated and operates.

References

Chakraborty, I. (2013). Does Capital Structure Depend on Group Affiliation? An Analysis of Indian Firms. Journal of Policy Modeling, 35(1), 110-120.

Getz, D., & Page, S. J. (2016). Event Studies: Theory, Research and Policy for Planned Events. Routledge.

Hopkin, P. (2017). Fundamentals of Risk Management: Understanding, Evaluating and Implementing Effective Risk Management. Kogan Page Publishers.

James, V. G. (1982). Cinema Licensing. Journal of The Indian Law Institute, 24(1), 102- 125.

Lee, W., & Chhabra, D. (2015). Heritage Hotels and Historic Lodging: Perspectives on Experiential Marketing and Sustainable Culture.

Mallen, C., & Adams, L. J. (Eds.). (2017). Event Management in Sport, Recreation and Tourism: Theoretical and Practical Dimensions. Routledge.

Malur, P. G., & Lakshmikantha, D. (2014). Reeling the Reality: A Study on Contemporary Reality Shows and Their Influence on Other Entertainment Program Genres. International Research Journal of Social Sciences, 3(8), 1-3.

Pai, D. S., Sridhar, L., Badwaik, M. R., & Rajeevan, M. (2015). Analysis of The Daily Rainfall Events Over India Using a New Long Period (1901–2010) High Resolution (0.25× 0.25) Gridded Rainfall Data Set. Climate Dynamics, 45(3-4), 755-776.

Perry-Kessaris, A. (2016). Global Business, Local Law: The Indian Legal System as A Communal Resource in Foreign Investment Relations. Routledge.

Rankin, G. C. (2016). Background to Indian Law. Cambridge University Press.
Saini, D. S., & Budhwar, P. S. (2014). Human Resource Management in India. Managing Human Resources in Asia-Pacific, 126-149.

Shekhar Singh, A. (2014). Conducting Case Study Research in Non-Profit Organisations. Qualitative Market Research: An International Journal, 17(1), 77-84.

Singh, B. J. R. (2016). Corporate Social Responsibility in India. International Journal of Higher Education Research & Development, 1(1).

Sulehria, F. (2017). DD and PTV As Victims of Media Globalisation. Asian Journal of Communication, 27(1), 97-112.

Zakarevičius, P., & Župerkienė, E. (2015). Improving the Development of Managers’ Personal and Professional Skills. Engineering Economics, 60(5).

In this article, Dr.V.Ramprasath Manohar who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Lawsuits on Patent Infringements In India And Pharma Patents.

Introduction

Patent gives exclusive rights to the owner to treat his intellectual property well by protecting it from others. Therefore enforcement of patent right is the major function of Indian Patent Act 1970. Whenever any patent applicant or patent right holder is aggrieved in enforcing his patent right under Indian patent act, he can approach the appropriate judicial authority to enforce his patent rights by way of filing law suits for infringement. This essay illustrates the patent jurisprudence in India with various case studies on law suits on patents infringement and pharma patents.

Patent Jurisprudence in India

• The Indian Patent Act 1970 is an act which covers the patent jurisprudence in India. This act was amended in 1999, 2002 and 2005 to adhere to the WIPO and TRIP guidelines on Patents. With these amendments, there is a paradoxical change in patent regime in India.
• The process patent of Indian patent regime is extended to product patent regime and the drugs, agriculture, and pharmaceutical sectors also being covered in new patent regime. Since 2005 amendments, there are many litigations on patent right infringements and therefore patent jurisprudence is evolving with various judgements on many patent related cases by High court and Supreme court.
• Indian patent law protects both product patent and process patent.
• In case of process patent infringement, the burden of proof lies on the defendant and in case of product patent infringement the burden lies on the patentee. It is important to have a strong IP regime in order to promote innovation and also to attract new investments in India. Further strong IP regime also promotes research and development in India and consumer will also be benefitted with new innovative products.

To know more about Patents please visit

Law suits on Patent Infringements

Patent infringement is not defined in Indian patent Act, but patent rights are described in the act. Patent right includes making, distributing, mortgaging, or selling the invention in India. Therefore, anything which interferes such patent rights may be considered as infringement of patent rights.  Hence, unauthorized making, using, offering for sale, selling any patented invention, or importing into India of patented invention during the live term of a patent may be considered as patent right infringement. In the initial phase, law suits of patent infringement were dealt with the tradition of civil suits of Indian court and civil remedies were awarded. Over the years, patent jurisprudence evolved and judgements on patent suits are centered on enforcement of rights of patent holder.

Over last 2-3 years number and nature of patent litigation has evolved dramatically. Innovators have not restricted themselves to mere gaining patent protection for their invention, but also aggressively protecting their patent right from being infringed upon by their competitors. Therefore, in recent years, protection and enforcement of patent right are the major points of patent litigation. Further, patent holders are also aggressively litigating to challenge the claim of new patent by their rivals.

Case studies on law suits on patent infringements and pharmaceutical patents in India

Gleevec case of Novartis case

• In this case, Novartis , a swizz based pharma company applied for patent right of its beta crystalline form of Imatinib mesylate( Gleevec). The patent claim was objected by CIPLA and other generic drug producers. The patent claim was rejected by Indian patent office and a writ petition was filed in Hon.
• Madras high court. Novartis has questioned the constitutional validity of 3(d) section of the patent act. Novartis contended that the term ‘efficacy’ in section 3(d) is vague and ambiguous and against article 14 of the Constitution of India. However, Hon. Madras High court dismissed writ petition and upheld the constitutional validity of section 3(d).
• Second appeal was filed by Novartis in Intellectual Property Appellate Board (IPAB) and IPAB has upheld the novel and invention aspect of Novartis claim, but rejected the claim of patentability under section 3(d). This order of IPAB was challenged in the Hon. Supreme court of India by filing an SLP.
• However, in 2013, the Hon. Supreme court of India has dismissed SLP and upheld that the Novartis claim was failing on both the test of invention and patentability as per the provisions of section 2(j), (ja ) (l) and section 3(d) of the patent act.
• The landmark judgement in patent litigation is epitome of patent jurisprudence in India. Because, the judgement of the Hon. Supreme court of India is illustration of balancing between the patent holder right and public right. It was clearly stated that evergreening of patent by patent holder and exploitation of general public and prohibition of competition of rivals are not the intention of the patent act.
• Indeed, the Hon. Supreme court upheld in paragraph 191 of the said judgement clearly stated that section 3(d) is valid and it does not disallow any right to patent on incremental innovation provided that the said incremental innovation fits into test of patentability.

Ericsson vs. Xiaomi case

• In this law suit, Ericsson filed a suit against Xiaomi in India in December 2014 to protect its patent right on the 8 standard-essential patents. An ex-parte injunction on the sale, manufacture, advertisement and import of Xiaomi’s devices was imposed by the Hon. Delhi High court.
• The Hon. Delhi high court injunction order was challenged by Xiaomi before a Division Bench of the Delhi High Court. A temporary order was issued by division bench to allow Xiaomi to resume the sale, import, manufacture, and advertisement of its mobile devices subject to the condition that Xiaomi would only sell devices having Qualcomm chips and royalty of Rs 100 per device would be deposited by Xiaomi.
• In this case, patent right infringement is averted by issuing injunction order against Xiomi to exploit patent rights of Ericcson and also remedies are provided to balance the right of patent holder as well as the user of patent.

Merck vs. Glenmark case

In this case, the Hon. Delhi High court passed injunction against Glenmark for manufacturing the generic drug Sitagliptin and using patented product of Merck Sharp. In this case, the Hon. Delhi High court upheld that there was Prima facie infringement of patent rights of Merck over its patented product sitagliptin and irreparable injury was also found to be caused to patent holder. Hence, balance of convenience is in favour of patent holder ie. Merck. and therefore the Hon. Delhi High court passed injunction order against Glenmark from manufacturing and selling of Zita and Zitamet. There by, patent rights of  Merck was protected and enforced.

Novartis vs. Cipla case

In another patent suit, Novartis filed suit against Indian generic drug maker Cipla from making or selling generic copy of Novartis’s “Onbrez”. In this case, temporary injunction was issued by Hon. Delhi High court against Cipla to protect the patent right of Novartis. The Hon. Delhi High court has cited Roche vs Cipla case, and observed that a strong prima facia case was established and validity of the patent of Novartis was not strongly disputed by Cipla. Further, Cipla’s counter arguments on the basis of “epidemic” or a “public health crisis”, unable to manufacture the same in India by Patentee and high cost of patented drug were not accepted by the Hon. Delhi High court. Therefore, claim of “urgent unmet need” for the drug in India was rejected by Hon. Delhi High court. Hence, the court granted injunction against Cipla to prevent patent infringement of Novartis.

This case is a classic illustration of patent jurisprudence in India to enforce the patent rights in a fair manner and to prevent inappropriate application of exemption clauses under patent act with a vested interest to infringe the patent rights of patentee. Further, the apprehension about the possibility of discrimination between MNC and Indian company in Indian patent regime was proved to be wrong.

SYMED Labs vs. Glenmark Pharmaceuticals case

In another case of SYMED Labs vs. Glenmark Pharmaceuticals, Glenmark Pharmaceuticals Laboratories was allegedly infringing two of SYMED patents: IN213062 & 213063. SYMED filed suit against Glenmerck in Delhi high court.

The court observed that there was a prima facie case in favour of SYMED. Further, the court also observed that protection to the patent processes ought to be granted to the SYMED as damages will not be an effective remedy. Thus, there will be irreparable loss and injury due to the misuse of patents by Glenmerck. Further, the balance of convenience was also found to be in favour of SYMED. Thus the court granted an ad interim injunction restraining Glenmark from manufacturing, selling, offering for sale, advertising or directly or indirectly dealing in the production of Linezolid. Thus, infringement of the SYMED’s registered Patents was effectively remedied by the court.

Vringo vs. ZTE case

• In this case, Vringo and Vringo Infrastructure alleged that ZTE has infringed patent rights of Vringo patent IN200572. A suit was filed by Vringo against ZTE against infringement of patent in the Hon.
• Delhi High court in 2014. In this case an ad interim ex-parte injunction was granted to restrain ZTE from importing, selling, and advertising, installing or operating devices that comprise the infringing components of Vringo. However, ZTE has contested innovativeness of Vringo patent and Hon. High court has appointed commission to look into the technical aspects of patent.
• This case is illustration that the post grant patent objection is also being considered by the Indian patent jurisprudence during the hearing of patent infringement cases. Therefore, patentability and innovativeness of patent may also be tested after grant of patent. This ensures that patent is not only under scrutiny during grant of patent, but also during its enforcement.

Maj. (Retd.) Sukesh Behl & Anr. vs Koninklijke Phillips case

In this case counterclaim for revocation of the suit under Section 64(1)(m) of the Patents Act, 1970 (for short “the Patents Act”) for non-compliance of the provisions of Section 8 was made by Sukesh Behl. In the original suit Koninklijke Phillips has sued for permanent injunction restraining Sukesh Behl from infringing its patent and for other incidental reliefs. However, the court examined counterclaim for revocation and observed that the failure to comply with the requirement of Section 8 of the Patents Act would invariably lead to the revocation of the suit patent under Section 64(1)(m) of the Patents Act. This is significant judgement in a complex patent jurisprudence to revocation of the suit on patent infringement.

Patent Revocation in Roche case

• In this case, a patent granted to Roche for Valganciclovir was revoked by controller of patents. The patent for Valganciclovir was granted to Roche in 2007 in India. The grant of the patent in India also looked as restrictions or a threat to cheaper generic versions of the drug that cannot enter the market. The principle ground for revocation of the patent was non patentability under section 3 (d) of the Indian Patent Act, 1970.
• Further, the drug formulation was alleged to exist before grant of patent and “efficacy” of patented drug over old drug was also questioned. The arguments were made stating that the drug was having improved bioavailability where whether the improvement of oral bioavailability constitutes enhancement of the known efficacy of that substance was discussed.
• By considering the thorough arguments The Controller ruled that the present patent was a ‘mere use of a known process’ which was not patentable under Section 3(d), Patents Act as well as known by the prior arts. Therefore on consideration of all the above arguments and evidences the patent granted to Valganciclovir was revoked. Thus, this case illustrates the evolution of Indian patent jurisprudence to revoke the patent claim during patent litigation.

Natco and Bristol Meyers Squibb case

• NATCO and BMS has made a settlement in the matter of drug named “Entecavir”. The drug is used in the treatment of hepatitis B infections and the dispute of the patent concerned the use of “Entecavir” oral composition once in a day. Prior to 1995, Indian Patent Act was not granting product patents and hence the drug did not process an Indian patent. Hence, many pharmaceutical companies infringed patent rights of patentee and launched their own generic product.
• Therefore, injunction was granted against Ranbaxy when they had launched the generic version of the same drug. When, the issue was raised against NATCO when they had launched their independent drug, X-Vir and challenged BMS in IPAB and settlement was entered with BMS. Thus, the alternative ways to protection of patent right through settlement among disputed patentee is an innovation of Indian patent jurisprudence.

Conclusion

• The patent regime in India is mainly governed by the Indian Patent Act 1970 which was amended in 1999, 2002 and 2005 to adhere to the WIPO and TRIP guidelines on Patents. Since 2005 amendments, there are many litigations on patent right infringements and therefore patent jurisprudence has evolved over the years with various judgements on many patent related cases by High court and Supreme court. The patent validity is being tested for innovativeness and patentability of patent.
• The claim of patent by the patentee during the law suits are being tested for the above two aspects. If the court is not convinced with these aspects, in many cases, the patent claim of patent applicant was dismissed by Indian judiciary.
• However, if the patent right is established by the patentee, by establishing three essential elements like prima facie case, irreparable injury and balance of convenience, in such cases, injunction orders were passed by the courts to prevent the infringement and suitable remedies to protect the patent right were also passed in various law suits of patent infringement.
• Post grant verification of patent during litigation, revoking of patent on counterclaim and settlement of claim among the disputed patentee are the other alternative innovation of Indian patent jurisprudence to protect and enforce patent rights without affecting public interest. Further, in few case, misuse of exemption clause of pharmaceutical patents was also injuncted by Indian judiciary.
• Non-discriminatory, fair, and innovative patent protection of patent rights and users of patent are the highlights of various patent case judgements in various law suits of patent infringements.

References:

1. Patent infringement suit by Dolby against oppo and vivo by Khurana and khurana
2. Pharma Patent Infringement Cases in India- Intellepedia
3. spicyip.com
4. http://www.thepharmaletter.com/article/plethora-of-pharma-patent-infringement-cases-in-india
5. Landmark pharma patent jurisprudence in India, vol 19 Journal of Intellectual property rights, March 2014.

In this article, Tirumala Chakraborty who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses difference between Registered and Unregistered Trademark.

Introduction

• From the beginning man possesses rights and there was no time when these rights were not infringed or his rights were free from piracies or invasion. And this is where the requirement of trademarks lies. Trademark is a distinctive sign or an indicator that gives identification or distinguishes the goods or services of an individual or a company from those of another or its competitors in the market.
• Thus trade mark gives protection to the right of one person from getting infringed by another or invaded by means of piracy. With the increase in trade and commerce and with several requests being made; necessity for legislation on trademark was keenly felt by the Indian Trading Public. The demand gained momentum and the then Central Government was compelled to accept the necessity for passing an Act on this subject and a memorandum was prepared and was circulated among all the local governments and commercial bodies for opinions.
• Ultimately on 11^th March 1940, the bill for this was passed and received the assent of the Governor-General. The Trade Marks Act, 1940 was enacted for the protection of trademarks and this Act was modeled on the English Act of 1938. But since then the need has been felt for revising the statute for effective or better protection of trade marks and in recent times the trade mark law has undergone changes to a large extent when the Trade Marks Bill, 1999 was passed. In India, the law relating to trade marks is mainly governed by The Trade Marks Act, 1999 and it provides the mechanism for trademarks registration and once it is registered, it grants status of property to the trademarks.

What is a Trademark

• The Trade Marks Act, 1999 was developed after reviewing the existing law in a comprehensive manner and mainly because of the fast developments and increasing globalization in the field of trade and commerce. This Act was passed as there was a need to simplify the trade mark system and also to encourage the flow of investment and transfer of technology.
• To achieve these objectives, the Act of 1999 amended the definition of trademark, considered registration of trademark for services in addition to goods, registration of which are imitation of those of the well-known trademarks are not permitted, grounds for refusal of registration has been enlarged and defensive trademark was omitted. The procedure for registration of the registered users has been simplified and the period of registration and renewal was increased from seven to ten years. This Act made trademark offences as cognizable and increased the punishment for offences relating to trademarks and provides an Appellate Board for speedy resolution of appeals.
• The term ‘trademark’ has been defined under Section 2(zb) of the Trade Marks Act, 1999. According to this Section, the term ‘trademark’ means a graphical representation of a mark, symbol or sign made in a manner with an objective to distinguish or differentiate the goods or services of one person from another.
• Such differentiation may include shape of goods, their packaging, and combination of colors. It is pertinent to note that in relation to Chapter XII [Offences, Penalties and Procedure] (other than section 107) [Penalty for falsely representing a trade mark as registered] a registered trademark could either be for the purpose of or in connection to trading activities and/with a view to grant rights to the proprietor to use the mark exclusively.
• In furtherance to the same and in relation to other provisions of this Act trademark will also refer to a mark used with a view to carry out trade between the goods or services and/for the purpose giving right to any person who may be a proprietor or a permitted user to use the mark whether with or without any indication of the identity of that person. A trademark also includes a certification trade mark or collective mark.
• A trademark is an indicator or distinctive sign that can include a name, design, symbol, device, brand, label, letter, word, shape of goods, packaging or combination of colors or any such combinations. A trademark is a visual representation of a mark and is used by an individual or an organization or company in order to identify or distinguish his products from those of another.
• The objective of the use of trade mark is to indicate a connection in trade between the goods or services, and some persons having the right to use such either being the proprietor or by way of permitted use. An extract from Milton Wright’s Inventions, Patents and Trade Marks (2^nd Edn., p. 38) that has been universally accepted says that an ideal trademark is a trademark that is easy to speak, remember, spell and is simple in design. An ideal trade mark should be attractive to sound and appearance and suggest the quality of the product. And most importantly an ideal trademark should be made in such a manner that it can be distinctive from other trademarks of the same class and should be registrable and protectable.

In Parle products vs. J.P & Co.,Mysore [AIR 1972 SC 1359, (1972) 1 SCA 184], it was observed by the Hon’ble Supreme Court,  that when a question arises relating to whether one mark is deceptively similar to another, the essential features of the two marks are to be considered before coming to any conclusion. Placing the two marks side by side for pointing out the differences is not adequate. It would be rather enough if the impugned mark has such an overall similarity to the registered mark as would be likely to cause confusion or mislead a person dealing with the registered trademark to the extent that he accepts the product bearing the impugned trademark when offered to him.

A proprietor of a trade mark must understand the class under which it should be registered and choose accordingly as it protects the goodwill of the business. In India, a trademark can be divided into several categories such as word mark, device mark, service mark, collective mark, certification mark, well- known mark and unconventional mark. Different types of

Different types of the trademark are discussed below briefly,

• A word mark is the form of trademark that gives the owner of the mark a right only in word, letter or numerical.
• Where a trademark is in the form of a unique representation of a word, letter or numerical, it is called a device mark.
• A service mark can not be seen in the case of goods but it represents the service offered by a person or a company. A service mark is a mechanism available to protect marks used in the service industry. The Service marks are represented by the symbol SM and not TM.

For example, McDonald’s which has a service mark for restaurant services it provides. Service mark cannot be easily distinguished from other kinds of trademarks and this is the reason why many companies prefer having both.

• The Collective marks are used by a group of companies or an association or public institution or cooperative to inform the general public about a specific feature of the product for which the mark is used. “CA” which denotes the members of Institute of Chartered Accountants is a prominent example.
• Certification marks are used to assure the buyers or the consumers that the product has certain standards and has successfully gone through a standard test specified. Woolmark, Agmark, and ISI are the few commonly used certification marks.
• A trademark achieves the title of a well-known trademark and gets more protection when it is recognized by a large percentage of people.
• Unconventional trademarks are those trademarks which are recognized for their distinctive feature such as color, sound, smell and shape for example when the smell of a perfume is distinctive and cannot be mistaken for an associated product, such can be registered as a smell mark. The Yahoo yodel was the first Sound Mark that was registered in India followed by Nokia tune.

All about registered Trademark

• Once a trademark is registered and approved by the Trademarks Registry, a bundle of rights including the right to use such mark is exclusively conferred upon the owner of such registered trademark owner. In India, registered trademark is any mark that is legally registered under The Trade Marks Act, 1999.
• Registration gives legal protection to the rights of the registered owner and one can approach the judiciary for infringement and can claim damages from the person who is using his trademark without his consent or approval. For registration, the owner of the mark needs to file an application before the Trademark Registry showing that it gives a unique identity to the goods or services, as the case may be, and can be distinguished from the others available in the market.
• And, once a trademark is registered, (R) is added in place of (TM) that indicates trademark and is usually written in the upper right-hand corner of the mark.
• In India, though the registration of trademark is not mandatory, but it is always advisable to register the mark because of certain benefits that derive automatically from such registration. Most importantly registration of the mark is required as it plays a vital role in identifying as well as advertising the product.
• Registration secures the goodwill of the trader and gives protection to the consumers from purchasing the imitation product or the second rate quality product. Chapter IV of the Trade Marks Act, 1999 talks about the effects of registration and by such registration certain rights are conferred under section 28 of the Act. As per Section 27 of the Act, no action for infringement can be taken in case of an unregistered trademark. Whereas, if a registered trademark is infringed, the aggrieved person can sue and take action for such infringement of his mark and can even ask for reliefs.
• According to Section 31 of the Act which is consistent to Section 31 of the Trade and Merchandise Act, 1958, registration of trade marks is to be a prima facie evidence of its validity. This means that the evidence is liable to be rebutted and the burden of proof is on the person alleging invalidity.

The Hon’ble Supreme Court observed in Corn Products Refining Co. versus Shangrila Food Products Ltd [AIR 1960 SC 142, (1960) 1 SCA 536], that the only presumption that follows from a registration of a trade mark is its prima facie evidentiary value of its validity.

• Chapter III of the Trade Marks Act, 1999 deals with the procedure and time period or duration of registration. The time period of registration for a trademark is ten years in India and is subject to renewal on expiration of such time period of 10 years. The entire process of registration in India is governed by the Trade Mark Act 1999.
• The procedure for registration is complex, costly and takes time. The proprietor interested in registering his trademark must make an application as prescribed under Section 18 of the Act.  Once the application is filed, it is examined by the Registrar carefully to find out if there is any discrepancy. The acceptance must be absolute and unconditional. After the application is accepted by the Registrar, the application has to be advertised in the Trademark Journal which is published weekly.
• Trademark Journal contains all the trademarks those are accepted by the Registrar. Once it is published in the Journal, general public have an opportunity to object such registration if he believes that such registration can be a cause of damage to him. Any third party may object within three months from the date of the advertisement of the application or within such further period not exceeding one month, as provided in the Act may object such registration by giving a notice writing to the Registrar in a prescribed manner. The Registrar is also empowered to withdraw the application under section 19 of the Act in case of any defects or errors.
• When no objection or opposition is received by the Registrar, the next step has to be the preparation and issuance of the trademark certificate to the applicant and once the certificate is issued, the trademark is considered to be registered trademark under Section 23 of the Act and then the ® symbol can then be placed next to the Trade Mark logo or the ™ symbol.

All about Unregistered Trademark

• An unregistered trademark is a trademark which is not registered under the Trade Marks Act 1999 and does not have safeguards against infringement. The proprietor of an unregistered trademark does not have the right to use ® symbol. An unregistered trademark only possesses the ™ logo indicating that such trademark is not registered but is distinguishable from other similar goods or services.
• Under the Trademarks Act, an unregistered trademark does not get much protection and cannot stop any third party from using the same mark. An unregistered trademark is one which does not get statutory protection but possess certain common law rights.
• There are traders who use trademarks which are not capable of registration and they just prefer not to apply for registration. Sometimes a trademark remains unregistered as the proprietors do not file an application for registration due to ignorance of the Intellectual Property laws. The whole procedure of registration is complex and quite lengthy and due to this, there are lots of cases pending before the Trademark Registry where an application has been filed by a proprietor but the trademark is yet to be considered as registered.
• An unregistered trademark does not get much security and legal protection as compared to the registered trademarked goods or services. The owner of an unregistered trademark can affix the ™ symbol. This serves as a notice to the public and indicates that mark used by him on his product is unregistered but can be used as a trademark to signify or distinguish his product from those of the other available in the market.
• Though no action can be taken for infringement of an unregistered trademark under the Trade Marks Act but the third party can be sued for passing off. Unregistered trademarks posses certain benefits under common law and the action against passing off is based on the principle which says that “a man may not sell his own goods under the pretense that they are the goods of another man”.
• Passing- off is a mechanism of practicing unfair trade and seeking profit from the goodwill of another associate trader. One of the main essential ingredients of a passing-off action is that some confusion has been formed in the minds of the consumers regarding the trade names and in such matters the test to be applied is whether a person of average understanding and a person of imperfect remembrance would be confused so as to identify the source of the product. It is the responsibility of the aggrieved to prove that there is a similarity and the defendant is fraudulently passing off his products as those of the aggrieved.

Difference between Registered and Unregistered Trademark

A registered trademark can be distinguished from an unregistered trademark on the basis of the grounds that are discussed below:

Validity and burden of proof when challenged

According to Sec 31 of the Trade Mark Act, registration of a trade mark has to be the ‘prima facie’ evidence of its validity. From this it can be easily concluded that with the registration, the trademark posses much benefits in terms of its evidential value. Validation is believed to act only upon trademark which are registered. It is the liability of the owner to prove the value and the goodwill attached to the goods or services in case of an unregistered trademark. In India where, registration of a trademark is not mandatory, an unregistered trademark may gain some protection only after the product earns some level of reputation in the market, manages a highly convincing position in the industry and gets well known among the large percentage of public. Hence the burden of proof lies with the proprietor when the validity of an unregistered trademark is challenged by someone.

Remedies available

A registered trademark gets much protection and if any dispute arises relating to the mark and its validity, the registered owner has a provision for statutory remedy under the Trade Mark Act, whereas, an unregistered mark is less protected and gets benefits under common law. In case any third party uses the mark of the registered proprietor without his consent, the proprietor has a legal remedy in his hand and he can take action for such infringement. An unregistered trademark, on the other hand, does not acquire the statutory right of infringement but can sue the third party and take an action for passing- off. An unregistered trademark can seek for remedies under the common law system.

The judgment given by the Hon’ble Supreme Court in the famous case of State of U.P. Vs. Ram Nath, Partner M/S Panna Lal, [AIR 1972 SC 232] still holds good and applicable on offences, penalties and procedures described in chapter XII of the Trade Marks Act, 1999. In this case, the Hon’ble Supreme Court has clearly distinguished a registered trade mark from an unregistered trade mark. The necessity was felt to interpret certain section such as section 77, 78 and 79 of the Trade and Merchandise Act, 1958 to lay down that the legislature is silent and has deliberately not used the word “registered” before the words trade mark, mark or trade description in the chapter while dealing with offences, penalties and procedure. It further adds that registration of the trade mark is not compulsory for initiating a criminal action. Hence, an unregistered trade mark holder can also take recourse to criminal action.

Right to use the symbol or the logo

The proprietor can use the TM symbol once they apply the mark on their goods or services as the case may be. TM symbol indicates that the mark used by the proprietor is a trademark of that particular proprietor. This logo is usually written in small font and is placed beside the mark. An unregistered trademark holder can use the TM or the trademark symbol but an unregistered trademark holder has no right to use the ® symbol. The ® symbol is a representation of registered trademark. Once a trademark is registered successfully without any objection and the certificate is issued, the proprietor can use the ® logo along with the ™ logo.

Time period or duration of registration and renewal

Once a trademark is registered and entered in the book of Trademark Registry, it lasts long for 10 years. It can be renewed from time to time upon the expiry of the time period of registration. Each renewal has to be made within a period of six months before the expiration of the last registration of the trademark. In case the renewal fee has not been paid by the proprietor at the expiration of the last registration, the Registrar is empowered to remove such trade mark from the Register and make the fact known to the public by advertising such in the Journal. But in case of an unregistered trademark, the proprietor is under the liability to prove the length of time or duration for which the reputation of his good or services exist or existed in the trade market system.

Territory or geographical area

Registered trademark gets nationwide protection resulting from such registration and if any applicant wishes to get his mark registered internationally, then he can do so by making an international application on the form prescribed by the Common Regulations for international registration of the trademark. In short, registration makes it easier for a trademark to survive in the market while on the other hand the proprietor of an unregistered trademark has to prove the geographical area in which his product has gained significant credibility among the consumers.

Conclusion

The Trade Marks Act deals with protections which are only applicable to the registered trademarks therefore registered trademark are more secured and protected when compared to unregistered trademarks. In brief, it is always better to register a trademark even if it is not mandatory in India and many other countries. Registration of a trademark has several incentives. Registration guards it from any action of infringement which somewhat gives relief to the registered trademark holders. The registered trademark holders can file a legal suit for infringement and since the trademark is registered, the burden of proof does not lie upon the holder.  Registered trademarked products create a better brand image in the market and get more preference over the unregistered trademarks by the consumers. And lastly but most importantly registration also plays a vital role in brand development which is extremely crucial for the growth of trade and commerce.

Hence we can say it is important to register a trademark to create good will in the trade market system. To survive in easy manner and for a longer period of time in the market, every individual, partnerships, company or organization, trade unions or legal associations should apply for the trademark provided the requirements of the Trademarks Act are met.

LIST OF ABBREVIATIONS/ SYMBOLS

 INDEX OF AUTHORITIES

• Books referred

Trade Marks Act, 1999 (Bare Act)

Commentary on the Trade Marks Act by Iyengar

• Websites referred

www.manupatra.com

www.indiankanoon.com

www.wikipedia.org

http://www.advocatekhoj.com/library/bareacts/trademarks/index.php?Title=Trade%20Marks%20Act,%201999

https://www.intepat.com/blog/trademark/unregistered-vs-registered-trademark/

http://patentinindia.com/trademark-registration-india/

https://www.indiafilings.com/learn/trademark-registration-process/

• Dictionaries referred

Oxford Dictionary

Black’s law Dictionary

• Table of Case Laws referred

In this article, Tejaswinee Roychowdhury who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Indian Trademark law. Comparison with US and EU.

Be it India or the US or the EU, all three countries have made trademark laws adhering to the eight fundamental principles and the TRIPs Agreement, Paris Convention, and the Madrid Protocol. However, their structure and implementation in certain cases vary and this variation has been addressed hereafter.

Introduction

A trademark comes under the protection of Intellectual Property Rights. WIPO defines a trademark as a sign which is capable of distinctly distinguishing the goods or services of one individual or enterprise from those of other individuals or enterprises. [1]

A trademark is a visual symbol/a distinctive mark or design used by an individual or a company. The trademark helps the consumer identify the products and services of a particular individual/organization/company. They have been in existence as along as trade itself when makers started to “mark” their wares with a word or a symbol to help identify the maker and have been unearthed in excavations from China, India, Persia, Egypt, Rome, Greece, and so on, dating back almost 4000 years. [2]

A trademark’s main functions are identification of goods and distinguishing them, signifying source of goods, signifying quality of goods and advertisement of goods. [3] Additionally, trademark protection aims to prevent the use of fraudulent marks. With developments in trade and commerce in the era of globalization, the need for encouragement of investment flows and transfer of technology and the need for harmonization and simplification of the trademark management system, trademarks have today acquired the goodwill and reputation of consumers. [4]

The international status of Trademark System

To fulfill the object and aims of trademarks, and in consonance with its functions, all the countries have unequivocally accepted the eight fundamental principles of trademark protection. It has been observed that ,

“it is of the highest importance that in such an important branch of commercial law as that relating to trademarks there should be uniformity as far as possible in all countries administering the same system of law.” [5]

The eight fundamental principles governing each of such countries including India, USA, and the EU are as follows:

1. It is common knowledge that trademark registration confers upon the proprietor a monopoly right to use the concerned mark. But, since no right can be absolute some restrictions are to be imposed on the use of certain classes of words/symbols /other representations as marks.
2. It should be maintained that the registration of a trademark should not be interfering with its bona fide use by persons who intend to use it in ordinary sense and ordinary purposes.
3. Since property rights in a trademark are acquired by the use of superior and similar rights obtained by registration, prior users of a trademark should be protected against any monopoly right.
4. The two main interests which are to be protected are – the interest of the public, so that the mark to be registered does not mislead the public; and the interest of the existing traders who may object if the mark is capable of being confused with existing marks. Similar observations were made by Lord Diplock [6] – “It has been held up on grounds of public policy that a trader ought not to be allowed to obtain by registration under the Trade Marks Act a monopoly in what other traders may legitimately desire to use.”
5. Since it is also a matter of public policy, any public who wishes to object to the granting of registration to any trademark must be allowed to present his objections along with reasons. [7]
6. It must be taken into consideration that situations may arise where a trader has been using a particular trademark for years although a similar mark is registered. Such a trader who has not registered his trademark but has been using it honestly and in good faith should not be deprived of the benefits of registration merely because he has not registered. Such registration is to be subject to certain suitable limitations and conditions.
7. The trademark should be put to continuous use. Stopping its use will result in its eventual death as there will be no equitable or logical basis of continuing with the protection of such a trademark.
8. A trademark is an intellectual property. The term ‘proprietor of a trademark’ is therefore used in its definition making it both assignable and transferable like any other property. However, owing to its nature, this kind of property cannot be assigned or transferred without adhering to certain conditions and limitations.

Indian Trademark Law. Comparison with US and EU

In light of the eight fundamental principles mentioned above, it is clear that be it India or the US or the EU, all three countries have made trademark laws adhering to these principles only. However, their structure and implementation in certain cases vary and this variation has been addressed hereafter.

Origin and Development

• The European legal practice of trademark protection has always focused on prevention of mistake, deceptions and any confusion with regard to the origin of the mark. Protection of public policy is, therefore, the primary focus on common law of trademark, protecting both buyers and sellers. Statutes from as early as the thirteenth-century show evidence of the presence of medieval guilds the members of which could control the marks of their co-workers so as to avoid confusions and so that the public policy was adhered to. Manufacturers were also offered valuable methods of marketing their goods. Trademark, mainly served to indicate the origin, “though the identity of the source may be in fact unknown to the public.” [8]
• The trademark laws followed by the European Community were incorporated in the Community Trade Marks (CTM) in 1996 based on the 1946 draft of the “Convention on European Trademark Law”. The European Union focuses on finding registered trademarks and does not adhere to the “first to use” rule used in India and the US.
• The Anglo-American law on trademarks was meant only to prevent ‘palming off’, as in, preventing the passing off of goods of one producer by another producer calling it his own. The legal protection of trademark prevented producers from producing under the mark that was clearly used by someone else.
• Later on, the law developed to allow the producer to promote his products using the mark and giving assurance to consumers as to the quality of such products. Trademark law in the US has been in constant development since 1870, the first of which was declared unconstitutional by the State Supreme Court [9] when the Congress sought to federalise the structure.
• Then in 1905, the interstate use of trademarks was addressed which too were incomplete in essence. Today, the US trademark laws are governed by the Lanham Act, the federal trademark registration, which came into effect from 1946.

• There was no statutory law on trademark in India before 1940 and common law was applicable to the subject as was applicable in England before their first Registration Act in 1875. The first statue introduced was the Trademarks Act, 1940, which introduced the machinery for registration and trademark protection.
• This was replaced by Trade and Merchandise Marks Act, 1958, as the previous statute focused too much on European trademark laws which made governing very difficult in India. With the Act of 1958, it was sought to address these complex difficulties and it was deemed necessary to protect the bona fide interests of other traders from litigations by registered traders.
• This made the Act very complex and extensive as well and a review was sought of the same to harmonize the laws in light of a rapidly globalizing trade and commerce system. India, being a party to the TRIPs Agreement sought to make laws in conformity with the Agreement.

Eventually, the Trade Marks Act, 1999, was adopted which replaced the Act of 1958. “The object of the Act was to amend and consolidate the law relating to trade marks, to provide for registration and better protection of trade marks for prevention of the use of fraudulent marks.” [10]

• Today, a thorough study of the Indian trademark law will show that it has deviated from the European system of focusing mainly on public policy and has adopted the US idea of “first to use” of a mark alongside the public policy concerns. Although it seems to have been adopted via the Trademarks Act, 1999, the principle was followed by the Indian Judiciary prior to the Act thus affording a wider scope to the term “first to use”, i.e., focusing on the concept of common law. Further, unlike in the US, first use is internationally accompanied by a transborder reputation of the mark and similarly, in India too, it is the determinant for ownership of trademark rights in India. [11]

 What constitutes a Mark

• In India, according to the Section 2 (zb) of the Trade Marks Act, 1999, the definition of trademark is not just descriptive but exhaustive as well. The Indian law is very clear on what may be a trademark. There are no stipulations as to what may not be a trademark.
• The Supreme Court in Laxmikant Patel v. Chetanbhat Shah [12] held that the definition of trademark under Indian law is very wide and means a mark which is capable of being represented graphically and is capable of distinguishing the goods or services produced and provided by various persons.
• It, inter alia, includes a name or a word, abbreviation of a word or a name along with shape of goods, their packaging, and combination of colours.

The Section 2 (1) (m) further mentions that “mark” includes – ‘a device, brand, heading label, ticket, name, signature, word letter, numeral shape of goods, packaging or combination of colours or any combination thereof’, making the definition very descriptive and exhaustive.

Position in US

Trademark law in the US is governed by the Lanham Act. Its definition of the term ‘trademark’ is very broad in its description as to what may constitute a mark. It says in Section 1127 that a trademark,

“includes any word, name, symbol, or device, or any combination thereof”.

• This definition, unlike the Indian definition, is only exhaustive as it is not very descriptive compared to the Indian definition. This makes the definition under the Lanham Act much wider than that of the Indian law. This definition is also quite unrestrictive in nature as a symbol or device may be meant to include a wide array of things.

Position in EU

The trademark law followed by the European Union is called the Community Trade Marks (CTM). The CTM does not exclusively define a trademark or state what constitutes a trademark. As compiled from the various regulations, a trademark includes a ‘word mark’ [13]; and other marks consisting of numerals, letters, and signs [14] for which the applicant does not claim any special graphic representation or colour. [15]

What constitutes Use

• As has been seen before, a trademark loses its lifeline when it falls into non-use for a considerable period of time. In India, the registration of a trademark may be attacked on the grounds of non-use under the Indian Trade Marks Act 1999. In such a case the mere fact that the mark is in use outside India or that the mark has an international reputation will not be sufficient to prevent it from its demise. In this aspect, the Indian Judiciary had given a wide meaning to the term ‘use’.
• The Supreme Court held [16] that the use of a trademark may also be ‘non-physical’ but it is pertinent that such use is ‘material’, as in, meaningful. For instance, the use of trademark on invoices is deemed to be ‘use’ in connection with the goods which the mark represents. [17] However, an advertisement will not be used under the Act, unless it is used in relation with the sale of some goods, like it was held by the Supreme Court in a case relating to the use of Toshiba Corporation’s logo in an advertisement in India.

Position in EU

• This test is very similar to the test under the Community Trade Marks (CTM) of the European Union where the use should not be some mere symbolic use. The use should be ‘genuine’ meaning the use should be actual and authentic.

Practically speaking, the definition of ‘use’ in India is much easier to work with. For instance, in the aforementioned Hardie Case [18], “the circulation of a price list for a product that was not yet available for sale” was held to be a material use of the mark in question.

• The point being that the Indian law is much wider when it comes to defining what constitutes ‘use’. The judiciary has been very active in this aspect so as to prevent the hardships of the traders and producers.

Position in US

The US trademark law makes a difference between the actual use of a mark and the intent to use a mark. Although registration can be applied for by producers under both circumstances, i.e., actual use of a mark and bona fide intention of using a mark, the registration is not granted by the Patents Office unless the actual use of the mark is shown and the use of this mark should be shown again after the 5^th and 6^th year and at the time of renewals in order to maintain the registration.

Dilution

• The doctrine of dilution is a concept peculiar to trademark law where if a trademark is well reputed and famous, the proprietor can forbid others from using the mark. The US trademark law allows such a proprietor to sue anyone who uses his famous mark whether by blurring or by tarnishment as both of these instances would give rise to a cause of action against the person who is making any such use of the mark.
• For the doctrine of dilution to apply, it is pertinent that the mark in question be in actual use in the US and for it to be qualified as famous, it is essential that majority of the US “general consuming public” readily identify the mark in relation to its proprietor or the goods or services that the mark purports to represent.

Under the trademark law of the EU, it is not necessary for the mark in question to be ‘famous’ in similar parameters as that in the US. It is enough if a substantial amount of the public can identify with the mark relation to its proprietor or the goods or services that the mark purports to represent. This implies that the mark must be in use in the European Community as well for a cause of action in dilution to arise.

• The doctrine of dilution had been accepted judicially in the Indian trademark law system since a long time. Today, it is distinctly provided for in the Section 29 of the Trade Marks Act, 1999, be the goods similar or otherwise.
• Therefore, in India, globally well-known and famous trademarks have automatic protection from any diluted use by blurring or by tarnishment. Companies such as Apple, Dunhill, Ford, Honda, Hyundai, Cartier, Mercedes-Benz, and Caterpillar have successfully passed off dilution based actions against persons who have used diluted versions of identical marks or similar marks which could not be readily distinguished, whether for similar goods or dissimilar ones.

In this light, the Delhi High Court had held [19] that, “It will be a great perversion of the law relating to trademarks and designs, if a mark of the order of the ‘Mercedes Benz’… is humbled by indiscriminate colourable imitation by all or anyone.”

Distinctiveness

• Indian Law is specific on the fact that a mark should not be ‘deceptively similar’ [20] and should be capable of distinguishing the goods and services of one person from those of others. The Indian Judiciary has incorporated distinctiveness as to being a mandatory quality of a mark in a trademark. The mark must be ‘adapted to distinguish’ the goods and words like ‘good’, ‘best’ or ‘superfine’ are not so adapted. [21]
• Further, user for one year prior to application is not sufficient to acquire distinctiveness under Section 9 to qualify for registration under the section, the mark should have acquired distinctiveness by long user. [22]

Under the US trademark law, a mark is required to be distinct under four classifications – Arbitrary and Fanciful (the distinctiveness is the strongest), Suggestive (the distinctiveness is medium), Descriptive (the distinctiveness is weak) and Generic (the distinctiveness is the weakest and so no protection is given in such cases).

Under the EU also, it must be seen to it that the mark has a distinctive character. Firstly, a mark can be used in a form where the elements differ and do not alter the distinctive character of the mark in the form in which it was primarily registered. [23] Secondly, a word mark may fall into non-use if the words or figurative elements used affects the mark’s distinctive character. Thirdly, if the mark contains a non-distinctive element, the applicant may disclaim any exclusive right to such element, separately. [24] [25] This exclusive right is also granted under the Section 17 of the Indian Trade Marks Act, 1999.

Enforcement

• In India, infringement of trademark protection amounts to penalised offences under the Chapter XII of the Trade Marks Act, 1999. Further, administrative proceedings are available to applicants for dealing with grievances relating to registration. The Act provides for the establishment of the Intellectual Property Appellate Board (IPAB) under Section 83 of the Act where the appeals are to be preferred after proceedings have been conducted before the Registrar of Trademarks.
• The IPAB is to be constituted of a Chairman, Vice-Chairman and a bench comprising of a technical member and a judicial member, as appointed by the Central Government. The proceeding and appeal procedures are to be conducted in accordance with the procedural laws of the country.
• Cancellation of Registration matters may also be preferred before one of the four High Courts of Delhi, Bombay, Calcutta and Madras as these Courts have the authority to try IPR cases. If a particular suit is outside the jurisdiction of these Courts, the suit must be instituted in the relevant District Court.

The Indian Judiciary has been promoting the need for an expeditious disposal of intellectual property infringement cases.

The Supreme Court has observed [26] that “all courts and tribunals in the country hearing IP cases should proceed with such matters on a day-to-day basis and final judgment should be given, normally, within four months from the date of filing of the suit.” There have also been encouragements for alternative remedies such as mediation for determining damages along with injunctions keeping in mind that not every defendant may have a strong finance.

Administrative hearings are also a part of the US and EU trademark law system. In the EU, the Register is maintained by the EUIPO and the trademark protection is valid for 10 years (same as in India under Section 25 of the Indian Trade Marks Act, 1999).

In the US, trademark is registered with the USPTO Trademark Examiner and the entries are made in the Principal Register. Infringement cases can be tried in the Federal courts of the country while cases relating to registration are to be tried before the Trademark Trial and Appeal Board. Additionally, the US Customs has the power to prevent goods bearing infringing marks from being imported into the country.

Conclusion

Being a matter of trade and commerce, capable of derailing the entire system, it is important that the nations keep a certain parity while formulating laws on intellectual property protection, and in this case, specifically trademark protection. India, US and the EU, though a little different in their approaches to the trademark law jurisprudence have been adhering to all the important international agreements and conventions and protocols such as the TRIPs Agreement, The Paris Convention and the Madrid Protocol.

Let’s take the EU to being a single country although it is essentially a community of all the European countries. EU effectively brings an entire set of countries under its umbrella thus creating a larger harmony in the trademark statutes of the world. All three countries have incorporated the definition of trademark, use, and so on from the TRIPs Agreement into their respective legislations. Registration procedures have been orchestrated and echoed through the Paris Convention in all three legislations. India has incorporated special provisions under the Madrid Protocol in Chapter IV A of the Indian Trademarks Act, 1999 through the Amendment Act 40 of 2010. US and EU have also acted and enacted laws with strict adherence to the protocol.

References

[1] http://www.wipo.int/trademarks/en/

[2] William H. Browne, A Treatise on the Law of Trade Marks (1885), p. 14

[3] J. T. Me Carthy, Trade Marks and Unfair Competition (1973), p. 86

[4] Dr. J. K. Das, Intellectual Property Rights

[5] Shredded Wheal, (1940) 57 RPC 137 at 149

[6] Smith Kline’s Appln (1976) RPC 511 at 538

[7] Bass v. Nicholson (1932) 49 RPC 88 at 111 (HL)

[8] United States v. Steffens, 100 US 82 L. Ed. 550 (1879)

[9] United States v. Steffens, 100 US 82 L. Ed. 550 (1879)

[10] Meghraj Biscuits Industries V. Commissioner of Central Excise (2007) 3 SCC 780

[11] Shwetasree Majumder, Fidus Law Chambers, Uttar Pradesh, India; Eesheta Shah, Nabarro LLP, London, UK; Sujata Chaudhri, Cowan Liebowitz & Latman, P.C., New York, New York, USA; Mahua Roy Chowdhury, Solomon & Roy, Mumbai, India, Indian Trademark Law: A Comparison with EU and U.S. Laws, INTABulletin (The Voice of International Trademark Association), Vol. 65 No. 7, April 1, 2010

[12] AIR 2002 SC 275

[13] Article 4 of CTMR

[14] Rule 3 of CTMIR

[15] An overview of conditions for registration and scope of protection for various trade mark categories under comparison from the perspective of the CTMR (http://euipo.europa.eu/en/office/ejs/pdf/von_Kapff.pdf)

[16] Hardie Trading v. Addison Paints, 2003

[17] Vulcan v. Palanichamy, AIR 1969 Cal 43

[18] Hardie Trading v. Addison Paints, 2003

[19] Daimler Benz Aktiegesellschft v. Hybo Hindustan, 1994

[20] Section 2 (h), Trade Marks Act, 1999

[21] Dr. J. K. Das, Intellectual Property Rights

[22] Sarda Plywood Industries Ltd. V. Deputy Registrar of Trade Marks, 2007 (34) PTC 352 (IPAB)

[23] Article 15, CTMR

[24] Article 38 (2), CTMR

[25] An overview of conditions for registration and scope of protection for various trade mark categories under comparison from the perspective of the CTMR (http://euipo.europa.eu/en/office/ejs/pdf/von_Kapff.pdf)

[26] Bajaj Auto Ltd. v. TVS Motor Co. Ltd.

In this article, Rohit Upadhyayay who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses How to register a charitable trusts and get necessary income tax registrations for donor benefit?

Introduction

Charitable trusts are the institutions incorporated to advance help and support to the person who really belongs to the poor and deprived category. This form of institution is incorporated to provide maximum benefit to the society. Trust so formed is purely independent and a nonprofit entity as the main aim of formation of trust is to cause public benefit. A trust also provides a various group of individuals to collectively help the person who are unable to survive and to take care of all of their needs. These institutions are formally incorporated as any other company or association and have its own individual legal identity as a legal person. The firm can also make its own individual decision by means of its trustee. The trusts so formed may be formed with a premeditated thought or it may be after its formation may solemnize the intention of formation of such an institution. The trusts so formed may be engaged in one or more than one business by means community service or to provide affordable services to the person availing those services. These trusts can be make to serve old age citizen, orphans, physically disabled children, specially able children, and even for animals.  Charitable trusts are also forms to promote efforts to bridge gap between the privileged and the needy.

Classification of trusts

The following are the major classifications of trust in India.

1. Private trust
2. Public trust

Private trust

Private trusts are the trusts which are formulated to benefit or to contribute towards any specific class or category of people and keeps their prospective interests on the key for such formations.  So a private trust could be recognized as a trust which has a specific cause of formulation and it has certain class which is made as the beneficiary. Example if an industrialist or an employer with an intention of service or to support the health, or other bonafide conditions of the family of the 100 laborers and his employees forms a trust that trust would be a private trust. The Indian trusts Act, 1882 governs all the private trusts in India. The act of 1882 is applicable all over India expect the state of Andaman and Nicobar islands and the state of Jammu and Kashmir.

The following mentioned have similar motive as that to a private trust but they are excludedWaqf

Waqf

Waqf boards are the boards which command the rights and maintains the property inherited by the virtue of donation by the Islamic community. The parliament has authorized this body by means of statutory authority and passing a statute in its favor.

Property of a Hindu Undivided Family’s

property of Hindu undivided family can also be settled as a trustee.

Public or private religious as charitable endowments

The endowment department of state is the authority which has been constituted with a view to manage all the religious donations received by the temple and other religious activities.

Creation of a private trust

few conditions to be taken care of before setting up of a private trust,

• Any person can form a private trust
• A private trust should have a legal purpose which is not forbidden by law and procedure to be adopted shall also be legal.
• The person so forming the trust should have attained majority, should be of sound mind must not suffer from any mental disability which renders him not suitable for holding any place or position.
• The person setting up any private trust should not be declared to be bankrupt or disqualifies by any other law or legal means.
• The person who is minor can also establish or create a trust but this condition would require prior approval from civil court of competent jurisdiction.

Trustee/beneficiary of a private trust

Trustees are the official living guardian of the trust and the officially hold the property. The trustee I regarded as the person who is officially authorized to hold the property on behalf of the trust and te position of the trustee is similar to that of a director of a company.   Except the director gets paid and the trustee doesn’t get paid. The trustee performs an ex-gartia duty for all the members of the trusts and beneficiaries

Qualifications of a trustee

• A person competent to hold property can become a trustee of a trust.
• The person holding the post of a trustee must have administrative skills to manage the affairs of the property vested with the trust and the trustee should also have reasonable prudence to strive to make his best efforts to take care of the interest of the beneficiaries and the trust itself.
• Any individual, association or company can also be appointed as trustee.

Public trust

Private trusts are formulated without any specific intention and the beneficiary class of society is also not clear. Such trusts are not very effective in administration and they have no such big participation into the development of the status of society neither they have any such mandatory obligation for such community service. The major purposes of incorporation of such public trusts are to manage religious affairs and such institution manages their personal dominations and other financial gifts as for religious donations.

• Waqf board.
• Endowment department for Hindu religious affairs.

Laws and regulations regarding the establishment of trusts in India

• The trusts incorporated in India are established by the virtue of Indian Trust Act 1882. The section 3 of the act defines trust as follows:
• “Trust” is an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.
• Section 4 of the act of 1881 provides that the trust should be formed for a lawful cause. A trust may never be formed for satisfaction of any unlawful action or activity, The trust so formed must also not defeat the provisions of law either in expressed or in any implied manner, the trust should not be formed to fulfill fraudulent intentions of a person, the trust shall not be constituted to cause any injury to any person individual or any company, the trust should not also involve any of those affairs which are against any public policy or declared by court to be immoral.
• Section 5 of the act of 1882, provides that no trust in reference to immovable property can be incorporate and effected unless the person proposing that transfer declares the same on a non-testamentary instrument which is duly signed and registered by the author of the deed or the creator of that trust. In case of a moveable property no trust in favor of such moveable property is valid until the property is transferred to the trustee.

The trust, when applied for registration, will have following contents in the application form as a valid requisite

• Name of the trust.
• Address of the trust
• Objects of the trust(charitable or Religious)
• One settler of the trust
• Two trustees of the trust
• Property of the trust-movable or immovable property (normally a small amount of cash/cheque is given to be the initial property of the trust, in order to save on the stamp duty).

After the above-mentioned conditions, the next following necessary steps are taken.

• Prepare a Trust Deed on stamp paper of the requisite value
• The trust deed so formed shall be registered with the locally empowered registrar who will register the trust under Indian Trust act, 1882.
• The trust deed would have due stamps required to incorporate such institution (ratable as per the norms of registration)
• The photo identity of the person setting up the trust along with his passport size photograph on the same deed.
• Passport size photograph of the two trustees who are being handed over this trust.
• Signature of the person setting up the trust.
• Signature of two witnesses on the trust deed.
• After compliance of all the relevant formalities the trust deed is submitted to registrar and after the approval of Registrar the trust comes to existence.

There are few other statutory provisions for the establishment of trusts.

Companies Act, 2013.

The companies’ acts 2013 have specific provisions for incorporation of nonprofit organization to support such causes of social interests. Prior to the act of 2013, the same provisions existed with the Companies Act of 1956. Under section 25 of the act incorporation of nonprofit organization

The nonprofit organization is the institution who are incorporated to serve the main objective of promotion of education, social, welfare, cultural and religious which are formally sourced by the individual or association for such profits.

• While incorporation of a trust under Companies Act 2013 there must be following compliances,

1. Digital signatures of the Director.
2. Director identification number (S.153)
3. Name availability of the proposed company
4. Preparation of Memorandum of association (MOA )and article of association(AOA).
5. Grant of license under section 8 of The Companies Act to work for charitable objective.

Indian Constitution

The constitution of India also empowers such effort of incorporation by setting and promoting of such formations. The Article 19 (1) (C) provides for the formation of such organizations. this has been a special incorporation by the means of a fundamental right.

The constitution of India also empowers other minority and other weaker and backward community to establish and manage their own institution to establish promote and profess their beliefs and to strive to promote their personal practice.

Society’s Act, 1860

The society’s act of 1860 also provides for registration of nonprofit organization and charitable trust as under. Any group of seven or more individuals can personally associate for any literary, scientific and charitable purpose or for any other purpose which may be defined in section of the societies act 1860may formally by subscribing their names to a memorandum of association and filing to the registrar of joint stock companies to formulate such society.

According to section 20, the concise list of the societies which can be registered under this act has been defined and the following may be registered under the societies act of 1860.

• Military orphan funds
• Societies established at several presidencies part of India.
• Established or promotion of science, literature and fine arts
• Foundation and maintenance of libraries.
• Museum, galleries, painting and other form of work.

The following are the relevant provision regarding income:

As the trust formed under any of the above mentioned programs are strictly for nonprofit initiatives as charitable trust enjoys income tax exemption and public trusts as the Hindu Religious Institutions and Charitable Endowments Act, 1997 and the Muslim Wakf council formed under Muslim Wakf Act, 1954. Enjoys additional benefit on account of being a public trust and get exemption from taxes based laws and regulation.

The details of the specific exemption are as follows

Section 11. Tax exemptions.

In compliance and consistency with the provision laid in section 60(transfer of income without transfer of asset) and 63(transfer and revocable transfers) of the income tax act the income earned by any religious trust would be exempted from taxation liability as per the extent specified in the schedule for this act.  To obtain such exemption from taxation the procured income must fulfill certain conditions.

Nature of income and the extent to which tax exemption is allowed – Section 11(1)(A)

When the property is completely and wholly for charitable purpose to the extent of income is applied to such charitable or religious purpose in India. Whereas such income is accrued or set apart for such application, to the extent of 15% of the income from such property.

• When any trust earns any income for some charitable purpose which aims for the promotion of welfare which helps in realizing Indian goals theses are exempted to such charitable or religious purpose outside India.

Section 12 of income tax provides for voluntary contribution

• Income earned by the trust by the means of contribution received by the trust from the donors
• A contribution voluntarily made by a charitable trust with and intention to engage into charitable or religious purpose can either receive or donate towards the charitable trust.

Section 13. Provides major guidelines when the special exemptions under the section 11 and section 12 would be forfeited and would not have the privilege of exemption.

• If the contribution and the income so received is not utilized for charitable performance.
• Misuse of the contribution of the earnings of the trust.
• Noncompliance of the AOA and MOA of the deed of the trust.
• If the trust is misusing the contribution of the trust for the personal benefits of the trustee, director, donors, relatives of the person having influence in the management of the trust.

The impact of donation upon the donor {under section 80G of the income tax act 1961}

1. The donor presented for the purpose of the charitable trust must be a legal person and any legal person can enjoy this right of donation to charitable trust. The person who is a rightful tax payer can become a donor for the purpose of this charitable trust.
2. The donations advanced towards any foreign trusts would not have any privilege under this law only donations made within India will have the enjoyment of such benefits not otherwise.
3. The donations made to charitable trusts are only eligible for any sort of tax benefit otherwise no person individual or company could claim any sort of donation made to any political parties as they are not formed with an intention to commit public service.
4. The donation to enjoy the benefit of tax exemption the donation must be made in a prescribed manner and to a prescribed institution for prescribed fund. It is done with a view to maintaining the transparency and scrutiny on the trust so receiving and the donor so making such donations.
5. In order to curtail the adverse usage of the charitable trusts the sum of donation if exceed more than 10% of the total gross income the additional donation made by the person will not have any special privilege for the income percentage donated in excess of the 10 % of the income.

Necessary compliance to obtain maximum benefit of the donations made under section 80G of the income tax act 1961: In order to obtain maximum benefit of the donation for taxation purpose the donor must follow following instructions.

1. The most important document is the receipt of the donation and the donation made under section 80 G must have a stamped receipt of the trust. Which bear the pan number and the address of the receiver trust receiving the donation with the name of the donor to the trust which has the clear amount of donation described and the mode of the donation upon the receipt itself.
2. The donation when made in the particular head that is entitled to 100% exemption the donor must emphasis on the receiver to provide him with form 58. So that he may further claim his 100% exemption regarding his donation. Without form no. 58 the donor cannot enjoy the complete 100% deduction benefit although his receipt mentions 100%exemption.
3. The donor must also check for the registration number upon the receipt issued by the trust as all trust receipt must have registration number issued by the income tax department under 80G.
4. The donor must ensure that the trust to which he is making any donation possesses a valid certificate of 80G otherwise his donation would not have the exemptions of 80G of the income tax act.
5. The donor should produce the photocopy of the 80G certificate of the trust.
6. Donation made in cash or by means of cheque are only entitled to tax benefits not otherwise as donations made by means of a donation of blanket, other utility based articles do not fall under the ambit of Section 80 G of the income tax act.
7. Donation made in any natural disaster or any natural emergency situations the maximum amount of the exemption which could be enjoyed from tax liability would be 10,000 Rs when mode by any medium other than cash (i.e cheque or electronic transfers.)
8. The employees can claim deduction under the same section 80 G after providing a certificate obtained by their employer that such an amount is already deducted from their salary.
9. There is no capping limitation upon the amount of donation a person can make. However, as per statutes there are various heads in which the limit of obtaining the deduction is restricted to 10%.
10. The donations made to specific organization are entitled to specific deduction and tax exemptions.

• 100 % deductions without any qualifying limits (no capping on the amount and full deduction): – Prime minister`s national relief fund.
• 50% deduction without any qualifying limit (no capping on the amount and half deduction) Indira Gandhi memorial trust.
• 100 % deduction to a qualifying limit (full deduction but capping on the for specific amount): – An approved institution for health planning.
• 50 % deduction to a qualifying limit (half deduction but capping on the for specific amount): – approved institution for charitable purpose other than promoting family planning.

The following are the institutions with 100% deduction without any qualification limit.

1. National defense fund.
2. The national blood transfusion council or a state blood transfusion council.
3. National illness assistance fund.
4. Prime minister`s national relief fund.

The following are the institutions with 50% deduction without any qualification limit.

1. Prime minister drought relief fund.
2. National children`s fund.
3. Rajiv Gandhi foundation.
4. Jawahar lal Nehru foundation.

The following are the institutions with 100% deduction subjected to 10% of the gross total income

1. The donations made to the local or government authority for the promotion of family planning.
2. Sum paid by a company to Indian Olympic association.

In this article, Rohit Sharma who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses applicability & Status of Arbitral Awards passed in any proceedings which Commenced prior to October 23, 2015.

Introduction

The new amended Arbitration and Conciliation Act, 2015 (‘Amended Act’)[1] was first introduced on 23 October 2015 in the form of an Ordinance.The issue of the applicability of the Act has been contentious since the promulgation of the ordinance and the same was put to rest by the Parliament when Lower House on 17 December 2015 passed the Arbitration (Amendment) Act and inserted section 26 which mandated that the Amended Act would not apply to proceedings instituted under the Principal Act unless agreed by the parties.

Inception of the Amended Act

In 2014, 246^thReport of Law Commission of India[2]reviewed the provisions of the Arbitration and Conciliation Act, 1996, where it gave some insight into several inadequacies observed in the functioning of the 1996 Act. Prior to this Report, the Commission had also recommended various amendments to the Act in its 176^th Report which was introduced as Arbitration and Conciliation (Amendment) Bill, 2001 but unfortunately, could not materialize into law due to several inadequacies. Finally in 2015, Law Commission’s recommendations were incorporated in the Arbitration and Conciliation (Amendment) Ordinance, 2015 later enacted as Arbitration and Conciliation (Amendment) Act, which deemed to have come into force on the October 23, 2015. The Amended Act caused has been cause of much speculation and conjecture since it came to force solely due to ambiguity over its effect on ongoing arbitration.

Main matter of Contention

Arbitration and Conciliation (Amendment) Ordinance, 2015, predecessor of Amended Act, was unclear about whether or not it would apply to pending arbitrations and related court proceedings because of it being so vaguely worded, as it merely stated that- shall come into force at once.^[3] This ordinance was orphaned from the intention of the Law Commission, when it gave its recommendation its 246^th Report[4] where it in Section 85-A, in no ambiguous words, it explained the scope of application of the proposed Act.The Law Commission in its Report had contemplated insertion of Section 85A to the Arbitration and Conciliation Act, 1996. As per its recommendation Section 85A stated-

Unless otherwise provided, the provisions of the instant Act (as amended) shall be prospective in operation and shall apply only to fresh arbitrations^[5] and fresh applications^[6], except in the following situations-

• The provisions of Section 6A shall apply to all pending proceedings and arbitrations. Explanation: It is clarified that where the issue of costs has already been decided by the court/tribunal, the same shall not be opened to that extent.
• The provisions of section 16 sub-section (7) shall apply to all pending proceedings and arbitrations, except where the issue has been decided by the court/tribunal.
• The provisions of second proviso to section 24 shall apply to all pending arbitrations.

Although, Section 85A was not incorporated in the Arbitration and Conciliation (Amendment) Ordinance, 2015, and there was no specific provision with respect to prospective or retrospective operation of the Ordinance, yet it is important to note that the Law Commission in its 246^th Report had clearly defined ‘fresh arbitration’ as:

• Arbitrations where there has been no request for appointment of arbitral tribunal, or
• Arbitrations where there has been application for appointment of arbitral tribunal, or
• Arbitrations where there has been appointment of the arbitral tribunal.

The recommendations by Law Commission were not incorporated in the Ordinance but this blatant ambiguity was addressed by section 26 of the Amended Act. Yet even after incorporation of section 26, the uncertainty prevails regarding the scope and applicability of the provision.

The critical question that has been contentious since the Amended Act came into force has been-Whether or not the Amended Act applies to arbitration proceedings which commenced before October 23, 2015 and were pending as on that date, or does it apply to only such arbitration-related court proceedings that were initiated on or after October 23, 2015 which are in relation to arbitral proceedings commenced before October 23, 2015. These questions have been addressed in detail in this paper by examining the scope of section 26 and application of general practice on retrospective application of a legislation where there exists no express provision on its retrospective.

Different High Courts have approached the issue differently which has further added to the prevailing confusion. The paper will separately address the stance of various High Courts and their implications.

Section 26 of the Amended Act[7]

The foremost intention behind the introduction of Section 26 was to not only clarify but to settle that unless the parties otherwise agreed, the Amendment would not apply to arbitrations that were initiated prior to the commencement of the Amendment. This is abundantly apparent from the phraseology of the provision-

26. Nothing contained in this Act shall apply to the arbitral proceedings commenced, in accordance with the provisions of Section 21 of the principal Act, before the commencement of this Act unless the parties otherwise agree but this Act shall apply in relation to arbitral proceedings commenced on or after the date of commencement of this Act

    .

After a thorough reading of the provision the root of trouble becomes apparent, the is – in the first part of the section declares that Amendment Act shall apply to-arbitral proceedings, and in the later part of the provision states that the Amendment Act shall apply ―in relation to arbitral proceedings. Use of two different phraseology makes it imperative to determine the import and significance of the expression –in relation to arbitral proceedings as differentiated from arbitral proceedings and to decipher why two different expressions have been used.

The Supreme Court in the case of Thyssen Stahlunion Gmbh v. Steel Authority of India[8]has already defined the expression- “in relation to arbitral proceedings” and held that the expression encompasses arbitral proceedings along with court proceedings relating to the arbitral proceedings. Therefore the expression covers the proceedings pending before the arbitrator along with proceedings before the court which are in relation to the same arbitral proceedings.

The Madras High Court on “Arbitral Proceedings” versus “In relation to Arbitral Proceedings

The Madras High Court in a matter New Tirupur Area Development Corporation Limited v. Hindustan Construction Co. Ltd.[9]discussed the two contentious phrases appearing in Section 26. The issue before the court was concerned with the effect ofSection 26 on any proceedings in court or going to be taken to the court, after the Amendment Act came into force. The court here in explicit terms held that the intention of the legislature was unequivocal, that theAmendment Act was prospective to “arbitral proceedings” commenced before the Amendment, but retrospective to matters “in relation to arbitral proceedings” which commenced after theAmendment (including court proceedings, notwithstanding whether these court actions were in relation to arbitral proceedings commenced before, or after the Amendment Act)[10]. This interpretation of statute lead to following conclusions-

Application of Section 26 was generalized. Amendment Act applied similarly to court proceedings related to arbitrations commenced before October 23, 2015, as well as court proceedings initiated on or after October 23, 2015 that are actually in relation to arbitrations, commenced before October 23, 2015.[11]

The anomaly in this judgment is apparent from the fact that concerned court proceedings – ones instituted after the commencement of the Amendment Act and the ones which branch out of arbitral proceedings initiated before the Amendment Act are being treated at the same footing.

In layman words it would imply that arbitral proceedings which commenced before the Amendment Act came into the picture, are to be governed by the 1996 Act, where as any and all court actions arising from said arbitral proceedings(commenced before October 23, 2015) , if instituted on or after the new regime, are to be governed by the new regime. Which in effect means that if an award was passed in an arbitration which commenced prior to October 23, 2015, and if a petition challenging the award is instituted after October 23, 2015, the challenge would be governed by the Amended Act (although the award was passed under the1996 Act).  This interpretation of the provision is fallacious on the face of it as profoundly affects the substantive rights of parties under section 34, with respect to setting aside of arbitral award.

The Substantive Nature of Section 34 Bars Any Retrospective Impact of the Amended Act

Section 34 of the pre-Amendment Act primarily deals with setting aside a domestic award which encompasses domestic award resulting from an international commercial arbitration.[12] It provides the substantive right for challenging an arbitral award which may be set aside on the grounds like- like incapacity of parties[13], invalidity of the arbitration agreement under the law to which the parties have subjected it[14], lack of proper notice of appointment of arbitrator or of the arbitral proceedings[15], where the courts find that the subject matter is not capable of settlement byarbitration[16], et cetera mentioned in Section 34. Additionally, the provision also allows setting aside of an award if it is in conflict with the public policy of India. Supreme Court has decided upon what meaning can be ascribed to “public policy of India” in the case ONGC Ltd. v.Saw Pipes.[17]

The right of Appeal is a Substantive Right

Law stands unanimously with respect to the proposition that the right of appeal is a substantive right and not merely a matter of procedure.[18]It is a vested right and accrues to the litigant and exists as on and from the date the list commences and although it may be actually exercised when the adverse judgement is pronounced, such right is to be governed by the law prevailing at the date of the institution of the suit or proceeding and not by the law that prevails at the date of its decision or at the date of filing of the appeal. This right can only be taken away by means of an express enactment and not otherwise.[19]

There is no argument to the proposition that an appeal is a continuation of suit. This right cannot be taken away by a procedural enactment which is not made retrospective, this right cannot be imperiled. This helps to establish the fact that the right to set aside an award underSection 34 of the pre-Amendment 1996 Act is a substantive right.

The Amendment Act affecting an Accrued Substantive Right cannot be applied

That the Amendment has imposed restriction on the right provided by the Act under section 34. The pertinent question that demands expeditious answer is – whether the restriction discussed above be imposed on the right to set aside an award arising from pre-Amendmentarbitral proceedings?

Several cases in past have settled the present proposition like ColonialSugar Refining Co. Ltd. v. Irving[20] stated that any interference with the existing rights is contrary to the well-known principle that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested, this principle has been frequently applied by the  SupremeCourt in HooseinKasam Dada (India) Ltd. v. State of Madhya Pradesh[21] which stated that ―a preexisting right of appeal is not destroyed by an amendment if the amendment is not made retrospective by express words or necessary intendment. The fact that the pre-existing right of appeal continues to exist must necessarily imply that the old Act continues to exist for the purpose of supporting the pre-existing right of appeal.[22]On implication from the settled case laws above it follows that the interpretation of Section 26 of the Amendment Act would be rendered fallacious when applying the new regime to court proceedings (commenced after the Amendment) which are in relation to pre-Amendment arbitral while applying the old regime to said arbitral proceedings.[23]

Delhi High Court  on Section 34

The same question recently came for consideration before the Division bench of High Court of Delhi in Ardee Infrastructure Pvt. Ltd. v. Ms. Anuradha Bhatia &Ors[1].  Here the court while adjudicating upon the controversy with regard to application of the Amendment Act, 2015 held that the right to have an award enforced or not is an accrued right and ‘the amended provisions would apply if they are merely procedural and do not affect any Accrued right(s).

Brief premise of the case was that a notice for invoking arbitration was given by the respondent in June, 2011. The statement of claim for the same was also filed in February 2013 and an interim award was passed on July 10, 2014 followed by the final award in October 2015.

Pursuant to the award, a petition under section 3 objecting the award was filed in January 2016. The Learned Single judge while deciding the case, in his order dated May 31^st, 2016 directed the Petitioner to deposit 2.70 crores along with the condition that if the said sum was not deposited within the stipulated time the objections filed by the Petitioner under section 34 would be dismissed. Aggrieved of the impugned order the petitioner preferred appeal before the division bench of Delhi High Court.

While Petitioner/Appellant argued that– Firstly, that the Petition under Section 34 of the Act would not be governed by the amended provisions of Sections 34 and 36 and, therefore they are entitled to an automatic stay on the filing of the Petitions under Section 34 of the Act. They agitated that as per Section 6 of the General Clauses Act, 1897, repeal of an enactment would not affect any right acquired or accrued under the repealed enactment unless a different intention appears in the repealing Act. Based on the same argument they argued that amendment cannot be allowed to take away the vested rights of the party and therefore Section 6 of the General Clauses Act, 1897 would be applicable. It was also argued by the counsel for Petitioners that Section 26 of the Amending Act does not express any intention of retrospective application prior to October 23, 2015, and therefore, it would operate prospectively and not to arbitration commenced prior to October 23, 2015.

Based on the above legal contentions they prayed that the order of Learned Single Judge, imposing condition upon the Petitioner, to deposit Rs. 2.70 Crores for issuing notice in its Petition under Section 34 of the Act to be declared illegal.

Respondent on the other hand heavily relied on the Madras High Court Judgment in New Tirupur Area Development Corporation Limited v. Hindustan Construction Company Ltd^[2] to contend that, the legitimate interpretation of Section 26 of the Amendment Act, 2015 would entail that – Section 26 of the Amendment Act uses the expression “to arbitral proceedings” instead of “in relation to arbitral proceedings”,  this implies that the legislative intent was to limit the scope of section 26 and it could not be extended to include post-arbitral proceedingsMoreover, aid to Section 6 of the General Clauses Act cannot be resorted because of use of the restrictive phrase in Section 26 of the Amending Act. It categorically denied that this interpretation of Section 26 would take away right accrued in favour of the Appellant.

Issue that the Hon’ble court culled out from the Appeal was,

The implication of the amendments brought to Section 34 and Section 36 of the Act, by the Amendment Act. The Court was burdened with adjudicating upon the issue that- whether the Appellant would be entitled to an automatic stay of the Award dated October 13, 2015 in terms of Section 36 of the Act or not.

The Hon’ble High Court of Delhi minutely observed that the logical interpretation of Section 26 of the Amended Act should be one which equitably dealt with all types of cases that would fall for consideration under the Act, after the amendments were introduced vide the Amended Act on October 23, 2015.

The Court has lucidly explained and for illustrative purposes identified three categories of cases that would fall under the Act, after introduction of the amendments:-

Category I: Cases whereArbitral proceedings commenced prior to October 23, 2015 and were pending before an arbitral tribunal on October 23, 2015;

Category II: Cases where Arbitral proceedings commenced prior to October 23, 2015 and the award was also made prior to October 23, 2015, but the petition under Section 34 seeking the setting aside of the award was made after October 23, 2015;

Category III: Cases where the arbitral proceedings commenced prior to October 23, 2015 and the awards were made prior to October 23, 2015, and the petition under Section 34 had also been instituted before court prior to October 23, 2015.

The Hon’ble High Court after thorough observation was of the view that, if Respondent’s interpretation to the expression “to the arbitral proceedings” is accepted it would lead to anomalies. However, if the expression “to the arbitral proceedings” which is employed to the first part of Section 26 of the Amended Act is given the same expansive meaning as the expression “in relation to arbitration proceedings” as appearing in second part of Section 26, it would not result in anomaly. The Hon’ble High Court also expounded the reason for digressing from the judgments passed by High Courts of Calcutta and Madras,and observed that if hypothetically a narrow view of the expression “to the arbitral proceedings” in Section 26 of the Amended Act is to be taken, then it would not address those categories of cases where the arbitral proceedings commenced prior to October 23, 2015 and where even the award was made prior to October 23, 2015, but where either a petition under Section 34 was under contemplation or was already pending on October 23, 2015, and this would not be the correct interpretation of the provision.

The interpretation supplied by Madras High Court and Calcutta High Court would still hold good if the amended provisions were merely procedural and would not have affected the accrued right of either party. As a consequence, the petitions filed by the appellants under Section 34 of the said Act would have to be considered under the unamended provisions of the Act and consequently, the appellants would be entitled to automatic stay of enforcement of the award till the disposal of the said petitions.

Conclusion

It cannot be disputed that if the present matter in question was a matter of procedure only, the retrospective applicability of the Amendment would have been well founded. The logical conclusion that may be drawn is that the un-amended 1996 Act would apply to the whole gambit of arbitration proceedings which commenced before the Amendment Act, right upto the culmination of the proceedings into a challenge or an enforcement of the award. [3]

It is evident that the contradictory judgments passed by different High Courts have only added to the confusion among the parties currently embroiled in enforcement proceedings post the amendments in the Act.[4] In the light of these conflicting judgments, it is pertinent that the confusion is clarified and/or settled by either the legislature or the Apex Court; otherwise, the ambiguity will continue and parties in future would suffer indefinitely. The ambiguous nature of this issue requires urgent consideration to provide uniformity to the law and for its effective implementation as this is an eminent threat to alternate dispute resolution mechanism in India

[1] Arbitration & Conciliation (Amendment) Act, 2015, No. 3 of 2015 (India)

[2] LAW COMMISSION OF INDIA, REPORT NO. 176 – THE ARBITRATION AND CONCILIATION (AMENDMENT) BILL, 2001[1] Arbitration & Conciliation (Amendment) Act, 2015, No. 3 of 2015 (India) (2001), available at http://lawcommissionofindia.nic.in/arb.pdf. (Hereinafter ‘246th LAW COMMISSION REPORT’)

[3]Section 8, The Arbitration and Conciliation (Amendment) Ordinance, 2015

[4]Supra n.2,  § 85(2)(a) 246th LAW COMMISSION REPORT

[5] “Fresh Arbitrations” mean arbitrations where there has been no request for appointment of arbitral tribunal; or application for appointment of arbitral tribunal; or appointment of the arbitral tribunal, prior to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.

[6] “Fresh Applications” mean applications to a court or arbitral tribunal made subsequent to the date of enforcement of the Arbitration and Conciliation (Amending) Act, 2014.

[7] Arbitration and Conciliation (Amendment) Act, No. 37 of 2015, § 26 (India).

[8](1999) 9 S.C.C. 334.

[9]A. No. 7674 of 2015 in O.P No. 931 of 2015 (Madras High Court) (India).

[10]D. Gracious Timothy, “The Conundrum Underlying Section 26 Of The Arbitration Amendment Act, 2015: Prospective Or Retrospective?” IJAL.Vol V(2) (2016):205

[11]Id, p. 79-82

[12]Arbitration and Conciliation (Amendment) Act, No. 37 of 2015

[13]Id, § 34(

[14]Id,§ 34(

[15]Id,§ 34(

[16]Id,§ 34(

[17] (2003) 5 S.C.C. 705 (India).

[18]Vijay Prakash v. Collector of Customs (1988) SCC 402

[19]Deep Chand v. Land Acquisition Officer, (1994) 4 SCC 99 at p. 102

[20]1905 A.C. 369 (U.K.).

[21]A.I.R. 1953 S.C. 221 (India).

[22]A.I.R. 1953 SC 221

[23]Supra n. 10 at p. 210

[24] FAO (OS) No. 221 of 2016 &FAO(OS) No. 222 of 2016

[25]Supra n. 9

[26] Seaford Court Estates Ltd. v. Asher, [1949] 2 K.B. 481 (U.K.).

[27]Supra n. 10 at p. 220

In this article, Rakesh Gupta who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Employee Provident Fund Withdrawal Rules and Taxes.

Introduction

A Provident Fund is a scheme developed by the Central Government which gives financial security to employees after their retirement. It is the part of employee salary structure. As per the scheme, a percentage from employee’s salary is deducted and added to his provident fund account every month and his employer would also require contributing the same percentage of the amount to the employee’s provident fund account. In India, there are three types of provident funds, i.e., Public Provident Fund for the public, Employees Provident Fund (EPF) for private sector employees and General Provident Fund (GPF) for Government employees.

Employee Provident fund (EPF)

The Employee Provident Fund (EPF) is governed by Employee Provident Fund Organization (EPFO), a statutory body under (Labour Ministry) Ministry of Finance, India. It helps private sector employees to save a small portion of their salary every month. This scheme helps them to fabricate a corpus which is duty excluded for use in the fag end of their lives or retirement. Employee Provident Fund is a long haul reserve funds apparatus, fundamentally went for a calm retirement, salaried representatives may pull back their cash in their EPF record to take into account diverse budgetary prerequisites or at the season of any real life occasions, for example, weddings, home remodel/adjustment and medicinal treatment among others. The amount is deposited at the Employee Provident Fund Organization (EPFO). The investments made by a number of employees are pooled together and invested by a trust. EPF covers following three schemes.

• Employees’ Provident Fund Scheme, (EPS) 1952
• Employees’ Pension Scheme, 1995 (replacing the Employees’ Family Pension Scheme, 1971) (EPS).
• Employees’ Deposit Linked Insurance Scheme, (EDILS) 1976.

As per Employees Provident Fund Act, rules and regulations, 12% of the basic pay of a salaried employee (in addition to dearness allowance and cash value of food allowances, if any) is deducted from his or her salary on a monthly basis as a contribution towards an EPF account. However, an employer contributes 8.33% in the Employee Pension Scheme (EPS) while only 3.67% is deposited in the Employee Provident Fund account. The current rate of interest on provident fund deposits (for the financial year 2016-17) for an EPF account is 8.65% p.a. The rate of interest is subject to change every year, as announced every year by Employee Provident Fund Organization apex body.

All associations which have hired more than 20 employees ought to obligatorily enrol with EPFO. To make the ideal utilisation of the EPF account, salaried representatives must know about what a provident reserve account involves and how it is worked.

As per the EPF Scheme withdrawals are not permitted from the EPF account until the worker has stopped working or is independently employed. The money from the EPF account can be withdrawn if the employee doesn’t have any job. PF exchanges are permitted if the holder changes employments. If an employee decides to withdraw money from his EPF account after quitting the job, he needs to submit a declaration mentioning the reasons for the same.

Employee Provident fund (EPF) withdrawal Rules

The Employees Provident Fund scheme has become the retirement saving scheme in the true sense. The Labor ministry of India issued a gazette notification about the changes in withdrawal rules EPF Act, with effect from 10^th February 2016 but it was withdrawn on 19^th April 2016 due to the pressure from the various trade unions. The changes brought in by the government was

• Retirement age of an employee increased from the current 55 years to 58 years.
• An Employee can withdraw 90% of EPF balance once he reaches the age of 57 years.
• An Employee cannot withdraw Employer contribution to EPF before 58 years.
• EPF membership does not end with leaving the job.
• Government plans to start online facility for EPF withdrawal in Aug 2016.

Let’s go through these changes in detail

Retirement age increased from the current 55 years to 58 years

As per earlier Employee Provident Fund rule, the retirement age of an employee was 55 years. From 10^th February 2016, the retirement age was increased to 58 years. In today’s global scenario retirement age is 58 years across all industrial sectors, so this change is keeping in step with times.

Withdraw 90% of EPF balance once an employee reaches the age of 57 years

Earlier the retirement age of employee as per EPF rules was 55 years. Therefore one was allowed to withdraw 90% of his EPF balance one year prior to retirement i.e. at the age of 54 years. With these new rules, the age of retirement has been increased to 58 years, now the employees will not be able to claim withdrawal of their provident fund after attaining the age of 54 years. They would have to wait till attaining the age 57 years. But the change is that now under this facility, the employee would be able to withdraw 100% of his contribution and interest earned on it unlike 90% of the total accumulations earlier.

Restriction on withdrawal of Employers contribution to Employees Provident Fund before 58 years. (This new rule has been withdrawn)

As per the notification dated 10^th February 2016 any person who is a subscriber to Employers Provident Fund cannot withdraw the employer’s contribution to EPF before the retirement. The employer’s portion can be withdrawn only after attaining the retirement age (58 years).  It is to be noted that the withdrawals from the Employers Provident Fund within five years of joining are still taxable. The problem that the Employers Provident Fund would face is whether it would pay interest on Employer share which one is not allowed to withdraw. ‘The inoperative account rule of Employers Provident Fund says that an Employers Provident Fund account would not earn interest if there is no contribution for 3 years’. Now onwards, there would be several Employers Provident Fund account without contribution as people would not be able to withdraw their full Employers Provident Fund corpus. Will such account not give any interest after 3 years? The rule says

“A member, who ceases to be in employment and continues to not be employed with a covered establishment for at least two months, may be permitted to withdraw only his own share of contribution, including interest earned thereon. The requirement of ‘two months’ period referred above shall not apply in the case of female members resigning from the service for the purpose of getting married or on account of pregnancy/ childbirth.”

Employee Provident Fund membership does not end with leaving the job

As per the notification dated 10^th February 2016 subscriber to Employees Provident Fund cannot withdraw the EPF contribution by the employer before the retirement. The employer’s part can be withdrawn after attaining the retirement age (58 years). Since one can’t withdraw the 100% of the PF balance, your Employee Provident Fund account is not closed. As per earlier Employees Provident Fund rules, the membership was linked with the employment. One becomes a member of Employee Provident Fund with the joining of a new job. Once the subscriber to Employee Provident Fund become jobless and withdraws his Provident Fund balance, the membership expires.

But now Employee Provident Fund membership would continue up to the retirement age. The Employee Provident Fund membership has become independent of the job. Since one can’t withdraw the 100% of the Provident Fund balance, the membership is bound to continue.

Withdrawal Purposes

Employees Provident Fund is an important part of most of the salaried persons. It can help one, at times when he is pressed for money in life. If any person who have already worked for years like 5-20 yrs., he must have accumulated a good amount in his Employee Provident Fund account. Such employees may withdraw money from their Employee Provident Fund accounts for various purposes, subject to certain conditions. Individuals have to furnish several documents in addition to meeting the eligibility criteria as per Employee Provident Fund withdrawal rules. The list of purposes and quantum of contribution which can be withdrawn are listed below:

Situations when an employee can withdraw money from Employee Provident Fund account while on employment

Hereunder are those major landmarks in life or reasons for which an employee can take out the money from his Employee Provident Fund account

• Marriage Purpose of Self, Sibling, and Children
• Education Purpose of Self + Children
• Repairs/Alteration of Existing House
• Repayment of Existing Home Loan
• Purchase/Construction of House or Flat
• For Medical Treatment
• Miscellaneous

Specific Rules for specific situations

Marriage purpose for self, children, and siblings

Any salaried employee can withdraw from his Employee Provident Fund account for the occasion of marriage if he has completed 7 (seven) yrs. of service. He can avail this facility 3 (three) times in life (during his tenure/service) and the maximum amount he can withdraw cannot be more than 50% of the “Employee share” in Employee Provident Fund account. For this purpose, part of employer’s contribution is not considered for withdrawal. So even if Employee Provident Fund account total balance is Rs 15 lacs, the whole amount is not considered for calculation purpose, only employees own contribution and interest on that amount are used for calculation purpose. This is applicable for the marriage of

1. Self
2. Son or Daughter
3. Brother or Sister

For the purpose of withdrawal, the employee needs to provide the full address of venue, marriage date in Form 31, and also attach some proof of weddings like Marriage invitation or the bonafide certificate of the fees payable and give it to his employer for verification and processing.

Education of Self + Children

A salaried employee can also withdraw for education expenses for self and children. This is valid only for post matriculation educational expenses. By post-matriculation, it means after 10th standard. So if any subscriber is admitting his child to any college or university for graduation or post-graduation or any other professional course, he can withdraw from his Employee Provident Fund account. But this can be availed only after 7 (seven) yrs. of service and the maximum amount can be withdrawn is 50% of own contribution.

This can be used for maximum 3 (three) times in employees lifetime, but this 3 (three) times also includes the “marriage” as the reason. So the fact of the matter is, for Marriage or Education purpose, you can withdraw for maximum 3 (three) times in total.

Purchase/Construction of House/Land

If a salaried employee plans to buy or construct a house OR purchase a land, then he is eligible to withdraw some limited money from his Employee Provident Fund account once in a lifetime.

Here are some of the rules which need to fulfilled

• The house/land should be on employees name or his/her spouse name or jointly in their name i.e. employee and his/her spouse (no other combination is allowed)
• Employee should have completed 5 yrs. of tenure in his employment
• If purchasing a land, the maximum permissible amount is 24 times of monthly wages.
• If purchasing or constructing a house/flat then, the permissible limit is 36 times of monthly wages (including the acquisition of land also)

The property in question should be free from any dispute or encumbrances to avail this facility. Also, the property should be registered and a proof of registration must be given to get this facility.

Repayment of Existing Home Loan

If an employee has a home loan, then he can withdraw some part of his/her Employee Provident Fund money to repay his home loan. But for this purpose, the employee needs to have minimum 10 yrs. of service. This facility is available only once in his/her lifetime and this time limit is, clubbed with the above- mentioned reason (3rd) above. Therefore one can either withdraw money from Employee Provident Fund account for purchase/construction of house or repayment of house loan, not both.

The property should be registered in the name of self, spouse or jointly registered with a spouse. The employee won’t get the benefit if the loan is taken jointly with father, mother, and siblings. The maximum amount one can withdraw is up to 36 times of monthly wages. The money to be received under this clause can be taken from self-contribution and employer contribution in Employee Provident Fund. To get the money under this clause one needs to provide the proof for house agreement, the sanction of house loan and some other documents as asked by the Employee Provident Fund Organization (EPFO) office. The money will be issued directly to the lender bank.

Repairs/Alteration of Existing House

If a salaried person wishes to withdraw from an Employee Provident Fund account for the purpose of house renovation or alteration, he needs to follow certain rules regarding this purpose. These rules are

• The maximum money employee can withdraw is 12 times of his/her monthly wages
• The house should be more than 5 yrs. old after construction completion date.
• Employee should have completed minimum 10 yrs. of service
• Employee can avail this facility only once
• The house should be in the name of self, spouse or jointly with spouse

For the above purpose, money can only come out of employees own contribution, not employer’s contribution

Medical Treatments

A salaried person can withdraw money from his Employee Provident Fund account for a medical treatment for self, parents, spouse and children in following 3 situations (anyone, not all)

1. More than I month of hospitalisation (for any reason), or
2. Major surgical operation in a hospital, or
3. If one is suffering from T.B., leprosy, paralysis, cancer, mental derangement or heart ailment and having been granted leave by his employer for the treatment of the said illness.

The benefit of this clause is that one can withdraw the money anytime in his service tenure. There is no requirement that, one must have completed a minimum/specific number of years in service/job. Even if one has been in service for just 1 yr. or 2 yrs., he can still withdraw money for medical treatment. The maximum money can be withdrawn is 6 months wages. This benefit can be taken anytime and for any number of times during a lifetime.

There are some documents which need to be produced and submitted along with Form 31

• A certificate from an employer stating that member is not getting the benefit of Employees’ State Insurance Scheme facility
• A certificate from an eligible doctor stating the medical illness to the member and time period for which hospitalisation is required.

Miscellaneous

Every employee subscribed to Employees Provident Fund scheme can choose to withdraw from their Employees Provident Fund account for other reasons as well

• Premature retirement due to any physical or mental disability
• Going abroad for the sake of better employment or
• Settling down in a foreign country.

Tax Implication on Employees Provident Fund Withdrawal

Tax on Employees Provident Fund money withdrawal is the main concern of the employees who leave early. Most of us know about the tax-free nature of Employees Provident Fund. The Employee Provident Fund is also considered most reliable retirement corpus. There is no chance of default. Subscribers will get a better interest rate and no one can take away provident Fund corpus.  Beside this Provident Fund is totally tax exempt. We have a common perception that Employees Provident Fund does not have any tax tension.

But, very few of us know that the Provident Fund corpus can also be subject to the ‘tax cut’. Provident Fund balance can be reduced by 34.6%. One may only get 65.5% of Provident Fund money. The TDS (tax deducted at source) can dent PF balance severely. There is a provision of the tax on the premature withdrawal of Employees Provident Fund.

Tax Treatment of Different Provident Funds

There are four types of provident fund, which give tax concession.  The following table has been taken from the Income tax website. The table shows the tax treatment of provident funds. Please do read the note given below the table.

Note

Salary for this calculation includes the following components

• Basic salary,
• Dearness allowance
• Commission based on a fixed percentage of turnover achieved by the employee.

Tax Benefit of Employees Provident Fund

As mentioned in the table, the Employees Provident Fund enjoys many tax benefits.  The Employees Provident Fund saves your tax in following ways:

1. Employer’s contribution to Employees Provident Fund account is exempt from tax. This exemption is subject to 12% of employee’s basic salary plus DA.
2. The interest on employer’s contribution is also exempt from tax.
3. The employee’s contribution toward Employees Provident Fund is also eligible for tax deduction under section 80C of the Income- tax Act.
4. The interest on the employee’s contribution is also tax exempt.

Tax Benefit Is Subject To Minimum Service Requirement

An investment which gives tax deduction comes with a lock-in period. Except for the ELSS, all other tax saving investments has a minimum lock- in period of 5 years. So is the case with Employees Provident Fund. The investment in Employees Provident Fund may give tax benefit up to 30%, but it depends upon the tax slab one has been in all previous years.

Therefore, if employee/s does not complete the minimum investment requirement of 5 years, the above tax exemption and deduction would be void.

Return Back of EPF Tax Benefit

If any employee withdraws from Employees Provident Fund balance before 5 years’ service all his tax saving will become null and void.

• The person has to return back the tax deduction because of the employee EPF contribution. The employee must have taken the 80C tax benefit on the EPF contribution. It is also calculated financial year wise
• The interest on PF contribution will become the part of other income. It would be added in the tax calculation of every financial year.

TDS on Employees Provident Fund

The new TDS rule of Provident Fund is painful for most of the employees as the percentage of TDS can be deducted are 34.6%. In Income- tax it is said to be the maximum marginal rate. The 34.6% tax is huge, that too of Employees Provident Fund corpus. It would be really very frustrating if one gets Employees Provident Fund money after such a big deduction.

Conditions of TDS on Employees Provident Fund Withdrawal

The Employee Provident Fund Organization (EPFO) can deduct tax at source (TDS) only if an employee falls under the following two criteria.

1. The employee has not completed total 5 years of continuous service.
2. The EPF withdrawal amount is more than 50,000. (Earlier this limit was Rs 30,000).

Explanation

‘5 years of continuous service mean aggregate service’. The person may have worked in different organisations, but total service period should be more than 5 years. However, the following points should be considered while calculating the continuous period of service.

• The employee must have transferred the Provident Fund balance of the previous organisations. If you have withdrawn the PF balance of previous employment, the service period of the employment is not considered for continuous service.
• Employee’s previous service period would not be added to recent service period unless he transfers the previous Provident Fund balance.

However, one can minimise or avoid TDS on Employees Provident Fund withdrawal if you fulfil some requirements

Relaxation of TDS from Employees Provident Fund withdrawal

• If employee has submitted PAN
• If an employee has given the PAN, the TDS would be 10% instead of 34.6%.
• If Employee has submitted Form 15G/ 15H

If an employee submits form 15 G with the Employees Provident Fund withdrawal form, the TDS would not be applicable. The form 15G/15H is a self-declaration that total income (including Employees Provident Fund corpus) is within the tax- free limit.

No TDS for Most of the Employees

A number of employees leave the job after 5 years of service. Therefore, they need not worry about the TDS of Employees Provident Fund. The following points need to be remembered:

1. The Employees Provident Fund maturity amount is tax-free if one is engaged in the continuous service of more than 5 years.
2. If the service termination is beyond employees control. If you are out of a job because the lockout, retrenchment or medical condition, the rule of TDS would not be applicable.

Suggestions

Ways to Avoid Tax on Employees Provident Fund Withdrawal

Early Provident Fund withdrawal can leave the salaried person in a heavy tax burden. Besides this, there are other hassles as well. But if one plans properly, tax and hassles can be avoided

1. One must avoid withdrawing Employees Provident Fund after every job switch. This might compel the person to pay tax after every withdrawal. Instead, Provided Fund transfer will save tax.
2. If one is taking a small break from the job, don’t withdraw the Employees Provident Fund balance. One can transfer the Employees Provident Fund balance after joining the service again. A Provident Fund account gives interest till 3 years of non-contribution.
3. If one is leaving a job and switching to a business or profession. Wait for completion of 5 years.

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LIST OF WEBSITES REFERRED

http://www.epfindia.com/site_docs/PDFs/Downloads_PDFs/EPFAct1952.pdf

https://www.taxmann.com/bookstore/…/employees-provident-funds-and-miscellaneou

https://www.bemoneyaware.com/blog/changes-in-epf-withdrawal-rules-from-10-feb-2016/

https://www.relakhs.com/latest-epf-withdrawal-rules-w-e-f-10th-feb-2016/

In this article, Rajan S who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses the recent amendments in Maternity Benefit Act.

Everything You Need To Know About The Recent Maternity Benefit Amendments

The aim of Maternity Benefit Act, 1961 is to regulate the employment of women employees in factories, plantations, mines, shops, the circus industry and establishments having ten or more persons, for certain periods before and after childbirth and also to provide maternity and other benefits.

Recently, the Rajya Sabha has passed the Maternity Benefit (Amendment) Bill, 2016 towards the Maternity Benefit Act, 1961 which has addressed the various provisions which are mainly focussed on enhancing the maternity benefit.

This amendment was passed based on the recommendations from the 44^th session of Indian Labour Conference (ILC) and the reiterations on its subsequent sessions of ILC. Moreover, the Ministry of Women and Child Development has also requested to enrich the maternity benefit. The proposed change was deliberated in Tripartite Consultations and further, it has been concluded to amend the Maternity Benefit Act 1961.

This amendment to the Maternity Benefit Act would be at par with international labour law standards set by the International Labour Organisation. Conversely, some of the proposed alterations could impact on cost to employers.

The following are the salient features of the proposed amendment,

Enhancement of paid Maternity Leave

• The existing paid maternity leave 12 weeks has been proposed to amend 26 weeks which is only applicable for the women who have less than two surviving children. Out of this 26 weeks, 8 weeks (previously 6 weeks) maternity leave can be availed before the expected date of delivery. However, for other cases the existing maternity paid leave shall continue i.e. 12 weeks period.

Maternity Benefits to Surrogate mother

• For the maternity benefit of Commissioning mother or surrogate mother (means a biological mother who uses her egg to create an embryo implanted in any other woman) shall be entitled for paid surrogacy leave of 12 weeks from the child handed over date. The same benefit shall also be applicable to adopting mother, provided the adopted child is less than three months old.

Work from home option

• This provision gives an option to women after her maternity leave. However, the terms of work at home option is applicable as may be mutually agreed between the employer and the women.

Crèche facilities

• The proposed amendment also has the benefit of crèche facilities to be mandatorily provided for the women by the employer who has 50 or more employees. The prescribed rules such as distance to the facility from the establishment, whether shared or individual crèche facility, whether chargeable basis or free of charge to the employee, would be guided on government official notification.
• This amendment permits the eligible women to make four visits per day to the crèche facility including the interval for rest.

This amendment also dictates that every establishment shall intimate to every woman in writing and electronically, at the time of appointment about the benefits available under the Act.

Given this amendment, below provisions remain unchanged for getting the maternity benefit,

• No change in Eligibility criteria i.e. only those women are eligible who has worked minimum 80 days in the 12 months prior to her expected delivery date.
• Also, it continues to prohibit the Employer to employ women for a period of six weeks immediate after her delivery.

This amendment shall come into effective from the date of Central Government notification in the Official Gazette.

Seeing these provisions in said amendment, particularly increase in maternity leave period and the crèche facilities to be provided by the employer would make a substantial impact on the cost to employer and may lead to potential decrease in the women employee recruitment.

On the other hand, this will indirectly create a goodwill among women employee with their employer which may pave the long term working with that employer. Moreover, it will also enhance the standard of parenting and reduces the strains for the working women during maternity period.