When a company hires an employee, an employer-and-employee relationship is established based on the contract and an arbitration agreement is signed, which can be triggered in future cases where both parties are in dispute. But what if the same dispute arises at the class level? The arbitration has to be performed at the individual level for all employees, which would break the concept of arbitration as a speedy trial. Now, the question arises as to why we shouldn’t make the arbitration proceeding a class action against the employer, so you are right that’s possible totally on the contract with clarity on the class action arbitration, which must be carefully drafted by both parties. So, we’ll be discussing this peculiar issue where companies can make their employees arbitrate disputes individually. This article will analyse the Lamps Plus case, one of the leading cases in class arbitration and discuss further the implications of the court’s decision for both employers and employees.
Facts of the case
Lamps Plus is a California-based lighting company where Frank Varela, an employee of Lamps Plus, In 2016, Varela was in his course of employment when he fell victim to a hacker. Through phishing, the tax information of nearly 1300 company employees was led into the hands of a hacker who fraudulently filed tax information using the name of Frank Varela. This has caused Frank Varela and other employees to suffer financial harm. Varela brought a class-action lawsuit against Lamps Plus for himself and other affected employees. Lamps Plus breach of trust against Varela’s class arbitration demanded a class action arbitration suit.
Contentions of both parties
However, Lamps Plus argued that the arbitration clause in Varela’s employment contract only allowed him to arbitrate his claim individually rather than as part of a class action and the arbitration clause stated that any disputes between the company and its employees would be resolved through an individual rather than a court system. Varela argued that the arbitration clause was ambiguous and did not clearly state if class action arbitration was allowed or not. He also argued that he should be allowed to present his case with a class action because it would incur a lot of expenses for him as well as the individual aggrieved. He requested to litigate his claim individually, which was allowed by the Court of California, but later, due to appeal, the case made its way up to the Supreme Court (Apex Court of the US). Which ultimately favoured Lamps Plus.
Writing for the majority, Chief Justice John Roberts held that “the arbitration clause did not allow for class arbitration, as it mentioned individual arbitration.” The Court found that Varela’s argument that the clause was ambiguous and unpersuasive, as any ambiguity should be resolved in favour of arbitration.
Observation of Lamps Plus vs. Varela
The Court also rejected Varela’s argument that he should be allowed to proceed with a class action because it would be too expensive for him to litigate his claim individually. The court found that the Federal Arbitration Act, which governs arbitration agreements based on the cost of individual arbitration, has important implications for employees and employers who are subject to arbitration agreements. Employers who went to prevent class actions will likely include explicit language in their arbitration agreements to prohibit class arbitration. Employees who want to bring class actions will need to carefully review their arbitration agreements to determine whether they are allowed to do so.
The decision also highlights the importance of understanding the terms of any contract before signing it. Employees who sign contracts with arbitration clauses should understand that they are waiving their right to sue in court and are instead agreeing to have their arbitration clauses clear and unambiguous to avoid potential legal challenges.
The dissenting justices in the case argued that the majority’s decision was unfair to employees and would prevent them from effectively vindicating their rights. Justice Ruth Bader Ginsburg, writing for the dissent, noted that individual arbitration can be a costly and time-consuming process that is not practical for many employees. She argued that employees should be allowed to proceed with class actions if the cost of individual arbitration would effectively prevent them from vindicating their rights. The dissenting judges also argued that the majority decision was innocent, that the Court’s previous decisions on arbitration agreements should be interpreted in the same manner as other contracts and that any ambiguity should be resolved against the party who drafted the agreement. They argued that the majority’s decision in Lamps Plus originated from this principle and by interpreting the arbitration clause that was in the agreement, it favoured the employers rather than the employee.
The court’s final decision
The Supreme Court passed the judgement in a 5-4 ratio, holding that the arbitration agreement did not permit class arbitration. The Court reasoned that under the Federal Arbitration Act (FAA), arbitration is a matter of contract and that parties are free to agree to the terms of their arbitration agreements. Therefore, the court held that the absence of clear language in the contract indicates that the parties were having mutual cohesion in sole arbitration rather than a class action.
This Court’s decision was based on prejudiced decisions backing AT&T Mobility LLC vs. Concepcion (2011) and Epic Systems Corp. vs. Lewis, which held that the FAA preempts state laws that invalidate class action waivers in arbitration agreements. These decisions have been seen as favourable to employers who wish to require their employees to arbitrate disputes individually.
Now coming to implications, there are the following implications for both employers and employees:
Employees
The Lamps Plus ruling from the court was less favourable towards employees that were in pursuit of filing a class action suit. Essentially, the Court’s decision implies that employees who have signed arbitration agreements are unable to collectively file a suit against Lamps Plus. It is less favourable for employees who wish to pursue their claims as part of a class action. The Court’s decision directly puts the employees in the corner, as it means that employees who have signed arbitration agreements cannot bring class-action claims against their employers in arbitration. Instead, they must arbitrate their claims individually, which can be more difficult and expensive to proceed with.
Employees who wish to pursue their claims as part of a class action may be limited in their ability to do so as a result of the court’s decision. This may be particularly problematic for low-wage workers who lack finances and proceeding with the court proceedings may result in a financial toll on their pocket.
Employers
The Court decision was not in favour of employees and gave a direct victory to employers. The Lamp Plus decision is a victory for employers who were mandating their employees to arbitrate disputes individually. The Court’s decision reaffirms the importance of arbitration agreements as a way to avoid costly and time-consuming litigation. By requiring employees to sign arbitration agreements, companies can ensure that disputes are resolved more efficiently and cost-effectively. It is still the most effective way to solve the disputes individually as a means of alternate dispute resolution, whereas considering the agreement, it was bound to happen. Furthermore, the court makes it clear that companies can limit the scope of arbitration agreements to individual disputes only. This means that employees cannot bring class-action claims against their employer in arbitration, which can be beneficial for companies facing the prospect of expensive class-action lawsuits.
Class action suit or arbitration in India
There is no such defined concept of class arbitration in India in relation to employer and employee relations, but there is a scope of such action under Section 245 of the Companies Act, 2013 that emphasises situations where class action suit is still a scope of action where aggrieved is not an individual but different individuals aggrieved of the same action or any resolution that is contrary to their rights as an employee or against any statute or labour laws, then it becomes a path to remedy for all. There are some decisions made by companies that are prejudicial to the interests of the company or its members to creditors. Such creditors can apply to the Tribunal on behalf of the members or creditors, seeking all or any remedy. In India, there are also some class-action arbitration options that are available in securities fraud cases. As we know, we have exhaustive labour laws and different acts like the Employee’s Compensation Act of 1923, the Industrial Employment (Standing Orders) Act of 1946, the Trade Unions Act of 1926, and many others that are balanced acts in the sense that their respective positions do not favour one party but provide protection to the right cause, and that can be determined by going through the objectives deriving from the preamble, which provide substantial protection to both employer and employee.
Conclusion
The Lamps Plus case is one of the cases that is very ambiguous and that can conflict the rights of both parties in a dispute. Any agreement that is too ambiguous can ultimately lead to circumstances where one party takes advantage of the other. Similar circumstances have previously occurred when parties asserted that they had incorporated a clause that allowed them to choose class arbitration in the case of a dispute. Several decisions on class arbitration have consistently favoured the parties who deliberately drafted an ambiguous contract. Since the Lamps Plus case, we have observed that the act requires more than uncertainty to confirm that the parties intended for the arbitration to apply to the entire class action suit. In ambiguous agreements, that could be used as justification. On the contrary, an agreement’s ambiguity could not be used as justification for requesting a class action suit. A clause explicitly allowing for class representation before an arbitral tribunal should be present for any class arbitration procedure to begin with, which can be considered an essential factor that makes it crystal clear for both parties and reduces disputes in the future.
The Supreme Court in the case of Transmission Corporation of Andhra Pradesh Limited vs. GMR Vemagiri Power Generation Limited (2018) said that while a contract can either be expressed or implied depending upon the circumstances, it is important to consider all relevant circumstances when determining the construction and interpretation of the contract. If a factor is ambiguous, it is preferable to consider all relevant circumstances, which will give a bigger picture of who and how the party should be held liable for the interpretation of unambiguous terms.
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Many times, the media is referred to as the face of a country, the reason being that it plays a vital role in a democratic country, which means how free the media is to represent and reflect the current and actual position of a country. This means that it has a great responsibility to perform. The important duty of the media is to inform, reflect and deliver the unfiltered truth.
However, unfortunately, many times, in the race to be first, the facts are more or less overlooked. Hence, in the current situation, it is important to consider how wisely the media plays its role. In many cases, we have seen that the media runs parallel trials of a person or a case, especially if it is the case of any actor, politician or public figure. Such parallel-running media trials affect many other aspects of society and laws.
Media trials, characterised by sensationalised coverage and public scrutiny, have become an integral part of today’s news landscape. While the media plays a crucial role in informing the public, the impact of media trials on both society and the judiciary raises important questions about ethics, fairness, and the rule of law.
What are media trials
Every now and then, we find some or other discussions, debates and investigations going on in social or other forms of media.
Generally, trials are run by judicial bodies in order to decide a particular case. In a similar fashion, when the media, before the judgement of the court, runs such parallel trials in any manner, then such trials are known as media trials. Herein, the media acts like any investigative agency and covers the case thoroughly.
In such trials, the media coverage directly portrays the accused as a criminal, which is a complete violation of the law. Any under-trial prisoner cannot be treated as a criminal until and unless proven guilty. Media trials take place, especially when any celebrity or other famous public figure is involved. Other than that, in cases of murder or rape, it takes place very often.
Some famous such cases are the Aarushi Talwar Murder case, wherein her own parents were made and portrayed as murderers. Later, they were acquitted by the Allahabad High Court. In the Nirbhaya Rape case, the media made it a public movement but in many of the channels, the victim’s character was questioned. When such a heinous crime takes place, the media is supposed to act responsibly. However, such an act by the media should be criticised. Questioning the victim’s character leads to demotivating other victims from raising their voice against such a crime.
Media trials and society
Society’s perspectives are in some way based on what they watch or listen to; eventually, their perspectives are based on what media shows them or what has been created by other people on such platforms. In a country like India, where everyone has their own derived judgements, media trials add to it.
Even before any proper investigation, just on a prima facie basis, media trials create an image of the accused as a criminal. It directly violates his right to privacy and a fair chance to gain justice.
In this situation, society begins to criticise and distance itself from both the individual and their family. Without any kind of investigation or punishment, they live the life of a criminal. Such social behaviour disturbs the accused as well as his family. It creates an environment of mental distress and harassment. Not only that but it would even have a psychological impact on the accused and his/her family, especially if the accused is not guilty.
Effects of media trials
In the Indian Constitution, there is a fair division between freedom and restrictions. However, many times, the media tends to forget it. Which leads to violations of the provisions and has many aftereffects.
Ultra-vires right: under Article 19(2) of the Indian Constitution, it gives freedom to express opinion freely with reasonable restrictions. The reasonable restrictions are imposed in the interests of the sovereignty and integrity of India, the security of the state, friendly relations with foreign states, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence. Hence, the press’s freedom of speech and expression is not unfettered. One must not forget that the right is given for opinions and not trials. This is a clear violation of its and others’ rights.
Risk of riots: The impact of media on society is huge and thereby the media has to act responsibly or else it would create a chaotic, uncontrollable situation. There are many such sensitive situations wherein media trials would lead to communal violence or regional group violence or may even accelerate violence. Media trials are often based on primary information, which may even be misleading to society, especially in such sensitive times.
Effects of media trials on an individual
Media trials can invade one’s privacy and disrupt their peace. It becomes a challenge for an accused to live in society and continue with his/her normal routine. It may even result in the person’s unemployment, even if he/she is not guilty.
Reputation: The reputation of the accused gets destroyed in the media trials without any certain judgement. At times, even the victim’s personal information is publicly exposed on television and in newspapers. For instance, in the Kathua Gang Rape case, the identity of the minor victim was disclosed. For which the Court barred the media according to the Prevention of Children from Sexual Offences Act, 2012. This can have adverse effects on the victim’s life.
Mental distress: The ongoing legal trials and constant exposure of the same issue in the media can exacerbate the mental distress of the victims and their family members. The creation of such an environment can further lead to traumatic situations. In the urge to get more views or have higher TRPs, the media gets greedy and does not really care about an individual.
Breach of privacy: According to the Indian Constitution, under Article 21, it is a citizen’s fundamental right to have the right to privacy, which the media seems not to understand. In the case of Sushant Singh Rajput, the media intensely covered it and even showed his personal diary to the world. The media’s role again here was widely criticised.
Media trials and the judiciary
The judiciary is one of the pillars of Indian democracy. The establishment of the judiciary is meant for the fair and smooth practise of law in the country. The rights of the citizens are surely protected through the judicial process. Whether he/she is an accused or victim, both must have a fair chance of representing themselves before the courts of justice, which has been enshrined in the Constitution. The judiciary is a completely independent body and the main motive or objective of having such a body is to have a fair trial and to deliver justice without any kind of political or social pressure.
Whereas due to media trials, a public opinion is formed, which, on some or another basis, creates pressure on the judges and might eventually, to a certain extent, affect the judicial process. According to Section 2(c) of the Contempt of Court Act, 1971, media trials are directly contempt of courts, as such media is not allowed by any means to publish or broadcast any such opinions or views of any case that is still under the proceedings of the court.
This directly means that media trials and judicial trials cannot go hand in hand.
Impacts of media trials on the judiciary
Societal pressure: Due to media trials, huge societal pressure is built on judges, which makes it difficult for a judge to conduct a free and fair trial for the accused. This may make it difficult for the judges to be impartial and not form an image of the accused. Many times, it may have an influence on the judgements of the court as an image is already portrayed.
Lowers the authority of the court: In the case of 26/11 even before the court announced their judgement, the media declared that the accused would be awarded the death penalty. Indirectly, it reduces the importance of the courts and lowers their authority by connecting the case with emotions and societal pressure. The judgements of the court have to be in accordance with the law and its process. Wherein the media trials directly hinder it. Only the judiciary has the power to decide or declare any kind of punishment for any accused.
Disruption to administration of justice: Under the constitution, even for heinous crimes, the fair process of law has to be followed and accordingly, the punishment has to be given. Due to the influence of the media and its coverage of certain cases, there is a complete disruption in the administration of justice. The media is just allowed to give relevant updates to the public in a factual manner but the media does interfere and disturb the process.
The Supreme Court on media
There are multiple cases where the Supreme Court has pointed out media trials and emphasised the media’s importance of acting responsibly.
Air India Urination case (2023)
In one of the incidents wherein the allegations were made against a man that he had urinated on an Air India flight. The court clearly showed its concerns over the news channel for being “TRP-driven”.
The bench of Justices KM Joseph and BV Nagarathna said, “He was called names. He was denigrated. Everyone has the right to dignity.” Indeed, in the race to being most popular the news channel forgets the individual’s life and his/her privacy.
Pradyuman Thakur case (2017)
This case was a perfect example of how a media trial had detrimental effects on the accused.
Facts of the case: A seven year old boy in Haryana was found dead with many injuries. In the initial proceedings, his bus conductor was charged with murder but later found innocent. This case was further transferred to CBI, where an unnamed sixteen year old student from the same school has since been charged with his murder.
Media trial effects on the case: the media had declared the bus conductor a criminal for murdering the student without any kind of judicial trial. Which resulted in no lawyer being ready to represent the bus conductor. The media had defamed him in such a manner that he was removed from his job and his career was badly affected by the same.
Just on the basis of mere speculations in the media, the person had to suffer a lot. Definitely, things could have been better if the media had acted responsibly.
Sushant Singh Rajput case (2020)
In this famous case, Rhea Chakraborty, the accused, was constantly followed by the media and was subjected to character assassination. She was in a relationship with the actor but was still accused of practising black magic on him. Constantly, her images and chats were published in the media.
Media trials were run to such an extent that the Bombay High Court held that a media trial interferes with the administration of justice and could lead to obstructing the investigation and administration of justice.
Analysis: If the media were to be fully regulated, it would result in the disappearance of press freedom in the country. There would be a controlled media system in a country, which can be even more dangerous for us. At the same time, regulating media trials is equally important. It is really high time now that the media strictly follow ethical journalism and maintain a certain level of privacy.
The laws must be made to enforce the Press Council guidelines and other regulations. The media licencing laws need to be strict now, and strict laws must be made regarding their suspension and renewal. The laws must draw a line between freedom of the press and the right to privacy. Both the judiciary and media can work in their accordance and one does not interfere in other work. The trials can be reduced only if the media platforms get rid of their TRP games. Responsible media is a desperate need in India, especially for the youth of India.
In the case of Saibal Kumar Gupta and Ors. vs. B.K. Sen and Anr (1961), it was held by the Supreme Court that “no doubt it would be mischievous for a newspaper to systematically conduct an independent investigation into a crime for which a man has been arrested and to publish the results of that investigation. This is because trials by newspapers, when a trial by one of the regular tribunals of the country is going on, must be prevented. The basis for this view is that such action on the part of a newspaper tends to interfere with the course of justice, whether the investigation tends to prejudice the accused or the prosecution. There is no comparison between a trial by a newspaper and what has happened in this case.”
In the case ofJustice K.S. Puttaswamy (Retd) vs. Union of India (2018), the Supreme Court has also recognised that media trials can infringe upon the right to privacy of an individual and has cautioned the media against violating the privacy of individuals involved in legal proceedings.
In the case of Harper Collins Publishers India … vs. Sanchita Gupta @ Shilpi & Ors. (2020), the Delhi High Court stated that there can be no bar on the discussion/publication but the moment these discussions are mere speculations or are baseless imputations, the person has the right to protect her/his reputation.
Conclusion
The functions of the media and judiciary must not overlap each other and instead must build a transparent society together. Still, there are many such people who, under the fear of media and media trials, refrain themselves from speaking the truth or from getting justice. The witnesses are also an important part of judicial trials and often stay away due to the ongoing media coverage.
The duty of the judiciary is to deliver justice and the duty of the media is to deliver information. If this concept is well understood, then the current media trials won’t be repeated again.
While media trials are a reflection of the evolving media landscape, their impact on society and the judiciary necessitates careful consideration. Balancing the right to information with the need for a fair trial is crucial to uphold the principles of justice and maintain public trust in both the media and the legal system. Only through responsible reporting and a collective commitment to ethical standards can we navigate the delicate intersection of media, society, and the judiciary.
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As human civilization evolves in a myriad of meandering ways, it is only understandable that the dimensions of technological sophistication will grow manifold correspondingly. This socio-technological phenomenon can be best observed through a raft of cool gadgets and devices that aim to usher in an unparalleled sense of comfort at our fingertips. It’s nothing short of a technological renaissance where the yardsticks of revolution are benchmarked more through “Clicks”, “Bleeps”, “Pings”, “Buzzes”, “Likes”, “Comments”, “Views” and “Share”.
Means of influence and its extent of expanse
Indeed. Few modern inventions have influenced and shaped our way of interacting with our immediate surroundings like mobile phones have. Truth be told, it has not devised a way to transform our world. Rather, “it” has become the way itself. From being a clutch of disconnected archipelagos to one unified global village, pervasive mobile connectivity has been the chief catalyst in this silent socio-technological reformation that has swept mankind off its feet.
The arc of human progress has been dramatically broadened by mobile communications due to their transformative powers, despite the fact that the tangible resources resulting from our latest technological innovations are at our fingertips in a way never seen before.
Furthermore, with the mobile internet, we are in for a total paradigm shift since smartphone computing now acts as the unique portal to a parallel, virtual world whose dynamics are decidedly different. Mobile internet has completely revolutionised the way we access and use a lot of day-to-day stuff through an unfettered stream of information. However, this so-called digital diet that we are being fed through an array of mobile apps at each moment is not an out-and-out wholesome blessing.
Far from it. Mobiles spew out the good, the bad, and the ugly all at once, making them the perfect double-edged sword to deal with from the standpoint of cybersecurity in particular. The stealthy steps of digital encroachment that we are all being subjected to by a plethora of mobile apps and various online platforms have their fair share of pitfalls. Some of these apps are good, some of them are bad, and some of them are downright a menace, acting under the benign camouflage of so-called “utility”.
Cybersecurity and the spectrum of dangers
But the discourse of cybersecurity is not that simple and follows rather a serpentine and crooked path of trick and deceit, often smacked, as it were, with an ulterior motive to penetrate and eventually exploit the slightest lacunae, vulnerabilities, or whatever gaps in security that those apps or online platforms offer, intentionally or inadvertently.
With the sheer mushrooming of various banking and financial apps that deal with colossal databases containing absolutely crucial and vitally sensitive personal and non-personal data, the implications of data security or any breach of it are far-reaching and perennially pregnant with dangerous consequences for any organisation or individual as well.
Avenues of traps and risks
Easy, entertaining, and powerful enough to juggle multiple tasks while being online at the same time are what make smartphone computing a lucrative domain for potentially dangerous cyberattacks. Due to their increased popularity and pervasive usage, today’s mobile devices have evolved to be incredibly powerful tools that can house a lot of different types of information, both sensitive and non-sensitive, and, most importantly, can share them with others absolutely at will and across platforms. Now, let’s look at some of the potential areas, or so-called traps, from which cyberattacks spring into action:
Weak programming
Developers who follow weak coding practises may inadvertently leave an in-built lacuna or two for hackers to exploit later. Such poor design faux pas may stem from various factors, including the practise of different coding procedures by the concerned developers. Sidestepping secure coding practises may just metamorphose into an unwitting invitation to perilous prospects. Such non-standard practises are always fraught with risky possibilities that may leave the entire app vulnerable to the shadowy attacks of hackers.
Poor or weak authentication mechanisms
The absence of an authentication process, weak authentication processes, or easy, predictable passwords that can be manipulated or guessed are another potent source of threat. The use of automated tools to repeatedly guess login credentials until the hackers finally break into the system and gain complete access is another doomsday scenario in all such cases. The sense of threat is compounded all the more by the fact that mobile applications do not require online authentication on every attempt. This particular loophole leaves the entire application potentially exposed to all sorts of cyberattacks.
Inadequate data encryption
Lack of proper encryption protocols can lead to data being intercepted midway through or during storage, with its confidentiality severely compromised. Hackers exploiting this lacuna can be in a position to steal, tamper with, or do anything they want with those data. Observing a high standard of encryption while transferring any data is an absolute must to safeguard its integrity.
Unpatched, un-updated apps
The perils of unpatched software are another shadowy area where the possibility of a potential attack lurks silently yet definitely. Developers generally release updates and patches to plug the known loopholes in the system. Failure to do so, either by the developer or by the end-user, makes the app that much more susceptible to hacking and eventual exploitation since the compromised database may just find its way to the dreaded dark web. The reason is that hackers are always on the prowl to locate and manipulate any such flaw in the older versions of the software.
Social engineering attacks
Social engineering is an umbrella term consisting of various nefarious and unethical methods that hackers employ to trick people psychologically into revealing some confidential information that they would not have done otherwise. While other forms of cyberattack exploit the technical flaws of the system itself, social engineering manipulates the frailties, biases, and emotions of the human mind and psychology that operate the very system. Hackers can use any one social engineering tactic or a combination of multiple tactics to ultimately gain unauthorised access to that very system. Some of the social engineering tricks include:
Phishing attacks
Phishing attacks involve malicious attempts that trick the victim into believing a particular email, message, link, or website is completely legitimate and genuine. Once the victim clicks the link given inside, it either installs malware or takes them to a fake website that ultimately steals their confidential information like login credentials, credit card numbers, CVV, etc. These sinister efforts often mimic a trusted source, thus hatching a wicked ploy to trap an unsuspecting victim into its cobweb only to betray him or her treacherously in due course of time.
Pretexting
Pretexting involves orchestrating a scenario where hackers impersonate the identity of someone in authority, like a representative from the bank, a specialist from tech support, etc., to gain the trust of the victim and ultimately secure all the confidential information. Along with that, the hackers also employ various soft skills to lend a touch of genuineness to the entire heist under camouflage.
Baiting
Baiting attacks make use of something that appears pretty lucrative and enticing. It could be a USB drive or any electronic device labelled alluringly so that the victim feels tempted enough to accept and use it ultimately on his machine, computer, or laptop. And when he eventually engages with that bait, he just unwittingly helps install deadly malware in his system, thus paving the way for the data to be stolen or tampered with.
Spear phishing
Spearphishing attacks are also phishing attacks but done with more thorough preparation and background research. In such cases, hackers generally do detailed research on the potential victim in advance and then send highly personalised mail spiced up with individual details or specific social references that mirror a sense of legitimacy, albeit highly camouflaged. Owing to their sophistication, these attacks are highly difficult to isolate and avoid.
Malware or trojan apps
Downloading malicious apps from third-party app stores or websites, disguised as completely benign and harmless, can be treacherous. Once installed, they can not only toy with the confidentiality and integrity of the data stored in the system but also the various utilities of the system itself in a perfidious manner.
Apart from all these deceitful ways and methods discussed above, hackers can employ tailgating, intimidation, or even highly personalised impersonation in the form of a voice message or email address of a close colleague to obtain access to very sensitive or highly classified information.
Countermeasures
Mobile devices these days, by their sheer ability, have the capacity to store a wealth of personal and non-personal information within their memory while acting as perhaps the most powerful gateway to connect with the digital world out there. However, their widespread popularity makes them soft prey for an array of digital predators operating at the shadowy intersection of information and ignorance.
However, the following measures can largely mitigate, or better yet, shut down completely, in some scenarios at least, the dreaded prospect of a breach in data security and confidentiality and, in the process, save millions of dollars, as well as any resulting irreparable dent in the trust and respect of the investors and potential investors in the image and credibility of the concerned company:
Use strong passwords and enable two-factor authentication (2FA).
Download apps only from trusted sources.
Keep your operating software and apps up to date.
Review and limit app permissions.
Use a mobile security app.
Be cautious with public charging stations.
Periodically review app permissions.
Encrypt your device.
Use a VPN on public Wi-Fi.
Regularly backup your data.
Keep the device physically safe and secure.
Disable Bluetooth and Wi-Fi when not in use.
Be careful about what links you click on
Conclusion
It should be noted that in this ever-evolving digital landscape of mobile security, complying with and maintaining even the above fourteen measures might not prove sufficient at times. In this age where the value of information is only spiralling upward, keeping yourself abreast of the latest technological developments and breakthroughs must form your first line of defence against these cunning, manipulative attempts to con you and your near and dear ones. And all these apply to developers and end-users alike.
Cybersecurity is a shared responsibility and you alone cannot win the war, even though you may win the battle. By being proactive and vigilant individually, you not only remain one step ahead of the curve but also ensure that you participate and contribute optimally in this collective crusade.
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This article has been written by Anjali Singh and updated by Pujari Dharani. This article explains the doctrine of legitimate expectation, including its origin, essential elements, types, results, and exceptions, among other things. This article also contains important case laws in relation to the doctrine of legitimate expectation.
It has been published by Rachit Garg.
Table of Contents
Introduction
“A man should keep his words. All the more so when the promise is not a bare promise but is made with the intention that the other party should act upon it”
Administrative Law is overarching in nature and it is difficult to categorize its multiple functions in watertight compartments. Consequently, multiple principles and doctrines have been formulated to ensure proper functioning of the administration. Such as principles of natural justice, the principle of proportionality, unreasonableness, the judicial obligations of the local public authorities, etc. One among them is the doctrine of legitimate expectation, which is not explained in any Indian statutory enactment or law. However, this doctrine played a significant role in developing Indian administrative law, especially the law relating to the theory of judicial review.
Let us see how the doctrine of legitimate expectation can be invoked to check arbitrary administrative actions.
The doctrine of legitimate expectation
The doctrine of ‘Legitimate Expectations’ is one amongst several tools incorporated by the Court to review administrative action. This doctrine pertains to the relationship between an individual and a public authority. According to this doctrine, the public authority can be made accountable in lieu of a ‘legitimate expectation’. A person may have a reasonable or legitimate expectation of being treated in a certain way by the administrative authorities owing to some consistent practice in the past or an express promise made by the concerned authority.
Origin of doctrine of legitimate expectations
The doctrine is not a specific legal right engraved in a particular statute or rule book. The first time, an attempt was made to establish the principles of the doctrine were in the case of Council of Civil Service Unions and Others v. Minister for the Civil Service([1985] AC 374), that the decision by the public authority should affect the person such that-
His rights or obligations are altered, which are enforceable by or against him
He is deprived of some benefit or advantage which he had been permitted by the authorizing body in the past and which he could have legitimately expected to enjoy until a valid ground for withdrawal of the same was communicated to him or he had been assured by the decision making body that such a benefit or advantage would not be withdrawn until him being given an opportunity of contending reasons as to why they were withdrawn.
What is a legitimate expectation
The term “legitimate expectation”, which was coined by Lord Denning in 1969, is an expectation of an ordinary man to have benefit or relief, which is a consequence of a promise or representation, either express or implied, made by the administrative authority concerned or its prior established practice. Hence, a legitimate expectation is an expectation to be treated in a particular way by the administrative authority or to receive some benefit as a matter of public law, although no such enforceable right is conferred on him under private law. Thus, this doctrine creates a central space between ‘no claim’ and a ‘legal claim’.
The Supreme Court of India described this doctrine accurately in Ram Pravesh Singh and Ors. v. State of Bihar and Ors. (2006), as “a person can be said to have a ‘legitimate expectation’ of a particular treatment, if any representation or promise is made by an authority, either expressly or impliedly, or if the regular and consistent past practice of the authority gives room for such expectation in the normal course”. Thus, the Supreme Court, through various judgements, has developed this doctrine in order to keep a check on the abuse of administrative power by public bodies.
Whether legitimate expectation is a legal right
There is no legal right conferred on an expectant, the person who has a legitimate expectation, in the application of the doctrine of legitimate expectation in administrative actions. As it is not a legal right, it is not absolutely enforceable in all cases. This doctrine is a concept designed by the courts; hence, it is up to the courts to decide on its enforceability.
Therefore, the legitimate expectation is neither a legal right given to an expectant nor a duty of administrative authority, but rather a procedural aspect on the part of the courts for invoking their power of judicial review of administrative actions that affect the said person, based on the requirement.
The legitimate expectation may not be a distinct enforceable legal right, but if the same is not given due consideration by the public authority in a decision-making process, it is said that the decision taken by the authority has violated the rule of non-arbitrariness, an essential concomitant of the rule of law, and the same can be invalidated on the ground of arbitrariness. In this regard, the Supreme Court stated, in M. P. Oil Extraction and Anr. etc. v. State of Madhya Pradesh and Ors. (1997), “the doctrine of ‘legitimate expectation’ operates in the domain of public law and, in appropriate cases, constitutes a substantive and enforceable right.”
Illustration
Let us illustrate that a state government introduced a ‘drinking water supply’ programme to remote areas where people were walking miles to get drinking water. In the notification of the programme, the names of all villages are mentioned as initial targets. However, through another notification, the government removed a few previously mentioned villages without citing any reasons. In this case, the legitimate expectations of the people from these villages, which are excluded from the purview of the scheme, are violated. If the decision to exclude those villages by the state government is just and reasonable, the Court cannot intervene. Contrarily, if it was unfair and arbitrary, the Court would accept the matter and hold the government responsible. Therefore, the doctrine of legitimate expectation ensures that the administrative authorities are abiding by the principles of natural justice.
Case survey
Origin and development of doctrine of legitimate expectations in India
The Doctrine of Legitimate Expectation was first discussed in the Indian arena in the case of State of Kerala v. K.G. Madhavan Pillai((1988) 4 SCC 669). Herein a sanction was issued for the respondents to open a new aided school and to upgrade the existing schools, however, an Order was issued 15 days later to keep the previous sanction in abeyance. This Order was challenged by the respondents instead of violation of principles of natural justice. The Supreme Court ruled that the sanction had entitled the respondents to legitimate expectation and the second order violated principles of natural justice.
In another Supreme Court case,Navjyoti Coop. Group Housing Society v. Union of India((1992) 4 SCC 477), wherein the new criteria for allotment of land was challenged. In the original policy, the seniority with regard to the allotment was decided based on the date of registration. Subsequently, a policy change was made in 1990, changing the criteria for deciding seniority based on the date of approval of the final list.
The Supreme Court thought that the Housing Societies were entitled to ‘legitimate expectation’ owing to the continuous and consistent practice in the past in matters of allotment. The court further elucidates on the principle stating that the presence of ‘legitimate expectations’ can have different outcomes and one such outcome is that the authority should not fail ‘legitimate expectation’ unless there is some justifiable public policy reason for the same.
It is further emphasized that the availability of reasonable opportunity to those likely being affected by the change in a policy which was consistent in nature is well within the ambit of acting fairly. The Honorable Court held that such an opportunity should have been given to the Housing Societies by way of a public notice.
The Supreme Court elaborated on the nature of the doctrine of legitimate expectations in Food Corporation of India v. Kamdhenu Cattle Feed Industries((1993) 1. S.C.C. 71), that the duty to act fairly on the part of public authorities, entitles every citizen to have legitimate expectation to be treated fairly and it is imperative to give due importance to such an expectation to satisfy the requirement of non-arbitrariness in state action or otherwise it may amount to abuse of power. The Court further made a remarkable point that such a reasonable or legitimate expectation may not be a directly enforceable legal right but failure in taking it into account may deem a decision arbitrary. To decide whether an expectation is a legitimate one is contextual and has to be decided on a case-by-case basis.
In Union of India v. Hindustan Development Corporation((1993) 3 SCC 499), the Supreme Court has dealt with the doctrine in great detail, starting with the explanation of the scope of the doctrine in Halsbury’s Laws of England, Fourth Edition, Volume I (I) 151 which says that a person can have a legitimate expectation of being treated in a certain fashion even though he doesn’t have a legal right to receive the same.
Origin and development of doctrine of legitimate expectations in English Law
The Court discusses that how the doctrine of legitimate expectations first stepped into English Law in the case of Schmidt v. Secretary of State for Home Affairs((1969) 2 Ch. 149) wherein it was observed that a foreigner who had been given leave to enter the United Kingdom, had the right to be heard and had a legitimate expectation of being allowed to stay for the allowed time.
The Court further goes on to discuss the famous case ofA.G. of Hong Kong v. Ng Yuen Shiu((1983) 2 A.C. 629) wherein Lord Fraser had observed that if a public authority has vowed to follow a procedure, it is imperative that it acts fairly and fulfils its promise, in the interest of good administration. The Court remarks that there is an absence of meaning and scope of the doctrine of legitimate expectation given by the Supreme Court and henceforth it would like to elaborate on the subject. The Court distinguishes expectation from anticipation and states that an expectation can be said to be legitimate only if it has a legal sanction or is backed by a procedure or custom that has been followed consistently.
This case can be categorized as a landmark one in the Indian discourse since it specifically draws the realm of the doctrine stating that it does not involve a ‘crystallised right’ and thus does not pave the way for a direct claim for relief and the doctrine can be confined to the right of fair hearing in a situation where a promise has been withdrawn or negative. A substantive expectation doesn’t necessarily amount to an absolute right unless the decision-maker is not able to justify the withdrawal by overriding public interest and more importantly such a decision should be founded in arbitrariness, unreasonableness and not justifiably taken in public interest.
The Court further enunciated that if the issue involves a question of policy or change in policy then the Courts must remain in their domain and refrain from interfering. Thus legitimate expectation may lead to judicial review but the scope of relief that can be given by the Court is very limited.
Essential elements of the doctrine of legitimate expectation
The doctrine of legitimate expectation can be invoked by a person in civil litigation seeking judicial intervention or control over administrative actions if the below essential elements of the said doctrine are fulfilled.
The expectation must be legitimate
To apply the above-mentioned doctrine of legitimate expectation, the expectation grown in a person’s mind must be legitimate or reasonable. If any prudent and ordinary man expects the same responsiveness or attitude from a particular public authority, then the expectation is said to be legitimate. If the expectation is just a random thought not derived from or inferred from a particular past event, it cannot be considered legitimate. Therefore, the court considers the question of the legitimacy of the expectation as a question of fact and decides, not given the expectant’s perception but from the view of the larger public interest.
Furthermore, expectation is not synonymous with anticipation, wish, desire, or hope, irrespective of their legitimacy. Also, mere disappointment does not result in legal consequences. The legitimate expectation is not even equated with terms like ‘claim’ or ‘demand’, which are sought before the courts to enforce the rights they lost, violated, or left unimplemented.
The legitimacy of an individual’s expectations does not depend upon the moral obligations of the public authority. Instead, legitimacy is decided based on the laws or customs or, at least, the established practice of the authority, provided it has consistency in its practice.
Presence of an established and regular practice or express promise
There must be an established and regular practice or an express promise on the part of the administrative authority concerned. The term “established and regular practice” refers to the practices that are within the powers of the authority and that have been performed regularly by a particular public authority in the past for a considerable period. Because of such prior, established practice, the applicant or claimant has a legitimate expectation.
Relationship between expectant and administrative authority
There must be an established relationship between government authorities and the expectant. The relationship can be a commercial transaction, a dealing, or even a negotiation on a particular issue. The only requirement is that the expectant should have been engaged in a recognised relationship with the authorities concerned. If the party, either in the past or present, has no relationship with the authority, then he cannot invoke the doctrine of legitimate expectation.
Besides this, the other essential aspect is that the established practice, because of which the expectant gained a legitimate expectation, shall be concerning the aforesaid dealing or negotiation.
Presence of an arbitrary decision by the administrative authority
The decision taken by the administrative authority regarding the issue raised by the claimant must be arbitrary, unfair, unreasonable, and violative of the principles of natural justice. If the court finds that the public authority has not considered factors such as public interest or policy while passing an order, which is against the claimant, who is not even heard before taking such a decision, then there is a strong basis for invoking the doctrine of legitimate expectation. Contrarily, if the administrative authority took a decision in view of the larger public interest or according to policy, the court would not interfere with the functioning of the public authority, except in cases where the administrative decision constitutes an abuse of power. If there is no abuse of power and the decision taken by the authority is bona fide, the administrative actions will not go through judicial review.
Otherwise, if the administrative authority made the decision on fair and reasonable terms, the court will interfere and strike down such a decision or order, even if it affects the legitimate expectation of the claimant. Therefore, the doctrine of legitimate expectation is implemented in case of the presence of an arbitrary decision, not in the case of procedural fairness.
The claimant must have a locus standi
Besides the above essential element, which ensures a foundation to invoke the doctrine of legitimate expectation, the claimant must also prove that his case has locus standi to get a judicial review of the administrative actions by applying the said doctrine. However, in Union of India and Ors. v. Hindustan Development Corporation and Ors. (1993), the Supreme Court decided that “legitimate expectation gives the applicant sufficient locus standi for judicial review“. Thus, the doctrine of legitimate expectation comes with the doctrine of locus standi.
Circumstances for the formation of legitimate expectation
If there was some explicit promise or representation made by the administrative body
That such a promise was clear and unambiguous
The existence of a consistent practice in the past which the person can reasonably expect to operate in the same way
It was laid down in P.T.R. Exports (Madras) Pvt. Ltd. And Others vs. Union of Indiaand others(AIR 1996 SC 3461) that the doctrine of legitimate expectations has no role to play when the appropriate authority is empowered to take a decision under an executive policy or the law itself and that the Government is not restricted from evolving new policy on account of ‘legitimate expectations’ as and when required in public interest.
The Supreme Court ruled in M.P. Oil Extraction v. State of M.P((1997) 7 SCC 592) that the doctrine of legitimate expectations operates in the realm of public law and is considered a substantive and enforceable right in appropriate cases. It was held that the industries had a legitimate expectation with regards to past practice and the renewal clause, that the agreements are renewed in a similar manner.
InNational Buildings Construction Corporation v S. Raghunathan ((1998) 7 SCC 66), respondents were brought on deputation for an overseas project that was to be carried out in Iraq by NBCC (Government Company). The Respondents chose to draw their salary in the same scale as of employee of Central P.W.D along with Deputation allowance. They were also given foreign allowance at 125% of the basic pay, however, their basic pay was revised. It was contended by them that this allowance should be paid out of the revised pay scale.
The claim which was based on legitimate expectations was rejected by NBCC. The Court agreed with the decision that no such promise or agreement was carried out by NBCC.
The Court while elaborating on the doctrine, stated that the doctrine has its genesis in the administrative law and that Government departments ought not to act in an unfettered manner guided by abuse of discretion.
The Court also pointed to a procedural aspect stating that the contention of ‘legitimate expectation’ should have been raised in the pleadings itself, and thus the High Court was erroneous in allowing the plea at the stage of arguments in the absence of pleadings and affidavit to support the same.
It can be inferred from the aforementioned case that the doctrine has both substantive and procedural facets to it.
It was reiterated in the case of Bannari Amman Sugars Ltd. V. CTO((2005) 1 SCC 625) that guarding legitimate expectation should not come at the cost of non-fulfilment of an overriding public interest, so to say that in case a legitimate expectation of a person is not fulfilled, the decision making body can hide behind the veil of ‘overriding public interest’.
Types of legitimate expectations
Legitimate expectations can be broadly divided into two types, namely, procedural legitimate expectation and substantive legitimate expectation.
Procedural legitimate expectation
The person claiming to have legitimate expectation has previously possessed an enforceable right, which was taken away as a result of administrative conduct. Wherever the claimant has a legitimate and reasonable expectation of having procedural protection, such as providing a fair hearing or being consulted before taking a decision or a change in policy affecting them adversely, the court provides procedural protection to the claimant. Because of the provision of procedural expectation on the ground of legitimate expectation, the concept of fairness is being met in administrative activities. Thus, providing notice and giving a fair opportunity to the decision-maker before making any decisions is the result of invoking the principle of “procedural legitimate expectation”.
Substantive legitimate expectation
Let’s say that the public authorities have given an assurance relating to the rights of an individual. Subsequently, the said individual will gain a legitimate expectation that his or her enforceable right will not be defeated. However, the right has been violated due to the conduct of the administration authorities, like policy changes. Due to such a violation of rights, the aggrieved party can invoke the doctrine of legitimate expectation. The court may grant the right that is defeated after examining the facts of the case. This is called the “principle of substantive legitimate expectation”.
In the initial stages of the development of the doctrine of legitimate expectation, there is only one kind of relief, i.e., issuing a notice, for the aggrieved party who has a legitimate expectation and nothing more. That is, there is only a principle of procedural legitimate expectation. However, the doctrine developed much and included the principle of substantive legitimate expectation as well through various decided cases. Therefore, the current evolved doctrine of legitimate expectation not only provides a fair hearing to the claimant but also grants a right that was infringed arbitrarily. Furthermore, the Supreme Court said, in Punjab Communications Ltd. v. Union of India and Ors. (1999), “the protection for the substantive legitimate expectation was based on Wednesbury reasonableness”.
Important considerations by the court
All the above-discussed essential elements are important considerations for a court when dealing with cases where the doctrine of legitimate expectation is invoked by the claimant. As already explained, a legitimate expectation for an individual arises due to the conduct of the administrative body, whether it is an established practice or a promise to provide a benefit. Once the individual is deprived of a benefit or right because of an administrative decision or change of policy, he or she can go against such a decision in court on the grounds of legitimate expectation.
Whenever the doctrine of legitimate expectation is invoked by the expectant, the court should consider the larger public interest and ensure it is not unfairly carried away with the expectation of the claimant. If there is no public interest in taking such a decision, the administrative authority must respect the claimant’s legitimate expectations. Another important consideration for the court is to determine to what extent the legitimate expectation of the claimant can be protected in light of administrative conduct.
In case of substantive legitimate expectation, the court has no right to alter the new policy, even if it has infringed on the rights of an individual. The principle allows the court only to examine and decide whether the policy change is illogical or unreasonable. Even the question of the overriding effect of public interest on the principle of substantive legitimate expectation should not be dealt with by courts but by decision-makers. Thus, the decision maker, i.e., the public body, is the one who should decide on the matter of policy, such as whether to withdraw the new policy, which has the effect of defeating the rights of an individual, or make changes to the new policy. The court interferes only when the policy in question is irrational or perverse. This was observed by the Supreme Court in the case of Punjab Communications Ltd. v. Union of India and Ors. (1999).
Result of invoking the doctrine of legitimate expectation
Once an individual, during court proceedings, expresses his legitimate expectation, the court may grant a benefit or relief in favour of the expectant according to the previous conduct or activities performed by the authority. However, relief from the administrative authorities cannot be claimed directly in all cases where the doctrine is applied because the applicant has no definite and absolute right to claim relief. The grant of relief is decided based on the merits of the case.
The relief may be vitiating the administrative action, making the promise made by the authority unenforceable, or withdrawing the dealing between the expectant and the administrative authority. For the above purposes, writs like mandamus or certiorari can be passed.
Limited in scope
The legitimate expectation shall be only one of the grounds for seeking a judicial review of an administrative action by the court, but the scope of the grant of relief is very limited, as stated by the Supreme Court of India in the case of Union of India and Ors. v. Hindustan Development Corporation and Ors. (1993).
Right to be heard
The applicant, by virtue of the doctrine of legitimate expectation, is conferred with the right to have a fair hearing before a judgment is passed, and, thus, the doctrine has a close relationship with the right to be heard. This will ensure that the non-statutory administrative powers of public authorities are enforced with the application of ethics of fairness and reasonableness. Therefore, the doctrine of legitimate expectation protects the principle of natural justice in the actions of public authorities by retaining the established practice or keeping its promise.
Exceptions against the legitimate expectation
The famous authority for the doctrine of legitimate expectation, Ram Pravesh Singh and Ors. v. State of Bihar and Ors. (2006), the Supreme Court observed that there are a few defences to make the plea of legitimate expectation inapplicable. The Court said, “public interest, policy change, the conduct of the expectant or any other valid or bonafide reason given by the decision-maker, may be sufficient to negative the ‘legitimate expectation’.” Thus, the legitimate expectation has a few exceptions. Let us look at more exceptions.
Contrary to law
If the expectation of the claimant is contrary to law or any statutory enactment, such an expectation cannot be said to be a legitimate expectation, rather, it would be an ignorance of law that cannot be excused by the State.
For instance, a cinema theatre cannot carry on shows without getting a license from a licensing authority. The Supreme Court dealt with a case, Ved Gupta v. Apsara Theatres (1983), where a person was managing a theatre without a license in contravention of the order passed by the District Magistrate. Talking about the doctrine of legitimate expectation, the Court observed: “The writ-petitioners could not also have any legitimate expectation that they will be allowed to run the theatre without a licence in violation of the law. In the absence of legitimate expectation being available to the petitioners, there was no obligation on the part of the District Magistrate to afford them a hearing before passing the impugned order.”
In addition to this, the Supreme Court, in Assistant Excise Commissioner v. Issac Peter (1994), held that the rule of legitimate expectation cannot be used as a plea in order to modify, alter, or vary the express terms of the contract between the parties, especially if the contract is statutory in nature.
Unsuccessful applicant
If the application for receiving a license or other equivalent documents is rejected on the grounds of not fulfilling any requirements for the same, the unsuccessful applicant cannot invoke the doctrine of legitimate expectation to have a fair hearing. In this regard, the Andhra Pradesh High Court, in Government Of Andhra Pradesh v. H.E.H. the Nizam VIII of Hyderabad (1992), said: “In India, the theory of legitimate expectation applies only to a fair hearing which the petitioner had before his application was rejected or to a final favourable order in pursuance of a similar intermediate order.”
Non-appointment for bona fide reasons
Let us illustrate that a person who has secured a rank or merit to be in the list of selected people is not recruited or appointed by the selecting authority to a post in the government service for which he applied and secured merit, not because of the arbitrariness of the said authority but on the ground of bona fide reasons using his discretionary powers. In this kind of scenario, the court cannot interfere with the fair decision taken by the authority, even if the legitimate expectation of the claimant is affected. However, if the court finds arbitrary or unfair terms in the rejection of the appointment of the selected candidate, then the doctrine of legitimate expectation can be invoked, and a right to be heard is granted to the candidate.
The right decision in this regard is Union Territory of Chandigarh v. Dilbagh Singh and Ors. (1992). In this case, the Supreme Court said that the qualified or selected candidate has no indefeasible right to be appointed to a civil post and, hence, cannot claim a right to be heard before the appointment is rejected for valid reasons.
Public interest
As already discussed, public interest is one of the important considerations that the court should take into account. Always, the interest of the larger public will be on a higher pedestal and can even override a legitimate expectation of an aggrieved party. The Supreme Court advised the courts that are dealing with the question of the legitimacy of the expectation of the claimant to decide the question “not according to the claimant’s perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant”, in Food Corporation of India v. Kamdhenu Cattle Feed Industries (1992).
Additionally, the benefit on the ground of legitimate expectation cannot be granted by the Court if the expectation is against the provisions of a statutory enactment whose objective is the public good. This was strongly affirmed by the Supreme Court in the case of Howrah Municipal Corporation and Ors. v. Ganges Rope Co. Ltd. and Ors. (2003).
Change in the policy
The benefit of the doctrine of legitimate expectation cannot be granted to the claimant if there is a change in the policy. This can be understood through the case law, S. B. International Ltd. and Ors. v. Assistant Director General of Foreign Trade and Union of India (1996). The Government of India introduced the ‘Duty Exemption Scheme’ under which materials that are required for export promotion are allowed to be imported without collecting duties, with the condition of satisfying a value addition that will be notified by the Government through public notice. On a later date, the public notice specified that the value addition is 1000% in the case of frozen marine products. After a few months, the value addition was changed to 1900%. Before this change, the petitioner, S. B. International Limited, made multiple applications for the advance license as it entered into many dealings for export with the view of the present policy. The petitioner contended that the new value addition would not be applied to the company because its application was made before the change and pleaded with the court to make the 1000% value addition applicable in his case based on the rule of promissory estoppel. The Supreme Court denied the plea of promissory estoppel as the rule does not apply in the case of a change in policy and dismissed the appeal.
Article 14 and Legitimate Expectation
It is a well-known fact that the actions of the State and its agencies must conform to the principle of non-arbitrariness and fairness, which is one of the main features of Article 14 of the Constitution of India, in all its activities. Hence, the public authority has some limitations or restrictions in using its powers because absolute power corrupts absolutely. The State and its authorities should ensure that their activities are for the public good because Article 14 imposes on the State, including public authorities, the obligation to function fairly and justly. In Food Corporation of India v. Kamdhenu Cattle Feed Industries (1992), the Supreme Court observed: “This (Article 14) imposes the duty to act fairly and to adopt a procedure which is `fair play in action’. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions.” For the implementation of this aspect of non-arbitrariness under Article 14, it is necessary for the administrative authorities to fairly consider the legitimate expectations of claimants while rendering a decision or passing an order, even though it is not a vested right.
It is now an established fact that Article 14 of the Indian Constitution can be enforced not only in cases of arbitrary ‘class legislation’, but also in cases of arbitrary ‘state action’. Therefore, the doctrine is being hailed as a fine principle of administrative jurisprudence for reconciling power with liberty.
Important case laws
Scheduled Caste and Weaker Section Welfare Association v. State of Karnataka (1991)
This case is an apt example of case law where the principles of natural justice have taken force and justice for the poor people is served based on legitimate expectations.
The facts of the case are that the Karnataka government announced a particular area as the “slum clearance area”, which was cancelled through another notification, causing a violation of the legitimate expectation of those people residing in the before-mentioned area. On examining all the facts of the case, the Supreme Court decided that there was an apparent infringement of the principles of natural justice.
Punjab Communications Ltd. v. Union of India and Ors. (1999)
In this case, the Supreme Court held that the legitimate expectation can be both procedural and substantive because this doctrine goes with the concept of the rule of law, which implements fairness in both procedural and substantive aspects. In this case, the Court further clarified that the procedural aspect of legitimate expectation is granting the right to be heard or any other proper procedure before the authority makes any change to its previous decision. Whereas, the substantive aspect of the doctrine is the grant or continuance of some benefit, which is substantive in nature. Both of these aspects should be provided to the claimant; if not, then the authorities must cite reasonable grounds for the same as well as provide a fair chance to the expectant before taking a decision or passing an order.
Dr. (Mrs.) Chanchal Goyal v. State of Rajasthan (2003)
In this case, the appellant is Dr. Chanchal Goyal, who was recruited under the local self-government department, the government of Rajasthan. In the appointment order, it was specified that her recruitment is purely temporary, i.e., for the period of six months or till she was selected by the Rajasthan Public Service Commission, whichever is earlier. Generally, her continuance cannot go beyond one year in the absence of the approval of the service commission. However, by virtue of the successive extension orders, her tenure ended even after one year. Later, on the terms of the appointment order, she was removed from the post. She took the plea of legitimate expectation. The Supreme Court rejected the plea and ruled that “mere continuance in service does not imply waiver (of the stipulation mentioned in the appointment order)”.
Conclusion
The doctrine has undoubtedly gained significance in the Indian Courts, giving locus standi to a person who may or may not have a direct legal right. The doctrine of legitimate expectations very well leads to a procedural right i.e. right to judicial review in India but the substantive aspect of the doctrine can be said to be in a budding stage. There has been hesitance amongst academicians as to whether the doctrine should apply to substantive rights at all. It has been argued that application of the doctrine to substantive rights might result in failure of separation of powers and would qualify as overstepping of Judiciary’s powers.
Besides this, the doctrine of legitimate expectation in public law, i.e., administrative law, was praised as it helps the court deliver justice to the people who could not seek relief based on the statutory provisions or law. It also makes the State and its authorities or departments accountable and responsible towards the people of the country. Thus, we can conclude that the doctrine of legitimate expectation is based on the principle that public power is a trust that must be exercised in the best interest of its beneficiaries, i.e., the people.
References
Lord Denning “Recent Development in the Doctrine of Consideration”, Modern Law Review, Vol. 15, 1956.
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I want to protect myself from any harm that may be caused to me. This harm is not limited only to bodily harm but also extends to my work, my creation, or something that is the result of effort, skill, and labour. I am sure this is not the case that applies to me only; everyone is possessive of their possessions, be it a small child, an adult, an organisation, or an entity, as it is their pride and joy, based on which they can flaunt their skills and show how proficient they are at what they can do.
A simple question, if you can answer it: Will you let anyone else take credit for your work or let them reap benefits from your work? No, you will not, because it is not only a matter of any economic value what other person may gain from your work, but it also questions the high power of justice to call them out on their wrongdoings and to set an example for society that a wrongdoer shall be punished for misdeeds. Works like literary, artistic, dramatic, sound recording, cinematograph film, etc. are protected under the Copyright Act of 1957. The term protection means no other person has the right to copy, use, or recreate the work without the express authorization of the owner of the work; if done otherwise, it will result in infringement of copyright.
The purpose of copyright law is to promote creativity among people, encourage them to create innovative works, and guarantee them exclusive rights over their work for a specific period. Also, in the Copyright Amendment Bill of 2012, one of the objectives was “Protection against Internet Piracy”. The protection of copyright owners against the theft of their work found traces in the Berne Convention. The danger to copyrighted works has been persistently recognised in various laws, which makes it an important subject of deliberation.
Understanding the nuances of copyright infringement
As per Section 14 of the Copyright Act, a copyrighted work encompasses several rights, like the right to reproduction, the right to communicate the work to the public, the right to make adaptations of the work, the right to make translations, etc., when all or any of the rights to use the work in any way are snatched from the true owner or are violated by the unauthorised use, resulting in copyright infringement. For example, there are many websites and applications where a new movie, even before its release date or after a few days of its release, without proper licencing arrangements, is made available at a lower charge and violates the rights emanating from a copyrighted work. There is an author, Mr. A, from India, who, after months of laborious work, has produced a novel named “Feathers of a Broken Bird” based on the true story and got it published through ABC Publishing House. Copies of such work are made available through paperback and ebook, which can be bought for Rs. 1760, but later he came to know that his book was made available on a website for free of charge. He can see his efforts, on which he worked diligently, going down the drain. When a copyrighted work is made available to the public via illegal channels, this conduct has a damaging effect both on the creators and the creative industry, so a person not only loses his hard-earned money but also suffers from reputational damage, self-doubt, security risks, loss of trust, costly litigation, devaluation of intellectual property, irreparable damage to the brand’s reputation, discouragement of innovation and creativity, etc. A creative industry suffers from the loss of investment in the production and distribution of its works, which has a damaging effect on its growth. Because of these reasons, it is crucial to protect intellectual property and stop it from falling into the wrong and malicious hands.
Legal framework
The first law that was directed towards protecting literary copyright was the Licencing Act of 1662 in Germany. This law prohibited the printing of any book that was not licenced. Later in the year 1709, a law named the Statute of Anne came into force. It was the world’s, or we can say England’s, first copyright law, and one of its purposes was to give authors protection against piracy. This act’s protection was limited only to literary work, but other works such as music, paintings, or photographs were protected under other legislation like the Engraving Copyright Act of 1734 and the Fine Arts Copyright Act of 1862. Later, all the legislation was merged into the Copyright Act of 1911, under which unpublished works were also entitled to protection.
From the perspective of protecting the creation of authors, the Berne Convention, adopted in 1886, can be considered paramount, as its goal was to safeguard the rights of artists and authors in their works. Here a few principles were adopted, but one such principle of significant importance was the principle of automatic protection. As per this principle, the works of an author or artist shall be guaranteed the same level of protection against infringement in the member countries as they enjoy in their country of origin, and this protection shall not be conditional upon the satisfaction of any formality.
Before the Independence of India, many copyright acts existed, like the India Copyright Act of 1847, the Copyright Act of 1911, and 1914, but the first copyright law after independence was passed in 1957, the Copyright Act of 1957, and this enactment is still in force. As per Section 2(y), literary, dramatic, musical, artistic, cinematographic film, and sound recording are considered works, and they are protected under the Copyright Act, irrespective of their registration. As per the Madras High Court in the case of Sulamangalam R. Jayalakshmi And … vs. Meta Musicals And Ors. (2000), “Copyright law is to preserve the fruits of a man’s effort, labour, talent, or test from annexation by other persons.” Section 2(m) of the Copyright Act, 1957, explains what “infringing copy” means and, as per this subsection, any reproduction of literary, dramatic, musical, or artistic work; making a copy of a cinematograph film on any medium; making a recording of any sound recording on any medium; and making a sound recording or cinematograph film of a program or performance in which performance rights or broadcast reproduction rights subsist.
In Blackwood And Sons Ltd. and Ors. vs. A.N. Parasuraman and Ors. (1958), Madras High Court held that “translation of literary work is itself a literary work and is entitled to copyright protection; reproduction of publication of translation without consent or licence of the owner of copyright in the original would amount to infringement.” Section 51 of the Copyright Act defines under what conditions an act will be considered an infringement of copyright:
Any act without express permission of the copyright holder or any act beyond the permissible limit;
Where a condition has been imposed in the licencing agreement stipulating that certain work shall not be communicated to the public beyond the allowed jurisdiction, violating such condition shall be considered copyright infringement;
Reproduction of the work of the copyright holder without express permission;
Importing infringing copies into India;
Exhibition of infringing copies by way of trade;
Distribution of infringing copies for trade, which results in economic loss to the copyright owner;
Making of the infringing copies of the work for sale or hire or offering for sale or hire.
Types of copyright infringement
Infringement of copyright can take place in two ways: primary infringement and secondary infringement. If one likes, they can be called direct and indirect infringement.
Primary infringement: Primary infringement indicates the actual deed of making infringing copies of the work of the copyright holder, for example, making a recording of a new cinematograph film and then uploading it on the websites.
Secondary infringement: This type of infringement means contributing to the principal act of copyright infringement. It is a legal theory that makes a person responsible for copyright infringement for partaking in activities such as selling, distributing, and importing infringing copies and providing a place that can be used for communication of work to the public.
Notable copyright infringement cases
Whenever something exceptional occurred in India’s history, it became part of our daily teachings to learn the surrounding circumstances, reasons, how the situation was dealt with, and the consequences of the same; similarly, there are some exceptional precedents present in the history of copyright, and it has become important to learn what the situation of copyright was and what was achieved with the help of the Hon’ble Courts of India:
R.G Anand vs. Deluxe Films and Ors. (1978)
Facts of the case
In this case, the plaintiff or appellant is a play producer, and he wrote a play called “Hum Hindustani” in 1953, which was the first time played in 1954 of the same year. As the play was enjoyed by many and gained popularity, Defendant No. 2 approached the plaintiff for a copy of the play to determine whether to make a movie on the play or not, but later in May 1955, it was announced that the defendant was making a movie titled “New Delhi,” which was released in September 1956. After watching the film “New Delhi”, the plaintiff sued defendant no. 2 for infringement of his copyright in the play “Hum Hindustani”, He alleged that defendant no. 2 had imitated his play and made a movie based on it. Defendant No. 2 denied all the allegations and argued that as the play is based on the idea of “provincialism,”, there cannot be copyright in the idea itself, and everyone has a right to present their idea in whatever manner they find acceptable. They further asserted that there are significant differences in the content, spirit, and climax of the movie, and even if there is any similarity, it is only because they share the same course, which is “provincialism.” Both the trial court and the Delhi High Court ruled in favour of the defendants that there had been no infringement of the plaintiff’s copyright.
Issues involved in the case
The issue before the Supreme Court was whether the defendants had infringed upon the copyright of the appellants in the play “Hum Hindustani” by making the film “New Delhi.”
Rule
The Supreme Court relied on the concept of the idea-expression dichotomy, the reasoning of the viewer of the works, and Section 13 of the Copyright Act.
Analysis
The Supreme Court ruled in favour of the defendant, and according to the court under Section 13 of the Copyright Act, the idea of “provincialism,” based on which both the play and movie are created, is not protected, as it protects literary, musical, theatrical, creative works, sound recording, and cinematographic films. The Copyright Act protects the expression, the manner, or the arrangement in which an idea is presented, not the idea per se. If the source of two or more works is the same, then some similarities are inevitable, and whether a particular work infringes on the copyright of another or not should be decided by the viewer. If, after reading or watching the work, a viewer is certain that the latter work seems to be a copy, then it would be labelled as copyright infringement.
Conclusion
Hence, the Supreme Court held that the plaintiff failed to prove that the defendant had in any way imitated the play. As there are no apparent and significant similarities between the play and the movie, aside from the idea of “provincialism,”, the film cannot be perceived as an imitation of the original play, so there is no infringement of copyright by the defendant.
Ratna Sagar Pvt. Ltd. vs. Trisea Publications and Ors., (1996)
Facts of the case
In this case, the plaintiff started its publishing business in 1982 and was involved in publishing books for children for educational purposes. The plaintiffs published five volumes of a book titled “LIVING SCIENCE” an educational book for children to make them aware of the features of plants and animals. The plaintiff was the owner of the copyright in these 5 volumes of the books published by them and had the sole right to use them; no one else had. The first defendant was the publisher of a series of books under the title ” UNIQUE: SCIENCE”, Volumes III, IV, and V, and defendants no. 2 and 3 were the editors of the said works. As per the allegations of the plaintiff, the series of books published by the first defendant under the title “UNIQUE SCIENCE” was a replica of the books published by the plaintiffs. The defendants contended that the work of the plaintiff and the defendants was derived from common sources, and the works are dissimilar; therefore, there is no question of any infringement of copyright. The defendants further alleged that the Copyright Act doesn’t protect the original thought or information; what it protects is the work, which may have the same source as that of the other work but has a completely different way of expressing the thoughts and information; it was produced with skill and labour. A person is entitled to further develop the idea derived from the common source. The work of the defendant, though derived from a common source, is not in any way similar to the alleged work of the plaintiff, where the idea being taken from a common source is developed differently, and similarities are bound to occur.
Issues involved in the case
Whether defendants are guilty of infringement of the copyright in the books published by the plaintiff?
Rule
The Court relied on the provisions of sections 13, 51, and 55 of the Copyright Act of 1957.
Analysis
Based on a thorough study, the court reviewed the materials presented by the parties as well as the arguments of the learned counsel for the parties. It has viewed the plaintiff’s books as well as the defendants’ books, and a detailed inspection of the books leaves the impression that the defendants duplicated the plaintiff’s work. No doubt, both the plaintiff and the defendants got their book ideas from nature, but what we’re interested in here is how the plaintiff and defendants portrayed the things that exist in nature. The notion of combining thoughts into a picture and words would serve as the pivot for every person’s work. As a result, where it is recognised that the plaintiff had previously published the work, its rights must be safeguarded. As a result, based on the facts and circumstances of the case, I have no hesitation in concluding that the defendants are guilty of violating the plaintiff’s copyright in the books, and the plaintiff has put out a prima facie strong case for an injunction. The plaintiff also wins on the balance of convenience.
Conclusion
It has been held by the court that the defendants have infringed the copyrighted work of the plaintiff, and accordingly, there shall be an injunction restraining the defendants from printing, publishing, selling, and/or offering for sale, advertising, directly or indirectly dealing in the infringing literary works titled “UNIQUE SCIENCE,” which works are an infringement of the copyright of the plaintiff.
Shree Venkatesh Films Pvt. Ltd. vs. Vipul Amrutlal Shah and Ors. (2009)
Facts of the case
In this case, the plaintiff/respondent is a producer and director of Hindi films, and in 2007, Vipul Amrutlal & Ors released a film named “Namastey London”. The film was a megahit, earning more than Rs. 100 crore through the box-office collection. But in July 2009, a Bengali film titled “Poran Jaye Joliya Rae” was released, which was supposedly an imitation of the film “Namastey London,” produced by the plaintiff/respondent. On the 28th of July 2009, after the release of the film, attempts were made to negotiate between the plaintiffs and the Bengali film producer for assigning the rights in the movie in favour of the plaintiffs, but the negotiations proved to be a complete failure. Later, 10 days after the release of the Bengali film, the plaintiffs filed a suit and interlocutory application to restrain the exhibition of the film as it infringed the plaintiff’s copyright in their Hindi film. The Hon’ble First Court passed an ad-interim order stopping the defendants (Shri Venkatesh Films Pvt. Ltd.) from exhibiting their film. The appeal was filed against the injunction order of the Hon’ble First Court in the Calcutta High Court.
Issue involved in the case
The issue before the Calcutta High Court was whether defendants or appellants were guilty of infringing the copyright of the plaintiffs or respondents in the film “Namastey London”?
Rule
Here, the Calcutta High Court interpreted the term “copy” in Section 14(d)(i) of the Copyright Act, 1957.
Analysis
The Court interpreted the term “copy” in Section 14(d)(i) and stated that “making a copy” of the film is not just limited to duplicating the film by storing it in any electric device or other, but it also points out that “copying of the film” would also mean and include the making of another film that fundamentally or substantially resembles the original film, copying that portion without which the movie or film has no structure to lean on. So, the Calcutta High Court pressurised giving broad meaning to the term “copy” in Section 14(d)(i). The court observed that where, in the opinion of the viewer, a film shows substantial similarity with another film, there is copyright infringement. The court further states that the two films have been compared scene by scene, and on a prima facie basis, it was held that the Bengali film is a coherent version of the Hindi film as a whole. So, there is an infringement of the story and screenplay in the Bengali film.
Conclusion
The Calcutta High Court confirmed the injunction order passed by the Hon’ble First Court and further restrained the defendants from making adaptations or copies of the film for any regional film.
Test for copyright infringement
The work is copied: Once the plaintiff has been successful in proving his right of ownership, the next task is to show that the defendant has, through any means possible, actually copied the work from the plaintiff’s work.
Substantial similarity: The next test to prove infringement of copyright is the substantial similarity test. It is often used by the courts even though there is no exact formula to determine whether a work is substantially similar or not, but there are few standards for the courts to use. One such method is to see how much work is copied from the original work and whether the presence of a copied version in a new work is trivial or substantial. This can be understood with a simple example: imagine that you are writing an article and you took a 250-word paragraph from a 5000-word research paper. The court may consider this trivial, but if you are writing a poem and you took one most important line from a 5-line poem, then there might be a good argument to make about the substantial similarity between the original and the new work.
Another portion of this test is to determine the similarity element. An idea might be similar to hundreds, but the creative way to present such an idea is what matters most. The choice of works, the order maintained in the work, the punctuation, the usage of graphs, etc., are what make the work of one person different from another. So, the court must compare the two works to find out whether the new work so clearly resembles the original work that it was most likely copied.
Lay observer’s test: The next test to determine copyright infringement is “the audience test.” Here, the plaintiff must prove that if the audience finds the expression in the defendant’s work substantially similar to the plaintiff’s work, in other words, the observer, or, as we can say, a layman, would find the two works so substantially similar that they would not be able to differentiate between the two, therefore the substantially similar work would not enjoy protection as it infringes the copyright of another. This test is also called “the observer test”.
Legal enforcement and remedies
Civil remedies: As per Section 55 of the Copyright Act, civil remedies for copyright infringement are: When a copyright owner files a suit for infringement of copyright before the trial starts, he also files for an interlocutory injunction. Such injunctions are filed to prevent the infringer from further utilising the copyrighted work and to provide immediate and temporary relief to the copyright owner, which can last until a trial is concluded or any subsequent orders are given. To provide an interim injunction, the following conditions must be fulfilled:
A prima facie case has been made.
The balance of convenience lies in the favour of the plaintiff.
Refusal of such an injunction would result in irreparable injury to the plaintiff.
Monetary remedies are also provided, as the court deems sufficient according to the facts and circumstances, to the copyright holder for infringement of his work:
Monetary damages are provided to the owner to restore him to his earlier position, which is the result of a loss of reputation, trust, a decrease in sales, etc.
Account of profits made by the sale of the infringing copies.
Cost of proceedings.
Criminal remedies: As per Section 63 of the Copyright Act, any person who intentionally infringes or abets the infringement of copyright in a work or any other rights involved in copyright conferred by the Copyright Act, 1957, shall be punished with imprisonment for six months, which may extend to three years, and with a fine, which shall not be less than fifty thousand rupees but may extend to two lakh rupees. In a situation where copyright in a work has been violated but not with the intent to gain in the course of trade or business, the court may punish such a violation for a term of less than six months and a fine of less than fifty thousand rupees.
Administrative remedies: When goods are brought into a country from abroad for sale, it is called importation, and sometimes limits are imposed on goods, which means that they won’t be sold in a particular territory or that their sale would be restricted to particular territories. Any act done contrary to such stipulations results in infringement of copyright through importation, so the injured party can approach the Registrar of Copyright to restrict the import of infringing copies to the copyright owner.
Technology and copyright infringement
Whenever someone faces any complication beyond his or her capacity, the one thought that overtakes one’s mind is “I cannot do this” or “I was not prepared to deal with this situation”. In the same way, our Copyright Act was not made with the intent to deal with the challenges of technological advancement and the digital age; however, it was the sheer willpower of the Parliamentarians to protect the integrity of the works produced by the authors and artists, so here we are today with a few amendments at par with all the issues that emerged from the digital age.
To deal with the emerging issues in the digital environment, the World Intellectual Property Organisation introduced two treaties, the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). The WCT was added as a special agreement under the Berne Convention, which pertains to protecting the works and rights of their authors in the digital world. Now, because of the WCT, computer programmes and the compilation of data are protected under copyright laws. It recognises the right to communicate work to the public, the right to distribute, and the right to rent, among other rights recognised by the Berne Convention.
The India Copyright Act of 1957 has been amended five times, preceding the 2012 amendments. This Copyright Amendment Act of 2012 was brought in to bring the Indian Copyright Act on par with WIPO’s “Internet Treaties” and some other amendments that go beyond these Internet Treaties. This amended statute introduces technological protection measures to make sure that authors and artists do not fall prey to the dangers of the digital era. Some examples of such amendments are given below:
The amendments made regarding sections 14(c), (d), and (e) of the Copyright Act, in respect of artistic work, cinematograph film, and sound recording, respectively The purpose was to interpret terms like the right to reproduce, the right to make a copy of the film, and the right to make a copy—to say that these terms mean the storing of it in any medium by electronic or other means—to create liability for the Internet service providers.
The next amendment modified the definition of cinematograph film under Section 2(f), and the amended definition is “any work of visual recording on any medium.” To define “visual recording,” clause (xxa) was added to propose that recording in any medium with any method possible, including storing it in electronic means from which it can be reproduced or communicated.
Another amendment complied with the “Internet Treaties” of WIPO by adding performance to Section 2(ff): Communication to the public means “making any work or performance available.” Looking back, this “Communication to the Public” was introduced by the 1994 Amendment to extend the rights to the Internet, and the rights that were only limited to the authors now have been extended to the performers as well, the reason being that the performers’ rights have been recognized by the WPPT and brought to the Indian Copyright Law by bringing sections 38 A, 38 B, etc.
To prevent infringement in digital media, digital locks called Technological Protection Measures were devised to prevent infringement of works, but simultaneously, circumvention of technologies was developed to beat the digital locks used by the copyright holders, so Section 65A has been introduced to punish any individual who circumvents digital locks used for protecting the rights of the copyright holders with imprisonment, which may extend to two years, and shall be liable for a fine.
The above-mentioned points were some significant amendments that have a direct impact on the rights in the works due to the technology; otherwise, many have been introduced by the Copyright Amendment Act of 2012.
Strategies for copyright protection
Protecting your intellectual property is important not only from a business perspective but also for building trust and security in your work. So, here are some important tips to consider in your daily life to steer clear of dangers to your copyrighted work:
Register your copyright: Even though there is no mandatory statutory requirement to register your copyright, it will certainly make your life easy and provide great help in establishing your ownership of the created work.
Digital watermarks: A digital watermark means a piece of code is embedded in the digital data. They are very helpful in detecting and eliminating data piracy to protect digital assets. So, if you are providing your work in digital form, this can help in the protection of your creation from online malicious acts.
Contractual clarity: While sharing your work with someone else for any reason, it can be licencing agreements, giving reproduction rights, etc., what you need to do is establish ownership in the work and demarcate which rights are restricted to them and what they are allowed to do.
Diligent monitoring: To identify any unauthorised use of your work, you need to diligently monitor the internet to take any timely action. This can help you remove the problem from its root and save time, energy, and resources.
Document your creation process: While creating a work, you need to document everything, like notes, rough drafts, timelines, research history, any downloaded material for reference, etc. This will provide significant assistance in establishing your claim on your work in case of disputes.
Conclusion
This is not the end; it is just the first step, which starts with gaining knowledge and then applying such knowledge to your daily life. In the intricate web of artistic and intellectual creation, the issue of copyright infringement in India has emerged as a formidable challenge, demanding both vigilance and adaptability. This article has delved into the multifaceted landscape of copyright protection in the country, highlighting the complexities and offering insights into potential solutions. In a nation as diverse and vibrant as India, where artistic expression knows no bounds, creators, consumers, and policymakers must be well-informed about copyright laws. Awareness empowers creators to protect their works, encourages consumers to respect intellectual property, and guides policymakers in crafting legislation that strikes a balance between innovation and protection.
The evolving digital landscape has ushered in both new opportunities and challenges. While it has democratised creativity, it has also amplified the scope of copyright infringement. However, technology is not the enemy; it is a tool that can be harnessed for good and can offer hope for a future where creators can safeguard their intellectual property more effectively.
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On October 7, 2023, the Hamas group launched approximately 5000 missiles on particular regions of Israel. In response, Israeli forces also launched a counterattack on the Hamas. Many Israelis, along with Palestinian citizens, lost their lives in this attack. The Prime Minister of Israel, Benjamin Netanyahu, declared official war with Hamas. This is another market uncertainty or conflict that has created an impact on the world in terms of the economy and the interrelationships of countries. This article will focus on identifying the impact of the Israel-Palestine War on the global economy. In this article, the global energy market, along with international trade, as well as the financial market and tourism sector, will be considered for analysing the influence of the Israel Palestine War.
The global energy market
In order to understand the impact of the Israel-Palestine war on oil prices, knowledge of the geographical location is essential. Israel is an important country in the Middle East. According to available information, Israel’s relationship with other Middle Eastern countries, including Gulf countries, is continually changing. Gulf countries are the largest producers of oil and petroleum products, upon which the global energy market heavily depends. There is a prediction that Iran and other Gulf countries could become involved in the Israel-Palestine conflict shortly. This situation could have a significant impact on the global energy market. However, neither Israel nor Palestine is a major producer of oil and petroleum products. The recent crisis or war is occurring in the region where the largest oil-producing nations are situated. As a result, investors are closely monitoring the potential conflict that may affect the overall supply chain network of the oil industry.
The Israel-Palestine War could be responsible for a decrease in the monetary value of currencies (except the American Dollar) and market indicators. On the 9th of October, market indicators in various countries decreased due to fear of future uncertainties related to the global financial market. According to The Guardian on October 16, 2023, share prices of the popular oil and gas company Shell increased by 1.5%. Prices of Brent crude also rose by more than 7% because of this sudden conflict.
If, in the future, OPEC countries take an active role in the Israel-Palestine War, it could affect the oil industry. As we know, after the pandemic, the demand for oil and petroleum products has increased. Increasing demand and decreasing supply of oil products could influence prices. Nowadays, people are facing various difficulties due to economic breakdown, inflation, and other economic issues. This conflict could present various challenges to governments in maintaining economic balance.
Impact on international trade
International trade plays a significant role in the economic development of the respective country. Israel Palestine War has created a fear of spreading the conflict across the region, which may negatively affect international trade. For example, in the case of India, Israel is one of the important trade partners of the nation. During the financial year 2022-23, India exported petroleum products worth $5.5 billion to Israel, which is more than 3.5 times compared to the previous financial year. Apart from that, the country also exports metals, precious stones, chemical products and textiles to Israel. India’s largest technology companies also have active operations in Israel. Due to this uncertain conflict, the operations of technology companies can be influenced. During the G20 Summit, India proposed a MoU (Memorandum of Understanding) to develop an economic corridor between India and the US, as well as European countries and Middle East regions. Developing an economic corridor between all these nations would promote international trade and transactions in the future. However, because of internal conflicts between Middle Eastern countries, these projects can be postponed or cancelled. According to the WTO chief, “Currently, the world is already going through weak international trade flows. The opposition to Israel, Hamas, has total control of the Gaza Strip. The chances of spreading the conflict further to other parts of Gaza may have a negative impact on economic growth. It is expected that, in 2024, trade growth will increase by 3.3%. This uncertain situation can create barriers to achieving the forecasted figure.”
Performance of the global financial market
This uncertain event also affected the global financial market. After getting the news of a surprise attack by Hamas on Israel, performance indicators of stock markets decreased on October 9. For example, in the case of India, Nifty50 fell by 0.90% compared to the previous closer rate. Another indicator of the Indian stock market, Sensex, also declined by 0.80 % because of this uncertain event. On the 9th of October, investors lost approximately 4 lakh crores. Investors are now very conscious about developing investment portfolios.
(Source: msn.com, 2023)
From the analysis of the above global stock indices, it can be seen that on the 9th of October, the share prices declined. Israel Hamas war could be the major reason behind this fall. This conflict could create a fear of loss in the market in the future. It is expected that interest rates will increase in the upcoming period, which may influence economic growth. The US Federal Reserve also provides hints regarding increasing interest rates in the future. Foreign institutional investors prefer to sell bonds and other investments in Indian equities because of the Israel Hamas conflict and other market factors. In the current situation, governments of countries, along with central banks and other authorities, are working collaboratively to support the economic situation and reduce the impact of the Israel Hamas conflict in the upcoming period.
Impact on tourism
Conflict between two countries or war creates a huge impact on the tourism sector of that respective region or country. Due to such incidents, the hospitality sector could face lots of challenges. In the case of Israel, the total number of tourists increased after the COVID era. In the current situation, approximately 9000 licenced tour guides are currently present in Israel. Before the war, Israel had more than 2.5 million tourists interested in different regions. Generally, the tourism sector supports the country or region in resolving economic issues and developing the economy. Most people from the USA, France, Germany and the UK prefer to visit Israel. Sightseeing, pilgrimage, solo trips, and group tours are the major purposes for which people are visiting Israel. As per recent statistics, approximately more than 56,000 tourist hotel rooms are available across the nation. Apart from that, popular hospitality companies such as Airbnb have also established guest houses, pod hotels and rental apartments across Israel. Not only the hospitality sector but also the airline sector in Israel is affected by the Israel Hamas conflict. Most countries across the world have issued restrictions to their citizens on visiting Israel. Citizens of Israel would also not be able to visit another country because of this uncertain conflict. Multinational hospitality and tourism companies that are restricted in Israel can face huge losses in the future. This war has also had a negative impact on the neighbouring countries of Israel and the Gulf countries.
Tel Aviv is a popular city where a large number of visitors prefer to visit. However, because of the Israel and Palestine conflict, hotels in the city have been emptied, and six of the largest transportation companies have stopped their services to Tel Aviv. easyJet has started cancelling all transportation packages to Tel Aviv until October 22, 2023. Virgin Atlantic Holidays has also postponed its tourism plans until October 18th or provided a refund to its clients. As per Elias al-Arja, approximately 90% of hotels in the area of the West Bank are currently empty. Dan Hotels is offering 50% discounts to locals. Intrepid Travel, which is an Australian tour operator, has cancelled tours until the end of 2023. Odysseys Unlimited has postponed its Israel trips as well as provided suggestions to its clients to visit Middle Eastern countries such as Egypt and Jordan later. This is how the Israel-Hamas conflict has affected tourism and the hospitality sector.
Conclusion
From the study of the above factors, it can be concluded that the Israel Palestine War could have an impact on the global economy in the upcoming period. World leader countries need to take the initiative to resolve this conflict as soon as possible. The participation of Gulf countries in the war could disrupt the oil supply chain network. This war can also create a negative impact on international trade. Due to this conflict, the establishment of the IMEEC (India-Middle East-Europe Economic Corridor) project may be delayed. The global economy is already facing various challenges, such as inflation, climate change, the impact of the Russia Ukraine war, and other internal conflicts. Israel Palestine conflict can create more challenges for the global economy. The tourism sector is another area that gets infected because of this market uncertainty. Not only Israel’s tourism and hospitality sectors but also global companies that offer tourism services to Israel are affected. The resolution of the Israel Palestine conflict is essential to reducing the loss of the global economy.
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This article is written by Mohammed Fardeen Yusuf. This article provides the readers with an in-depth analysis of the Telangana Shops and Establishment Act, of 1988. It gives an overview of the purpose and objective behind the enactment of the Act. Further, it gives a detailed explanation of the important definitions of the Act, followed by an overview of the important provisions. The article also discusses the important judicial pronouncements relating to this Act.
It has been published by Rachit Garg.
Table of Contents
Introduction
The Telangana Shops and Establishment Act, 1988, is a regulation that provides shop owners with a basic licence. A business needs proper planning and, most significantly, the legal necessities. After deciding to establish a particular type of business, you need to check all the compulsory guidelines. Among all requirements, getting a licence is of utmost importance. In addition to this, the Act also determines the wages, the prescribed working hours of the employees, and other associated things that are necessary for a business owner to run a business in the state. The article will give an overview of this Act to the reader, going through the objectives, definitions, essential provisions, case laws, and recent developments.
Purpose and Objectives of the Act
The purpose and objectives of various Acts about the shops and establishment may vary across diverse states; however, usually, the fundamental objectives are similar. There may be some differences in the purposes and objectives as articulated in different statutes. From the bare reading of the various provisions of the Telangana Shops and Establishment Act, 1988, the purposes and objectives of the Act are as mentioned below:
The first and foremost objective is to ensure proper registration of the business establishment.
Ensure that the shops and establishments maintain a proper register, including details of the employees.
To check the smooth functioning of the establishment, including the closing and opening of shops. The Act provides for specific working hours and states that there shall not be more than eight hours in a day and forty hours in a week.
To ensure that no child is required or allowed to work in the establishment.
To provide maternity benefits for the welfare of women.
To ensure proper health and safety measures for workers. The provisions for the same are enumerated in Chapter VI of this Act. The chapter provides provisions for various health and safety measures like cleanliness, ventilation, and permissible transportation loads.
To grant leave equally to all the employees who have served according to the period mentioned.
Equal wages for equal work are to be provided without any discrimination, as provided under the provisions of Chapter VIII of this Act.
To impose penalties and fines on the employee by the employer for not working within the guidelines provided by the establishment.
To ensure the appointment of authorities, which in turn are supposed to hear and decide the claims relating to wages.
To safeguard the rights and privileges that are not affected by any other law of the employees working in the establishment.
Important definitions
There are several definitions described under Section 2 of the Telangana Shops and Establishment Act. The Act provides various definitions under Chapter I, Section 2. These definitions are provided to narrow down the scope of misinterpretation and reduce ambiguity while understanding the provisions enumerated in the Act.
Let’s discuss the definitions of these important terms:
Commercial Establishment
Section 2(5) talks about the commercial establishment, which refers to an establishment that carries on any trade, business, profession or any work in connection with or incidental or ancillary to any such trade, business, or profession, or the work which is clerical that also includes a factory or an industrial undertaking that is also a commercial, trading, banking, insurance establishment, and includes an establishment that is controlled by a co-operative society. It also includes the establishment of a factory or an industrial undertaking that falls outside the scope of the Factories Act, 1948, (Central Act 63 of 1948), and any such establishment that the government may declare by notification to be a commercial establishment under this act but does not include a shop.
Employee
Section 2(8) defines “employee,” which means a person wholly or principally employed in, and in connection with, any establishment, and includes an apprentice and any clerical or other staff of a factory or industrial establishment who fall outside the scope of the Factories Act, 1948 (Central Act, 63 of 1948), but does not include the husband, wife, son, daughter, father, mother, brother, or sister of an employer or his partner, who is living with and depending upon such employer or partner and is not in receipt of any wages.
Shop
Section 2(21) refers to the term “Shop,” which talks about the premises under which any form of trade or business is carried out, including customers, and the contribution of the cooperative society in ensuring the smooth working of shops. It consists of warehouses, godowns, and any form of storehouse found under the same premises ultimately used to achieve the motive of trade and business. Lastly, any other establishment that is notified by the government shall be regarded as a shop within this Act but not read within the commercial establishment.
Establishment
Section 2(10) defines establishments, which includes shops, restaurants, food hubs, hotels, lodges, places of public entertainment, or any other establishment that the government may deem fit and notifies and declares to be an establishment under this Act.
Wages
Section 2 (23) talks about “wages” which means every remuneration, whether by way of salary, allowance, or otherwise expressed in terms of money or capable of being so expressed by the terms of employment, if fulfilled, would be payable to an employee towards the work done in such employment, which also includes:
The remuneration that is payable under any settlement between the parties or order of a tribunal or court.
The employee is entitled to the salary in respect of overtime work holidays or any leave period.
The additional remuneration that is to be paid under the terms of employment is called a bonus.
The sum to be paid on the termination of employment of the employee under any law, contract, or instrument that allows for the payment of such sum, but it does not provide for the time within which the payment is to be made.
The sum that is paid to the employee under any scheme framed under any law for the time being in force.
The bonus, which is included under a scheme of profit sharing or otherwise, is not a remuneration payable under the terms of employment and is certainly not payable through an award or settlement between the parties or by the order of the court.
The payment to be made for the house accommodation value, or of the supply of light, water, medical essentials, or other amenities, or of any service excluded from the computation of wages by a general or special order of the government.
The payment that is made to the employer or any person and includes any of the interest which may have accrued thereon.
The amount to be paid for the travelling allowance including the value of any travelling concession.
The additional sum is paid to the employee for the special expenses according to the nature of his employment.
The compensation needed to be paid upon the termination of employment in cases other than those specified in subclause (d).
The subscription fees paid by the employee for the life insurance and the contribution paid by the employer to the life insurance of the employee under the provisions of this Act and the bonus which may have accrued thereon.
The house rent allowance is to be paid by the employer.
Essential provisions of the Act
This Act serves as a significant instrument for the establishment and operation of businesses or trades within Telangana. However, adherence to certain provisions is necessary to ensure a seamless business workflow. The following are the essential provisions under this Act that are to be kept in mind:
Registration
Section 3 of this Act refers to the registration of the establishment shall be done under the guidance of the appointed inspector, who shall make sure that this provision of the Act is duly followed, or else it will lead to the direct cancellation of the registration of the establishment.
The employer of an establishment shall,
Proceed with registration within thirty days from which the establishment came into existence from the date of commencement of this Act.
Thirty days from the date on which the establishment commences its work, which is sent to the inspector with a statement of particulars and the fees as prescribed.
The inspector shall register the establishment upon receiving payment in the register of establishments and shall issue, in the prescribed form, a registration certificate to the employer, who shall display it at a prominent place in the establishment.
A registration certificate is to be issued under sub-section (2), and be valid upon the date of issuance up to the 31st day of December.
The employer is to inform the inspector in case of any changes made in the particulars under sub-section (1) within fifteen days. On receipt of such intimation and the fees prescribed, the inspector shall make the change in the register of establishments with the prescribed changes and shall amend the registration certificate or issue a fresh registration certificate, if required.
On the closure of the establishment, the employer is required to inform the inspector within fifteen days to remove the name of the establishment from the register of establishments and cancel the registration certificate.
If the inspector is satisfied with such an intimation for the closure of the establishment, then he shall remove the name of such establishment from the register and cancel the registration certificate.
Opening and closing hours of shops
Section 7 of this Act refers to the conditions of the functioning of the shops to regulate the hours for the functioning of the shop, followed by the interval period, and grant holidays on special occasions.
No shops are to be opened earlier or closed later than the prescribed period, and the customer who is served in that shop during the hours that are fixed for the closing shall be served.
The government has the sole authority to prescribe the hours for the different classes of shops in different areas.
Application of this Chapter to establishments other than shops
Section 14 talks about the establishment other than the shops with all the essential conditions that are to be applied to the shops.
Children not to work in the establishment
Section 20 of this Act mentions that no children are allowed or required to undergo work in any establishment.
Cleanliness
Section 26 refers that the area of the establishment shall be clean and free from any waste that may arise from the drains or any other nuisance and shall be required to be cleaned from time to time by any prescribed method.
Compulsory enrolment of employees in insurance cum savings scheme
Section 34 talks about the employees who have served for not less than one year in an establishment shall be subscribers to an insurance scheme or any saving scheme that is notified by the government and that shall apply to an establishment towards which the employee is associated with the rates as prescribed by the government. It can be paid in a lump sum or every year in monthly instalments, which are also to be prescribed by the government, and the employer is required to pay the authority on behalf of the employee and shall recover the same amount from the employee.
Every employer of the establishment whose insurance scheme is made to be applicable by the government is required to pay the fees in advance to the employee as notified by the government from time to time and shall also be notified by the authority.
Payment of Wages
Section 35 refers to the employer of an establishment being responsible for the payment of wages to the employee and all the other sums that are required to be paid under this Act.
Fines
Section 41 talks about the fines which are to be acquired as mentioned below:
The employees shall be liable for the payment of fines towards such Acts and omissions on the employer’s part, which would certainly require the prior approval of the government or the authority in charge.
To be notified by notice upon liability for such acts and omissions in the manner prescribed under which the employment is carried on.
The fine shall not be imposed on the first instance, as an opportunity should be provided to the party to show cause for the validity of the imposed fine in compliance with the prescribed procedures.
The imposed fine on the wage of the employee must not exceed the amount of three paise of the wages payable in that period.
Fines shall not be imposed on those employees who have not completed the age of 15 years.
The fines shall not be recovered from the person after the expiry of sixty days from the day on which the fine was imposed.
A fine may only be imposed on the day of commission of the act or omission.
Fines recovered by the employer shall be recorded by the employer in a register, and the fines shall only be consumed for the well-being of the employees in that establishment.
Appointment of authority to hear and decide the claims relating to wages
Section 50 talks about how the government shall appoint the authority for the matters and claims to be settled concerning the deductions, wages, delay of payment, and the compensation that is required to be paid under this act towards the employees in any establishment under the area.
Appeal
Section 52 talks about the appeal arising from an order which dismisses the application partially or as a whole made under sub-section (1) of Section 51 shall be presented before the authority prescribed by the government within thirty days from the date on which the directions were given to the applicant or the employer.
The employer is concerned with the total amount of sum that is to be paid in wages or service compensation, which certainly exceeds three hundred rupees.
Any other person who has applied for the compensation to be claimed under sub-section (1) of section 51 is on hold by the employer towards the employee exceeding fifty rupees.
By a person who is directed to pay the penalty under sub-section (3) of section 51.
Powers and duties of Chief Inspectors
Section 59 refers to the several powers granted to an inspector to be exercised within the limits of the prescribed jurisdiction:
To enter into an establishment during reasonable hours and may accompany an assistant as he thinks fit for further assistance in the work which he believes to be an establishment.
To conduct inspections of the premises, to check the records and the registers and to collect the required pieces of evidence that seem necessary.
The sole power to exercise the powers which seem necessary to assure the proper implementation of the Act.
Landmark case laws
St Anns College for Women v. State of Telangana (2021)
Brief Facts
In this case, the appellant institution was an educational institution, and the respondent was appointed in the year 1985 as an attendee and given resignation in 2009, and service dues were also settled.
Issues
The question was whether the educational institution falls under the definition of “establishment” under Section 2(10) of the Telangana Shops and Establishment Act of 1988.
Judgement
The Supreme Court referred to the definition of ‘establishment’ under the Bihar Shops and Establishments Act, which is exactly similar to the definition under the Telangana Shops and Establishment Act, and significantly held that an educational institution does not fall within the scope of establishment under the Act. The educational institution is not an establishment as held by the Supreme Court, although it may fall under the definition of ‘industry’, but does not fall under the meaning of ‘establishment’. Further, the order passed by an appellate authority was dismissed. Once this Court is of the view that the order passed by respondent 2 was without jurisdiction, this Court can certainly interfere with the same even though there is an alternative remedy of appeal before the Deputy Commissioner of Labour. Hence, a writ appeal was allowed.
Smt. Anita Hari v. The State of Telangana and 4 others (2020)
Facts
In this case, the applicant was appointed by the management (respondent) for the position of manager client for the daily tasks and the process plan to be implemented to create enhanced coordination. After her probation for 6 months, the company passed a letter to her announcing the emoluments, and the manager was informed about her noncompliance with higher posts as an allegation was made highlighting improper behaviour with the senior officials. The applicant was terminated by the arbitrary and illegal decision of the company and was demanding the continuation of employment with the pending wages and the rendered service benefits. Relief from the services without any reason; despite stating to resume her services, she received no reply and continued her services for 90 days. She further requested wages and compensation of Rs 5,00,000 for the harassment and mental agony caused to her by false allegations
Issues
Whether the termination was lawful? If not, is she entitled to the compensation? Regarding Section 48 (3) of the Telangana Shops and Establishment Act, 1988, alleging unlawful termination and seeking reinstatement with full back wages with all attendant benefits and continuity for the said service.
Judgement
The HC further stated that Section 47 (1) of the Telangana Shops and Establishment Act, 1988, further describes the conditions for the termination of the services to be covered up with compensation. No employer shall terminate the service of an employee who has been in employment for six months and would be required to give one month’s notice in writing, with the wages in lieu, and the employee should be employed for not less than one year. As the applicant stated that she only worked for less than six months under the respondents, the removal that was made is justified, and no further interference can be made. Hence, the application was dismissed.
New developments
The registration of any shop or commercial establishment can be done online by simply following the methods at the available portal for online registration and getting a licence:
Click on the “Register yourself” button.
Fill up the required blanks with information which shall include:
the photographs of the establishment mentioned in Telugu font,
the employed number of workers, if on rent (rent deed required),
a photograph of the owner of the business,
certificate of incorporation and if a company would require an article of association and a Memorandum of Association.
Log in after a successful registration.
Form 1 will appear. Fill out the form after entering the required details that have been asked in the form.
Attach all the required copies of documents.
Pay the registration fees as per the number of employees in the establishment.
Form II will appear after the successful entry of the data.
You can further track the status of the application on the same site under “Track Application Status”.
The licence has to be renewed every 30 days, which requires a prescribed amount of fees to be paid.
The table below will give you an idea of the required fee structure for the number of employees for the process of registration:
The Telangana Shops and Establishment Act, 1988 provides a safeguard for anyone who would set up a shop or commercial establishment by doing a proper registration and getting a valid licence and thus helps the business owner for the smooth workflow of the business with the conditions of work to be fulfilled accordingly, as both employers and employees can enjoy their environment of work. The recent new development provides ease of work for the online methods of registration with the limited number of documents required for registration.
Frequently Asked Questions
What is the validity of a shop and establishment licence in Telangana?
The certificate’s validity will remain from the issued date to the 31st day of December of that particular year. You need to renew this certificate within 30 working days after it expires.
What is the minimum Labour required for a Labour licence in Telangana?
The minimum number of labour required in an establishment, which includes the government, a local authority, or any place where any trade, industry, business, manufacture, or occupation is 5 to get a labour licence in Telangana under this Act.
What is the Telangana Shops and Establishment Act?
This Act was enacted to regulate the condition of work and employment in shops and commercial establishments, theatres, restaurants, and other establishments.
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Contracts govern various transactions and relationships daily and are a fundamental aspect of our legal system. The concept of Quasi obligations is often overlooked in contract law. Such relations that resemble contracts are called contracts implied in law or quasi-contracts. This is not, in actuality, a contract based on an agreement between the parties. Such obligations come into existence through a fiction of law. Quasi obligations are obligations that are created without a contract.
Although there is no agreement between the parties, it may become necessary to establish a person’s obligation to another on the ground that otherwise he would be retaining money or some other benefit that has come into his hands to which the law regards the other person as better entitled, or another person may suffer unfair loss. The law of quasi-contracts addresses such situations.
Being aware of quasi-contractual obligations is not only necessary for legal scholars and practitioners but also for every individual and business owner. If you have mistakenly received funds or provided any goods or services without a clear agreement or beneficiary of someone else’s generosity, quasi-contracts determine rights and responsibilities.
Chapter 5 of the Indian Contract Act, 1872 deals with quasi-contracts and lays down five various obligations and remedies.
What are quasi-contractual obligations
Quasi-contractual obligations, or implied-in-law contracts, are legal obligations imposed by law to prevent unjust enrichment or unfairness; they do not arise out of actual contracts. These obligations arise when one party is the beneficiary at the expense of another party without any formal agreement or contract.
Quasi-contracts are not actual contracts. In the case of quasi-contracts, mutual consent is not required, and the parties may not even know each other. The concept is a legal fiction to create fairness and equity in certain situations.
Quasi-contracts ensure that the receiving party makes restitution or compensation to the party who conferred the benefit.
Examples of quasi-contracts:
Money paid by mistake: If a person has mistakenly paid some money to another person, he can recover the money paid. Or if a person pays for a product that is never delivered, he can recover the money paid.
If someone supplies necessary supplies to a person unable to make the necessary arrangements: the value of such goods and services can be recovered if they are provided to the disabled person.
Elements of a quasi-contract
Quasi-contracts are legal tools to ensure fairness and prevent a person from getting any benefit at the expense of another party. There are certain elements to establish such obligations to impose an obligation on the person who gets benefit at the expense of another to make restitution to another party. Restitution means restoring the party to the position it would have been in had the unjust enrichment not occurred.
There need to be several key elements to establish a quasi-contract. Some of these are discussed below:
Unjust enrichment: This is the fundamental principle behind a quasi-contract. It means that one party has gotten some value at the expense of the other party, and the other party has suffered a loss as a result.
Enrichment of defendant: To establish a quasi-contract obligation, it is necessary that the defendant has received some benefit and has indeed been enriched. It means that he has received some benefit or obtained some advantage as a result of the situation.
The expense to the plaintiff: To establish a quasi-contractual obligation, it is necessary that the plaintiff has suffered a loss and must have incurred some form of expense.
No mutual intention to contract: One of the key differences between an expressed contract and a quasi-contract is the lack of a mutual intent to contract. In a quasi-contract, there is no intent to enter into a contract; the court imposes legal obligations to prevent unjust enrichment.
Types of quasi-contractual obligations under the Indian Contract Act, 1872
Chapter 5 of the Indian Contract Act, 1872 (Section 68-72) deals explicitly with the provisions of quasi-contractual obligations and provides legal remedies in such situations where there is no actual contract but one party is the beneficiary at the expense of another party.
Types of quasi-contractual obligations covered by the Indian Contract Act, 1872 are:
Section 68: Necessaries supplied to a person incapable of contracting.
As per the provisions of Section 68 of the Indian Contract Act, 1872 the person who has supplied some type of necessary to a person unable to enter into a contract due to any disability, such as a minority or unsoundness of mind, is entitled to be reimbursed from the property of the incapable person.
Necessaries include defending a suit on behalf of a minor in which his property was in jeopardy, lending a loan to a minor to save his property from sale in the execution of a decree, and advancing to a minor for marriage.
As per the provisions of Section 69 of the Indian Contract Act, 1872, if a person pays money that another person is legally obligated to pay to another due to mistake or coercion and the person who paid the money is in his interest, the person who was obliged to pay is entitled to compensation. The payment is considered to have been made under a quasi-contractual obligation.
The provisions of this section apply only to payments made bona fide for the protection of one’s interest. It is enough for a person claiming under this section to show that he had an interest in paying the money at the time of payment.
For example, if A’s goods are wrongfully attached to realise arrears of government revenue due by B and A pays the amount to save the goods from the sale, he is entitled to recover the amounts from B.
As per Section 70 of the Indian Contract Act, 1872, if a person does any awful act from another person or delivers something, not intending to do it free of cost, and another person has enjoyed such benefit, the person who receives the benefit is required to compensate or restore the benefit to the person who has done or delivered something.
There are three essential conditions to be fulfilled:
There must be a lawful thing done by the person.
The person must do it, not intending to do it gratuitously
The person has enjoyed the benefit of it, for whom the thing is done.
As per Section 71 of the Indian Contract Act, 1872 whenever there is a situation where a person finds lost goods and takes them into his custody. Such a finder is under an obligation to take reasonable care of the goods and try to find out the real owner. The finder is subject to the same responsibility as a bailee.
If the finder fails to find the owner of the goods and incurs expenses in preserving the goods, he is entitled to reasonable compensation from the value of the goods.
Section 72: Liability of a person to whom money is paid or anything delivered by mistake or under coercion.
Section 72 of the Indian Contract Act, 1872, deals with cases when a person has paid money or delivered anything to another person under a mistake or coercion, and that person has received the benefit. The person who has received the benefit is obliged to repay or restore it to the person who made the payment or delivered anything under mistake or coercion.
It has been laid down by the Judicial Committee that the word ‘coercion’ used in this section is to be used in its general and ordinary sense, and its meaning is not to be construed as in Section 15 of the Indian Contract Act, 1872.
These sections in the Indian Contract Act of 1872 aim to ensure fairness and prevent unjust enrichment in various circumstances where there is no formal contract but a benefit has been conferred or necessaries have been supplied. They provide legal remedies to parties who have been unjustly deprived of their property or money.
Landmark cases in quasi-contractual obligations
The Indian Contract Act 1872 has been interpreted through various landmark cases in the Indian legal system. Although the Act specifically deals with a contractual obligation, several judgements have set important precedents related to quasi-contractual obligations under Sections 68 to 72 of the Act.
Some of the landmark judgements on the quasi-contractual obligations that have helped shape the understanding are discussed below:
Govindram Gordhandas Seksaria vs. the State of Gondal (1949)
In this case, the Maharaja of Gondal was bound to pay a certain sum to a third party to prevent the sale of certain mills because of unpaid municipal taxes. The Maharaja contended that he held no liability to pay the money as there was no contract between him and the third party.
However, the Privy Council held that the Maharaja is obliged to pay the money under the doctrine of quasi-contract. It was held that the Maharaja has received a benefit from the third party, and it would be unjust to allow him to keep the benefit without paying for it.
State of West Bengal vs. M/S B.K. Mondal & Sons (1961)
In this case, a contractor had constructed some works for the State of West Bengal at the request of an officer of the state. The state accepted the work, but when it came to payment, it refused to pay the contractors and contended that the contract was not valid as it had not been made as per the provisions under the Bombay Municipal Corporation Act.
The Hon’ble Supreme Court held that the state was obliged to pay for the works under the doctrine of quasi-contract. It was held that the state has received a benefit from the contractor, and it would be unjust to keep the benefit without paying for it.
Hari Ram Khandsari vs. Commissioner of Sales Tax (2003)
In this case, a taxpayer had overpaid the sales tax. The taxpayer contended that he was entitled to a refund of the overpaid tax. The government contended that the taxpayer was not entitled to a refund as there were no statutory provisions for refunds of overpaid sales tax.
The High Court held that the taxpayer was entitled to a refund under the doctrine of quasi-contract. It was held that the government had received a benefit from the taxpayer, and it would be unjust to allow the government to keep the benefit without making a refund to the taxpayer.
Differences between quasi-contracts and express contracts
The key difference between express contracts and quasi-contracts is that quasi-contracts are not created by the agreement between the parties but by the operation of law. On the other hand, express contacts are created by the agreement between the parties.
Characteristic
Quasi-Contract
Express Contract
Formation
Quasi-contracts are created by operation of the law to prevent unjust enrichment.
Express contracts are created when both parties mutually agree to enter into a contract.
Consent
In quasi-contracts, no consent is required.
In express contracts, the consent of the parties is a key factor.
Consideration
There is no consideration in quasi-contracts.
There is no consideration in quasi-contracts.
Enforceability
Not enforceable; instead, instead court imposes quasi-contractual obligations.
Express contracts are enforceable.
Negotiability
Quasi-contracts are not negotiated before entering into.
Parties negotiate before entering into a contract.
Examples of quasi contracts:
A person who has provided necessary supplies to a minor can recover the value of those supplies from the property of the minor.
A person who has mistakenly paid money for goods or services can recover the value paid.
Examples of express contracts:
A contract to sell goods
A lease deed
An employment contract
NDA
Both express contracts and quasi-contracts play an important role in contract law. Quasi-contracts ensure that no one is unjustly enriched at the expense of others, and express contracts make it possible for people to freely agree to exchange goods or services.
Remedies and damages provided by quasi-contracts
Quasi-contractual obligations exist to provide remedies in circumstances where one party gets the benefit at the expense of another party without any compensation or legal justification, even though there is no formal contract between the parties. The law imposes quasi-contracts to prevent unjust enrichment.
The primary remedies and damages available for quasi-contractual obligations are:
Restitution: If a person gets unjustly enriched at the expense of another, he must return the benefit to the party who conferred it. For example, if a person has received money or property by mistake, he has to return the money or property to its rightful owner.
Damages: The party who is at a loss from the quasi-contracts is entitled to recover damages from the party who gets the benefit. For example, if necessary goods are provided to a minor who is unable to pay for them, the person who supplied the necessities can recover the damages from the property of the minor. The amount of damage varies from case to case. As per general principle, the damage must be sufficient to compensate the injured party for the losses it has suffered.
What are the benefits of quasi-contracts
Quasi-contracts are necessary to establish obligations even though there is no actual contract between the parties, to avoid unjust enrichment or unfairness. If a person gets a benefit at the expense of another person, the law of quasi-contracts provides remedies in such circumstances. There are several benefits to quasi-contracts which are discussed below:
Quasi-contracts prevent unjust enrichment: Quasi-contracts help in preventing unjust enrichment. Unjust enrichment means when a party gets benefits at the expense of another party without any legal justification. For instance, if a person receives money by mistake on another person’s behalf, it would be unjust if he kept the money. Quasi-contracts provide the remedies for recovering such money.
Quasi-contracts promote fairness and justice: Quasi-contracts promote fairness and justice by ensuring that people are compensated for providing benefits to others. For instance, if necessary goods or services are supplied to a minor by a person, the person who provided the necessities must be compensated from the property of the minor.
Quasi-contracts are available even in the absence of contracts: It does not matter if there is an actual contract or not; quasi-contracts ensure that the person who conferred benefit on another person must be compensated for it.
Conclusion
Quasi-contractual obligations are legal obligations that are not created by formal contracts but are imposed by law to prevent unjust enrichment or unfairness when a party gets the benefit at the expense of another party. The concept of a quasi-contract is based on the principles of equity and fairness.
The quasi-contractual obligations are governed under Chapter 5 (Section 68-72) of the Indian Contract Act, 1872. There are some common situations where quasi-contracts may apply when a benefit is conferred without any express contract or any payment made by mistake or under coercion.
Understanding quasi-contractual obligations is necessary for legal compliance, fairness and risk management in both personal and business matters.
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This article has been written by Dhriti Thingalaya. This article gives a holistic view of the Gujarat Shops and Establishment Act, 2019 with regards to several provisions, objectives, and the impact that it had on the region. It also outlines various definitions in reference to the Act.
It has been published by Rachit Garg.
Table of Contents
Introduction
The labour class, also known as the working class, plays a very vital role in the functioning of businesses. Their contributions to the economy are multifaceted and include several commercial entities that engage in trade or commerce, such as residential hotels, shops, theatres, restaurants and other public places of amusement. In order to regulate and safeguard the rights of both employers and employees, foster employment opportunities and improve the working conditions of the labour class, several appropriate laws have been passed by the central and state governments. One such Act that was introduced by the Gujarat state was the Gujarat Shops and Establishment Act, 2019 form A. The Gujarat Shops and Establishments (Regulation of Employment and Services) Act, 1948, was revoked and replaced with the new notification of Gujarat Shops and establishment Act, 2019 which was passed by both the assemblies of the state legislature and was published in the official gazette after receiving the assent of the Governor in the Gujarat Government Gazette on March 7, 2019 and has been made effective from May 1, 2019. This new Act was brought into force due to the introduction of the Model Shops and Establishments (Regulation of Employment and Conditions of Services) Bill, 2016, by the Government of India. This Act enables the state to freely adopt it and make changes according to the necessary amendments required for industrial growth. The revamped Act has brought in various reforms and scopes of development in the workings of different commercial entities. It also stipulates additional compliance with statutory obligations by employers and for them to administer the rights of employees in the unorganised sector. The old Gujarat Shops and Establishments Act, 1948, stands repealed; however, various bye-laws, notices, registrations and any other rules or sub-rules created under this Act were to remain effective until a new rule under the provisions of the new Act was notified. As and when the Shops and Establishment Act Amendment Rules, 2020 were established, the above mentioned rules became ineffective.
Purpose and objective of the Act
The erstwhile Act, the Gujarat Shops and Establishment Act, 1948 (now repealed), was applicable to all establishments, irrespective of the number of workers employed. The new Act is applicable to establishments where 10 or more workers employed and not to small establishments. For establishments with less than 10 workers are required to intimate about their establishment, commencement of their business, and some other details to the facilitator/inspector (appointed under the new Act) in whose jurisdiction the business is located. This brings major compliance relief to smaller and newer establishments. The Act also outlines various requirements, such as enhancing overtime pay for workers, opening and closing hours of establishments, increasing charges for penalties in cases of non compliance, facilitating provisions for the welfare of women, leaves and holidays, and so on. Hence, the State of Gujarat is the second state after Maharashtra to adopt the Model Shops and Establishments (Regulation of Employment and Conditions of Services) Bill, 2016. It’s a progressive move by the state government that will enable ‘Ease of doing business’ among the retailers, said Kumar Rajagoapaln, CEO of the Retailers Association of India.
Important definitions
Section 2 of the Gujarat Shops and Establishments Act, 2019 has defined several words used under this Act, following are some of the important definitions
Employer [Section 2(b)]
It means an individual having ultimate power or authority over the affairs or operations of his business or over the establishment. It can either be a partner of a firm or association of individuals, a director of the company, or, in the case of any establishment owned by the central or state government, any person authorised to manage the operation of such establishment.
Establishment [Section 2(c)]
An establishment comprises various entities that are involved in manufacturing, trade, business, banking, insurance, brokerage, stocks, etc.
It also includes:
Professional consultants: Advocates, Architects, Engineer, Doctor and others
Medical facilities: Maternity homes, clinics, hospitals and more
Societies and Trusts: Societies registered under Societies Registration Act, 1860, whether formally registered or not, that engage in various business and trades.
Such other establishment as the State Government may,by notification in the Official Gazette, declare to be an establishment for the purposes of this Act.
Factory [Section 2(d)]
A factory is defined as any location or any surrounding area that qualifies as a factory as per the criteria given under clause (m) of Section 2 and Section 85 of The Factories Act, 1948.
It can be defined as a register maintained for recording the registrations of shops and establishments under this Act either manually or electronically.
Shift [Section 2(n)]
It means where the same kind of work is carried out in an establishment that is taken care of by different sets of workers, each set of workers is called a group or a relay, and thus each set of group work during different periods of the day, and each of such periods is called a shift.
Shop [Section 2(o)]
It’s a premise where different types of goods are sold and purchased, either by retail or wholesale, and includes a storeroom, a godown, an office or a warehouse, whether in the same location or otherwise, but it doesn’t include a factory.
Wages [Section 2(q)]
It refers to complete compensation in monetary terms for the work done by an individual who is employed in a particular establishment, provided the terms of an employment, explicit or implied, are fulfilled. It includes:
Any remuneration agreed upon during the court settlement, tribunal decision or award passed
Any compensation that a person is entitled to receive in respect of overtime work, or holidays or
Additional payments as per the terms of employment agreement.
House rent allowance payable in cash
Any amount a person is entitled to during the law in force at that time.
Any sum payable as a result of termination of employment as stipulated by law or any relevant document.
Exclusions under this provision are as under:
Bonuses not forming part of terms of employment agreement nor a part of any of the court orders.
The value of accommodation, light, water, medical services or any other amenities that are excluded from the wage calculation.
Travel allowance or the value of travel concessions
Gratuity paid upon termination, except for specified cases
Any sum paid to the worker employed to cover specific expenses due to the nature of their work.
Spread-over [Section 2(p)]
Spread-over means the period between the commencement of the work and the termination of the work of a worker on one day.
Worker [Section 2(s)]
Any individual including any person sent through an outsourcing agency (except an apprentice under the Apprentices Act,1961) is employed to do any manual, unskilled, skilled, operational, technical or clerical work for hire or reward whether the terms of employment be express or implied.
Essential provisions of the Act
Chapter 2 : Registration of Shops and Establishments
Registration of Shops or Establishments
Section 6 talks about Registration of Shops and Establishments From the date of commencement of any shop or business or from the beginning of any establishment, the employer of the respective shop engaging 10 or more workers within a period of 60 days must submit an application for registration in Form A to the concerned inspector. Along with the fees payable and relevant self-certified documents as they may be prescribed in Form A of the schedule: Provided that nothing contained herein above shall apply to the shops and establishments already having valid registration under the gujarat Shops and Establishment Act,1948 until the expiry of their registration.
FORM A
(See rule 3)
APPLICATION FOR REGISTRATION
Sr.No.
Table of Contents
1.
Name of Establishment
2.
Postal address and situation of the establishment
3.
Date of commencement of business
4.
Nature of business
5.
Address of the office,storeroom,godown,warehouse or workplace if any other than the address mentioned above(should be filed only when the office,showroom etc is not separately registered under the Act)
6.
Name of the employer
7.
Residential address of the employer
Status,Designation
Mobile no. or E-mail Id
Aadhar Card No. (optional)(copy)
8.
Category of establishment(Shop/establishment)
Type of Organisation(proprietor,LLP, Partnership, Company/Trust/Cooperative Society/ Board)
9.
Details of the Partner/Director/Trustee/Board and Society members
Name and Residential address
Aadhar Card No..
Mobile no. and email id
10.
Government Resolution no. incase of Board/Corporation(upload copy)
11.
In case of Company or LLP company registration or partnership registration certificate, of appropriate authority(upload copy )
12.
Incase of Co-operative Society or Trust, the certificate of registration of appropriate authority(upload copy)
13.
Reserve bank of India/Securities and exchange Board of India/ Insurance Regulatory and development Authority of India. Registration no. or any such Registration no. which is mandatory before starting such business as banking/mutual fund/ share/Finance lending Institute/insurance etc.(upload a copy)
14.
Name of the member of the employers family employed in the establishment
15.
Name of the other persons occupying position of management or workers engaged in confidential capacity
16.
Manpower/Worker Details
Persons working in managerial/Supervisory/Confidential Capacity
No. of workers other than above
No. of apprentices under the Apprentices Act,1961(52 of 1961)
No. of contract labour
No. of part-time workers
Total
17.
a) Name and residential address of authorised person
Name and email id
Aadhar Card no.
Mobile no.
b)Name and residential address of manager
Name and email id
Aadhar Card no.
Mobile no.
18.
(A)Is this place of business conducted in owned premises?
Yes/No
If yes, details of the place or business as per agreement
Name of the owner-
Address of the premises-
Plot no.-
Gala/Shop no.-
City Survey no.-
Name of the society/Building-
Name of the Road-
Locality, District,taluka,Village-
Pin no.-
If the place of business is located in Self-owned premises, documents mentioned at Serial no.(4) of Part-A of the schedule should be uploaded along with the application.
(B)Is the place of business conducted in rental premises?
Yes/No
If yes upload any one of the document relating to the owner of the premises
Name of the owner-
Name of the lease-
Address of the premises-
Plot no.-
Gala/Shop no.-
City Survey No.
Name of the building/Society-
Name of the Road-
Pin no.-
If the place of business is located in rented or leased premises,documents mentioned at serial no.(5) of part-A of the schedule should be uploaded along with the application.
19.
Is the business conducted in the premises rented/owned by any member of the family relative?
Yes/No.
If yes, no objection letter for doing such business, in the premises of such owner shall be obtained and uploaded, along with documents mentioned in Column no. 18
20.
Is the business conducted in the premises of a flat/apartment/residential unit of a housing society?
Yes/No
If yes, obtain a no objection certificate from society or any such authority responsible for maintenance of the premises, along with documents mentioned in Column no. 18.
Fees to be paid by an establishment employing 10 or more workers during the time of registration for different categories of businesses/trades. The fees to be paid along with the application for registration in Form-G shall be as specified below. The fees shall be paid through e-payment where online access is available.
Sr. No.
Category of Establishment
Fees to be paid in Rupees
1.
Establishments
500/-
2.
Shops
500/-
3.
Residential Hotels
2500/-
4.
Restaurants and Eating Houses
1000/-
5.
Theatres and other places of public amusement or entertainment
5000/-
Every application submitted, either online or offline, shall be scrutinised by the concerned Inspector. If the application is complete in all respects, i.e., all the required documents are submitted either online or otherwise, payment of the requisite fees is done and Form A is filled completely without any misleading facts, then the inspector will register the shop in the Register of Establishments to be maintained in Form C and on the demand of the employer, the registration certificate will be produced by the inspector.
A registration certificate issued under Sub Section 2 shall remain in force until a change in ownership or nature of business takes place. In case these changes occur, the employer shall submit a notice to the Inspector for the issuance of a new registration certificate. On receipt of such notice, the Inspector shall scrutinise the same and shall either sign digitally or otherwise, as the case may be, and issue a fresh modified certificate within one day from the date of receipt of such notice. However, if the notice is not complete or is not supported by the required documents or if the prescribed fees is not paid, he shall reject the notice within one day by mentioning the reasons thereof.
Intimation by establishment having less than 10 workers
Section 7 is about intimation by establishments having less than 10 workers. Within 60 days of the commencement of a business, the employer of an establishment employing less than 10 workers must intimate the concerned Inspector in whose jurisdiction the business is located, by submitting an online application, a self declaration and self certified documents in a prescribed manner after reviewing all the details of the establishment. The inspector shall provide a receipt of intimation to the respective employer of that establishment. The details of the receipt of interpretation will be recorded online in such a form as may be prescribed.
Provided that nothing contained herein above shall apply to shops and establishments already having valid registration under the Gujarat Shops and Establishments Act, 1948, until the expiry of their registration.
Cancellation of registration of a shop or establishment
Section 8 is regarding the cancellation of registration of a shop or establishment. If at any point the Inspector finds that the registration has been obtained through misrepresentation or certain material facts have not been disclosed, or forged documents were submitted during the time of verification, then in that case the Inspector shall provide a benefit of doubt to the employer by accepting the notice issued by the employer.
A notice requires an employer to have an opportunity to be heard as to why the registration should not be cancelled.
If within 10 days from the date of receipt of notice, the employer fails to present his case with relevant documents, the inspector is authorised to cancel the registration of such shop or establishment.
If within 10 days the employer submits his case along with relevant documents, and if the Inspector is content about the correctness of the case presented or otherwise then he may either withdraw or cancel the registration of such shop or establishment as the case may be and remove the same from the register of establishments maintained in Form C.
Notice for change in Particular
Section 9 deals with the duty of the employer to communicate with the Inspector regarding any change in any of the particulars contained in the application. Any changes in the certificate shall be submitted in Form G to the Inspector as per Section 9 of the Act, along with the required documents as specified in Part C of the Schedule. In addition to these, fees to be paid along with the Application for Registration in Form G is to be submitted.
The Inspector on receiving such a notice along with the prescribed fees and all the necessary documents, shall sign the document either digitally or otherwise, record the changes in the register of establishments, and proceed to provide a fresh registration certificate within one day from the date of receipt of such notice. However, if the notice is incomplete, not supported by relevant documents, or fees are unpaid then the Inspector is eligible to cancel the notice within one day by giving suitable reasons for the same.
Notice for closure of Businesst
Section 10 is about the employer of an establishment employing 10 or more workers shall inform the Inspector within 30 days from the date of the closing of business that the establishment has been closed for business in Form H.
The employer of an establishment employing less than 10 workers shall inform the Inspector within 30 days from the date of the closing of business that the establishment has been closed for business in Form I.
On receiving such information and being satisfied about its correctness, the Inspector shall remove the entry of such shop or establishment from the register of establishments and cancel the registration certificate.
If the Inspector does not receive the information but is otherwise satisfied that any shop or establishment has been closed, he may remove the entry of such shop or establishment from the register of establishment and cancel such certificate.
Chapter 3 : Duties of Employer
Health and safety of workers
Section 11 is related to the duty of every employer to take preventive steps relating to the health and safety of its workers. Regular supervision of the workers during their shifts needs to be undertaken to ensure compliance of rules for health and safety is being made according to sub-section 1.
Fixing the working hours
Section 12 is regarding No worker must be compelled to work for more than 9 hours in a day and 48 hours in a week, and the worker who has been continuously working for 5 hours straight should be provided with a half an hour of break. In cases of urgent nature, weekly holidays or working hours can be relaxed with prior permission from the Inspector.
Prohibition of discrimination of women
Section 13 is about
No women worker shall be discriminated against on the grounds of training, promotion, recruitment, wages etc.
No women workers shall be accepted or allowed to work in any establishment except between the hours of 6 am to 9 pm.
Provided the concerned Inspector is satisfied with necessary provisions or measures undertaken for the safety and protection of a woman worker.
Spread-over hours of work
Section 14 states that from the commencement of the workers’ day in the business of an establishment to the end of the day, it shall not be more than ten and a half hours. In cases of intermittent work, the working hours can extend to twelve hours, but not more than that.
Payment of wages for overtime
Section 15 deals with when a worker is required to work in an establishment beyond 9 hours a day or 48 hours a week, he shall be entitled to receive double the amount of his ordinary wages in respect to the overtime work that he/she has completed. The total number of overtime working hours shall not exceed one hundred and twenty five hours in a period of three months.
Shift working and Rest
Section 16 is related to A department or section of a department of an establishment may work more than one shift at the discretion of an employer.
A shop or establishment may work on all days in a week provided that they are allowed weekly holidays.
If the worker is not granted a weekly holiday, he shall be entitled for the same within 2 months of providing a weekly holiday.
The period and hours of work in a week for all workers shall be informed in writing and shall be sent to the Inspector electronically or otherwise.
Furnishing Identity Cards to the Workers
Section 17 states that the employer of a shop or establishment shall issue an identity card to the worker, containing all the necessary details, which shall be produced by the employee when demanded by the Inspector.
Chapter 4 : Leave with pay and payment of wages
Weekly Holidays: Every employee is entitled to a weekly holiday as directed by the state government for different shops and establishments on various days of the week as designated by the Government.
Casual Leave: Workers are granted 7 days of casual leave in a calendar year. unused casual leaves at the end of the year will lapse.
Sick Leave: Every labourer is granted 7 days of medical leave with wages in a given Calendar year. Similar to casual leaves, if sick leaves are un-availed at the end of the year, they will lapse.
Earned Leave: Workers who have worked for 240 days or more during a given calendar year will be entitled to earned leaves in the subsequent year. The number of days is calculated at the rate of 1 day for every 20 days of work performed in the previous year.
Accumulated Earned leave: Every worker shall be permitted to accumulate earned leave up to a maximum of 63 days.
Leave Encashment: If an employer refuses to grant leave due under earned leave provisions when applied for 15 days in advance, the worker has the right to encash leave in excess of 6 days.
Festival Holidays: Workers have the right to 8 paid leaves during festivals, including significant days like 26th January, 15th August, and 2nd October and other 5 days as agreed upon by the employer and worker.
Compensatory Work: Employers can require workers to work on festival days and, in return, have to either pay double the wages or provide holiday on another day.
Chapter 5 : Welfare provisions
In addition to the obligation of the employer in providing sufficient supply of wholesome drinking water and latrine facilities for both men and women as may be prescribed. However, in cases of space constraints, common urinal facilities should be made available for both men and women.
The New Act also prescribes that if an establishment employs 30 or more women workers then a suitable room or creche facility for the children of those workers should be maintained. A group of establishments decided to provide creche within a radius of 1km, subject to the conditions which are prescribed by the labour department.
Every employer shall provide at the place of work first-aid facilities as may be prescribed.
When in an establishment there are 100 or more workers employed, then in that case the employers are also required to maintain a canteen for the use of its workers. Provided that if a group of shops or establishments decide to provide a common canteen, then the same shall be permitted by the Inspector by an order,subject to such conditions as may be specified in the order.
Chapter 6 : Enforcement and Inspection
Provisions for Enforcement of the Act
Section 24 talks about local authorities being responsible for enforcing the provisions of this Act within their respective jurisdiction under the supervision of the Act.
For areas without a local authority, the government can authorise an individual responsible for enforcement through official notification.
Both local authorities and the state government can appoint Inspectors to look after the enforcement of the provisions of this Act.
Powers and duties of Inspector
Section 25 deals with The state government may create an inspection scheme for shops and establishments which can include a web-based Inspection Schedule.
Provide advice and information to employers and workers to comply with the Act.
Inspect shops or establishments within their respective areas.
Report defects found during inspection to the state government.
Enter premises with reasonable notice and assistance if needed
Examine premises, records, registers and take evidence for enforcement purposes.
Require individuals to provide information regarding the establishment
Section 25(3) is concerned with any person who is required to produce any document to the respective Inspector or is required to provide any information then he/she is legally bound to do so within the meaning of Section 175 and 176 of the Indian Penal Code.
Section 25(4) is about the provisions of the Code of Criminal Procedure, 1973 under sub-clause (e) of clause (ii) of Sub-section 2, may apply to the search or seizure made under the authority of a warrant issued under Section 94 of the said Code.
Section 25(5) talks about Every Inspector appointed under Section 24 shall be deemed to be a public servant within the meaning of Section 21 of the Indian Penal Pode.
Chapter 7 : Records and Returns
Maintenance of Registers and Record
Section 26 is related to the requirement that employers maintain records and registers as prescribed by the Act in a specified form and manner.
Records can be maintained manually or electronically, but hard copies of the necessary documents need to be provided if requested by the Inspector.
Employers or their respective representatives must furnish all the relevant records, notices or registers for inspection when demanded by the Inspector.
All such records and registers must be kept within the premises of the shop.
Annual Returns
Section 27 talks about The employer must produce an annual return in a specified form and manner to the relevant authority,which can also be submitted electronically.
Chapter 8: Offences and Penalties
Penalty for non-registration of shop or establishment
Section 28 states that whoever runs an establishment without registration in breach of the provisions of Section 6, shall be punishable with a penalty of ten thousand rupees, which also includes registration fees. On recovery of the amount of fine and the fees payable, the establishment is deemed necessary to apply for registration, and then the registration certificate shall be issued by the Inspector.
Offences by companies
Section 31 is regarding when an offence under this Act has been committed by a company and it has been proved that due to the negligence on the part of the director, the managing partner or managing agent shall be liable to be guilty of an offence and shall be proceeded against and punished accordingly.
Cognizance of Offences
Section 33 provides that no court shall take cognizance of any offences committed under this Act unless the complaint is made by an Inspector within 3 months from the date on which the commission of this offence takes place.
The Metropolitan Magistrate or Judicial Magistrate of the First Class shall try an offence punishable under this Act on the basis of Rules mentioned thereunder, notwithstanding anything contained in Code of Criminal Procedure, 1973.
Compounding Offences
Section 34, in connection with compounding means any person can settle the case by paying a fine and this can happen either before the beginning of the prosecution or after its initiation.Under this Act certain offences can be compounded.
A designated officer assigned with the task of managing issues relating to Compounding, as may be determined by the state government through official notification. This officer has the authority to accept the fine provided for the offence.
Limitation of this Act is that it does not apply to those persons who have committed the offence more than once or more within a five-year period from the date of either:
Committing a similar offence that was previously compounded
Committing a similar offence for which a person has been previously convicted.
Every officer will exercise his powers subject to direction, control, and supervision.
Every application for the compounding of an offence shall be made in a prescribed format
If the compounding of an offence is made before the initiation of the prosecution no such prosecution shall be instituted against the offender.But where the composition of an offence is done after the institution of prosecution procedure then the officer appointed shall refer the same matter in writing to the Court in the form of Notice. On receiving such a notice , the offender against whom such a notice has been compounded will be discharged.
Chapter 9: Miscellaneous
Section 35 deals with opening and closing hours of the shops or establishments located in and around the municipal corporation, hotel premises, national highway, railway platforms, state roadways, bus station premises, may be kept open for 24 hours if and only if the establishment complies with all the requirements regarding working hours,leaves and holidays, spread-over, weekly offs. Other shops and establishments may be kept open throughout the year between 11pm. to 6 a.m.
Section 36 is about protection of rights of the workers under any other Law, nothing in this Act shall prevent the worker from exercising his or her rights and privileges that he/she is entitled to while working in the shop or establishment at the date of commencement under any law, contract,agreement,or any award or custom binding upon the employer if such rights or privileges are more favourable to him than that would be entitled under this Act.
Section 37 talks about protection of action taken in good faith. No suit ,prosecution or legal proceeding shall lie against any public servant or any other person acting under the direction of such public servant done or intended to be done under this Act. Same applies to the Government no suit, prosecution or legal proceeding shall lie against government servant for any damage caused or likely to be caused anything in good faith done or intended to be done in pursuance of this Act.
Section 38 states that the provisions of the Act shall be in addition to and not in derogation of, the provisions of any other law for the time being in force.
Section 39 is in connection with the powers vested in the State Government to make rules through a notification in an Official Gazette. All acts made under this Act shall be subject to the condition of previous publication. All rules made under this Act shall be laid down for 30 days before the State Legislature as soon as they are formulated. During this period the Rules will be subject to modification by the State Legislature. Then this rescission or modification will be published in the Official Gazette and will be made effective thereunder.
Section 40 is concerned with dealing with any difficulty that may arise during giving effect to the provisions of the Act. In such a situation, the State Government as mentioned in the order of the official Gazette takes necessary actions to expediently solve the issue that has arised without breaching the provisions of the Act.
Section 41 states that the Gujarat Shops and Establishments Act, 1948 will be repealed upon the inception of the New Act. However any existing rules,regulation,appointments,legal proceedings under the Old Act will continue to be valid and enforced under the New Act as long as they are not in conflict with the New Act, unless and until superseded by a New Act, order, or regulation. Any penalties or legal proceedings ongoing against a trial shall be continued as if the Old Act is still in effect until the proceedings is completed or the penalty amount is recovered.
Conclusion
The Gujarat Shops and Establishment Act is a progressive step by the state government, which has certainly provided clarity in terms of the procedural loopholes that remained uncovered in the previous Act of Gujarat Shops and Establishment Act, 1948. The New Act’s foundation is based on the legislation of the Model Shops and Establishments Act, 2016. Nevertheless, it has replicated several provisions from the previous Act but has made the necessary modifications that would benefit the people at large.
The applicability of the new Act has been reduced to establishments employing 10 or more workers and shops/establishments engaging less than 10 workers must provide an online intimation. This has reduced the hassle for small establishments by providing a major compliance relief. Also by introducing a provision for Cancellation of Registration Certificate it would lead to reduction of fraud shops/establishments that would mislead the consumers or employees in case of misrepresentation of facts. At the same time the New Act increases the penalties to a great extent which would provide an effective deterrent. The New Act also provides flexibility in terms of the working hours of establishments located in different areas of the region. It is creditable to note that there are specific provisions dealing with women’s right to work including providing them with various benefits and prohibiting discrimination against them and also providing them with the benefit of creche facilities for establishments above a certain size. Establishments with 30 or more women workers are required to provide this facility which is in contradiction to the 2017 Judgement of the Maternity Benefit Act, 1961 wherein establishments with 50 or more women workers are required to maintain a room as a creche.
Despite such reforms having been introduced, the New Act does not specify the minimum statutory notice period which may be issued by an employer during termination as opposed to the Old Act which provides a minimum 30 days time period for employees who have been in service for not less than 1 year. Due to such an ambiguity the employer might consider issuing a notice period in accordance with the Old Act. Also, the Gujarat Shops and Establishment Act 2019 in conjunction with the Gujarat Shops and Establishment Act, 2020 Rules does not offer significant responsibility when it comes to the deployment of women workers during night shifts, Because the extent of flexibility relies upon the discretion of Inspector’s order permitting establishments to employ women for night shifts.
Frequently Asked Questions
What is the difference between MSME, shop and establishment?
MSME refers to the business that falls under the micro small and medium enterprises based on their turnover and investment, shops means where buying and selling of goods takes place, establishment is a place which includes restaurants, hotels, theatres and other public enjoyment parks. MSME is a centralised registration process and Shop and establishment are localised registration processes.
How can one apply for the Shop and Establishment Act?
Employers of establishments or shops can register their shops or establishments, or modify, cancel their registration through eNagar Portal and receive an update via email or SMS so the Business operators can also avail these services from other sources as well, like Ahmedabad Municipal Corporation’s portal.
What is a Gumastadhara Certificate?
Gumastadhara Certificate is a licence that gives you authority to run a business in a particular place. It’s a legal obligation owned by the Municipal Corporation of Gujarat Shops and Establishment Act.
What documents are required for a Gujarat Shop License Act?
Business operators of shops and establishments require Address proof, Id proof, PAN Card, details of the employees, Payment Challan to avail Registration Certificate for their respective shops.
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Markets today are bustling. Businesses, companies, freelancers, and organisations worldwide are outsourcing, collaborating, and expanding more than ever. Food chains and marts are expanding their franchises. Startups and freelancers are constantly engaging among themselves, teaming and collaborating on R&D and other projects.
Such interactions among the different entities involve the trade secrets, business models, sales figures, know-how, and other confidential information of one being exposed to the other. The interactions are porous, as the intellectual property of one party is exposed to the other party. Therefore, there is a need to protect the intellectual property of the disclosing party from being exploited by others while also allowing the entities to collaborate, licence, assign, and fulfil their interests.
Why do IP rights need protection
Intellectual property is intangible. It does not exist in physical or material form like a property, a gift, or a house. The very reason that it is born out of human intellect and involves the hard work of the creator is why it is valued and should be protected.
IPs like patents, trademarks, business models, company sales figures, know-how, etc. are highly economical and are used by owners to alienate their competition and have an edge in the market. Trademarks help consumers connect a product with a certain brand. Patents establish an exclusive monopoly of the inventor over the invention and allow the invention to enter the market only through the owner. Trade secrets and know-how help food chains and businesses preserve their recipes and solutions, respectively. Copyrights prevent original literary, dramatic, artistic, or musical works from being exploited by others as their own.
Intellectual property rights promote and protect the exclusive economic rights of authors, inventors, businesses, and organisations. These original creations of the owner give them absolute, exclusive rights to use, reproduce, assign, exploit, and licence their intellectual property.
How does a contract protect intellectual property rights
As already stated, with the constant interaction among different entities, the valuable information of one entity is also exposed to the other. If there is no reassurance to the owner that his intellectual property and associated rights will be protected and he feels that they may be used against his benefit, companies, businesses, freelancers, authors, and inventors may stop collaborating and working on projects or R&D. In the long run, this might be disadvantageous to the consumers- who are at the receiving end of the market. Contracts and Intellectual Property Rights Agreements (IPRA) come to the rescue here!
Contracts are legal documents that are made by parties based on their terms and conditions. The rights and liabilities, duration, scope of work, obligations, penalties, etc. are all decided mutually by the parties. Contracts are thus tailor-made to address the apprehensions of both parties. IPRAs are legal contracts that specifically define, inter alia, how the IP of entities has to be dealt with.
Both of these documents protect the IPR of the owner in the following ways:
Assert ownership: These contracts specify the ownership of an IP to an entity so that later it does not become a point of dispute and also so that the owner can assert his IP rights.
Direct how IP is to be used: The contracts specify how and to what extent an IP is to be accessed, used, and shared among the parties. It also defines just how much information is to be disclosed by the parties to each other.
Term of contract: These contracts define the term for which the parties are to share information and engage with each other. It also provides guidelines about how the IP is to be managed once the contract is over. (Post-Termination Obligations)
Consequences of breach: These contracts also explain the relief available to the party in the event of its IP rights being violated by the other. Relief can be in the form of injunctions, compensation penalties, etc.
Licencing and assignment: These contracts allow parties to licence their IP (either exclusively or partially) or assign them completely to another entity while enjoying the royalty and earnings.
Types of agreements that protect IPR
Non-Disclosure Agreement (NDA)
NDAs protect confidential information from being leaked. These are typically signed when the parties are in the negotiation stage of their deals. They allow parties to reveal their trade secrets, company structures, know-how, finances, and accounting for various collaborations, merger acquisitions, and R&D even before anything is finalised.
These contracts are also used by an employer and an employee, or an inventor and potential investors, while negotiating the terms of their deal without withholding anything material from the deal.
Licence agreement
Licences allow other people to access and benefit from the IP of the owner. It gives licensees partial IP rights. The owner may grant an exclusive licence to a particular licensee, thus preventing others from using it, or may grant the licence to more than one person (Non-Exclusive licence). The owner benefits from them by earning royalties from the licence.
Agreements selling IP or assignments
Assignment refers to an absolute transfer of ownership of the IP by the owner to another person. Assignment transfers the title of the IP and the IP rights from the owner to the assignee.
Assignment is usually seen in employment contracts, where any invention or copyright by the employer automatically becomes the property of the employee and restricts the employer from selling it under his name.
Assignment of patents, copyrights, and trademarks is common in employment agreements.
Collaboration agreements
When two businesses, companies, organisations, freelancers, startups, etc. engage with each other on R&D, projects, or joint ventures to create a new product, technology, or creative brand, it requires both sides to unveil some confidential information, figures, and models. Therefore, collaboration agreements are signed to protect the IPs that both parties reveal. It also determines the ownership of the new product or IP that will be developed.
Franchise agreements
Franchise agreements are mostly used by food chains and businesses that expand their businesses by allowing a person to replicate their business model, know-how, and trade secrets in exchange for some royalty.
Employment agreements
Employment agreements are widely used by companies, agencies, and businesses when hiring and negotiating with potential employees. They allow companies and agencies to claim ownership of any IP created by the employee during his employment and prevent any dispute over the title of the IP later in time.
Important clauses to include in a contract protecting IP
Having discussed the importance of securing the IP rights of the owner through a contract, it becomes important to look at the most important clauses in a contract for protecting the IP. The inclusion of these clauses makes the contract strong, clear, unambiguous, and less likely to be a subject of dispute.
The following clauses are considered a must in IP contracts:
Definition- The definition clause is extensively used for interpreting the meaning of the words used in the contract. It is advised that the definition of IP should be kept wide so that nothing confidential is left out. The broad definition also protects IP that is not registered. If the definition is limited, it allows parties to share and access information that is not protected by the contract.
Term of the contract- The term of the contract specifies for how long the contract is subsisting and therefore specifies the duration of the period until the IP can be accessed by the parties. It prevents the unauthorised use of other’s IP beyond what is allowed.
Ownership of IP- The insertion of this clause is highly recommended as it averts any dispute about the ownership of the IP at a later date. This is especially useful in Joint-Venture agreements where a new product or service is developed by two parties. This is also recommended in an employment agreement where any creation by the employee is, as a general practice, owned by the employer.
Confidentiality clause- Parties, when forming a contract, share a multitude of pieces of information with each other. This clause specifies what information is confidential and is supposed to be treated as such. The party disclosing the information is advised to keep the scope of confidential information very wide to include all the information in it. On the other hand, the party that receives the information tries to limit the information that goes into confidential information to reduce its obligations.
Representation and warranties- This clause is important as it lays down all the representations that were made by the parties to each other. It lists the information, the facts, and the disclosures made by the parties to each other so that, at a later date, one of the parties does not shy away from its disclosures. It empowers the other party, in the event that the first party makes any false representation, to avoid fulfilling its obligations.
Obligations of parties- This clause lists the obligations and liabilities of the parties. It is advised to make this clause as comprehensive and clear as possible so that both parties are clear about their rights and duties. This also prevents any scope of confusion and helps put a person on responsibility.
Post-termination obligations- Post-term obligations determine the rights and obligations of parties once the term of the contract ends. It specifies the date on which the contract terminates and how and by whom the IP is to be managed from that day on. It specifies how (if at all) the IP needs to be disposed of, destroyed by the party, or returned to the owner.
Breach- This clause specifies the relief available to the party if the other breaches the terms of the contract. Relief can be in the form of an injunction, compensation, or penalty.
Conclusion
Intellectual property is a powerful tool in the hands of the owner. It can generate economic benefits for the owner and therefore it requires protection. IPR contracts provide protection and reassurance to the parties that their IP will be secured and allow them to engage freely with others to meet their interests. A good IPR contract is wide enough to encompass all confidential information in it. It clearly defines all the intellectual property. It contains all the clauses required to protect the IP of the parties.
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