In this blog post, Anubhav Pandey, a second year law student pursuing law from, Rajiv Gandhi National University Of Law, Punjab discusses the know-how on Legal Aid and when to apply for the same.

Introduction

Indian understanding of legal profession mostly dangles between two thick edges. One, a top notch lawyer, charging hefty amount per hearing and the second, an Umbrella, a typewriter and 50 Rupees for an affidavit. A case takes years to settle. Seeking justice in Indian court demands a price. It is not the court fee which causes burden on the litigants but it is the procedural intricacies, starting from hiring a lawyer up to giving Munshi’s their token for grace. On an average, Rs 519, is what a litigant spends a day while attending a single hearing. Rs 873, is the loss faced by the Litigants because of loss of work time or wages or business losses. Families which cannot even afford a 4 square meal a day are fighting cases for their land, cattle and what nots. With these facts, pops several question is one’s mind. What is Justice? What is the  relationship between justice and the price that one has to pay for it?

the answers to these question can be very subjective but one can sufficiently presume, if (say) justice demands price then poor have no use of it! Justice is based on compassion. The concept of legal aid roughly says, opportunities shall be provided for securing justice to any citizen who by reasons of economic or other disability cannot afford it. The principle of legal aid is built on the very foundation that, everyone has the right to get appropriate legal assistance. So, the Indian legal system says, relax! Even if you are poor or by any means unable to defend yourself, the Vedic philosophy of, “ justice shall triumph” shall prevail.

History of free legal aid

This very concept of “free legal aid” is not something new or utopian to the Indian society. It prevails from a time immemorial. The Vedic period, Vikrama Samvat (Vikramaditya’s era), The Muslim period, British period, Post colonial era ( 1920’s- beginning era of free legal aid societies, Justice Bhagwati Committe), Post-Constitution Period, CILAS committee ,  LSA act.

Vedic age– The 36th and 42nd slokas under Chapter I2 refer to the need for saving people from rakshas’ and violent people. Rig Veda provides for mustering strength, including monetary assistance, i.e. ‘Dann’ for extending aid and assistance to those fearing or facing the attacks. Sloka 103 of Chapter III clarifies that a king, who gives money to one in such need, is the winner of the wealth of opponents and that Devtas always protect him. We can infer that, providing social aid and also King’s ( State) assistance to poor or to persons suffering from any disability is Dharma.

Muslim Period– During the reign of Shahjahan and Aurangzeb, the state vakils were directed to give advice free of charge to the poor. Such state lawyer known as vakil — e -sarkar 4 or vakil —e-sharai were whole time and appointed by Chief Qazi of the province or sometimes by the Chief Justice, the Qazi-ul-Quzat.

British Period– During the Colonial  rule, justice was rendered freely without charging any court fee or stamp duty.  For justice to be accessible to the poor, legal aid societies like Bombay Legal aid Society was established in 1924. To qualify for legal aid the applicant had to pass a mean test.

Post independence– With the formation of the Indian constitution, vast varieties of legal rights were vesting with the citizens. Various committees helped in evolving the concept of free legal aid as it exists in today’s Indian legal system. Justice N.H. Bhgwati Report 1949 was one such report. It advised for, formation of a four level machinery for the administration of legal aid at the State, High court, District and Taluka level. Report recommended for assigning of free advocates to the poor. Legal aid included, court fees, process fees, diets of witness, cost of certified copies etc. Constitution scheme includes Article 14 which talks of equal protection for all. CILAS ( committee for implementation of legal aid services) under the chairmanship of Justice P.N Bhagwati was constituted which made tremendous recommendations on the field of legal aid. This eventually led to the enactment of Legal Service Authority Act, 1987.

LEGAL AID

Lawyers are blamed of using fancy words to get away with things. As a layman, say “A” is a poor needy guy accused of drug trafficking and has no money to defend himself in the court of law . What are the options left with A? Either to surrender or to fight his own case. An easy way out is, as per the understanding of Article 39 A, free legal aid via appointment of counsel for A. Hence, ensuring that justice is not denied to litigating parties due to financial difficulties. So court will provide A (accused) not only with a lawyer but also will waive his court fees and also provide other monetary relief accounted throughout the case. Legal aid is a noble approach to help the poor. Legal Aid implies giving free legal services to the poor and needy who cannot afford the services of lawyer for the conduct of a case or legal proceeding in any court, tribunal or before any authority. One of the fundamental rights in the legal system is the right to counsel. This right generally provides that anyone who is accused of a crime has the right to receive legal aid from an attorney. The right to counsel may be found in various international, regional, as well as domestic legal authorities

Quoting Article 39A of the Indian Constitution:  

Equal justice and free legal aid: The State shall secure that the operation of the legal system promotes justice, on a basis of equal opportunity, and shall, in particular, provide free legal aid, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities.

Twice the use of word ‘shall’ makes it clear that the article is couched in mandatory terms. Supreme Court Khatri v. State of Bihar according to which where the necessary conditions existed, free legal aid  was obligatory from the very time the accused was produced before the Magistrate, and the Magistrate himself was under duty to inform the accused that he was entitled to legal aid.

Universal declaration of Human Rights: Art. 8 Everyone has a right or an effective remedy by the competent national tribunals for acts violating fundamental rights granted by Constitution or by law.

International Covenant on Civil and Political Rights, 1966 – adopted by the United Nations, ICCPR, guarantees the following rights to the accused in a criminal trial—to defend himself in court or have a lawyer defend him in court; to be informed of his right to legal counsel if he does not know of that right; and to have a lawyer assigned to his case if the accused cannot otherwise afford a lawyer.

Legal Provisions related to Legal aid can be divided under 3 broad heads:

(i) Constitutional

(ii) Procedural

(iii) Statutory

Constitutional Schemes

In the Indian Legal system, the right to free legal aid for the disadvantaged is grounded in the Constitution and certain statutes. Though the express article conferring this right was inserted in the Constitution only in 1976, the intention of the Constituent Assembly was implied in the Preamble  wherein the Constituent Assembly envisaged to secure “to all its citizens: JUSTICE, social, economic and political;  liberty and equality of status and opportunity”.

By the 42nd amendment to the constitution, effected in 1977, Article 39 A was inserted. This article provides for free legal aid by suitable legislation or schemes or in any other manner to ensure that opportunities for securing justice are not denied to any citizen by reason of economic or other disability. This article also emphasises that free legal service is an unalienable element of “reasonable, fair and just” procedure established by law. This is a constitutional right of every accused person who is unable to engage a lawyer and secure legal services on account of reasons such as poverty, indigence and the State is under a mandate to provide a lawyer to an accused person if the circumstances of the case and the needs of justice so require, provided of course the accused person does not object to the provision of such lawyer. To put it simply, it is the constitutional duty of the Government to provide the citizens of the country with such judicial infrastructure and means of access to justice so that every person is able to receive an expeditious, inexpensive and fair trial. The plea of financial limitations or constraints can hardly be justified as a valid excuse to avoid performance of the constitutional duty of the Government, more particularly, when such rights are accepted as basic and fundamental to the human rights of citizens.”  Legal aid cannot be denied on the grounds of insufficient funds also.

Article 14 & 21- Part III of The Indian Constitution guarantees fundamental rights to all citizens and some of these rights, particularly the right to equality (Article 14) and the right to life (Article 21), to all persons. Both these articles are essential for understanding the nature and scope of the right to legal aid as access to justice. The denial of access to justice to a person on account of economic and social inequalities is a manifestation of the violation of the right to equality as forming part of the scheme of Articles 14 and 21. No true democracy can endure without the system of administration of justice of which the poorest are able to take advantage. When a person is unable to access to the court of law due to poverty for defending himself against a legal action, justice becomes unequal and laws which are meant for protection becomes meaningless. The rendering of legal aid to the poor litigants is therefore not a minor problem of procedure law but a question of a fundamental character.  Discrimination on grounds of poverty is also an infringement of Article 14, i.e., right to equality.                    

Article 21 of the Indian constitution is equivalent to the air that we breathe as it supplies life to the constitution. It covers a vast area including right to healthy environment, movement and more. Principle of Natural justice says, justice should be done in a sound and reasonable manner which includes hearing of the parties involved in the matter. Right to hearing is an integral part of natural justice. If the right to counsel is essential to fair trial it is equally important to see that the accused has the necessary means of his defence.. Right to free legal services is an essential ingredient of reasonable, fair and just procedure for an accused.            

No writ (Mandamus) can be granted to enforce Article 39A          

Procedural Provisions                                                                                           

Criminal Procedure Code provides that legal aid to accused at State expense has to be provided, it further provides that where in a trial before the court of session, the accused is not represented by a pleader and where it appears to the court that the accused has no sufficient means to engage pleader the court shall engage a pleader, the court shall assign a pleader for his defence at the expense of the State. The mandate of providing free legal aid extents to the stages when the accused is first produced before the Magistrate. But, again if A is a poor guy accused of Theft, he cannot ask for  a lawyer of his own choice to defend him at the expense of State. Code of civil procedure merely exempts an utterly poor person from the payment of court fees. Even the advocates, officers of the court have the duty to provide legal aid to poor and needy under Advocates Act 1961.

Statutory Provisions

LEGAL SERVICES AUTHORITY ACT, 1987

The legal services authority act has been enacted to provide legal aid services to the poor and needy people to fulfil the idea of justice and free legal aid as given in Article 39A of the Indian constitution. Legal service means, the rendering of any service in the conduct of a case or legal proceeding before any court or authority or tribunal and extending advice on a legal matter or issue. It may be in the form of providing advocates at the state expense. It may also be in the form of making payment of court fee on behalf of the persons who are eligible for legal aid. It may also be in the form of paying other expenses connected with the litigation, e.g. expenses in relation to the preparation of documents or summoning of the witness etc. It is the duty of the state to provide the poor and the needy legal aid so he can approach civil, criminal, revenue, tribunal, or other authority to exercise judicial and quasi-judicial activities. The act provides for dispute redressal agency called the Legal service authority at 4 tiers of government namely, Taluka/Mandal, District, State and National level.

Eligibility and Procedure for Legal Aid

The national Legal service scheme is framed for downtrodden masses of our country, therefore, free aid is not available to all person. There are three tests for the determination of eligibility. MEANS TEST, PRIMA FACIE TEST, and REASONABLENESS TEST. As the word suggests, means test scrutinises whether a person is eligible for legal aid by checking his capability of undertaking the cost of litigation. An income limit is prescribed as a means test. Limit is between the range of 25000 and 50000 per annum. By prima facie we mean, when,  THINGS SPEAKS FOR ITSELF.  Again pops Mr. A, this time a person accused under criminal assault. If A wears (**Reebuk **) shoes and demands for legal aid then the underlying idea behind this test that public fund should not be allowed to be misused in supporting or defending litigation where no prima facie case is made out will be defeated. Sometime it may appear that applicant’s case satisfies means test and prima facie test but it is otherwise not reasonable to provide free legal services. E.g., in case of defamation, election, immoral traffic, food adulteration etc.

Person Who Are Eligible For Legal Aid

• A member of Schedule tribe or Schedule caste or a person whose annual income is not more than 50000 for cases before Supreme court and 25000 in other courts.
• A person victim of trafficking in human beings or beggar.
• Disabled including mentally disabled.
• A woman or Child
• A victim of mass disaster, ethnic violence, caste atrocity, flood, drought earthquake
• An Industrial workman
• A person in custody including protective home, juvenile home or psychiatric hospital
• A person facing charge which might result in his imprisonment
• A person unable to engage a lawyer and secure legal services on account of reason such as poverty and indigence,

An affidavit made by the person as his income may be regarded as sufficient for making him eligible to the entitlement of legal services under this Act unless the concerned authority has reason to disbelieve such affidavit. It is the duty of the Magistrate or the sessions judge to inform the accused who appears before them without any aid because of his poverty or indigence that he is entitled to free legal services at the cost of state.

How To Approach

The person who needs free legal aid can approach the Legal Service Authority at any level- National, state district or Taluka. A written application can be made to the concerned authority and where the person is illiterate, his application will be recorded along with his thumb impression and that will be his application. Person has to file an affidavit of his income. Then eligibility criteria and the merits of the case are examined. If the application for legal aid is rejected, reasons shall be duly recorded and also informed to the applicant. ONE CANNOT FOOL THE COURT  WHILE ASKING FOR LEGAL AID. One can even apply for legal aid On-line through: http://nalsa.gov.in/content/how-apply

Cases Where Legal Aid Can be Provided

Free legal aid can be provided in all kind of Civil and Criminal cases, Property matters and Execution of Decree, Matrimonial/Family dispute, Appeals, Cases pending in the commissions and Tribunals (E.g., Consumer Dispute Redressal Agencies).

Refusal Of Legal Aid

Legal Aid or Legal Service may be refused to a person in a case of contempt of court, To a person in a proceeding relating to any election, In a proceeding under Immoral Traffic (Prevention) Act, 1956 except to a victim of trafficking in human beings, In a proceedings under the Protection of Civil rights act, 1955 except to a person who is subject to any dispute under this act and to a person accused of an offence committed under the Schedule Castes and Scheduled tribes (Prevention and atrocities) act, 1989.

Lok Adalat

Every Central, State, District and Taluka Legal service authority are responsible for organising Lok Adalats . The Lok Adalat is an effective mechanism for the settlement of disputes. Prior to 1987, it had no legal structure, but was organised voluntarily, by organisations, on principles of mediation. Unlike the pre-trial processes, followed in countries like Canada or the United States, the Lok Adalat came in only when the parties wished to settle the dispute amicably, or where the court felt it necessary to refer the dispute for settlement, thereby limiting its scope of activity. The Lok Adalat, as the word suggests, is organised for the “Lok” or for the “People”, thus aiming to benefit the masses and thereby strengthening the principles of legal services.

So after the deadly terrorist attacks in Mumbai, an intense debate gripped the whole nation. Should such cases be given a chance to defend in the court of law? Are they entitled to legal help considering the degree of his crime? Should they be executed or hanged without any trial as it is done in countries like China, Iran, Iraq, etc.? Whether not providing any legal help will spoil India’s image as world’s largest democracy, which is built on the principle of justice and equality. Is capital punishment all that they deserve?

 However, answers to these questions require several aspects to be considered thoroughly, including India’s international obligations, the Constitutional guarantees provided to every citizen in this regard, violation of human rights, and the difference between democracy and an unjust society.

Legally speaking, there is no denying the fact the cases like Ajmal Kasab should be given legal aid, but going by the anger in the common public and popular sentiment that he should be hanged so as to send a clear message that no one should dare threaten the country’s integrity and security.

Legal Aid: In Cases of Prostitution

Is the provision of Legal aid as enshrined in the Indian constitution readily available and accessible by everyone? What is the ground reality? What happens to weaker sections of the society like transgender and prostitutes, do they get legal aid when required?

Madad chaahti hai ye hawa ki beti

Yahsoda ki hamjins raadha ki beti

Payambar ki ummat zulekha ki beti,

Sanaakhwaan-e-taqdees-e-mashriq  kahan hai?

Zara mulk ke rahbaron ko bulao

Ye kuche ye galiya ye manzar dikhao

Sanaakhwaan-e-taqdees-e-mashriq ko lao

Sanaakhwaan-e-taqdees-e-mashriq kahan hai?

Dark, damp rooms, the sound of anklets in the narrow corridors and drunken men haggling over prices. It is 9 o’clock in the evening, and as the rest of the city prepares to retire for the night, this part awakens to carry on with its profession. The profession is not difficult to guess – prostitution..

In BUDHADEV KARMASKAR (4) V STATE OF WB Justice Markandey Katju argues for the rights of the prostitutes and talks of condition of trafficked prostitutes. If an incident of the involvement of the family of the girl pushing her into the sex racket comes to the notice of anyone concerned including NGOs, authorities, etc. such incident be reported to the Executive Chairman/Secretary of the State Legal Services Authority. It will be open for the said Authority to take appropriate penal action against such illegality or person who may be found involved. State Legal Services Authorities should provide a helpline number to the NGOs and to the State machinery as well as to the sex workers and victims of sex trade who are in distress and who are compelled to continue with the sex trade, so that they can avail the benefit of the helpline number for providing legal assistance, to get them rescued or any other assistance which may be offered to them by way of free legal aid. The State Legal Services Authorities thereafter may direct them to the appropriate authorities concerned for taking remedial measures in that regard and also report the matter to the Panel which has been constituted by the Supreme Court.  Housing, legal aid, free counselling assistance and all other similar aids and services are meaningful measures to ensure that unfortunate fallen women do not again fall into the trap of red-light area contaminated with foul atmosphere.

 The assumption of our legal system is that all citizens have equal access to means of legal redress. But in practice, legal services of all kinds have gone to the highest bidders. Wealthy persons and large corporations receive the highest quality of advice. Free legal aid is undoubtedly beneficial to the poor and has been instituted with noble purpose. Yet it has become a good ground for breeding corruption. Free legal aid for a fee is common practice. Once a lawyer is engaged through legal aid, obviously the party or his men would come to the lawyer for consultation and it is then that they are asked to fish out some money which they naturally cannot refuse. One factor that largely contributes to this is that the meagre remuneration paid to the lawyers by Legal Aid Committee. The major obstacle to the legal aid movement in India is the lack of legal awareness. People are still not aware of their basic rights. There needs to be a review of the working of Legal Aid system. Free Aid must not be read to imply poor or inferior legal services. Definition of what it is meant by poor and needy needs to be revised with time. Pro Bono litigation (free of cost) should be encouraged more.  Law schools are the budding garden of fresh , young talent, not only the inclusion of law students but also insertion of the legal academicians who with their deepened knowledge and experience can be an active part in the implementation of the legal aid programme. People often fall into the traps of Kangaroo court instead of availing the facility of free legal aid which further adds on to their demise.

In this blog post, Suharshan Mohata, a student at K.C. Law College, Mumbai and pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the process of taxation of immovable property in India.   

Introduction

India in the recent years gained popularity for its High Net worth Individuals (HNI) and every other transaction of immovable property estimating at amounts exceeding hundreds of crores. Altamount Road at Mumbai, was once ranked amongst the top 10 most expensive streets of the world.

Immovable property can serve as a recurring source of income, a rewarding investment and a valuable gift to your loved ones. It is essential for one to understand the various tax implications on the same to make the most out of his/her money without getting caught in a whirlpool of taxes.

The objective of this article is to introduce one to the various taxes subjected to transactions involving Immovable Property.

How is ‘Immovable Property’ and ‘Tax’ defined in India?

A] The definition of immovable property sought under the existing laws of India is as follows:

• Transfer of Property Act
  • Immovable property does not include standing timber, growing crops or grass

• General Clauses Act
  • Immovable property shall include land, benefits to arise out of land, and things attached to the earth, or permanently fastened to anything attached to the earth.

Upon perusing the aforesaid definitions, one may still ponder onto what does and does not qualify as ‘immovable property’. The list shared below is by no means exhaustive, but gives a picture of the many interpretations of Immovable Property:

• Land
• House
• Trees attached to the ground
• Benefits to arise out of land
• Things attached to the earth or permanently fastened to anything which is attached to the earth

B] The word ‘Tax’ is defined in the Income Tax Act, 1961, as follows:

• ‘Tax’ in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date [and in relation to the assessment year commencing on the 1st day of April, 2006, and any subsequent assessment year includes the fringe benefit tax payable under section 115WA] ;]

Income from House Property – Head under Taxation

Income from House Property is recognized as a taxable component under the tax mechanism in India as a source of income. Income from House Property is recognized under Section 22 to Section 27 of the Income Tax Act, 1961.

Preconditions–

• There must be a Building or a Land appurtenant thereto i.e. a piece of land must be adjoined to a building
• Person must be owner of the property

Types of Income from Immovable Property–

• Rental Income

Rent in the hands of the owner by letting out the house property.

• Deemed Rentals

When rental income is not received by the registered owner of the property and such income is not charged as tax under the head “income from house property”.

Example-

• Transfer of property to a minor or spouse without adequate consideration.
• Holder of impartible estate is deemed as the owner of the property comprised in the estate.

Capital Gains tax on sale of Immovable Property

The difference between the cost of acquisition and the cost of sale of a certain capital asset (Immovable Property in our case) is called Capital Gain or Capital Loss.

Mathematical illustration: Cost of sale – cost of acquisition = Capital Gain/Loss

Illustration– Mr. Adam owns a flat which he purchased at a price of INR 1,00,000/- in the year 2000, he sells the same flat for INR 10,00,00/- in the year 2005. Capital Gains on this transaction amounts to INR 9,00,000/- (10,00,000 – 1,00,000).

There are two types of Capital Gains/Losses, namely:

• Short Term Capital Gain/Loss (STCG or STCL)

• If the land or other Immovable Property is held of 36 months (3 years) or less, the proceeds of sale of such asset would classify as STCG or STCL.
• Short Term Capital Gains are included in your taxable income and taxed as per applicable income tax slab rates.

• Long Term Capital Gain/Loss (LTCG or LTGL)

d

• If the land or other Immovable Property is held for over 36 months (3 years), the proceeds of sale of such asset would classify as LTCG or LTCL.
• Long Term Capital Gains are taxed at 20%

Tax applicable on Lease, Rent, Leave & License transactions

Immovable Property such as home, land, and building make for an additional source of income for many. To understand the tax component with such income, it is primarily necessary to understand what transactions one could engage in, with reference to immovable property.

• Renting of immovable property

includes renting, letting, leasing, licensing or other similar arrangements of immovable property for use in the course or furtherance of business or commerce but does not include —
(i) renting of immovable property by a religious body or to a religious body; or
(ii) renting of immovable property to an educational body, imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre;
Explanation—For the purposes of this clause, “for use in the course or furtherance of business or commerce” includes use of immovable property as factories, office buildings, warehouses, theatres, exhibition halls and multiple-use buildings

Renting of immovable property is a service and is subject to service tax.
The table below will give a summary of the various components that are subject to service tax:

Note– Service Tax on rent of immovable property is charged at 15% currently.

Application of tax on gifts of Immovable Property

Indians are familiar with the concept of gifting immovable property within the family. Usually such gifts are not subjected to tax under the system established in India. However, there are certain types of immovable property, which when gifted, do attract a tax component. The Income Tax Act, 1961 specifies as to which gifts are not be taxed when received and those which are to be taxed.

The individual gifting the property (Donor) is usually not subjected to any tax upon making such a gift; it is the receiver (Donee) who is liable to taxes under the head ‘Income from Other Sources’ under the Income Tax Act, 1961.

• Tax Free Gifts

Gifts received under a will or from a relative; gifts received on the occasion of marriage; gifts received from local authorities or educational institutions are some examples of tax free gifts.

The word relative is construed as spouse of the giver, brother or sister, brother or sister of the spouse of the giver, brother or sister of either of the parents, lineal ascendant or descendant of the giver, lineal ascendant or descendant of the spouse of the giver and spouse of any of the above persons.

• Taxable Gifts

Immovable property (being land or building or both) stamp duty of which exceeds INR 50,000/- (Rupees Fifty Thousand only) will be taxable when received by an individual (without any consideration) who is ordinarily a resident in India.

Note– A gift of immovable property needs to be compulsorily registered with the sub-registrar in the area where the property is situated. The Indian Registration Act, 1908, mandates registration of the transfer of an immovable property subject to its value exceeding Rs. 100.

Wealth Tax on Immovable Property

Wealth Tax is no longer leviable from assessment year 2016-17.

Value Added Tax (VAT) paid by developers on immovable property

VAT is a multi-stage tax levied at each stage of the value addition chain, with a provision to allow input tax credit (ITC) on tax paid at an earlier stage, which can be appropriated against the VAT liability on subsequent sale.

VAT is intended to tax every stage of sale where some value is added to raw materials, but taxpayers will receive credit for tax already paid on procurement stages. Thus, VAT will be without the problem of double taxation as prevalent in the earlier Sales tax laws.

Presently the developer incurs various kinds of expenses in the construction of a project. These expenses include various taxes, one such being VAT. However, we can expect to see a change in the system as the Goods and Service Tax Bill (GST) finally got approved in August 2016. The ambit of GST is likely to cover under-construction flats and rental flats.

Conclusion

Indians have seen a boom and dip in the prices of immovable property and yet, each individual continues to await for either a boom to encash profits or a dip to make the best investment with his/her funds. It is vital to study the trends correctly before investing; immovable property doesn’t come cheap and can also depreciate in value; to add, one can only see a profitable exchange on the same in the long term (3 years or more) without losing a considerable percentage of the capital gains as taxes.

REFERENCE

1. House Property Income Computation

http://www.caclubindia.com/articles/house-property-income-computation-935.asp

1. FAQs on Income From House Property

http://taxguru.in/income-tax/faqs-income-house-property.html

1. Advance Learning on Income from House Property

http://www.incometaxindia.gov.in/tutorials/income-from-house-property-practical.pdf

1. Handbook on Service Tax

http://handbookonservicetax.blogspot.in/2013/08/service-tax-on-renting-of-immovable_9198.html

1. 13 Points About Service Tax On Renting Of Immovable Property

http://www.simplifiedlaws.com/13-points-about-service-tax-on-renting-of-immovable-property/

1. How to Save Capital Gains Tax on Sale of Land?

http://www.relakhs.com/how-to-save-capital-gains-tax-on-sale-of-land-house-property/

1. Selling a House? Watch out for tax implications

http://economictimes.indiatimes.com/wealth/tax/selling-a-house-watch-out-for-tax-implications/articleshow/52583834.cms

In this blog post, Tanmayee Sahoo, a BA LLB student from Bangalore Institute of Legal Studies pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the tax treatment of channel placement fees.  

In the broadcasting sector in India the TV channels are placed or distributed by the broadcasters or many a times through their authorized distribution agencies to the platform where it is distributed. As according to the regulations and guidelines issued by the Telecom Regulatory Authority of India (TRAI), every broadcaster is required to pay a certain carriage fee and placement fee to the distributor of the particular TV channel. This occurrence of carriage fee and placement fee is a recent incident in the multi system operator business. Earlier the traditional cable services used to consist of signals, carried in analog form thus restricting the capacity of the cable. As the number of channel present in the market is in excess of the capacity, the Multi system operators started charging carriage and placement fee for the channels to be carried on their networks.

Channel placement fee in India is essentially a fee paid by the broadcaster to the distributor of a TV channel. The fee is paid to a distributor of TV channels for setup and placement of the channels of the broadcaster vis-à-vis channels of other broadcasters on the distribution platform owned and operated by such distributor of TV channels. It is also a fee paid by the broadcasters towards the placement of such channels on a particular frequency or bandwidth in a manner in which it would ensure more viewership for the channel. The broadcaster in India pay channel or band placement fees to multi system operators (MSOs) or the cable operators for placing their channel on a preferred frequency or band to augment viewership of the channel. Carriage and placement fee precisely provide the broadcasters of the channel access to multi service operators network. These fees including the advertising revenue and the collection of subscription revenue from the consumer are the major financial transactions and the revenue generated by Indian Television Industry.

Owing to the revenue generated every year the Indian Broadcasting industry, the industry is at the forefront of paying a major share of Tax. The broadcasting sector is always amongst the most litigious sector in India due to its cross-border transitions and the tax controversies. The payment in this sector is made as Royalty or otherwise and the same is taxable.

Royalty as defined under the Income Tax Act is any consideration for:

1. the transfer of all or any rights (including the granting of a license) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property;
2. the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property;
3. the use of any patent, invention, model, design, secret formula or process or trade mark or similar property;
4. the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill;
5. the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB;]
6. the transfer of all or any rights (including the granting of a license) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting, but not including consideration for the sale, distribution or exhibition of cinematographic films 

As this comes under the preview of granting of license and technical services, it falls precisely under the preview of the above section and is thus taxable under the Income Tax Act 1961.

Tax treatment of the Royalty or placement fee

The Tax authorities has contended that the placement fee paid to the broadcasters are in the nature of Royalty. The royalty paid to the broadcasters are taxable under section 194J of the Income Tax Act. The Revenue authorities have adopted a position that as the band placement fees are in the nature of royalty will fall under Section 194J. Section 194C of the Income Tax Act is the provision that deals with broadcasting and telecasting specifically. Accordingly, it is necessary to deduct withholding tax at 10%. .

The Tribunal observed that the Punjab and Haryana High Court in the case of Kurukshetra Darpans (P) Ltd. v. CIT had held that as the expression ‘work’ as used in Explanation to Section 194C included inter alia broadcasting and telecasting including production of programmes for such broadcasting and telecasting, payments for obtaining TV signals would be liable for TDS under Section 194C of the Act. The Tribunal also observed that the Delhi High Court in the decided case of CIT v. Prasar Bharati had held that as the work of broadcasting and telecasting of the programmes specifically falls under the ambit of provisions of section 194C it had to be preferred over the provisions of Section 194J of the Act.

In view of these decisions the Tribunal held that placement fee paid by the taxpayer to the cable operators should be subjected to TDS as per provisions of Section 194C of the Act. The Honorable Income Tax Tribunal in the year July 9, 2014 clarified its ruling in the landmark case of NGC Network (I)Pvt Ltd that if tax has been deducted at source on channel placement fees at 2% prior to the expansion of the definition of royalty under income Tax Act 1961. it should not result in a disallowance of the expenditure on the ground that TDS ought to have been deducted at a higher TDS of 10% (applicable for royalties). However, the Tribunal has not clearly dealt with the question as to whether channel placement fees would be characterized as royalty post the retroactive amendments to the definition of ‘royalty’ and the issue still remains open. The Income Tax tribunal has upheld the contentions stated by the taxpayers that it will withhold tax to 2% as contractual payment but this issue is still pending for litigation.

In cases where the distribution rights is granted by foreign broadcasters are in fact termed as ‘royalty’, the same would be taxed in case of foreign companies under section 115A (1)(b) at the rate of 30%, 20% or 10% based on date on which such agreement was entered into.

Service Tax on Band Placement Fee

In the broadcasting industry service provided by the cable operators or the Multi System Operators (MSO) to the broadcasters for placing their channels on a frequency as preferred by them falls under the category and are subject to service tax. It is not negated or exempted under any law and is taxable.

Conclusion  

The issues with broadcasting industry is resolved typically by judicial precedents and decisions, however as this sector is emerging and the laws are not yet settled. In the absence of judicial precedents, the parliament by way of law and the apex court by way of guidelines clarify the legal position in this regard. It is need of the hour that the policy makers and the government should take quick steps which will be adequate enough to clear the ambiguities in the tax framework and facilitate the growth of this industry by avoiding unnecessary litigation.

In this blog post, Ishita Mehta, a final year law student from Christ University Bengaluru explains the things to be done if the police harasses a person.

Introduction

Police harassment is an abuse of an officer’s authority by continually or arbitrarily stopping someone,  questioning him or her, or by conducting an unwarranted or illegal search and seizure. Law enforcement officers have used questioning, search and seizure, arrest, and accusation to harass ordinary citizens. Law enforcement officers have the right and the duty to stop and question any citizen, whenever a felony has been committed and they have reasonable grounds to believe that the citizen may have been involved in that felony. However, citizens have constitutional protections against unreasonable search and seizures, interrogation without counsel, and unlawful detainment.

In the event that and when you feel badgered by the police, or one officer in particular, the primary thing you ought to dependably do is record a badgering grievance against the cop you feel annoyed by, at the police headquarters in the ward where the cop is utilized. On the off chance that that doesn’t end the badgering, recording an objection inside the Internal Affairs Bureau is frequently the best course to take.

Harassment is both a criminal offence and a civil action under the Protection from Harassment Act 1997.

Things To Do

By and large, once your rights have been abused by a cop, whether it was an issue of unreasonable utilization of compel, a false capture, or whatever other of the huge numbers of sorts of offense out there, you’ll almost certainly be captured, regardless of the possibility that lone as a way to cover for the first rights infringement. In this way, first things to start with, the privilege to be noiseless is your closest companion.

Mostly people start thinking about filing a civil suit or complaint. Also documentation is very important . If you see a police misconduct, immediately write down exactly what happened as soon as you can, before you call anyone.

Some important details to document:

-A precise timeline of events along with your best guess at when each event occurred.

-Where each event happened within the time line.

-Who witnessed each event, if you don’t know names then write down descriptions with as much detail as possible.

-Who did what, when did they do it, in front of whom, and what was said.

In your own words describe everything that happened from the very start of the police encounter to the end. When quoting yourself or the officer try to use exact words. Be specific about the location, time of day, etc. Replay the events slowly in your head to help remember as many details as possible.

Also  witness’s names and contact information and the officers’ names, physical descriptions, car number and badge numbers should be included.  If necessary, return to the scene of the incident to talk to possible witnesses. This might also help jog your memory about other important details. Only include facts that you’re sure about. Be very careful to avoid inaccuracies. These can easily damage your credibility and undermine your important work.

Publicize  this incident there and ask them to take action. File a complaint in writing with the commissioner of police, with all the details of the incident as you recall – including any identifiers of the policeman in question. Higher ups are usually sympathetic to genuine complaints brought through a formal process. File an FIR regarding the incident at the jurisdictional police station.

This step is essential if you were arrested following the incident. (If you were not arrested, it’s optional but recommended ). Victims of police misconduct are often forcefully prosecuted in order to gain leverage in case the victim files a lawsuit. If you’re caught in a situation like this, you need a good police misconduct attorney immediately. Avoid attorneys who work in many different areas of the law.

Police offense cases are testing, and legal counselors take a considerable measure to troublesome individuals. Separate yourself by being quiet and all around composed. Regardless of whether you were not accused of a wrongdoing taking after the episode, you may at present need to seek after a common suit against the police. A lawyer will help you figure out if you have a sufficiently solid case.

This step cannot begin until all criminal charges and civil actions have been resolved. Prematurely filing a police misconduct report will hurt your chances in court by revealing too much information to the police. (Of course, if you weren’t charged with a crime and you’re not suing, file the complaint right away.)The materials you prepared (documentation)  will form the body of your complaint. The police may try and contact you by phone or mail to do a “follow up” about your complaint. Don’t answer any questions and never go down to the police station for an interview. Tell them everything they need to know is in the letter you sent and then say good bye. Stick to what you said in your complaint letter and say nothing else.

A police complaint will not get a victim compensated for police abuse and police complaints are not lawsuits. If you file a complaint against a police officer and the police clear themselves as they often do, the only recourse you may have is a civil lawsuit. In a civil lawsuit you may receive compensation if you and your attorney can prove damages or civil rights violations. Contact a competent civil rights attorney if you need more information about filing a lawsuit for civil rights violations. If you’re interested in knowing what complaints have been filed against police officers in your community, you may request a copy of that information be sent to you from that police agency

Writing to media harnesses the power of social network. Get yourself a lawyer and remember the policeman’s actions might do less harm to the society than your silence. These days media and other social networks have been a major platform to write down and convey all the problems which are being dealt in day to day life including police harassment.

To fight police abuse effectively, you must have realistic expectations. You must not expect too much of any one remedy because no single remedy will cure the problem. A “mix” of reforms is required. And even after citizen action has won reforms, your community must keep the pressure on through monitoring and oversight to ensure that the reforms are actually implemented.

Nonetheless, even one person, or a small group of persistent people, can make a big difference. Sometimes outmoded and abusive police practices prevail largely because no one has ever questioned them. In such cases, the simple act of spotlighting a problem can have a powerful effect that leads to reform. Just by raising questions, one person or a few people — who need not be experts — can open up some corner of the all-too-secretive and insular world of policing to public scrutiny. Depending on what is revealed, their inquiries can snowball into a full blown examination by the media, the public and politicians.

There are lot of things Police officers do which results in the harassment by them. Those things include:

1. Police shootings-  You need to know about police firearm discharges, which refer to the number of times a police weapon has been fired. This information is more complete than statistics on the number of persons shot and wounded or killed. (However, information on the race of persons shot and wounded or killed is important.) Particularly important is data on repeat shooters, which can tell you whether some officers fire their weapons at a suspiciously high rate.
2. Use of physical force –  Under any circumstance physical abuse shouldn’t be taken into place. Violent nature can result into grievous results and accidents might resulting into death or harmful injury.

C .Official strategies- You have to comprehend what the nearby police office’s formal, composed arrangements are on how officers should act specifically circumstances. How does the division treat abusive behavior at home protestations? What is the approach on how officers should manage vagrants? Does the division utilize canine watches and, assuming this is the case, under what conditions? In looking at authority strategies, you have to assess them in contrast with suggested norms.

1. Claims- You have to know what number of claims natives have documented against your nearby police division. You’ll need to realize what the charges were, the quantity of officers included, whether certain officers are named over and over in suits, what was the result and, on account of fruitful suits, how much the city paid in harm.

What To Do If Harassed By The Traffic Police

To increase transparency in working of Delhi Traffic police and reduce possibility of misuse of prosecution power an order has been issued  today clarifying the prosecution powers of Head Constables of Police.

In brief what the order says is that no Head Constable can prosecute anybody for any offence which presently has a penalty for more than 100 Rs per offence. If any official threaten you with challan for Rs. 1,100 he is misuing his powers and if you know that he cannot issue a challan for this amount you can go ahead and ask him to issue challan. It is certain that once you ask for challan and he knows that you are aware that he cannot prosecute you for a violation punishable with penalty of more than 100 Rs. chances are he will not harass you. Yes if someone commit two offences like not wearing helmet and jumping the red light he can rightly issue a challan for 200 Rs for two offences of driving without helmet and jumping the red light.

Police business is by and large covered in mystery, which covers obsolete arrangements and departmental idleness, empowers smoke screens and, obviously, breeds open suspicion. In any case, recollect: Police divisions are an arm of government, and the administration’s business is your business. Police approaches, techniques, memoranda, records, reports, tape recordings, and so on ought not be withheld from general visibility unless their discharge would debilitate progressing examinations, imperil officers or others, or attack somebody’s close to home security. Requesting data about police practices is an essential part of the battle to set up police responsibility. Without a doubt, a battle concentrated exclusively on getting data from the police can serve as a vehicle for arranging a group to handle police manhandle. As to of the accompanying classifications, one of the strategies your group could utilize is to premium a nearby investigative columnist in looking for data from the police for a progression of articles. Once close by, the data your group has gathered or uncovered is an apparatus for considering the police responsible for their activities.

Conclusion

Police misconduct and human rights violations are commonplace in India. What should be an exception is treated as a norm. People are illegally detained and tortured in police stations for days at a time. Abusive intimidation tactics that know no boundaries are incessantly used to break a person. False charges and accusations are lodged in order to get their way. Stalling or slowing the process down of FIR retrieval, deliberate attempts to not follow up a case, delay carrying out an investigation to let mitigating factors come into play are some of the other ways in which police abuses it’s power.

The citizens are extremely fearful of the police. The moment you see a police car next to your house, you start panicking. The kind of fear that the police induces in people is astonishing and shocking. It’s hard to believe that this establishment has been put in place for our own protection and well-being. No one wants to go against the police. No one wants to fight them in case they trap them in a false charge or build a criminal case against them. No one wants to even get involved in a police case. This is the way the police manipulates the citizens to follow their command. They have led people to believe that their authority is absolute and binding, and that they can make life difficult for anyone who opposes them.

In this blog post, Vanshaj Mehta, a student of Institute Of Law, Nirma University, who is currently pursuing a  Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the incorporation of an Arbitration Clause in a Contract by Reference.

Most notable amongst the disputable and fascinating query in arbitration law is incorporation by reference. It is a common practice in a few industries, especially dispatching and development, for the legally binding relationship between the parties to be made out of a few documents. It may sometime happen that a conflict emerges with reference to one of these documents, while the arbitration clause is contained in another. Common-law rules have evolved to find out whether the parties expected to fuse the mediation proviso in one record into another, and the typical decide is that “general” fuse to the next archive does not suffice.

The Supreme Court has as of late considered this issue in an contemplated and exhaustive judgment, in M.R. Engineers v. Som Datt Builders[1],. For this situation, Som Datt Builders Ltd. [“SDBL”] had gone into an agreement with the Kerala PWD. Provision 67.3 of this agreement contained a discretion proviso which gave that issue would be given to a Committee of three authorities to be designated by different Government divisions. SDB sub-contracted a piece of its commitments to MR Engineers Pvt. Ltd. [“MREPL”]. The work order laid down that “This sub- contract shall be carried out on the terms and conditions as applicable to main contract unless otherwise mentioned in this order letter.”

Issue emerged amongst MREPL and SDBL over dues which were owed to MREPL, and MREPL ultimately filed an application under s. 11 of the Arbitration and Conciliation Act, 1999, looking for the arrangement of a mediator. MRE contended that Clause 67.3 of the agreement between the Kerala PWD and SDBL stood joined into the agreement amongst SDBL and MREPL by goodness of the dialect extricated previously. The Kerala High Court rejected the application, holding that incorporation was not enough and that there was thus no arbitration agreement amongst MREPL and SDBL.

In the Supreme Court, Justice Raveendran alluded to the arrangements of s. 7(5) of the Arbitration Act, which gives that “the reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract“. The Court saw that the words, “ such as to make that arbitration part of the contract ” implied that just a reference is not enough. Plainly, s. 7(5) required “conscious acceptance” of the arbitration clause, and the Court held that this question would need to be answered as per the ordinary principles of document construction, without statutory guidelines.

The most prominent of this intention is the construction of the incorporating clause. The Court noticed that agreements in some cases join different contracts, utilizing the language along the lines of “the considerable number of terms and condition” or “this agreement should be administered by the arrangements of…” and so forth. In such cases, the arbitration clause is likewise incorporated. Where, in any case, the consolidating proviso refers to a particular part of another agreement, the assumption is that it was not expected to join the arbitration clause. This turned out to be critical for the situation, on the grounds that the incorporating clause used the expression “this subcontract shall be carried out” The Court held that the utilization of words “carried out” demonstrated the motive of the parties to keep incorporation to matters of execution and administration, and that it could therefore not stretch out to conditions outside this ambit, for example, security stores and arbitration clauses.

The second critical premise for this situation is a divergence that the Court made between “standard frame contracts” and other contracts. Depending on perceptions in Russell on Arbitration, the Court held that general reference may suffice if the reference was to a standard type of terms and states of “exchange affiliations or administrative organizations”. The thinking is that parties that understand the terms and conditions of such reputable corporations and foundation are probably aware of the presence of the arbitration clause, especially since these terms and conditions are quite often reported. On this premise, the Court recognized two of its earlier judgments where incorporation was acknowledged with regards to the General Conditions of Contract of the Grain and Food Trade Association and the General Conditions of the Fertilizer Association of India. In this instance, the Court observed that the reference was general and not to a standard type of an exchange affiliation. It was in this way viewed as lacking on the truths of the case.

A final reason to dismiss the incorporation argument is the origin for another imperative lawful argument – the arbitration condition, after incorporation, must stay in consonance with the contract into which it is incorporated. For this situation, the authorities were to be named by different Government Departments, which could obviously not make a difference to an agreement to which the Government was not a party.

In whole, the following important reasons rise up out of the judgment:

1.      Mere reference is not enough for the intention behind s. 7(5), which is important for an inspection into the aim of the parties on the premise of the typical standards of development of agreements.
2.      General reference to another agreement is generally insufficient, with the exception of where the reference is to the standard terms and states of a “trade association or regulatory institution”
3.      The language of the incorporation of a proviso is a vital element – in the event that it refers to a particular part of another agreement, for example, supply or execution, the arbitration statement is not refereed, though consolidation completely is adequate to join the intervention condition also.
4.      Incorporation falls flat if the arbitration condition on joining will be conflicting with the terms or plan of the agreement into which it is consolidated.

[1] 2009 (9) SCALE 298

In this blog post, Tanisha Agarwal, a student of Institute of Law, Nirma Universtiy, Ahmedabad, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the powers of an arbitrator to punish for contempt.

Introduction

The more widespread legal thought is that the orders of an arbitrator are powerless because the arbitrator has no authority to implement them. Therefore, involvement of a Court to achieve enforceable orders, even in an on-going arbitration, becomes unavoidable. This article is intended at refuting this proposition by explaining that an arbitrator is assigned with the power of contempt (at par with the Court), under the [Indian] Arbitration and Conciliation Act, 1996 (hereinafter, the “Arbitration and Conciliation Act”), and has complete command over implementing its own orders sans interference of any Court.

Arbitrator differs from a “Court”

An arbitrator under the Arbitration and Conciliation Act possesses several powers comparable to that of the Court, for example, the power to grant interim relief under Section 17. Although an arbitrator is an adjudicating authority under the Arbitration and Conciliation Act and has to act judicially, an arbitrator differs from a Court. On the same basis, under Section 17 of the Arbitration and Conciliation Act, an arbitrator is not bound by the principles of the Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872. Even the definition of “Court” under Section 2 of the Indian Evidence Act, 1872 specifically eliminates an arbitrator. Hence, it is apparent that an arbitrator is not a “Court”.

As an arbitral tribunal is not a “Court” and is a result of an agreement between the parties, it has no authority to punish a defiant party for contempt of its orders, not only under the Constitution of India, but also under the Contempt of Courts Act, 1971.

Supreme Court’s View on Arbitrator’s Power to Enforce its Orders

The Supreme Court of India, in MD, Army Welfare Housing Organisation v, Sumangal Services (P) Ltd. while looking into the sections of the old Arbitration Act, 1940, made some remarks (which could only possibly serve as obiter dicta), vis-à-vis the power of an arbitrator to implement its orders under Section 17 of the Arbitration and Conciliation Act, which gives authority to the arbitral tribunal to grant interim relief to the parties during the pendency of the arbitration proceedings. The Court remarked that even under Section 17, no authority is conferred upon the arbitral tribunal to implement its order nor does it arrange for any judicial implementation.

Further, in the case of Sundaram Finance Ltd. v. NEPC India Ltd.[1], the Supreme Court has categorically stated that even though Section 17 gives the arbitral tribunal the power to grant interim relief, such orders cannot be obligatory as orders of a Court are. Therefore, Section 9 gives a concurrent power to the Court to pass interim orders even during the arbitration proceedings. It is for this reason only that Section 9 gives the court power to pass interim orders during the arbitration proceedings.

Consequently, in M.D. Army Welfare Housing Organisation v. Sumangal Services Pvt. Ltd.[2], the Apex Court had held at para 56 thereof that under section 17 of the Act no power is conferred on the arbitral tribunal to enforce its order nor does it provide the judicial enforcement thereof.

Section 27 (5) of the Arbitration and Conciliation Act, 1996

Somehow, these decisions of the Apex Court fail to take notice of Section 27 (5) of the Arbitration and Conciliation Act, 1996 which expressly confers the power on the arbitral tribunal to punish for its contempt.

Section 27 (5) stipulates that “Persons failing to attend in accordance with such process, or making any other fault, or refusing to give their evidence, or guilty of any contempt to the arbitral tribunal during the conduct of arbitral proceedings, shall be subject to the like disadvantages, penalties and punishments by order of the Court on the representation of the arbitral tribunal as they would incur for the like offences is suits tried before the Court”.[3]

High Court of Delhi on Section 27 (5) of Arbitration and Conciliation Act

In the case of Sri Krishan v. Anand[4], the Delhi High Court was apprehended of the issue whether a petition under Section 9 of the Arbitration and Conciliation Act, 1996 would stand for an identical interim measure which has already been passed by the arbitral tribunal under Section 17 earlier. The petitioner had tried to validate the petition under Section 9 of the Act on the stand that orders passed by an arbitral tribunal are powerless and not enforceable.

Justice Endlaw of the High court of Delhi while rejecting the argument of the petitioner said that the legislative intent of passing Section 17 of the Arbitration and Conciliation Act is to make the arbitral tribunal a comprehensive platform not only for completely resolving disputes between parties but to also order interim measures. The Court additionally held that absolutely no purpose would be aided in coming to the arbitral tribunal under Section 17, if for implementing orders under Section 17 a distinct petition under Section 9 has to be filed consequently.

The Court said that under Section 27 (5) of the Arbitration and Conciliation Act, 1996 any individual failing to conform to the order of the arbitral tribunal would be considered to be “making any other default” or “guilty of any contempt to the arbitral tribunal during the conduct of the proceedings”. The Delhi High Court also elucidated that Section 27(5) was not observed in Sundaram Finance Ltd. or in Sumangal Services Pvt. Ltd. probably, since it was dodged in the heading/title of Section 27. Nonetheless, as the said heading/title cannot confine or contract the otherwise extensive ambit of Sub-section (5) of Section 27. The default, contempt specified within that cannot be narrowed to that only in appearance of witnesses in front of the arbitral tribunal. Doing so, would be to reduce the words “any other default” and “guilty of any contempt” therein futile.

Therefore, the option before the aggrieved party in a case of non-compliance of the order of the arbitrator is to apply to the tribunal for putting across a representation to the Court to give out such a punishment to the disobedient party, as would have been necessary in a case of contempt of Court. The arbitral tribunal should create such a representation to the Court only if it is pleased that the defaulter is in default or in contempt. When such a representation by the arbitral tribunal is before the Court, the Court is at the discretion to deal with such disobedient party as if in contempt of order of the Court. This may well be either under the sections of the Contempt of Courts Act or under the sections of Order 39 Rule 2A of the Code of Civil Procedure, which arranges for penalties of disobedience or breach of injunction.

This particular point of law has been endorsed by a following decision of the Delhi High Court in the case of India Bulls Financial Services Limited v. Jubilee Plots and Housing Private Limited,[5] depending upon the already mentioned decisions of the Apex court, all the courts in India have observed that the arbitral tribunals have no authority to implement their own orders. Further, there have only been a couple of dissenting decisions by the same judge.

In T. Sudhakar Prasad v. Govt. Of AP & Ors (2000), the Apex Court went on to understand the pertinent sections of Chandrakumar’s case. Court remarked that in Chandrakumar, the Supreme Court had inferred Articles 323A and 323B of the Constitution of India as ultra vires insofar as they impinged on the basic structure of the Constitution, of which the power of judicial review of the High Courts and Supreme Court was essential.

To explain further, those powers of administrative tribunals which were precisely given under Article 323A and thereafter the Administrative Tribunals Act, which did not run different to the Constitution’s basic structure, would be intact and not be impacted by the ruling in Chandrakumar’s case. Thus, the power to punish for contempt under Section 17 of the Administrative Tribunals Act, which flowed by Article 323A(b), was not impacted by the judgment.

Conclusion

When parties are required to take recourse to Courts for assistance despite having agreed to arbitration, the benefits and attractiveness of arbitration gets significantly diminished. Giving due meaning to Section 27 (5) of the Arbitration and Conciliation Act by the Courts would act as a deterrent to litigants for filing separate proceedings for the same relief under Section 9 and Section 17 of the Arbitration and Conciliation Act, and would also be consistent with the objectives of the Arbitration and Conciliation Act, in reducing interference of Courts in arbitration proceedings.

According to Article 141 of the Constitution of India, the pronouncements of the Supreme Court of India, carry on to be the “law of the land” and are compulsory to be observed by all other Courts in India. Nevertheless, keeping in mind Section 27 (5) of the Arbitration and Conciliation Act and the judgements of the Delhi High Court, the law on this issue needs to be reconsidered.

[1] (1999) 2 SCC 479

[2] ( 2004 ) 9 SCC 619

[3] Section 27(5), Arbitration and Conciliation Act, 1996

[4] (2009) 3 ArbLR 447 (Del

[5] MANU/DE/1829/2009

In this blogpost, Aritra Mandal, a recent graduate from Jindal Global Law School, describes how and when to apply for a Special Leave Petition with relevant case laws.

Introduction

Knowledge of the law is essential [G1] for every individual to some extent. Each member of the human society lives his or her life in conformity with certain recognized rules and principles of social conduct. An individual is confronted daily with situations which call for knowledge of legal information to chart out the right way. In this series let us understand what we call special leave petition.

What is an SLP?

In any legal system, there is a hierarchy of courts and tribunals at different levels. After a judgment has been passed by a court lower in a hierarchy[G2] , any party, unsatisfied or aggrieved by the outcome may go in for an appeal in the appellate court; which in India is generally a High Court.  However, if any of the parties is unsatisfied by the appellate court’s decision, a further appeal can be made to the Supreme Court of India. The guidelines for these appeal processes are provided by the Articles 132 to 136.

There is a special class of appeals, which may not follow the general hierarchy of the courts and tribunals. Article 136 of the Indian Constitution, allows the Supreme Court to grant special leave to appeal against any judgment or order in any matter or case, made by any court or tribunal in the country. The Supreme Court is vested with the absolute power of interpretation of the constitution being the ultimate guardian of it.

When can an SLP be made?

The appeal can be made in a case where a substantial question of law is involved or where gross injustice has been observed[1]. The judgment, decree or order against which the appeal is being made must have the character of judicial adjudication. This implies that purely administrative or executive order or ruling cannot be a matter of appeal[2] and further, it is also important that the authority whose [G3] judgment or order is being appealed against must fall under the definition of a court or a tribunal.

The Special Leave Petition shall not apply to any judgment or order handed down by any court or tribunal involving the armed forces. This is the only exclusion as is given in the clause 2 of Article 136.

What is “special” about SLP?

What is so special about article 136 that distinguishes it from the general appeals listed in 132-135 are as follows. First, it is not just restricted to appeals against judgments, decrees and final orders of the High court but it can also be granted against the judgments of lower courts. The second thing to note is that article 136 is fluid and flexible compared to articles 132-135 which deals with appeals. What is basically meant is that the judgments, decrees or orders do not have to be final in nature and appeals are allowed even against interlocutory and interim judgments and they may be from cases or matters of either criminal or civil nature or otherwise. However, in the normal course, it is generally expected that the appellant has exhausted all other recourses the law provides.[G4]  Moreover, there may not be any law which limits the jurisdiction of the [G5] Supreme Court when it comes to article 136.

Rules about Special Leave Petition

In leading case laws the following rules have been established.

By virtue of this article, we can grant special leave in cases of civil, criminal, Income tax related cases, cases from various tribunals and any variety of other cases[G6] .[3]

SLP can also be filed when a High Court does not approve fitness for appeal to Supreme Court.

Ordinarily, a private party other than the complainant should not be permitted to appeal.[G7] [4]

The “How” of an SLP

The petition has to contain all the facts which are important for the SC to decide whether an SLP may be admitted or not. This petition has to be duly signed by the Advocate on record and should also be inclusive of the petitioner’s statement that no other petition has been filed in the HC. The same should also have a copy of the judgment the SLP is sought against, along with a verifying affidavit and all relevant documents.

After the petition is filed, the court hears the case and depending on the merits of the case allows the opponent party to state their views in a counter affidavit. Thereafter, the court decides if special leave can be granted or not. If leave is granted, the SC will exercise its appellate jurisdiction. Subsequent decisions of the SC are binding on both the parties.

In the case of Kunhayammed v State of Kerala, AIR 2000 SC 2587, the discussion was about   the exercise of the jurisdiction under article 136 and if it consisted of granting of the SLP and subsequently hearing the appeal. The court has a choice to grant the SLP and if the court decides to not grant it on its findings then the appellate jurisdiction of the court does not come into existence. However, mere dismissal of the SLP petition does not mean that there is res judicata, it merely means that the case was not fit for the grant of SLP and it is open to the aggrieved party to approach the concerned court for review under article 226.

Time Frame

SLP can be filed against any judgement of High Court within 90 days from the date of the judgement. However, there is flexibility at the discretion of the SC. Or it can be filed within 60 days against the order of the HC refusing to grant the certificate of fitness for appeal to SC.

Scope of Article 136

Article 136 bestows the Supreme Court discretion to entertain appeals in suitable situations, not otherwise provided for in the Constitution. The SC may exercise this discretionary power to grant special leave to appeal any judgment or decree or may refuse to grant the leave since this is not a matter of right. An aggrieved party can approach the Supreme Court, for clarification of any constitutional or legal issue involved in any civil, criminal or other type cases, through article 136.[G8]  Thus, the nature of this power of the SC is of residuary nature and its definition is not limited. A study of the SLPs, however, shows that the SC grants leave only in case of exceptional situations and follows well-established judicial procedures in exercising the discretionary power. [G9]

The residuary jurisdiction has been invoked more frequently in case of criminal appeals. SC had declared repeatedly that special leave will not be granted unless special and exceptional circumstances exist and / or grave injustice has been committed. The case of Pritam Singh v. State, (AIR 1950 SC 169:1950 SCR 453) has had a huge importance in understanding the SLP.

This was an appeal by special leave from a judgment and order of the High Court of Judicature for the Province of East Punjab at Simla dated the 23rd November, 1949, in Criminal Appeal No. 367 of 1949 upholding the conviction of the appellant on a charge of murder and confirming a sentence of death passed on him by the Sessions Judge of Ferozepore. On appeal, the Punjab High Court dismissed the appeal and upheld the sentence. The counsel for the special leave pleaded that once an appeal had been admitted by special leave, the entire case was at large and the appellant had the freedom to contest all the findings of the High Court or the trial Court.

The SC found this totally unwarranted.  The SC actually explained how the discretionary powers will be exercised in granting special leave to appeal. This has actually gone on to define SLP. The appeal was subsequently dismissed.

In normal circumstances, the SC does not interfere with an order of acquittal by the High Court as has been exemplified in the case of State of AP v the P Anjaneyulu (AIR 1982, SC 1184). In exceptional situation only, the SC allows an appellant to raise fresh pleas under special leave. For example, in the case of CCE v National Tobacco Co of India Ltd. (AIR 1972 SC 2563), where the authority does not have any jurisdiction under the rules to issue the impugned notice the SC allowed a special leave.  However, a new plea requiring investigations of facts is not generally permitted at this level. Once again, in a situation, where an interpretation of a statute is the basis of a new plea, leave petition may be permitted.[G10]  In the case of Laxmi & Co. v Anand R Deshpande, (AIR 1973, SC 171), it was held that “the court takes notice of subsequent events while hearing appeals under Article 136 to shorten litigation, to preserve the rights of both the parties and to subserve the ends of justice”.

The Supreme Court holds that as the court of last resort it has an inherent power to correct its own previous decisions which may be in violation of the law or the constitution or fundamental rights causing gross injustice to any party. Such ruling arrived at the Antulay v RS Naik (AIR 1984, SC 684) case, where the petitioner sought to invalidate decisions from an earlier case involving the same parties and issues in the apex court.[G11]

A few case studies in brief

1.                  Sanwat Singh v. the State of Rajasthan[G12] , AIR 1961, SC 715

There was a riot between two rival factions of resulting in injuries to many and death of two farmers. The Sessions court acquitted the convicts, but on appeal, the High [G13] Court found some accused guilty and sentenced them to various terms of imprisonment.  One of the convicts applied for a special leave against the conviction and sentence by the High Court. The counsel for the appellants argued that the High Court has interfered with the findings of the Sessions court and this was a departure from the principles of the Privy Council, which was referred. The SC ruled that Article 136 vests discretionary power which cannot be exhaustively defined but does not permit interference unless substantial and grave injustice has been done and the conscience of the court is shocked. The appeal was dismissed[G14] .[G15]

2.                  Jaswant Sugar Mills Ltd. v. Laxmichand, AIR 1963 SC 677

The workers of the Jaswant Sugar Mills Ltd. Company resorted to agitation for enforcing their demands for a bonus, leave[G16]  etc. The company wanted the agitating workers to be dismissed. Since a dispute between the company and its workers was already pending before the Industrial Tribunal the workers could not be discharged without the permission of the Conciliation Officer.  The Officer granted permission in respect of only a few workers.  The company made an appeal to the  Labour  Appellate Tribunal but  it  was  dismissed  as incompetent on the ground that the Conciliation Officer  was not an authority as per the Industrial  disputes  (Appellate Tribunal) Act, 1950. The company then obtained special leave to appeal to the Supreme Court against the direction of the Conciliation Officer and also against the order of the Labour Appellate Tribunal.

SC agreed that the Conciliation Officer is not a tribunal or court. The right to appeal under Article 136 is only against awards or decisions, and a Conciliatory officer’s job is not to award or deliver any definitive judgment affecting rights of parties.  The Labour Appellate tribunal also upheld this position. Therefore, both the appeals were dismissed.

3.                  Kunhayammed v State of Kerala, AIR 2000 SC 2587

In this particular case, the [G17] subject of discussion was the exercise of the jurisdiction under article 136 and whether it consisted of the granting of the SLP and subsequently hearing the appeal. The court has a choice to grant the SLP and if the court decides to not allow this on its findings then the appellate jurisdiction of the court does not come into existence. However mere dismissal of the SLP petition does not mean that there is res judicata, it merely means that the case was not fit for the grant of SLP and it is open to the aggrieved party to approach the concerned court for review under article 226.

Finally, if a special leave is not granted, the parties must abide by the decisions given by the courts. Article 141 of the Constitution lays down that the law declared by the SC is binding on all courts.

Conclusion

Special Leave Petition is a huge instrument of the dispensation of justice from the apex court in the country. [G18] However, SLP is a very fluid and flexible provision because of its inherent nature. Consequently, there are many leave petitions, which tend to choke the SC, but there are plenty which is rejected at the admissions stage also, which sort of keeps a balance.[G19] [G20]

Note: If more information is required on the subject of Special Leave Petition, the reader can consult the book “Constitution of India” by VN Shukla, Eastern Book Company, 2013, which is a good source.

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[1] Sanwat Singh v. the State of Rajasthan, AIR 1961, SC 715

[2] Jaswant Sugar Mills Ltd. v. Laxmichand, AIR 1963 SC 677

[3] Pritam Singh v. State, AIR 1950 SC 169:1950 SCR 453.

[4] K Manjushree v. State of AP, AIR 2008, SC 1470