In this blogpost, Sudhi Ranjan Bagri, Student, National Law Institute University, Bhopal writes about the doctrine of stare decisis and its position in India, Canada and Unites States

Introduction

In its literal sense, “stare decisis” translates as “to stand by decided matters”. “Stare decisis” is an abbreviation of the Latin phrase “stare decisis et non quieta movere” which translates as “to stand by decisions and not to disturb settled matters.”

In its most generic sense, this doctrine states that the lower court is bound by the decision of the higher court, provided the lower court falls within the provincial jurisdiction of that higher court. However, the decision by any other higher court, which doesn’t have such jurisdiction, would only have persuasive authority.

The degree of persuasiveness is dependent upon various factors, which includes:

• Nature of the other jurisdiction plays a very important role.
• Then, comes the degree of persuasiveness, which in turn depends upon the level of the court which decided the earlier case in the other jurisdiction.
• The date on which such precedent was set. This factor is important because there is an assumption that more recent the case, the more reliable it will be, although this is not necessarily so.
• In some rare occasions, the reputation of the judge who has decided the earlier case also affects the degree of the persuasiveness of the authority.

The Indian position

The Supreme Court has correctly pointed out that the words of Article 141-“binding on all courts in India”, must be given a wide interpretation, but such as not to include the Supreme Court. The SC is not bound by its own judgments but is free to reconsider them in appropriate cases as and when required.[1]

However given the power to overrule a decision, what are the circumstances in which the power should be exercised. In the case of I.T.O Tuticorin v. T.S.D. Nadar[2], it was held that “the decisions of the court should not be overruled except under circumstances which compel them to do so…every time the court overrules its previous decision, the confidence of the public in the soundness of decision of this court is bound to be shaken…decisions of this court should be confined to questions of great public importance”.

While deciding the extent of applicability, of the doctrine of stare decesis upon the Supreme Court itself, Supreme Court has, in the case of Rupa Ashok Hurra v. Ashok Hurra and Anr[3]., held that when the Apex Court is deciding any questions of law, it must take note that such decisions are being binding on all other subordinate courts, by the applicability of Article 141, and hence the SC must maintain an element of certainty and continuity in the interpretation of law in the country. The SC further stated that if the previous decisions, which are already having a force of precedent, are reviewed and altered, then it might lead towards making law uncertain, and might create confusion in its applicability, which must be constantly avoided. So, the higher courts must overrule its previous decision only after being satisfied that the previous decision was erroneous, and a fair amount of ambiguity is present and that to clear out such ambiguity the intervention of the court is necessary.

The Canadian position

Because of the maturing of Canadian jurisprudence, the Supreme Court of Canada has relatively reassessed its own position on the effect of its own prior decisions. In light of these changes, the current position appears to be as follows:

The Supreme Court of Canada is not bound to follow its own prior decisions. The Supreme Court can no longer be content to say that the case is governed by an earlier decision unless the decision provides the proper reconciliation of the competing interests which are involved.

All Canadian courts are bound to follow a precedent of the Supreme Court of Canada[4] and any pre-1949 decision of the Privy Council which has not been overruled by the Supreme Court of Canada. A minority opinion of the Supreme Court of Canada is, however, not binding.

A decision of a court of co-ordinate jurisdiction is not binding although where there is a conflict it may be appropriate to refer the case to the Court of Appeal. While the decisions of co-ordinate courts aren’t of binding nature, however, these are highly persuasive in nature.

The US Position

In the US, there are two variants of the doctrine of stare decisis. One is the strong form, according to which precedents are binding in nature. Another form is a weaker form, according to which precedents have mere persuasive value. In the weaker form, the dissenting or minority opinion of judgment could be more persuasive than the prevailing or majority opinion of the court. In this form, precedent becomes a convenient way to save time in litigation, the person who is arguing the case can simply cite the reasoning that has been given in another case, by saying that “My reasoning is similar to that”, and nothing more.

The principle of stare decisis thus essentially acts as a safeguard for the judges. It encourages the judges to resort to the previous judgments when required. Time and again, courts have held that such decisions are influential on the decisions by subordinate courts and therefore, the superior courts must be very careful and cautious while interpreting the law. The need is to demand that the judges exhibit more courage, and return to fundamental principles, resorting to stare decisis only when the positions lie on the fuzzy boundary of the region of legitimacy.

Conclusion

The available literature for this more or less settled issue of utmost jurisprudential importance is still wrapped in an enigma. While there exists a dominant school of thought that propounds the academic virtues of the doctrine, there is also another school, not contradictory but rather complementary to the same and which attaches a more philosophical connotation to the doctrine.

In my opinion, the doctrine of stare decesis is very much needed, but it must not be applied, where applying such would lead to injustice and unfairness to the parties in a suit.

[1] Bengal Immunity Company Limited v. State of Bihar, (1955) 2 S.C.R 603

[2] AIR 1965 TN 234

[3] AIR 1997 SC 1266

[4] Paul M. Perell, “The Doctrine of Stare Decisis,”

Available at <http://legalresearch.org/docs/perell.html#17> (last visited on 4^th September, 2012)

In this blogpost, Sudhi Ranjan Bagri, Student, National Law Institute University, Bhopal, writes about what is the doctrine of indoor management, what is the doctrine of constructive notice and  the exceptions to the doctrine of indoor management.

Doctrine of constructive notice

The company is given the status of an artificial person. The memorandum and articles of association, of a company, contemplates the documents, which sets out the objects and powers of a company. These documents are accessible to the people either without any costs or on payment of a nominal amount. Therefore, any person who enters into a contract with the company is thus presumed to have inspected such documents and thus to be aware of the powers that are being delegated to the directors. In other words, every person dealing with the company is presumed to have read these documents and understood them in their true perspective.[1]

This doctrine operates on the assumption that people entering into contracts with the company will be sufficiently motivated to check the company’s constitution or other public documents to ensure that the transaction they are entering into is not only allowed but to determine whether there are any internal formalities that must be complied with.[2]

Indoor Management: an antithesis to constructive notice principle

The foundation of the rule of indoor management was laid down in the case of Royal British Bank v Turquand,[3] and the doctrine of ‘indoor management’ evolved as a partial exception to the doctrine of ‘constructive notice’.

In this case, the directors of a company borrowed money by issuing a bond. As per the articles of association of the company, they were authorized to do so subject to a special resolution in that behalf. But no such resolution was passed by the company. The court held that the company would still be liable to pay off the debts incurred, and the bank was entitled to assume that before borrowing money, the resolution was passed.

Professor Gower, summarizing the doctrine stated, “If the directors have the power and authority to bind the company but certain preliminaries are required to be gone through on the part of the company before that power can be duly exercised, and then the person contracting with the directors is not bound to see that all these preliminaries have been observed. He is entitled to presume that the directors are acting lawfully in what they do.”[4]

The doctrine of indoor management is based on the policy of public convenience and justice. The reason as to why such doctrine is needed[5] is that the internal procedure, which happens within the company, is not a matter of public knowledge. Therefore, though any outsider is presumed to be aware of the documents which are publically accessible, but not of the internal proceedings of which he cannot be reasonably aware of because those are not accessible to the public.

Thus, the doctrine of constructive notice and indoor management go hand in hand. On one hand, the doctrine of constructive notice protects the company from the outsiders; on the other hand, the principal of indoor management offers protection to the outsiders while dealing with the affairs of the company. The doctrine of constructive notice comes into picture when an outsider fails to inquire about the company. However, the doctrine of indoor management can be invoked by any outsider dealing with the company and cannot be invoked by the company.

Exceptions to the doctrine of indoor management

The doctrine of indoor management has been used for almost a century now. Since in the modern world, the companies extended their roles to various social and political spheres, therefore the scope of this doctrine was widened. Since the scope was widened, the chances of its misuse also increased, so the courts came up with following exceptions to this rule:

Knowledge of Irregularity

This exception covers situations where the person dealing with a company is aware of the irregularities which are present in internal management. Such knowledge can be either by actual or constructive notice, and the person thus cannot claim the benefit under the rule of indoor management.[6]

This exemption can be better understood, by considering the case of T.R. Pratt (Bombay) Ltd. v. E.D. Sassoon & Co. Ltd.[7], wherein one company lent some money to another company on a mortgage of its assets. However, the procedure which was necessary to comply before such transaction, was not complied with. The directors of the two companies were the same. The court thus held that since the lender had notice of the irregularity, the doctrine could not be invoked and hence the mortgage was not binding. The transfer was approved by two directors, and the transferor was aware of the fact that one of the directors was not validly appointed, and the other was disqualified being the transferee himself. Hence, the court held that the transfer was ineffective.

Negligence

The person cannot invoke this doctrine if the person, who is entering into a contract with the company, has not enquired prudently and has not made proper inquiries, because of which he is not aware of the irregularity. If he would have conducted proper inquiries, then would have known that irregularity exists, and hence it is because of his own fault that he is unaware of the irregularity. This exception also covers the situation where the situations surrounding the contract were so suspicious that a prudent person would have made an inquiry, but the concerned person has not done so and hence is not entitled to claim the benefit of the doctrine.

This exception could be better understood while referring to the case of Anand Bihari Lal v. Dinshaw & Co.[8]. In this case, the plaintiff accepted a transfer of a company’s property from its accountant. The court held that the transaction entered by the accountant was clearly beyond the scope of his authority, and hence the transfer was void. The plaintiff was reasonably expected to see the power of attorney executed in favour of the accountant before accepting such transfer by the accountant on behalf of the company.

Forgery

The doctrine of internal management cannot be used to validate transactions in which the person relies on a document which has been forged. The leading case on this point is of Shri Kishan Rathi v. Mondal Brothers and Co. (P.) Ltd.[9]. In this case, the plaintiff was the transferee of a share certificate issued under the seal of the defendant company. The certificate which was issued contained the seal of the company and forged signatures of two directors, and such forgery was done by the company’s secretary. It was being argued by the plaintiff that the matter regarding the genuineness of the signature is a part of internal management, and thus, such forgery of the signature cannot be contended by the company. But the court held that the doctrine of indoor management cannot be extended to validate and cover forgery cases. The court also said that this doctrine applies to irregularities which might affect a genuine transaction and not to forgery.

Representation through Articles

This exception deals with the most controversial and highly confusing aspect of the doctrine of indoor management. Articles of association generally contains what is called the “power of delegation”. The case in which the meaning and effect of a delegation clause has been explained is the case of Lakshmi Ratan Cotton Mills v. J.K. Jute Mills Co.[10]. One G was a director of a company. The company had managing agents of which also G was a director. The article of association, empowered the directors to borrow money and to further delegate this power to any of them. G borrowed a sum of money from the plaintiffs. The company argued that since there was no resolution of the board delegating the power to borrow to G, he was not authorized to borrow money and hence refused to be bound by the loan. But the court held that the company is bound to repay the loan.

Thus it can be said that the effect of a delegation clause is that a person who enters into a contract with an individual director of a company, with the knowledge that the board has power to delegate its authority to such an individual, he may assume that the power of delegation has been exercised, and thus can claim the benefit under this doctrine.

Acts outside the scope of apparent authority

This exception covers situations wherein, if an officer of a company enters into a contract with a third party and if the act of the officer is beyond the scope of his authority, the company is not bound by such act of the officer. So in these situations, the plaintiff cannot claim the protection of the doctrine of indoor management merely because under the Articles the power to do the act could have been delegated to him. The plaintiff can sue the company only if the power to act has in fact been delegated to the officer with whom he has entered into the contract.[11]

Conclusion

The doctrine of constructive notice doctrine expects each and every outsider not only to know the documents of the company but also presumes to understand the exact nature of documents, which is practically not possible, and thus, in my opinion, is a little unfavorable to the outsiders dealing with the company. However, in reality, the company is not known by the documents but by the people who represent it and deal with an outsider. Those who enter into contracts with the company usually do so, on the basis of goodwill and reputation of the persons representing the company rather than the documents of the company.

Hence, the courts have evolved the doctrine of indoor management as an opposite to the doctrine of constructive notice in order to protect the interests of the outsiders. In my opinion, the doctrine of indoor management is absolutely necessary for protecting the outsiders and forcing the company to fulfill their part of obligation in genuine transactions. This also needs to be implemented subject to certain exceptions and the same have been evolved by the courts.

[1] Narayana, ‘The Companies Act, 1956-Company Rules & Allied Laws’, First Ed., 2006, Alt Publications, Hyderabad.

[2] Lumb, R., ‘Corporate Personality’, 4 University of Queensland Law Journal 418 (1961-64).

[3] Royal British Bank v Turquand, (1856) 6 E&B 327.

[4] Paul L Davies, Gower’s Principles of modern Company law, p-222.

[5] Sealy & Hooley, ‘Commercial Law-Text, Cases and Materials’, Fourth Ed., 2009, Oxford University Press.

[6] Koessler, M. ‘The Person in Imagination or Persona Ficta of the Corporation’, 9 Louisiana Law Review 435 (1948-490.

[7] T.R. Pratt (Bombay) Ltd. v. E.D. Sassoon & Co. Ltd. ,AIR 1936 Bom 62.

[8] Anand Bihari Lal v. Dinshaw & Co., (1946) 48 BOMLR 293.

[9] Shri Kishan Rathi v. Mondal Brothers and Co. (P.) Ltd., AIR 1967 Cal 75.

[10]  Lakshmi Ratan Cotton Mills v. J.K. Jute Mills Co., AIR 1957 All 311.

[11] Koessler, M. ‘The Person in Imagination or Persona Ficta of the Corporation’, 9 Louisiana Law Review 435 (1948-490.

In this blogpost, Shivam Anand, student, DSNLU, Vishakhapatnam, writes on, the Laws Relating to meetings under the Companies Act and its essentials.

1. Annual general meeting

Provided under Section 96 of the companies act “Annual General Meeting” every company other than a One person company shall each year hold a general meeting as annual general meeting other than any other kind of meetings and the company should make sure that there should not be a gap of more than fifteen months between two annual general meetings.

First annual general meeting

With respect to first AGM, it should be held within the time frame of nine months from the date of closing of the first financial year. Now one of the biggest dilemmas is with respect to first financial year of the company as some major changes were brought up in the companies act 2013. Under the new provisions of the companies act, the financial year of the company incorporated after 1st January of a year would be 31st March of the following year and in other cases, it would be the period ending on the 31st March. One can understand this from the following example. In a case a company is incorporated on 5th January 2016, the first financial year of the company would end on 31st of March 2017, and it should with respect to Section 96 which deals with annual general meeting hold it’s AGM on or before 31st December 2017. In the same example if the company is incorporated on 20th December 2015 or on any date before 1st January 2016 then the first financial year would close on 31st March 2016 irrespective of the question whether the time frame is of 1 year or not and in such a circumstance the AGM should be held on or before 31st of December 2016(which is within 9 months from the closure of first financial year).
In any other case, the AGM should be held within 6 months from the date of close of the financial year. Also, the registrar may for the special reason extend the time of AGM, other the first AGM by a period not exceeding 3 months. Under the new Act, AGM can be held on any day including Saturdays, Sundays and public holiday except National Holidays(26th January, 15th August and 2nd October) between 9 a.m to 6 p.m.

Notice for Annual General Meeting

For a general meeting not less than a clear notice of 21 days either in writing or through electronic mode should be given. But a general meeting may be called after giving a shorter notice if consent by not less than 95% of the members entitled to vote at such meeting is given in writing or by electronic mode. The notice of such meeting should consist of place, day, date and the proper hour of the meeting and should also contain a statement stating business which is to be transacted at such meeting. The notice should be circulated to every member of the company, legal representative of deceased and assignee of insolvent member, auditor and every director of the company. Section 101 of the Companies act 2013, deals with the provision of Notice for the annual general meeting.

Quorum of meeting

As provided under section 103 of the companies act the quorum of the company in case of public company should be five personally present in case the total member on date of the meeting does not exceed 1000, 15 in case more than thousand but less than five thousand and 30 in case of more than 5000 members on the date of meeting. While in the case of a private company only 2 members if personally present will make up the quorum of the meeting. It has been also provided that in case the quorum is not fulfilled within half an hour the scheduled time of the meeting then the meeting would be adjourned to the same day of the next week. In case the quorum is not filled within half an hour in the adjourned meeting then the present members would form the required quorum for the meeting. In the case of the meeting by requisition under section 100, the meeting stand cancelled in case of lack of quorum as provided under section 103(2).

2. Extraordinary General Meeting

1) Under Section 100(1) of the Companies Act, the board may whenever it deems fit may call an extraordinary meeting of the company.
2) Section 100(2) lays down the procedure for calling an extraordinary general meeting in case of the requisition. In case of the company who has share capital(basically the company limited by shares ), should be voted upon by such number of members who on the date of receipt of the requisition holds not less than one-tenth of such of the paid-up share capital of the company as on that date carries the right of voting and in case of the company who does not have a share capital(basically the company limited by guarantee who don’t have share capital) should be voted upon by such number of members who on the date of receipt of the requisition holds not less than one-tenth of the total voting power of all the members having on the said date a right to vote.
One of the basic feature of the call for meeting by requisition is that in case the board within twenty-one days of the receipt of requisition fails to proceed to call for meeting for the consideration of that matter on a day not later than forty-five days from the date of receipt of such requisition then the meeting cab be called by the requisitionists themselves as per the process in which board holds the meeting and the cost of the same would be borne by the company.

3. Meeting called by tribunals

Under Section 98 of the Companies Act tribunal has been endowed with power to call for meetings on application by the member of the company or any director who is entitled to vote at such a meeting. It is basically done in the case where it is not practically possible for the company to hold a meeting other than an annual general meeting. It can pass any ancillary or consequential order as the tribunal may feel important.
Also, under section 97 of the Act Tribunal can call an annual general meeting in case of default of the company. It can pass any ancillary or consequential order as the tribunal feels expedient to do.

4. Board meetings

Under Section 173 of the Act, this provision of the board meeting is applicable to all types of companies including one person company. The first board meeting is mandatory to be held within thirty days of the incorporation of the company and subsequent to that the company should hold a minimum of four meetings of the board of directors. One of the most important aspects is that not more than 120 days gap should be there between two such meetings. One Person Company shall convene at least 1 board meeting in half calendar year and the gap between two meeting should not exceed by more than 90 days. The meeting can be done by way of video conferencing or any other audio-video means. The central government may decide upon exceptions, modifications or conditions of the companies or class of companies to be excluded from the applicability of this section and it can also decide which matters can’t be decided upon by way of video conferencing.

Notice and quorum for board meeting

A minimum notice of not less than seven days has to be provided to every director of the company about the meeting at his registered address in the company by way of post or by e-mode. The meeting can be called at a shorter notice. In the case of absence of the independent director, decisions of such meeting should be circulated to every director and should also be ratified by at least one independent director. The quorum for the board meeting is 1/3rd of the total strength of the board of director or two, whichever is highest.

5. Meeting of audit committee

Audit committee has formation, rights and liabilities have been provided under section 177 of the Act. It consists of a minimum of three directors along with independent directors forming a majority.They can hold a meeting with respect to the discussion of audit reports.

In this blogpost, Deiya Goswami, student, University of Petroleum and Energy Studies, Dehradun, writes about the Reality behind the Bars of Indian Jails.

“Hate the crime not the criminals”

– Mahatma Gandhi.

Every man is born free it is his work or action which makes him a criminal. Even though the prisoner is imprisoned because of his own misdeed but he deserves to get a safe, secure and healthy life.

The Forbidden Truth

The general society has a false notion about the prisons that the inmates are dangerous criminals and are a threat to the society. They should remain inside the prison with just basic rights like food, clothing, life and liberty. But sadly, little people know that the inmates live a very gloomy life, “The slaves were boys between ten and eighteen, employed as ‘helpers’, and there were scores of them. They cooked, washed utensils, cleaned rooms, fetched water and did much back-breaking labour to ‘help’ those who were paid to do these chores.”[1], was said by Kuldip Nayar, who spend some time in Tihar Jail, during the time when the emergency was invoked.

Sexual harassment of women prisoners 

Women prisoners are tortured most, they are not only beaten up by the jail authorities, but are also sexually harassed not only by the authorities but sometimes also by the fellow prisoners, and rarely any step is taken towards their protection. An incident happened in Khetri Jail, Rajasthan, where two jailers bailed out a woman and kept her for a week to rape her every day. The All Bengal Women’s Association’s report on women prisoners in Presidency Jail, Calcutta, in 1974 highlights similar incidents.[2]

In Elisaar jail, Meena had arrived in the fearful state, she was unable to walk, her rectum and the vaginal area was torn and was bleeding, she became lunatic, as she had been kept in police custody for twenty-two days after her arrest and was brutally being raped by five or six policemen. She was from a village in Nepal, and the irony was she was sentenced a ‘simple imprisonment’ for seven days, and this was what she had faced. There have been many more incidents in which sexual harassment of women prisoners were reported.

Class wise treatment

A person whether a free man, or a prisoner, have the right to healthy food, but the condition of food in these prisons is pathetic. The food quality of the jail has always been a matter of disappointment; there is a huge improvement required in this regard. The improvement in this area is being handled by government, but instead, the government is providing discriminatory services that, the people could enjoy benefit only if they have the capacity to pay for the extra benefit.

The class-A prisoners are provided with the special benefits like, they could pay for their own expenditure by depositing  a certain amount fixed by the government for enjoying special services like- morning tea, newspaper, pillow, 3 times non-vegetarian food in a week and if they are vegetarian they will be served ghee, dal, and buttermilk.

“Natural” Deaths

The environment in jail is very unhygienic. Such unhygienic and unclean environment leads to a rise in many diseases and infections, and not much attention is paid to the medical aids that should be given to these prisoners.

 Every year, a number of prisoners die in the prison because of infections which are generally minor and curable. In Seraikela Jail which has a capacity of 82 and which was being utilized to keep 400 to 800 prisoner, “143 prisoners, generally Adivasi under-trials passed on somewhere around 1973 and 1975”. Bhabani Shanker Hoota, a political dissident, who invest some energy in Rourkela Special Jail, Orissa, Emergency, lets us know of two death in legal guardianship “because of the joined negligence of doctor’s facility and correctional facility staff.” Similar are the complaints from Central Jail, Jaipur. Here, a man of 22, was sent from Karoli to Central Jail, Jaipur “for treatment”. His right arm was cracked. Was the bone uncovered, as well as around an inch of it was bulging out Furthermore, what was more awful, he had been in that state for more than 20 days when I met him. He had been visiting the prison specialist regularly, and the specialist obediently connected a yellow medication and dressed it. Why was he not sent to the city healing facility? “No police watchman to go with him to the doctor’s facility,” was the answer. (On the other hand, three days after my visit he was sent to the doctor’s facility and was worked upon.) In Karnataka, Snehlata Reddy, a genuine ceaseless asthma patient, was denied legitimate restorative treatment. She was declined parole despite the specialist’s proposal and kicked the bucket with-in a week of her discharge.

The Positive side

The prison is not a place which is to be compared to hell; it has some recreational activities also like the rehabs, which employs the inmates so that the life in jail does not stops. Once the prisoners leave the jail, they are used to working, and they also have some amount of money with them which help them to restart their lives. This is beneficial for the people who are giving imprisonment terms for long terms. These people often face desertion from their family; they have to restart their lives from ground zero level so especially for these people IGNOU courses are offered to them.

How so ever heinous crime must have been committed by that person, he is being given an opportunity for the educational facilities. The main courses that are being provided are BA, MA, and MBA etc. and other post-graduation courses. In many jails in order to provide full-fledged computer training vocational training is also provided.

In many places, training for carpentry and fabric painting is also provided. Also in many jails women empowerment by training them in weaving, making toys, stitching and making embroidery items. Wage earning and gratuity schemes and incentives are also used to reduce the psychological burden on the convicts. Recently, the Government of Himachal Pradesh had lifted ban on wearing Gandhi cap in jails. Various seminars are organized by jail authorities to enlighten the prisoners on their legal rights, health and sanitation problems, HIV/AIDS and issues of mental health, juveniles, minorities and steps to reduce the violence in prisons.[3]

Conclusion

The prisons in India needs to be well established with new and improved laws which give the prisoners a better life during their jail time. Also, there must be a central committee which should make sure that the inmates are treated well by the policemen, and every intended accused should be made to see the magistrate in the stipulated 24 hours. In my opinion the laws exists but the implementation needs to be taken care off. They should be given the basic rights necessary for human existence.

[1] http://www.pucl.org/from-archives/81nov/tihar.htm

[2] http://www.pucl.org/from-archives/81nov/khetri.htm

[3] http://www.legalserviceindia.com/article/l174-Prison-Reforms-In-Indian-Prison-System.html

http://inn-live.blogspot.com/2015/03/the-horror-of-indian-jails-dark-sub.html

In this blogpost, Nimisha Srivastava, student, Gujrat National Law University, writes about what is a term sheet and the cases related to its enforceability  in India.

What is a term sheet

The arrangement of a business exchange, for the most part, begins with agreement upon the terms of business in the type of term sheet. The term sheet is a declaration of what parties intend to accomplish upon by the agreement, instead of what they eventually concur upon. Term sheets are additionally called as ‘letter of intent’ or ‘side letter.’ Essentially, a side letter is a record that is auxiliary to another contract: clearing up, supplementing or changing the first contract. A letter of intent is utilized by the purchasers and merchants as a part of typical to celebrate their agreement on the material terms of exchange, for example, value, closing date, financing, due diligence and other essential arrangement focuses. This is at the transaction stage and aides in getting down to business the last term of the agreement. It is an all around settled guideline of the law of contract that such reports are not binding in nature. The terms of these letters might negative genuine contractual intention. A side letter of nature depicted just forces a commitment to the parties to negotiate in compliance with good faith and nothing more. Be that as it may, every now and again contain binding provisions governing confidentiality and marketing or negotiating exclusivity. A letter of intent, as the name suggests, is composed as a letter though a term sheet is all the more often a rundown of the critical parts of the foreseen contract or agreement.

Jurisprudence

A landmark decision with regard to enforceability of side letters came before the English Courts in the case of Barbudev v. Eurocom Cable Management Bulgaria EOOD and others.[1] The main issue that was sought to be resolved by the claimant was whether a side letter signed by the parties could be enforced. Before High Court, it was held that the side letter did not show any intention to create legal relations, and the terms were too uncertain, therefore making it unenforceable. The matter went before Court of Appeal, and the main contentions of the claimant were: (1) the parties did intend to create legal relations; and (2) the side letter was more than an agreement to agree, and hence, enforceable. The Court while reading the contract, pointed out that “the court must consider the language used and ascertain what a reasonable person … would have understood the parties to have meant. The court must have regard to all the relevant circumstances and, in a business context; it should prefer the construction that is more consistent with business common sense.” Here the court came to conclusion that the side letter did intend to create legal obligations as it was drafted by external legal advisors, it was drafted in legal language, it referred to an English statute and provided for a provision to be governed by English law and a clear intention as to the binding nature of confidentiality clause. The court came to the conclusion that the letter intended to create legal obligations. However, on the question of enforceability of the legal relationship forged between the parties due to the letter, the court said that it amounted to no more than an agreement to agree. It was merely an instrument by which respondents had agreed to negotiate with claimants in good faith.

In this particular judgment, the court of appeal put a distinction between a) intention to create legal relations and b) the enforceability of the said relations. This is a two step process that needs to be followed while determining the binding nature of the agreement between parties. Firstly intention has to be ascertained by following the communications and information that was exchanged between the parties and later the enforceable nature of the contract needs to be ascertained.[2]

This decision will have vital implications in India.

Indian Scenario

If we need to consider the binding nature of such agreements, we have to look at the facts of each case and decide accordingly, in consonance with the provisions of Indian Contract Act, 1872. The following broad conditions must be satisfied:

1. There exists a clear intention to create legal relations.
2. That it is not an agreement to agree into an agreement.
3. The terms are clear and unambiguous.
4. The subject matter is certain.
5. There is a flow of consideration.

Under Section 9 of the Specific Relief Act, 1963, particular execution of a legitimately closed contract can be upheld. The offended party who is guaranteeing particular execution of the agreement needs to demonstrate that the conditions for the legitimacy of agreement tried to be upheld are fulfilled.

Any First Party might go into the Agreement with the Other Party and from there on issue the Side Letter upon Other Party for setting up, running and working particular things admissible in law. Both the Agreement and the Side Letter will offer ascent to lawfully enforceable rights and commitments.

That it is superfluous, with reference to whether or not, the Agreement or the Side Letter are registered. For whatever length of time that ownership is not separated with there is no prerequisite for enlistment. No further archive should be executed and/or enrolled between the gatherings the length of a straightforward permit is allowed with no exchange of proprietorship or outright ownership.

Both the Agreement and the Side Letter will be allowable as substantial evidence under the Court of Law. Therefore, it is essential to unmistakably put forward in the letter of intent that there is no commitment to arrange in accordance with some basic honesty and that the letter of intent is not expected to be a binding contract. In most instances, an unsigned term sheet can accomplish the same purpose as a signed letter of intent. To be erring on the side of caution, the unsigned term sheet ought to still incorporate a procurement that there is no commitment to arrange in accordance with some basic honesty and that the term sheet is not a lawfully enforceable contract.

In Kollipara Sriramulu (dead) by L.R. v T. Aswatha Narayana (dead) by L.R[3], it was held that

“Where the documents or letters relied on as constituting a contract contemplate the execution of a further contract between the parties, it is a question of construction whether the execution of a further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go through. In the former case there is no enforceable contract, while in the latter there is a binding contract.”

It is necessary to mention in this connection that equity holds people bound by a contract which though deficient in some requirement as to form, is nevertheless an existing contract.[4]

The agreement that is mentioned in the correspondence is not at all fundamental to the contract to sell and was intended merely to be ancillary arrangement for effectuating the sale, and recording the manner and mode of carrying it out.[5]

In another case it was held that there is nothing expressly agreed between the parties and no concluded enforceable and binding agreement came into existence between them. The correspondence exchanged between the parties, shows that the parties were only negotiating and had not arrived at any agreement. There is a vast difference between negotiating a bargain and entering into a binding contract.[6]

In P. Panneerselvan v. A. Baylis and Others[7] , the Madras High Court settled a case where the appellant and respondent had entered into an agreement for the sale of land, without reference to the description of land or particulars of value and area of land or time period within which the contract is to be executed. The agreement simply contained a provision that acknowledged the fact that the respondent is willing to sell land for a particular amount. The Court remarked that nature of the contract raised an element of doubt as to the intention of the parties to the agreement. The said agreement was uncertain and void of material particulars. The agreement cannot be said to be a concluded enforceable agreement. On the other hand, in Nanak Builders and Investors Pvt. Ltd. v Vinod Kumar Alag[8] the Delhi High Court held that where the important terms have been agreed upon and reduced into writing, and the agreement makes no mention of  another formal agreement to be executed, the Court would not consider the agreement an incomplete agreement. In this case, the parties entered into an agreement to sell. The defendant refused to accept the consideration paid by the plaintiff stating that no contract is in force and the document signed earlier was merely a receipt. Further in Chairman cum Managing Director, Tamil Nadu Tea Plantation Corporation Ltd. v. Srinivasa Timbers[9] , the respondent furnished security amount in furtherance of acceptance of bid. Since there was no formal agreement, Court did not consider acceptance of the as an executed contract and, accordingly, held it unenforceable.

Conclusion

Generally, term sheets are non- binding in nature, but they can become legally binding if executed on a stamp paper. The provision for its nature being non-binding can be inserted in the term sheet itself. Parties should be careful while drafting these documents at the negotiation stage.

[1] [2012] EWCA Civ 548, 27 April 2012

[2] http://www.allenovery.com/publications/en-gb/Pages/Side-letters-intention-to-create-legal-relations.aspx,

[3] AIR 1968 SC 1028

[4] Subimalchandra Chatterji vs Radhanath Ray  AIR 1934 Cal 235

[5] Gostho Behari Sirkar v. Surs’ Estates Ltd. , AIR 1960 Cal 752

[6] Rickmers Verwaltung Gimb H. v. Indian Oil Corporation Ltd., (1999)1 SCC 1

[7] AIR 1986 Mad 284

[8] AIR 1993 Delhi 315

[9] 1999 (1) CTC 436

This blogpost, is written by Prof Raja Mutthirulandi, Hon. Project Director, Human Rights Education, WCCI, Tiruchirapalli

Abstract

Freedom of / Right to Information (FOI/RTI) has now been universally recognized as a Fundamental Human Right. Such a wide recognition of the important right has perhaps propelled nearly 104 countries so far to bring into operation specific legal instruments to ensure this right to their people. Pitching with the global trend in this direction, almost all countries in the SAARC do have in force (except Sri Lanka and Bhutan) exclusive Acts (Ordinance in Pakistan) to provide access to public information. But, the legal framework of the relevant enactments of these countries – globally evaluated on the basis of ‘seven different categories’ – present a glaring mixture of top and bottom scores. This is indicative of the levels of access to information available to the people through relevant Acts in their countries.

One of the basic elements of FOI/RTI Act is ‘‘Exemptions’’ and this is also a crucial category of evaluation employed by International bodies assessing the efficacy of laws in this sphere. The “Exemptions” section is often reckoned as the heart of the FOI/RTI legislation. This is mainly because, “exemptions” to a large extent, determine the levels of people’s access to public records under the Legislation. Generally, Acts to provide access to information are expected, among other things, to have very limited but clearly spelt-out exclusions as per international norms and be precisely disclosure-oriented. Further, there should be specific, unambiguous provisions for “public interest override”, “severability of information”, “duration to withhold information under exempt category”, “avoidance of blanket exclusions of public bodies” and “supremacy of the Act” in relation to existing legislations.

A closer analysis of FOI/RTI Acts of SAARC nations with reference to the aspects listed hereinabove, reveal a high level of disparity among them and a clear disclosure deficit. This paper undertakes an in-depth scrutiny of the relevant Acts in force in SAARC countries, with particular reference to the provisions related to “exemptions/exclusions from disclosure” housed in the Acts.

Key words: FOI/RTI, exemptions, disclosure deficit.

[divider]

A groundswell of national legislations for providing peoples’ access to information and simultaneous development of international norms in this regard has happened since the post-1995 period.[1]This wide-spread development has undoubtedly heralded the surging up of, as Mark Bovens (2002) characterized, the ‘fourth great wave of citizen’s rights, equivalent to the civil, political and social rights’.[2]  The rapid- pace acceleration of passage of Freedom of/Right/Access to information (FOI/RTI/ATI)[3] Acts in the recent decades is indicative of the  global recognition of the legitimacy of peoples’ right to information. Actually, the fundamental change that RTI laws intended to bring about  and assert was that “people had a right to access information held by the Government,” as underlined in the Queensland Report[4].  Scholars like John M. Ackerman et al. (2006), viewed this phenomenon as an ‘impressive display of policy innovation at a global level’ and also reckoned it as a ‘global wave of innovation in administrative law.’[5]

But, over the years, the RTI reality has manifested differently in different jurisdictions. Several governments, mostly entrenched in the still unshed-out culture of secrecy, save a few, have come out with RTI Acts designed with explicit or implicit aims to somehow shrink the nature, scope, and levels of peoples’ access to information. Commencing from the scripting of the scope of the law; prescribing the eligibility to make a request for information; chiseling definitions of crucial terms such as ‘information’, ‘public body/authority’ etc in a way to turn them ambiguous; introducing cumbersome procedure/forms for requesting information; levying unreasonable costs; granting the officials room for time manipulations to  respond/ decide appeals; frustrating remedy routes/mechanisms; blanket exclusions of many government organisations from the ambit of the law and also through a spread of layers of restrictive measures throughout the legal architecture, the governments tend to throttle down flow of  requested information to the people from official sources. It is perhaps, in acknowledgment of such a reality prevailing everywhere, the Queensland report laments that “unfortunately that clear statement of intent seems to have been buried by the scores of pages of legislation that are devoted to exclusions and exemptions and other qualifications of that right.”[6]

RTI laws in SAARC Nations

The South Asian region has also witnessed a corresponding spurt in enacting RTI laws in the post-1995 era. Pakistan scored first in 2002, though the Freedom of Information Ordinance (FOI), still in force, is much widely deplored. The FOI Ordinance remained in a shell for two years until relevant rules were framed in 2004. To counter mounting criticism about the glaring lacunae of the 2002 Ordinance and to improve the law in the field, the Pakistan Government introduced a draft Act in 2008, and it is yet to win final approval.[7] India joined  next the galaxy of nations with RTI laws with its much feted Right to Information Act, 2005. Coming third among SAARC nations, Nepal enacted its Right to Information in 2007 and rules thereunder got framed only in 2009. The present Act of Bangladesh (2009) has come to stand as a slightly improved version of the country’s earlier Ordinance (2008). In   Maldives, the draft bill was first tabled in the Majlis (Legislature) in November 2009, and it took several years for its ultimate adoption in 2014. The recent addition from SAARC is Afghanistan with its Access to Information Law 2014, enacted after protracted delay since early 2010 and reports say that this has made the country the 101^st with RTI law. In Bhutan, the Right to Information Bill, 2013 was passed by Lower House and it is still pending without due approval/passage in the Council of Bhutan. In Sri Lanka, attempts to adopt RTI legislation in the country have not yet met with any concrete success, even after a constitutional amendment guaranteeing RTI for the people.[8] Given this scenario, the analysis of the paper is necessarily confined to RTI laws in force – those of Pakistan, India, Nepal, Bangladesh, Maldives and Afghanistan – leaving Bhutan and Sri Lanka for inclusion in a later study after the countries commence implementation of RTI laws. It would be appropriate to note at this stage, the scores and ranking of RTI laws (2015) provided by the Centre For Law and Development (CLD): Among SAARC nations, India is on top with a score of 128 points out of 150 and global ranking of 3^rd position, Maldives coming next has earned 116 points and is placed in 10^th rank. Bangladesh with a score of 107 is placed in rank 20 followed by Nepal in rank 23 and a score of 104. Afghanistan and Pakistan are far below both in SAARC group and among countries in global level. Afghanistan’s score is 77, rank 64 and Pakistan is way back with a score of 66 and rank of 84, out of 103 countries.[9]

General Overview of RTI Acts in SAARC Countries

Nearly all SAARC countries (included in the present analysis) have conferred the much celebrated right to information only to ‘citizens’ of their countries.[10] But Maldives has expanded the eligibility criteria by providing that “requests for information can come from any person, rather than being restricted to Maldivian citizens.”[11] The Indian and Bangladesh Acts are in general conformity with the foundational principle of RTI laws and they profess that ‘transparency is the rule, and secrecy the exception.’ [12] In the matter of extending ease of access to information, Pakistan’s FOI Ordinance deviates from recognized standards as it requires citizens to provide ‘a reason for seeking information’ and also imposes a restriction on the requestor that he should use  the information obtained ‘only to the purpose stated in the application’. In India and Bangladesh, citizens requesting access to information need not provide any reason for such requests. Maldives Act, among SAARC nations, has a strange requirement by prescribing that ‘all requests for information to specify the right that is to be protected or enforced.’[13] Nepal, going half-way in this matter, stipulates that citizens must give a reason for request, but they are not required to justify those reasons.[14] The Afghanistan law is highly restrictive in the access stage itself. It prescribes a form for request; requires  request to be sent to ‘appropriate unit’[15] ;  makes a condition that only information in ‘documents’ are accessible; slaps a stipulation that the access to information will be allowed only in cases that “serve a right or bring ease to performing of the relevant duties”[16]. Providing reasons for denial of requests is generally expected. But, in Pakistan, Nepal and Bangladesh, the respective laws do not explicitly require an authority refusing disclosure to justify the refusal of request for information and this is a serious lacunae. As per the Indian Act, the authority denying the request for information has to state the grounds under which the denial is ordered.[17]

One of the international expectations on RTI laws is incorporation of a clear provision in the Act conferring supremacy of the legislation over other laws in force, and to the extent of conflicts in application between them and more specifically, those of the secrecy laws, if any. While Pakistan’s FOI Ordinance[18], in outright negation of the global standard, clearly declares that the law does not enjoy any overriding powers, in India, Bangladesh, Maldives and Afghanistan the laws contain provisions for overriding other laws that may infringe on citizens’ right to information.[19] Ambiguity prevails in Nepal’s RTI Act in the matter of RTI law overriding secrecy laws. [20]

Information belongs to public. In recognition of the principle it is always considered desirable that the governments practice pro-active disclosure of vital information impacting citizens’ lives and actions. Pakistan’s Ordinance has no clear provision for pro-active disclosure.[21] India, Nepal, Bangladesh and Maldives have specific provisions on proactive disclosure of information.[22]

The widely accepted norm for coverage under FOI/RTI law is to make the ambit of law broader and bring in all government departments at all levels; agencies receiving funds from governments; bodies engaged in governmental functions etc. Standing as an exception, Pakistan Ordinance covers only the Federal Government bodies, leaving provincial and local governments to separate provincial legislations. Further, in Pakistan, the military is fully exempt from coverage of the Ordinance. The FOI Ordinance does not cover any private organization or institution receiving funds from national, international donors and agencies.[23] RTI Acts of other SAARC countries cover all levels- legislative, executive and judiciary- of government. India’s RTI Act covers bodies owned, controlled, or substantially financed by the government. Although the Act does not make explicit mention of NGOs and other private bodies, any private organization or NGOs, ‘substantially funded by Government’   are brought under the ambit of RTI Act as confirmed a Supreme Court decisions. In Bangladesh and Maldives, the RTI Act explicitly covers NGOs, private bodies, and international organizations[24].

In the matter of excluding certain organization from the ambit of the law, India and Bangladesh, provide a blanket exemption from coverage for some national security and intelligence agencies[25]. However, in India, this exemption has been made inapplicable if the information sought relates to allegations of corruption or human rights abuses in those excluded organizations. Nepal’s RTI Act has a pioneering provision which includes even political parties within its ambit whereas in India, the recent decision of the Central Information Commission stands stayed through maneuvers by powerful political parties.

It is expected that, through RTI laws, Citizens should be enabled to have hustle free procedure for access to information. Among SAARC nations, Pakistan’s FOI Ordinance prescribes a specific format for an RTI application[26]  and also a fee of rupees (PKR) 50 for the first ten 10 pages of documents, and PKR 5.00 for each additional page.[27] Nepal’s RTI Act does not specify any procedural requirements for submitting an application but has a requirement that the request should be submitted only to the relevant information officer.[28] The Indian and Maldives RTI Acts have very helpful provisions casting a duty on the officials to transfer the request to appropriate department within prescribed days of receipt of the request [29]. There is no such provision for automatic transfer of the request in the RTI laws of Bangladesh, Nepal, Afghanistan and Pakistan. In the matter of cots, the Afghanistan law goes to burden the requestor ‘to cover the expenses of processing their request.’[30]  Fee for requests under India, Nepal, Bangladesh and Maldives Acts is reasonable and in India people below poverty line are provided total fee waiver.

 Exemptions: A General Discussion

The paradox of RTI laws is that while the dominant and mechanical objective of the law is “disclosure”, the broad mandate for disclosure has to be justifiably frustrated by bridling the law for granting the governments some reasonable space for confidentiality in carrying out their business. Even hard-core votaries of liberal RTI regimes would appreciate this need and will have no hesitation to concede this point of providing some limited tenancy to ‘exceptions and exclusions’ in the laws. The inherent conflict between ‘openness’ and equally broad justification for ‘official secrecy’ needs to be tackled with utmost care by suitably fabricating the ‘exclusions and exemptions’ in the architecture of the law. But this rope walk has not proved easier for drafters everywhere. Confirming that the, “relationship of right to information laws with secrecy laws”  Toby Mendel  states that is  “a difficult issue”[31] He adds that “perhaps the most difficult issue for any right to information law is the scope of the regime of exceptions. On the one hand, it is clearly important to protect all legitimate secrecy interests. On the other hand, if these are defined too broadly, this has the potential to seriously undermine openness.”[32]  He opines that the difficulty could be mitigated if   “… the exception is appropriate in scope, taking into account the need for openness.” [33] That exceptions could cause deficits in disclosure stands generally conceded.Due to the problem potential of exemptions, “the question of exemptions” as John M. Ackerman observes, has become “the most debated aspect” of RTI laws.”[34] Exemptions and exclusions in the   RTI laws, deployed for ‘balancing’, would serve as ‘the basis for decisions about disclosure.’[35] To put it simply, the more and rigid the exemptions are, the disclosure levels would invariably be low, whereas, if exemptions are lesser and liberal, it would facilitate copious flow of information from government sources.

Achieving the acknowledged principle of ‘maximum disclosure of information held by public bodies, with only limited exemptions’[36] largely hinges on deft balancing between the twin requirements – peoples’ access to information and the governments need for some confidentiality. John M. Ackerman (2006) cautions that “a badly written set of exemptions can gut the law by allowing the authorities to withhold information at their discretion.”[37] By way of emphasizing the need to have a fit and ‘balanced’framework for the RTI law, Prof. Maeve McDonagh opines that  “the degree of commitment to FOI of a particular jurisdiction… can be most readily measured by reviewing the legislative framework for FOI…”[38]. Further, elaborating on the aspects of FOI law that have “the potential to profoundly impact upon their effectiveness”, he includes “the scope and design of the exemption provisions” along with “the overall scope of the laws in terms of the bodies to which they apply, the types of record covered , the strength of the enforcement machinery etc.”[39] The World Bank also, in one of its reports, acknowledges that ‘‘what exceptions should be made to a freedom of information law is a complex and controversial issue, and an area where some otherwise progressive laws fall short.’’[40] It is therefore not surprising that we see an emphasis in Holsen (2007) holding that ‘evaluating FOI laws requires focusing on how it limits access through exemptions.[41]

Exemptions, with ‘limited species’, have come to be accepted as a part of the ecosystem of access to information. In order to contain their malicious effects on RTI environment, certain softeners are widely suggested. Article XIX has proposed a three part test to justify exemptions: 1) The information must relate to a legitimate aim listed in the law; 2) disclosure must threaten to cause substantial harm to the aim in (1) and 3) the harm to the aim must be greater than the public interest in having the information.[42] It is expected that only when all three conditions are satisfied, exemptions should stay. It has further proposed that the overall formulation should “ensure that the law provides for a comprehensive list of exceptions, set out in precise and narrowly-drawn terms.”[43] It is generally conceded that exceptions geared to protect interests such as defense and security, legitimate interests such as personal information, health and safety related information can stay. Toby Mendel (2008) has observed that “few of the laws surveyed” in his book “strictly conform to all three parts of this test, but many do at least broadly reflect it.”[44] Within exemptions, additional provisions for ‘partial disclosure’ or ‘severability’ of information; time-specific life-span for exemptions are envisaged to turn the law a pro-disclosure frame.

 Exemptions in RTI Acts of SAARC nations

The first law in this region, the Pakistan’s FOI Ordinance houses several provisions for withholding official information in the ‘public interest’. Information is exempt if its disclosure would invade the privacy of any identifiable individual (including a deceased individual) other than requester. The FOI Ordinance has a strange provision to “withhold public information even if its disclosure is in public interest.[45] Bangladesh Act has a lengthy list with 20 exemptions[46]. Maldives, too, though being a recent law, has listed a lot of exemptions spread over several sections[47]Afghanistan’s ATI law contains, besides legitimate exemptions, certain problematic exemptions too.[48] The RTI acts in India, Nepal, Bangladesh, exempt disclosure of information where it would legitimately harm the public interest[49]. These exemptions apply to information that would harm national security, foreign affairs, or commercial and trade relations. Mendel highlights  the specific mention of the Indian law “that it takes precedence over the Official Secrets Act, 1923, presumably because it was recognized as being particularly problematical from a secrecy point of view.’’[50]

It would be of interest to know that the CLD (2015), while carrying out overall rating of the respective laws as per global norms, have awarded the following scores under the head ‘exceptions and refusals’  to RTI laws in SAARC network. The scores (out of 40): India – 26; Maldives- 17; Bangladesh – 20; Nepal -15; Afghanistan- 11; and Pakistan- 11. We note that Bangladesh which ranks below Maldives overall, has earned a better score on exceptions than Maldives. This may be due to the vast list of exceptions in Maldives Act In the case of Afghanistan and Pakistan, countries with vast differences in overall ranking, the score for both, on exceptions, are equal reflecting the scope and strict nature of exemptions in their Acts. In the case of other countries, the scores on exceptions   also descend in accordance to their global ranks.

Public Interest Override: Megan Carter and Andrew Bouris (2006) observe that ‘most regimes which govern access to information held by governments are based on the same building blocks’ and offer a simple explanation to describe the mechanism of public interest override. It works as follows: ‘There is a general right of access to information held by public authorities; the right of access is subject to a range of exemptions and some of the exemptions are subject to a public interest test requiring the decision maker to take public interest considerations into account when deciding whether to release information even where an exemption applies prima farcie.’[51] Article XIX has also emphasized the need for incorporating public interest override stating that “such an override is essential to ensure that exceptions are not allowed to trump the overall public interest and to ensure that minor concerns are not abused to refuse access to information.”[52] The World Bank, in its Model FOI Law has also envisaged incorporation of a separate provision for public interest override.[53]  Under India’s RTI Act, exempt information can be disclosed if the public interest in disclosure outweighs the harm to the protected interests.[54] Additionally, the Act states that, exemptions notwithstanding, ‘information that information that can’t be denied to Parliament or state legislature, can’t be denied to the citizen.’ Afghanistan and Maldives provide a contrast with the former having a provision for a general override[55] without a provision for overriding exemptions and the later Act provides for a general precedence to the RTI Act over other laws[56] while also incorporating a specific precedence of public interest in dealing with exemptions[57]. Bangladesh has a lengthy list of twenty exemptions, excluding noting on files even at the definition stage for ‘information’ and has no exclusive provision for public interest disclosure. Nepal too does not have specific provision for public interest override. It is to be noted that Nepal has only a short list of 5 categories of exemptions but has failed to have a public interest override. Pakistan Ordinance does not have any public interest override and is designed, as Rehman, (2006) considers it to “serve only as a vehicle for denying information instead of making it public.”[58] In the Pakistan ordinance, ‘reverse public interest test’ can be applied, ‘such that the Government can broadly refuse to disclose any other record from the purview of this Ordinance in the public interest’.[59]

Harm Test

Harm test is defined “as a formula for determining absolute exemptions”[60]. Legislations will usually state that certain information shall be exempted if it satisfies the harm test. The application of ‘Harm test’ is therefore intended to help decision making by demonstrating whether disclosure of information will substantially harm any protected interests. On this score, harm test has a prominent position in the exemptions regime. Toby Mendel (2008) has observed that “most laws have at least some exceptions that are not subject to a harm test” and holds that the harm tests have “an important bearing on disclosure of information”.[61] In his survey (2008) of Global laws, he mentions some of the frequent terminology used in this regard: “‘would be likely to prejudice’, ‘could lead to a negative result’, adequate reason to believe harm would result’ and ‘harm could reasonably be expected’”[62]. Among SAARC nations, India has a particular provision to apply harm test and deny information if it is likely to incite violence, communal tension etc. Nepal law has provided for making most of the exceptions subject to harm test but has not provided for the public interest override.[63] Nepal Act’s exemption regime has incurred a very negative appraisal under Art XIX [64] and Nepal’s harm test provision has also invited its criticism of being too rigid to the level of denying information.[65] Observing some later trends, Toby Mendel (2011) has come to remark that “many right to information laws contain exceptions which are not harm-based or which are overbroad, and which would, as a result, breach … standard.”[66]

Severability of information

In reality, the RTI law generally provides a ‘standard battery of exceptions to disclosure’. But that should not be taken to mean that the whole gamut under the cover of ‘exception’ is to remain under the veil. The provision of a ‘severability clause’, brings to citizens access to even classified documents, albeit with sensitive portions ‘blacked-out’ or ‘non-harming’ portions released. It is an internationally accepted good practice to provide to the public information or part of it that doesn’t harm any protected interest. Toby Mendel (2008) considers such an arrangement making “… obvious sense since the fact that some information in a document is confidential cannot of itself prevent disclosure of the rest of the document.”[67] India has a provision for severability of exempted information.[68] Pakistan has no such provision, whereas Bangladesh [69] Maldives[70] and Nepal Act [71] have severability clauses.

Time-Specific Exemptions

It is another good practice to introduce an overall time limit beyond which exceptions expire. “This kind of practice,” according to Article XIX, “ followed in many democracies, ensures that old archives become fully accessible to researchers once the information they contain can no longer cause serious harm to any current interest.”[72] India’s RTI Act has a limit of 20 years after which even exempted information could be disclosed. Afghanistan law has no such provision. Maldives, whose ‘exception’ regime is very broader has the longest life period of 30 years for exemptions. Nepal provides a similar (30 year) life span for protected information.[73] Nepal is the only country among SAARC group, to provide for the constitution of a Committee of Officials to classify protected information.[74]

Conclusion

The ideal RTI law shall provide powers of overriding other laws clearly and particularly those that are inconsistent with the provisions of RTI law ;  shall have well defined, far shorter list of protected interests; put all of the exceptions subject to a harm test; apply the public interest override for disclosure while protecting legitimate privacy exceptions. This is a far cry in SAARC nations perhaps with the exception of India. The Indian RTI Act that ranks 3^rd at the global level also has room for improvement and if carried out will be a model RTI law at the global level.

The main reason for lurking hesitation of governments to allow a liberal RTI regime in their jurisdictions is –in SAARC countries and elsewhere- as widely viewed, the culture of secrecy deeply embedded in the administrative hierarchy inherited from their medieval/ colonial past. The levels of literacy and poverty of people of countries in the SAARC group have also served as factors tolerating for long veiled transactions of government business. Political instability in Nepal, Afghanistan, Maldives, Pakistan and Bangladesh are also among causes for impacting the RTI scenario in the respective jurisdictions. The dominance of military in Pakistan, internal strife, economy in Afghanistan and uneasy political situation in Maldives are challenges for liberal RTI regimes in these countries. Mitigation of poverty; civil society enlightenment; encouragement of active, direct participation of people in public affairs; sea-change in the mindset of rulers towards RTI could gradually bring in desired levels of openness in government administration. Deficits in disclosures of information will continue up to a dawn of the culture of acceptance to the fact that information with government ultimately belongs to the people. When such a dawn turns a reality, the RTI regimes in SAARC region would stand ranking high in global esteem.

[1] *Chief Functionary, Forum for Good Governance (FFGG), Tiruchirapalli-620012, T.N. India,

[Email: [email protected]]

Limitations of the present study: All FOI/RTI/ATI Acts/Ordinance discussed in this paper are accessed through internet sources and the study is therefore grounded on content available therein. English translations of Acts, where original legislations are in other languages, as available in internet resources offered by Centre for Law and Democracy [CLD], Human Rights Initiative (humanrightsinitiative.org) are relied upon. For dates/years of enactments of Acts, data available in CLD Country data and data from freedomofinfo.org, has been adopted. The question of authenticity of content available/ accessed from internet sources, in the wake of some notable variations in their contents, looms over the present study.

The Author understands that a study of “exemptions” provisioned in the respective Acts is likely to be viewed as an exercise emphasizing more on the ‘legal architecture’, than on the other equally vital aspect, ‘implementation’. The main justification for this study stems from the acknowledged fact that the quantum, nature, crafting and language employed in dealing with exemptions in FOI/RTI Acts is the most debated aspect of such laws. Additional reinforcement of justification is derived from the reality that “exemptions”, due to their mischief potential, cause considerable deficits in disclosure of information. Moreover, we find that CLD, while ranking global FOI laws, accords equal weightage of scores both to “exemptions” and the other aspect, ‘implementation’

1 The number of countries with freedom of information laws or similar administrative regulations stands at 105, according to FreedomInfo.org’s running tally. See http://www.freedominfo.org/105-international-foi-regimes-freedominfo-org-count-show/  [Accessed on 10 March 2016]

[2] Mark Bovens, Information Rights: Citizenship in the Information Society, 10.J POL.PHIL317, 317-41 (2002), quoted in John M .Ackerman, Irma Sandoval-Ballesteros [See Note 5 below]

[3] There is an international trend,as Tony Mendel says, favouring RTI. See Tony Mendel, FOI A Compartive legal Survey, 2^nd Edn, UNESCO, Paris 2008. [P3]. Like Tony Mendel, an increasing number of experts and commentators prefer using the term RTI [FOI will remain as the generic term for legislations.] [ See Also Queensland Report http://www.rti.qld.gov.au/__data/assets/pdf_file/0019/107632/solomon-report.pdf The Right To  Inforamtion:Reviewing Queensland’s FOI, The Report by the FOI Independent Panel, 2008 [P 325]. In agreement with this proposal, the Author elects to use RTI to denote the law generally , save specific name(s) of the Act(s) discussed herein.

[4] The Queensland Report – see later part of Note 3 [P.72]

[5] John M. Ackerman &Irma E. Sandoval-Ballesteros, Global Explosion of Freedom of Information Laws, Administrative Law Review, 58 ADMIN.L.REV.85 (2006).

[6] See Note 3& 4 [P.72]

[7] See Citizens’ Access To Information In South Asia, Regional Synthesis Report, Asia Foundation, August 2014. [P.13]

Available at http://asiafoundation.org/resources/pdfs/CitizensAccesstoInformationinSouthAsia.pdf

[8] See Note 7 (P 15)

[9] See http://www.rti-rating.org/country-data (Accessed on 12 march 2016)

[10] Pakistan: Section 12(1); India: Section 3; Nepal: Section 3(2); Bangladesh: Section 4.Also see note 7 [P 25]

[11] Section 4(a) of Maldives RTI Act. See The Maldives, Comments on the draft Right to Information Bill

Centre for Law and Democracy [July 2010]

[12] Sections 4 & 6(1) (2) of Bangladesh Act; Supreme Court Decisions in India since S.P. Gupta case

[13] Section 6(a) (iv) of Maldives Act.

[14] Section 7(1) of Nepal Act .see Note 7[P. 26]

[15] Section 6 of Afghanistan ATI

[16] Section 5 of Afghan Act

[17] In India, any rejection will have to be as per Sec 8 & 9 of the Act

[18] Section 17 Pakistan FOI

[19] India: Section 22; Bangladesh: Section 3(b); Maldives Sec 3(1) (c); Afghanistan Section 32

[20] Section 37. See Note 7 [P.25]

[21] Section 5 Pak FOI Ordinance

[22] India: Section 4; Nepal Section 3 &5; Bangladesh: Section 6. Maldives Act Sec 37

[23] Pak FOI Ordinance

[24] Section 2 (b) (IV), (v) and (VI); Section 72 of Maldives Act.

[25] India: Section 24; Bangladesh: 32(1)

[26] Section 12 Pak Ordinance

[27] See Note 7 [P.28]

[28]  Section 7(1), Nepal RTI Act

[29] Section 6(3) Indian RTI Act, Maldives Section 9(a) and (c)

[30] Section 8 Afghan ATI

[31] Toby Mendel, Freedom of Information: A Comparative Legal Survey, Second Edition, Revised and Updated, UNESCO: Paris, 2008

[32] Toby Mendel, Thoughts From the Panel, UNESCO Report 2011, Available at http://unesdoc.unesco.org/images/0019/001936/193653e.pdf (Access 3 March 2016)

[33] Toby Mendel cited above.

[34] See Not 5

[35] Toby Mendel, Freedom of Information: A Comparative Legal Survey, Second Edition, Revised and Updated, UNESCO: Paris, 2008]

[36] APAI 2011, Principle 2, 8; Article 19 2007, Principle 4.See http://reggov2014.ibei.org/bcn-14-papers/66-212.pdf

[37] See Note 3 [P 101]

[38] Prof. Maeve McDonagh, The public interest test in FOI legislation,

See www.right2info.org/…/eu-mcdonagh-maeve-the-public-interest-test-in-foi-legislation (Access 8Mar 2016)

[39] See Note 22

[40] See   http://www1.worldbank.org/prem/PREMNotes/premnote93.pdf

[41] Quoted in World Bank Report. See Note 23

[42] Article XIX, The Public’s Right to know: Principles on FOI Legislation, June 1999. See Principle 4

[43] Article XIX Memorandum on The Draft Information Law of Yemen, (2009)

[44] Toby Mendel (2008) cited above.

[45] Section 8(i). See Note 4 [P 27].

[46] Section 7

[47] Sections 20 to 32

[48] Section 17 of ATI Act. Problematic sections 17(1) (a) ; 17 (1) (b)

[49] India: Sections 8 and 9; Nepal: Section 3(3); Bangladesh: Section 7

[50] See Toby Mendel (2008) cited above

[51] Megan Carter and Andrew Bouris, Freedom of Information: Balancing the Public Interest, Second Edn May 2006 (accessed through : https://www.ucl.ac.uk/spp/publications/unit-publications/134.pdf )

[52] Article XIX Memorandum on RTI of the State of Nepal .2008 .Available in https://www.article19.org/data/files/pdfs/analysis/nepal-rti-act.pdf

[53] The World Bank A Model FOI Law  Section 22 “Public Interest Override; Notwithstanding any provision in this Part, a body may not refuse to indicate whether or not it holds a record, or refuse to communicate information, unless the harm to the protected interest outweighs the public interest in disclosure.

[54] Section 8(2)

[55] Section 32 ATI Act

[56] Section 3 ( C ) of Maldives RTI

[57] Chapter 7 of Maldives Act

[58] Rehman, I. (2006). Report on Freedom of Information Ordinance. In I. A. (ed.), Sapana: South Asian Studies Vol. XII-Media & Peace in South Asia (pp. 277-280). Lahore: Free Media Foundation.

[59] See Commonwealth Human Rights Initiative, ACCESS TO INFORMATION LAWS IN THE COMMONWEALTH COMPARATIVE TABLE – Section as per Section 8 (i) of the Ordinance.

[60] OECD (2010), “The Right to Open Public Administrations in Europe: Emerging Legal Standards”, Sigma Papers, No. 46, OECD Publishing. Available at  http://dx.doi.org/10.1787/5km4g0zfqt27-en >

[61] Toby Mendel (2008) cited above

[62] Toby Mendel (2008) cited above.

[63] Country Report: Nepal Available at https://www.article19.org/resources.php/resource/38205/en/country-report:-the-right-to-information-in-nepal   Access 3 March 2016.

[64] Article XIX memorandum on RTI Act of State of Nepal, 2008 -Available at https://www.article19.org/data/files/pdfs/analysis/nepal-rti-act.pdf [Access: 20 Feb 2016] – “The exceptions regime in the RTI Act is one of its weakest points and it fails to strike a careful balance between the right of the public to know and the need to protect other important individual and social interests.”

[65] Article XIX memorandum on RTI Act of State of Nepal, 2008 – “Article 3(3) (b) provides that information which “directly affects” the investigation, inquiry and prosecution of crimes shall not be released, which appears to be a considerably lower standard than ‘serious jeopardy’’.

[66] Toby Mendel (2011) UNESCO Report cited earlier.

[67] Ibid

[68] Section 10(1) of RTI Act.

[69] See Commonwealth Human Rights Initiative , ACCESS TO INFORMATION LAWS IN THE COMMONWEALTH  COMPARATIVE TABLE

[70] Section 21 of the Act

[71] Country Report Nepal Article XIX report cited above

[72] Article XIX Memorandum 2008 on RTI Nepal (cited above)

[73] Section 27 (5) of Nepal Act.

[74] Section 27 (1) of Nepal Act

In this blogpost, Priyanka Kansara, Student, National Law University, Jodhpur writes about the new Gujarat Labour Laws (Amendment) Bill, 2015, the features of the bill and the key changes introduced by the bill. She also discusses the impact of such bill on Make in India Campaign as well as the issues which still needs to be addressed by such bill.

Introduction

The Gujarat Labour Laws (Amendment) Bill, 2015 has come up with certain reformatory rather evolutionary ideas for the upliftment of the labour law policies in the State, but several controversies have arisen with this Legislative piece. Certain provisions of the Bill were in contradiction with the Central Labour Laws, mainly with regard to the ‘Compromise Formula’ and ‘amendment in the penalty policies’, etc. The bill has got the assent of the President. With the President giving nod to the new Gujarat Labour Laws Amendment Bill, soon about 1.2 Crore Labourers of Gujarat would get their wages by Cheque directly transferred into their Bank account created under Jan Dhan Scheme.

The Labour Laws Amendment Bill aimed at amending the Employees’ Compensations Act 1923, the Industrial Disputes Act 1947, the Minimum Wages Act 1948, the Motor Transport Workers Act 1961, the Beedi & Cigar Workers Act 1966, the Contract Labour (Regulations & Abolition) Act 1970, the Payment of Gratuity Act 1972, the Equal Remuneration Act 1976, the Building & Other Construction Workers Act 1996, and the Unorganized Workers’ Social Responsibility Act 2008.

Salient features of the new Bill

Presently, if we look into the Criminal Law with regard to the Industrial Disputes, the Court of Judicial Magistrate First Class is overburdened with such cases; it takes several years to get the Judgment for a specific case. The Bill introduces Mediation as an alternative dispute mechanism, through which the labourers can arrive at a compromise with the employer without approaching the Court. This can be done by paying a certain payment/penalty to the Government. With the emergence of this Bill, Gujarat would become the first state to introduce the provision where both parties could end their dispute through a compromise popularly known as “compounding of offences”. The advantage of this policy is that it would reduce the unnecessary and endless hullabaloo in the Judicial Procedure and the Labour Law disputes. Certain offences under certain Laws such as the Motor Transport Workers Act 1961, the Beedi & Cigar Workers Act 1966, the Contract Labour (Regulations & Abolition) Act 1970, the Payment of Gratuity Act 1972, the Equal Remuneration Act 1976 will also be included in this ‘compounding of offences’ policy.

The Bill also allows the State Government to prohibit Labour strikes in the public utility. The new Act seeks to give powers to the Government to prohibit strikes in public utility services in the first instance for one year. This can subsequently be increased up to two years to any number of times. The prohibition of a strike or lock-out in the circumstances enumerated in the Law is based on the scheme of Public Policy. Strikes which commence and continue for an indefinite time are against the Public Policy norms and have some deformative impact on the Industrial safety reforms. We could presume that with the Mediation coming into the picture, the disputes related to the clashes of interests resulted in strike, can be resolved empathically.

The new Law erased ‘hire and fire’ by proposing to lift restrictions on the sacking of Workers and payment of compensation in special investment regions, National Investment and Manufacturing Zone and some other Economic Zone. The Bill also proposes to enhance the entrenchment compensation to 60 days; employees working in large industrial sectors, such as Special Economic Zones, are now entitled to get 60 days of salary if they are laid off by the employer. At present, the limit is 45 days of salary.

The proviso is introduced under Section 22 of the Employees’ Compensation Act 1923, under the Bill, as in the previous provision, it has been stated that no application for the settlement of any matter by a commissioner (other than an application by a dependent or dependents for compensation) shall be made unless and until some question has arisen between the parties in connection therewith which they have been unable to settle by agreement, has been provided with a proviso that if an application by an employee or by dependent or dependents for compensation is not made before the Commissioner within a period of ninety days from the date of the occurrence of the accident, then such application may be filed by an officer authorized by the State Government in this behalf for the purpose of compensation to be paid to such employee or dependent or dependents. It is beneficial for the dependent/dependents, who are less aware of the right entrusted under the Law or could file such applications for Compensation.  The Bill further proposes to disburse 75% to 100% of the compounded amount to the affected workers. In some cases, where workers are not indefinable, the compounded amount will be deposited in the Gujarat State Social Security Board.

An amendment was introduced under the Industrial Disputes Act 1947 in proviso to the subsection (n) of Section 2, wherein the period specified under the proviso, in the first instance, exceeded to one year (instead of six months) but may by a like notification, be extended from time to time for any period not exceeding two years (instead of six months), at any one time, if in the opinion of the appropriate Government, public emergency or public interest requires such extension; which means that the Government can now ban the strikes in Public Utility Service for up to one year the first time. Further, in Section 2A(3), for the words three years, the words ‘one year’ has been substituted. Thus, it seems that the intention of the government to pass the Bill is to relax labour laws to give an impetus to industrialisation in the State.

A provision under the Minimum Wages Act, 1948 has amended; under the definition of contractor ‘outsourcing agencies[1]’, which means an agency which by contractual agreement or otherwise provides services or supply employees, was also included, which is in some cases the Government itself. This will attest more powers to the Government. Shops or establishment of factories employing 20 or more manpower shall make the payment of minimum wages through Bank Account. Under the new definition of Outsourcing Agencies’, the Contractor of Service Agencies employing 20 or more Labourers either skilled or unskilled will also pay wages through Bank Account.

Another reformatory step was taken under the Building & Other Construction Workers Act, 1996; employees working as a supervisor also, whose salary is less than three times of Minimum Wages will also be eligible to get the benefit of the Act; previously Supervisors were excluded from taking benefits.

Impact of the Bill on the Make in India Campaign

If any new labour or Industrial Reform Policy emerges, it can be examined under the blueprint of Make in India Campaign i.e. promotion of a simplified and rationalised labour regime aimed at higher productivity and economic growth. Moreover, the Campaign has another policy as to not only to create capital but to create employments also. The provisions under the Bill could have a reformative impact on the domestic campaign ‘Make in India’. Ease of Labour and Industrial Law Policies and Industrial Safety Reforms are the first and foremost requirements if Make in India has to be made successful.  Simplification of labour laws can also be one of the key factors on which the government’s Make in India campaign that seeks to turn the country into a global manufacturing hub hinges on.

Such reformations can give recognition to the unsecured labourers also. The inclusion of the Unskilled Workers as an object under the Bill could be proved as a reformatory step as it creates more industrialised environment. Protection of the Labourers and enhancement of the industrial productivity, modernization and competitiveness are the key requirements under the Labour Law Regime, but balance of interest between industries and workers and creating an environment, which is conducive to both the industry and the workers are must in the field of Labour Law Reform Regime.

For the promotion of the Bill, protection, recognition, reformation in Labour welfare policy are the main factors but this is only one face of the coin. India is a labour surplus economy. All the proposed changes, taken together should mean an expansion of the unorganised sector, removal of the instability in employment Policies, but for the Make in India Campaign something more is needed i.e. whether the Bill will be capable of enhancing the economy of the country; whether it has a capability that makes India stand as a Global Manufacturing Hub. One thing is clear; India doesn’t lack creativity, Labour and Labour Laws; what makes it lagged behind others is a lack of full-fledged implementation of the Laws. It cannot be said as to whether the Bill would be proved beneficial for this Campaign or not, but it is certain that the bill will enhance the productivity in the Labour and Industrial areas.

[1] Section 2 (e), the Minimum Wages Act 1948 (Act No. 14 of 1947), 11^th March 1947, http://pblabour.gov.in/pdf/acts_rules/inustrial_disputes_act_1947.pdf (accessed on December 3, 2015).