The decision of the United Kingdom (UK) to leave the European Union (EU), commonly referred to as Brexit, has had far-reaching legal consequences. The process of untangling the UK’s regulatory framework from the EU has been complex and significant for UK-based companies. Brexit has triggered a seismic shift in the legal landscape, impacting trade regulations, employment, intellectual property, and financial services. Trade and customs regulations have been overhauled, requiring UK-based companies to navigate updated paperwork, customs checks, and compliance requirements when trading with EU member states. This has introduced additional administrative burdens and costs, particularly for small and medium-sized enterprises (SMEs).
Brexit also has another critical consequence. With the UK no longer bound by EU laws and regulations, it can establish its own regulatory framework. This has resulted in potential differences in product standards, data protection laws, financial regulations, and more. UK-based companies operating in sectors that heavily rely on harmonisation. EU regulations now face the challenge of adapting to these legal changes, which may affect market access and competitiveness.
The termination of freedom of movement between the UK and the EU has implications for employment and immigration. UK-based companies, particularly in agriculture, hospitality, and healthcare, have encountered difficulties recruiting and retaining skilled EU workers. The introduction of the points-based immigration system adds further administrative burdens and costs for companies seeking EU workers.
Brexit has also impacted intellectual property rights. Previously, EU-wide IP protection covered the UK. However, post-Brexit, separate applications and registrations are required for IP protection in the UK and the EU. This has increased costs and administrative procedures for UK-based companies, potentially affecting their ability to safeguard IP rights across the EU.
In the financial services sector, the loss of passporting rights, which allowed UK-based financial institutions to operate seamlessly across the EU, has prompted many companies to establish subsidiaries or relocate operations to maintain access to the EU market. The future regulatory relationship between the UK and the EU in financial services remains uncertain, posing ongoing challenges for UK-based investment firms.
Legal consequences of Brexit and their impact on UK based companies
The legal consequences of Brexit and their impact on UK-based companies are:
Trademarks, designs, plant varieties, etc.
Trade marks, designs, plant varieties, and other intellectual property rights have been significantly affected by Brexit. With the UK’s departure from the European Union, EU Trade Marks, Registered and Unregistered Community Designs, and Community Plant Variety Rights no longer hold validity in the UK. The regulations that govern these rights under the EU framework no longer apply in the UK. To address this, the UK government is implementing legislation to establish equivalent rights, ensuring minimal or no loss of rights for intellectual property rights holders. Draft Statutory Instruments have been presented to Parliament, including the Trade Marks (Amendment etc.) (EU Exit) Regulations 2019, to introduce these new rights. Similar regulations for plant variety rights and geographical indications are expected to be introduced in the future. The UK government has confirmed that holders of existing EU Trade Marks and registered Community Design rights will be protected through the creation of new, equivalent UK rights at no cost and with minimal administrative burden. Right holders can opt out if they do not wish to receive these new rights.
For individuals or corporations with pending EU Trade Mark and registered +Community Design applications at the time of Brexit, there is a 9-month window to apply for equivalent UK protections. The initial EU application date and any seniority rights can be retained as the priority dates for these applications. These new UK trade mark and registered design rights can be renewed separately from their EU counterparts, form the basis for proceedings in UK courts and the UK Intellectual Property Office (UKIPO), and can be assigned and licenced independently. The UKIPO is now responsible for administering these registrations, which substitute for the former EU-wide rights in the UK. Existing Unregistered Community Design Rights (UCDRs) will remain enforceable in the UK until the end of their protection period under the Design and IR Exit Regulations. These designs will be known as ‘continuing unregistered Community Designs’. Additionally, the UK government will introduce a new ‘supplementary unregistered design right’, which mirrors the scope of the UCDR and arises automatically. This protects designs disclosed to the public in the UK after Brexit.
It’s important to note that existing EU Trade Marks, Community Plant Variety Rights, registered community designs, and UCDRs arising from disclosure in the UK before Brexit will remain valid in the remaining EU member states. However, UK registrants of ‘.eu’ domain names will no longer have the right to own such domains post-Brexit. They must transfer their rights to an EU-based registrant or consider alternative top-level domains. Regarding ongoing litigation before UK courts based on an EU Trade Mark or Community design, the UK government has stated that provisions will be made, but further guidance is expected once the future relationship becomes clearer. Brexit has also impacted the rights of UK lawyers, patent attorneys, and trade mark attorneys. They have lost their rights of audience before EU courts and bodies, including the Court of Justice of the European Union (CJEU) and the EU Intellectual Property Office (EUIPO). Unless they hold an alternative EU/EEA qualification, they are no longer able to represent clients directly before these institutions. This may require restructuring IP departments within UK companies, such as by relocating, replacing staff, or instructing external agents for representation.
Patents and supplementary protection certificates
The European Patent Convention (EPC) is an international treaty establishing a unified patent system for 37 European countries. The EPC is not an EU instrument, and as such, it will not be affected by Brexit. This means that European Patents (EPs) with a UK designation will continue to be granted by the European Patent Office (EPO) and to take effect in the UK. Amendments to the Patents Act of 1977, of the UK introduced by secondary legislation under the European Communities Act of 1972, to implement EU Directives (notably the Biotech Directive) will also be preserved when the ECA is repealed. This means that the UK will continue to implement the Biotech Directive in its national patent law. Existing UK Supplementary Protection Certificates (SPCs) will also continue. SPCs are granted and administered nationally, and the UK government has confirmed that it intends to maintain the current SPC legal framework as the UK leaves the EU. This means the UK will continue to have a strong patent system after Brexit. Patent holders will still be able to obtain patent protection for their inventions in the UK, and they will still be able to enforce their patents in the UK courts.
Investment
The UK’s relationship with the EU can also affect how much businesses choose to spend on factories, training, equipment, and technology. The Chancellor of the Exchequer has acknowledged that investment can help boost economic growth. However, business investment has stalled since the Brexit referendum. This is because businesses are wary of the outlook for the economy. The investment was not great even before 2016, but if it had continued its pre-referendum trend, it could be about 25% higher than it is now. Economists argue about why there is this gap. Some, including the International Monetary Fund, believe that uncertainty surrounding Brexit, including the unsettled issue of the Northern Ireland Protocol, has deterred some businesses from investing. Sir Richard Branson is among the business leaders who have said that the cost of Brexit red tape would put them off investing in the UK. The pro-Brexit group, Briefings for Business, claims that the numbers are misleading and that there is no evidence of a Brexit-related hit to investment. Ultimately, a lack of investment means the UK economy is less efficient and earns less than it could.
Jobs
When the UK left the European Union, it also left the EU’s free movement of labour rules. This meant that businesses could no longer hire EU citizens without first obtaining a visa. This change in the rules has had a significant impact on the UK labour market. A study by the think tanks Centre for European Reform and UK in a Changing Europe suggests that there are 330,000 fewer workers in the UK due to Brexit. This may only be 1% of the total workforce, but sectors such as transport, hospitality, and retail have been particularly hard hit. The lack of workers has led to shortages in these sectors, which have in turn pushed up prices for customers. Some commentators argue that these constraints will persuade businesses to invest more in training and skill development. In the financial services sector, the impact of Brexit has been less severe. A House of Commons report suggests that 7,000 jobs may have been lost, but this is far fewer than the 70,000 that were previously feared. The full impact of Brexit on the UK labour market is still being felt. However,the changes to the rules on the free movement of labour have had a significant impact on some sectors of the economy.
Customs detention and parallel imports
Customs detention of goods allegedly infringing is an important tool for rights holders, not only against counterfeiters but also in standards-based industries such as electronics and telecommunications. After the UK leaves the EU, there will be a border between the UK and the EU where goods can be detained. Whether or not a rights holder can object to the importation of goods depends on the principle of exhaustion of intellectual property rights. Currently, once a product is placed on the market anywhere in the European Economic Area (EEA) with the consent of the rights holder, the IP rights protecting that product are said to be exhausted and the rights holder cannot rely on their intellectual property rights to prevent the importation of the product. Since January 1, 2021, the UK has recognised the EEA regional exhaustion regime. This means that post-Brexit IP rights in relation to goods (lawfully) sold in the EEA have been considered exhausted in the UK and parallel imports have continued from the EEA. However, IP rights in goods lawfully sold in the UK may not be considered exhausted in the EEA. This means that exports of goods first placed on the market in the UK to the EEA may need the permission of rights holders as of January 1, 2021. The UK government recently launched a detailed consultation to consider what IP exhaustion regime it will apply in the longer term.
The UK government is broadly considering four options:
Maintaining the current UK regime.
Moving to a national exhaustion regime.
Moving to an international exhaustion regime.
Creating a mixed regime where specific goods, sectors or IP rights are subject to different regimes.
IP licencing
The impact of Brexit on IP licencing is likely to be small for major businesses. This is because licences typically cover the whole or substantial parts of Europe and need to comply with EU law, even if the law of a non-EU member state governs them. The only way that Brexit could have a significant impact on IP licencing is if licencing businesses treat the UK as an entity separate from the EU. In this case, IP rights would need to be licenced separately to the UK. To protect themselves from this eventuality, businesses should include provisions in their licencing agreements that allow for licenced rights, such as European Union trademarks or registered or unregistered community designs, to be converted into national rights.
Conclusion
Brexit has had significant legal consequences for the United Kingdom (UK) and its companies. The process of separating from the European Union (EU) has led to changes in trade regulations, employment rules, intellectual property rights, and financial services. UK-based companies now face new administrative burdens, compliance requirements, and potential differences in product standards and regulations.
Regarding intellectual property, Brexit has affected trademarks, designs, plant varieties, and other rights. Previously, EU-wide protections no longer apply in the UK. However, the UK government has introduced legislation to establish equivalent rights, ensuring minimal or no loss of rights for intellectual property holders. Existing rights holders will be protected, and there is a window for pending applications to apply for equivalent UK protections.
In the patent system, the European Patent Convention (EPC) remains unaffected by Brexit. European Patents (EPs) with a UK designation will continue to be granted by the European Patent Office (EPO) and will be enforceable in UK courts. The UK government also intends to maintain the current UK patent law, ensuring a strong patent system after Brexit.
Brexit has also impacted investment and job markets. Businesses have been cautious about investing due to economic uncertainties surrounding Brexit, leading to lower investment levels than pre-referendum trends. Additionally, changes in free movement of labour rules have reduced the workforce, particularly in sectors such as transport, hospitality, and retail. Overall, Brexit has brought significant legal changes and challenges for UK-based companies across various sectors. Navigating these changes and adapting to new regulations will be crucial for ensuring continued success in the post-Brexit era.
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This article is written by Shailja Singh, an LL.B. student of Bharati Vidyapeeth (Deemed to be) University, Pune, and Nimisha Dublish, a student of Vivekananda Institute Of Professional Studies (VIPS), GGSIPU.
Imagine you saw a crime happening or anticipated that a crime was going to be committed by a person. You feel panicked and wish to inform the police authorities to stop or prevent the crime from happening. As a responsible citizen and a human being, you feel that you must report the crime and seek legal remedy for it. It could be anyone at this spot. As we have seen in various television series and movies, it only takes an FIR to get registered if you want to report a crime or an apprehension of the same. But it’s not that straightforward and easy; there lies a quantum of requirements that should be fulfilled before going down the path of filing an FIR. This article will unravel the rights, requirements, and responsibilities and the path thereafter to successfully deliver justice in society.
Meaning
The term ‘First Information Report’ has not been defined in the Code of Criminal Procedure. Rather the term has not been used except in section 207 which requires the Magistrate to furnish to the accused a copy of the First Information Report recorded under section 154 (1) of the Code. The report first recorded by the police relating to the commission of a cognizable case is the First Information Report giving information on the cognizable crime.
It may be defined as follows:
It is a piece of information given to the police officer.
The information must relate to a cognizable offence.
It is a piece of information reported first in point of time.
The victim of the cognizable offence or someone on his/her behalf gives information and lodges a complaint with the police.
This is the information on the basis of which investigation begins. The FIR must be in writing.
In the State of Rajasthan v. Shiv Singh, the Rajasthan High Court defined a First Information Report as ‘the statement of the maker of the report at a police station before a police officer recorded in the manner provided by the provisions of the Code.’
The FIR marks the beginning of the journey of investigation that is to be performed by the police officers. The police officers, during the process of investigation, look for evidence and possible witnesses who could testify for the commission of the offence or the offence for which the FIR is filed. It is essential that the person filing an FIR not give false information with malicious intentions to hamper justice. An FIR is a fundamental document that initiates legal proceedings by providing significant information about the offence committed or the apprehension of the same. It can be a criminal offence, a public concern, or both. This document plays a major role in providing direction to police officers as to in which direction they need to proceed with the investigation. This document is essential for both parties to the case.
A brief overview of all the sections dealing with FIR
Section 2(c) of the CrPC
Section 2(c) of the CrPC defines the cognizable offences for which an FIR can be lodged. These offences are listed in Schedule I of the Code. These offences fall under this category and are allowed for filing/lodging an FIR. Cognizable offences are those for which the police officer is allowed to arrest the accused without a warrant or magistrate’s permission. These offences are more heinous and serious in nature. For example, murder, rape, kidnapping, abduction, etc. These crimes have the capability of harming the peace and harmony of a society. They are mostly public offences. Usually, the punishment given for cognizable offences is more than 3 years and may extend to life imprisonment or the death penalty.
Schedule I of the CrPC
Schedule I of the CrPC enlists the offences that are classified as cognizable offences, for example, murder, robbery, etc. These offences require immediate police attention, and preventive measures are needed to be taken by them. These offences are generally more severe and graver in nature and act against the public interest at large.
Section 154(1) of the CrPC
Section 154(1) of the CrPC talks about the procedure for recording an FIR. Cognizable offences that are reported orally or in writing must be written down by the police officer. They should be re-read by the officer for the person lodging the FIR and signed by him thereafter. A copy of the report must be given to the person lodging the FIR, i.e., the informant, free of cost. This Section lays out a brief outline of the process by which an FIR must be recorded, documented, and acted upon by the police officer.
Section 154(3) of the CrPC
Section 154(3) of the CrPC talks about the actions to be taken if a police officer denies recording the FIR. In such cases, the informant can go to the Superintendent of Police (also known as the Deputy Commissioner in a Police Department). On satisfaction that the crime committed is cognizable, he should either investigate the case himself or direct a subordinate to take the required measures. This Section provides for a remedy or legal recourse that may be taken by the informant if he feels that his complaint is not being entertained by the police officer.
Object
The main objective of filing F.I.R. is to set the criminal law in motion. And also to enable the police officer to start the investigation of the crime committed and collect all the possible pieces of evidence as soon as possible.
The various objects of recording F.I.R. are:
To inform the District Magistrate and the District Superintendent of Police, who are responsible for the peace and safety of the district, of the offence, reported at the police station.
To make known to the judiciary and judicial officers before whom the case has to be ultimately tried, about the facts and scenario which came out after the immediate occurrence of the crime.
To safeguard and protect the accused against subsequent additions or variations.
Essential Conditions of F.I.R.
In Moni Mohan v. Emperor, it was decided that the essential conditions of F.I.R. are:
It must be a piece of information.
It must be in writing. If given in writing, should be reduced into writing by the concerned police officer.
The main act or crime should be cognizable in nature, not the ones subsequent to the main act.
The F.I.R. must be in the nature of complaint or accusation with the object of getting the law in motion.
Information in Cognizable Cases [S.154]
Since the information received u/s 154 is termed as FIR, it is important to know the provisions relating to the procedure for recording information in respect of cognizable cases u/s/ 154.
If the information is given orally to an officer in charge of a police station, it has to be reduced in writing by the concerned police officer. It should be then read over to the informant, and then signed by him. The information thus received has to be recorded in a book authorised by the state government regarding the same.
A copy of the information recorded is to be given to the informant, free of cost.
If the officer in charge refuses to record the information, the person may send such information, the aggrieved person may send, the substance of such information to the Superintendent of Police and the Superintendent of Police if satisfied about the commission of the cognizable offence, shall either investigate the case himself or direct an investigation to be made by the subordinate police officer. Such police officer shall exercise all the powers of an officer in charge of the police station in the concerning offence.
When the information is given by a woman against whom any of the offences under sections 326 – A, 326-B, 354, 354-A to 354-D, 376, 376-A to 376-E or 509 IPC is alleged to have been committed or attempted, such statement shall be recorded by a woman police officer or any woman officer.
What Kind of Information is Considered in an F.I.R?
Only information relating to the commission of a cognizable offence can be termed as an FIR. It is not necessary that the information must set out every detail of the case. It need not state the name of the accused also. What is necessary is that it must disclose information regarding the commission of a cognizable offence.
Information received in the following cases is not considered as FIR:
Information received after commencement of the investigation.
Telephonic information, unless it has been given by a known person who discloses his identity and the message contains all the necessary facts which constitute an offence and such a message is reduced to writing by S.H.O.
Information of mere assemblage of some persons.
Indefinite, Vague and unauthorized information.
Evidentiary Value of F.I.R.
An FIR is not a substantive piece of evidence. That is, it cannot be considered as evidence of facts stated therein. However, FIR may be used for the following purposes:
It can be used to corroborate an informant witness u/s 157 of Evidence Act. But it cannot be used to contradict or discredit other witnesses.
It can be used to contradict an informant witness u/s 145 of Evidence Act.
FIR can be used by the defence to impeach the credit of the maker under sec. 155(3) of the Evidence Act.
A non-confessional FIR given by an accused can be used as an admission against him u/s 21 of Evidence Act.
FIR can be used as a dying declaration as substantive evidence If it relates to the cause or occasion or circumstances and facts which resulted in the informant’s death. within the meaning of section 32(1) of the Evidence Act.
If the accused himself lodges the FIR, it cannot be used for corroboration or contradiction because the accused cannot be a prosecution witness, and he would very rarely offer himself to be a defence witness u/s 315 of the Code.
Delay in Filing FIR
The object of early filing of F.I.R. to the police as soon as possible, in respect of the commission of the offence is to obtain and receive fresh information regarding the circumstances and facts which tend to result in the commission of the offence. The FIR shall have better corroborative value if it is recorded and taken before the informant’s memory fades and before he starts to forget the facts. Thus, if there is a delay in lodging FIR and the delay is unreasonable and unexplained, it is likely to create scope for suspicion or introduction of a concocted story by the prosecution. It is the duty of the prosecution to explain the delay in lodging FIR. If satisfactorily explained, it does not lose its evidentiary value. However, mere delay in lodging FIR is not fatal to the prosecution case.
In Raghbir Singh v. The State of Haryana, It was held that going to the hospital due to the condition of the victim for saving his life instead of going to the police station first was a reasonable and valid explanation for the delay in filing F.I.R.
Delay in Filing FIR in Case of Rape
In cases of rape and other sexual offences, the case is not only related to the victim but also with the family of the victim. Many times due to shame and honour they do not contact the police immediately. Therefore the courts have consistently ruled that delay in a case of sexual assault cannot be equated with the case involving other offences.
In Harpal Singh v. State of Himachal Pradesh, It was held that ‘delay of 10 days in lodging the first information report stands reasonably explained when the prosecution stated that as the honour of the family was involved, the members needed time to decide whether the matter should be taken to the court or not.
Relevant Provision qua FIR
Under section 157 of the Indian Evidence Act, any former statement relating to the same fact may be proved. The former statement may be written or oral. The account book of a witness may also be included. The object of this section is to admit the statements made at a time when the mind of the witness is still so connected with the event as to make it reasonably probable that the description given by him is or would be accurate or correct.
Section 145 of the Evidence Act provides for one of the matters in which credit of a witness may be impeached. The object is either to test the memory of the witness or to contradict him by the previous statement in writing. The statement in FIR made by the witness can be used for this purpose but a witness can be contradicted only by his own previous statement and not the statement of any other.
Section 8 of the Evidence Act provides the guilty mind begets guilty conduct. Conduct of any person against whom the offence was committed is always relevant and it is shown in illustration (j) and (k) of section 8. Conduct here includes the conduct of both i.e. accused as well as the victim. Conduct of accused which is of non-confessional nature may be brought within section 8 and it will be admissible also under section 21 of the Evidence Act.
The FIR can also be used for cross-examination of informants and for contradicting him. But it cannot be used for the purpose of corroborating or contradicting any witness other than the one lodging the FIR.
Who can lodge an FIR?
An FIR may be filed by any person who either witnessed or has knowledge of the commission of a cognizable offence. The police officer is under the obligation to file such an FIR for the cognizable offence. The person against whom an FIR is being filed can be the person who either committed an offence, has knowledge of the commission of an offence, witnessed the offence, or abetted in such an offence. The informant doesn’t need to have first-hand information about the offence. Even an anonymous notice to the police that contains information about such an offence can be treated as a formal complaint. The police officer can also lodge an FIR himself if he has knowledge that a cognizable offence has been committed. In Hallu v. State of MP (1974), it was held that Section 154 of the CrPC talks about the information that an informant holds relating to the cognizable offence given to the officer in charge; thus it is not necessary for the informant to have personal knowledge of such an offence.
Duration for filing an FIR
It has been seen that an FIR should be filed promptly and expeditiously without wasting any time. However, there might be certain circumstances where some amount of concession must be given on reasonable grounds. This shall only be allowed in the interest of justice. Judges have to judiciously decide using their wisdom whether to grant such a concession or not. There is no fixed duration of time that can be granted to apply the test of reasonableness. It is purely dependent on the facts and circumstances of the case and the gravity of the offence.
Steps for filing an FIR
The procedure to get an FIR lodged is fairly simple:
The moment a cognizable offence is committed or is apprehended, you need to contact your nearest police station. The FIR must be filed immediately, and there shall be no delay in filing the FIR. If, for some reason, it gets delayed, then you need to provide reasonable justification for the delay.
The informant has to tell the police officer the exact things and circumstances that he knew or witnessed. You can describe the incident either orally or in writing. However, it is the duty of the police officer to reduce it in writing.
The report must be read back to the informant and signed by him. Before signing the report, you must ensure its accuracy. You should sign the report only after it has been carefully read and verified by you.
It is the duty of the police officer to serve you with a free copy of the FIR.
The following things must be mentioned in the FIR-
Name,
Address;
Date, time and location of the incident,
FIR number,
Name of the police station,
Facts of the incident,
Name and descriptions of the persons involved in the incident,
Witnesses (if any).
Rights of a person lodging FIR
There are certain rights and protections given to the person who is lodging an FIR in the interest of justice, and those are:
The informant has the right to receive copies of the FIR and related documents as soon as they are filled out by the police officer in charge, as per Section 154(2).
The informant has the right to receive the information in case the police officer does not conduct an investigation on insufficient grounds. This right is vested with us under Section 157(2).
The police officer must deliver a copy of the report submitted by him for the inquiry by the magistrate. As per Section 173(2)(i) and (ii), the informant must have knowledge of the actions taken by the police officer.
If the magistrate issues the process, then the informant must be given notice and a fair chance of getting heard by the magistrate.
Reports and statements that do not amount to FIR
A report or a statement that is recorded after the commencement of the investigation under Sections 162 and 163 of the CrPC.
Information not about the occurrence of a cognizable offence but only a cryptic message in the form of an appeal for immediate help.
Information to the Magistrate or police officer is given via phone or any electronic device.
Reports were recorded after several days of development of facts and circumstances.
Information received at the police station prior to the lodging of an FIR.
Reports not recorded immediately but after questioning of witnesses.
Complaint to the Magistrate.
It was held in Damodar v. State of Rajasthan (2011) that if the information was conveyed to police by telephone and a DO entry was made, it would not constitute an FIR even if the information disclosed the commission of the cognizable offence. The Supreme Court has given Directions to be followed in regard to the registration of an FIR. These directions are as follows-
The registration of an FIR is mandatory under Section 154 of the CrPC. It is mandatory only under the circumstances where there is the commission of a cognizable offence or no preliminary inquiry is allowed in such a situation
A preliminary inquiry can be conducted in cases where it is not clear whether a cognizable offence was committed or not.
An FIR must be registered if it is clear from the inquiry conducted that a cognizable offence was committed.
If the inquiry is closed with a complaint, then the informant must be informed about it along with the reasons in writing within 1 week of such closure.
The officers cannot refuse to register the FIR if a cognizable offence is committed. If any officer denies, action must be taken against him.
A preliminary inquiry is conducted just to know if a cognizable offence was committed or not.
Cases in which preliminary inquiry is conducted are as follows (the mentioned list is not exhaustive but is merely illustrations)-
Matrimonial disputes
Family disputes
Commercial offences
Medical negligence cases
Corruption cases
Cases where there’s a delay in the initiation of proceedings
The preliminary inquiry must be time bound and should not exceed 7 days. The general diary entry must contain the facts and reasons for the delay.
The diary in which all the information relating to a cognizable offence is recorded must reflect the reason for conducting a preliminary inquiry.
Types of FIR
False FIR
An FIR filed with a malicious intention to spread false information about someone or defame him. If such information is given to a public official to harm another person, he can be punished under Section 182 or Section 203 of the Indian Penal Code (1860), as the case may be. Section 177 of the IPC covers the situation where the police officer himself gives incorrect information even after being aware of the truth.
Second FIR
There has been a lot of debate over the permissibility of a second FIR. It completely depends on the nature and circumstances of a case. It is permissible even if there are the same facts and conditions, provided that the formal complaint was decided on insufficient grounds and without understanding the gravity of the offence. However, it won’t be maintainable if the case was decided and disposed of on the complete merits and after consideration of facts and circumstances. Various courts have laid down different interpretations of the circumstances. They have provided various tests for it. Tests are given by the courts for figuring out the following:
Whether the conspiracies are identical or not?
Whether the earlier complaint was disposed off on immaterial grounds or not?
Whether an order has been passed without understanding the nature of the complaint or not.
Zero FIR
A zero FIR can be registered in cases of cognizable offences that require the immediate attention of the police to act. It can be registered at any police station, irrespective of jurisdiction. The police officers can act on this without the court’s permission and even before the complaint is handed over to the relevant jurisdiction. It is typically used for offences like murder and rape. Zero FIR is meant to help victims of serious offences, especially women and children. It is a quick and convenient way to lodge a complaint, without having to go from one police station to another. If an officer disregards the registration of a zero FIR, he may face consequences under Section 166A of the IPC.
Cross FIR
When the parties involved in a case file an FIR against each other regarding the same incident, it is known as a cross FIR.
Multiple FIR
When the aggrieved parties file multiple FIRs for the same cause of action, same incident, and same persons, it is called a multiple FIR. Filing multiple FIRs is prohibited by the court in the case of Surender Kaushik v. State of UP (2013). This act jeopardises the inquiry and causes confusion, and delays justice.
Evidentiary value of FIR
The FIR is not a substantive piece of evidence but can be considered evidence in the following situations:
As per Section 154 of the CrPC, the FIR marks the beginning of the investigation proceedings, and on the basis of this investigation, the charge sheet is made under Section 173 of the CrPC.
Though the FIR is not a substantive piece of evidence, it helps in corroborating the facts and statements made by the informant and cross-examining him thereafter.
As per Section 32(1) of the Indian Evidence Act (1872), if the informant dies and the statement recorded by the police in the FIR includes the reason for his death or about the events that might lead to his death, then it can act as substantial proof to validate the reasons for his death. This acts as a dying declaration, wherein the person testifies about the circumstances leading to his death.
As per Section 145 of the Indian Evidence Act (1872), the FIR may be used to refute the informant’s testimony. This Section allows the contradiction of witnesses during the cross-examination.
As per Section 157 of the Indian Evidence Act (1872), the FIR may be used in support of a witness but cannot be used to refute or undermine the testimony of other witnesses.
If the accused himself lodges the FIR, it cannot be used for corroboration or contradiction because the accused cannot be a prosecution witness, and he would very rarely offer himself to be a defence witness as per Section 315 of the Code of Criminal Procedure.
Difference Between F.I.R and Complaint
While in common parlance the terms FIR and complaint are often used interchangeably, both terms have different legal meanings and implications. The primary difference between a complaint and FIR is that while FIR is lodged with the police, a complaint is made to the magistrate.
The major points of difference are:
F.I.R
COMPLAINT
FIR is not defined under the code.
Complaint is defined u/s 2(d) of the Code as “any allegation made orally or in writing to a Magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has committed an offence, but does not include a police report.[1]
FIR is lodged with an officer in charge of a police station.
Complaint is filed with the Magistrate.
FIR relates to information as to the commission of a cognizable offence.
It may relate to the commission of any offence, whether cognizable or non-cognizable.
The magistrate cannot take into cognizance of an offence.
The magistrate is empowered u/s 190 of Cr.P.C. to take cognizance of an offence upon a private complaint.
It is not a substantive piece of evidence.
The complaint itself is substantial evidence.
The FIR once lodged with the police station cannot be withdrawn by the informant.
In a summons case, a complainant can withdraw a complaint against all or any of the accused, at any time before a final order is passed. (Sec. 257)
The informant is not bound to take an oath before the police officer while lodging FIR.
The Complainant must take an oath before the Magistrate.
The informant would not be liable for malicious prosecution if the information furnished by him is found to be incorrect or false.
The complainant is liable for malicious prosecution if the complaint is found to be false.
Case laws
Sidhartha Vashisht @ Manu Sharma v. State (NCT of Delhi), 2010 (famously known as Jessica Lal’s murder case)
Facts of the case
In this case, model Jessica Lal was found shot dead in a restaurant in Delhi. Jessica Lal refused to serve more drinks to the petitioner, as a result of which the petitioner shot her, which led to her death. Manu Sharma managed to escape from the scene but later on, he was called upon for the offence he committed. The offence took place at Qutub Colonnade, and there were several witnesses who testified to the presence of Manu Sharma at the crime scene. The prosecution relied on the telephonic/wireless message that was received by the Mehrauli Police Station. The communication was relied on as evidence. Manu Sharma was acquitted in the initial trial, but later on, the decision was overturned by the Delhi High Court who found him guilty of the offences. As a result of which he appealed for conviction in the Supreme Court.
Issues involved in the case
Along with the main issue of whether or not Manu was present at the murder scene, there was one more issue, i.e., the reliability of the wireless message as evidence.
Judgement of the Court
The Supreme Court in this case held that telecommunication or wireless communication, i.e., phone calls that are made immediately after the offence, will be eligible to be considered an FIR only when it is established that they were not vague or cryptic. However, the calls that are made to police officers to merely get them to the crime scene do not necessarily qualify as an FIR. Hence, the Supreme Court upheld the decision of the Delhi High Court.
Tehal Singh and Ors. v. State of Punjab, 1978
Facts of the case
In this case, telephonic communication was received by the police officer in charge, and the court examined the circumstances that are to be considered for such information to be considered an FIR under Section 154 of the CrPC. There was a chain of events involved, for which Tehal Singh was accused of attacking and killing Pirthi Singh. They claimed that they were provoked by Pirthi Singh, but it was not considered part of the same transaction. Tehal Singh contended that he and his companions were falsely involved in this case and that whatever he did was in self-defence.
Issues involved in the case
Whether the telephonic conversation meets the criteria of an FIR or not?
Judgement of the Court
The High Court of Punjab and Haryana held that there are certain conditions that must be met to consider telephonic communication an FIR. The Court emphasised the fact that the information given by the informant must be reduced to writing to be considered an FIR as per Section 154 of the CrPC. Further, an appeal was filed in the Supreme Court. The Supreme Court also confirmed the decision given by the High Court and dismissed the appeal. The Supreme Court didn’t find any flaw in the session court’s judgement, which was then confirmed by the High Court.
Lalita Kumari v. Government of UP, 2013
Facts of the case
In this case, a writ petition in the Supreme Court was filed by Lalita Kumari’s father, Bhola Kamat, under Article 32 of the Constitution of India. Lalita Kumari was the minor daughter of Bhola Kamat. She was kidnapped, and her father lodged an FIR at the nearest police station. The police officers did not take any action to find Lalita Kumari, even after registering the FIR. The case was heard by a five-judge Constitution Bench. The Supreme Court examined the mandatory requirements for filing an FIR under Section 154(1) of the Code. The Court attempted to distinguish between cognizable and non-cognizable offences and laid down guidelines for the procedure related to FIR registration.
Issues involved in the case
The main issues were the scope, applicability, and obligation of the police while registering an FIR.
Judgement of the Court
The Supreme Court held that the conditions under Section 154(1) of the Code must be strictly adhered to. The police must conduct a preliminary investigation to determine if the nature of the offence is cognizable or non-cognizable. The informant must be told within seven days after the preliminary inquiry is concluded, whether or not the FIR should be filed. If not, then the reasoning must be provided.
Conclusion
The FIR is the stepping stone of the whole justice delivery system. It is a very crucial document for every criminal case. It marks the beginning of the criminal prosecution. An FIR can be registered in simple steps and is still a significant document for the investigation to begin. As rightly observed in the case of Mohan Lal v. State of Uttar Pradesh (1988), an FIR is the Bible of the case initiated on the public record. Hence, it is vital for every citizen to understand their rights related to an FIR. These are very helpful in understanding how an individual should proceed if he wishes to report a crime or raise his voice against public offences.
Frequently Asked Questions (FAQs)
What information should be included in an FIR?
It must include the date, time, location, nature, description, witnesses, accused, and evidence of the offence committed.
Can FIR be filed online?
Yes, in many jurisdictions, an FIR can be filed online. It is for the convenience and accessibility of the informant.
What is the difference between a complaint and FIR?
A complaint is an allegation made either orally or in writing to a magistrate. The complaint is made regarding a known or unknown person who has committed an offence, but it doesn’t include a police report. Whereas an FIR is a document that is prepared by police officers after verifying the details of the crime and the alleged person. An FIR is only filed in case of a cognizable offence.
What is the importance of an FIR?
An FIR is a document that embarks on the beginning of the process of investigation. An investigation can only be done after filing an FIR. (Lalita Kumari v. Government of UP)
What are the basic rights of an informant?
The basic rights of an informant are the right to be heard, the right to confidentiality, and the right to be informed. However, the informant also has the obligation and responsibility to provide true and accurate information. He must also cooperate with the police investigation and attend court proceedings as and when called.
What should I do if the police refuse to file my FIR?
The police may refuse to file your FIR on reasonable grounds such as date, time, place, gravity of the offence, etc. But if you think that they are refusing to file an FIR on unreasonable grounds, then you can approach a higher-ranking police officer or superintendent of police and address your issue there. You can submit a written complaint at their office and attach supporting documents and evidence. If you are unable to get justice, you can seek legal assistance and consult with a lawyer. At last, if all these steps fail, you can file a private complaint with the local magistrate or Metropolitan magistrate, as per the jurisdiction. If your complaint is reasonable and the magistrate is convinced that further inquiry must be done in this case, then he shall, at his own discretion, direct the police to file the FIR and conduct the investigation.
Can an FIR be used as evidence in court?
Yes, it can be used as evidence, as it serves as a formal record of the complaint. However, an FIR alone may not act as a strong piece of evidence.
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This article has been written by Rashmi Natekar, presently associated with VPMS TMC LAW COLLEGE, THANE as an Assistant Professor and have written this article on the basis of her earlier banking industry experience of 5+ years in due diligence of immovable properties. This article has been edited by Shashwat Kaushik.
Table of Contents
Introduction
Due diligence/title verification of immovable properties refers to scrutinising the legal status of the immovable property. There are numerous transactions related to immovable properties that take place on a day to day basis in our country. We have different laws, rules, and rules/other statutory materials governing this particular topic. The purchase of immovable property is a big decision. The investments, purchases, and transactions are high ticket transactions and hence the interests of the parties are at stake. Meticulous due diligence or title verification of the properties is crucial and therefore, thorough inquiries, searches and application of laws are of utmost importance.
How to conduct title verification/due diligence
Carrying out due diligence/title verification revolves around two main aspects.
First, what is the nature of the right?
Second, who is the holder of such a right?
So basically, scrutiny of the party claiming to possess a particular right in the property has to be ascertained. Ascertaining these two things will require the scrutiny of many documents. We can enlist the general procedure/checklist that can be relied upon to begin the title verification/due diligence.
Nature of the right to property
Ascertaining the nature of the right to the property can help decide what type of transaction can be entered into by the parties. It also helps to determine the type of documentation that would be required to enter into such a transaction. It also helps to decide the range of negotiations that the party can engage in.
The nature of the right in the property can be broadly classified as:
Freehold/ownership: acquired by way of sale, gift, inheritance, etc.
Perpetual/long term: generally acquired by way of lease.
Development rights: by way of irrevocable POA/assignment etc.
Leave and licence rights
Easement rights
Who is the holder of the right
Ascertaining the holder of a right is necessary to ensure that the party claiming to have the right to the property actually possesses that right.
Chain of agreements/documents establishing the right
A chain of agreements / documents that establish the right would have to be scrutinised for a period of 12 to 30 years, depending on the type of transaction that is proposed to be entered into. This period is also known as the ‘look back period’. The lookback period is the period for which the rights in the property will have to be scrutinised so as to anticipate the potential legal risks involved in the transaction. General timelines for the lookback period can range from 12 years to 30 years.
12 years
The limitation period for adverse possession is 12 years. This simply means that a person can claim ownership of the property if he has possessed it for a period of 12 years with the consent of the owner of the property. Therefore, to check the legal risk posed by adverse possession, generally the rights of a person in a particular property are traced back at least 12 years.
30 years:
Property right in name of minor (considering age 0 when such right accrues to it when it attains majority, i.e., 18 years) + 12 years of adverse possession = 30 years.
The limitation period for the recovery of the mortgage property, where the debtor has defaulted is 30 years, calculated from when such recovery right accrues.
Limitation period for presumption of correctness of a document – a document is considered to be correctly executed a valid proposal and acceptance, the parties should not be minors, insolvent or of unsound mind; consent between the parties should be free and entered into with lawful object and consideration; and such a transaction should not come under the ambit of agreements expressly declared void by law.
While scrutinising the title of the immovable property, there will be many other documents and records that need to be scrutinised on a case to case basis. Legal Counsel will have to inspect them as per the case in hand.
Legal presumptions with respect to immovable property
Two important legal presumptions with respect to immovable property are:
Legal presumption of notice
The legal presumption of notice simply refers to situations wherein a party interested in the transaction is deemed to have information about the said property.
The provisions of the Transfer of Property Act of 1882, specifically Section 3, talk about the legal presumption of notice. Section 3 of The Transfer of Property Act, 1882. As per these provisions, the person will have notice of a fact if he actually knows the fact, or he would have known that fact if he had made such an inquiry but did not make it, or he would have known the fact if he had not neglected it.
The person will be presumed to have had notice of any transaction related to the immovable property if such property is transferred by way of a registered instrument as per the provisions of the Indian Registration Act, 1908.
The person acquiring any immovable property will be presumed to have had notice if he is aware of the person having possession of such property.
The aforesaid provision reveals the following presumptions of legal notice:
A person would have known the fact if he had carried out an inquiry or search, but he willfully abstained from doing it or was grossly negligent in making such an inquiry or search. This type of notice is an actual or direct notice.
If the transaction requires compulsory registration as per the Indian Registration Act, 1908, then such a document is available in public domain. This type of notice is called constructive notice or implied notice.
The person acquiring the property is aware of the type of interest a person who is in possession of the property holds. This type of notice is a constructive or implied notice.
The person is deemed to have a notice if the agent has acquired on his behalf in the course of the transaction, with the exception of fraud committed by such an agent. Thus, Section 3 of Transfer of Property Act, 1988, elaborates on both the actual and constructive presumptions of legal notice.
Doctrine of Caveat Emptor
The Doctrine of Caveat Emptor is one of the Common Law principles, which simply means “buyer be aware”. This principle imposes a duty on the buyer to scrutinise the article that is to be bought. It is presumed under this principle that the buyer scrutinised the particular article before purchasing it, and any complaints pertaining to its quality won’t be entertained after such a transaction is done. This principle is mainly used with respect to movable properties and is also subject to certain exceptions.
This principle does not apply to immovable properties under Section 55 of the Transfer of Property Act, 1882. Section 55 of the Transfer of Property Act, 1882. As per this Section, the seller of the immovable property is bound to disclose to the seller the hidden and latent defects in the immovable property that the seller is aware of but the buyer is not. The seller is bound to disclose any material defect in the property, to produce all the documents of title in its possession to the buyer for examination of title and to answer all the relevant questions asked by the buyer in respect of the property or title.
Commercial perspective of carrying out due diligence
The legal counsel who is carrying out due diligence for his client, along with the legal aspects, has to also take into consideration the commercial perspective of the transaction. Whether to go ahead with the transaction, what are the risks involved, how can they be mitigated, and other facts should be considered while advising the client.
Key considerations are enumerated below:
Feasibility of the transaction.
Advising on negotiations and documentation.
Red flags, title issues, and potential litigation.
Carrying out due diligence/title verification of the immovable property has to be done meticulously and the due diligence report has to be given to the client in very lucid, clear and understandable language. The client is dependent upon the counsel for entering into such transactions. This very fact magnifies the responsibility of the legal counsellor manifold. Moreover, any material defect in the due diligence report that results in any loss/litigation/problem for the client can attract serious action from the Bar Council. So, thorough knowledge and deep investigations are necessary to be carried out by the Legal Counsel, and the due diligence report has to be drafted very minutely and clearly by the Legal Counsel to avoid any further problems.
Mergers and amalgamations in the Indian banking sector have seen various successful mergers with the primary motive of improving the banking and finance sector in India and penetrating the market with a rise in market competition. In order to ensure greater customer reach and trust among the public, many banks acquire weaker banks to lower their NPAs and provide higher interest on the deposits of the public so that they entrust their money with the banks in the country. There were many mergers that took place in the past but the author seeks to place emphasis on one of the largest mergers that took place in 2008 between HDFC Bank and Centurion Bank of Punjab, which made HDFC Bank the largest private bank in India.
About HDFC Bank
HDFC, i.e., Housing Development and Financing Corporation, was the first financial institution to get ‘in principle’ approval from the RBI as a part of the liberalisation policy in 1994. It got a banking licence in 1995 and was incorporated as ‘HDFC Bank Ltd. HDFC got oversubscribed 55 times at its first IPO and listed in both the BSE and NSE. The first friendly merger in the banking industry was done with Times Bank using the share swap method.
HDFC was the first to launch the international debit card in association with Visa International. It is the first and largest private bank to be authorised by the RBI to collect direct taxes. HDFC Bank approved the acquisition of Centurion Bank of Punjab for $2.4 billion, becoming one of the largest mergers in the financial sector in India. Recently, HDFC Ltd. (a mortgage lender) merged with HDFC Bank with the aim of rebranding itself. HDFC Bank is listed on the New York Stock Exchange (NYSE) and the Luxembourg Stock Exchange.
About Centurion Bank of Punjab (CBoP)
It was incorporated in 1994 as a joint venture between 20th Century Finance Corporation Limited, its associates and the Keppel Group of Singapore. Centurion Bank ltd. got merged with Bank of Punjab to form Centurion Bank of Punjab in 2005. Prior to the merger, the Bank was awarded the Highest A1 rating by the Industrial Credit Rating Agency. The merger of CBoP with HDFC Bank took place in 2008.
Need for the scheme of amalgamation
Both banking institutions merged to gain synergies across economies. Acquiring Centurion Bank of Punjab enables it to strengthen the distribution network of HDFC Bank. The CBoP had various benchmarks for growth, including having talented employees and a valuable franchise. The main purpose of HDFC’s acquisition of the CBoP was to increase the scale of the business, expand its geography and take advantage of the strong employee base of the merging entity. The executives of HDFC Bank recognised the proposed merger as it would increase the bank’s market reach globally.
Role of RBI in mergers, amalgamations, and acquisitions
As per the Banking Regulation Act, 1949, a banking company can only be voluntarily wound up when the Reserve Bank certifies in writing that the company is able to pay in full all the debts to its creditors. As per Section 44A of the Act, a banking company will amalgamate with another banking company when all the terms of the scheme of amalgamation have been presented before the shareholders as a draft and must be approved by a majority of not less than two-thirds of the shareholders of each company. The dissenting shareholder can be liable to claim the value of its shares as determined by the Reserve Bank if the scheme has been sanctioned by the RBI.
Under the scheme sanctioned by the RBI, the properties and liabilities would be transferred to the banking company, which would acquire the businesses of the amalgamated companies. According to Section 44B of the Act, it mentions the restriction on compromise or arrangement between the banking companies and its creditors, where the compromise or arrangement shall be certified by the Reserve Bank in writing that the scheme is capable of being worked and is not detrimental to the interest of depositors.
The power to impose a moratorium on banking operations lies with the RBI as per Section 45 of the Banking Regulation Act, 1949. During the moratorium period, if the RBI is satisfied that it is necessary in the interest of the public, depositors, the banking system as a whole or the proper management of banking companies, it may prepare the scheme for the reconstruction or the amalgamation of the banking company.
Terms and conditions of the scheme
The Scheme of Amalgamation of CBoP and HDFC Bank provides for the following terms that will govern the whole transaction:
As per the arrangement, all the assets, estates, licences, permits, leases,approvals, rights, claims, benefits, etc. of CBoP will get transferred and vested to the HDFC Bank as per the provisions of the Banking Act. Along With this, all the trade arrangements and contractual obligations whatsoever of the CBoP shall be honoured by the HDFC Bank.
All the post-dated cheques or other cheques that are outstanding and remain uncashed after the merger of the banks and any securities over movable or immovable property of CBoP will stand vested and be deemed to be in favour of HDFC Bank.
All the liabilities, dues, and obligations of CBoP shall be deemed to be the liabilities, duties, obligations and undertakings of the HDFC Bank without obtaining any consent from a third party.
In order to make the scheme of amalgamation effective, certain conditions precedent need to be fulfilled, which include obtaining approvals under statutory or regulatory laws, making application for receiving sanction from RBI under Section 44A of Banking Regulation Act and all other applicable provisions of the Banking Act; and receiving the consent of a majority in numbers (two-thirds in value) of members of both banks at their respective board meetings.
As per this scheme, HDFC Bank will be entitled to or deemed to be a party to any contracts, deeds, agreements, or compromises of any nature to which CBoP is a party. The Transferee bank, i.e., HDFC Bank, will also be a party to the contacts, deeds, etc. of which the Transferor bank (CBoP) was a part.
The scheme provides that all the employees, benefits, and policies in favour of employees of CBoP will be deemed to be the employees of HDFC Bank and all other management and operations of CBoP shall be substituted for HDFC Bank.
It was proposed in the scheme to list the new shares of HDFC Bank on a recognised stock exchange for the purpose of trading.
Business conduct post merger
As per the scheme of amalgamation, all the activities of the business of CBoP will be deemed to have been held in the possession of HDFC Bank. It includes all profits, incomes, expenditures, or losses arising from the business of CBoP, which will be treated as profits, incomes, expenditures, or losses of HDFC Bank.
For the purpose of implementing or executing the terms of this scheme or scrutinising the existing arrangements, both parties were to constitute the Integration Committee, which has various sub-committees and they must agree unanimously to implement any decision with respect to this scheme.
Every shareholder of CBoP will receive 1 share of HDFC Bank with a face value of Rs.10/- each for every 29 shares of CBoP with a face value of Rs. 1/- of CBoP. There would be no layoff as all the employees would be deemed to be employees of HDFC Bank. Post-merger, the top management of the merged entity will consist of Mr. Rana Talwar, Chairman of Centurion Bank, as a non-executive director and Mr. Shailendra Bhandari, Managing Director of Centurion Bank, as the Executive Director on the Board.
Post-merger impact on financial position of HDFC Bank
The RBI sanctioned the scheme of amalgamation, resulting in all the branches of Centurion Bank of Punjab functioning as branches of HDFC Bank. The financial position of HDFC Bank, post merger showed a positive impact in terms of net profit and earnings per share. The credit deposit ratio, return on assets, return on equity and cost – income ratio showed an upward trend; however, the net interest margin showed a downward trend.
The earnings per share after the merger had started to increase gradually. It can be clearly indicated that acquiring the CBoP has significantly impacted the financial position of HDFC Bank. It can be inferred from the fact that, prior to the merger, EPS value had been declining in past years. HDFC Bank, post merger, became one of the largest private sector banks, having a strong consumer and employee base and a strong banking channel globally.
Conclusion
The banking industry has been experiencing many mergers and acquisitions to provide better services and acquire great market share in this sector. HDFC became the largest private bank in India after the merger with CBoP. The Indian financial institution has seen various mergers and acquisitions for better functioning and to achieve synergies in the economy. For every merger or acquisition of banks, it is necessary to get sanction and approval from the RBI under the Banking Regulation Act. The executives must consider various factors and need to enter into any such arrangement after conducting due diligence on another party. A merger between two banking institutions is known as a Horizontal merger since both companies are engaged in the same line of business in similar industries.
This is a timeline where we seek equality in everything, and that absolutely makes sense. Needless to say, we have reached this point after travelling through decades and centuries of discrimination, power play and manipulation. We have broken chains of restrictions and taboos, fought gruelling battles against violence on grounds of caste, religion and sex. When it comes to employment, it’s no exception that equality needs to exist.
What is equal employment opportunity
Equal employment opportunity (EEO) stands for fairness and non-discriminatory treatment of all employees and applicants. It requires the employer to treat all employees and job applicants equally, irrespective of their race, religion, colour, age, gender, gender identity, disability, sexual orientation, or any other protected characteristic. Due to previous evidence of discrimination, certain characteristics have been classified as protected. In many countries, these characteristics include: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation
EEO is not only a legal obligation for employers but also a strategic advantage that can enhance organisational performance, diversity and inclusion. In the eyes of the law, employers cannot allow biases against certain characteristics to hire or reject candidates or make other employment decisions, which include compensation and benefits, bonuses and incentives, work environment and conditions of employment, promotions/demotions and transfers, disciplinary measures, attendance and leave management, dressing and appearance. The only things that can influence their decision are the merits/ demerits, ability, work ethics, knowledge and skills of the employee/ potential employee.
A brief history of how EEO came into existence
EEO laws and regulations were enacted during the 20th century in the US, culminating in the Civil Rights Movement and the efforts of Congress.
The first major milestone in the history of EEO was the Civil Rights Act of 1964, which prohibited discrimination in employment based on colour, national origin, race, religion, and sex. Title VII of the Act also created the Equal Employment Opportunity Commission (EEOC) to enforce the law and assist United States employees who faced discrimination. It was the first federal law in favour of protecting the interests of workers and employees.
The first few years following the legislation of the EEOC were spent interpreting, defining and handing out guidelines to employees and workers about its laws and clauses. However, the EEOC did not have much power until 1972, when Congress granted it the authority to handle lawsuits against employers who violated the anti-discriminatory clauses.
In addition to Title VII, other federal statutes were enacted over the years to expand the scope of EEO and protect more groups of workers from discrimination. These include:
The Equal Pay Act of 1963 prohibits employers from paying employees of one sex less wages than those of the other while making them perform work of equal capacity, intelligence and time requirements.
The Age Discrimination in Employment Act of 1967 prohibits discrimination in employment on the basis of age against individuals 40 years of age or older. It does not consider individuals under the age of 40.
The Rehabilitation Act of 1973, which prohibits discrimination on the basis of mental and physical disability. Under this Act, those who possess, or are thought to possess, a wide range of disabilities, ranging from Paraplegia to Down Syndrome to Autism, are protected. However, it does not emphasise that an employer must hire candidates with the disabilities that the statute mentions.
The Americans with Disabilities Act of 1990 prohibits discrimination against qualified individuals with disabilities by private employers, state and local governments, employment agencies, and labour unions.
These laws also required employers to make reasonable accommodations for employees with disabilities unless it would cause undue hardship to their business operations.
The various ways in which EEO can benefit organisations
EEO is not only a legal obligation but also a moral and business imperative. It promotes diversity, inclusion, and fairness in the workplace, which, in turn, benefits both employees and employers in terms of productivity, innovation, and customer satisfaction. It is a strategic management move. Let’s have a look at the various aspects that get boosted upon implementation of EEO:
Improving employee engagement and retention: Employees who feel valued, respected and supported by their employers are more likely to stay motivated, productive and loyal. They are also less likely to experience stress, burnout and discomfort at the workplace. This is a strategic step to bring down employee turnover. According to a study by Deloitte, inclusive teams outperformed their peers by 80% in team-based assessments.
Attracting and retaining diverse talent: EEO can help organisations tap into a wider pool of qualified candidates and leverage the advantages of diverse perspectives, skills and experiences. Diversity fosters creativity, innovation and problem-solving, as well as improving customer service and market reach.
Enhancing organisational reputation and brand image: An organisation with EEO naturally builds trust and credibility with its stakeholders, which include customers, investors, suppliers and communities. EEO helps organisations comply with legal and ethical standards and avoid potential lawsuits, fines or sanctions. For example, a report by McKinsey & Company records that companies in the top quartile for racial and ethnic diversity were 35% more likely to have financial returns above their national industry median. A Glassdoor survey revealed that 76% of job seekers said that a diverse workforce was important when considering job offers. Companies that rank top on the charts of diversity and inclusion are: Visa, Accenture, Here Technologies, Novartis, Medtronics, Nestle and the list goes on.
Promoting a culture of diversity, inclusion and belonging (DIB): EEO encourages a work environment where everyone feels welcome, valued and empowered to contribute to the organisational goals and vision. DIB can foster collaboration, communication and learning among employees, as well as enhance their well-being and sense of purpose. A Society for Human Resource Management (SHRM) report showed that 88% of the employees considered respectful treatment on the job crucial to their job satisfaction.
EEO facilitates Business Process Outsourcing (BPOs): One of the sectors that can greatly benefit from EEO is business process outsourcing (BPO). BPOs often operate in global markets and serve diverse clients across different industries and regions. Therefore, having a diverse and inclusive workforce can help BPOs gain a competitive edge and deliver high-quality services. Some of the benefits of EEO for BPOs are:
Improving customer satisfaction and loyalty: BPOs can better understand and meet the needs and expectations of their diverse customers by having employees who can relate to them culturally, linguistically and emotionally. BPOs can also leverage their employees’ diverse insights and feedback to improve their products, services and processes. According to a study by Acquire BPO, 86% of customers said that they would be more loyal to a company that values diversity.
Enhancing employee performance and productivity: BPOs can boost their employees’ morale, motivation and efficiency by providing them with equal opportunities for career development, training and recognition. BPOs can also reduce employee turnover and absenteeism rates by creating a supportive and respectful work culture. According to a study by the International Journal for Scientific Research and Development (IJSRD), there was a positive correlation between EEO practises and employee performance in BPOs.
Reducing operational costs and risks: A lot of money and resources can be saved by BPO’s by avoiding legal disputes, penalties or reputational damage due to discrimination or harassment complaints. This can be achieved by enforcing policies that ensure compliance with EEO. BPOs can also mitigate the risks of losing clients or contracts due to poor service quality or ethical violations through the implementation of EEO. According to a study by the International Journal of Financial Management Research (IJFMR), there was a negative correlation between EEO practises and operational costs in BPOs.
How do you file an EEO complaint in the United States
A federal employee or job applicant who has faced discrimination in the workplace, has the right to file an Equal Employment Opportunity (EEO) complaint. This is a legal process that can help them seek justice and remedy any form of discrimination they face at the workplace or during recruitment. However, filing an EEO complaint can be daunting and confusing, especially if one is not familiar with the rules and procedures involved. So, let’s explain the basic steps of filing an EEO complaint and provide some useful tips and resources to help you along the way (note that these are meant for employees and job seekers in the United States):
Contact an EEO counsellor: The first thing you need to do is contact an EEO counsellor at the agency where you work or where you applied for a job. You must do this within 45 days from the day the incident of discrimination occurred, or you may lose your right to file a complaint. The EEO counsellor will inform you of your rights and responsibilities, explaining the EEO process. They will first try to resolve the matter informally through alternative dispute resolution (ADR) procedures. The counselling or ADR period usually lasts for 30 days, but it can be extended by another 60 days if both parties agree.
File a formal complaint: If the dispute does not find settlement during the ADR, the next step is to file a formal complaint against the agency with its EEO Office. You will receive a notice from your EEO counsellor after the final interview about how to file a complaint and you must do it in the next 15 days. You must file your complaint at the same EEO Office where you received counselling.
Your complaint must contain:
Your name, address, and telephone number;
A short description of the events that you believe were discriminatory (for example, you were terminated, demoted, harassed);
Reason why you believe you were discriminated against (for example, because of your race, colour, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability, genetic information or retaliation);
A short description of any injury you suffered; and
Your signature (or your lawyer’s signature).
The agency will review your complaint and decide whether to accept it for investigation or dismiss it for a procedural reason (for example, because your claim was filed too late). If the agency accepts your complaint, it has 180 days to complete it. If the agency dismisses your complaint, you can appeal the dismissal to the EEOC or file a lawsuit in federal court.
Request a hearing or an agency decision: After the investigation is completed, the agency will give you two choices: you can either request a hearing before an EEOC Administrative Judge or ask the agency to issue a decision as to whether discrimination occurred. You must make your choice within 30 days from the day you receive the investigation report from the agency.
If you request a hearing, an EEOC Administrative Judge will conduct a trial-like proceeding where both parties can present evidence and witnesses. The judge will issue a decision within 180 days of your hearing request. The agency must issue a final order within 40 days of receiving the judge’s decision, stating whether it agrees or disagrees with the decision. It also states the remedies it will provide.
If you ask for an agency decision, the agency will issue a final decision within 60 days of receiving your request.
File a lawsuit: If you are not satisfied with the outcome of your complaint, you have several options to challenge it:
You can challenge the agency’s final order or decision within 30 days of receiving it.
You can file a lawsuit in federal court within 90 days of receiving the agency’s final order or decision.
You can request reconsideration of the EEOC’s appellate decision within 30 days of receiving it.
You can file a lawsuit in federal court within 90 days of receiving the EEOC’s appellate decision if that decision is also unsatisfactory to you.
You should consult with an attorney before pursuing any of these options.
Handy tips and resources while filing an EEO complaint
Filing an EEO complaint can be a complex and lengthy process, but you don’t have to go through it alone. Here are some tips and resources to help you:
Keep a record of all the documents and communications related to your complaint, such as the dates, times, names, and details of the discriminatory events, the names and contact information of any witnesses, and copies of your complaint, notices, reports, and decisions within accessible reach.
Follow the deadlines and instructions carefully. If you miss a deadline or fail to follow a procedure, your complaint may be dismissed or delayed.
Seek a legal advisor’s representation. You have the right to hire a lawyer or a representative at any stage of the EEO process. A lawyer or a representative can help you understand your rights, prepare your complaint, gather evidence, negotiate a settlement, or litigate your case. You can find a list of lawyers and representatives who specialise in EEO cases here.
What are the EEO provisions in the Indian Constitution?
The Indian Constitution embodies the spirit of anti-discrimination and equal opportunity and is the flagbearer of the nation’s democratic foundations. Article 15 of our Constitution prohibits the state from discriminating on the grounds of religion, race, caste, sex or place of birth in matters such as access to public places, education and employment. Article 16 guarantees equal opportunity in matters of public employment and prohibits any discrimination on the same grounds as mentioned in Article 15, additionally, on the grounds of descent or residence.
However, the same articles also allow for some exceptions and reservations to promote the interests of socially and economically disadvantaged groups, such as the Scheduled Castes, Scheduled Tribes and Other Backward Classes. Article 16(4) empowers the state to make any provision for the reservation of appointments or posts in favour of any backward class citizens that, in the opinion of the state, are not adequately represented in the services under the state. Article 16(4A) further enables the state to make any provision for reservation in matters of promotion in favour of the Scheduled Castes and Scheduled Tribes, which, in the opinion of the state, are not adequately represented in the services under the state. These provisions, although seemingly contradictory, are complementary to the provision of EEO under law.
Provision of EEO in other Indian laws and policies
Apart from the constitutional provisions, there are other statutes and policies that aim to uphold EEO and prevent discrimination in employment. Some of these are:
The Equal Remuneration Act, 1976, prohibits discrimination on the grounds of sex in matters of wages and recruitment for the same work or work of a similar nature.
The Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995, which provides for reservation of not less than three percent of vacancies in government establishments for persons with disabilities. The Act lists seven conditions of disabilities that are considered under this act: blindness, low vision, leprosy (cured), hearing impairment, locomotor disability, mental retardation, and mental illness.
The Equal Employment Opportunity (EEO) and Anti-Discrimination Policy Document by Digital Empowerment Foundation (DEF), which is an example of a voluntary policy adopted by a non-governmental organisation to promote EEO and discourage workplace discrimination.
Conclusion
The impact of equal employment on organisations is profound and far-reaching. It extends beyond compliance with legal requirements and ethical considerations to become a strategic imperative for businesses in the modern world. Organisations that prioritise diversity, equity, and inclusion in their workforce experience a multitude of benefits.
First and foremost, equal employment fosters a more innovative and creative work environment. Diverse teams bring together individuals with varied perspectives, backgrounds, and experiences, leading to richer and more comprehensive problem-solving and decision-making processes. This diversity of thought can be a significant driver of innovation and competitive advantage.
In today’s digital age, the internet has become a thriving platform for businesses to advertise and promote their products and services. However, with the rise of online advertising, trademark infringement has become a significant concern for trademark owners. The Internet’s borderless nature poses jurisdictional challenges when addressing trademark infringement through website advertising. Trademarks are essential business assets, serving as distinctive symbols that establish brand identity and consumer trust. The unauthorised use of trademarks through online advertisements can cause significant harm to trademark owners, leading to confusion among consumers and dilution of the brand’s reputation. However, the internet’s borderless nature complicates the determination of jurisdiction, making it challenging for trademark owners to enforce their rights against infringers in different jurisdictions. This article explores the complexities surrounding jurisdictional issues in the context of trademark infringement and provides insights into potential solutions
What is trademark infringement
“The ideal trademark is pushed to its utmost limits in terms of abstraction and ambiguity yet is still readable. Trademarks are usually metaphors of one kind or another. And are, in a certain sense, thinking made visible.” ~ Saul Bass
As Saul Bass mentioned, a trademark in its basic sense means any symbol or mark that is unique so that it differentiates any product or service from its competitors in the market, and it becomes easy for the customer to identify the same. The whole and sole aim of registering a brand is to protect it from unauthorised use by any other party. A trademark is a sort of licenced innovation; it can be possessed by any business association, individual or any legitimate element. While an infringement literally means any violation, breach or unauthorised act. In layman’s language, an action or situation that interferes with the rights of the person and the freedom they are entitled to.
Subsequently, merging both terms, it can be inferred that trademark infringement is the unauthorised use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or a mistake about the source of the goods and/or services.
To register a trademark in India, one needs to file an application and submit the relevant fees to the Trademark Registry (TMR). TMR then reviews the submitted application, and the proprietors of the accepted application are then provided with the certification of Trademark registration.
Section 2 of the Trademarks Act of 1999 defines various terms used in relation to trademarks and related activities. It defines “mark” as a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging, combination of colours, or any combination thereof.
According to Section 29 of the Act, a registered trademark is infringed when an unlicensed proprietor uses the aforementioned mark for business or commercial purposes. Section 29(4) of the Act also emphasises that the word ‘dilution’ provides the basis for trademark infringement.
Website advertisements and trademark infringement
Online advertisement or web advertising, is nothing but an Internet-based advertisement, where it means advertisement in any form; it could include email campaigns, social media activity, website, blog, etc. But if website advertising is discussed, it may pertain to PPC and display advertising. This type of advertising is more engaging than its contemporary forms. In PPC, or pay-per-click, the company pays a search engine (Google or Bing) per click on the advertisement or link to its website, which appears on any search by any user.
Make-My-Trip vs Booking.com
In this case, it was said that whenever any user searched for ‘MakeMyTrip’ on Google, the first link to be shown was www.booking.com.
Upon review, it appeared that the latter had been using MakeMyTrip’s trademark for its own Google Ad promotions. Owing to MakeMyTrip’s prominent existence in the Indian travel-booking space, Booking.com, a Dutch online travel agency, tried to gain quick and easy prominence in the country’s travel ecosystem.
As a result, a lawsuit was filed under which Booking.com is now restrained from using the mark ‘MakeMyTrip’ altogether as a keyword in the Google Ads programme until a further hearing.
Jurisdictional issues
Jurisdictional issues arise when a trademark holder wants to take legal action against a website owner for trademark infringement. In most cases, the website owner is located in a different country than the trademark holder. This makes it difficult to determine which country’s laws apply to the case.
In order to determine jurisdiction, courts will look at several factors, including where the website is hosted, where the website owner is located, and where the trademark holder is located. The courts will also look at where the majority of the website’s users are located.
One of the biggest challenges in these cases is enforcing judgements across borders. If a court in one country orders a website owner in another country to pay damages, it can be difficult to enforce that judgement.
Overall, jurisdictional issues in cases of website advertising and trademark infringement can be complex and difficult to navigate. It’s important for trademark holders to work with experienced attorneys who can help them understand their legal options and navigate the legal system.
The jurisdictional challenges in addressing trademark infringement through website advertising are complex due to the unique nature of the Internet. Some challenges include:
Lack of international harmonisation: The lack of uniform international laws governing jurisdiction in website advertising trademark infringement cases makes it difficult to establish clear rules for jurisdictional determinations. Harmonisation efforts across jurisdictions could help streamline the process.
Difficulty in enforcing judgments: Even if a court asserts jurisdiction over a trademark infringement case, enforcing judgements against infringing parties located in foreign jurisdictions can be a daunting task. Cooperation and mutual recognition agreements between countries can facilitate the enforcement process.
Personal jurisdiction: One of the key jurisdictional challenges in trademark infringement cases involving website advertisements is establishing personal jurisdiction over the defendant. Traditional notions of personal jurisdiction, which were developed long before the internet era, are often ill-suited to handle online disputes. Courts must consider whether the defendant’s online activities, such as placing ads on websites accessible in a particular jurisdiction, are sufficient to establish jurisdiction.
Specific vs. general jurisdiction: Courts may distinguish between specific and general jurisdiction. Specific jurisdiction relates to cases where the defendant has purposefully directed their activities towards a particular jurisdiction, such as targeting customers in that area through online advertisements. General jurisdiction, on the other hand, typically requires a higher threshold, such as the defendant having continuous and systematic contacts with the jurisdiction.
Choice of law: Determining which jurisdiction’s laws apply in cases involving website advertisements can be challenging. Courts must consider not only where the infringement occurred but also which jurisdiction has the most significant interest in the case. This may involve analysing where the trademark is registered, where the defendant is based, and where the majority of the harm occurred.
Ht Media Limited & Anr. vs. Brainlink International, Inc. & Anr. (2021)
In the above mentioned case, petitioners were a leading national news agency, and they found that an entity in New York is infringing upon its trademark rights by using the domain name www.hindustan.com, which is indistinguishable from Hindustan Times, which was the plaintiff’s registered trademark in India.
The Court, while exercising its extra-territorial jurisdiction over the defendant based out of New York, granted an anti-suit injunction against its use of the domain name. The honourable Delhi High Court pointed out:
The filing of the instant suit by the defendant in New York is vexatious and oppressive, as the plaintiff has no registered trademark rights in the USA.
The act of the defendant is an attempt on his part to validate the infringement of the plaintiff’s trademark. The trademarks of the plaintiffs are registered only in India and the goodwill of the plaintiffs extends across international borders.
On the basis of the aforementioned observations, it was held that the plaintiff prima facie made a case and hence was granted an anti-suit injunction.
Recent developments
Courts have been grappling with these jurisdictional challenges and have started to adapt to the digital age. Here are a few noteworthy developments:
Zippo sliding scale: Some courts have adopted the Zippo sliding scale, which categorises website interactions into three levels:
Websites with no interactivity,
websites with limited interactivity, and
websites with substantial interactivity.
Courts use this scale to determine whether personal jurisdiction is appropriate based on the level of interaction between the website and users in the jurisdiction.
Streamlined procedures: Some jurisdictions have introduced streamlined procedures for handling trademark infringement cases involving online activities. These procedures aim to provide efficient resolutions while ensuring fairness to all parties involved.
Suggestions
The best suggestion for dealing with jurisdictional issues in website advertising and trademark infringement is to include a clause in the website’s terms and conditions that specifies the jurisdiction that will handle any disputes related to trademark infringement. This can help to avoid confusion and ensure that all parties are aware of the governing laws and regulations. Additionally, it’s important to work with a legal expert who can provide guidance on how to navigate these complex issues and ensure that your business is in compliance with all applicable laws and regulations.
Some more potential solutions to address these challenges could be:
Enhanced cooperation between jurisdictions: Increased collaboration can help establish consistent principles for determining jurisdiction in website advertising trademark infringement cases. International agreements and conventions could promote uniformity and provide clearer guidelines for courts worldwide.
Strengthening enforcement mechanisms: Establishing effective mechanisms for cross-border enforcement of judgements is crucial. Strengthening international cooperation in intellectual property enforcement and encouraging the adoption of mutual recognition agreements can facilitate the enforcement of judgements across jurisdictions.
Developing specialised forums: Establishing specialised forums or courts to handle cross-border intellectual property disputes could provide expertise in dealing with jurisdictional issues arising from website advertising trademark infringement cases. These forums could be equipped to understand the unique complexities of online advertising and ensure fair and efficient resolution of disputes
Conclusion
Jurisdictional issues in trademark infringement cases related to website advertising present significant challenges due to the global reach of the Internet. The borderless nature of the digital landscape requires innovative approaches to resolve these challenges effectively. By fostering international cooperation Additionally, the nature of website advertisements often involves complex networks and multiple intermediaries, such as ad networks and hosting providers. Identifying the responsible party and establishing jurisdiction can be a convoluted process, further complicating legal proceedings.
Furthermore, issues of jurisdictional enforcement arise when attempting to enforce judgements or seek remedies across borders. Even if a trademark owner succeeds in obtaining a favourable judgement, enforcing it in another jurisdiction may be challenging due to differences in legal systems and a lack of international cooperation. Addressing jurisdictional issues in website advertising trademark infringement cases requires a multifaceted approach. Collaborative efforts, technological innovations, educational initiatives, and international cooperation are key to creating a more harmonious and effective framework for resolving disputes in the digital era. By navigating the complexities of jurisdiction, stakeholders can protect their trademark rights and foster a fair and equitable online marketplace.
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This article is written by Sakshi Singh, from Amity Law School, Lucknow. This article provides a detailed analysis of fundamental rights and constitutional rights, their meaning, origin, scope, and classification, while focusing mainly on the differences between the two.
Table of Contents
Introduction
The concept of rights originated from the voice of protest against oppression perpetrated by the dominant group in society. Rights are meant to safeguard an individual from the irresponsible and arbitrary use of power by the state or the ruling class. The Constitution of India, 1950 is one such supreme law of the land that contains various essential rights. It consists of fundamental rights, directive principles of state policy (DPSP), fundamental duties, etc.
The Indian Constitution is a unique legal document that enshrines a special kind of norm and stands at the top of the normative pyramid. Among every right incorporated in the Indian Constitution, fundamental rights are the most important, followed by other constitutional rights. Though fundamental rights are also part of constitutional rights, they are added in a different Part (Part III) of the Constitution so as to give exclusive recognition to inherent human dignity and the equal and inalienable rights of all members of the human family. Such recognition is the foundation of freedom, justice, and peace in the world.
After independence, when India proceeded to become a welfare state, certain rights were considered fundamental for a dignified life. For instance, the right to equality without any discrimination, the right to freedom, etc. are essential rights for the dignified survival of an individual. However, the overall concept of rights is not limited to fundamental rights; there are other constitutional rights and legal rights.
Difference between constitutional rights and fundamental rights
Fundamental rights and constitutional rights are differentiated on the basis of their meaning, origin, scope, and classification. Following is the detailed differentiation between fundamental rights and constitutional rights on different grounds:
Meaning
Constitutional rights
Constitutional rights, as the name suggests, are a set of rights specifically stipulated in the Constitution of a nation. These are the rights conferred on every citizen of the country, as we have adopted this Constitution and the rights thereunder for ourselves. The Preamble of the Indian Constitution is proof of this fact and expressly states that “We, the people of India ……do hereby adopt, enact and give to ourselves this Constitution.”
Unlike fundamental rights, which are granted to everyone without any discrimination on the grounds of age, sex, place of birth, etc., constitutional rights are not granted to everyone. For instance, the right to vote is a constitutional right guaranteed under Article 326 for Indian citizens over 18 years of age.
Fundamental rights
Part III of the Constitution of India provides for important fundamental rights. The Indian Constitution guarantees basic human rights and liberty to all the people of India by means of fundamental rights. Along with that, fundamental rights also contain welfare measures for the downtrodden sections of society in order to uplift them and help them stand on par with the privileged or common population. Women, children, socially and economically backward classes, Scheduled Tribes, and other backward classes of society have been granted upliftment through guaranteeing fundamental rights and recognising historical injustice. For instance, the provision for reservation under Article 16 and Article 17 incorporates the provision for the abolition of untouchability, which had been practised in the rural settings of the country for ages.
Fundamental rights are the set of rights granted to citizens of the country as well as non-citizens i.e., foreigners in some cases. For instance, the fundamental right of equality under Article 14 is for all, irrespective of their religion, race, caste, sex, or place of birth. The importance of fundamental rights can be assessed by the fact that even during a period of emergency when all rights under the Constitution are suspended, only two fundamental rights persist: (i) the right to life and personal liberty under Article 21; and (ii) right of protection with respect to a conviction against the state under Article 20.
In the case of Kaushal Kishore v. The State of Uttar Pradesh and Ors. (2023), a family was travelling from Noida to Sahjahanpur, where they were waylaid by goons who then looted and gang raped the daughter and wife of the petitioner. While deciding on the question of whether fundamental rights can be enforced against private parties other than the state or its instrumentalities, the constitutional bench of the Supreme Court has affirmatively held that the original thinking of this Court that these rights can be enforced only against the state changed over a period of time. “The transformation was from “State” to “Authorities” to “instrumentalities of State” to “agency of the Government” to “impregnation with Governmental character” to “enjoyment of monopoly status conferred by State” to “deep and pervasive control” to the “nature of the duties/functions performed”.
Origin of the concept
Constitutional rights
In the year 1215, the then King John of England signed a Charter which is known as Magna Carta. The Magna Carta, or “Great Charter,” has great historical significance and influence in the development of the rules of constitutional law. The first codified Constitution of the world was the Constitution of the United States of America which was written in 1787 and came into force in 1788. It consisted of a Preamble, 7 Articles, a closing endorsement along with Bill of Rights.
Since constitutional rights are an after-effect of the Indian Constitution, their origin can be understood by the origin of the Constitution. All this starts with the Nehru report published in 1928 as a result of the All Party Conference.
The Constitution of India has been assembled from borrowed features from British India’s legislation and the Constitution of other countries. Statutes such as the Government of India Act 1919, the Indian Councils Acts of 1861, 1892 and 1909, the Government of India Act, 1935 and the Indian Independence Act, 1947 played a vital role in framing the Constitution we have now. It was the constituent assembly that drafted the Indian Constitution, consisting of all the rights, in almost 3 years. Since then, the people of India have enjoyed numerous constitutional rights, including civil and political rights, fundamental rights, social rights, and economic rights.
Fundamental rights
The origin of fundamental rights can be traced back to the 17th century with the introduction of theories that enumerated the concept of basic, inalienable natural rights. It was believed that, by virtue of being humans, we are all granted some natural and inseparable rights.
However, the modern trend of guaranteeing everyone basic fundamental rights can be traced back to 1789, when the first ever Constitution of the United States of America (USA) was drafted. The U.S. Constitution was the first modern constitution that gave the world a solid notion of human rights by incorporating them into the fundamental law of the land and making them justiciable and enforceable through the instrumentality of the Courts through the 14th Amendment.
Scope
Constitutional rights
In a way, constitutional rights do not have a wider scope with regard to applicability and judicial interpretation. However, when it comes to the range of rights, it has a wider scope in the sense that it includes a wide range of rights and freedoms.
It can be seen from the following image that fundamental rights fall within the ambit of constitutional rights. The Indian Constitution contains certain rights that are known as constitutional rights. Further, there is a specific Part of the Constitution that guarantees basic rights known as fundamental rights.
Fundamental rights
Fundamental rights have a broader scope than normal constitutional rights. All laws in India are subject to judicial interpretation, and the higher judiciary has, from time to time, worked to broaden the scope and applicability of the fundamental rights. Article 13 clearly states that the state is not empowered to make or formulate any law that derogates from the fundamental rights guaranteed under Part III of the Constitution. If state make such laws, they would be void to the extent that the particular law derogates from a fundamental right. This Article is also applicable to the laws that were passed before the commencement of the Constitution. So far, the law made before the commencement of the Constitution is inconsistent with the fundamental right; to that extent, it would be void. In this Article, the term ‘law’ has a very wide definition, which includes ordinance, order, bye-law, rule, regulation, notification, custom, or usages in force within the territory of India. Therefore, any statute, rule, regulation, or amendment that, even in the slightest way, contravenes the basic fundamental rights can be abrogated with immediate effects.
As held in the recent notable case of Indian Young Lawyers Association v. State of Kerala (2018), also known as the Sabarimala case, where the question was raised on the practice of prohibiting women from entering the temple if they belong to the age group of 10-50. This practice was backed by Rule 3(b) of the Kerala Hindu Places of Public Worship Act, 1965 which stated the right of Hindu denominations to exclude women from places of worship if it is done on the basis of customs. The Supreme Court, in this case, has held that this practice is violative of the right to equality under Article 14, the right against discrimination under Article 15, the right to liberty under Article 21, and the right to religion under Article 25(1). Consequently, Rule 3(b) of the Kerala Hindu Places of Public Worship Act, 1965 was declared unconstitutional.
Not only the laws of India, but if any Act or omission on the part of the state contravenes the fundamental rights given in Part III of the Indian Constitution. Please note that state here means the state defined under Article 12 which includes the Central Government, State Governments, both Houses of Parliament, and the Legislative Assembly of each state, along with all local or other authorities within the territory of India or under the control of the Government of India.
Classification
Constitutional rights
Constitutional rights can be roughly classified into four categories namely, (i) civil rights; (ii) political rights; (iii) economic rights; and (iv) social rights
Civil rights
Civil rights are those rights, powers, immunities, and privileges that are conferred on citizens of any nation by virtue of being citizens. Civil rights are given to everyone regardless of their gender, class, caste, creed, race, ethnicity, religion, nationality, or any other personal character. It is being conferred to all the citizens residing within the territorial boundaries of a country for their peaceful and dignified existence.
In the case of Hussainara Khatoon and Ors. v. Home Secretary, State of Bihar (1979), a PIL was filed in the Apex Court on the basis of news reports of a mass of undertrials being kept in the jails of Bihar for the period extending the actual imprisonment that might be awarded. The issue of contention in this case was whether the right to speedy trials is part of Article 21. A single judge bench of P. N. Bhagwati has held that “the State is under a constitutional mandate to ensure speedy trial”. Further, the Court held that the right to speedy trials is part of Article 21 as well as Article 14, which is about equal justice, and is also a compulsion of the constitutional directive embodied in Article 39A.
Certain examples of civil rights guaranteed under the Indian Constitution, inter alia, include:
Every citizen of the country who is 18 years of age or older will have the right to vote without any discrimination on the basis of religion, race, caste, or sex.
The provisions of Article 20 grant every citizen the right to a fair trial. In other words, rights against self-incrimination, rights against ex-post facto laws, and rights against double jeopardy. To learn more about a fair trial, refer here.
The right to be part of government services (Article 309);
To know more about civil rights under the Indian Constitution, refer here.
Political rights
The rights by which citizens of a country participate in the political agendas of the country, including that of the management of government, are known as political rights. Some of the important political rights granted under the Indian Constitution include the right to criticise the government, the right to vote, the right to contest elections, the right to public offices, the right to form political parties, the reservation of seats for certain classes in Parliament and legislative assemblies, etc.
Economic rights
Economic rights are those rights guaranteed under the Constitution to ensure the economic security of every citizen. Economic rights include the right to work, the right to a good working environment, the right to proper wages, the right to food, etc.
To learn more about economic rights under the Constitution, refer here.
Social rights
Social rights are those rights that are important to fulfil societal demands and promote social inclusion and solidarity. Social rights under the Indian Constitution include right to healthcare services, right to access to social protection, right to employment, right to free legal aid, social rights for minority social groups, etc.
Fundamental rights
Fundamental rights can be categorised into six classes-
Right to equality (Article 14-18)
The right to equality means treating everyone equally without any favouritism or discrimination towards any person or group. It means equality before the law and equal protection of the law under Article 14 of the Indian Constitution. The interpreted meaning of the right to equality is “equality among equals” i.e., people with equal social and economic status must be treated equally. Therefore, any kind of discrimination on the grounds of religion, race, caste, sex, or place of birth is prohibited under Article 15 of the Constitution. Further, Article 16 vouchsafes for equality of opportunity for all citizens in the matter of public employment, in other words, there shall be no discrimination on the grounds of religion, sex, descent, race, caste, or place of birth in the matter of employment opportunity in public offices. However, this Article creates a separate room for the reservation of socially and economically backwards classes of citizens.
The right to equality is incomplete without breaking the shackles of the age-old practice of untouchability and differentiation on the basis of the elite and lower classes. Therefore, to achieve equality in the true sense, Article 17 abolishes the practice of untouchability and makes it an offence punishable under law, and Article 18 makes a provision for the abolition of titles and a prohibition on holding the office of profit.
To learn more about the right to equality, refer here.
Right to freedom (Article 19-22)
The right to freedom basically means exercising the chores of life without any unwarranted restriction. The right to freedom is a fundamental right granted under Article 19 to Article 22. These rights were crucial to living a free human life, as promoted in the preamble of the Indian Constitution. To begin with, Article 19 guarantees six distinctive rights granted exclusively to citizens of India, including:
(i) Right to freedom of speech and expression [Article 19(1)(a)];
(ii) Right of peaceful assembly without arms [Article 19(1)(b)];
(iii) Right to form associations, unions or cooperative societies [Article 19(1)(c)];
(iv) Right to free movement in the territory of India [Article 19(1)(d)];
(v) Right to reside and settle within any part of Indian territorial border [Article 19(1)(e)]; and
(vi) Right to practise any lawful profession, trade, business, or occupation [Article 19(1)(g)].
All these above-mentioned rights to freedom are subjected to reasonable restrictions imposed from Article 19(2) to Article 19(6) on the grounds of sovereignty and integrity of India, security of the state, friendly relations with a foreign state, public order, decency, and morality, contempt of court, defamation, or Incitement to an offence.
Further, the right to freedom includes protection with respect to conviction for the offences. It is believed that a human is a free soul and can not be confined unless required by law to maintain the law and order of society. Therefore, Article 20 of the Indian Constitution provides the following kinds of protections for personal liberty in the case of conviction for offences – (i) Protection against ex post facto laws; (ii) Protection against double jeopardy; and (iii) Protection against self-incrimination.
The important provision in the right to freedom is Article 21, which talks about the protection of life and personal liberty. The scope of Article 21 has grown wider while including within its ambit the right to privacy, the right to pollution-free water and air, the right against public hanging, the right against custodial death, the right to health and free medical aid, the right to shelter, the right to be under trial, right to go abroad, etc. It is pertinent to note here that the right to education is part of the right to freedom under Article 21A inserted by the Constitution (Eighty-sixth Amendment) Act, 2002. It was so inserted because, without basic education, a sense of freedom cannot be inculcated in a human being.
The last right in this category is provided under Article 22, the right of protection against unlawful arrest and detention. This Article ensures that no person shall be arrested without informing him of the reason for the same. The arrested person deserves the right to consult a legal advisor, or he shall be produced before the magistrate within 24 hours of the arrest. Certain people are excluded from claiming these rights, such as enemy aliens & persons arrested for preventive detention.
To know more about the right to freedom, refer here.
Right against exploitation (Article 23-24)
The right against exploitation is in the third category of fundamental rights given under Article 23 and Article 24. India was ruled and exploited by Brithishers for centuries and was known for bonded labourers and child labourers. To tackle the same, Article 23 strictly prohibits human trafficking, unpaid labour, or any kind of forced labour. To avoid any confusion regarding employment and labour. Article 23(2) makes it clear that the state is free to impose compulsory service for public purposes without any discrimination on the grounds of religion, race, class, or caste. It is crucial to note here that contravention of this provision entails a penal action against the violator in accordance with the law. Further, Article 24 provides protection to children below 14 years of age against employment in any hazardous place, including a factory or mine.
To know more about rights against exploitation, refer here.
Right to freedom of religion (Article 25-28)
India is a country of different faiths ranging from Hinduism, Islam, Christianity, Parsi, etc. Thus, it becomes very important to look after the issue and provide an environment of mutual respect and individual practice. Article 25 of the Indian Constitution manifests freedom to profess, practice and propagate any religion and freedom of conscience, subject to public order, health, and morality. However, the religious rights in this Article can be restricted by an existing law or a new law.
Again, with due regard to public order, health and morality, under Article 26, every religious denomination has the right to:
establish and maintain institutions for the purpose of religion or charity;
manage its religious affairs in the way they want;
own and acquire property of movable or immovable nature under the name of the institution; and
administer such property in accordance with the law.
Next, Article 27 talks about the freedom from paying taxes in matters related to expenses for the promotion and maintenance of a religion or its denominations. Lastly, Article 28 confers the right to freedom from being compelled to attend religious instruction in an educational institution wholly funded by the state. However, if that educational institution is established by a trust that has a basic requirement to impart religious knowledge, then such institutions are free to do so even if they are funded by the state. Again, a criterion for the consent of the person who has to take part in religious institutions is mandatory. Without his consent (or his guardian’s consent, if he is a minor), no person shall be compelled to take part in religious instruction in an education institution receiving aid from state funds.
To know more about the right to freedom of religion, refer here.
Cultural and educational rights (Article 29-30)
India is a country of varied cultures, arts, languages, and customs. Therefore, in this category of rights, Article 29 provides that every residing citizen of India who has a distinct language, script, or culture shall have the right to conserve the same. Further, regarding admission into educational institutions funded by the state, it is clear that no citizen will be denied admission only on the ground of religion, race, caste, or language.
Article 30 provides that all religious and linguistic minorities in society have the right to establish and administer educational institutions of their liking. The state may grant aid to these minority educational institutions, but while doing so, they will not be discriminated against on the basis of religion or language. If the rank is to be acquired to establish such a minority educational institution, then the amount fixed against such acquisition shall not be arbitrary so as to abrogate or restrict the right guaranteed under this Article.
To know more about cultural and educational rights, refer here.
Right to constitutional remedies (Article 32-35)
A bunch of exclusive rights without the means to enforce them doesn’t make sense because a lack of deterrence will render these rights useless in the event of constant infringement. Article 32 of the Indian Constitution gives the Supreme Court the power to issue directions, orders, or writs. There are five kinds of writs the apex court can issue to protect fundamental rights:
Habeas Corpus
Mandamus
Prohibition
Quo Warranto
Certiorari
This power to issue the above mentioned writs is currently confined to the Supreme Court; however, it can be conferred on other courts of valid jurisdiction by a law passed by Parliament.
Further, in this category of fundamental rights, Article 33 confers upon Parliament the power to modify rights under Part III in relation to members of the armed forces, persons employed in a bureau of intelligence or counterintelligence, and persons employed in a telecommunication system for the armed forces or intelligence bureau. This restriction is imposed on these people in order to maintain discipline and ensure the proper discharge of their duties. Along with this, rights in this part can also be restricted if martial law is imposed in any area in accordance with Article 34. Lastly, under Article 35, parliament (and not the state legislature) shall have the power to effectuate law in consonance with rights conferred in this Part.
To know more about the right to constitutional remedies, refer here
Amendability
In this part, a differentiation will be pointed out between fundamental rights and Constitutional rights on the basis of the extent of amendments. Part XX of the Indian Constitution deals with the ‘Amendment of the Constitution’. Article 368 of the Constitution states that Parliament has the power to amend, vary, or repeal any provision of this Constitution by passing a Bill to that effect in both Houses of Parliament. Notably, a majority of 2/3rd of the members present and voting is required for such amendments. Such a passed amendment Bill becomes effective from the date on which the President gives his assent to the Bill.
Constitutional rights
It is known to all that the basic structure doctrine came into existence in the landmark case of Kesavananda Bharati and Anr. v. State of Kerala (1973). In this case, the Apex Court has given a list of constitutional subjects that fall under the purview of basic structure. The basic structure of the Constitution includes supremacy of the Constitution, unity and sovereignty of India, democratic, republican and secularism, federal character of the Constitution, separation of power, fundamental rights, etc. If any Constitutional amendment is found to be violative of the basic structure doctrine, it can be struck down by the Court.
Fundamental rights
Although Parliament is empowered to amend any part of the Constitution, when it comes to the amendability of fundamental rights, a cautious move is recommended so as not to interfere with the basic structure of the Constitution. The basic structure, inter alia, includes “various rights guaranteed in Part III of the Constitution along with the Directive Principle of State Policy (DPSP) under Part IV, which was incorporated in order to build a welfare State.”
In the case of Minerva Mills Ltd. v. Union of India (1980), Sections 4 and 5 of the Constitution (Forty-second Amendment) Act, 1976, were challenged as unconstitutional. Section 5 inserted a new Article 31D, which provided that a law made for the prohibition of anti-national activities shall not be challenged on the ground that it is violative of Articles 14, 19, and 31 (now repealed). The Supreme Court, in this case, has struck down Section 5 of the said amendment and held it to be unconstitutional because it was against the basic structure – the fundamental rights.
Position during emergency
There are certain emergency situations when the rights guaranteed in the Indian Constitution need to be suspended. Part XVIII of the Constitution mentions the emergency provisions. There are three types of emergencies that might be imposed on the country: (i) National emergency; (ii) State emergency; (iii) Financial emergency.
Constitutional rights
During an emergency, Constitutional rights are not suspended as such. Article 226, which is a constitutional right, is not suspended. A person may approach the court for the enforcement of those rights that are not suspended, like the right to life under Article 21.
Fundamental rights
Once an emergency is declared by the President, fundamental rights are suspended for the period of the emergency. Article 359 of the Constitution states that all the rights granted in Part III of the Constitution except (Article 20 and Article 21) are suspended during an emergency. Along with this, all proceedings in any court for the enforcement of such suspended rights are also suspended. Notably, Article 20 is about the rights of the person in relation to conviction in any case, and Article 21 is about rights to life and personal liberty.
Further, According to Article 32(4), fundamental rights can only be suspended in a situation when an emergency is declared by the President. It can not be suspended for any other reason not specified in the Constitution.
Restrictive clauses
Rights without restriction can be dangerous as it may bring anarchy and absolutism. Therefore, it becomes crucial that certain restrictions be imposed upon the ‘rights’ be it fundamental rights, constitutional rights, or statutory rights. These restrictions are put into force in order to harmonise rights with other public objectives or to strike a balance between two conflicting rights.
Constitutional rights
Constitutional rights can be restricted via the formulation of new legislation and also with reasonable restrictions specified in the provision itself. For instance, the right to citizenship under Part II of the Constitution is granted only to those who were domiciled in India for at least 5 years at the commencement of this Constitution or who have one or both parents from India. No other person can claim citizenship under Article 5 of the Indian Constitution. However, the Citizenship (Amendment) Act, 2019 has added new ways to get Indian citizenship along with certain restrictions. It states that illegal migrants from Afghanistan, Bangladesh, and Pakistan who are Hindus, Sikhs, Buddhists, Jains, Parsis, and Christians by religion shall be eligible for citizenship once he/she complete 5 years of residence in India. This right is not conferred on other neighbouring countries like Nepal, Bhutan, and Sri Lanka, nor is it applicable to people of the Islamic faith.
Fundamental rights
Though, the main purpose of imposing restrictions on rights is to balance out conflicting rights, in certain emergency situations, rights can be restricted or curtailed altogether in order to control the situation. For instance, the right granted in Article 19(1)(d),i.e., the. “right to freedom of movement,” was restricted during the time of the COVID-19 pandemic. As Article 19(5) clearly states that rights granted in sub-clause (d) can be restricted inter alia in the interest of the general public. Therefore, in order to protect the interests of the public at large and to contain the spread of the virus, a lockdown can be imposed in any part or whole of India as per Section 144 of the Code of Criminal Procedure, 1973.
Remedies upon denial of rights
Ubi jus ibi remedium is a Latin maxim that carries the meaning that where there are rights, there is always a remedy. A right without remedies ceases to exist because if there is no means to enforce a right upon its infringement, then the basic purpose of giving a right comes to an end.
Constitutional rights
For the enforcement of constitutional rights or to seek remedies in cases of denial of constitutional rights, a person may invoke Article 226 of the Constitution. A person whose rights are infringed may approach the High Court of competent jurisdiction to hear the matter and issue writs, directions or orders to any Government, authority, or other person who has so infringed the rights.
Fundamental rights
Where a fundamental right is encroached upon, the person whose right is encroached upon may approach the Supreme Court under Article 32 of the Indian Constitution. Article 32(1) states that for the enforcement of fundamental rights granted in Part III of the Constitution, a proceeding may be initiated in the Apex Court. The Supreme Court shall have the power to issue any of the five writs- habeas corpus, mandamus, prohibition, quo warranto, and certiorari along with any other appropriate order or direction needed for the enforcement of fundamental rights.
It should be noted that Article 32 can only be invoked for the enforcement of the rights guaranteed in Part III of the Constitution.
Examples
Constitutional rights
Right to vote (Article 325 – 326)
The right to vote is a constitutional right mentioned in Part XV of the Indian Constitution. Article 325 of the Indian Constitution provides that there shall not be any discrimination on the ground of religion, race, caste, or sex with regard to eligibility to cast a vote in the election of Parliament or the state legislature. Further, Article 326 provides the right to vote to every citizen of India who is 18 years of age or older, also known as adult suffrage.
Right to property (Article 300A)
Article 300A provides that everyone has the right to property and this right can only be snatched away by the authority of law.
Right to approach High Court for violating fundamental rights or any other legal rights
Article 226 from Chapter V of Part VI of the Indian Constitution gives the constitutional rights of getting writs, orders, or directions in the form of habeas corpus, mandamus, prohibition, quo warranto and certiorari.
Earlier, the right to education was part of the constitutional rights, but after the 86th Constitutional Amendment Act, 2002, it was added to the list of fundamental rights under Article 21A. Article 21A provides for free and compulsory education for every citizen under the age of 14 years,
Right to Internet
The right to Internet is not an explicit part of the fundamental rights but it was included under the ambit of Article 21 in the case of Faheema Shirin v. State of Kerala (2019).
Differences between constitutional rights and fundamental rights
Basis
Fundamental rights
Constitutional Rights
Meaning
Fundamental rights are a set of rights which are innate necessities to live a dignified human life.
Constitutional rights are the rights granted to the people of India in the Indian Constitution. It also includes fundamental rights.
Fundamental rights can be amended by Constitutional amendment provided that the basic structure of the constitution remains intact.
Constitutional rights can be amended by a constitutional amendment, unlike legal rights which can be amended by ordinary amendment.
Position during emergency
All fundamental rights are suspended during an emergency except Article 20 and Article 21. As per Article 32(4), other than those conditions prescribed under the constitution i.e. emergency provision, fundamental rights can not be suspended on any other ground.
All constitutional rights are not suspended during the emergency period.
Restriction
There are certain reasonable restrictions imposed upon the fundamental rights which are embodied in that particular Article. Eg- Article 21 guarantees the right to life and personal liberty but is subject to “procedure established by law”.
Apart from those specified in the Article, constitutional rights are also subjected to the statutory limitations imposed upon the will of the House of People.Eg- The right to property under Article 300A can be snatched ‘by the authority of law’. This could not have been possible if it were a fundamental right.
Remedies upon denial of rights
In case, any person is denied rights under Part III of the constitution he/she may approach the Supreme Court under Article 32 or the High Court Under Article 226.
Upon infringement of any Constitutional right also one may approach either the High Court under Article 226.
Example
Examples of fundamental rights include: Right to Privacy Right to basic educationRight to seek constitutional remedies
Examples of constitutional rights include: Right to propertyLegislative privilegesReservation of seats for certain classes in the House of People
Conclusion
It is very pertinent to know that fundamental rights cannot be completely differentiated from constitutional rights because fundamental rights are an integral part of the Indian Constitution and are incorporated in Part III of this supreme document. Thus, it can be said that all fundamental rights are constitutional rights, but all constitutional rights are not fundamental rights. However, because of the distinctive and peculiar nature of the rights in Part III of the Indian Constitution, they have an upper hand over the other rights mentioned in other parts of the Constitution. However, for the proper functioning of India as a welfare state, all the rights mentioned in the Constitution other than fundamental rights and constitutional rights are also equally important.
Frequently Asked Questions (FAQs)
Are fundamental rights and constitutional rights different?
This question has mixed answers. It should be noted that fundamental rights are part of constitutional rights. All fundamental rights are constitutional rights,, but all constitutional rights are not fundamental rights. Therefore, these rights can’t be differentiated in the true sense. However, there are still chances for differentiation on the basis of their nature, position during emergency, extent of amendments, restriction, remedies, etc.
What is the basic difference between fundamental rights and constitutional rights?
Though all the rights conferred in the Indian Constitution are equally important to maintain the equitable and humane conditions of societal living. However, amongst the plethora of rights incorporated in the Constitution, rights granted under Part III of the Constitution is an innate necessity for the dignified survival of humankind.
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Congratulations on becoming a Partner at Saraf and Partners! What sparked your interest in this specialised area of law?
Many thanks for the wishes and would like to state that feels like a God-sent opportunity to be able to collaborate with great legal luminaires at Saraf and Partners.
The epiphany with respect to my penchant for tax as a subject was early in my formative years whilst I was pursuing my Chartered Accountancy course (following my father’s footsteps) wherein tax is a paramount subject and I particularly enjoyed dwelling into income tax owing to its complexity and interpretation being involved.
Even the great Eistein has been quoted to say “the hardest thing in the world to understand is income taxes” andI’m sure he wasn’t even talking about the Indian income tax statute. About the Indian Income Tax Act, interestingly, in a High Court decision, Judges have stated that if we have a look at the entire scheme of the Income Tax Act, we’ll learn that it is as complicated as complications could be.
Even at the time of seeking out mandatory articleship/internship under the CA course whilst I was able to get through larger firms based on my academics (being an All India Rank Holder in both the initial levels of CA (PE-I &PE-II)), I chose to learn the ins and outs of tax in a more extensive manner. So that’s how I finally entered into the tax domain and still learning and deciphering the dynamic tax statute with the zeal to provide the requisite handholding to clients.
With your expertise as a Chartered Accountant and a CFA, how do you combine financial analysis and tax advisory to provide holistic solutions to clients?
The advice that one provides to their clients has to be plausible on the legal front but also should be aligned with the financial treatment that would be entailed in the books with respect to the transaction at hand.
Whilst it is a trite law that the financials are not conclusive with respect to the finality of the tax incidence, but the financials would definitely have a persuasive value towards the tax treatment since the financials amongst other things also reflect the intention of the parties. In fact, with the advent of the IND-AS, which are the new accounting standards premised on fair value accounting, the face of the financials has also undergone a drastic shift and deciphering the financials is a different ball game owing to the IND-AS induced notional adjustments and treatments. The financials and the tax reporting carried out by a client are the starting point for any tax controversy/litigation and thus the same should marry well with the tax advice based on the underlying commercial objectives.
Also, we are in an era where valuations are at the forefront and the tax authorities are screening valuations very closely. My learnings from such specialisations enable me to understand the workings of business models and valuations, along with the underlying assumptions based on which the same are formulated. The same has enabled me to handle M&A advisory assignments and advise/defend Clients with respect to transactions consummated by them. The endeavour is to keep learning and upgrading my multi-disciplinary skillsets to be better positioned to provide implementable value-adding advice and support to Clients from all dimensions.
Can you tell us about your journey in the field of taxation and transaction advisory? Being associated with esteemed firms like Nangia Andersen LLP, Grant Thornton, Lakshmikumaran & Sridharan, and MPC Legal, what valuable lessons and experiences have you gained that you plan to bring to your role at Saraf and Partners?
Have been very blessed to be bestowed with very diverse areas of work and great mentors under whose tutelage got to work on complex and challenging assignments early on in my career. The journey has been unfolding to be even more interesting ever since. Handled a wide array of search and seizure matters (including ones involving foreign assets and bank accounts) and represented clients before the tax authorities and various fora for complex tax matters. Have done some bit of work around supporting tax compliances for Clients which helps one understand how the tax advice is put to paper in the tax filings which play a pivotal role.
The majority of my career has been dedicated to assisting clients on myriad transactions: conceptualising, evaluating and presenting avant-garde alternatives for consummating the desired transactions based on the underlying commercial objectives since the same involves a lot of brainstorming sessions.
Was part of the core Private Client Service development group in my earlier stints and have been advising various coveted clients for promoter-centric matters including, inter-alia, estate and succession planning.
My journey and learnings so far would enable me to provide support and value addition to the Clients at Saraf and Partners.
With over a decade of experience, you must have encountered a diverse range of transactions. Could you share a particularly challenging or complex case you’ve handled and how you navigated through it successfully?
Have been involved in a host of transactional matters involving organization structure realignments through mergers/demergers, slump sale/exchange; share & asset deals and capital restructuring, pre-IPO/REIT structuring, ESOP and MSOP structuring, et al.
Each transaction is distinct from the last one and involves its own set of challenges and nuances in all spheres especially on the tax front.
In the recent past, had been approached by Clients for similarly aimed transactions following almost a trend-like pattern.
Owing to the perception and other potential risks with respect to some jurisdictions, we have been approached by Clients to assist them to re-jig their Hold Co. structure. During COVID Clients were reaching out to realign their group structure to avoid issues in the Indian context by virtue of any linkage to a particular jurisdiction(s). Such assignments were really extensive involving multiple jurisdictions and stakeholders.
Over the last few years, fast-growing start-ups and other entities have been actively pursuing the externalisation of their structures to expand their presence in the international landscape and in the process be able to facilitate overseas listing and garner more international clientele/funding. Such externalisation/ internationalisation assignments were fascinating since they involved inter-play of multiple laws and jurisdictions.
However, soon thereafter, we also witnessed a lot of reverse-flips wherein the Clients were keen to dismantle their externalised structures and redomicile their holding company in India owing to various factors(including the India Growth story everyone has been talking about Globally). Such assignments were even more intellectually stimulating and engaging to come up with newfangled alternatives for undoing the structure in an efficient manner.
My approach for every complex transactional assignment has been to break it down into steps and mapping the implications to key activities/steps to the transaction and then outline modalities of attaining the efficient alternative for facilitating the transaction.
In the ever-evolving landscape of tax law, how do you stay up-to-date with the latest developments, and how do you ensure your clients receive the most accurate and up-to-date advice?
With the slew of amendments and/or updates that are being rolled out coupled with the host of judicial pronouncements that are doled out in the realm of Income tax, one needs to have more than just an inclination to go through tax and other literature.
My passion for the subject and zeal to do better drives me to keep myself updated and spend time on a daily basis to revisit the statute and the basic tenets of income tax which are sought to be altered through the amendments and being re-interpreted through new jurisprudence.
With this backdrop, a clear understanding of the facts involved and in-depth exhaustive research form the backbone of every deliverable/advice to ensure that the advice is plausible, well-reasoned and most importantly aligned with the underlying commercial and other key objectives. As trusted partners for the Clients, we need to be proactive and well-versed with the developments to provide holistic advice to facilitate decision-making and implementation.
As the Tax practice at Saraf and Partners expands, how do you plan to mentor and develop junior associates, ensuring a strong talent pipeline for the future? Also, can you share some of your valuable insights for law students who are piqued by tax law and want to grow professionally and enhance their knowledge in tax law?
This is one big responsibility that one is entrusted with while assuming leadership positions to be able to inspire, nurture and guide new professionals on the block. The right guidance and instilling the right methodologies early on would go a long way in gearing up such young minds to be well-rounded tax attorneys in the future. Have developed and/or picked up things, which I to continue to implement even at Saraf and Partners for enhancing the collective wisdom and experience of the Team. We start our day by picking up a provision along with any relevant updates/cases to deliberate amongst ourselves and dwell deeper into the same. This is something even I look forward to since new thought-provoking interpretations and doubts for the same provisions usually germinate in the young minds which are not pre-dispositioned. To facilitate these discussions and as a small token, I give small tax acts to the young associates/interns which is something they can call their own and encourage them to familiarise themselves with the framework of the tax statute. The intention would be to mould aspiring tax attorneys to be better professionals and play a small role in their long lustrous careers ahead.
With respect to the tax field which is perceived to be a super specialised field of law, I get to hear that entrants are mostly reluctant to venture into this domain owing to various factors. For the ones who wish to take up tax, which commands perseverance, in my personal view dwelling on the interpretation of statutes would be a good starting point to be able to better appreciate the essence and interpretation of any law including a fiscal statute like income tax act. Other than this, it would be ideal to get into tax-centric internships and participate in discussions, moots, et al to understand the exact dynamics of tax subjects and practice thereof. In parallel, I keep reading and learning along the way like myself.
Can you tell us about a challenging client situation you encountered in your previous practice, and how you handled it to maintain client satisfaction and trust?
Well, an interesting yet challenging one was one involving a marquee Real Estate Client and one of the land-owning companies within the Group had received compensation from the Government pursuant to a compulsory acquisition. The Client had approached us to understand the implications of upstreaming such compensation to the Group’s flagship entity.
The Client entire team was confident that the compensation received was taxable in the hands of the Group company and the Client wanted us to only focus on the modalities and implications of the dividend being paid by the Company to the Parent since there was a need for deployment of funds on an immediate basis.
We based on our zeal to provide a complete solution to the Client kept pushing for the underlying compulsory acquisition-related documents despite the Client’s reluctance and belief that the compensation would be taxable. We were finally able to get the underlying document from the Client and based on the same we were able to assail that the compensation was not exigible to income tax in the hands of the Group company. Further, to manage the timelines for the fund deployment, we sought to merge the Group entity into the flagship entity through a fast-track merger route.
The assignment was challenging since it required breaking through pre-conceived positions but what matters is that we were able to deliver on our commitment to the Client to provide implementable and efficient solutions in their best interest.
Could you share an example of a tax issue on which you’ve successfully supported a client in the past and the strategies you employed to achieve a favourable outcome?
The IBC law, vis-à-vis, Income tax law interplay has been a very interesting space and has witnessed a lot of tax amendments and jurisprudence but the controversies around the same seem to be never-ending. In one such assignment, we were assisting a client (which was itself in the process of listing) in acquiring another listed entity through the CIRP route. The assignment involved intricacies and strategic decisions around corporate restructuring (consolidation of the targets with the clients, target group restructuring), target listing versus delisting, claims structuring and IBC acquisition tax efficiency.
The acquisition of an entity through IBC (especially a listed one) would entail its own nuances on the tax front including, inter-alia, preservation of available tax losses, implications emanating out of hair cuts/loan waiver, mitigating tax incidence by virtue of share issuance/transfers whilst aiming to attain the desired shareholding in the target and maintaining the public float mandate.
We were able to successfully support the client in strategizing the entire acquisition in an efficient manner and also garner the CoC and NCLT nod on their Resolution Plan to effectuate the acquisition.
In your opinion, what are the key challenges and opportunities for businesses in relation to taxation in the current economic and regulatory landscape?
In the current Indian landscape, the intention of the legislators can be gathered from various amendments and introductions in the recent Finance Acts which is to deepen and widen the tax base or net in India. A similar exercise is also being carried out in the international tax landscape to ensure that the jurisdictions get their fair share of taxes.
In the Indian context, the same is being done since tax collections are what the exchequer needs to fuel India’s Growth story and direct taxes are the major contributor to the current overall scheme
One sort of interesting fact around this is that: Kautilya in his ‘Arthashstra’ had profoundly stated that kosh moolo dandah meaning treasury is the root of administration, which is and it even more important today. You will be surprised to find this on the face of the Income tax return’s acknowledgements(in the watermark) even today.
The challenges which stem from this is that the businesses and their stakeholders would need to keep themselves updated on the latest developments to be in a position to make more informed decisions to mitigate exposures and far-reaching consequences for genuine taxpayers. The opportunity that would arise from such a situation would be that the business should get experts involved at the inception/planning stage itself who would empower the stakeholders to make more informed and efficient decisions from a tax and regulatory perspective.
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The Code on Wages Act, 2019, has brought about significant changes to the existing Payment of Wages Act, with the most notable being the redefinition of “Wage.” In this blog, we will explore the implications of the new wage definition in relation to the Act and its impact on employee salaries.
I have authored this blog with the purpose of assisting readers in finding answers to their general inquiries regarding the new salary structure under the Code on Wages Act. The blog aims to address common FAQs related to the act, providing clarity on readers’ queries. If you have any further questions concerning the Act, please feel free to reach out to me. I am here to help.
The new definition of “wages” according to the Act
The Code on Wages Act, 2019 says:
Wages means all remunerations, whether they are called salaries, allowances, or otherwise, expressed in terms of money.
Wages include basic, dearness allowance, and retaining allowance (if any). These components are also called inclusion components of wages.
Alteration of wages as per the new Act
The Payment of Wages Act applies to employees who earn less than 24,000 rupees per month. But there is no such limit as per the new Code. Hence, the Code shall be applicable to all employees, irrespective of their monthly wages.
Limits of included and specified exclusions
To answer this, let’s delve into the first provisos of Section 2(K) from the Code on Wages Act, provided that, for calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceed one-half, or such other percent as may be notified by the Central Government, of all remuneration calculated under this clause, the amount which exceeds such one-half, or the percent so notified, shall be deemed remuneration and shall be accordingly added to wages under this Clause.
According to the proviso, if the sum of payments made by the employer to the employee under Clauses (a) to (i) exceeds 50% of the total remuneration calculated under this clause, or any other percentage notified by the Central Government, then the amount that exceeds this 50% (or the notified percentage) will be considered part of the remuneration and shall be added back to the wages under this clause. In other words, the provision states that the specified exclusion components are excluded from wages up to a maximum of 50% of the total remuneration.
It is important to note here that the Act clarifies that the excluded components must not exceed 50% of the total remuneration. However, it does not impose any specific limit on the included components, therefore leaving room for the included components to be at least 50% of the gross pay. It is possible for wages to be above the 50% limit and even reach 100% of the salary if there are no excluded components or if they constitute less than or equal to 50% of the total remuneration. The Act aims to ensure that a significant portion of the employee’s compensation is related to wages while allowing flexibility in the inclusion of various components in the remuneration package.
Prescribed limit for “basic” salary pay
The Act specifies that the inclusion components of wages are basic, dearness allowance, and retaining allowance, and it stipulates that these components must constitute at least 50% of the gross pay. Dearness allowance (DA) and retaining allowance (RA) are considered part of the “wages” along with the Basic Pay under the Code on Wages, 2019. So when you calculate the 50% threshold, DA and RA are included in the basic components along with the Basic Pay. Therefore, the sum of basic pay, dearness allowance, and retaining allowance should be at least 50% or more of the gross pay. This also means that wages should be at least 50% of the total remuneration.
What are the specific exclusion components of wages
The Act defines the exemption list as below-
Any statutory bonus;
Any commission payable to the employee;
Any contribution paid by the employer to provident fund or pension are not part of wages;
Any conveyance allowance or travel expense incurred by the employer are excluded from wages;
Any payment provided to an employee to cover specific expenses arising from the nature of their job;
House rent allowance;
Remuneration payable under any award or settlement; or
Any overtime allowance, like-
Any gratuity payable on the termination of the employment; or
Any retrenchment compensation or benefit payable or ex gratia payment made.
The second proviso of Section 2 (K) of the Act says, “Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage.” Explanation- This provision states that in order to ensure equal wages for all genders and for the purpose of calculating wages, the specified emoluments outlined in clauses (d), (f), (g), and (h) will be considered for the computation of salaries. The specified items are limited to 50% of the total salary. If this limit is exceeded, the excess amount will be considered remuneration and will be included in wages.
Continuity of special allowances in the salary structure
While the Code on Wages Act does not explicitly categorise special allowance as an inclusion or exclusion component, it is important to review the specific details in the appointment letter. Provided that your appointment letter does not explicitly define the term special allowance’ concerning this point in the exclusion components list, it may be appropriate to consider the Special Allowance as a part of salary structures while calculating the Cost to Company (CTC). In this context, the Special Allowance can be utilised in the salary structure to account for the residual value, which is the gross salary minus basic and other inclusion components.
Handling dearness allowance (DA) in private companies
In private companies, the dearness allowance is not explicitly defined in the offer letter as it is merged with the employee’s basic salary. If the salaries are paid to the employees above the minimum range, DA can be subsumed.
What is retaining allowance
Under the new Code on Wages, the retaining allowance is classified as wages, necessitating its inclusion in the salary structure if companies have such an allowance outlined in their compensation and benefits policies.
No, the retaining allowance and special allowance are not necessarily equivalent. Ideally, the purposes of both components are different. The retaining allowance is an additional component provided to the employees with the purpose of encouraging them to remain with the organisation for a specific period of time. This component is designed to incentivise employee retention. On the other hand, special allowance is a broader term that encompasses various types of allowances provided to employees. While retention allowance could potentially be included under the umbrella of special allowance, it is important to note that the specific components and their definitions can vary across organisations and industries. Therefore, it’s advisable to refer to the specific policies and guidelines of the organisation in question to determine how these components are defined and categorised within their salary structure.
Meaning of “remuneration in kind”
The definition in the Act mentions that remuneration in kind can be included in wages up to the extent of 15% of wages (gross pay). However , the meaning of the term ‘remuneration in kind’ has not been explained. In general, payment in kind is non-cash remuneration received by an employee for work performed. This can include: food vouchers, grocery, entertainment tickets, fuel, clothing, footwear, free or subsidised housing or transport, electricity, car parking, nurseries or crèches vouchers, training, recreation or club memberships, low or zero-interest loans or subsidised mortgages. Such allowances are given for the personal use or benefit of the employee and family.
Conclusion
The implementation of The Code on Wages Act, 2019, marks a significant milestone in the Indian labour landscape. This comprehensive legislation consolidates and simplifies various wage-related laws, offering greater clarity and transparency for both employers and employees. By setting standardised norms for minimum wages and ensuring timely payments, the Act aims to promote fair labour practises, reduce wage disparities, and enhance the overall welfare of workers across the country.
Furthermore, the Code on Wages Act, 2019, incorporates provisions for regular revision of minimum wages, taking inflation and changing economic conditions into account. This demonstrates a commitment to keeping wages aligned with the cost of living and addressing income inequality.
Mergers and acquisitions (M&A) have become increasingly prevalent in the Indian business landscape, driven by the need for growth, market consolidation, and increased competitiveness. However, M&A transactions are complex undertakings that require careful consideration of legal and regulatory frameworks, particularly finance law. In India, M&A transactions are governed by a comprehensive legal and regulatory framework, including the Companies Act, 2013,the Competition Act, 2002, and various guidelines issued by regulatory authorities such as the Securities and Exchange Board of India (SEBI). Finance law plays a pivotal role in ensuring compliance with these regulations and providing a structured framework for conducting M&A transactions. One key factor for successful M&A transactions in India is compliance with regulatory requirements. Finance law mandates adherence to various regulations, including those related to competition, securities, taxation, and foreign investment. Companies engaging in M&A activities must navigate through these complex laws to ensure compliance and avoid legal repercussions. This necessitates thorough due diligence to identify potential legal risks and liabilities associated with the target company.
Definition and scope of finance law in M&A
Finance law in the context of mergers and acquisitions (M&A) refers to the legal framework that governs the financial aspects of such transactions. The scope of finance law in M&A transactions in India is extensive and crucial to ensure compliance, protect stakeholders’ interests, and facilitate smooth and transparent transactions. It encompasses various key areas, including:
Corporate Law
The Companies Act, 2013, is the primary legislation that governs the formation, management, and regulation of companies in India. In the context of M&A transactions, the Act sets out legal requirements and procedures that companies must adhere to. These include obtaining shareholder approvals for significant decisions, such as mergers, acquisitions, or amalgamations. The Act also outlines the necessary filing of documents with regulatory authorities and ensures compliance with corporate governance norms.
Securities regulations
The Securities and Exchange Board of India (SEBI) regulates the securities market in India. It plays a vital role in M&A transactions by overseeing disclosure requirements, insider trading regulations, and takeover codes to ensure transparency and fairness for investors. One important aspect of securities regulations in M&A transactions is the requirement for adequate disclosure. SEBI mandates that companies involved in M&A activities disclose all material information to the public in a timely manner. This includes information related to the transaction, such as the rationale, financial details, risks, and impact on shareholders’ interests. The objective is to ensure that investors have access to accurate and comprehensive information to make informed investment decisions. SEBI also regulates insider trading in M&A transactions. It imposes restrictions on individuals with access to non-public information about the transaction from trading in securities. Additionally, SEBI has formulated takeover regulations, commonly known as the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, to govern the acquisition of shares and change of control in listed companies. These regulations provide guidelines for the acquisition process, pricing, mandatory open offers, and disclosure requirements, aiming to ensure fairness and the protection of minority shareholders during M&A transactions.
Competition Law
The Competition Act, 2002, aims to prevent anti-competitive practises and regulate combinations that may have an adverse impact on competition. The Competition Commission of India (CCI) reviews and approves M&A transactions to ensure they do not result in unfair market dominance or restrict competition. The CCI examines M&A transactions to assess their potential impact on competition in the relevant market. The primary concern is to prevent the creation of market structures that could lead to a significant reduction in competition or abuse of a dominant position. To comply with the Competition Act, parties to an M&A transaction meeting certain thresholds are required to notify the CCI and obtain its approval before proceeding with the deal. The CCI conducts a comprehensive assessment to determine whether the transaction could have an appreciable adverse effect on competition in the market. If concerns are identified, the CCI may impose conditions or even prohibit the transaction to safeguard competition and protect the interests of consumers.
Tax Laws
Tax considerations are integral to M&A transactions. Finance law encompasses various tax provisions, including those related to capital gains, transfer pricing, and stamp duty, which impact the structuring, valuation, and financial aspects of M&A deals. Recently, the budget aimed at boosting economic growth through increased healthcare and infrastructure spending in response to the Covid-19 pandemic. Proposed reforms in the Finance Bill, 2021, including changes to the Income-Tax Act, 1961, could have a substantial impact on M&A transactions in India, potentially altering the conventional approach and necessitating careful evaluation by stakeholders before entering into such deals.
Due diligence and risk assessment
By conducting comprehensive due diligence, parties can uncover potential legal, financial, and regulatory stumbling blocks that may impact the viability or value of the transaction. The process typically includes the following steps:
Information gathering
The acquiring company, with the assistance of legal and financial advisors, collects relevant information about the target company. This may include financial statements, contracts, legal documents, intellectual property rights, employee information, and regulatory filings.
Financial, legal and operational
Financial experts assess the company’s financial health, profitability, debt obligations, and potential risks. This analysis helps identify any financial red flags or potential liabilities that could impact the transaction. Legal experts review the target company’s legal documents, contracts, licences, permits, litigation history, and compliance with applicable laws and regulations. Operations specialists evaluate the target company’s operational capabilities, assess the efficiency and scalability of the company’s operations and identify any operational risks or bottlenecks.
Risk assessment
Based on the findings from the due diligence process, the acquiring company and its advisors conducted a comprehensive risk assessment. They identify and evaluate potential risks, including financial, legal, operational, market, and regulatory risks. This assessment helps quantify and prioritise risks, enabling the parties to develop strategies to mitigate or manage them.
Reporting and decision-making
The findings from due diligence and risk assessment are documented in a report, which summarises the identified risks, their potential impact, and possible mitigation measures. The report serves as a basis for informed decision-making by the acquiring company’s management and stakeholders.
Post-merger integration and legal compliance
Post-merger integration and legal compliance are crucial aspects of M&A transactions in India. Once a merger or acquisition is completed, the merging entities must navigate the process of integrating their operations while ensuring compliance with legal and regulatory requirements. The following points elaborate on post-merger integration and legal compliance in M&A in India:
Harmonisation of financial statements
Post-merger, the merging entities need to align their financial reporting systems and practises. They must consolidate their financial statements in accordance with accounting standards and regulatory guidelines. This harmonisation ensures accurate financial reporting and transparency in the merged entity’s operations.
Tax planning and compliance
Tax considerations play a significant role in post-merger integration. The merged entity must evaluate its tax obligations and undertake tax planning strategies to optimise its tax position. This involves compliance with tax laws, claiming tax benefits, and ensuring appropriate tax filings in accordance with applicable regulations.
Regulatory compliance
The merged entity must comply with various regulatory requirements specific to its industry. This may include obtaining necessary licences and permits, complying with sector-specific regulations, and adhering to reporting obligations to regulatory authorities such as the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), or other sector-specific regulators.
Employee integration and labour law compliance
Post-merger, integrating the workforce of the merged entities is critical. This includes managing employee contracts, benefits, and policies to ensure compliance with labour laws. Employers must consider employee rights, obligations, and any required notifications to employee representative bodies or labour authorities.
Contractual obligations and legal agreements
The merged entity must review and assess the contractual obligations of both merging entities. This includes reviewing existing agreements, contracts, leases, and licences to ensure compliance with legal requirements and a smooth transition. Any necessary amendments or renegotiations should be undertaken to align with the post-merger strategy.
Corporate governance and compliance
The merged entity must establish effective corporate governance practises, including board structures, decision-making processes, and compliance mechanisms. This ensures adherence to corporate governance regulations, ethical standards, and accountability to stakeholders.
Intellectual property rights
Post-merger, the merged entity must evaluate and consolidate its intellectual property (IP) portfolio. This includes identifying, protecting, and managing the IP assets of both entities to ensure compliance with IP laws and safeguard the merged entity’s IP rights.
Ongoing compliance monitoring
The merged entity must implement a robust compliance monitoring system to ensure ongoing adherence to legal and regulatory requirements. This includes periodic audits, internal controls, and compliance reporting to regulatory authorities as necessary.
Conclusion
Understanding the role of finance law in M&A transactions is imperative for successful deals. It enables stakeholders to navigate the complex legal and financial landscape, ensuring compliance with pertinent regulations throughout the process. From compliance and regulatory frameworks to post-merger integration, finance law provides the framework for achieving favourable outcomes.
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