This article written by Aratrika Deb and Debottam Chattopadhyay of 4th Year, School of Law, KIIT University, Bhubaneswar.

Introduction

The Indian Law has evolved manifold and India has become a pro-arbitration nation with a Judiciary which has given due importance to the process of arbitration. Several cases have received a lot of attention from the world at large. Yet, some areas of arbitration law still remain vague and unexplained due to the lack of judicial decisions interpreting some of the grey areas of the law. One of the most enigmatic or puzzling question is if two Indian Parties can select a Foreign Seat to arbitrate and thus exclude Part I of the Arbitration and Conciliation Act, 1996. This article proposes to analyse and present the current judicial pronouncements on this matter especially in the light of recent case laws.

Relevant Case Laws Analysed and Discussed

M/s Addhar Mercantile Private Limited v Shree Jagdamba Agrico Exports Pvt Ltd[1](Addhar) has considered the important issue – Whether two Indian parties choosing a foreign seat of arbitration and a foreign law governing the arbitration agreement may be understood to be contracting out of Indian law and be therefore considered to be opposed to public policy.

In this case the Applicant and the Respondent had entered into an agreement whereby all disputes were to be referred to arbitration and the arbitration clause included the following language to mean that the arbitration is to take place in India or Singapore and English law is to be applied, though in very ambiguous words.

Eventually a dispute ensued and the Applicant filed an application under Section 11 for appointment of arbitrator and under Section 9 for certain interim relief. The Respondent opposed the application under Section 11(6) of the Arbitration Act on the ground that the parties are governed by English Law and the venue of arbitration should be Singapore.

The question arose if Part One of the Arbitration and Conciliation Act, 1996 (Act) can be excluded by the intent of the both domestic parties.

The applicant contended that the Intention of parties was clear to have arbitration in India and since both parties are Indian, they cannot be allowed to seek exemption from Indian law having cited the judgement in TDM Infrastructure Private Limited v UE Development India Private Limited[2](TDM). The respondent replied by stating that the Hon’ble Bombay High Court has no jurisdiction to resolve the issue. Though both parties are Indian, parties by agreement can agree to the seat of arbitration at Singapore and apply English law as the governing law. Thus, if the Hon’ble Bombay High Court exercised its jurisdiction to appoint an arbitrator under Section 11 of the Arbitration Act, it would be contrary to Section 28 (1) (a) of the Arbitration Act.

The Hon’ble Bombay High Court clearly stated that the legislative intent makes it very clear that if two parties are Indian they cannot preclude Indian law and if they do it will be contrary to public policy. The court heavily relied on the Hon’ble Supreme Court’s judgement in the TDM case.

But Reliance Industries Limited v Union of India[3] gave a contradictory view by upholding the intent of the parties which was English Laws coupled with the choice of a foreign seat and thus the preclusion of Part I of the Act.

In the case of Sasan Power Ltd v. North America Coal Corporation India Pvt Ltd[4] (Sasan), the Madhya Pradesh High Court has stated that two Indian parties may conduct arbitration in a foreign seat under English law. The Court relied upon Enercon (India) Private Limited v. Enercon GMBH[5] and Chatterjee Petroleum v. Haldia Petro Chemicals[6] (Chatterjee) to opine that where the parties had agreed to resolve their disputes through arbitration, the courts were to give effect to the intention of the parties and interfere only when the agreement was null or void or inoperative. The Court also stated that the nationality of the party does not matter in relation applicability of Part II of the Act. Further, the Court made it very clear that if by mutual agreement that parties have decided to preclude part one of the Act.

It is to be noted that the Hon’ble Supreme Court in the case of Atlas Exports Industries v. Kotak & Company[7] – the Hon’ble Supreme Court, under the Arbitration Act, 1940 had held that it was not against the public policy of India when two Indian parties contract to have a foreign-seated arbitration and the same is not contrary to Sections 23 and 28 of the Indian Contract Act, 1872- making it the most conclusive judgement from the Hon’ble Supreme Court when it comes to this particular matter.  However, TDM Infrastructure did not permit two Indian parties to derogate from Indian law by agreeing to conduct arbitration with a foreign seat and a foreign law.

It was held in the case of TDM Infrastructure and the same was relied upon in Aadhar:

“Determination of nationality of the parties plays a crucial role in the matter of appointment of an arbitrator. A company incorporated in India can only have Indian nationality for the purpose of the Act. It cannot be said that a company incorporated in India does not have an Indian nationality. Hence, where both parties have Indian nationalities, then the arbitration between such parties cannot be said to be an international commercial arbitration.”

More, so it should be kept in mind as was held in Chatterjee and as was contended in the Sasan case: “that the parties have agreed for arbitration and when the arbitration Act has been enacted for the purpose of amicable resolution of a dispute through arbitration, the Court should give effect to the arbitration agreement and the adversarial system of litigation should not be resorted to. Learned counsel argued that the Court must adopt a pro arbitration attitude and ensure that the arbitration is proceeded with, without any delay.”

CONCLUSION

Clarity will come to this matter only when a Supreme Court judgement deals with the matter.  But the Reliance Industries case being the most recent of the Hon’ble Supreme Court pronouncements, there could be an apprehension that the Hon’ble Supreme Court may eventually allow Indian parties to arbitrate abroad upholding that the intent of the parties has to be clearly deciphered to understand the way the arbitration shall occur. Further the Hon’ble Madhya Pradesh High Court has also given primacy to the intent of the party. However most previous pronouncements have been relied upon by the Hon’ble Bombay High Court and as such reflect the current law on this matter.  Post the 2015 Amendment Ordinance it has been made clear that Section 9 will apply to International Commercial unless an agreement says the contrary and puts primacy on the intent of contracting parties. But if such intent is not clear Section 9 shall apply to any International Commercial Arbitration. Hopefully, the Hon’ble Supreme Court will soon pronounce a definitive judgement on this matter.

[1] Arbitration Application No 197 of 2014 along with Arbitration Petition No 910 of 2013

[2] (2008) 14 SCC 271

[3] (2014) 7 SCC 603

[4] First Appeal 310 of 2015

[5] 2014 (5) SCC 1

[6] 2013 ARBLR 456 (SC

[7] (1999) 7 SCC 61

This article is written by Diksha Trivedi, a student of Nirma University.

INTRODUCTION

Money laundering is an act of underground economy which engages in the concealing of the source or destination of the specific financial transaction. In 1995, The Interpol General Secretariat Assembly defined money laundering as: “Any act or attempted act to conceal or disguise the identity of illegally obtained proceeds, so that they appear to have originated from legitimate sources”. This unfettered investment and spending of the criminally converted income of the offenders has been an ongoing concern of law enforcement agencies.

The concept of money laundering originated in the U.S.A. In history, the first case of money laundering was when American mobster Meyer Lansky transferred funds from small casinos to overseas accounts, especially Swiss banks. The term given at that time, to this act was ‘capital flight’. However, the term money laundering was used for the first time by a British newspaper in the case of “Waterland Scam” where, illegal funds obtained for the president’s re-election were moved to Mexico and then brought back through a company to Miami.

The Basel Principles suggested the following policies in order to curb Money Laundering:

• Customer Identification –RBI introduced the ‘Know Your Customer'(KYC) compliance to make sensible pains for true identification of the client and related measures to check the bonafide information provided by customers.
• Compliance with Laws –The rules with regards to the financial transactions are to be implemented as put in the banking statutes. Banks should further not allow any financial service if there is a suspicion that the money might be used for money laundering.
• Cooperation with Law Enforcement agencies – Banks should interlinked with law enforcement authorities and regulate the laws for maintaining the privacy of its customers.

MONEY LAUNDERING IN INDIA – THE PROBLEMS AND SOLUTIONS

In India, money laundering is interlinked with drug trafficking. Money launderers ensure that money does not reach the hands of the formally regulated institution thus making sure that law enforcement in this respect does not take place. There is no legal paper work for this underground system of money as well as no room for penetration as these systems are generally family operated or gang operated.

The money laundering impact in India is substantial; the Union Revenue Department unearthed 900 bank accounts, holding a pooled cash of nearly Rs. 1,000 crore being owned by sham names in Delhi alone. As per a KPMG report, India holds around 2-3% laundered money of the whole country’s GDP. To prevent or at the least reduce money laundering in India, the Government introduced the Prevention of Money Laundering (amendment) Bill, 2008 (PMLA) in Parliament. This was a new milestone in the anti-money laundering initiatives spectrum by the Government of India.

What Is Anti-Money Laundering?

In simple terms, Anti-Money Laundering or AML are the regulations and procedures that are designed to prevent money laundering. The increasing success of Anti-Money Laundering has been helped at the grass roots level by the growth in credit cards and the increasingly cashless society we now live in. In the context of the investment industry and the hedge fund industry, Anti-Money Laundering procedures that are followed, or should be followed, are, to a great extent, based on three core requirements;

First – client verification procedures what is known as Know Your Client or KYC,

Second – identifying and knowing the source of the money that is being invested and confirming that it is bona fide;

Third – and, in my opinion, this is, perhaps, the most important procedure that needs to be followed, ensuring that the proceeds of any investment made into a hedge fund, are, when redeemed or liquidated, repaid into the original remitting bank account or, at least, into a bank account in the name of the investor, providing that account is held at a reputable bank, based in an approved and reputable jurisdiction.

The requirements at that time were to have a file containing a certified or notarised copy of each client’s passport or some other photo ID, together with some proof of residence usually provided in the form of a certified or notarised copy of a utility bill. Today, Client Verification or KYC information is very much more comprehensive than it used to be but, in essence, it is relatively simple.  The difficultly sometimes is getting that information and one of the things that the investment industry has to devote some time and effort to is, in my opinion, educating investors so that they realise they have to do this in order to invest in any respectable investment, wherever they may live or wherever that investment may be established or domiciled.

One of the basic tenets of regulation and, particularly of Anti-Money Laundering, has been to provide any steps to ensure that duplication of work does not weaken the process.  This leads to the concept of the Designated Body.  A Designated Body is, in simple terms and in the context of Anti-Money Laundering, a financial institution that is regulated by an appropriate regulator in an appropriate jurisdiction and meets certain regulatory standards regarding anti-money laundering procedures in accordance with your own local regulations.

The Reserve Bank of India is cracking Down on Money Laundering

India has a panoptic “informal economy.”Many wealthy Indian keep their money capital out of formal regulation hence store their wealth in sources which are difficult to  trace for laws application like  housing, land or precious metals,. About 85% of Indians  are paid in cash .It is estimated that  about $2 trillion of the money existing outside  the financial system as black economy of India, which  is a lot more that country’s GDP.    However, Indian government has done little with respect to that.  India, in June 2010  attended as the 34^th  member of the Financial Action Task Force (“FATF”),  an inter government body that looks after  money crime and provide suggestion to the government for crimes like terrorist financing,  money laundering and other ills of a financial system. The Reserve Bank of India (RBI) has increased its responsibility in fighting money laundering and with regards to this it issued several advisories to local financial institution in combating the same. On failing to perform the obligations strict actions will be taken by the apex bank of India. On a surprise check RBI found  438 financial institution being in violation of compliance with Anti-Money Laundering (AML) , Know Your Customer (KYC), and Combating the Financing of Terrorism (CFT) guidelines. Among those violators many were under the control of the central government and hence RBI believed government to be violators of the money laundering. RBI for the same reasons introduced various guidelines for non-complying customers but their implementation is difficult because they hold around 8100 million of deposits in the economy. One such compliance is that financial institution must have a record of the customer dealings as well as where the money is coming from and where it is going to, including address and photograph as RBI screening priorities. This compliance is made so that RBI should be aware about the locus standi of the person who is making the transaction. This is the attempt made in order to bring stability to the turmoil of Indian economy in 2015 by following the ethics and compliance suggested by RBI.

Know Your Customer and Other Guidelines

The RBI too has played an important role in curbing the menace of money laundering The RBI issued the Know-Your-Customers (KYC) Guidelines – Anti Money Laundering Standards on 16th August 2005. The Government has also established a Financial Intelligence Unit-India (FIU-IND), in rank with FATF recommendations. The FIU would be given the Suspicious Activity Reports from all FIs and would study them before passing them to the Enforcement Directorate for investigation and prosecution. The RBI has stressed that banks can successfully control and decrease their risks only if they have an understanding of the normal and practical activity of the customer so that they have the means of spotting transactions that fall outside the standard model of activity.

In the context of internet banking, there is always a danger that being extremely mobile, these transactions shall remain undetected. Thereby such banks have been asked to open accounts only after proper physical introduction and substantiation of the customer. The online banking systems are also required to keep a record of all the transactions or series of transactions taking place within a month, the character and worth of which may be set by the Central Government. This will sufficiently guard in opposition to any abuse of the Internet banking services for the intention of money laundering.

The RBI’s know your customer standards are important in the context of controlling money laundering. As per these standard, Banks must outline their KYC policies slotting in the following four key fundamentals:

• Customer Acceptance Policy;
• Customer Identification Procedures;
• Monitoring of Transactions; and
• Risk management.

Besides this, the RBI has cautioned eight other banks[1]  to put in place appropriate measures and review them from time to time to ensure strict compliance of KYC requirements in future.

“This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank and its customers,” it said. The penal action was based on the basis of a complaint received by the RBI from a private organisation.

A scrutiny of “fixed accounts” opened in its name in Mumbai-based branches of certain public sector banks was undertaken in July 2014.

“With more complaints and involvement of other banks coming to light, a wider thematic review was conducted and in all 12 branches of 11 public sector banks were covered,” it said.

“The scrutiny or thematic review looked into the modus operandi of the alleged frauds involving accounts of certain organisations in these banks, deficiencies or irregularities while opening Fixed Deposits (FDs) and extending Overdraft (OD) facility there against,” it said.

Besides, it said, the effectiveness of systems and processes in place pertaining to implementation of know your customer (KYC) norms or anti-money laundering (AML) standards in respect of these accounts was also looked into.

The findings revealed violation of certain regulatory guidelines issued by the RBI as also other “disquieting” actions on the part of the banks including non-adherence to the RBI’s instructions regarding funds received through Real Time Gross Settlement System (RTGS) and opening of FD accounts and granting overdrafts there against without due diligence.

Additionally, the RBI also found involvement of middlemen or intermediaries in opening of the accounts as also subsequent operations in those accounts.

Based on the findings, the RBI issued a show cause notice to 11 banks, in response to which the individual banks submitted written replies.

“After considering the facts of each case and individual bank’s reply, as also, personal submissions, information submitted and documents furnished, the RBI came to the conclusion that some of the violations of serious nature were substantiated and warranted imposition of monetary penalty on three banks, namely, BoM, Dena Bank and OBC,” it said.

DUTY OF THE FIRMS TO PREVENT MONEY LAUNDERING

All firms who are subject to the Money Laundering Regulations 2007 must put in place systems and control to prevent and detect money laundering. Many authorised firms also have an additional regulatory obligation to put in place and maintain policies and procedures to mitigate their money laundering risk. These include systems and controls to identify, assess and monitor money-laundering risk as well as customer due diligence (CDD) measures and monitoring to manage the risks identified. Firms must determine the extent of CDD measures and monitoring on a risk-sensitive basis depending on the type of customer, business relationship and product or transaction. For this purpose, The FCA is the competent authority for supervising compliance of most credit and financial institutions with the Money Laundering Regulations.

Firms must ensure that their systems and controls enable them to identify suspicious transactions. They are required under the Proceeds of Crime Act 2002 to submit any Suspicious Activity Report to the National Crime Agency where they know or suspect that a person is engaged in, or attempting, money laundering.

Firms must ensure that they are able to demonstrate the extent of their CDD measures is appropriate in view of the risks of money laundering and terrorist financing.

Additionally, all firms who are subject to the AML rules must allocate overall responsibility for anti-money laundering systems and controls to a director or senior manager. They must also appoint a Money Laundering Reporting Officer (MLRO), who should act as a focal point for the firm’s anti-money laundering activity.

With respect to mortgage brokers, general insurers and general insurance brokers who are not subject to our AML rules and the Money Laundering Regulations they are required to put in place systems and controls to prevent financial crime, which includes money laundering. Failure to have adequate systems and controls in place, for example, the absence of a process for reporting knowledge or suspicions of money laundering, put these firms and their employees at risk of committing money laundering offences. Many firms therefore choose to implement controls similar to those adopted by firms who are subject to the Money Laundering Regulations and the FSA’s AML rules.

Despite the various measures that have been undertaken it has to be understood that India’s anti-money laundering regime is still in its early stages and banks need to put in place, better systems to ensure they do not fall prey to misuse. Banks can effectively reduce the risks of banking transactions if they identify transactions that fall outside the regular pattern of consumer’s activities. Banks need to have an effective anti-money laundering technology system. These have yet to be effectively implemented in the country.

Conclusion

Money laundering is a serious threat to the global financial system and good governance. It is also boosting international crimes and terrorist activities. Governments in various countries today have come up with different legislations to deal with this menace. However more needs to be done in this regard. Black money in India, it is estimated accounts for around 40% of India’s GDP. Moreover it is the politicians in India, who are high risk customers who indulge in this activity.

In times of globalization, Indian financial institutions and banks would like to become important players in the financial setup. This could be achieved only by ensuring that proper prevention of money laundering norms are in place and have been setup effectively. In the absence of these norms it is likely that the indigenous institutions and banks shall be black listed by the foreign countries. Thereby there is a need to not only effectively implement the anti-money laundering operations, but also to ensure that there is a constant review of the anti-money laundering (AML) programme and timely up gradation as well. Also, Banks must strictly adhere to the Know Your Customer (KYC) Guidelines as setup by the RBI.

[1] Central Bank of India, Bank of India, Punjab and Sind Bank, Punjab National Bank, State Bank of Bikaner & Jaipur, UCO Bank, Union Bank of India and Vijaya Bank

 This article is written by Bhanu Dhingra, a student of Amity Law School, Noida.

The easy confidence with which I know another man’s religion is folly teaches me to suspect that my own is also. I would not interfere with any one’s religion, either to strengthen it or to weaken it. I am not able to believe one’s religion can affect his hereafter one way or the other, no matter what that religion may be. But it may easily be a great comfort to him in this life–hence it is a valuable possession to him.  – Mark Twain

INTRODUCTION

Constitution of India guarantees freedom of religion under Article 19 and Article 25, respectively.

India being a diverse nation in terms of religion is home to four major religions i.e. Hinduism, Jainism, Buddhism, and Sikhism. There have been many incidents of religious intolerance which resulted in riots and violence, such as the anti-Sikh and Muslims riots in India in the year 1984 and 2002 respectively. Religious procession plays a very important role in religious ceremonies which are performed by the people of a particular religion. Religious processions are being practiced by people since a long time, just like the customs are being performed since ancient times.

RIGHT TO PRACTISE AND PROPAGATE LAWFULLY

 Every Indian citizen has the right to promote and practice his/her religion freely and peacefully which involves people to move in a ceremonious, orderly and a formal manner which can be seen during  funerals, yatras, road rallies, protests etc. Carrying out a religious procession is not easy; in order to make it happen the permission from Deputy Commissioner of Police (DCP) is very important and also necessary. The police have a duty to facilitate citizens in exercising their fundamental rights to hold peaceful public meetings. The DCP makes sure that such religious procession is not going to result in any sort of violence act and is going to be carried out peacefully and in harmony. He cannot stop anyone from taking part in a peaceful procession if they have the permission to carry it out.

PROCESS TO CARRY OUT RELIGIOUS PROCESSION IN PUBLIC

To carry out a religious procession, rally or a protest, there are specific requirements which include a written permission from the District DCP by giving him all necessary details regarding the procession, rally or protest that needs to be carried out. The permission is required from the Police headquarters, New Delhi, in case the event is spread to more than one district. Permission regarding the use of loud speakers during procession must comply with Noise Pollution Rules framed under Environment Protection Act, 1986 according to the Supreme Court’s order. NOC and permission are required from the land owning authority which must be carried along during the procession.

If it is later found that the procession is   disorderly and violent the police can stop them and ask them to discontinue the same. The actions of the DCP should be reasonable with proper justification. The police are not there to punish people but to ensure their safety and to maintain law and order, so they must use force as the last resort. The DCP cannot use any force without the permission of Executive Magistrate and owing to which the DCP will decide how much force is needed for the particular situation to be controlled.  These situations will arise only when certain conditions are violated, such as;

• Occupying more than one-fourth of the width of the road for procession,
• The procession is taken out before 11 am and after 5 pm.
• The pandal is placed in the bye-lanes without getting clearance from the local Police and Traffic inspector.
• The use of loud speakers, public Address and Music system is done before 6 am and after 10 pm and indulging in activities such as bursting of crackers and firing of weapons during a procession, meeting or a gathering resulting in declaring the procession as unlawful in the event of non-compliance and the prosecution can be framed against the violators.
• Violation may also attract court proceedings for the use of loudspeakers where action can be taken under Noise Pollution (regulation and control) rules 2000 framed under  the Environment protection act, 1986.

WHAT THE COURTS HAVE HELD

In the case Maharishi Valmiki Janmotsav Committee (Regd.) Delhi   vs. Commissioner of Police and Ors., it was observed by the Delhi High Court that keeping in mind the law & order, and also the traffic point of view, the Court agreed with the notice sent by the Delhi police for the request to grant permission for ShobhaYatra could not be acceded as the Secretary of Maharishi Janmotsav Committee (Mr. Sanjay Kamwal) was affiliated to Mohan Singh Pehlwan and his four brothers who were all notorious criminals and several criminal cases filed against them.

Religion is one’s faith for self-attainment of eternal bliss. Right to believe in one’s religion does not affect anyone else. It is only when one’s belief is practiced through outward acts that its practice starts to affect the others.  The constitution of various nations guarantee freedom of religion and the laws of most of these countries also circumscribe the scope to exercise such rights. These grounds are generally restricted on the grounds of ‘public order’, ‘health’, ‘morality’, ‘rights of others’, etc. The terms used are very general therefore making it difficult for a person to arrive at a uniform understanding of the limitations of the right to freedom of religion.

Reference can be made to the second deadly stampede that took place during an Indian festival, namely RathYatra or Chariot Festival in the temple of Puri in Orissa, in which the permission was taken for only a few thousands of people but ended up in a gathering of almost the whole of Orissa. Deadly stampedes are very common during Indian religious festivals where thousands of people gather in small areas creating a lot of troubles where safety measures are not in place.

In the case  Acharya Jagdishwarananda Avadhuta and Ors v. Commissioner of Police, Calcutta, and Anr, it was held that Tandava Dance has been prescribed as a religious dance for every follower of Ananda Margis yet the Tandava Dance cannot be performed as a religious Procession in public. The court said that the petitioner cannot claim his fundamental right under article 25 and 26 to perform the tandava dance in public. Still the respondent performed the tandava dance in public violating the orders of the court. Therefore, the respondent stated that even though Ananda Margi which has been declared by the court as a religion is singled out by West Bengal court because it is based on spirituality. The respondent also stated that there are many processions of various hues which are regularly  taken out; the Muslim festival of Muharram is taken out with deadly weapons and Sikh celebration with sword fighting display in public and these are the examples of religious tolerance in our country and hence the court held that these processions are not going to harm  public tranquility but Tandava Dance was not allowed to be performed because the court said that it is offensive and against  morality and is bound to create external problems affecting people’s life and safety and also harming children, and such procession if allowed will cause widespread panic, public disturbance and also cause traffic.

In India, all people are equally entitled to freely practice, propagate and profess their religion. However, this is a right which is subjected to public order, health and morality to the other provisions of the constitution of India. Article 25(2) of the Indian Constitution provides for the interference of the State in matters related to financial, economic, and political or other secular activity which is related to reform or social welfare. In India, people believe in a religious procession with all their heart and follow all the methods and techniques of the procession with complete purity. In Said Manzur Hassan vs. Saiyid Muhammed, the Privy Council was of the view that every religion has a right to conduct its religious procession with its proper observances along a highway. People practicing various religions are allowed to conduct religious procession through public streets so that they do not intervene in the informal use of such streets as the magistrate may lawfully give to prevent and stop breach of the public peace, But the claim by one to attain the services of the highway to take out their religious procession is not justifiable and also untenable.

CONCLUSION

In India, religion is a way of life for people. It is a very important part of the traditions that people follow.. According to me, the common practices in religions such as music, dance and feasting have crept in under the bracket of a procession which Indians follow with all their love and devotions. Each of it has its own heroes, pilgrimage sites, legends and specialties for which they are the center of attraction. In a country like India, religious processions are carried out with utmost love, faith, and devotions where all the devotees show immense belief and love toward their religion and celebrate their religion in full sway. Hence, the SPARK OF RELIGIOUS PROCESSION IN INDIA tells us what energy and light it brings to peoples life and belief of people since years long concludes their love towards their gods and goddesses.

This article is written by Shubham Kumar, a student of Dr. Ram Manohar Lohiya National Law University, on social engineering.

Introduction

 The relation between the individual, society and the State have been changing and various theories regarding them have been propounded from time to time. In the beginning, society was governed by customs which had only social sanction. Then came the supremacy of the priests. After that, the secular state emerged and dominated all the institutions. As a reaction, the importance of individual was asserted by thinkers and philosophers. There were revolutions and political changes. The necessity of balancing the welfare of the society and individual was realized.[1]

       Society and human life always go together. From childhood to till old age, every human being expects that his or her desire is to be fulfilled for which their arise conflict of desires or claims which comes under the term “interest”. It is impossible to fulfill all the desires of a human being. So to fulfill the desires of maximum human being for the welfare of society the concept of Social Engineering was emerged and which was coined by Roscoe Pound. Social engineering is based on the theory that laws are created to shape the society and regulate the people’s behavior. It is an attempt to control the human conduct through the help of Law.

      According to Pound, “Law is social engineering which means a balance between the competing interests in society,” in which applied science are used for resolving individual and social problems.[2]

For the purpose of maintaining the legal framework and its proper functioning, certain interest needs to be considered like individual interests, public and social interests, a definition of limits within which such interests will be recognized and given effect to, and the securing of those interest within the limits as defined.

When determining the scope and subject matter of the system, the following things have to be done:

• Preparation of an inventory of interests, classifying them,
• Selection of the interests which should be legally recognized,
• Demarcation of the limits of securing the interests so selected,
• Consideration of the means whereby laws might secure the interests when those have been acknowledged and delimited, and
• Evolution of the principles of valuation of interests. [3]

Theory of Social Engineering

Pound compared the task of the lawyer to the engineers. He stated that the aim of social engineering is to build a structure of society as possible which requires the fulfillment or satisfaction of maximum wants with minimum usage of resources. It involves the balancing of competing interests. He called this theory as the theory of “Social Engineering.”

Here Pound has used two words i.e. “Social” which means group of individual forming a society. The second word is “Engineering” which means applied science carried out by engineers to produce finished products, based on continuous experimentation and experience to get the finished product by means of an instrument or device.

For facilitating the tasks of social engineering, Pound classified various interests to be protected by law in three heads:

1. Private Interests / Individual Interest– Individual interests, according to Pound are claims, or demands or desires from the point of the individual. Individual interests according to Pound includes:

a. Personality- interest of personality consist of interests in –

• The physical person,
• Freedom of will,
• Honour and reputation,
• Privacy and sensibilities,
• Belief and opinion.

b. Domestic relations – it is important to distinguish between the interest of individuals in domestic relationships and that of society in such institutions as family and marriage. Individual interests include those of :

• Parents and Children,
• Husbands and Wives &
• Marital interests.

c. Interest of substance- this includes

• Interests of property,
• Succession and testamentary disposition,
• Freedom of industry and contract,
• Promised advantages
• Advantageous relations with others,
• Freedom of association, and
• Continuity of employment

2.  Public Interest– Public interests according to him are the claims or demands or desires looked at from the stand point life in politically organized society. The main public interest according to Roscoe pound are :

a. Interests of state as a juristic person which includes

Interests of state as a juristic person i.e. protection

Claims of the politically organized society as a corporation to property acquired and held  for corporate purposes.

b. Interests of State as a guardian of social interest, namely superintendence and  administration of trusts, charitable endowments, protection of natural environment, territorial waters, sea-shores, regulation of public employment and so on to make use of  thing which are open to public use , this interest seem to overlap with social interests.

3. Social Interest : Social interests are the claim or demands or desires thought of in terms of social life and generalized as claims of social groups. Social interests are said to include :

a. Social interest in general security -Social interest in the general security embraces those branches of the law which relate to

• General safety,
• General health,
• Peace and order,
• Security of acquisitions and
• Security of transactions.

b. Social interest in the security of social institutions- Social interest in the security of the social institutions include

• General security of domestic institutions,
• Religious institutions, political institution and
• Economic institutions.

c. Social interest in general morals – Social interest in general morals comprises of prevention and prohibition of prostitution, drunkenness, gambling, etc.

d. Social interest in conservation of social resources- Social interests in the conservation of social resources covers conservation of social resources and protection and training of dependents and defectives, i.e. , conservation of human resources, protective and education of dependents and defectives, reformation of delinquents, protection of economically dependents.

e. Social interest in general progress – Social interest in general progress has three aspects. Economic progress, political progress and cultural progress.

1. Political progress covers free speech and free association, free opinion, free criticisms.
2. Economic progress covers freedom of use and sale of properly , free, trade , free industry and encouragement of inventions by the grant of patents.
3. Cultural progress covers free science, free letters, encouragements of arts and letters, encouragements of higher  education an learning and aesthetics

f. Social interest in individual life.- Meaning thereby each individual be able to live a human life according to the individual’s

1. Political life
2. Physical life
3. Cultural
4. Social and
5. Economic life.[4]

Jural Postulates Of  Roscoe Pound 

      In order to evaluate the conflicting interests in due order of priority, pound suggested that every society has certain basic assumption upon which its ordering rests, through for most of the time they may be implicit rather than expressly formulated. This assumption may be called as jural postulates of the legal system of that society.

Pound has mentioned five jural postulates as follows-

1. Jural postulate I– in civilised society men must be able to assume that others will commit no intentional aggression upon them.
2. Jural postulate II– in civilised society men must be able to assume that  they may control for beneficial purposes what  they have  discovered and appropriated to their own use, what they have created by their own labour and what they  have created by their own labour and what they  have acquired under the existing social and economic order.
3. Jural postulate III – In a civilized society men must be able to assume that those with whom they deal as a member of the society will act in good faith and hence-
4. Will make good reasonable expectations which their promises or other conduct reasonably create;
5. Will carry out their undertaking according to the expectations which the moral sentiment of the community attaches thereto.
6. Will restore specifically or by equivalent what comes to them by mistake, or failure of the pre-suppositions of a transaction, or other unanticipated situation whereby they receive at other’s expense what they could not reasonably have expected to receive under the actual circumstances.
7. Jural postulate IV– in civilized society men must be able to assume that those who engage in some course of conduct will act with due care not to cast an unreasonable risk of injury upon others.
8. Jural postulate V-in a civilized society men must be able to assume that others who maintain things or employ agencies, harmless in the sphere of their use but harmful in their normal action elsewhere, and having a natural tendency to cross the boundaries of their proper use will restrain them and keep them within their proper bounds.

     Pounds confessed that these jural postulates are not absolute but they have relative value. These are ideal standards which law should   pursue in society they are of a changing nature and new postulates may emerge if the changes in society so warrant. Thus the jural postulates by Roscoe pound provide guidelines for civilized life and they also seek to strike a balance between reality and idealism as also power and social accountability of men in the community.

CONCLUSION

    It is concluded that law plays an important role in adjusting conflict of interests. Both the social interest and individual interest co-exist. Both of them have equal priority. Roscoe Pound has given the idea of Social Engineering for the American Society but this concept is followed universally for dispute resolution. India also followed the same concept in establishing a societal welfare. Both Judiciary and Legislators play an important role in enacting the statutes which fulfill the various desires of human being. In this techsavvy society desires of human being grows and to fulfill their desires new policies, strategy has been developed.

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[1] V.D.MAHAJAN,JURISPRUDENCE AND LEGAL THEORY,5th ed reprint 2006,Eastern book company, Luknow.pg 605,para1

[2] Dr. B N Mani Tripathi,Jurisprudence Legal Theory,16^th ed.,Allahabad Book Agency,pg.49,para 1

[3] Supra note 1, at pg. 634

[4] SN Dhyani, Fundamentals of Jurisprudence, Third edition,Central Law Agency,pg.335

This article is written by Ankit Bhandari, a 2nd-year law student from National Law University, Assam.

Commercial Surrogacy refers to the contract  wherein a woman carries a pregnancy for another couple and a fee to woman is given in exchange of carrying and delivering a baby. After birth the child is handed over to the one for whom the woman carries the baby. Surrogacy was defined by the Warnock Committee as the practice whereby one women carries a child for another with the intention child should be handed over after birth, which implies that the carrying woman acts at the request of another women who is unable to have child herself[1]. There are two types of surrogacy namely:

1. Traditional or Complete Surrogacy, in which the eggs of the surrogate mother are used in the conception of the child and the surrogate mother is genetically related to the child and thus more accurately considered as the biological mother of the child[2].
2. The second type of the surrogacy arrangement is gestational carrier in which wife is incapable of carrying a growing fetus but she is fertile. The child is conceived by the vitro fertilization using wife’s eggs and husband’s sperm[3].

The history of the surrogacy goes back to the dawn of the time but modern surrogacy got its big start in 1970s. Infertility is not new, women of all the ages have experienced this and when they are unable to conceive pregnancy then one way to start the family was through the assistance of the surrogate mother. In 1976, lawyer Noel Keane brokered the legal agreement between the set of intended parents and the surrogate mother. Surrogate mother in the present case was not duly compensated for her services. Keane went on to create infertility centers arranging hundreds of the surrogate pregnancies per year. Louise joy was the first test tube baby born. While this was not the surrogate motherhood arrangement the historic event paved the way towards gestational surrogacy in the future[4].

Legality of Surrogacy

The legal aspect  relatedto surrogacy is very complex, very diverse and unsettled.  In most of the countries around the world, the  women who gives birth to the child is considered as the legal mother. But in few countries the intended parents are to be recognized as the legal parents of the child. India is one of the countries which  recognises the intended/commissioning parents as the legal parents.

In India

Commercial surrogacy has been legal in Indian since 2002. In recent times Indian has emerged as the leader in the international surrogacy reason being, availability of surrogates at lower cost as compared to the other nations. Indian clinics are becoming more competitive not only in matter of pricing but also in the hiring of the retention of Indian females surrogates. The Honorable Supreme Court of India through Manji Yamada Case[5] held that commercial surrogacy  is legal in India.  As far as this case is concerned, it involved Baby Manji, born on 25-7-2008, under a surrogacy agreement executed between Japanese biological/genetic parents and an Indian surrogate mother. She became focus of legal as well as diplomatic crisis soon after her birth. Her genetic parents had divorced months before her birth. The genetic mother was refusing the child, while the father and grandmother  wanted to raise the child. In this case, it was held that if the petitioner has any grievance in relation to the order to be passed by the Central Government, such remedy, as is available in law may be invalid. It is also to be noted that the Commissions for Protection of Child Rights Act, 2005 has b-een enacted for the constitution of a National Commission and the State Commission for protection of child rights and children’s courts for providing speedy trial of offences against children or of violation of child rights and for matters connected therewith and incidental thereto. In the present case, if any action is to be taken that has to be taken by the Commission. Section 13 which appears in Chapter III of the Act is of considerable importance[6].

In another case of the Jan Balaz v Union of India[7] question in front of Gujarat High Court was that whether a child born to a surrogate mother has an Indian national whose father is a foreign nation would get the citizenship of Indian or not? . Gujarat High Court  bestowed Indian citizenship upon the twin babies fathered through compensated by a German nation. In relation of the surrogated mother to the child she is carrying is nothing but womb leasing or womb for rent. After the birth of the child she has no right to keep the child because she is neither the mother (where both ova and sperm are from different persons) nor the owner of the genetic material. She is only a contractor who is willing to give the end product once the contract between her and the person is fulfilled[8]. If any person wants to deal with pre-requisites of commercial surrogacy there is no uniform law at time in India, but owing to growing demand for the surrogacy in India and protection of child rights[9]. Government has drafted a legislationknown as the Assisted Reproductive Technology (Regulation) Bill 2008[10].For the time being guidelines for accreditation, supervision and regulation of Assisted Reproductive Technology clinics formulated by the Indian Council of Medical Research and National Academy of Medical Sciences are used as a basic platform and the code for the purpose of conducting surrogacy in India. The extract form of the guideline is given below:

• A child born through surrogacy must be adopted by the genetic (biological) parents unless they can establish through genetic (DNA) fingerprinting (of which the records will be maintained in the clinic) that the child is theirs. Surrogacy by assisted conception should normally be considered only for patients for whom it would be physically or medically impossible to carry a baby to term.
• Payments to surrogate mothers should cover all genuine expenses associated with the pregnancy. Documentary evidence of the financial arrangement for surrogacy must be available. The ART center should not be involved in this monetary aspect.
• Advertisements regarding surrogacy should not be made by the ART clinic. Theresponsibilityof finding a surrogate mother, through advertisement orotherwise, should rest with the couple, or a semen bank.
• A surrogate mother should not be over 45 years of age. Before accepting a woman as a possible surrogate for a particular couple’s child, the ART clinic must ensure (and put on record) that the woman satisfies all the testable criteria to go through a successful full-term pregnancy
• A relative, a known person, as well as a person unknown to the couple may act as a surrogate mother for the couple. In the case of a relative acting as a surrogate, the relative should belong to the same generation as the women desiring the surrogate.
• A prospective surrogate mother must be tested for HIV and shown to baser negative for this virus just before embryo transfer. She must also provide a written certificate that she has not had a drug intravenously administered into her through a shared syringe, she has not undergone blood transfusion and she and her husband has had no extramarital relationship in the last six months.
• The prospective surrogate mother must also declare that she will not use drugs intravenously and not undergo blood transfusion expecting blood obtained through a certified blood bank
• No woman may act as a surrogate more than thrice in her lifetime.[11]

Recommendations by Law Commission

The Law Commission of India has submitted its 228th Report on “Need For Legislation To Regulate Assisted Reproductive Technology Clinics As Well As Rights And Obligations Of Parties To A Surrogacy.” The following observations had been made by the Law Commission: –

 (a) Surrogacy arrangement will continue to be governed by contract amongst parties, which will contain all the terms requiring consent of surrogate mother to bear child, agreement of her husband and other family members for the same, medical procedures of artificial insemination, reimbursement of all reasonable expenses for carrying child to full term, willingness to hand over the child born to the commissioning parent(s), etc. But such an arrangement should not be for commercial purposes.

(b) A surrogacy arrangement should provide for financial support for surrogate child in the event of death of the commissioning couple or individual before delivery of the child, or divorce between the intended parents and subsequent willingness of none to take delivery of the child.

(c) A surrogacy contract should necessarily take care of life insurance cover for surrogate mother.

(d) One of the intended parents should be a donor as well, because the bond of love and affection with a child primarily emanates from biological relationship. Also, the chances of various kinds of child-abuse, which have been noticed in cases of adoptions, will be reduced. In case the intended parent is single, he or she should be a donor to be able to have a surrogate child. Otherwise, adoption is the way to have a child which is resorted to if biological (natural) parents and adoptive parents are different.

(e) Legislation itself should recognize a surrogate child to be the legitimate child of the commissioning parent(s) without there being any need for adoption or even declaration of guardian.

(f) The birth certificate of the surrogate child should contain the name(s) of the commissioning parent(s) only.

(g) Right to privacy of donor as well as surrogate mother should be protected.

(h) Sex-selective surrogacy should be prohibited.

(i) Cases of abortions should be governed by the Medical Termination of Pregnancy Act 1971 only.[12]

Conclusion

At the end of the discussion it can be said that right to reproduce is inborn human right as well as fundamental, surrogacy is the one way to conquer biological and social infertility. It provides medically infertile couples and socially infertile individuals who are unwilling to married to chance to have child of their own. Legalization of gestational surrogacy would aim to protect the surrogate’s interests as well as those of the intended parents and baby born out of surrogacy.

[1] Stauch, M., and Wheat,K. with Tingle J., 2006. “Text, Cases & Materials on Medical Law”, 3rd Edition,New York: Routlage, p.389.

[2] Ibid

[3] Ibid

[4] Information on Surrogacy.2008 History of Surrogacy, http://www.information-on-surrogacy.com/history-of-surrogacy.html

[5] Baby Manji Yamada v Union of India and Another (2008) 13 SCC 518

[6] From L.P.A No. 2151 of 2009, High Court of Gujarat

[7] Anita Rao, Surrogate Motherhood-legal Perspective as cited in Kelra,K.,2010. Surrogacy Arrangements: Legal and Social Issues. Journal of Law Teachers of India. Volume 1(Issue No.1-2)p.131

[8] India’s Legislation of commercial surrogacy, http://www.indian-surrogacy.com/item/india-legalisation-of-commercial-surrogacy.html.

[9] Ibid

[10] Ibid

[11] Hari,G.R.,2009 FEWBASICS FROM ICMR GUIDELINES,”http://blog.indiansurrogacylaw.com/2009/01/few-basics-from”

[12] 228^th law commission report, “http://lawcommissionofindia.nic.in/reports/report228.pdf”