Challenges and opportunities in technology for data security and privacy

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August 17, 2023

This article has been written by Anusha Nethala, pursuing an Executive Certificate Course in US Accounting and Bookkeeping from LawSikho.

It has been published by Rachit Garg.

Introduction

In today’s digital world, keeping our data safe and maintaining our privacy have become top priorities. As technology advances, we encounter both challenges and opportunities when it comes to protecting our information. With interconnected systems and the Always-present risk of cyber threats, data security is more tested than ever. So, fasten your safety belt as we dive into the interesting world of data security and privacy! In this article, we will explore the hurdles we face and the exciting possibilities that technology brings to bolster our digital protection and safeguard our privacy.

Technology’s opportunities and challenges for data privacy and security

Nowadays, in the digital world, keeping our data safe and protecting our privacy have become major concerns. In this article, we will investigate some of the basic difficulties and hopeful possibilities that surface from the use of technology in this area. Technology plays a major role in finding sensitive information, but it also brings challenges and opportunities regarding privacy and data security.

Challenges

Cyber threats and attacks

As technology pushes on, so do the smart tricks used by black hats to break into systems and access data illegally. Organizations must invest in good cybersecurity gadgets like firewalls and regular security checks to protect their valuable data from hackers. These attacks happen more often as we grow up. The challenge lies in staying one step ahead by using robust security computing and keeping up with new threats.

Data breaches

Data breaches have become more common and have major outcomes for individuals and organisations. When data is split, it can be traded on the dark web, mainly for identity theft, financial fraud, and damage to status. By implementing strong security, organizations can greatly decrease the chances of successful attacks and protect sensitive information. Reducing the risk of data breaches requires having comprehensive security protocols and converting sensitive data.

Privacy concerns

With the widespread use of technology, personal data is collected and stored on a large scale. This raises concerns worldwide about privacy and how personal information is used. Finding a balance between using data for innovation and respecting privacy rights is a very big challenge. To address these, organizations need to be crystal clear about how they collect data, obtain permission from individuals, and give people control over their data. Regulations like the European Union’s General Data Protection Regulation (GDPR) have been created to protect isolation rights and require responsible data handling.

Insider threats

While we often focus on outside threats, insiders can also pose a serious risk to data security. By promoting a culture of security awareness and making employees aware of their duty, organisations can underpin their protection against internal neglect. Employees or authorized individuals who have access to sensitive information can waste it or accidentally expose it, leading to breaches. To reduce the risk of insider threats, organisations must have strict access controls, use scan systems, and provide ongoing employee training.

Evolving regulatory landscape

The rules and regulations related to privacy and data security are constantly changing. New laws are introduced to address the changing technological outlook and protect human rights. Cutting across the complex and different requirements across different places adds a turn to data security and privacy efforts. Anyhow, keeping up with these regulations and making sure agreements are compliant can be challenging for organisations that must stay updated on the latest regulations, conduct privacy impact ratings, and have solid plans in place to meet the legal task.

Data interoperability and sharing

Partnerships and the need to share data between different organisations bring the challenge of ensuring secure data sharing. Setting up secure protocols for data sharing and using technologies that allow controlled and secure access to data across different systems and platforms is testing. Standardising data formats, using encryption, and integrating secure interfaces can enable secure data sharing without compromising privacy. Organisations may need to exchange sensitive information while maintaining privacy.

Opportunities

Advanced encryption techniques

Technology offers advanced encoding techniques that can protect data when it’s stored or transmitted. Encoding algorithms, like the Advanced Encryption Standard (AES), provide very strong protection against unapproved access. Further research and development in encoding technologies can increase data security and privacy. Organisations should adopt encoding as a standard action to protect sensitive data and invest in developing even stronger encoding techniques.

Artificial Intelligence and machine learning

Artificial Intelligence (AI) and Machine Learning (ML) have great potential to improve data security. These technologies can scan large amounts of data, detect anomalies, and identify potential security breaches in real-time. AI and ML can also perform robotic security processes, reducing the chance of human error. Implementing AI-powered threat clearing systems and using ML algorithms for pattern recognition can strengthen data security by identifying and reducing threats.

Blockchain technology

Blockchain, the blockchain behind Bitcoin, offers secure data storage and transaction opportunities. Its decentralized and tamper-resistant nature makes it attractive for maintaining reliable records and increasing data security. Blockchain has the potential to revolutionize industries such as finance, healthcare, and supply chain management by improving data integrity and clarity. Institutions should explore the use of blockchain for secure data management and consider its implementation to boost data security and privacy.

Privacy-enhancing technologies

Technological advancements also bring innovative solutions for increased privacy. Techniques like differential privacy, homomorphic encryption, and secure multi-party computation allow data analysis while protecting individual privacy. Organisations should invest in the research and development of privacy-upgrade hardware and integrate it into their data processing and analysis practices. These technologies enable organisations to gain awareness from data without compromising sensitive information.

Enhanced security awareness and education

With increased awareness of data security and isolation examination, there is an opportunity to educate humans and institutions about best practices. Technology can be used to deliver workshops, training programs, and resources to promote a culture of security awareness. Organizations should conduct regular cybersecurity training programs, raise awareness about common security threats, and promote a security-alert mindset among their employees. Educating people about cybersecurity is a remarkable contribution to data protection efforts.

Collaboration and industry standards

Collaboration among industry stakeholders is important to effectively address data security and privacy challenges. Industry alliances and partnerships can play a crucial role in driving innovation, fostering cooperation, and establishing guidelines for secure data practices. Sharing best practices, partnering on threat intelligence, and demonstrating industry standards can help organizations stay ahead of evolving threats. Institutions should actively participate in industry cooperation to leverage collective knowledge and further secure human data.

Some additional points for data security and privacy

Secure remote work

The switch to remote work has introduced new challenges for privacy and data security. Organizations need to implement secure remote access solutions, such as virtual private networks (VPNs) and multi-factor authentication, to ensure that data remains protected even in remote work environments. Employees working from home or other remote locations may access sensitive data from personal devices or unsecured networks, increasing the risk of data breaches.

Third-party risk management

Many organizations rely on third-party sellers and service providers to handle their data. Organizations must exercise thorough due diligence when selecting sellers, assess their security practices, and set up clear contractual agreements regarding data security and privacy. Regular checks and monitoring of third-party activities are trying to mitigate the risk of data breaches or unapproved access. However, outsourcing data management introduces future security risks.

Data lifecycle management

Successful data security and privacy measures should cover the entire data lifecycle, from collection to distraction. Implementing data minimisation practices, where only important data is collected and kept back, decreases the risk associated with storing unwanted sensitive information. Organizations must define data retention policies, encode data both in transport and at rest, and securely dispose of data when it’s no longer required.

Regular data backups

Verify the honesty of backups regularly and ensure they are securely stored in off-site or cloud-based Areas. Maintain regular data backups to reduce the impact of data breaches, system failures, or natural failures.

User access controls

Granting appropriate access benefits to users is necessary for maintaining data security and privacy. Daily reviewing and updating user access permissions, damaging unused accounts, and carrying out strong password policies are important measures to prevent uncertified access to sensitive data. Perform role-based access controls (RBAC) to confirm that employees have access only to the data required for their roles.

Conclusion

The challenges and good times associated with technology for data security and privacy are closely linked. While technology has created new threats and risks, it also provides modern solutions. By taking an effective approach, staying informed about emerging technologies, and implementing strong security measures, we can ensure the robust protection of data and privacy in our increasingly digital world. As technology continues to advance, it is important for humans, organizations, and policymakers to work together to address the challenges and make the most of the opportunities.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Vikash Kumar v. Union Public Service Commission & Ors. : case analysis

By

Vanshika Kapoor

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August 17, 2023

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This article has been written by Naman Verma, pursuing a Certificate Course in Introduction to Legal Drafting: Contracts, Petitions, Opinions & Articles from LawSikho, and has been edited by Shashwat Kaushik.

It has been published by Rachit Garg.

Table of Contents

Introduction

The Constitution of India guarantees certain rights that are essential for maintaining equilibrium in society at large. These basic rights are so intrinsic that a situation to the contrary could lead to the failure of the entire constitutional machinery. The right to equality, the right to life and liberty, and freedom of speech and expression are some of the rights that form part of such a classification. With time, the idea and scope of these rights have evolved, and rightly so, as an evolving society would need an equally evolved mechanism of laws to successfully preserve its tenets. However, sometimes certain concepts of these rights are so generalised and taken for granted that this fallacy leads to a misinterpretation, which with time takes the form of a stereotyped notion in interpreting the rationale behind the idea of these rights. One such instance where the Supreme Court of India has efficaciously burst the bubble of a stereotyped notion is the case of Vikash Kumar vs. Union Public Service Commission & Ors. (2021), where the Court has admirably discussed the facets of law in interpreting the rights reserved for persons with disabilities in the context of modern times. The court has shifted its perspective on viewing disability as an affliction and has considered giving it a human rights perspective.

Brief facts of the case

The appellant, Vikash Kumar, a civil services aspirant, suffered from a neurological condition called “Dysgraphia,” also known as ‘writer’s cramp’. Accordingly, while applying for the 2017 UPSC exam, he applied under the category of person with locomotor disability and was therefore provided with a scribe for the written test by the UPSC. In 2018, via a notification, the Department of Personnel and Training (DoPT) issued the CSE 2018 Rules, describing the manner of conducting the examination and providing that only the candidates who fall under the categories of: Blindness, Locomotor Disability, and Cerebral Palsy with a minimum of 40% impairment would be allowed the support of a scribe. While applying for the Civil Services Exam 2018, the appellant thereby declared himself a person with a disability of more than 40% and requested that UPSC provide a scribe for him during the examination. UPSC rejected his request, stating that he did not fulfil the criteria specified under the CSE Rules 2018. Moreover, the applicant was initially declined the disability certificate by the designated authority at Ram Manohar Lohia Hospital, Delhi, which also stated that the disability was less than 6%. After facing disappointment from the Central Administrative Tribunal, which rejected the contentions of the applicant and was upheld by the High Court, the appellant approached the Supreme Court seeking relief. Under the directions of the Supreme Court, a medical examination of the appellant was conducted by AIIMS, which concluded that the appellant did suffer from the said neurological condition; however, his disability did not fall under the category of “Benchmark Disability” as described under the Rights of Persons with Disability Act, 2016.

Contentions of the parties

Contentions of the appellant

The primary contentions of the appellant were that since the appellant has been granted a certificate stating that he suffers from Writer’s Cramp and since the disability is recognised under the Schedule of the RPwD Act, 2016, and now that the Ministry of Social Justice and Empowerment has also recognised the said disability in its notification dated January 14, 2018, the appellant has rights under the given statute. Moreover, it was his contention that the new rules promulgated by the DoPT are in violation of Section 20 of the RPwD Act, 2016, as they contravene the mandate of providing a reasonable accommodation to the disabled and are not restricted to those with benchmark disabilities only. The applicant also alleged violations of Article 14 and Article 16(1) on the ground that scribes support was provided only to a certain class of persons, i.e., those who suffer from Blindness, Locomotor disability, and Cerebral palsy, whereas the other benefits are given to all the disabled.

Contentions of UPSC

UPSC contended that the governing rules would be those issued by DoPT and that scribes could be provided only to persons falling under the category of “Benchmark Disability”.

Contentions of Union of India

The primary contention of the Union was that, as per the new rules, the appellant is not entitled to get the help of a scribe since the writer’s cramp is not specifically stated in the schedule and that it is also not a “Benchmark Disability”. However, since not all medical conditions have been recognised as disabilities, it is for the examination body to decide on a case-by-case basis whether help through scribe and compensatory time should be given to the concerned candidates and whether the requisite of having a disability up to a certain percentage is not mandatory to avail of certain facilities.

Primary observations of the Supreme Court

The principle of inclusive equality vis a vis reasonable accommodation

The Supreme Court emphasised the legislative intent behind mentioning persons with disabilities and persons with benchmark disabilities in Sections 2(s) and 2(r) of the RPwD Act, 2016. It stated that though persons with benchmark disabilities are entitled to a more comprehensive set of benefits, the definition under Section 2(s) could not be met with the same restriction of having a measurable quantification of disability as under Section 2(r). It further emphasised that the statutory definition implies that

“Disability is not only a function of physical or mental impairment but its interaction with barriers resulting in a social milieu which prevents the realisation of full, effective and equal participation in society”.

Moreover, the court emphasised that the principle of providing reasonable accommodation to persons with disabilities is at the core of upholding the principle of inclusive equality. It stated that since the disabled face social barriers to participating in society, it is the obligation of the state to take positive actions to remove those barriers. It would be arbitrary to make a distinction between persons with benchmark disabilities and persons with disabilities in providing a conducive environment to enable them to participate in society at a similar level to that of a normal person. In order to protect the individual dignity and autonomy of the disabled, affirmative action must go beyond the general concept of non-discrimination in order to live up to the spirit of Article 14 of the Indian Constitution.

The court pointed out that disability is to be seen in the broader sense, i.e., as something more than a medical condition. It is to be understood that it is the societal barriers and not just the disability itself that exclude the disabled and limit their participation in society. The already existing restraint in the form of disability, along with these societal barriers, poses an unfair disadvantage to the disabled, thereby making them more vulnerable to societal norms. It is only by giving certain rights to the disabled, which cast obligations on society, that this shortcoming can be done away with.

To make it clear what reasonable accommodation means, it stated:

“In the specific context of disability, the principle of reasonable accommodation postulates that the conditions which exclude the disabled from full and effective participation as equal members of society have to give way to an accommodative society which accepts difference, respects their needs and facilitates the creation of an environment in which the societal barriers to disability are progressively answered.”

The Supreme Court overruled its previous judgement in V. Surendra Mohan vs. State of Tamil Nadu (2019), and said that the previous view was in the light of the old RPwD Act of 1995, which lacked the perspective of the principle of reasonable accommodation, where a limit on the disability was imposed in order to be given a benefit, which was upheld by this court on the ground that it was a reasonable restriction. In the present case, it has been stated that the denial of reasonable accommodation would be considered disability based discrimination under Section 3 of the RPwD Act, 2016.

The policy disconnect between the two ministries

The Supreme Court observed a policy disconnect between the Department of Personnel and Training and the Ministry of Social Justice and Empowerment. UPSC followed the guidelines provided by DoPT, which provide that the facility of scribe is provided to people with benchmark disabilities only. The Ministry of Social Justice and Empowerment, on the other hand, contends that though the appellant’s disability is not covered under the Schedule of the RPwD Act 2016, there are many such medical conditions that are not covered, and it is up to the examination body to decide on a case to case basis if and whether a scribe facility should be provided to a candidate or not, in consultation with the Ministry of Health and Welfare. Thus, there is a disconnect in the principles of the policy in question between the two ministries.

Changing the linguistic discourse

The court has specified that certain derogatory words like mentally ill and divyangjan are to be refrained from being used. The use of such language is merely a reflection of the state of the disabled and the fact that they are far from being treated as normal human beings. The language used should be one where the disabled are empowered and thereby treated as equals.

Decision of the Court

In the present case, the Supreme Court held that the fact that the appellant suffers from a disability is quite evident, as it has been made clear through certificates about the existence of such a disability and the examination of the appellant by AIIMS under the direction of the Court. Moreover, denying the appellant the benefits he has under the RPwD Act 2016 would be discriminatory. It stated that the appellant was entitled to receive the facility of a scribe while writing his competitive examinations.

Analysis of the judgement

In this case, the Supreme Court has attempted to uphold the values given to the rights enshrined under Part III of the Constitution, primarily Articles 14 and 21, and has interpreted the provisions of the RPwD Act, 2016 in view of the same. The Court has strived to adhere to the new concept of Equality as discussed and propounded in the landmark judgement of E.P. Royappa vs. State of Tamil Nadu & Anr. (1974). The basic principle revolves around the concept of Equal protection of laws, a principle forming the basic pillar of Article 14 of the Indian Constitution. The idea inherent in the principle is that it is not that every law has to be applied equally to all; rather, it advocates the notion that the laws would be applicable in a like manner to persons situated in the same situation and in an alike manner to persons situated differently. There is no concept of universal application of the law. In the E.P. Royapppa judgement, the scope has been further broadened and stated as follows:

“Equality is a dynamic concept with many aspects and dimensions, and it cannot be cribbed, cabined, and confined” within traditional and doctrinaire limits. From a positivistic point of view, equality is antithetic to arbitrariness.”

In this light, the Supreme Court has stated the importance of the test of reasonableness under Article 21 of the Indian Constitution, where the law must be reasonable and not arbitrary and oppressive. Keeping in mind the above-stated principles, the Supreme Court has interpreted the provisions of the RPwD Act, 2016, primarily Section 3 of the Act, where equality and non-discrimination are said to be the foundation of the said Act, and it is in this context that the Court has emphasised the distinction between “persons with disabilities” and “persons with benchmark disabilities” and has specified the significance of the term “reasonable accommodation.”

Since equality as a principle goes beyond non-discrimination and calls for positive action in order to give the disabled equal treatment, the concept of reasonable accommodation is deemed to work under the same umbrella. The Court, while laying importance on this concept, has stated that while providing a scribe to a disabled person for his written examination, one cannot argue that because he is less disabled, it would be a privilege for him to have a scribe. It is an obligation of the state to provide benefits to disabled persons as given under the statute. Even if one person is disabled and needs support to come to an equal footing with others, and even if he is a class in himself, it would be a reasonable classification under Article 14.

The court stated that except in those circumstances where the eligibility criteria of benchmark disabilities specifically apply, it would be discrimination if a disabled person was denied the rights guaranteed under the Act, and it would be constitutionally and in the context of the concerned statute, invalid. The court thus specifically called out UPSC’s norm to provide benefits only to persons with benchmark disabilities as flawed and an incorrect application of the statute.

This judgement thus lays out the significance of altering our approach to treating the disabled the way we do. By emphasising the reasonable accommodation principle under the RPwD Act, 2016, along with the fundamental constitutional principles, it has shown us the need for substantive equality as a standard measure.

Conclusion

In this case, the Supreme Court has tried to maintain that the concept of equality as derived from Article 14 of the Indian Constitution is something more than non-discrimination. The court has illustrated through instances and observations that equality for the disabled would only exist if certain affirmative actions were taken in order to remove social barriers and enable them to effectively participate in society. Merely following the rule of non-discrimination would not entitle the disabled to dignity and would deprive them of an equal footing with others. The court has clarified that Section 3 of the RPwD Act, 2016, has inherent in it the principles enshrined under Articles 14, 19, and 21 of the Indian Constitution. The emphasis has been laid down on the principle of reasonable accommodation, which now forms the basis of distinction between the two categories, i.e., person with disability and person with benchmark disability. It has, by upholding the right of the appellant to seek the help of a scribe because of his disability, paved the way for the institutions and other government entities to abide by the principle of inclusive equality, which will unquestionably be a resilient touchstone in upholding equality for the citizens, especially the disabled.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

International Court of Justice (ICJ) : all you need to know

By

Sneha Mahawar

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August 17, 2023

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This article has been written by Akhilesh Aggarwal pursuing Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution and has been edited by Oishika Banerji (Team Lawsikho).

This article has been published by Sneha Mahawar.

Introduction

A legal dispute can arise whenever two or more parties have different interests in mind and cannot come to a common ground. This principle applies to international law as well wherein disputes between states are resolved by the International Court of Justice (ICJ). ICJ was established in 1945 by the United Nations to work as the primary judicial organ of the UN. It is the world’s highest court based in The Hague, Netherlands and has the power to give advisory opinions or settle disputes pertaining to matters of international legal importance. Article 33 of the United Nations Charter provides the methods to be used for settlement of disputes like negotiations, mediations, arbitration, judicial settlement and much more. In the mediation method, parties involved are allowed to solve the dispute amicably amongst themselves. With arbitration, this settlement is subject to the decision that is provided by the third-party which is impartial and the decision therefore dictates a binding statement. Judicial settlement however, is a stricter rule following the method version of arbitration that is followed by the ICJ. This article discusses in detail the ICJ and every other related aspect to it.

History of origin

The Permanent Court of International Justice (PCIJ) was the predecessor of ICJ. PCIJ was established by the League of Nations (United Nations Predecessor) in 1920 for the maintenance of world peace and harmony following the aftermath of World War I. Although it was a permanent institution which was accessible to all the states, its decline after the 1930s and eventually failing to prevent World War II made the leading nations advocate for a new improved court system. The San Francisco Conference of 1945 involving 50 countries adopted the Statute of ICJ, which is based on the Statute of PCIJ.

Membership of International Court of Justice (ICJ)

Tenure and election

The membership of ICJ consists of 15 judges who have a term-period of 9 years with the eligibility of re-election and requirement that each judge must be of a different nation of origin. One-third or 5 members of the Court are elected every three years with the elected candidates having to receive an absolute majority of vote in both the United Nations General Assembly and the Security Council.

Proposal of candidates

When it comes to proposing potential candidates for the members of the ICJ, all the state parties to the Statute of the Court are entitled to make their proposals. However such a proposal cannot be made by the governments of the states involved but is done by members of the Permanent Court of Arbitration (PCA) which is designated by that State. PCA is a group of four individuals who can also serve as members of the Arbitral tribunal under the Hague Conventions of 1899 and 1907. Four nominations can be made by the group, however only two nominations can be made by the group of its own nationality while the rest can range from any country whatsoever.

Nationality and dismissal

The Court is obligated not to include nationals of the same state making each member from a distinct nation of origin. In addition to this, the Court as a whole must represent the principal major legal systems of the world. Once a member is elected, they cease to be a delegate of their own country or any other country. The members of the court have to solemnly declare to remain impartial and to exercise their powers conscientiously. When it comes to dismissal, no member of the Court can be dismissed unless it is a unanimous decision passed by the rest of the members.

Presidency of International Court of Justice (ICJ)

Tenure and election

There is no nationality criteria when it comes to the election of the President and Vice-President. The members of the Court elect both the President and the Vice- President every three years and the election method undertaken is the secret-ballot method. Re-election is allowed as well. For the election process however, an absolute majority needs to be achieved.

Working

Along with supervising and presiding over all the meetings of the Court, the President along with the aid of the Budgetary and Administrative Committees ensure the smooth working of the Court. The Vice-President aids the President and replaces them during their absence or inability to work as the President.

Issues presented before International Court of Justice (ICJ)

The cases brought before ICJ fall into three categories.

Contentious issues

These issues involve disputes that arise between two states. In such cases, the states often represent the issues of its own states’ individuals or organisations concerns as individuals and organisations cannot bring their cases before the ICJ. This practice is called ‘diplomatic protection’.

Incidental issues

These types of cases demand some relief to a party to prevent further harm or to protect the rights of the party. ICJ orders such temporary reliefs and measures which stand valid till the issue at hand is being contested before ICJ.

Advisory issues

This involves the other UN bodies like the United Nations General Assembly (UNGA) or the Security Council (UNSC) to aid them in any matter involving legal interpretation.

Jurisdiction of International Court of Justice (ICJ)

A number of cases seek the aid of ICJ over their matters but the jurisdiction of the ICJ is often put under questions. For cases involving contentious issues, both parties involved often favours ICJ’s aid to resolve the dispute thus ensuring that the parties shall abide by the ruling. ICJ also has Compulsory jurisdiction under which a state agrees to accept the mandatory jurisdiction under curtained defined matters. Therefore, compulsory jurisdiction is voluntary in nature. Article 36 of the Statute lists the nature of the legal dispute under which compulsory jurisdiction can be recognised before the court. This jurisdiction is not very effective as states often tend to exclude themselves from some or the other issues. Further, any and all declarations that have been made by the ICJ and any case involving a state requesting aid with their case also fall under ICJ’s jurisdiction.

ICJ has no enforcement powers therefore in a case where not adhering to the judgement by a state threatens the peace and harmony, the UNSC may take action. UNSC, has been empowered under Article 94 of the UN Charter which states that on the request of the injured state, UNSC can make recommendations or implement special measures to enforce the judgement. Although so far when it comes to the part of the court’s ruling, the whole international community considers it to be valid which makes the states involved more likely to accept the ruling and comply rather than disobeying it and infuriating the international community as well.

Landmark cases before International Court of Justice (ICJ)

ICJ has dealt with a number of cases right from its establishment and have given landmark judgments in the process. Some of them are listed below:

Corfu Channel Case (1947-49)

It dealt with state liability for maritime damages. This case also discussed the theory of innocent passage. In this case, two British Warships had collided with mines in the Corfu Channel in Albanian Sea which resulted in loss and destruction to both life and property. In response to this, the British Navy did a search operation without Albania’s approval in the Albanian sea and also sought for reparations from Albania for the loss incurred. Albania however counter-claimed that the UK had violated its territorial seas.

Decision of the ICJ

Albania had to reimburse the UK for the loss of life and property and was held liable on the grounds that it had continued surveillance of the Channel and therefore such an incident should have been averted.

SS Lotus Case (1926)

This case enabled the states to act in any way they wished for as long as the act did not violate any explicit prohibition. This therefore laid the foundation of international law. This case was a criminal trial wherein a crash between a French steamship and a Turkish vessel resulted in 8 members of the Turkish vessel drowning to their death. The question before the court was whether Turkish courts had the power or the authority to trial the French officer who was on duty at the time of crash.

Decision of the International Court of Justice (ICJ)

Two principles emerged from this case after France’s claim was rejected that cited that the nation whose flag flew over the ship should have the jurisdiction.

The first principle states that unless a nation is authorised by international treaties or laws, it cannot exercise its jurisdictions outside its defined borders.
The second principle states that a nation is free to exercise its jurisdictional powers inside its territories to any extent, even without being empowered by an international law.

Nicaragua v. United States of America (1986)

This case is one of the most famous examples of the enforcement powers of the ICJ and the UN. In this case, the Court had ruled that the U.S had supported the rebel groups in Nicaragua as covert-war efforts against the then Nicaraguan government which was a violation of the International Law. The Court ordered the US to pay war reparations to Nicaragua but the US refused to do so and also pulled out from the compulsory jurisdiction. When Nicaragua approached the UNSC for enforcement of the ICJ order, the US vetoed the enforcement action.

Conclusion

The International Court of Justice, right from its time of establishment, has resolved countless conflicts and restored a sense of justice to the international community through different methods and judgements. There is no doubt that the ICJ emerged as a saviour to the legal rights of the international community after two horrific world wars. Over time, ICJ has also adapted itself to the changing domains of international law. More and more cases emerge from newer issues pertaining to environmental law, human rights and so more. With all the changes, it is certain that with interactions amongst states, conflict of opinions and views shall always arise. However, every international conflict can be expressed in legal conflicts including instances where the violations of the law are also justified in legal terms. With ICJ as the central institution, the rule of law shall continue to be the pillar of support that the international community needs to co-exist peacefully. There exists criticisms that claim the existence of bias within ICJ. Further instances like States representing the concerns and representing their individuals concerns are allowed but there is no express mechanism for situations wherein the State support for minorities or the grieved is absent. However, when all ways fail before humanity and humans revert back to war-like mechanisms, international law exists as a last possible resort in such situations. To achieve this, the International Court of Justice is not to be under-estimated as not only the Court carries significant weight of trust in the International community but also has the power to bring about a change.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

IP valuation and need for due diligence in M&A

By

Sneha Mahawar

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August 16, 2023

0

This article has been written by Maitree Tyagi pursuing a Diploma in Intellectual Property, Media and Entertainment Laws at LawSikho and has been edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

Corporate restructuring activities have been on an uphill climb each year and have reached an all time high in 2022, with an increase of 139% in deal value in 2022. This paper aims to understand the concept of IP valuation and its effect and importance in M&A activities. The importance of due diligence is to get a proper and accurate value of the assets of a company, which helps a company determine whether to undergo any sort of corporate restructuring or not.

According to the Bains report, “Even if India’s economy changes course, executives feel optimistic about the prospects for deals, and they are not pausing M&A.” However, all mergers and acquisitions do not see the light of day and lead to their downfall due to poor valuation of both tangible and intangible assets, with the merger between Kingfisher and Deccan Airlines being one of the prime examples. Many corporate executives still weigh heavily on factors other than due diligence when viewing the advantages of a merger between two entities.

IP valuation has no fixed method to be used. Different methods, like the income method, the cost-based method, and the market approach, can be used according to the conditions and priorities of any corporation. IP valuation is nevertheless important to get the true value of a business and capitalise on its assets. With this, due diligence becomes an investigative yet voluntary requirement. It helps to classify the intangible assets as ones that can afford profits, like the registered intangible assets and the unregistered ones. It can also help identify assets that can be registered and potentially generate profit. Hence, IP valuation and due diligence can lead to a successful merger, generate greater synergy, and lead to the actual transfer of technology in order to gain a competitive edge over others.

In 1998, Rolls Royce was acquired by Volkswagen, wherein Volkswagen purchased all the assets of Rolls Royce; however, out of all the assets, the right over the logo was not transferred; that is, the transfer was restricted to the trademark of Rolls Royce. It was later found that, due to improper IP due diligence, the Rolls Royce logo was in fact bought by BMW, as they were producing engines for Rolls Royce according to an agreement. However, after a lengthy process of negotiations and agreements that were tripartite in nature, Volkswagen retained the Bentley trademark, and BMW became the owner of the Rolls-Royce brand.

This is one of the prime examples of improper valuation of assets, which leads to the buying of overpriced or under-priced assets. Any company needs to do a proper IP valuation as part of its due diligence on intangible assets, as there is a growing reliance on intangible assets around the world. One of the drawbacks of doing business in India is that you rely heavily on factors other than due diligence and the valuation of the target company. Let us look at mergers and IPR as separate concepts.

Role of mergers and intellectual property rights

Mergers are corporate restructuring or combining. When two companies of about the same size proceed to merge as a single entity, it is referred to as a merger of equals. However, mergers of equals do not usually take place. Mergers can take place either through absorption or consolidation. Scenarios include one company acquiring the other. Acquisition, on the other hand, takes place when one company buys more than half of the targeted company’s shares. By doing so, one company gains control over the other. The combination of two or more entities to form a separately owned and separate entity is known as a merger. A merger can take place for a number of reasons, like to attain diversification, increase economies of scale, or, in some cases, eliminate competition.

Indian and M&A

In contrast to world patterns, the merger and acquisition landscape, i.e., the deal value, has risen by 139% in 2022 due to various factors like the availability of assets and many conglomerates looking forward to diversifying their businesses. Another one of the major reasons for the rise in deal value is that it has become a global hotspot for Foreign Direct Investments. The deal value around the world has fallen sharply to a 10 year low of 36% in 2022 with respect to deal values.

2022 marked a boom in terms of mergers, with the biggest merger, HDFC-HDFC Bank, taking place. Companies, as per the reports, are buying online business-like Aditya Birla Fashion and Retail Limited (ABFRL), which bought online businesses like Bewakoof and Urbano Fashion. The initiatives of the Indian government’s very ambitious energy transition policies have led companies to invest more in renewable forms of energy, which has marked a paradigm shift in the investing scenario of the country.

However, according to the same report, one of the few challenges companies face is the retention of talent after deal competition. Many employees view such activity as a threat to their careers and start to look for other jobs. Further highlighted by the report, India needs to cover up the huge gaps left in due diligence. Due diligence becomes vital in knowing whether such a deal is beneficial for one’s business or not. As per the data, 30% of India-based executives say they heavily weigh assessing the cultural and strategic fit of the target company before initiating due diligence.

Intellectual Property Rights: Intellectual Property refers to incorporeal, intangible property, i.e., immaterial property. It refers to the creation of the human mind through skill and labour. The immaterial things that the law recognises as subject matter of rights are the products of human labour and skill, which are known as Intellectual Property Rights. Intellectual Property is everywhere around us, from advanced gadgets to literary and artistic creations like music composition, novels, and even symbols that differentiate one trade from the other.

As a justification for Intellectual Property Rights, John Locke rightly justified that a man uses his labour and skill on a resource that is generally held in common to invest, and that such a person should have a natural right to such a product produced and ensure that such rights are properly protected and enforced.

Various immaterial rights are vested by virtue of:

Patents: Patents are known as exclusive rights, or popularly known as monopoly rights, which are granted to the inventor to exploit his invention and to prevent others from exploiting it according to the provisions of the respective Act for a specified period. Patents are granted for a limited duration, which is generally 20 years in most countries.
Trademark: It is generally comprised of commercial names. Logos, signs, marks, lines, packaging combinations of colour, or any combination would be considered trademarks. A trademark is defined under Section 2(1)(zb) of the Trademarks Act of 1999 which states that a trademark should be one of the following:

Which can be represented graphically, or
one that can distinguish the goods and services of one person from those of another.

This serves two purposes- it helps the owner protect his business and does not create confusion in the minds of consumers.

Copyright: It comprises musical, dramatic, artistic, and literal works, along with sound recordings and cinematograph films. It vests in the owner of the copyright the right to exploit the creation by performing the work in public, making copies of it, or cinematographing films.
Trade secret: It contains confidential information. Such information is valuable in the sense that it can afford an economic advantage to a company, a firm, etc. Trade secrets include any method or process, any unpublished patent application, computer programmes, and many more.
Other intangible properties include designs, know-how and integrated designs, which can constitute an important part of intangible assets and afford a competitive edge, as well as factorshat are important in the case of any sort of corporate restructuring.

Connecting the dots

Intellectual property contributes heavily to the assets of any company; hence, it becomes very important for the company to take into consideration the value of intangible assets while undergoing any corporate restructuring, as it helps to determine the true value of the business. Intellectual Property Rights have helped businesses in building a brand value for themselves in terms of design, invention, etc., which helps it to distinguish one’s business from that of the other. Moreover, IPR helps a company to attain a competitive edge by getting a technology which helps it in some function of the production or servicing line.

Mergers and acquisitions involve the transfer of assets from one company to another. Such assets can be both tangible and intangible, and IP valuation thus plays a vital role. It highlights the importance of targeting the company after checking the IP portfolio. The strategy of world class companies such as Volkswagen group and Tata group enunciates the IP valuation technique to adopt brands, Intangible assets now form 90% of its value.

IP mergers take place with the main objective of acquiring a new technology in a less complex and time taking manner, as inventing a product or a process of manufacture may take up a lot of time and the company’s resources. However, many companies tend to neglect such intangible assets for the sole purpose of eliminating competition. Acquiring IP after IP valuation can help a company

IP valuation

Intellectual property is an intangible asset, and hence it becomes difficult to value such assets, unlike tangible assets like property, which can be calculated on the basis of comparative methods. Nevertheless, they form an essential part of mergers and acquisitions. IP Valuation helps determine the monetary value of IP assets.

Intellectual property valuation is nevertheless important to get the true value of a business and capitalise on its assets. There is a growing dependence on intangible assets. According to the study conducted by Ocean Tomo, which is an intellectual property merchant bank, such intangible assets now form 90% of the business value as against 80% in 2005. A business places a high reliance on trademarks, which distinguish them from different trades and help establish goodwill.

Year	Intangible assets	Tangible assets
1995	68%	32%
2020	90%	10%

Businesses derive monetary incentives from intangible assets through the sale or licencing of the same. Many companies, prior to any corporate restructuring, check the intellectual property portfolio of the targeted company. Many companies, like Tata, focus on intellectual capital as a growth strategy. Many companies are encouraging the growth of a strong IP portfolio strategy to protect its intellectual property and attract management and investors

However, due to the nature of intellectual property, there is no best suited method for Intellectual Property (IP) Valuation. There are various methods that can be applied by any company according to the circumstances. The methods can be divided into quantitative and qualitative. The Quantitative method includes:

Market approach: also known as the transactional method, this involves the price paid for transferring rights for similar corporeal assets under similar circumstances. The transactional method is known to be the most popular and reliable method for valuation, as it sets a fair price on the value of the intangible assets involved, moreover, it can determine fair royalty rates.
Income method: the value is determined by the amount of wealth the intangible asset can generate. It is considered the most mathematical method because it considers the value of time. Due to its mathematical nature, it is usually considered the final stage after the cost method and the market method.
Cost based method: This is further divided into historic and futuristic approaches.

The historic approach normally includes the cost of making the intangible asset, like the cost of procuring raw materials, cost of manpower, cost of the patent grant application, and others.
Futuristic, on the other hand, depends on the ability to reproduce the creation or replace the creation out there with another one. For example, We know LED televisions would constitute the replacement cost of LCD television technology.

One of the most important questions that surrounds intellectual property in corporate restructuring is how to maximise its value. The simple answer to this question will be utilisation of the intangible assets to create revenue. There can be no brand creation or capitalization from assets until and unless there is exploitation of the intellectual property. For example, there can be no ‘Cadbury’ brand without the use of its trademarks and goodwill. This part helps in attracting the management and the investors and, in many cases, leads to the acquisition of the same when one buys more than half of the stocks of the targeting company’s shares.

Due diligence

Due diligence, in literal terms, can be explained as taking the necessary steps and precautions in order to avoid any loss or harm. Due diligence in the context of mergers and acquisitions can be referred to as investigating the ownership of the business or assets of the business as well as the identification and valuation of the assets, which include both tangible and intangible assets.

IP due diligence, in particular, refers to ascertaining the valuation of the incorporeal assets of any company or business and determining whether any corporate restructuring with the target company yields any commercial benefits or not. It helps the company to acquaint themselves with both the advantages and disadvantages with respect to the nature and extent of the target company’s liabilities.

IP due diligence takes into account factors like domestic and foreign patents and steps taken to protect IPR, like whether the company has registered their creation, whether such an intangible asset is licensed to any third party, or if there are any encumbrances on the assets. Any wrong valuation may lead to either the buying of overpriced or under-priced assets or paying for invalidated IPR. IP nowadays constitutes the highlight of any company portfolio and due diligence in turn helps in building new strategies, like whether the company

Steps involved in the same:

Identifying the intangible assets: Intangible assets can be in the form of innovations protected by patents, designs, any logo or symbol, databases, manuals, etc. According to the data, 10% of the SME’s have their own registered IPRs, out of which 93% have seen a positive impact because intangible assets help lift the reputation of a brand. By identifying the intangible assets properly, there are fewer chances of mistakes in the further process of due diligence.
Existence of IPR-related IP assets: It is important to categorise whether the intangible assets are protected, registered, or unregistered as matter of fact. It is only when these assets are registered and protected that the inventor gets the right to prevent others from exploiting the invention.

It is also important to take into account the assets that are not protected by the company but can do so and eventually lead to the future profitability of the business.

Valuation and the current situation of IPR: The valuation of IPR, as discussed in the paper, helps to ascertain the value of business. In addition, certain other factors, like ownership over the property, are to be considered. A corporation cannot be the first and true inventor; however, a corporation can be an assignee. Another factor in business is the employer-employee relationship. Generally, the employer has the right over the creations made by the employee in course of business; however, in the absence of any contract, the employee may be able to exercise the rights first. In addition, it is important to check whether an additional fee is paid for the invention or not. Further, any sort of opposition or objection may delay the process of granting a patent for an invention.
It is almost essential to check the rights and liabilities that may arise due to ownership. For example, many contractual obligations may be attached to the IP rights, like the existence of a license and the duration attached to the same. Similarly, confidentiality by way of non-disclosure agreements related to information that is sufficient to provide commercial benefits is to be maintained. Certain non-contractual obligations are also included, like infringement claims, which can considerably impact the IPR value, and other non-judicial processes like ongoing arbitration and mediation.

Another case of improper valuation and due diligence

One of the prime examples of mergers without taking into consideration intangible assets happened with Kingfisher Airlines. The downhill for the Kingfisher airline started with the merger with Deccan Airline, which was a low-cost airline providing seats at an affordable rate. After the merger, neglecting the brand reputation both companies held with respect to their trademarks, Kingfisher changed it to Kingfisher Red, which created confusion in the minds of consumers as to the difference between Kingfisher and Kingfisher Red, as a result of which Kingfisher went into debt with heavy losses. Hence, it becomes all the more important to take into account the intangible assets and how much they contribute to the brand’s value.

Conclusion

I would like to highlight a quote by James Gleick that reads, “Patent battles have become a strong catalyst for mergers, reducing competition in various domains. The largest corporations, with gigantic patent portfolios, routinely enter into cross-licensing agreements with their largest competitors.”

Mergers have become a common affair due to the uncertain economic landscape. However, it becomes equally important to weigh the tangible and intangible assets, as both contribute to determining the true value of the assets and the makeup of the value of the company. It is important for any corporation to look into the history of the company, such as what technology it possesses, as well as whether acquiring such technology will benefit the firm’s business in any way. Moreover, the maximum utilization will generate the best IP value; for example, a brand can create goodwill attached to it through its maximum utilization. Giving more weight to initiating due diligence and relying on the same will leave a company with answers and increase the chances of the merger being a success. A robust IP Valuation infrastructure before any mergers is now a necessity to avoid another infamous Volkswagen-Rolls Royce case.

References

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IP rights and artificial intelligence

By

Sneha Mahawar

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August 16, 2023

0

This article has been written by Shivam Sharma and has been edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

In recent times, safeguarding intellectual property rights has undergone significant transformation. Despite nations’ attempts to expeditiously take measures to align with IP-related issues and matters raised by the WIPO and WTO, experts in this domain opine that recent scientific progressions in the intellectual property sphere appear to outpace existing scholarly literature in the field of intellectual property. This indicates a pressing need for more comprehensive research in the IP domain and its regulation to keep pace with these advancements.

One such area that has come to the forefront is machine learning, more commonly known as Artificial Intelligence (AI). AI is “the ability of a computer or a robot controlled by a computer to do tasks usually done by humans because they require human intelligence and discernment. Although there are no AIs that can perform the wide variety of tasks an ordinary human can do, some AIs can match humans in specific tasks.”

The Director General of WIPO held three sessions (from when to when) discussing the impact of AI on IP rights. The issues surrounding the involvement of governments in matters pertaining to artificial intelligence that were then contemplated included, inter alia, the formulation of policies and strategies to bolster the development of AI as well as regulatory initiatives. A panel of experts held a discourse on the complexities surrounding the attribution of inventorship, authorship, and ownership of works and inventions that were either generated or assisted by AI.

This article talks about the IP rights protection of AI-generated and AI-assisted works in the light of Copyright, Patents, and Trademarks.

Artificial intelligence and Copyright Law

The chief considerations while granting copyright protection to any work are those related to authorship, ownership, and whether the work can be deemed to be an original creation. In the case of AI generated or AI assisted works, it is difficult to attribute authorship or ownership to an individual that has created the work with the help of AI. Should the credit behind the creation go to the programmers or developers that created the AI system, or the company (if any) that used the AI system and employed individuals to come up with a creation using the AI technology, or the end-user itself that generated something out of his own creative thinking but only after using the AI tool developed by a programmer. In the US, works created using AI tools are refused protection as they do not fulfil the “human authorship requirement.” Such works are, therefore, released into the public domain. In most countries, the requirement of having a human author is of vital importance. In general, the subject matter of copyright is works borne out of an intellectual mind that, upon acquiring certain skills, employing certain labour, create something so unique that it is extremely difficult to call it a replication of an existing work (the originality requirement). Under US law, in the case of end users of AI, if a work has been created by them using AI, after acknowledging the use of such an AI tool in the work, IP rights can be claimed over that work.

The US “made for hire” solution

It has been suggested that the “made for hire” doctrine envisaged under the US Copyright Act of 1976 tends to resolve the issue related to authorship/ownership of works created using AI The doctrine attributes authorship to the employer for works created by employees under a made-for-hire agreement. It has been suggested that to encompass the present conundrum of authorship of AI-created works, the definition of the words “employer” and “employee” under the statute could be redefined, where employer may include an AI programmer or a body corporate that owns the AI device, while “employee” may include an AI program/device since it works upon instructions/commands from the employer. This, however, does not deal with situations where the AI is solely responsible for creating a work with absolutely no human intervention. The problem arises when an application for copyright registration is filed in the name of the AI itself. In 2018-19, DABUS, aka “Device for Autonomous Bootstrapping of Unified Sentience”, filed for copyright registration before the US Copyright Office (USCO), with the AI tool as the author of the autonomously created work. The USCO rejected the application stating that the work lacks the human authorship necessary to support a copyright claim, and in 2022, the Copyright Review Board reaffirmed the decision stating that copyright protection cannot be extended to non-human creations under the current regime and that the doctrine (work for hire) requires binding legal contracts, which the AI cannot enter into. The Board stated that “A work made for hire must be either (A) prepared by an employee or (B) by one or more parties who expressly agree in a written instrument” that the work is for-hire. In both cases, the work is created as the result of a binding legal contract—an employment agreement or a work-for-hire agreement.”

Similarly, the UK Copyright, Designs and Patents Act of 1988 states under Section 9(3) that, “In the case of a literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken.” Therefore, copyright protection for AI-generated works under this Section might face the same fate as the DABUS case before the USCO and Review Board in the US.

The situation in cases where there is a human co-author might be different. For example, in Canada, in a copyright registration application, the names of both the AI painting App “RAGHAV” and the human co-author Ankit Sahni were mentioned. The Canadian Intellectual Property Office (CIPO) registered the copyright since listing the human co-author bypassed the human authorship requirement.

The Indian challenge

In the Indian scenario, Section 2(d)(vi) of the Copyright Act of 1957 says that an author in relation to an artistic work that is computer-generated means the person who causes the work to be created. A work solely generated by AI, as in the DABUS case, again goes out of the purview of this definition. Furthermore, Section 17(c), in some consonance with the foreign, ‘made for hire’ doctrine, makes an author, working in employment under a contract of service or apprenticeship, the first owner of the copyright therein in the absence of an agreement to the contrary. The Delhi High Court in ‘Neetu Singh vs. Rajiv Saumitra and Ors.’, was of the opinion that the Defendants (the employer therein) had to establish by means of any terms and conditions that the literary work was also a part of the duties and obligations of the plaintiff (employee therein) in her capacity as an employee, in the absence of which the copyright cannot go to the employer. Simply put, a conjoint reading of this rule and Section 2(d)(vi) shows that if an employer causes, authorises, or commands the creation of a work, he can be said to be an author as per the Act. Therefore, for AI-assisted or AI generated works created by or with assistance from a ‘human co-author’, copyright protection should exist. The problem still lies with works created solely by an AI where the AI itself claims protection. This would be particularly difficult to achieve as many courts have ruled since times immemorial that IP rights exist only for humans as (i) usually, they can only employ their intellect, labour, and skills into a creation (or invention) out of volition or free will, and (ii) the author “…is the person who translates an idea into a fixed, tangible expression entitled to copyright protection. Such criteria cannot be met in a work created solely by AI, as the question of translating its own idea into a tangible expression out of free will, does not arise.

Patents and artificial intelligence

Patent laws generally offer the same questions to be answered as copyright laws, i.e., is an AI Invention patentable under the current patent laws, and who can be credited with the inventorship? The above-mentioned case of DABUS went to the US Patent Office too, seeking Patent rights over the inventions created by DABUS. Here, DABUS was mentioned as the sole inventor, even though the computer scientist behind DABUS, Stephen Thaler, filed documentation assigning him all the rights to DABUS as an inventor. The United States Patent and Trademark Office (USPTO), however, denied all the claims owing to the “human inventorship” requirement. The matter was contested before the Court of Eastern District of Virginia and later appealed before the Court of Appeals for the Federal Circuit, but the decision of the USPTO was upheld each time, noting that inventors must be human beings. Thaler even argued for a wider and more inclusive definition of the words “individual” and “whoever” appearing in the US Patent Act to include “AI software” and “corporations and other non-human entities”, respectively. However, the court maintained that “In the Patent Act, individuals—and, thus, inventors—are unambiguously natural persons.”

Possible solutions

As in the copyright cases, by making changes to certain definitions or using an inclusive interpretation for terms such as “inventors”, “individuals”, “inventions”, etc., the present problem of AI as an inventor cannot be solved. Different stakeholders have tried to come up with different possible ways in which this can be achieved.

To bypass the “human-inventor” requirement by modifying the Patent Act so that an AI can be named as a co-inventor(s). However, in such a scenario, the AI would not be able to fulfil the accountability standards in cases of litigation, compliance, or giving consent and declarations. In such cases, the US Court of Appeals for the Second Circuit has held that a person claiming to be the author of a joint work must prove that both parties intended each other to be joint authors. How can an AI give consent or a declaration to be a joint author (or joint-inventor for that matter)? That would be the big question.

Secondly, the “made for hire” doctrine in copyright laws should be made applicable to “made for hire” inventions as a possible solution where Corporations/Institutions owning or setting up an AI system shall apply as inventors. Though, in the absence of a human, at least copyright claims under this doctrine have been rejected by US Courts where AI was the sole author, even when seeking refuge under the “made for hire” doctrine, as seen in the review board’s decision in the DABUS’ copyright registration application.

Artificial intelligence and trademarks

AI has affected Trademarks in quite a different way than it has with copyright and patent laws. Here, the problem is not with getting a Trademark registered for AI systems but with how such a system has affected business entities adversely. The entire foundation of Trademark laws centres around the fact that consumers have choices, and such choices can be influenced or manipulated. Laws related to such influences in trade slowly developed to prevent unfair trade practices and promote fair competition between different players. Now that AI technologies are emerging, this whole system needs upgrading. Take, for example, the famous case of Cosmetics Warriors Ltd. & Anor vs. Amazon.co.uk Ltd. and Anor (2014). In this case, the claimants (who claimed infringement) called Lush owned the trademark called ‘Lush,’ while Amazon made bids to Google on AdWords keywords that included ‘lush’. Therefore, when a consumer searched the word lush, Amazon’s sponsored links would appear, taking the user to products named lush but not the products of the claimants. As a result, claimant ‘Lush’ brought infringement proceedings against Amazon. The court ruled in the claimants’ favour since Amazon showed products titled ‘lush’ from third parties but did not show the claimants’ products even though they had the mark ‘lush’ registered. This case is just a small, almost decade-old example of how AI can be used to manipulate consumers to the disadvantage of businesses. Now the situation can only be presumed to have worsened in the absence of regulations and laws delineating responsibilities and liabilities in cases where AI applications recommend trademark infringing goods or where the AI application leads a consumer to buy counterfeit goods or is led to a particular product or service through manipulation of algorithms.

Conclusion

In the case of copyright and patents, suffice it to say that changes in certain existing definitions under these statutes may help curb the issues to some extent. A wider and more inclusive interpretation of existing terminology, such as including the term ‘mechanical persons’ as opposed to using only natural persons where AI-assisted or AI-generated work can fit in, may be a possible solution. In the case of trademarks, proper authorities need to regulate the use of AI systems by means of regulations, prohibitions, bylaws, etc. and also state who shall be held liable where the AI systems mislead consumers to infringing or counterfeit goods and where business entities are indulging in unfair trade practices.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Shah Bano case

By

Vanshika Kapoor

-

August 16, 2023

0

This article is written by Monesh Mehndiratta, of Graphic Era Hill University, Dehradun. The article explains the famous case of Shah Bano. This case pertains to the right of Muslim women to seek maintenance and is considered as one of the landmark judgments in the development of Muslim Personal Law. The article provides the brief facts of the case, issues involved, opinions of the judges, judgement, and its critical analysis.

It has been published by Rachit Garg.

Introduction

Have you ever imagined that three words could actually change someone’s life?

Three words..?

Shocking, right? You might be wondering what those three words are and how they can change someone’s life within seconds. Well, those three words are “Talaq, Talaq, Talaq”. These words could change the status of Muslim married women from being married to divorced within 3 seconds. Yes, that’s true, Talaq-ul-biddat, one of the forms of talaq in Muslim personal law involves pronouncing the word ‘talaq’ three times which results in an instant dissolution of marriage.

It has catastrophic implications on the woman as she is left at the whims of her husband and has nowhere to go after divorce. Muslim marriage is majorly considered as a contract that depends on the will of the parties. The husband has been given the right to divorce his wife while the women did not have such rights. It was after certain amendments and judicial decisions that Muslim woman’s position was secured with respect to divorce, maintenance and other rights. One such decision that created history in this regard and is still considered as an important precedent for Muslim law is the ‘Case of Shah Bano’. The present article provides a case study on the Shah Bano case, gives the brief facts of the case, and explains the judgement and law applied. It also provides the consequences of the judgement and its analysis. Let us begin the journey to understand one of the historic judgements related to Muslim marriage.

Details of the case

Name of the case

Mohd. Ahmed Khan v. Shah Bano Begum and Ors.

Citation

1985 AIR 945, 1985 SCR (3) 844

Date of judgement

23rd April, 1985

Name of the petitioner

Mohd. Ahmed Khan

Name of the respondent

Shah Bano Begum and others

Name of the judges

CJ. Y.V. Chandrachud, J. D.A. Desai, J. Chinnappa O. Reddy, J. E.S. Venkataramaiah and J. Rangnath Misra

Name of the court

Hon’ble Supreme Court of India

Brief Facts of the case

Shah Bano was married to Mohd. Ahmed Khan since 1932 and also had children. In 1978, she was cast out along with her children by her husband. Having no other option, she was compelled to file a petition for maintenance in 1978 for her kids and herself under Section 125 of the Criminal Procedure Code, 1973. The husband, on the other hand, instantly dissolved the marriage by irrevocable talaq. In Muslim Personal Law, the provision for maintenance of the wife is limited to the Iddat period, and the husband has no liabilities thereafter.

However, he was directed by the magistrate to pay maintenance of Rs.25 per month to the respondent. Aggrieved by the amount of maintenance, she filed a revision petition to enhance and increase the maintenance. The instant case is a result of an appeal filed by the husband, Mohd. Ahmed Khan, seeking the dismissal of a petition filed by his aggrieved wife who prayed for an increase in the amount of maintenance.

Issues involved in the case

The following issues were to be decided by the Supreme Court:

Is there any obligation on the husband under Muslim personal law to give maintenance to his wife after divorce apart from?
Whether Section 125 of the Code is applicable to Muslim women?
Are Muslim women eligible for any kind of sum payable by their husband apart from ‘Mahr’ or ‘dower’?

Contention of the parties

Arguments presented by Petitioner

The petitioner, Mohd. Ahmed Khan argued that under Muslim personal law, he is required to pay maintenance to his wife only during the iddat period and no further. Iddat is a period of seclusion that a Muslim woman has to face after the death of her husband or divorce in which she cannot marry any other person. His arguments were also supported by the All India Muslim Personal Law Board. They argued that the court has no power to interfere in matters governed by Muslim Personal Law as it is against the Sharia Law. He also argued that Section 125 of the Code is not applicable to her as these matters are governed by The Muslim Personal Law (Shariat) Application Act, 1937.

Arguments presented by respondent

The respondent, Shah Bano, claimed maintenance from her husband under Section 125 of the Criminal Procedure Code, 1973. It was argued that this provision imposes a duty on the husband to provide maintenance to his wife after divorce there are no means of sustenance for her. The respondents relied on the case of Bai Tahira v. Ali Hussain Fidalli Chothia (1979) and Fazlunbi v. K. Khader Vali (1980) in which the court settled the position with respect to the application of Section 125 of the Code to Muslim women. It was held that this section is equally applicable to Muslim women as well.

Judgement of the court

Ratio decidendi

With respect to the application of Section 125 of the Code, the Hon’ble Supreme Court held that it is applicable to all women irrespective of their religion. While dealing with the question of whether there is any conflict between Section 125 of the Code and the Muslim Personal Law, the court held that Section 125 is a part of the Criminal Procedure Code, 1973 and not of any personal law. This means every spouse irrespective of their religion is under an obligation to pay maintenance to his wife until she remarries.

Further, it was held that mahr or dower is an amount payable to the Muslim wife as a consideration for marriage and not after divorce. If a Muslim husband has paid the dower or mahr completely then it will not satisfy his duty of paying maintenance to his wife after divorce. Mahr or dower is a mark of respect for a wife under Muslim personal law and cannot be considered as an amount payable on divorce. Thus, the petitioner was asked to pay maintenance to his wife till she remarries.

Opinions of the judges

The bench consisting of J. A. Vardharajan and Murtaza Fazal Ali was of the view that the cases referred for the applicability of Section 125 on Muslim women were not decided correctly and thus, referred the appeal to be decided by a larger bench consisting of the Chief Justice. This is because they opined that these cases need reconsideration as they are against the concept of divorce which is governed by Section 2 of the The Muslim Personal Law (Shariat) Application Act, 1937. On this issue, the Supreme Court observed that Section 125 is clear and precise and provides that a husband has to pay maintenance to his wife if she is not able to maintain herself. Religion has no role to play in the applicability of this section and that it does not limit itself to any particular class or religion of society. The then Chief Justice YY Chandrachud opined that the aim of the provision is to provide speedy remedy to those women who are not able to maintain themselves after divorce.

The petitioner and his supporters relied on some texts and books to support the contention that the Muslim husband is not under an obligation to pay maintenance to his wife after iddat. The court observed that the texts referred by them failed to establish this proposition and stress was laid to give regard to entire Muslim personal law and then decide the liability of a husband to maintain his wife after divorce who has no means to sustain. The court found the comparison of the amount of Mahr given as consideration to Muslim women on marriage with the amount payable after divorce as maintenance, unjust and incorrect. The true position is, if a Muslim woman is able to maintain herself, only then is the duty of the husband to pay maintenance after the iddat period ceases. If she is unable to do so, she can take the recourse of Section 125. This also settled the position that there is no conflict between the said provision and the Muslim Personal Law.

With respect to the issue of any other sum payable to the wife apart from dower of mahr, the court observed that the dower is a sum paid to the wife as a consideration for marriage and is a mark of respect and not as maintenance after divorce. It was also observed that Mahr is divided into two parts:

Prompt – payable on demand of wife,
Deferred – payable on dissolution of marriage or death of husband.

However, this amount cannot be considered as maintenance. This also opposes its aim which is respect for the wife. Hence, it was concluded that any sum payable out of respect or a mark of respect cannot be considered as a sum payable on divorce.

After effects of the judgement

This case was highly criticised by the Muslim community and the All India Muslim Personal Law Board on the ground that the Courts have no power to interfere in their religious matters and that this violates the Sharia Law. This resulted in huge controversy and protests. Many people from the community came to the streets and protested against the decision of the court. Further, the Parliament enacted the Muslim Women (Protection of Rights on Divorce) Act, 1986 in order to nullify the decision of the court.

The Act was, however, contrary to the judgement delivered in the Shah Bano case and took away the remedy of Section 125 of the Code given to Muslim Women. It provided that the liability of a husband to pay maintenance to his wife is restricted to iddat period only. However, the constitutional validity of the Act was challenged in the case of Daniel Latifi v. Union of India (2001) on the ground that it is violative of Article 14, 15 and 21 of the Constitution as it deprives Muslim women right to seek maintenance under Section 125 of the code. The Supreme Court in this case clarified the position with respect to maintenance to be paid to Muslim women by their husbands after divorce and provided that:

The Muslim husband is under an obligation to pay maintenance to his wife beyond the iddat period after divorce and that he must also make fair and reasonable provisions for her future maintenance.
The court also provided that if she is unable to maintain herself after iddat period, it will be the responsibility of the relatives of her husband to take care of her and give her maintenance. She can file an application in this regard according to Section 4 of the Act.
If relatives are able to do so, it is the duty of the Wakf board to maintain her.

This was done to strike a balance between personal laws and the rights of divorced women to seek maintenance and so the validity of the Act was upheld. However, the Act itself was contrary to the judgement delivered by the Supreme Court in this case rendering the judgement inapplicable. But the Hon’ble Supreme Court settled the position with respect to maintenance to Muslim women after divorce in the case of Daniel Latifi v. Union of India by stating that Muslim women are entitled to maintenance even after the iddat period if she is unable to maintain themselves. Thus, the case of Shah Bano is considered as one of the historic judgements with respect to the rights of Muslim women in the country.

Analysis of the judgement

This case is a landmark judgement with respect to the rights of Muslim women. It settled the law and position related to their right to maintenance after divorce. Not only this, but the Supreme Court also stressed on the importance of Uniform Civil Code in this case. Chief Justice Y.V. Chandrachud opined that this issue of conflicting ideologies and unsettled position with respect to laws can be resolved by the Uniform Civil Code. However, No Uniform Civil Code has been enacted so far. This is because interfering with personal laws may not be acceptable to people and create a situation of chaos in the country.

Though the judgement in this case was criticised by those who supported the petitioner, one cannot forget that it gave equal rights of maintenance to Muslim women under Section 125 of the Code of Criminal Procedure, 1973. It also led to the enactment of the Muslim Women (Protection of Rights on Divorce) Act, 1986 which settled the issue of maintenance to Muslim women after divorce. Such legislation for the protection of rights of Muslim women was enacted for the first time and appreciated by women as their rights were discussed and given importance.

Conclusion

The present case is considered to be a milestone in the development of Muslim Law and the rights of women in the country. It gave equal rights to one such section which is considered vulnerable and is neglected in society. Even today the case is considered as one of the landmark cases delivered by the judiciary. It also highlighted the importance of Uniform Civil Code in the country mentioned in Article 44 of the Constitution.

Women were mostly exploited and this is one of the situations where Muslim women initiated to express themselves and fight for their rights. This case serves as a big step towards the practice of courts of deciding involving interpretation of personal laws. Though this case led to protest and controversy, it also resulted in enactment of a legislation to protect the rights of Muslim women whose position was settled by the court in another case.

Frequently Asked Questions (FAQs)

Who represented Shah Bano in the Supreme Court in this case?

She was represented by Advocate Daniel Latifi who also challenged the validity of The Muslim Women (Protection of Rights on Divorce Act),1986.

What is the time period of iddat in case of dissolution of marriage?

In case of divorce, the Muslim woman has to observe iddat period of three lunar months.

How much maintenance was given to Shah Bano?

In the present case, the Judicial Magistrate of First Class ordered the maintenance of Rs. 500 per day to be paid to Shah Bano by her husband.

References

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Interpretation of Section 7(5)(a) of the IBC 2016 by the Supreme Court of India : all you need to know

By

Vanshika Kapoor

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August 14, 2023

0

This article has been written by Prasanth M, pursuing Diploma in Corporate Litigation ( FEB-01-2023 ) and has been edited by Oishika Banerji (Team Lawsikho).

It has been published by Rachit Garg.

Table of Contents

Introduction

When a company or LLP borrows a loan from the bank or financial institution and makes a default in repaying such loan then in such circumstances such bank or financial institution either itself or by joining with other creditors can initiate a corporate insolvency resolution process (CIRP) against the company or LLP in default. The same is the crux of Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). When an application moved by a financial creditor i.e. the bank or financial institution is admitted by the NCLT in respect of a default, the CIRP is said to have been initiated. The implication of this is that the management of the defaulting company shifts from its directors to the insolvency professional who shall manage the affairs of the company and does all his duties as per the provisions of this Code.This article specifically highlights on Section 7(5)(a) of the IBC which grants the adjudicating authority discretionary power to admit an application of a financial creditor for initiation of CIRP.

An insight to Section 7(5) (a) of the Insolvency and Bankruptcy Code, 2016

Firstly, to constitute a default there should be a non payment of debt either wholly or any part therein and it becomes due and payable and the same is not paid by the corporate debtor I.e. the company or LLP.

Secondly , the application must satisfy the provision contained under Section 7(2) which talks about the form, manner, the fees and such they are prescribed under “the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016”

Lastly there should not be any disciplinary proceedings pending against the proposed Interim resolution professional with the Insolvency and bankruptcy board of India which is the regulatory authority of IP’s.

Supreme Courts’ judgement interpreting Section 7(5)(a) of IBC 2016

The Adjudicating Authority has the discretion to admit or reject a CIRP application submitted under Section 7 of the Insolvency and Bankruptcy Code, 2016 when examining the existence of debt and default by a corporate debtor, according to a recent ruling by the Supreme Court on July 12, 2022 in the case of Vidarbha Industries Power Ltd vs. Axis Bank Limited (2022). The admission of claims made by a financial creditor is addressed in Section 7(5) of the Code, whereas the admission of claims filed by an operational creditor is addressed in Section 9(5). Alongside this judgement there are a few more where interpretation of the provision has grabbed eyeballs. The same has been discussed hereunder.

Vidarbha Industries Power Ltd vs. Axis Bank Limited (2022)

Facts of the case

Vidarbha Industries is a Power Generation Company Registered with the Maharashtra Electricity Regulatory Commission. Axis BanK Ltd filed an application under Section 7(2) of the IBC before the NCLT, Mumbai for Initiating CIRP.

Vidarbha Industries filed an application before the NCLT, Mumbai to stay the proceedings under Section 7 of the Code taking a stand that the financial debt owed by Vidarbha Industries to Axis BanK Ltd was Rs. 700/-crores, whereas Vidarbha industries by virtue of an order from the Appellate Tribunal for Electricity was entitled to a sum of Rs.1730 Crores and the appeal on the said order was pending before the Supreme Court of India.

Both NCLT, Mumbai and the NCLAT dismissed the applications to stay the proceeding under Section 7(5)(a) taking only into consideration the fact that there was a financial debt and the presence of a default. However, an appeal was filed by Vidarbha Industries before the Supreme Court of India against the order of NCLAT.

Issue of the case

The issue before the Supreme Court was whether the provisions of Section 7(5)(a) is discretionary or mandatory in nature.

Judgement and analysis

The Supreme Court observed that the legislature has in its own wisdom, chosen to use the expression “may” in Section 7(5)(A) of the Code and if the NCLT is satisfied that a default has occurred and the application made by the financial creditor is complete and also there is no disciplinary proceedings pending against the proposed Interim Resolution Professional, then the NCLT “may ” admit the application.

The Supreme Court further observed that the Section 9(5) which refers to the application made by the operational creditor is mandatory in nature. However in case of an application filed by a financial creditor under Section 7(5)(a) then the NCLT has to examine the expediency of initiation of CIRP, taking into account all relevant facts and circumstances including the overall overall financial stability and viability of the corporate debtor.

The Supreme Court had noted that both NCLT and NCLAT fell in error in holding that once it was found that a debt existed, and the corporate debtor was in default payment of the debt there would be no option to the NCLT but to admit the petition under Section 7 of the Code. The Supreme Court also stated that both NCLT and NCLAT have brushed aside the case to the appellant, that an amount of Rupees 1,730 crores was realisable.

The Supreme Court also observed that the objective of IBC is not to penalise the solvent companies for temporary default by initiating CIRP. It was further observed that adjudicating authority shall not use the discretionary power under Section 7(5)(a) of IBC arbitrarily or capriciously.

The decision of the Apex court has paved ways for various defences by the corporate debtor particularly when there is a pending litigation and in which the outcome of the order or award will nullify the default of the corporate debtor under which the CIRP is intended to be initiated.

K. Paramasivam vs. The Karur Vysya Bank Ltd & Anr (2022)

This is yet another case in which the Supreme Court attempted to provide better clarification on understanding the provision of Section 7 of IBC.

Facts of the case

The brief facts of this case is that the Karur Vysya Bank Ltd advanced credit to (i) Sri Maharaja Refineries, a Partnership Firm; (ii) Sri Maharaja Industries, a proprietary concern of K. Paramasivam; and (iii) Sri Maharaja Enterprises, a proprietary concern of P. Sathiyamoorthy and all of the aforementioned credit is guaranteed by Maharaja Theme Parks and Resorts Pvt. Ltd. The ground for the appeal was that the Maharaja Theme Parks and Resorts Pvt. Ltd iwa not the corporate debtor within the ambit as defined under Section 3(8) of IBC nor is he a guarantor as defined under Section 5(5A) of IBC.

Issue of the case

The issue here was whether a financial creditor can initiate a CIRP process against the guarantor without taking action against the principal borrower. In other words whether the liability of the guarantor is co-extensive with that of the principal borrower.

Judgement of the case

The Supreme Court relied on the well settled three bench judgement of Laxmi Pat Surana vs. Union Bank of India and Another (2020) wherein it was held that the CIRP can be initiated against the personal guarantor even without proceeding against the Corporate debtor and such the liability of the guarantor is jointly and severally as of the corporate debtor.

E S Krishnamurthy and others v. M/s Bharathi Tech Builders (2021)

Facts of the case

The brief facts of this case was that the M/s Bharath Hi Tech Builders was engaged in the business of construction of real estate projects which promised to build and register plots to the allotted within a stipulated time failing which the allottees are entitled to be refunded with the entire amount with interest. The builder failed to honour the obligation and therefore the allotted moved an application under Section 7 of IBC. The builder took a stand that the settlement is in process with the allottees.

Issue of the case

The underlying issue before the Supreme Court in this present case is whether the adjudicating authority can dismiss the petition filed under Section 7 of IBC on the ground that the parties were attempting to settle the issue out of Court.

Judgement of the case

NCLT in this case had provided the parties a timeframe of 3 months to solve the dispute as the settlement was undergoing and if otherwise, parties were allowed to file an appeal and dismiss the petition filed under Section 7 of IBC. The petitioner appealed against the order of the NCLT with the NCLAT which upheld the decision. The Supreme Court gave literal interpretation to the provision of Section 7(5) of IBC and observed that the NCLT or NCLAT may or may not admit the petition, however there is no statute to refer the parties to settle out of court.

Conclusion

As we have seen in the discussed cases, the Supreme Court in its various judgments from time to time has interpreted Section 7(5)(a) and it is now a well settled piece of legislation. The objective of CIRP is not money recovery but to aid the corporate debtor to revive his sinking business and thereby the stakeholders and public at large are not affected.

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Corporate governance and internal policies: all you need to know

By

Sneha Mahawar

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August 14, 2023

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This article has been written by Apeksha Choubey pursuing a Diploma in US Corporate Law for Company Secretaries and Chartered Accountants at LawSikho, and has been edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

From the past few decades, we have been going through lots of developments in every field: education, infrastructure, art, industries, trading, manufacturing, Stock exchange transactions, mass media and communication, entertainment, etc. With the expansion in every area, there is a need to put up some type of code and ethics to conduct the business of companies to protect the interests of large numbers of people related to these companies and society at large. Hence, the term corporate governance is gaining more and more awareness all over the world. It consists of two words “Corporate” which means any company, and “Governance”, which denotes some type of control. Through this article, we will try to focus on thoroughly understanding it and its various aspects.

What is corporate governance and its relation with internal policies

As we know, various types of activities are required to perform and run a company’s business. Corporate governance is the system of code, ethics, internal controls, rules, and regulations through which the business of the company is conducted and controlled. This is a kind of framework which is binding on the company to achieve its goals and objectives in such a way as not to dilute the interests of all parties related to the company, such as employees, shareholders, customers, government, etc. The boards of directors are responsible for creating, managing, and controlling this framework to support the company’s goals by having a sound and effective internal control system.

A good corporate governance framework can be achieved by installing a few golden principles in the internal control system of the company. Effective, transparent, and detailed internal policies (employee manual code of conduct, customers, suppliers, Human resources, production, shareholders, compliance, security, audit, governance, etc.) are the foundation for making a sound and effective internal control system. These internal policies are an indispensable part of the internal control system, which ultimately provides sufficient assurance to all parties in a company that it has good corporate governance. It is crucial to have an appropriate internal control system that is efficient enough to detect fraud and errors on time and save the company from any major losses and negative goodwill. Now, we have seen how internal policies are closely related to good corporate governance for a company. On the contrary, bad corporate governance in a company can result in major financial and goodwill losses and failure to achieve objectives.

Further, various other aspects are explained in later headings below.

Benefits and need of good corporate governance and internal policies

Better management and control: It creates a clear and effective code of conduct, rules and regulations, and sound internal control to manage the company’s affairs and activities with clarity and achieve company goals and objectives in line with the expectations of shareholders, investors, and other parties involved who are spread across the world.
Goodwill: It builds greater amounts of trust and confidence among shareholders, investors, and other parties involved, the community at large, and the government.
Social responsibility: Every company has a social responsibility towards society to protect the environment, control pollution, promote social development and upliftment of the poor, and provide better goods and services at reasonable prices. All these social plans can only be met through good corporate governance.
Frauds and errors: Both monetary and non monetary losses are the result of weak internal control systems and policies in the company, as internal and external people continuously perform fraud and errors in some way or another, which sometimes damage the company’s reputation as well. Hence, companies must have good corporate governance with sound internal control and policies in place to reduce the chances of fraud, errors, financial loss, and corruption.
Long term sustainability and returns: Good corporate governance fosters long term sustainability, financial soundness, numerous growth and expansion opportunities, and a higher rate of return to the company.
Facilitate easy capital and market share: It helps in raising capital requirements in the market easily, whether through an IPO or loans. High share prices on the stock exchange are also directly correlated with it. Good corporate governance results in good market sentiment and boosts investors confidence in the company.

Principles of corporate governance

Fair treatment: It is the duty of the Board of Directors to provide equal and fair treatment to shareholders, customers, investors, suppliers, and employees. Every party should know their rights and have the power to exercise them in the correct manner.
Responsibility and accountability: The Board of Directors is responsible for managing the affairs of the company as per the rules and policies defined and acting best in its interests. Moreover, they are also held accountable for decision-making and the execution of short and long term development plans for the company- success and failure lie in the hands of the board of directors.
Transparent: The Board of Directors is also responsible for providing clear and timely information which is critical to compliance related and legal decisions to all related parties, such as annual financial statements and announcements of key policy changes, appointment of auditors, etc.
Risk management: Managing every type of risk is also one of the most crucial functions performed by the Board of Directors. It is related to designing robust accounting and internal control systems that help in detecting fraud and errors in the early stages and reduce financial and non financial losses to the company. Risk could arise either due to external or internal factors such as internal fraud, market risk , legal risk, technological risk, etc.

Bad and good cases of corporate governance

The Enron Scandal

The Enron scandal is an example of bad corporate governance. Enron Corporation declared bankruptcy in 2001. It was one of the largest companies in the U.S. This company falsely reported its revenue by a high margin and committed fraud in relation to hiding debts from investors and regulators to escape accountability. This scandal had a lasting effect on Wall Street and led the government to pass new corporate accountability and governance regulations.

The Worldcom Scandal

Another major scandal that occurred in 2002 was WorldCom, in which the founder and CEO planned a scheme to increase the incomes in the accounting records to maintain high share prices on the stock exchange. Internal auditors discovered fraudulent entries in records where assets were overstated by making false balance sheet entries.

PepsiCo.

PepsiCo. is one of the good examples of corporate governance; in its 2020 proxy statement, the company sought input from investors on following areas as under

Long term plans and business sustainability issues;
Human capital management;
Leadership structure and Board composition;
Compensation; and
Good governance and corporate ethics.

Some important requirements enacted

Sarbanes –Oxley Act: It is popularly known as SOX and was passed to control unlawful and fraudulent activities committed by chief executives of big companies to gain public and investor confidence again. Its emphasis is that top management must certify the accuracy of the yearly financial information presented, and severe penalties were imposed for indulging in fraudulent financial activity.

Basel II: Basel II provides guidelines for minimum capital requirements, regulatory supervision, and market discipline. Banks are required to maintain certain ratios of capital to their risk-weighted assets. This requirement reduces the financial effect of risky operational decisions, which form part of corporate governance.

Corporate governance scenario in India and changes in Companies Act, 2013

Different committees were formed, such as the Confederation of Indian Industry (CII), the Securities Exchange Board of India (SEBI), and the Narayana Murthy Committee, and they identified major features: accountability, transparency, and treating all shareholders equally. To improve the chief affairs of the company, the Ministry of Corporate Affairs (MCA) issued a new set of Corporate Governance Voluntary Guidelines in 2009.

The Companies Act, 2013 was introduced on August 29, 2013 and replaced the Companies Act, 1956. Afterwards, MCA issued rules for management and administration, the appointment and qualification of directors, meetings of the Board of Directors, and its powers and accounts, known as the Companies (Management and Administration) Rules These two amendments provided a robust framework for corporate governance.

Conclusion

The concept of corporate governance is becoming very prominent due to the occurrence of many eye opening scandals in the past that adversely affected economies all over the world. Governments are taking various measures in their respective countries to enact rules and provisions in the laws that should be strictly followed by companies and protect shareholders and others from both financial and non-financial loss. But ultimately, good corporate governance is the responsibility of those who are managing affairs and taking crucial decisions for the company to achieve its goals and objectives by complying with its basic principles.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://t.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.

Deemed conveyance

By

Vanshika Kapoor

-

August 14, 2023

0

This article is written by Srushti Khule, a student of NALSAR, University of Law, Hyderabad. The article provides basic knowledge about deemed conveyance in layman’s language.It delineates its importance and the process of registration and addresses some of the basic questions around it.

It has been published by Rachit Garg.

Introduction

Everyone must have heard people saying that they want their own home. Buying your own house is considered the foremost step on the ladder of success. This is true for most of us, but sometimes unawareness or lack of knowledge about some documentation work may bring us problems. On the one hand, when we aspire for a new home, we should understand the complete procedure of house ownership. The residential real estate sector is one of the fastest-growing sectors of the Indian economy. It has been reaching new heights in the last few years. This mainly happens due to urbanisation, rising income, and increasing population. But the rise of the sector is a proportionately increasing number of malpractices, corruption, and frauds. The government has taken several initiatives from its side to combat such wrongs.

One such initiative was taken by the Maharashtra government, which introduced the provision of deemed conveyance in 2008. This initiative is to help the housing societies get title, rights, or interests on land from the landowner or builder if he is not cooperating through the means of legal authority, i.e., the registrar’s office. This article will comprehensively discuss this initiative of deemed conveyance, why one should do it, the documents required, and the process of its registration.

What is deemed conveyance

The deemed conveyance was introduced by the Maharashtra government through the amendment in Maharashtra Ownership Flats( Regulation of the promotion of construction, sale, management, and transfer) Act, 1963 in 2008.
- Section 11 of the original Act was renumbered as sub-section(1) and other sub-sections (2), (3), (4) and (5) were inserted through the amendment of 2008.
- According to sub-section (1), the promoter, who may be a builder or landowner, is required to transfer his right, title, and interest in the land and building in the name of the company or housing society. This is known as the deed of conveyance.
- According to sub-section (3), if the promoter fails to issue this deed of conveyance in due time. In such cases, the housing society or company or association of apartment owners or flat purchasers, whatever the case may be, may apply to the concerned competent authority to issue a certificate that such company or society is entitled to have title or rights executed in their favour. This is known as deemed conveyance.

Rule 9 of the Maharashtra Ownership of Flats (Regulation of the promotion of construction, etc.) Rules, 1964 mentions the time period in which a promoter shall issue a conveyance deed. It says that if no period is agreed upon between the housing society and promoter, then the promoter shall issue a conveyance deed within four months from the date the housing society is registered or the association of flat takers is constituted.
Section 17 of the Real Estate (Regulation and Development) Act, 2016 mentions the promoter to execute a registered conveyance deed and hand over physical possession and other title documents to the association of allottees or competent authority within the specified time as per provisions of local laws. In the absence of local laws, it gives three months to execute the conveyance deed from the date of issuance of the occupancy certificate.
In addition, Rule 9(2) of the Maharashtra Real Estate (Regulation and Development) (Registration of real estate projects, Registration of real estate agents, rates of interest and disclosures on website) Rules, 2017 mentions the time period to convey title by the promoter in a case of plots, single building project and a layout.
- Rule 9(2)(i) gives a three-month period to the promoter from the date allottees in the plot have paid full consideration to the promoter.
- Rule 9(2)(ii) gives a three-month period to the promoter in cases of a single-building project, given no period is agreed upon between the promoter and allottees.
- Rule 9(2)(iii) gives a one-month time period to the promoter in case of a building or a wing of the building in a layout, given no period is agreed upon between the promoter and allottees.

Importance of deemed conveyance

The provision of deemed conveyance was introduced keeping in mind the rising number of complaints where promoters or building developers sold off some parts of land such as common areas, parking lots, clubhouse, and other amenities to an innocent third party for his illicit benefits. The provision ensures that the ownership and control rights are transferred to respective rights holders. It legally recognizes the housing society or company as the rightful owner, making enforcing rules, regulations, and other laws easier.

It promotes transparency and accountability in the functioning of the housing society. The association or cooperative housing society becomes responsible for managing the common areas, and its members have a say in decision-making. This helps foster a sense of community and ensures that the interests of all residents are prioritised.

Redevelopment of societies

There are many societies that were constructed years back, but the builder or developer has not yet issued the conveyance deed. The housing society or association of flat owners of that building may not be able to undergo redevelopment of buildings in their building unless the title, rights, or interest are transferred from the builder to them. Deemed conveyance is an effective and convenient option in these cases. The housing society or association of flat owners of buildings gains control over the title, rights, and interest on that land. They can plan and undertake repairs, renovations, and improvements without dependence on the builder or developer. This allows society to ensure the upkeep of these areas according to their specific requirements and preferences. It helps them maintain and develop society in their desired way.

Difference between deemed conveyance and conveyance

Conveyance	Deemed Conveyance
In legal terms, ‘conveyance’ refers to the transfer of title, right, or interest from one person to another.	This was introduced by the Maharashtra government through a 2008 amendment to give competent authority to issue unilateral conveyance, which is known as deemed conveyance.
The deed of conveyance is issued when the promoter or builder willingly transfers his title, right, or interest in the land and building to the housing society.	Deemed conveyance is the unilateral conveyance that happens due to the non-cooperation of the promoter or builder. It is issued by the registrar’s office on behalf of the promoter if he declines to willingly transfer his title, rights, or interest in the land and building.
This process takes place smoothly and conveniently.	Due to the unwillingness and non-cooperation of the promoter, the force of legal authority is used here.

Documents required for deemed conveyance

The documents are necessary to complete the process of deemed conveyance. Even if a single document is missing, it may extend and complicate the process. Both the online and offline modes to apply for deemed conveyance are available. The documents required for both modes are mentioned below.

All these documents are mentioned on the official website of the Maharashtra government https://mahasewa.org/. The source of this information is the Government Notification dated 22nd June 2018 about the steps, list of documents, procedure, and format for deemed conveyance.

Documents required for online application

According to the official GR dated 22nd June 2018, available at the official website https://mahasewa.org/, the documents to be submitted while applying online are as follows:

The very first step is submitting the application through Form no. 7.
There shall be evidence of registration of the housing society.
There shall be a property card that is not old than three months. A property card is a document issued by the land record department of the state to property owners authenticating the ownership of property.
A list of all legal flat owners of the housing society in the prescribed form. The prescribed form is not mentioned specifically in the GR.
There shall be a copy of the legal notice given to the promoter and other relevant parties according to the Maharashtra Apartment Ownership Act, 1970, regarding the conveyance certificate and intimation of proceeding for deemed conveyance.
The occupancy certificate of the building should be submitted. It is a document issued by the Department of Urban Development certifying that the construction of buildings complies with approved plans and is in an appropriate condition for occupancy. If the concerned housing society does not have an Occupation certificate, then a self-declaration or affidavit stating that the responsibilities and liabilities and actual possession of a building are acceptable.
There shall be a commencement certificate of the building. It is a certificate issued by a competent authority allowing builders for the commencement of construction of the property.
There shall be details of the applicant society and a copy of the resolution regarding deemed conveyance passed in the Annual General Body Meeting or Special General Body Meeting.
The court stamp of Rs 2000 or online fees should be paid.
Lastly, the self-declaration of the applicant that all the documents, to the best of their knowledge, are true and correct is required.

Documents for offline application

According to the said official GR dated 22nd June 2018, available at the official website https://mahasewa.org/, the documents to be submitted while applying online are as follows.

The first step is similar to that for online applications that is, submitting an application through Form no. 7.
There shall be a copy of Form 7 acknowledging deemed conveyance number.
There shall be a sale agreement copy of the flat of one member or proof of ownership, which may include a court decree, will, or inheritance certificate.
Lastly, a copy of the final architect certificate shall be presented.

Procedure for registration of deemed conveyance

According to the said official GR dated 22nd June 2018, available at the official website https://mahasewa.org/, the procedure for registration of deemed conveyance is as follows:

Step 1 – Application

The first step is filing an application. The housing society must fill out form No. 7 and submit it with the documents mentioned above to the concerned District Deputy Registrar. After applying, two things are required to be seen. First, the concerned holders on 7/12 are the same holders given in writing. 7/12 extract is a document containing details of a specific piece of land such as owner name, survey number, area, liabilities, etc. Second, all the other societies and apartments on the same layout are included as parties.

Then the hearing notice is issued to all concerned parties. In the hearing, the promoter or landowner will be given a reasonable opportunity of being heard. After the end of the hearing, the certificate of deemed conveyance will be passed. This is part of the entire procedure. The procedure does not end here.

Step 2 – Adjudication

The second step is the process of adjudication. The housing society shall go to the stamp duty office for adjudication. Here they shall pay all the stamp duty amount if they have paid less or no stamp duty. Stamp duty is to be paid according to the current rent. If it is found that less stamp duty is paid, a penalty may be imposed. The final adjudication order will be issued by the Collector of Stamps.

Step 3 – Registration

The third step is registration. The housing society shall go to the Sub- registrar’s office in the respective jurisdiction of the society. The concerned Sub-Registrar shall complete registration within a one-day time limit according to Maharashtra Lok Seva Hakk Notification, 2015. The deemed conveyance will be registered here.

Step 4 – Entry in record

This is the last step in the process of obtaining deemed conveyance. The concerned society shall apply to the Talathi/Tahsildar or City Survey Officer of the respective jurisdiction for entering the name of the housing society on the Property Card or 7/12 extract. The concerned housing society shall ensure their name is registered on the Property card or 7/12 extract. After checking this, one can consider that the process of deemed conveyance is completed.

Stamp duty applicable for deemed conveyance

The stamp duty is to be paid during the process of adjudication. The sub-registrar shall complete the process if he is satisfied with two conditions.

It is specifically mentioned in the deemed conveyance documents that no F.S.I. is balanced, and it is attached with the current date architect’s certificate. Floor Space Index (F.S.I) is the floor area ratio in a building to the area or size of the piece of land.
The society can submit deemed conveyance deed directly for registration after paying stamp duty at the rate of the number of flats X Rs. 100/- or as prescribed by the Government from time to time if the agreements in the benefit of the present tenement holders are registered with proper stamp duty according to the current rate.

After this, if it is found by the Collector of Stamp of the District that less stamp duty is paid for the said documents, then liability and penalty can be imposed on the concerned society according to Maharashtra Stamp Act, 1958.

Documents to be submitted for Adjudication along with Stamp Duty

The documents are as follows

Application form affixed with Rs. 10/- Court fee stamp;
Code number received by making data entry on the website of https://igrmaharashtra.gov.in/ of Registrar and Stamp Duty Department;
Draft of Conveyance Deed (in two copies).
A copy of the deemed conveyance order and certificate issued under Section 11(3) of the Maharashtra Ownership Flats (Reguláfion of the promotion of construction, sale, management and transfer) Act, 1963.
Proof of making payment of Stamp Duty on the Agreement of Flats (if an agreement is registered, then Index No.2, otherwise original agreements).

Conclusion

The Maharashtra government took the initiative to help the housing society by providing them with legal ownership rights. However, this initiative has yet to bring the result it was aimed at. The data says that a tiny percentage of the total housing society has gone through deemed conveyance. One of the main reasons is that people need to be aware of the advantages of getting deemed conveyance. Instead, they see it as a long hectic process. There is a need to make them aware of their rights. Otherwise, the landowners will keep reaping illicit profits or interests in that building without knowledge of the housing society or flat purchasers. Another main reason for the failure of the desired outcome from this scheme is that various middlemen between the housing society and the registrar’s office informed high stamp duty to the housing society. As a result of this, small housing societies do not consider going for deemed conveyance. Some middlemen perform incomplete work, which results in an incomplete procedure putting the housing society in more problems.

The housing societies should consider deemed conveyance an option for their betterment and not a time-consuming process. Considering these small points and documentation work may make each of us a dream come true for our own home.

Frequently Asked Questions (FAQs)

Is deemed conveyance a time-consuming process?

The timeframe for the deemed conveyance process can vary depending on several factors, including the jurisdiction, complexity of the case, availability of documents, and cooperation of all parties involved. The aim is to resolve the case within the minimum time available. The Maharashtra government recently issued a directive to approve deemed conveyance within 30 days for societies undergoing redevelopment.

Can a society undertake redevelopment after obtaining deemed conveyance?

After obtaining deemed conveyance, a society can undertake redevelopment with the right of ownership and control of the common areas. It can make decisions regarding the reconstruction or renovation of the property, subject to local regulations and bylaws.

References

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A study on UAE’s Copyright Law

By

Sneha Mahawar

-

August 13, 2023

0

This article has been written by Roshini Sivakumar, pursuing a Diploma in US Contract Drafting and Paralegal Studies from LawSikho, and has been edited by Shashwat Kaushik.

This article has been published by Sneha Mahawar.

Table of Contents

Introduction

The United Arab Emirates (UAE) is known for its artistic designs and architecture. It incorporated its first Intellectual Property Rights in 1992 and was later revised in 2002. It is one of the signatories to several other International Conventions to ensure that intellectual property rights are protected under international standards and that there is unified legislation governing various aspects of Intellectual Property rights.

International conventions

Intellectual Property Rights in the UAE are governed by the Ministry of Economy, but the UAE does not have comprehensive legislation, and there are other governing laws that are related to Intellectual Property Rights. For example, Trademark Federal Law No. 37 of 1992, as amended, which regulates the protection of Trademarks and Trade names; Federal Law No. 7 of 2002, on Author’s and neighbouring Rights; and Federal Industrial Property Law No. 17 of 2002, as amended.

As the United Arab Emirates is also a member of the Gulf Cooperation Council (GCC), it includes the GCC unified patent law and the unified draft GCC Trade law. Furthermore, the UAE is found to be a part of a number of International conventions, such as:

WIPO Berne Convention for Protection of Literary and Artistic Works, 1971(Berne Convention).
WIPO Rome Convention for Protection of Performers, Producers of Phonograms and Broadcasting Organization, 1961( Rome Convention).
Paris Convention.
World Trade Organization Agreement on Trade Related Aspects of Intellectual Property Rights, 1994.

Copyright in the UAE

Copyright in the UAE is an exclusive legal right of the owner of the creative work. It is considered to be the right to copy or reproduce. The Federal Law No. 7 of 2002 is in respect of Author Copyright and Parallel Rights and is defined as having a diverse array of original and tangible works such as books, lectures, musicals, architectural drawings, photographs, computer software, and other similar creations that are subject to copyright protection. The following are the important rights under the copyright laws:

Performers rights- These are the rights that are interchangeably used as related rights and neighboring rights. They are generally aligned with the rights that are used to safeguard the legal interests of a particular class of individuals who are associated with cultural performances, performing artists, and phonogram producers. Further, it is to be noted that in 2016, keeping in view the rights of the performers, the UAE government considered establishing a committee for the purpose of providing licences to music performers and acquiring royalties on behalf of the composers.

Moral rights – These are personal rights that connect the creator to their work. Moral rights are considered to be inherent in an owner’s intellectual work and in being identified as the originator of that work. The law also safeguards the right to hinder alteration or mutilation of the same and does not allow the transfer of the right to another person; thus, the author would solely continue to enjoy his or her rights.

Economic rights- These are a set of rights that permit copyright holders to retain ownership but allow authorised reproduction and dissemination of their work in return for remuneration. These rights are also called exclusive rights, which are granted to withhold the creation from being circulated and maintain anonymity.

Protection for copyright under UAE Law

The term of copyright protection for the author or composer of their work is secured from the time the work originated until a period of 50 years is granted exclusive rights over it. But, for work related to Broadcasting Organisations, the term of the copyright can be protected for only 20 years after the start of the succeeding calendar from the date of first transmission. There are many other exceptions that are covered under the copyright law, such as legal documents such as regulations and contracts, newspapers and articles in the media, and various other works that are under the domain of public property.

The new copyright law is the result of the vast changes occurring in various legislative matters in the land of the United Arab Emirates. The new copyright law replaces the old one as Federal Law No. 38 of 2021 and came into effect on January 2, 2022.

It is imperative to note here that the copyright law follows the repealed copyright law in prohibiting a blanket assignment of future works. However, the previous copyright law allowed the transfer of future copyright only up to five or fewer, but there is an exception to the same, wherein it is seen that there will be an implementation of regulations that would have lesser restrictions around the transfer of future copyright.

The concept of work for hire

As the new Copyright Law is the replacement of the old Federal Law No. 07 of 2002 (old Copyright Law), developments were made to the new law, and the concept of work for hire was introduced, wherein the work is created by an employee and commissioned by an employer, by which the employee is compensated for the same, and the employer would be the legal author for the same.

However, there are two instances where the employer will be the legal author for the work – when an author creates the work for the benefit of another person, in such cases the copyright would belong to the latter. Secondly, where the author creates the work within the scope of the employer by using their resources, tools, etc., the employer would have the right to the copyright. Thus, the law also discovers situations where the employee remains the copyright holder and includes instances where the author creates work outside the scope of employment and not related to the business or activities of the employment. If the author creates the work without the employer’s resources, tools, and information, then ownership merely lies with the employee.

Importance to the government

There are some improvements that were made in the introduction of copyright’s work with some software entities to guard smart appliances, PC programs, databases, and similar other software appliances that are determined under the Ministry of Economy. It is important to have protection for these works, as they are considered to be fast growing sectors in the innovation space. The New Copyright Law under the United Arab Emirates also allows protection of ownership on architectural designs, which are also of importance to the country for their brilliance in designs and buildings. Further, under the new law, the ownership of the designs for architecture will be with the owner of the property instead of the first author of the designs.

Protection of individual rights

Under the new regime, an important concept introduced was the concept of “fair use. To understand this better, let’s take, for instance, a photograph, a sound, or a visual effect that has individual involvement; it will not be easy to get that published or distributed without the permission of the person. Thus, it would always be important for any media company to seek permission from other companies or agencies to avoid exploitation and have validity for use. This concept shows there is overall protection for individual rights and not just mere protection for the subject matter. However, this right is situated only with fair use of the work where there is no infringement on the rights of the author.

New grievance committee

The new copyright law allows for a provision under the law to form a competent committee under the Ministry of Economy in the Name of “The Grievance Committee for Copyrights and Neighboring Rights” in order to deal with disputes regarding copyrights and neighboring rights.

Amendment to the existing provisions

The law also provides increases in the penalties for violations and infringement of the copyright, which have increased to AED 100,000 for infringement of the copyright. Also, for the infringement of one of the moral or monetary rights, it has increased to AED 100,000 from AED 50,000 under the previous law. Furthermore, the penalties for exploitation of computer applications or viruses for not getting licences from the authors or the successors will lead to a minimum fine of AED 100,000 to AED 10,00,000, up from the earlier rate of AED 30,000.

Suggestions

It is pertinent to note that, apart from what’s been discussed above, there are certain provisions that talk about the withdrawal of the circulation of proprietary works by the author if it has a justified reason. There are exceptions for that, which include the withdrawals, chance of retreating the smart appliances, PC programs, and circulation of software, which successfully involve third parties to invest in such fields with incentives.

The law also includes comments on joint works, where multiple people have joined hands to create a work and it’s out of the question to separate the work between them. The right to the work will be co-jointly owned by all the authors, and it cannot be owned by any one author alone. And, where there are no legal heirs for any copyright, the work of such would be appropriately preserved by the Ministry of Economy, which can still exercise the relevant rights with the aim of conserving.

Conclusion

The new copyright laws regarding copyrights in the United Arab Emirates (UAE) have filled the gaps through their latest amendments, as briefly stated above. This is considered a huge step for the consideration, removal, and addressing of the issues, notably on the topics of work and possession of the rights. However, there is clarity in certain areas of the law, but it requires a lot of work to make it much more stringent and exhaustive in nature to avoid loopholes.

References

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

https://ty.me/lawyerscommunity

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.